Exhibit 10(c) - Anmended and Restated Limited Partnership Agreement of
Colorful Avenue Ltd., A Colorado Limited Partnership
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
Colorful Avenue, Ltd.
A Colorado Limited Partnership
THIS LIMITED PARTNERSHIP AGREEMENT ("Partnership Agreement") made and
entered into this 20th day of October, 2000 by HWS Colorful, LLC ("General
Partner"), and each individual and legal entity who becomes a Partner to
this Partnership Agreement by executing the Agreement. In consideration of
the mutual promises and covenants contained herein, the parties agree as
follows:
ARTICLE I
FORMATION OF PARTNERSHIP AND NAME
1.01 Formation: The General Partner and the Limited Partners hereby form
a Limited Partnership (the "Partnership") pursuant to the Colorado Uniform
Limited Partnership Act of 1981 as it now exists or may hereafter be modified
or amended (the "Act").
1.02 Term: The Partnership shall commence on the day the Certificate of
Limited Partnership is filed for record with the Office of the Secretary of
State of the State of Colorado, and ,subject to this Agreement, shall
continue until the first of the following events:
(a) The expiration of forty (40) years from and after the effective
date;
(b) The retirement, resignation or expulsion of a General Partner;
(c) The death of a General Partner;
(d) The adjudication of a General Partner as mentally incompetent; or
(e) The bankruptcy of a General Partner, or, in the alternative, the
filing, whether voluntary or involuntary, of a petition in bankruptcy
by or against a General Partner, the making of an assignment for the
benefit of the creditors of a General Partner under any federal or
state bankruptcy act or similar statute, relating to the bankruptcy or
reorganization by reason of insolvency;
provided, however, that in the event of a dissolution by virtue of (b), (c),
(d), or (e) above, the remaining General Partner(s) may agree to continue the
Partnership. If there are no remaining General Partner(s) in the event of a
dissolution by virtue of (b), (c), (d), or (e) above, the Limited Partners
may re-establish the Partnership in accordance with the terms of this
Partnership Agreement with the written agreement of a majority of the
Limited Partners. If the Limited Partners so agree to the re-establishment
of the Partnership, the Limited Partners shall elect a General Partner under
this Agreement with the approval of Limited Partners with a majority of the
remaining Percentage Interests in the Partnership.
1.03 Name: The name of the Partnership shall be: Colorful Avenue, Ltd.
1.04 Filings: A certificate of formation of a Limited Partnership, properly
signed and sworn to by the General Partner and the initial Limited Partners,
acting directly or through an attorney in fact, shall be filed for record in
the Office of the Secretary of State of the State of Colorado, in accordance
with the Act; and the General Partner shall execute and file such further
documents and take such further actions as may be appropriate to comply with
the requirements of law for the formation and operation of a limited partner-
ship in all other counties, states and other jurisdictions where the Partner-
ship elects to do business. In addition, as deemed necessary by the General
Partner, the General Partner shall sign, acknowledge and file any trade name
affidavits required by Colorado law and any other notices, certificates,
statements or other instruments required by any provision of the law governing
the formation of the Partnership or the conduct of its business.
1.05 Definitions: For purposes of this Partnership Agreement:
(a) "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account
as of the end of the relevant Fiscal Year, after giving effect to the
following adjustments:
(i) Credit to such Capital Account any amounts which such
Partner is obligated to restore pursuant to Section 8.04 of
this Agreement or is deemed to be obligated to restore pursuant
to the penultimate sentences in Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations; and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Regulations and shall be interpreted consistently therewith.
(b) "Affiliate of the General Partner" shall mean any individual,
joint venture, partnership, corporation or other entity which controls,
is controlled by or is under common control with the General Partner
when used with reference to a specified person,
(i) any person that directly or indirectly though one or more
intermediaries controls or is controlled by or is under
common control with the specified person;
(ii) any person that is an officer of, partner in or trustee of,
or serves in a similar capacity with respect to, the
specified person or of which the specified person is an
officer, partner or trustee, or with respect to which the
specified person serves in a similar capacity,
(iii) any person that, directly or indirectly, is the beneficial
owner of ten percent (10%) or more of any class of equity
securities of, or otherwise has a substantial class of equity
securities or in which the specified person has a substantial
beneficial interest, and
(iv) any relative or spouse of the specified person. Affiliate of
the General Partner does not include a person who is a Partner
in the Partnership or a Satellite Partnership if such Person
is not otherwise an affiliate of the General Partner.
(c) "Agreement" and "Partnership Agreement" shall mean this Agreement
and the Certificates of Limited Partnership, as originally executed and
as amended from time to time, as the context requires. Words such as
"herein", "hereafter", "hereof", "hereto", "hereby", and "hereunder",
when used with reference to this Agreement, refer to this Agreement as
a whole, unless the context otherwise requires.
(d) "Annual Tax Liability" means, for any Fiscal Year, an amount equal
to:
(i) The product of (A) the Applicable Tax Rate and (B) the
estimated taxable income (if any) of the Partnership
(determined as if the Partnership were itself a corporate
taxpayer for such Fiscal Year (taking into account any net
operating loss carryforwards)); minus
(ii) the sum of any applicable federal income tax credits
(determined as if the Partnership were itself a corporate
taxpayer but only to the extent that all the Partners are
eligible to claim any such credit or would be so eligible
if they had sufficient tax liability against which to utilize
such credit) for such Fiscal Year.
(e) "Applicable Tax Rate" means the sum of (A) the highest marginal
federal income tax rate applicable to individuals for the relevant
Fiscal Year under Section 1 of the Code (expressed as a percentage)
and (B) the product of (i) the highest marginal Colorado income tax
rate applicable to individuals for such Fiscal Year (also expressed
as a percentage) and (ii) 100% minus the rate determined under clause
(A).
(f) "Capital Account" shall mean the capital account maintained for
each Partner pursuant to Section 5.01 hererof.
(g) "Capital Contributions" shall mean all contributions of cash or
property (valued for this purpose at initial Gross Asset Value) made
by a Partner or its predecessor in interest.
(h) "Closing" shall mean the actual settlement date of that certain
"Contract to Buy & Sell Real Estate" dated September 12, 2000 between
Colorful Avenue, Ltd., as Buyer, and Concepts Direct, Inc., as Seller.
(i) "Code" shall mean the Internal Revenue Code of 1986, as amended
to date, or corresponding provisions of subsequent superseding federal
revenue laws.
(j) "Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable
with respect to an asset for such Fiscal 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 Fiscal 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 Fiscal Year bears to such
beginning adjusted tax basis, provided, however, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of
such Fiscal Year is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable
method selected by the General Partner.
(k) "Distributable Cash" shall mean, with respect to any Fiscal Year,
all cash receipts from operations in the ordinary course of business
without deduction for depreciation, but after deducting payments for
Operating Cash Expenses in connection with the Partnership and its
properties, debt service and capital expenditures paid from such cash
receipts, and any amounts set aside in the discretion of the General
Partner for the creation of or addition to Reserves.
(l) "Entity" shall mean any general partnership, limited partnership,
corporation, joint venture, trust, business trust, cooperative or
association.
(m) "Fiscal Year" shall mean the calendar year or, in the case of the
first Fiscal Year, the fraction thereof commencing on the date on which
the Partnership is formed under the Act and, in the case of the last
Fiscal Year, the fraction thereof ending on the date on which the
winding up of the Company is completed.
(n) "General Partner" shall mean one or more general partners.
(o) "Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value
of such asset, as reasonably determined by the General Partner;
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values (taking
Code Section 7701(g) into account), as determined by the General
Partner as of the following times: (A) the acquisition of an
additional interest in the Partnership by any new or existing
Partner in exchange for more than a de minimis Capital Contribution,
(B) the distribution by the Partnership to a Partner of more than a
de minimis amount of Partnership property as consideration for an
interest in the Partnership, and (C) the liquidation of the
Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), provided that an adjustment described in
clauses (A) and (B) of this paragraph shall be made only if the
General Partner reasonably determines that such adjustment is
necessary to reflect the relative economic interests of Partners
in the Partnership;
(iii) The Gross Asset Value of any item of Partnership assets
distributed to any Partner shall be adjusted to equal the gross fair
market value (taking Code Section 7701(g) into account) of such
asset on the date of distribution as determined by the General
Partner; and
(iv) The Gross Asset Values of Partnership assets shall 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 Regulations
Section 1.704-1(b)(2)(iv)(m) and clause (vi) of the definition of
"Profits" and "Losses"; provided, however, that Gross Asset Values
shall not be adjusted pursuant to this clause (iv) to the extent
that an adjustment pursuant to clause (ii) is required in connection
with a transaction that would otherwise result in an adjustment
pursuant to this clause (iv).
Such Gross Asset Value shall be adjusted by the Depreciation taken into
account with respect to such asset, for purposes of computing Profits and
Losses.
(p) "Interest" shall mean the entire ownership interest of a Partner
in the Partnership at any particular time, including without limitation,
such Partner's right to share in Profits and Losses, and to receive
distributions from, the Partnership, any and all rights to vote, and
the rights to any and all benefits to which such Partner is entitled
as provided in this Agreement, together with the obligations of such
Partner to comply with all of the terms and provisions of this Agreement.
(q) "Limited Partner" shall mean each of the parties who has subscribed
for and purchased a limited partnership interest in the Partnership and
each of the parties who may hereafter become additional or substituted
Limited Partners. To the extent a General Partner has purchased Limited
Partnership Interest in the Partnership, it will have all the rights of
a Limited Partner with respect to such interest; and the term "Limited
Partner", as used herein, shall include a General Partner to the extent
it has purchased such interest in the Partnership.
(r) "Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
(s) "Nonrecourse Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
(t) "Other Limited Partners" shall mean all the Limited Partners
not including the Special Limited Partner.
(u) "Operating Cash Expenses" mean, with respect to any Fiscal Year,
the amount of cash disbursed in such period in the ordinary course of
business during such period, including, without limitation, all cash
expenses, such as construction costs, advertising, promotional,
property management, insurance premiums, statistical, or bookkeeping
service and computing or accounting equipment use, organization expenses
and telephone expenses. Operating Cash Expenses include the expenses
incurred by the General Partner in performing bookkeeping, computer,
printing, management, public relations services and lobbying for the
Partnership necessary for the administration of the Partnership or the
maintenance and transfer, of any of the Properties, (including
specifically allocated payments to salaried employees rending such
services and payments for supplies), which services, but for their
performance by the General Partner, would be required to be performed
for the Partnership in the normal course of business.
(v) "Partner" shall mean any General Partner or any Limited Partner.
"Partners" shall mean the General Partner or Partners and all Limited
Partners.
(w) "Partner Nonrecourse Debt" has the meaning set forth in Section
1.704-2(b)(4) of the Regulations.
(x) "Partner Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership
Minimum Gain that would result if such Partner Nonrecourse Debt were
treated as a Nonrecourse Liability, determined in accordance with
Section 1.704-2(i)(3) of the Regulations.
(y) "Partner Nonrecourse Deductions" has the meaning set forth in
Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
(z) "Partnership" shall refer to the Limited Partnership created by
this Partnership Agreement, as amended and restated.
(aa) "Partnership Minimum Gain" has the meaning set forth in Section
1.704-2(I)(3) of the Regulations.
(bb) "Percentage Interest" shall have the meaning set forth in Section
5.02(a) hereof.
(cc) "Person" shall mean any individual or entity, and the heirs,
executors, administrators, legal representatives, successors and
assigns of such "Person" where the context so admits; and, unless
the context otherwise requires, the singular shall include the plural,
and masculine gender shall include the feminine and the neuter and
vice-versa.
(dd) "Profits" and "Losses" mean, for each Fiscal Year, an amount equal
to the Partnership's taxable income or loss for such Fiscal Year,
determined in accordance with the 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 (without
duplication):
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Profits
or Losses pursuant to this definition of "Profits" and "Losses" shall
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 pursuant to Regulations Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Profits or Losses
pursuant to this definition of "Profits" and "Losses" shall be
subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to clauses (ii) or (iii) of the definition
of Gross Asset Value, the amount of such adjustment shall be treated
as an item of gain (if the adjustment increases the Gross Asset Value
of the asset) or an item of loss (if the adjustment decreases the
Gross Asset Value of the asset) from the disposition of such asset
and shall be taken into account for purposes of computing Profits or
Losses;
(iv) Gain or loss resulting from any disposition of 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;
(v) 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, computed in accordance with the definition of
Depreciation;
(vi) To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) is required,
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Partner's interest in
the Partnership, the amount of such adjustment shall be treated as
an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) from the disposition
of such asset and shall be taken into account for purposes of
computing Profits or Losses; and
(vii) Notwithstanding any other provision of this definition,
any items which are specially allocated pursuant to Section 5.02(b)
shall not be taken into account in computing Profits or Losses.
The amounts of the items of Partnership income, gain, loss or
deduction available to be specially allocated pursuant to Section
5.02(b) shall be determined by applying rules analogous to those
set forth in clauses (i) through (vii) above.
(ee) "Property" shall refer to the assets acquired by the Partnership,
specifically common stock, notes receivable or their personal or real
properties coming under ownership of the Partnership at its inception
or in the future.
(ff) "Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as they may be
amended from time to time (including corresponding provisions of
succeeding regulations).
(gg) "Reserves" means, with respect to any Fiscal Year, funds set
aside or amounts allocated during such period to reserves which shall
be maintained in amount deemed sufficient by the General Partner for
working capital and to pay taxes, insurance, debt service, repairs,
replacement for renewals, or other costs or expenses, incident to the
ownership or operation of the properties.
(hh) "Special Limited Partner" shall mean Concepts Direct, Inc.
(ii) "Substitute Limited Partner" shall have the meaning set forth
in Section 7.05 hereof.
ARTICLE II
PURPOSES AND PRINCIPAL PLACE OF BUSINESS
2.01 Purposes and Objectives: The Partnership's business and purpose shall
consist solely of the acquisition, ownership, operation and management of an
office warehouse real estate project known as ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, located
in Longmont, Colorado (the "Property") and such activities as are necessary,
incidental or appropriate in connection therewith. Subject to the provisions
of this Agreement, the management of the Partnership shall be under the
direction of a General Partner.
2.02 Place of Business: The principal place of business of the Partnership
shall be located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., #▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at
such other place as the General Partner may from time to time designate in
writing to the Limited Partners. In addition, the Partnership may maintain
such other offices as the General Partner may deem advisable at any other
place or places within the United States.
2.03 Title to Partnership Property. All property owned by the Partnership
shall be owned by the Partnership as an entity and, insofar as permitted by
applicable law, no Partner shall have any ownership interest in any
Partnership property in its individual name or right, and each Partner's
Interest shall be personal property for all purposes.
2.04 Separateness/Operation Matters. The Partnership shall conduct its
business and operations in accordance with the following provisions:
(i) the partnership will not assume liability for the debts of any other
person, and the Partnership will not hold itself out as being liable for the
debts of any other person;
(ii) none of the liabilities of the Partnership shall be paid from the funds
of its Partners or any other person without the Partnership being obligated
for such liabilities;
(iii) the Partnership shall not guarantee the debt or the performance of any
obligation of any of its Partners or any other person. The Partnership will
not pledge any of the Partnership assets for the benefit of any of its
Partners or any other person, and no person shall pledge its assets for the
benefit of the Partnership;
(iv) the Partnership shall conduct its affairs strictly in accordance with
this Agreement and shall observe all necessary, appropriate, and customary
partnership formalities, including, but not limited to, maintaining accurate
and separate books, records and accounts (including, but not limited to,
transaction accounts with any affiliate of the Partnership);
(v) the books, records, and accounts of the Partnership will at all times be
maintained in a manner permitting the assets and liabilities of the
Partnership to be easily separated and readily ascertained from those of any
other person;
(vi) the Partnership will hold itself out to creditors and the public as a
legal entity separate and distinct from any other entity, and will not hold
itself out to the public or to any of its individual creditors as being a
unified entity with assets and liabilities in common with any other person;
and
(vii) the Partnership shall not commingle its assets or funds with those of
any other person.
ARTICLE III
RIGHTS AND DUTIES OF GENERAL PARTNER
3.01 Subject to this Agreement, the General Partner shall have the right,
duty and power to manage the business of the Partnership, including, without
limitation, the right and power to:
(a) maintain, improve, develop or lease the Partnership's office
and warehouse property at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in Longmont, Colorado;
(b) except as is otherwise provided in this Partnership Agreement,
borrow money on behalf of the Partnership in the ordinary course of
its business, and repay the same at any time or from time to time;
(c) establish investment accounts for the Partnership and deposit
and withdraw funds in or from such accounts;
(d) assign, compromise or release any claim of, or debt due, the
Partnership;
(e) institute and defend actions at law or in equity on behalf of
the Partnership and consent to arbitrate any disputes or controversies
of the Partnership;
(f) engage and retain accountants, lawyers and other professional
persons to perform services for the Partnership, and purchase such
goods and other services as may be required to conduct the business
of the Partnership, provided that no service or purchase contract
shall violate the other provisions of this Partnership Agreement;
(g) admit additional or Substitute Limited Partners;
(h) enter into such contracts and perform such other acts as may
be necessary to further the business of the Partnership;
(i) require additional contributions from Other Limited Partners
in the amounts and at the time as may be determined by the General
Partner in order to carry out the objectives of the Partnership and
to satisfy Partnership obligations; and
(j) all such other powers and duties provided in the Act.
3.02 Without the consent of all of the Partners, the General Partner shall
have no authority to:
(i) do any act in contravention of this Agreement;
(ii) do any act which would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise provided
in this Agreement;
(iii) possess the Property, or assign rights in the Property,
for other than a Partnership purpose;
(iv) knowingly perform any act that would subject any Limited Partner
to liability as a general partner in any jurisdiction;
(v) borrow money on behalf of the Partnership other than in the
ordinary course of business, or grant consensual liens on the
Partnership's property; except, however, that the General Partner
is hereby authorized to secure financing for the Partnership pursuant
to the terms of the mortgage relating to that certain $8,500,000.00
loan to be secured by the real property at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Mortgage") and other indebtedness expressly
permitted herein or in the documents related to the Mortgage, and to
grant a mortgage, lien or liens on the Partnership's Property to
secure such Mortgage;
(vi) file a voluntary petition or otherwise initiate proceedings to
have the Partnership adjudicated bankrupt or insolvent, or consent to
the institution of bankruptcy or insolvency proceedings against the
Partnership, or file a petition seeking or consenting to
reorganization or relief of the Partnership as debtor under any
applicable federal or state law relating to bankruptcy, insolvency,
or other relief for debtors with respect to the Partnership; or seek
or consent to the appointment of any trustee, receiver, conservator,
assignee, sequestrator, custodian, liquidator (or other similar
official) of the Partnership or of all or any substantial part of the
properties and assets of the Partnership, or make any general
assignment for the benefit of creditors of the Partnership, or admit
in writing the inability of the Partnership to pay its debts generally
as they become due or declare or effect a moratorium on the
Partnership debt or take any action in furtherance of any action;
(vii) dissolve or liquidate the Partnership;
3.03 Without the consent of the specified percentage of the Partners, the
General Partner shall have no authority to
(i) (50%) to sell or lease, or otherwise dispose of all or
substantially all of the assets of the Partnership;
(ii) (66%) to amend, modify or alter this Agreement;
(iii) (80%) to merge or consolidate with any other entity.
Notwithstanding the foregoing and so long as any obligations secured by the
Mortgage remain outstanding and not discharged in full, the General Partner
shall have no authority to take any action in items (i) through (iii) above
unless such action has been approved by unanimous vote of the Members of the
General Partner or without the written consent of the holder of the Mortgage,
take any of the actions described in the following provisions of this
Agreement:
1. Subsection v and vii of Article 3.02;
2. Subsection i of Article 3.03 unless the sale, lease or other
disposition will directly result in (1) prepayment of all of the
obligations secured by the Mortgage as specifically allowed under
the Mortgage, or (2) "Defeasance" of the real property securing
the Mortgage as set forth in Section 1.35;
3. Subsection ii of Article 3.03 if the amendment, modification or
alteration concerns Article II, III and Subsection 4.06 of this
Agreement, or;
4. Subsection iii of Article 3.03.
So long as the obligation secured by the Mortgage remains outstanding and
not discharged in full, the Partnership shall have a limited liability
company as a General Partner having an Operating Agreement containing the
restrictions and terms set forth in Article Three of this Limited Partnership
Agreement as of the date hereof, and the Partnership shall have no other
general partners.
3.04 Until five years from Closing, the General Partner shall have no
authority, without the consent of the majority of the Other Limited Partners
and the written consent of the Special Limited Partner, such consent not to
be unreasonably withheld, to:
(i) resign or withdraw from office;
(ii) incur indebtedness in the name of the Partnership if the
amount of its indebtedness, at any time, will exceed, in the
aggregate, the sum of $500,000;
(iii) make distributions of cash or property if, after giving
effect to the distribution, the liabilities of the Partnership will
exceed the fair value of the assets of the Partnership;
(iv) admit or remove a General Partner;
(v) change the Partners' Percentage Interests, unless required
by this Agreement; and
(vi) amend the Partnership Agreement.
After the five year period, the General Partner shall have the authority to
resign or withdraw from office at any time after giving sixty (60) days
written notice to the other Partners. Also after the five year period, the
General Partner shall have no authority to take the actions is (ii), (iii),
(iv), or (v) above without the consent of the majority of the Limited
Partners.
3.05 Duty of Care: The General Partner's duty of care to the Partnership
and the Limited Partners in the conduct or winding up of the Partnership
business is limited to complying with the provisions of this Partnership
Agreement and Colorado and federal law, and refraining from engaging in
negligent or reckless conduct, intentional misconduct or a knowing violation
of law which has, or can reasonably be expected to have, a material adverse
effect on the business of the Partnership.
3.07 General Partner's Power of Attorney: Subject to this Agreement, the
General Partner shall have, and is hereby granted, a power of attorney to
act within the scope of the General Partner's duties to execute whatever
documents may be necessary to effectuate the actions of the Partnership.
In addition, for any action of the Partnership requiring either a majority
or unanimous vote of the Limited Partners, should any Limited Partner's
consent or approval be deemed pursuant to Section 4.08 below, the Limited
Partners hereby grant a power of attorney to record such deemed consent or
approval and to execute whatever documents may be necessary to effectuate
the Limited Partner's consent or approval.
ARTICLE IV
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
4.01 Limitation of Liability; Withdrawal: Each Limited Partner's liability
shall be limited as set forth in the Act. The Limited Partners shall not
participate in the control of the business of the Partnership. Unless the
Limited Partner transfers its entire Interest pursuant to Article VII, a
Limited Partner shall not be entitled to withdraw from the Partnership except
upon the prior written consent of the General Partner and, if such consent is
given, the General Partner may impose reasonable terms and conditions to such
withdrawal in order to protect the Property and business of the Partnership.
4.02 Limited Partner's actions: A Limited Partner shall not be deemed to
have participated in the control of business of the Partnership by doing one
or more of the following:
(a) Being a contractor for or an agent or employee of the
Partnership or of a General Partner;
(b) Being an officer, director or shareholder of a corporate General
Partner;
(c) Consulting with and advising a General Partner with respect to
the business of the Partnership;
(d) Acting as surety for the Partnership or guaranteeing or assuming
one or more specific obligations of the Partnership or providing
collateral for an obligation of the Partnership;
(e) Bringing an action in the right of the Partnership to recover a
judgment in its favor pursuant to the Act;
(f) Calling, requesting or participating in a meeting of the
Partners;
(g) Winding up the Partnership pursuant to the Act;
(h) Exercising any right or power permitted to partners under
Colorado law; or
(i) Proposing or approving or disapproving, by voting or otherwise,
one or more of the following matters:
(i) The dissolution and winding up or continuation of the
Partnership;
(ii) The sale, exchange, lease, mortgage, pledge, or other
transfer of any assets of the Partnership;
(iii) The incurrence of indebtedness by the Partnership;
(iv) A change in the nature of the business;
(v) The admission or removal of a Partner;
(vi) A transaction or other matter involving an actual or
potential conflict of interest; or
(vii) An amendment to the Partnership Agreement or Certificate
of Limited Partnership.
Notwithstanding any implication to the contrary contained in this Section
4.02, no individual Limited Partner shall have the right or authority to
unilaterally do any of the foregoing. Such actions may only be taken in the
context of this Partnership Agreement and shall be subject to an appropriate
vote of the Partners.
4.03 Prosecution and Settlement of Suits, Judgments, Etc.: In furtherance
of the intent of the parties that each Limited Partner shall be liable to the
Partnership only up to the amount of his total Capital Contributions, the
parties hereto agree as follows:
(a) The General Partner shall arrange to prosecute, defend, settle or
compromise actions at law or in equity at the expense of the
Partnership, as such may be necessary to enforce or protect
interests of the Partnership.
(b) The General Partner shall satisfy any judgment, decree, decision
or settlement; first, out of any insurance proceeds available
therefor; and next, out of Partnership assets and income; and
finally, out of the assets and income of the General Partner.
4.04 Right to Engage in Other Business Ventures: The General Partner and
any Limited Partner may engage in or possess an interest in other business
ventures of every nature and description independently or with others,
including, but not limited to the ownership, financing, leasing, operation,
management, syndication, brokerage and development; and neither the
Partnership nor the Partners shall have any right by virtue of this Agreement
in and to such independent ventures or to the income or profits derived
therefrom.
4.05 Investment Purposes: Each Limited Partner hereby represents and
warrants to the Partnership that his Interest in the Partnership is for
investment purposes only and not for resale or in connection with any
offering or distribution. Each Limited Partner acknowledges and understands
that his Interest in the Partnership may not be transferred, sold, assigned
or conveyed except in accordance with the terms of this Agreement and, to the
extent necessary in accordance with the applicable provisions of and
regulations under the Securities Act of 1933, as amended (hereinafter, the
"Securities Act") and any applicable State securities statutes and
regulations. Each Limited Partner acknowledges that the Interest of the
Partnership owned by him has not been registered under the Securities Act
and that in order to register the Interest for sale under the Securities Act,
it may be necessary to provide financial or other information which may not
be available. Each Limited Partner acknowledges that the Partnership and
the General Partner have made no representations or entered into any
agreement to register the Interest under the Securities Act or with respect
to the resale of the Interest or that information necessary to register the
Interest will be available at any time in the future. Each Limited Partner
acknowledges that he has been advised and has had the opportunity to consult
legal counsel and obtain professional advice before entering into the
Partnership.
4.06 Death or Legal Incapacity of Limited Partner: Effect of Bankruptcy,
Death or Incompetency of a Limited Partner. The bankruptcy, death,
dissolution, liquidation, termination or adjudication of incompetency of a
Limited Partner shall not cause the termination or dissolution of the
Partnership and the business of the Partnership shall continue. Upon any
such occurrence, the trustee, receiver, executor, administrator, committee,
guardian or conservator of such Limited Partner shall have all the rights of
such Limited Partner for the purpose of settling or managing its estate or
property, subject to satisfying conditions precedent to the admission of
such assignee as a substitute Limited Partner. The transfer by such trustee,
receiver, executor, administrator, committee, guardian or conservator of any
Partnership Interest shall be subject to all of the restrictions, hereunder
to which such transfer would have been subject if such transfer had been made
by such bankrupt, deceased, dissolved, liquidated, terminated or incompetent
Limited Partner.
4.07 The Special Limited Partner: The Special Limited Partner shall not be
obligated to make any additional contributions to its Capital Account, unless
it wishes to do so.
4.08 Deemed Approval: The Limited Partners shall have an affirmative duty
to timely respond to requests by the General Partner for a vote on Partner-
ship matters. If any Limited Partner fails to respond within thirty (30)
days to any such request for action of the Limited Partners by the General
Partner, consent or approval, as appropriate, shall be deemed.
ARTICLE V
CAPITAL; COMPENSATION; PROFITS AND LOSSES; DISTRIBUTIONS
5.01 Capital.
(a) Each of the Partners has contributed to the capital of the
Partnership the amount [of cash] set forth on Schedule A. The Partners
shall not be required to make any additional capital contributions
unless required by law or this Agreement. No Partner shall have any
right to require the return of all or any part of such Person's
contributions to capital.
(b) The Partnership shall maintain a single Capital Account for
each Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be credited
that Partner's Capital Contributions, that Partner's
distributive share of Profits and any items in the nature of
income or gain which are allocated pursuant to Section 5.02(b)
and the amount of any Partnership liabilities assumed by that
Partner or which are secured by any property distributed to
that Partner.
(ii) To each Partner's Capital Account there shall be debited
the amount of cash and the Gross Asset Value of any property
distributed to that Partner pursuant to this Agreement, that
Partner's distributive share of Losses and any items in the
nature of expenses or losses that are allocated pursuant to
Section 5.02(b), and the amount of any liabilities of that
Partner assumed by the Partnership or which are secured by any
property contributed by that Partner to the Partnership.
(iii) In determining the amount of any liability for purposes
of clauses (a) and (b) above, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the
Code and Regulations.
(iv) In the event an 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.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Code Section 704(b) and Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent therewith. In the event the
General Partner (based on the advice of the Partnership's professional tax
advisor) shall determine that it is prudent to modify or adjust the manner
in which the Capital Accounts, or any debits or credits thereto (including
debits or credits relating to liabilities that are secured by contributed
or distributed property or that are assumed by the Partnership or any
Partners), are computed in order to comply with such Regulations, the General
Partner may make such modification or adjustment. The Partners shall
exercise good faith in cooperating to amend this Agreement to effect the
changes, if any, recommended by the General Partner to cause compliance with
Code Section 704(b) and the Regulations promulgated thereunder.
(c) A loan by a Partner to the Partnership shall not be considered a
Capital Contribution and shall be repaid as debt of the Partnership.
5.02 Allocations.
(a) Except as otherwise provided in this Agreement, Profits and
Losses for any Fiscal Year shall be allocated among the Partners in
the percentages set forth on Schedule A under the heading "Percentage
Interest" (as the same may be amended from time to time, the
"Percentage Interests"). A Partner's Percentage Interests shall be
adjusted periodically by the General Partner based on the percentage
of any Partner's Capital Contributions to the Capital Contributions
made by all the Partners.
(b) Special allocations:
(i) Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(f) of the Regulations, notwithstanding any
other provision of this Section 5.02, if there is a net
decrease in Partnership Minimum Gain during any Fiscal
Year, each Partner shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to
such Partner's share of the net decrease in Partnership
Minimum Gain, determined in accordance with Regulations
Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant
thereto. The items to be so allocated shall be determined
in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2)
of the Regulations. This Section 5.02(b)(i) is intended to
comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Regulations and shall be
interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(i)(4) of the Regulations,
notwithstanding any other provision of this Section 5, if
there is a net decrease in Partner Nonrecourse Debt Minimum
Gain attributable to a Partner Nonrecourse Debt during any
Fiscal Year, each Partner who has a share of the Partner
Nonrecourse Debt Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Section
1.704-2(i)(5) of the Regulations, shall be specially
allocated items of Partnership income and gain for such
Fiscal Year (and, if necessary, subsequent Fiscal Years)
in an amount equal to such Partner's share of the net
decrease in Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to
be allocated to each Partner pursuant thereto. The items
to be so allocated shall be determined in accordance with
Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations.
This Section 5.02(b)(ii) is intended to comply with the
partner minimum gain chargeback requirement in Section
1.704-2(i)(4) of the Regulations and shall be interpreted
consistently therewith.
(iii)Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations, or
distributions described in Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the
Regulations, items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of the
Partner as quickly as possible, provided that an allocation
pursuant to this Section 5.02(b)(iii) shall be made only if
and to the extent that the Partner would have an Adjusted
Capital Account Deficit after all other allocations
provided for in this Section 5.02(b) have been tentatively
made as if this Section 5.02(b)(iii) were not in the
Agreement.
(iv) Nonrecourse Deductions. Nonrecourse Deductions for
any Fiscal Year shall be specially allocated to Partners
in proportion to their relative Percentage Interests.
(v) Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any Fiscal Year shall be
specially allocated to the Partner who bears the economic
risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section
1.704-2(i)(l).
(vi) Section 754 Adjustments. To the extent that an
adjust to the tax basis of any Partnership asset pursuant
to Code Section 734(b) or Code Section 743(b) is required
to be taken into account, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), in determining Capital Accounts, the
amount of such adjustment to Capital Accounts shall be
treated as an item of gain (if the adjustment increases
the tax basis of the asset) or loss (if the adjustment
decreases the tax basis of the asset), and such gain or
loss shall be specially allocated to Partners in accordance
with the manner in which their Capital Accounts are
required to be adjusted pursuant to Regulations Section
1.704-1(b)(2)(iv)(m).
(c) Curative Allocations.
The allocations set forth in Sections 5.02(b) and 5.02(d) (the
"Regulatory Allocations") are intended to comply with certain requirements
of the Regulations. It is the intent of Partners that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of
Partnership income, gain, loss or deduction pursuant to this Section 5.02(c).
Therefore, notwithstanding any other provision of this Section 5.02(c)
(other than the Regulatory Allocations), the General Partner shall make such
offsetting special allocations of Partnership income, gain, loss or deduction
in whatever manner it determines appropriate so that, after such offsetting
allocations are made, each partner's Capital Account balance is, to the
extent possible, equal to the Capital Account balance such Partner would
have had if the Regulatory Allocations were not part of the Agreement and all
Partnership items were allocated pursuant to Section 5.02(a).
(d) Loss Limitation.
Losses allocated pursuant to Section 5.02(a) shall not exceed the
maximum amount of Losses that can be allocated without causing any Partner
to have an Adjusted Capital Account Deficit at the end of any Fiscal Year.
In the event some but not all of Partners would have Adjusted Capital Account
Deficits as a consequence of an allocation of Losses pursuant to Section
5.02(a), the limitation set forth in this Section 5.02(d) shall be applied
on a Partner by Partner basis, and Losses not allocable to any Partner as a
result of such limitation shall be allocated (a) first, to the other Partners
in accordance with the positive balances in such Partners' Capital Accounts
so as to allocate the maximum permissible Losses to each Partner under
Section 1.704-1(b)(2)(ii)(d) of the Regulations (until the Capital Account
balances of all Partners shall be reduced to zero), and (b) thereafter, in
the same manner as Nonrecourse Deductions.
(e) Other Allocation Rules.
(i) For purposes of determining the Profits, Losses or any
other items allocable to any Fiscal Year, Profits, Losses,
and any such other items shall be determined on a daily,
monthly, or other basis, as determined by the General
Partner using any permissible method under Code Section
706 and the Regulations thereunder.
(ii) Partners are aware of the income tax consequences of the
allocations made by this Section 5.02 in reporting their
shares of Partnership income and loss for income tax
purposes.
(iii) For purposes of determining a Partner's proportionate share
of the "excess nonrecourse liabilities" of the Partnership
within the meaning of Regulations Section 1.752-3(a)(3),
Partners' interests in Company profits are in proportion
to their relative Percentage Interests.
(f) Tax Allocations: Code Section 704(c).
In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss, and deduction with respect to any property contributed
to the capital of the Partnership shall, solely for tax purposes, be
allocated among Partners so as to take account of any variation between the
adjusted basis of such property to the Partnership for federal income tax
purposes and its initial Gross Asset Value (computed in accordance with the
definition of Gross Asset Value), as determined by the General Partner using
any permissible method under Code Section 704(c) and the Regulations
thereunder.
In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to clause (ii) of the definition of Gross Asset Value, 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 Regulations thereunder.
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 5.02(f) 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
Partner's Capital Account or share of Profits, Losses, other items, or
distributions pursuant to any provisions of this Agreement.
5.03 Distributions: (a) The General Partner shall use its best efforts to
distribute to the Partners, within 15 days after the end of each fiscal
quarter of the Partnership, out of Distributable Cash, an amount equal to
the estimated Annual Tax Liability for the Fiscal Year to date, less any
distributions already made with respect to such Fiscal Year pursuant to this
Section 5.03(a) or pursuant to Section 5.03(b).
(b) The General Partner may make such additional distributions to the
Partners, out of Distributable Cash, from time to time as it deems advisable.
(c) All distributions of Distributable Cash pursuant to Sections
5.03(a) and 5.03(b) shall be made in proportion to the Partners' respective
Percentage Interests.
(d) Proceeds from the liquidation of the Partnership shall be
distributed in accordance with Article VIII hereof.
(e) No distribution shall be declared and paid if payment of such
distribution would cause the Partnership to violate any limitation on
distributions provided in the Act.
5.04 Limited Liability: The liability of each of the Limited Partners for
the debts and losses of the Partnership shall under no circumstance exceed
in the aggregate the total amount of his Capital Contribution.
5.05 Capital Calls: Any capital calls of the Partnership to its Partners
shall be done pro-rata based on the then current Partnership Interest.
However, the Special Limited Partner has no obligation to contribute
additional capital to the Partnership or make a capital call. None-the-less,
should a capital call be made upon the Other Limited Partners, the Special
Limited Partner's Interest and Percentage Interest in the Partnership shall
be diluted in accordance with Section 5.02(a), unless the Special Limited
Partner should elect to contribute in any case. If any of the Other Limited
Partners fails to satisfy its required capital call obligations, its Interest
and Partnership Interest shall likewise be diluted. The Partners shall have
thirty (30) days after receiving notice of a capital call to fulfill their
obligation and if a Partner does not fulfill that obligation, it shall be
deemed to have failed to satisfy the obligation and will be automatically
diluted. The Interests and Percentage Interests of any of the other Partners
who make up the difference in the capital call correspondingly shall be
increased.
ARTICLE VI
INDEMNIFICATION
6.01 Indemnification
(a) The Partnership shall indemnify each Partner who was, is or is
threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative,
and whether formal or informal (a "Proceeding"), solely by reason of
being or having been a Partner, against any liability and reasonable
expenses (including reasonable attorney's fees), incurred as a result
of such Proceeding, except such liabilities and expenses which are
incurred as a result of a breach of this Partnership Agreement or a
knowing violation of law. There shall be no obligation to indemnify
as a result of conduct, which is covered by liability insurance,
regardless of how the premiums were paid.
(b) The Partnership shall promptly make advances or reimbursements
for reasonable expenses (including attorney's fees) incurred by any
Partner claiming indemnification under this Article unless it has
been determined that such Partner is not entitled to indemnification.
Advances or reimbursements made in advance of any such determination
shall be conditioned upon receipt from the Partner claiming
indemnification of a written undertaking to repay the amount of such
advances or reimbursements if it is ultimately determined that such
Partner is not entitled to indemnification.
(c) The General Partner shall be indemnified against all liability
for the obligations of the Partnership, unless the obligation in
question was incurred by the General Partner on behalf of the
Partnership in violation with this Agreement or law. Further, the
General Partner shall be indemnified by the Partnership for all acts
of the General Partner, either commission or omission, undertaken by
the General Partner on behalf of the Partnership, not in violation
of Section 3.03 of this Agreement. The General Partner shall be
entitled to indemnification unless it is determined by a court of
competent jurisdiction that the General Partner was not entitled to
indemnification hereunder.
(d) The determination that indemnification under the foregoing
provisions of this Article is permissible for a Limited Partner
shall be made by the Limited Partners not seeking indemnification,
after having received a recommendation from the General Partner.
(e) Nothing in this Article shall be deemed to preclude other
indemnification of the Partners, General or Limited. Determinations
as to whether or not other indemnification is proper shall be made in
the manner set forth in paragraph (c) of this Section.
ARTICLE VII
TRANSFERABILITY OF PARTNERS' INTEREST - RESTRICTIONS
7.01 Assignment of General Partner's Interest: The General Partner shall
not assign, pledge, encumber, sell or otherwise dispose of its Interest as
General Partner in the Partnership nor enter into any agreement as a result
of which any person, firm or corporation shall have a general partnership
interest with them in this Partnership, without written consent of all of
the Limited Partners.
7.02 Assignment of Limited Partner's Interest: A Limited Partner shall not
assign, pledge, encumber, sell or otherwise dispose of its Interest as a
Limited Partner in the Partnership nor enter into any agreement as a result
of which any person, firm or corporation shall have a general partnership
interest with them, without the written consent of the General Partner.
7.03 Family and Intra-Partnership Transfers: A Limited Partner may sell,
assign, give or otherwise dispose of all or any part of his Interest in the
Partnership to his spouse, his child, or children, a spouse of a child,
grandchildren, any other Partner hereof or any beneficial owner of an
interest in this Partnership, without the consent of the General Partner
and without such transfer being subject to subsection 7.02; provided,
however, any such assignee shall not become a Substituted Limited Partner
until the provisions of subsection 7.05 are satisfied.
7.04 Right of First Refusal: Except as provided in subsection this 7.04
hereof, if any Limited Partner desires to sell or otherwise dispose of all
or any portion of his Interest in the Partnership to a bona-fide purchaser
or purchasers other than those described in subsection 7.03 above, then the
General Partner shall have a right of first refusal to purchase such Interest
upon the same terms and conditions as the selling Limited Partner would be
willing to accept from the third party. A Limited Partner desiring to sell
all or a portion of his Interest in the Partnership under the terms of this
subsection shall give written notice thereof to the General Partner, who then
shall have 30 days to purchase the Interest on the same terms and conditions.
The provisions hereof shall be binding upon all of the Limited Partners,
their personal representatives, and any trustee, receiver or other fiduciary
appointed for them.
7.05 Creation and Rights: If a Limited Partner has sold, assigned or
transferred all or part of his Interest in compliance with this Article VII,
the assignee (other than a person who is already a Partner) shall have the
right to become a substitute Limited Partner ("Substitute Limited Partner")
only with the approval of the General Partner and if the assignee shall
consent in writing in a form satisfactory to the General Partner to be bound
by all of the terms and conditions of this Agreement in the place and stead
of the assigning Limited Partner and obligate himself to pay, as the General
Partner may determine, reasonable expenses connected with such admission,
including but not limited to the cost of preparing the filing an amendment
to the Certificate of Limited Partnership. Upon approval of the General
Partner and execution of such a document, this assignee shall become a
Substituted Limited Partner, possessing all of the rights, powers and
interests, and subject to the same duties and obligations of his assignor.
7.06 Rights of Assignees Not Made Substituted Limited Partners: Any
assignee who is not accepted as a Substituted Limited Partner shall not have
any right to require information or accounting of the Partnership
transactions nor to inspect the Partnership books, but shall be entitled to
receive only the share of Profits and Losses and the distributions to which
his assignor would otherwise be entitled.
ARTICLE VIII
DISSOLUTION AND TERMINATION
8.01 Dissolution: The Partnership shall be dissolved upon the occurrence
of any of the following events;
(a) retirement, withdrawal, dissolution (except as a consequence of
a merger or consolidation), death, insanity, or bankruptcy (or the
entry of an order for relief under the Bankruptcy Act of 1978, as
amended) of a General Partner, except that the Partnership shall
continue if a majority of the Partners agree to continue the Partner-
ship and either (1) a new General Partner is elected within sixty
(60) days of any such occurrence or (2) one or more existing General
Partners remain as General Partners;
(b) the continued conduct of the Partnership business becoming
unlawful;
(c) the expiration of the term of the Partnership unless extended by
a vote in favor of such an extension by Partners having a majority of
the Percentage Interests in the Partnership;
(d) the removal of the General Partner by the Limited Partners as
provided unless a new General Partner is simultaneously elected or
one or more existing General Partner(s) remain as General Partner(s);
or
(e) any event which would cause a dissolution of the Partnership under
Colorado law, whether or not such event would cause a dissolution under
subparagraph (a) through (d) above.
8.02 Liquidation: In the event of dissolution as provided in paragraph
8.01 above, and following the sale of all the Partnership's assets, the
assets of the Partnership shall be paid and distributed as follows:
(a) to creditors, including Partners who are creditors, to the extent
otherwise permitted by law, in satisfaction of liabilities of the
Partnership other than liabilities for distributions under Section
8.02(b);
(b) to Partners and former Partners in satisfaction of liabilities
for distributions under Sections 7-62-601 and 7-62-604 of the Act;
and
(c) to Partners in accordance with the positive balances in their
Capital Accounts, after giving effect to all contributions,
distributions and allocations for all prior periods, including the
period during which the process of liquidation occurs.
Upon dissolution, each Partner shall look solely to the assets of the
Partnership for the return of his contribution. After the consent of the
Limited Partners under Section 3.02(b) is obtained, the winding up of the
affairs of the Partnership and the distribution of its assets shall be
conducted exclusively by the General Partner. In the event of dissolution or
bankruptcy of a General Partner or removal of a General Partner by the
Limited Partners and failure to appoint a new General Partner, the winding
up of the affairs of the Partnership and the distribution of its assets
shall be conducted by such person(s) or entity(ies) that is hereby authorized
to do any and all acts and things authorized by law for these purposes.
8.03 Distribution in Kind: If the General Partner or other liquidator
determines that a portion of the Partnership's assets should be distributed
in kind to the Partners, he shall obtain an independent appraisal of the fair
market value of each such asset as of a date reasonably close to the date of
liquidation.
8.04 Negative Capital Account Payback: If, after making final distributions
provided for in Section 8.03, any Partner or Transferee other than the
Special Limited Partner has a deficit Capital Account balance, then each
such Partner or Transferee shall be required to make contributions to the
capital of the Partnership in an amount equal to the lesser of:
(a) the amount of the deficit balance in such Partner's or
Transferee's Capital Account; or
(b) such Partner's or Transferee's share (determined pro rata in
proportion to the deficit balances in the Capital Accounts of all
Partners and Transferee having deficit Capital Account balances at
that time) of the sum of the amount required to satisfy any recourse
liabilities of the Partnership.
All amounts contributed to the Partnership under this subsection
8.04(b) shall then be applied and distributed as provided in Section
8.03. In no event shall the Special Limited Partner have any
obligation under this subsection 8.04.
8.05 Termination: Upon the completion of the distribution of Partnership
assets as provided in subsection 8.02, the Partnership shall be terminated,
and the General Partner or other person acting as liquidator (or the
Partners, if necessary) shall cause the Certificate of Limited Partnership
to be cancelled and shall take other actions as may be necessary to terminate
the Partnership.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 Designation of the Tax Matters Partner: HWS Associates, LLC is hereby
designated as the tax matters partner of the Partnership (the "Tax Matters
Partner"), with all the authority and rights which may be accorded to it
under section 6231 of the Code and the Regulations thereunder. Each Partner
hereby consents to such designation and agrees that upon the request of the
Tax Matters Partner it will execute, certify, acknowledge, deliver, swear to,
file and record at the appropriate public office such documents as may be
necessary or appropriate to evidence such consent.
9.02 Notices: Any notice, payment demand or communication required or
permitted to be given by any provision of this Agreement shall be deemed to
have been sufficiently given or served for all purposes if delivered
personally to the party or to an executive officer of the party to whom the
same is directed or, if sent by registered or certified mail, postage and
charges prepaid addressed as follows:
If to General Partner: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇., #▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Limited Partner: the address last given to the General Partner.
Any such notice shall be deemed to be given on the date on which the same
was deposited in a regularly maintained receptacle for the deposit of United
States mail, addressed and sent as aforesaid. If a Limited Partner wishes to
or is required to give notice under this Agreement to the other Limited
Partners, then that Limited Partner shall send the notice to the General
Partner who shall in turn promptly send the notice to the other Limited
Partners. The Special Limited Partner shall not contact any of the Other
Limited Partners directly but shall do so through the General Partner unless
the General Partner withdraws or ceases to exist.
9.03 Books of Account and Records: The Partnership's books and records and
the Certificate of Limited Partnership shall be maintained at the principal
office of the Partnership and each Partner shall have access thereto at all
reasonable times.
9.04 Application of Colorado Law: This Partnership Agreement, and the
application or interpretation hereof, shall be governed exclusively by its
terms and by the laws of the State of Colorado, without regard to the
application of conflicts of law rules.
9.05 Entire Agreement; Execution in Counterparts: This Partnership Agreement
includes and incorporates the terms and conditions of the Subscription
Agreements pursuant to which each of the Limited Partners has invested in
the Partnership, each of which is hereby made a part of this Partnership
Agreement as fully as if set forth at length herein. This instrument,
together with the Subscription Agreements and the exhibits hereto, contains
the entire agreement among the parties. This Partnership Agreement may be
executed in any number of counterparts with the same document. All
counterparts shall be construed together and shall constitute one agreement.
9.06 Waiver of Action for Partition: Each of the parties hereto irrevocably
waives during the term of this Partnership any right that he or it may have
to maintain any action for partition with respect to the property of the
Partnership.
9.07 Assignability: Each and all of the covenants, terms, provisions, and
agreements herein contained shall be binding upon and, except as restricted
by Article VII, shall inure to the benefit of the successors and assigns of
the respective parties hereto.
9.08 Amendments: No amendment to this Partnership Agreement shall be
effective unless consented to in writing by all Partners.
9.09 Execution of Additional Instruments: Each Limited Partner hereby
agrees to execute and deliver to the General Partner within five (5) days
after receipt of the General Partner's written request therefore, such other
and further statements of interest and holdings, designations, powers of
attorney and other instruments as the General Partner deems necessary to
comply with any laws, rules or regulations.
9.10 Arbitration: The parties hereby submit all controversies, claims and
matters of difference to arbitration in Denver, Colorado, according to the
rules and practices of the American Arbitration Association from time to
time as amended and agreement to arbitrate shall be specifically enforceable.
Without limiting the generality of the foregoing, the following shall be
considered controversies for this purpose:
(a) all questions relating to the breach of any obligation, warranty
or condition hereunder;
(b) denying or rejecting a claim or demand of any other party, or the
failure to act on such a claim or demand;
(c) failure of the parties to this Agreement to agree on the value
to be paid to the General Partner for its Interest in the Partnership
in the event it is removed as General Partner; and
(d) all questions as to whether the right to arbitrate any question
exists.
Arbitration may proceed in the absence of any party if written notice
(pursuant to the American Arbitration Association's rules and regulations)
of the proceedings has been given to such party. The parties agree to abide
by all awards rendered in such proceedings. Such awards shall be final and
binding on all parties to the extent and in the manner provided by Colorado
statute. All awards may be filed with the Clerk of the District Court in
Denver, Colorado, as a basis of judgment and of the issuance of execution
for its collection and, at the election of the party making such filing,
with the Clerk of one or more other Courts, State or Federal, having
jurisdiction over the party against whom such an award is rendered on his
property.
9.11 Title to Partnership Properties: Title to all Partnership properties
may be held in the name of the Partnership or in d.b.a.'s as designated by
the General Partner. The General Partner shall have the power to enter into
nominee agreements with any such entity or person.
9.12 Construction: Whenever the singular number is used in this Agreement
and when required by the contest, the same shall include the plural; and the
masculine gender shall include the feminine and neuter genders; and the word
"person" or "party" shall include corporation, firm, partnership,
proprietorship or other form of association.
9.13 Headings: The headings in this Agreement are inserted for convenience
only and are in no way intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement or any provision hereof.
9.14 Waivers: The failure of any party to seek redress for violation of or
to insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
9.15 Rights and Remedies Cumulative: The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the
parties may have by law, statute, ordinance, or otherwise.
9.16 Severability: If any provision of this Agreement or the application
thereof to any person or circumstances shall be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement and application
of such provision shall not be affected and shall be enforced to the greatest
extent permitted by law.
9.17 Heirs, Successors and Assigns: Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure
to the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective heirs, legal representatives, successors and
assigns.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
Colorful Avenue, Ltd.
a Colorado Limited Partnership
By:___________________________________
HWS Colorful, LLC
By ▇▇▇▇ ▇▇▇▇▇▇▇, Member
STATE OF COLORADO )
) ss
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 20th day of October,
2000 by HWS Colorful, LLC, the General Partner of Colorful Avenue, Ltd., a
Colorado Limited Partnership.
Witness my hand and official seal.
_______________________________
Notary Public
My commission expires: ______________
SCHEDULE A
GENERAL PARTNER
Name and Business Address Capital Contribution Percentage Interest
LIMITED PARTNERS
Name and Business Address Capital Contribution Percentage Interest