LIMITED PARTNERSHIP AGREEMENT Exhibit 10.11
This LIMITED PARTNERSHIP AGREEMENT is made and dated as of the _____
day of February, 1995, between ___________________, a _____________
corporation, as general partner, and LSB Holdings, Inc., an Oklahoma
corporation, as limited partner.
WHEREAS, the parties hereto have determined that it is in their best
interests to own and operate a _____________________ program at
____________ in ________________, and
WHEREAS, the parties have determined that it is desirable to form a
limited partnership under the laws of the State of ________________ for the
foregoing purposes;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
SECTION 1: DEFINITIONS
The capitalized terms used in this Agreement shall have the meanings
ascribed to them in this Section 1 (such meanings to be equally applicable
to both the singular and plural forms of the terms defined). Except to the
extent expressly included in this Section 1, the definitions contained in
_____________ of the Act shall not apply to this Agreement.
Act.__The _________________ Revised Limited Partnership Act,
________________, as amended from time to time. Reference to any section
of the Act shall be deemed to refer to a similar provision in any amendment
to the Act.
Affiliate.__Any person (a) who, directly or indirectly, through one
or more intermediaries, controls or is controlled by, or is under common
control with, any specified Partner (the term "control" for these purposes
meaning the ability, whether by ownership of shares or other equity
interests, by contract or otherwise, to elect a majority of the directors
of a corporation, to select the managing or general partner of a
partnership, or otherwise to select, or have the power to remove and then
select, a majority of those persons exercising governing authority over an
entity, and, without limiting the generality of the foregoing, shall
conclusively be presumed in the case of ownership of fifty percent (50%) or
more of the equity interests of such entity), (b) who is an executive
officer, director, trustee or general partner of any Partner, or (c) who is
an officer, director, trustee or general partner of any person described in
clauses (a) or (b).
Agreement. This Limited Partnership Agreement, including any
amendments.
"Army" shall mean the United States Department of the Army.
"Army Novation" shall mean the Novation in the form of Exhibit A to
the Loan Agreement.
Assignee. A Person who has acquired from a Partner a beneficial
interest in the Partnership's Profits, Losses and distributions, but who is
not a substituted Partner.
Bankruptcy. With respect to the Partnership or a Partner therein:
(a) an adjudication that it is bankrupt or insolvent, or the entry of an
order for relief under the Federal Bankruptcy Code or any other applicable
bankruptcy or insolvency statute or law, (b) its inability to pay its debts
generally as they mature (after giving effect to applicable grace periods),
(c) the making by it of an assignment for the benefit of creditors or the
dissolution and winding up of its affairs, (d) the filing by it of a
petition in bankruptcy or a petition for relief under any section of the
Federal Bankruptcy Code or any other applicable bankruptcy or insolvency
statute or law or any answer or other pleading admitting or failing to deny
the allegations of any such petition, (e) the filing against it of any such
petition (unless such petition is dismissed within 90 days from the date of
filing thereof), (f) its seeking, consenting to or acquiescence in the
appointment of a trustee, conservator, receiver or liquidator for it or for
all or any substantial part of its assets, (g) the appointment without its
consent or acquiescence of a trustee, conservator, receiver or liquidator
for it or for all or any substantial part of its assets (unless such
appointment is vacated or stayed within 90 days from its effective date),
or (h) with respect to a Partner, the acquisition by a creditor of such
Partner, or by any other Person acting on behalf of such creditor, of any
rights with respect to such Partner's interest in the Partnership or to
Profits (other than by the voluntary grant of such rights by the Partner),
if such acquisition shall continue for a period of 90 days.
Business Day. Any day other than a Saturday, Sunday or other day on
which banks in _________________ are authorized to close.
Capital Account. The account maintained by the Partnership for each
Partner as provided in Section 4.2.
Cash From Refinancing. The net cash the Partnership realizes from
the refinancing of all or a portion of the Partnership Property after (i)
retirement of debt secured by the Partnership Property or the portion
thereof refinanced, (ii) payment of all Partnership Expenses related to
such refinancing transaction, (iii) application of the refinancing proceeds
for the uses for which they were procured, and (iv) deduction of amounts
for Reserves related to such refinancing transaction.
Cash From Sales. The net cash the Partnership realizes from the sale
or other disposition of Partnership Property, or from insurance proceeds
paid for damage to or destruction of Partnership Property, or due to any
award paid on account of a taking of Partnership Property by eminent
domain, after (i) retirement of debt secured by the Partnership Property or
the portion thereof sold, damaged or taken; (ii) payment of all Partnership
Expenses related to such transaction or event, including the cost of any
repairs or reconstruction; and (iii) deduction of amounts for Reserves
related to such transaction or event.
Certificate and "Certificate Register. Certificate and Certificate
Registered as defined in Sections 10.1.4 and 10.1.5, respectively.
Code. The United States Internal Revenue Code of 1986, as amended.
Consent. The written consent of a Person. Used as a verb, "Consent"
shall have a correlative meaning.
Contribution. Money and the Net Book Value (as defined in Exhibit A)
of any property contributed as capital to the Partnership by a Partner in
its capacity as a Partner.
Depositary Agreement. The Depositary Agreement as defined in the
Loan Agreement.
Distribution Period. Quarterly on the dates provided for withdrawals
from the Revenues Account, as defined in the Depositary Agreement, under
Subsection 4.7(c) of the Depositary Agreement.
Delivery Date. The date on which the Facility is acquired by the
Partnership.
Excess Cash. Gross Revenues less (a) the aggregate amount of all
disbursements the Partnership makes for Partnership Expenses and (b)
amounts set aside for Reserves.
Facility.
.
GAAP. Generally accepted accounting principles in effect from time
to time in the United States, consistently applied.
General Partner. _______________, a ______________ corporation
qualified to do business in ______________, in its capacity as General
Partner of the Partnership, or its successors or permitted assigns.
Gross Revenues. The sum of all cash receipts of the Partnership from
any source other than (a) Contributions, (b) Cash From Sales, (c) Cash From
Refinancing and (d) proceeds of any other loan to the Partnership.
Indebtedness. All items that in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of
a balance sheet as of the date as of which indebtedness is to be
determined, including, without limitation, (a) monetary obligations under
leases, (b) indebtedness secured by any mortgage, pledge, lien or other
security interest or encumbrance existing on property owned subject to such
mortgage, pledge, lien or other security interest or encumbrance, even
though the indebtedness secured thereby shall not have been assumed, (c)
all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by the obligor,
even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property and (d) guarantees of obligations that themselves would
constitute "Indebtedness" but for the fact that they are obligations of
another Person.
Interest. An ownership interest in the Partnership held by a Limited
Partner or successor thereto including any and all benefits to which the
holder of such an Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement.
Lender. The Lender as defined in the Loan Agreement and its
successors and assigns.
Limited Partner. LSB Holdings, Inc., an Oklahoma corporation, or any
Person who has been admitted to the Partnership as a Substitute Limited
Partner or additional Limited Partner in accordance with Section 10. Any
General Partner who is separately designated as a Limited Partner shall
have the rights and powers and be subject to the restrictions and
liabilities of both a General Partner and a Limited Partner to the extent
of its participation in the Partnership as each.
Loan Agreement. That certain Note Purchase Agreement of even date
herewith entered into by and among the General Partner, the Partnership and
Prudential Insurance Company of America, a New Jersey mutual insurance
company.
Loan Note(s). The promissory note(s) executed and delivered by the
Partnership pursuant to the Loan Agreement.
Majority Vote. The affirmative vote or Consent of Partners
collectively holding 75 percent or more of the Percentage Interests held by
all of the Partners.
Partner. The General Partner or any Limited Partner.
Partner Funded Minimum Gain. "Partner Funded Minimum Gain" means the
sum of each Partner's "share of the minimum gain attributable to a partner
non-recourse debt" as those quoted terms are used in Treasury Regulations
Section 1.704-IT(b)(4)(iv)(h)(5).
Partnership. Limited Partnership, as such partnership
may from time to time be constituted.
Partnership Accountants. As defined in Section 9.7.
Partnership Expenses. All costs and expenses of every kind and
character the Partnership incurs in connection with the Partnership's
management, business affairs and operations, including, without limitation,
(a) capital expenditures (but only to the extent financed out of Gross
Revenues), (b) debt service on Partnership Indebtedness, (c) fees of
independent public accountants, attorneys and other Persons engaged by the
General Partner to perform work on behalf of the Partnership pursuant to
the authority granted in Section 7.1(d) (including, without limitation,
fees of the _____________________________________________________ and (d)
start-up expenses (including, without limitation, fees and expenses of
counsel to the Partners incurred in connection with the organization of the
Partnership) but only to the extent paid out of Gross Revenues or advances
made by the General Partner which have not been reimbursed. Partnership
Expenses shall not include (x) any salaries, compensation and fringe
benefits of directors, officers and employees of the General Partner; (y)
overhead of the General Partner, including rent and general office
expenses; or (z) expenses incurred by the Operator pursuant to the
______________________________________ to the extent such expenses are not
expressly stated therein to be the responsibility of the Partnership.
Partnership Minimum Gain. The amount determined, in accordance with
the Treasury Regulations promulgated under Section 704 from time to time
and subject to any modification or elaboration therein, by (i) computing,
with respect to each nonrecourse liability of the Partnership, the amount
of gain that would be realized by the Partnership if, in a taxable
transaction, it disposed of Partnership Property subject to such liability
in full satisfaction thereof (and for no other consideration) and (ii) then
aggregating the amounts so computed.
Partnership Property. The Partnership's right, title and interest in
(a) the Facility and (b) any other real or personal property, whether
tangible or intangible, other than cash.
Percentage Interest. The amount (expressed as a percentage) which
shall be utilized to measure certain aspects of a Partner's interest in the
Partnership. The Partners' initial respective Percentage Interests are:
______________________, fifty percent (50%); and LSB Holdings, Inc., fifty
percent (50%). Thereafter, the Partners' respective Percentage Interests
are subject to change from time to time as a result of transfers pursuant
to Section 10 hereof and as provided in Section 4.2 hereof.
Person. Any individual, firm, partnership, trust estate,
association, corporation or other entity.
Profits and Losses. For each fiscal year or other period an amount
equal to the Partnership's income or loss, or any items of income or loss,
determined in accordance with the accounting method and principles used by
the Partnership in maintaining its books and records, including those
described in Exhibit A attached hereto, provided that the determination
shall include any adjustments or other items the Tax Matters Partner in its
good faith judgment considers necessary or appropriate to assure compliance
with the rules set forth in Treasury Regulations Section 1.704-1(b).
Prudent Electrical Practices. At a particular time, those practices,
methods, equipment and acts then commonly used in prudent electrical
engineering and operations to design, operate and maintain electric
equipment of the type and nature in the Facility lawfully and with safety,
dependability, efficiency and economy.
Reserves. The amount of cash the General Partner from time to time
reasonably determines in good faith to be necessary or advisable as
reserves for: (a) repayment of Partnership Indebtedness authorized pursuant
to this Agreement: (b) payment of taxes, insurance premiums, professional
fees and fees payable under the
_____________________________________________; and (c) other contingencies
related to the Partnership's business; provided, however, that in no event
shall the General Partner include in Reserves (i) any amount pursuant to
the foregoing clause (c) in excess of $_____________; or (ii) any amount
with respect to any payment that is the responsibility of any Person other
than the Partnership.
Securities Act. The Securities Act of 1933, as amended.
Security. A "security" within the meaning of Section 2(1) of the
Securities Act.
Substitute Limited Partner. A Person who has become a Substitute
Limited Partner pursuant to Section 10.5.
Tax Book Value. The value of an asset determined in accordance with
the rules described in Exhibit A attached hereto.
Tax Matters Partner. As defined in Section 7.4.
Terminating Event.
(a) For an individual Partner: Bankruptcy; death; any disabling
mental or physical condition which continues for an uninterrupted period of
more than six months; entry of an order adjudicating the Partner
incompetent by a court of competent jurisdiction; appointment of a
conservator; or execution of a certificate diagnosing the Partner's
incompetency by a physician licensed to practice medicine in the state of
the Partner's residence.
(b) For a Partner that is an entity: Bankruptcy; filing of a
certificate of dissolution or its equivalent for any corporation;
dissolution of a partnership; termination of a trust; distribution of an
estate's entire Partnership interest; or the dissolution or termination of
any other entity that is a Partner, whether voluntary or involuntary;
provided, however that neither (i) the consolidation or merger of a Partner
with or into any other Person nor (ii) the sale, conveyance or transfer of
all or substantially all of a Partner's assets to any Person, shall be a
Terminating Event if either (x) the Partner is the surviving corporation,
or (y) provided the conditions set forth in Section 10 with respect to the
Transfer effected thereby have otherwise been met, the corporation formed
by such consolidation or into which the Partner is merged or the Person
which so acquires all or substantially all of such Partner's assets is an
entity organized under the laws of the United States, any state thereof or
the District of Columbia, assumes in writing or by operation of law the
timely performance of every covenant of this Agreement on the part of such
Partner to be performed or observed.
(c) For the General Partner, in addition to the foregoing, as
applicable: withdrawal from the Partnership; removal of the General
Partner from the Partnership pursuant to this Agreement.
Transaction Documents. Transaction Documents shall have the meaning
ascribed thereto in the Loan Agreement.
Transfer. Any sale, exchange, assignment, encumbrance,
hypothecation, pledge, foreclosure, conveyance in trust, gift or other
transfer of any kind, whether direct or indirect, other than as a direct
consequence of a Terminating Event. Used as a verb, "transfer" shall mean
to effectuate a Transfer.
Voting Stock. Securities, the holders of which are ordinarily, in
the absence of contingencies, entitled to elect the corporate directors (or
Persons performing a similar function).
SECTION 2: FORMATION
2.1 Statutory Authority and Documents. The parties hereto have
agreed to and by these presents and upon filing of a certificate of limited
partnership do form the Partnership as a limited partnership under and
pursuant to the Act.
The General Partner hereto has executed and filed with the
Secretary of State of the State of ________________ an LP-1 form and such
other forms as are required to constitute the Partnership as a limited
partnership under the Act. The parties hereto shall execute such other
documents and shall perform such other filings and recordings and such
other acts conforming hereto as shall constitute compliance with all
requirements for the organization and/or continuing of a limited
partnership under the laws of the State of ________________ and such other
states or political subdivisions in which the Partnership elects to do
business.
2.2 Term. The Partnership will commence on February 2, 1995.
Unless sooner dissolved in accordance with the terms of this Agreement, the
Partnership shall continue in existence until February 20, 2025, upon which
date it shall be dissolved.
2.3 Name. The name of the Partnership shall be "________________
Limited Partnership."
2.4 Purpose. The purpose of the Partnership shall be to
construct, own, hold, operate, manage, lease or sell the Facility and other
Partnership Property incidental thereto, to maximize revenues from the
Facility to the extent consistent with Prudent Electrical Practices and to
undertake any and all other acts and things reasonably necessary, proper,
convenient or advisable to effectuate and carry out such purpose.
2.5 Principal Office: Agent For Service of Process. The street
address of the Partnership's principal executive office shall be
____________________________________________________, or such other address
as the General Partner may designate from time to time by an appropriate
certificate filed in the office of the __________________ Secretary of
State.
2.6 Fiscal Year: Accounting Method. The Partnership's fiscal year
shall be January 1 through December 31. The Partnership's books and
records shall be maintained on an accrual basis in accordance with (a) GAAP
except as otherwise agreed by the Partners, (b) tax accounting methods,
unless otherwise required by law, and (c) the Treasury Regulations under
Section 704(b) of the Code.
SECTION 3: CERTIFICATES
3.1 Certificate of Limited Partnership. The General Partner has
caused to be executed and filed in the office of the ________________
Secretary of State an LP-1 form in accordance with the Act.
3.2 Certificates of Amendment. The General Partner shall timely
prepare, sign, acknowledge and file in the office of the _________________
Secretary of State any certificate of amendment the Act requires, and shall
promptly deliver a copy of the certificate of amendment to each Limited
Partner. If the General Partner fails to sign or file any certificate of
amendment that the Act requires within five Business Days after a Limited
Partner has requested in writing that it be filed, a Limited Partner may
cause the certificate to be prepared, signed, acknowledged and filed.
3.3 Certificates of Dissolution and Cancellation. The General
Partner shall timely prepare, sign, acknowledge and file in the office of
the _______________ Secretary of State any certificates of dissolution,
continuation and cancellation the Act requires, unless the dissolution is
caused by an event described in Section 11.l(c), in which case the Limited
Partners winding up the affairs of the Partnership under the Act shall
prepare, sign, acknowledge and file the required certificates.
3.4 Other Certificates. The General Partner shall timely prepare,
sign, acknowledge, verify, publish, file or record, as may be necessary or
appropriate, any notices, certificates, statements or instruments required:
(a) to comply with all laws that apply to the Partnership or the conduct of
its business; (b) to perfect the Partnership's formation and maintain its
existence; (c) to enable the Partnership to hold Partnership Property in
the Partnership's name; or (d) to create presumptions in favor of bona fide
lenders or encumbrancers for value of Partnership Property.
SECTION 4: CAPITAL
4.1 Requisite Contributions. Subject to satisfactory completion
of all required documentation, the General Partner will contribute to the
Partnership one hundred percent (100%) ownership of the Facility, any
contracts, goods, equipment, assets, property and rights associated with
the Facility, and _______________________________ Dollars ($_____________)
and the Limited Partner will contribute to the Partnership
________________________________ Dollars ($_____________). In no event
shall any Partner be obligated to make contributions to the Partnership in
excess of the amounts set forth in the previous sentence. The Limited
Partner shall make its Contribution by depositing the same with the
Depositary (as defined in the Loan Agreement) on or before the date of
satisfaction of all other conditions to the Initial Advance (as defined in
the Loan Agreement) as provided in Section 4.1 of the Loan Agreement and
upon the satisfaction of all other conditions to the initial draw as
provided in Section 4.1 of the Loan Agreement. The General Partner shall
make its monetary Contribution by depositing with the Depositary one or
more installments aggregating the total amount of its Contribution on or
before the earlier of the Conversion Date (as defined in the Loan
Agreement) or one year from the date of funding of the Initial Advance.
Said Contribution may be made from funds available in the Revenues Account
(as defined in the Depositary Agreement) in accordance with and subject to
the terms and conditions of the Depositary Agreement and the Loan
Agreement. Those portions of the General Partner's contributions made from
funds available in the Revenues Account which would otherwise be
distributed to this Partnership and then to the Limited Partners shall be
repaid to Limited Partner from the General Partner's first distributions
under this Agreement. The General Partner's non-monetary Contribution
shall be made by assignment thereof from General Partner and by General
Partner causing an assignment thereof from _________________ directly to
the Partnership.
4.2 Capital Accounts. A Capital Account shall be maintained for
each Partner in accordance with Treasury Regulations Section 1.704-1(b), as
modified and supplemented by Treasury Regulations Section 1.704-IT(b) or
any successor provision, and, to the extent consistent therewith, the rules
set forth in Exhibit A.
4.3 No Interest on Capital. The Partnership shall not pay to any
Partner interest upon any Contribution or upon undistributed or reinvested
Profits.
4.4 Capital Withdrawals and Returns. Except as otherwise provided
in this Agreement: (a) no Partner shall have the right to withdraw or
reduce its Contributions to the capital of the Partnership; and (b) no
Partner shall have the right to demand or receive property, other than
cash, in return for its Contribution or have priority over another Partner,
either as to the return of Contribution of capital or as to Profits, Losses
or distributions.
4.5 Waiver of Partition. The Partners hereby waive and forfeit
all rights arising out of statute or by operation of law to seek, bring or
maintain in any court an action for partition pertaining to any Partnership
Property.
4.6 No Third Party Rights. The obligations or rights of the
Partnership or of Partners to make or require any contribution under this
Section 4 shall not grant any rights to or confer any benefits upon any
Person who is not a Partner.
4.7 Additional Capital Contributions and Loans. No Partner shall
have the right to make voluntary contributions of capital or loans to the
Partnership other than advances by the General Partner to meet Partnership
Expenses incurred by the Partnership in the conduct of its ordinary course
of business; provided, however, that nothing in this Section 4.7 shall
require the General Partner to make any such advances. No Partner shall
have the obligation to make mandatory contributions of capital other than
the contributions required by Section 4.1 above.
SECTION 5: PROFITS AND LOSSES
5.1 Allocations of Profits and Losses.
(a) The Profits and Losses shall be allocated among the
Partners according to their respective Percentage Interests.
(b) Profits and Losses shall be determined and specific
items of income, gain, loss or credit shall in all events be allocated in
the manner necessary to assure compliance with Treasury Regulations Section
1.704-1(b) or any successor provision and, to the extent consistent
therewith, pursuant to the allocation rules described in Exhibit A and the
other provisions of this Section 5.
5.2 Special Allocations.
(a) Notwithstanding anything to the contrary herein and
except as provided in Section 5.2(b) hereof, if any Partner unexpectedly
receives any adjustment, allocation or distribution described in
subparagraphs (4), (5) and (6) of Treasury Regulations Section
1.704-l(b)(2)(ii)(d), items of Partnership gross income and gain
(consisting of a pro rata portion of each item of Partnership income,
including gross income, and gain) shall be specially allocated to that
Partner in an amount and manner sufficient to eliminate a deficit balance
in that Partner's Capital Account as quickly as possible. This provision
is intended to constitute a "qualified income offset" within the meaning of
Section 1.704-l(b)(2)(ii)(d) of the Treasury Regulations and shall be
interpreted as such.
(b) If in any fiscal year of the Partnership, there is a
net decrease in Partnership Minimum Gain, items of Partnership gross income
and gain shall be allocated to the Partners in accordance with Section
1.704-l(b)(4)(iv)(e) of the Temporary Treasury Regulations. This provision
is intended to constitute a "minimum gain chargeback" within the meaning of
Section 1.704-IT(b)(4)(iv)(e) of the Temporary Treasury Regulations and
shall be interpreted as such.
(c) Notwithstanding any provision hereof to the contrary,
any item (or any portion of any such item) of Partnership loss, deduction
or expenditure described in Section 705(a)(2)(B) of the Code for any fiscal
year attributable to "partner nonrecourse debt" shall be allocated to the
Partner or Partners that bears or bear the economic risk of loss for such
debt, in accordance with Treasury Regulation Section
1.704-IT(b)(4)(iv)(h)(2). If in any fiscal year of the Partnership, there
is a net decrease in Partner Funded Minimum Gain, items of Partnership
gross, income and gain shall be allocated to Partners in accordance with
Section 1.704-IT(b)(4)(iv)(h)(4) of the Temporary Treasury Regulations.
(d) The allocations set forth in this Section 5.2 hereof
(the "Regulatory Allocations") are intended to comply with certain
requirements of Sections 1.704-1(b) and 1.704-IT(b) of the Treasury
Regulations. The Partners acknowledge and agree that the Regulatory
Allocations may not be consistent with the manner in which the Partners
intend to divide the Partnership distributions. Accordingly, the General
Partner is hereby authorized and directed to divide other allocations of
Profit and Loss among the Partners in any reasonable manner (not
inconsistent with Section 704(b) of the Code or the Treasury Regulations
promulgated thereunder) so as to prevent the Regulatory Allocations from
distorting the manner in which the Partnership distributions would
otherwise be divided among the Partners pursuant to Section 5 hereof and
upon dissolution. In general, the Partners anticipate that this will be
accomplished by specially allocating other items of Profit and Loss among
the Partners so that, after offsetting special allocations are made, the
amount of each Partner's Capital Account balance shall equal the Capital
Account balance such Partner would have had if the Regulatory Allocations
were not a part of this Agreement and all Partnership items had been
allocated to the Partners solely pursuant to Section 5.1 hereof.
5.3 Other Allocation Rules.
(a) Generally, all Profits and Losses allocated to the
Partners shall be allocated among them as provided in Section 5.1. If
additional Limited Partners are admitted to the Partnership on different
dates during any fiscal year, Partners withdraw from the Partnership during
any fiscal year or the interests of any Partner in Profits or Losses
changes during any fiscal year, the Profits or Losses allocated to the
Limited Partners for such fiscal year shall be allocated among them in
proportion to the Percentage interests each holds from time to time in
accordance with Section 706 of the Code, using any convention permitted by
law and selected by the Tax Matters Partner.
(b) Except as otherwise provided in this Agreement, all
items of Partnership income, gain, loss, deduction, and any other
allocations not otherwise provided for shall be allocated among the
Partners in the same proportions as they share Profits or Losses, as the
case may be, for the subject period.
5.4 Tax Allocations. In accordance with Code Section 704(c) and
the Treasury Regulations thereunder, income, gain, loss, and deductions
with respect to any property contributed to the capital of the Partnership
shall, solely for tax purposes, be allocated among the Partners so as to
take account of any variation between the adjusted basis of the property to
the Partnership for federal income tax purposes and its Tax Book Value at
the time it is contributed. If the Tax Book Value of any Partnership
Property is adjusted, subsequent allocations of income, gain, loss, and
deduction with respect to that property shall take into account any
variation between its adjusted basis for federal income tax purposes and
its Tax Book Value in the same manner as under Code Section 704(c) and the
Treasury Regulations thereunder. Any elections or other decisions relating
to these allocations shall be made by the Tax Matters Partner in a manner
that reflects the purpose and intention of this Agreement. These
allocations 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
Capital Account or share of Profits, Losses, other items, or distributions
pursuant to any provision of this Agreement. Nothing herein shall be
construed to permit any Partner to make any contribution to the capital of
the Partnership of property other than money or to make any voluntary
contribution inconsistent with Section 4.7.
SECTION 6: DISTRIBUTIONS
6.1 Distribution of Excess Cash. The General Partner shall cause
the Partnership to make distributions of Excess Cash (and any reserves that
may have been set aside and are subsequently deemed available for
distribution by the General Partner) to the Partners in accordance with the
allocation of profits and losses pursuant to Section 5.1(a).
6.2 Cash From Sales; Cash From Refinancing. Subject to any
obligations of the Partnership to third parties, the Partnership shall
distribute Cash From Sales and Cash From Refinancing to the Partners within
60 days of receipt in the same manner and order as specified in Section
6.1.
6.3 Effect of Distribution. Notwithstanding anything to the
contrary contained in this Section 6, the Partnership shall not make any
distribution if any Partner at the time of such distribution would be
required to return the distribution to the Partnership pursuant to the Act.
Any Partner who receives a distribution in violation of this Section 6.3
shall promptly return the distribution to the Partnership.
6.4 Form of Distribution. No Partner shall have any right to
receive any Partnership Property other than cash upon a distribution,
except as specifically provided in this Agreement. A Partner shall not be
compelled to accept a distribution of Partnership Property other than cash
in lieu of a proportionate distribution of cash being made to other
Partners.
SECTION 7: MANAGEMENT
7.1 Control in General Partner. The General Partner shall have
exclusive management and control of the Partnership's business and, subject
to Sections 7.2 and 8.1, shall have all of the rights, powers and authority
generally conferred by law or necessary, advisable or consistent with
accomplishing the Partnership's purpose as set forth in Section 2.4.
Without limiting the generality of the foregoing, the General Partner shall
have the right, to the extent in furtherance of the purposes of the
Partnership as set forth in Section 2.4 and subject to Sections 7.2 and 8.1
and the applicable voting rights of Limited Partners specified elsewhere in
this Agreement:
(a) to acquire, hold, sell, lease, exchange or convey real
and personal property or any interest therein on the Partnership's behalf,
upon such terms as it deems advisable;
(b) to borrow money on the Partnership's behalf, to
mortgage or otherwise encumber Partnership Property, upon such terms as it
may deem necessary or advisable; provided, however, that a creditor must
not have or acquire, at any time as a result of making a loan, any direct
or indirect interest in the profit, capital or property of the Partnership
other than a security interest in Partnership Property, except to the
extent required or permitted by the Loan Agreement and the Transaction
Documents (as defined in the Loan Agreement);
(c) to prepay in whole or in part, refinance, increase,
modify or extend any agreement, the Loan Agreements, Loan Note(s),
Transaction Documents, lease, mortgage, deed of trust or other obligation
affecting Partnership Property;
(d) subject to Sections 8.1(b) (vii) and (viii), to
delegate duties to and employ from time to time, any Persons (including the
General Partner and Subsidiaries or Affiliates of the General Partner and
shareholders, directors, officers, employees or agents of any thereof)
necessary or advisable for the management and operation of the
Partnership's business, including the Operator under the
______________________________________________ and also including property
managers, on-site personnel, insurance brokers, leasing agents, real estate
brokers and loan brokers, appraisers, consultants, accountants, attorneys,
architects and engineers, on terms and for compensation as are reasonable
and customary for similar services;
(e) to pay all Partnership Expenses; and
(f) to negotiate, enter into and execute the Loan
Agreement, the Transaction Documents, Loan Note(s), deeds, deeds of trust,
contracts, leases, joint venture or partnership agreements, assignments and
other instruments and to take any other actions necessary or desirable on
the Partnership's behalf in connection with any of the rights of the
General Partner set forth in this Section 7.1.
7.2 Limitations on General Partner's Authority. Without the
Consent of all Partners, the General Partner shall not have authority to:
(a) do any act in contravention of this Agreement
(including, without limitation, do any act referred to in Section 8.1
without the Consent of the Limited Partners specified in Section 8.1);
(b) possess Partnership Property or assign rights in
Partnership Property other than for the Partnership's purposes;
(c) borrow from the Partnership;
(d) confess a judgment against the Partnership;
(e) affirmatively represent to any Person that any Limited
Partner is a general partner of the Partnership; fail to qualify or
maintain the qualification of the Partnership to do business in any
jurisdiction in which the failure to do so would subject any Limited
Partner to liability as a general partner therein; or perform any act, not
requested by a Limited Partner or required or expressly permitted by this
Agreement, that would subject any Limited Partner to liability as a general
partner in any jurisdiction;
(f) except in accordance with section 10.2.1, admit a
Person as an additional or substitute General Partner; or
(g) except in accordance with the terms of this Agreement,
admit a Person as an additional Limited Partner or Substitute Limited
Partner.
7.3 Devotion of Skill and Time; Specific Duties.
(a) The General Partner shall cause its officers and
employees diligently to pursue and to apply their general skills, time and
effort to the Partnership's business to the extent reasonably necessary to
manage and operate the Partnership and its business in the best interests
of all of the Partners and in the exercise of sound business judgment.
Nevertheless, the officers and employees of the General Partner shall not
be required to devote their full time to Partnership affairs, except to the
extent necessary from time to time for the proper performance of its duties
hereunder, and may engage in other businesses, including businesses
identical or similar to the Partnership's business.
(b) The General Partner shall take all actions that the
General Partner reasonably and in good faith deems to be necessary or
appropriate for carrying out the purpose of the Partnership in accordance
with applicable laws and regulations and for continuing the Partnership's
valid existence as a limited partnership under the laws of the State of
____________, qualified to do business in ______________.
(c) The General Partner shall not commit waste, and shall
use diligent efforts to prevent others from committing waste, against
Partnership Property, whether or not in the immediate possession or control
of the General Partner, and shall not employ, and shall use diligent
efforts to prevent others from employing, Partnership Property for purposes
other than Partnership purposes.
(d) The General Partner shall in good faith administer and
enforce the rights of the Partnership against its Affiliates, including,
without limitation, those set forth in the
___________________________________.
(e) The General Partner shall give the Limited Partners
written notice of the occurrence of a default by any party under any
contract pertaining to the Facility if such default continues for a period
of 30 days.
7.4 General Partner as Tax Matters Partner.
(a) The General Partner is designated the tax matters
partner ("Tax Matters Partner") as provided in Section 6231(a)(7)(A) of the
Code and any comparable provision of state or local law. This designation
is subject to the following terms and conditions:
(i) The Tax Matters Partner shall timely file all
necessary federal, state and local partnership returns for the Partnership
and shall furnish the Limited Partners on a timely basis with schedules
consistent with the treatment of all items on those returns (including
K-1's and their state and local counterparts).
(ii) The Tax Matters Partner shall furnish to the
Secretary of the Treasury the name and address of each of the Limited
Partners and shall provide timely updates to reflect the admission of
additional Limited Partners to the Partnership (and to reflect the
withdrawal of Limited Partners from the Partnership) from time to time in
accordance with the provisions of this Agreement.
(iii) The Tax Matters Partner shall keep the Limited
Partners fully and timely informed of all administrative and judicial
proceedings for the adjustment of "partnership items" (as defined in
Section 6231(a)(3) of the Code and any comparable provision of state or
local law) ("Partnership Item") at the Partnership level and shall, without
limitation forward to each Limited Partner any agent's reports and notices
of conferences and all other correspondence pertaining to the progress of
any audit being conducted by any federal, state or local taxing authority.
(iv) Each of the Partners (including the Tax Matters
Partner) agrees that it will not enter into a settlement agreement with the
Internal Revenue Service (or any state or local taxing authority) with
respect to the determination of any Partnership Item that has the effect of
binding another Partner without first obtaining the written consent of such
other Partner.
(v) Any Partner who enters into a settlement
agreement with any taxing authority with respect to any Partnership item
shall notify the Tax Matters Partner of the agreement and its terms within
30 days from the date of such agreement, and the Tax Matters Partner shall
notify the other Partners promptly and in any event of the settlement
within 30 days of receipt of notification by the Partner entering into the
settlement.
(vi) If notice of an administrative proceeding under
Section 6223 of the Code (or any comparable provision of state or local
law) is received by a Limited Partner, the Limited Partner shall notify the
Tax Matters Partner of the treatment of any Partnership item on the Limited
Partner's income tax return which is or may be inconsistent with the
treatment of that item on the Partnership return.
(vii) If a notice of a final partnership
administrative determination is mailed to the Tax Matters Partner, the Tax
Matters Partner shall promptly notify each of the other Partners of said
event and provide them with a copy of said notice. The Tax Matters Partner
shall not, in its capacity as such, file a petition for a readjustment of
any Partnership Item set forth in said notice in any of the courts
described in Section 6226 of the Code unless requested to do so by (1) a
majority of the Percentage Interests of the Limited Partners having an
interest in the outcome (as defined in Section 6226(d) of the Code) or (2)
in the event such majority is not obtainable, three quarters of the Limited
Partners having an interest in the outcome or (3) in the event
three-quarters of the Limited Partners having an interest in the outcome do
not agree, the Limited Partner with an interest in the outcome that has the
largest Percentage interest of such Partners.
(viii) The Tax Matters Partner shall not extend the
statute of limitations for assessment of tax deficiencies against any
Partner with respect to adjustments to the Partnership's federal, state or
local tax returns without the consent of all Partners.
(b) Upon the admission to the Partnership of a substitute
General Partner under the terms of Section 10.2 of this Agreement, such
substitute General Partner shall be substituted as the Tax Matters Partner
of the Partnership.
7.5 Compensation; Reimbursement; Indemnification.
(a) The General Partner shall not receive any salary or
other compensation for services rendered to the Partnership under this
Agreement, except as set forth in this Section 7.5(a). If a Terminating
Event occurs with respect to the General Partner and all of the Limited
Partners elect to continue the Partnership notwithstanding the Terminating
Event as provided in Section 11.2, then the Partnership shall pay any
successor General Partner such salary and other compensation as may be
approved by Majority Vote.
(b) If the Partnership ever pays a salary or other
compensation to the General Partner, the amount thereof shall be a
Partnership Expense and deducted in computing Profits and Losses under
Section 5.
(c) No salary or other compensation shall be paid to any
Limited Partner in its role as Limited Partner.
(d) The Partnership shall reimburse the General Partner for
Partnership Expenses it pays on the Partnership's behalf not attributable
to the willful misconduct, bad faith or negligence of the General Partner
or any Affiliate or any of their respective directors, officers, employees
or agents.
(e) The Partnership shall indemnify the General Partner
against any liability, loss or expense, including, without limitation,
reasonable attorneys' fees, litigation costs, settlement amounts and
judgments, it may incur by reason of any act by or omission of the General
Partner in connection with the management and operation of the Partnership
and its business, unless the liability, loss or expense is caused by (i)
the willful misconduct, bad faith or negligence of the General Partner or
any Affiliate or any of their respective directors, officers, employees or
agents, (ii) any other failure of any of the foregoing to act in good faith
and in a manner that such Person reasonably believed, under the
circumstances then existing, to be in the best interests of the
Partnership, or (iii) any failure of the General Partner or any Affiliate
to perform or observe any material term, covenant, agreement, condition or
provision of this Agreement or any other agreement concerning the Facility
to be performed or observed by it. The indemnity contained in this Section
7.5(e) shall be recoverable solely from the assets of the Partnership and
shall not be recoverable from the Limited Partners.
7.6 Execution of Partnership Instruments. The General Partner
shall execute all deeds, leases, the Loan Agreement, Loan Note(s), the
Transaction Documents, mortgages, joint venture or partnership agreements,
contracts, certificates, correspondence and any and all other instruments
executed on the Partnership's behalf in substantially the following form:
_____________ Limited Partnership
By: _____________________, General Partner
By: ___________________________________
(Name of authorized representative)
Its: Title
7.7 Inconsistent Positions. No Partner shall report on its
federal income tax return its distributive share of Partnership Profits or
Losses or any Partnership Item in an amount or manner that is inconsistent
with the Partnership's federal income tax return unless (a) the Partner
proposing to take such position notifies the Tax Matters Partner in writing
that it plans to do so at least 30 days in advance of filing its return (or
such lesser period as may be practical under the circumstances) and (b)
such Partner accompanies such notice with an opinion of independent tax
counsel to the effect that the position which such Partner proposes to take
is more likely to be sustained if challenged in a court of law than the
position taken by the Partnership. The Tax Matters Partner shall promptly
send a copy of such opinion to each of the other Partners, and such other
Partners shall then have the right to take such position without producing
such an opinion.
SECTION 8: APPROVAL RIGHTS OF THE LIMITED PARTNERS; MEETINGS
8.1 Approval.
(a) The Limited Partners shall not, and shall have no right
to, participate in the control of the Partnership's business. The Limited
Partners shall not have the right to vote on any matters except as
specifically provided in this Section 8.1 or elsewhere in this Agreement.
(b) Without the prior Consent to the specific act by
Majority Vote of the Limited Partners (or the prior Consent to the specific
act by all the Partners or the affected Partners, as required by clause
(iii) of this Section 8.1(b)), the General Partner shall not have the
authority to, nor shall it:
(i) dissolve the Partnership (other than in
accordance with this Agreement);
(ii) sell, exchange, lease, mortgage, pledge or
otherwise transfer all or any substantial part of the Partnership Property
(other than to create a security interest therein as contemplated in
connection with the Loan Agreement and the Transaction Documents);
(iii) amend this Agreement (except that (A) an
amendment of this clause (iii) or of Section 7.2 shall require the Consent
of all the Partners, (B) any amendment that would change any Partner's
share of Profits, Losses, tax benefits or distributions shall require the
Consent of the affected Partner, and (C) any amendment that would require
any Partner to make any additional Contribution to the Partnership shall
require the Consent of all the Partners);
(iv) change the nature of the Partnership's business
from that described in Section 2.4 or do any act that would make it
impossible to carry on the ordinary business of the Partnership including,
without limitation, make a determination permanently to cease operation of
the Facility;
(v) file any petition for the Partnership under the
federal Bankruptcy Act, or seek the protection of any other federal or
state bankruptcy or insolvency law or debtor relief statute or consent to
or acquiesce in the filing of any such petition or the seeking of any such
protection;
(vi) cause or permit the Partnership to incur
Indebtedness other than in the ordinary course of its business (except for
Obligations incurred pursuant to and as defined in the Loan Agreement and
the Transaction Documents) or act as guarantor or surety for the debts of
another Person, or mortgage or otherwise encumber Partnership Property;
(vii) cause the Partnership to modify, amend or waive
any provision of the ________________________________ (including failure to
exercise the option to terminate the Operator for failure to maintain
revenues) or the _______________________________.
(viii) cause or permit the Partnership to enter into
any contract or other agreement with, or employ or delegate duties to the
General Partner or any Affiliate of the General Partner, or any
shareholder, director, officer, employee or agent of any thereof; or
(ix) cause the Partnership to prepay in whole or in
part, refinance, increase, or otherwise modify, amend or waive any material
provision of, or extend, any agreement, note, lease, mortgage, deed of
trust or other obligation affecting Partnership Property.
8.2 Consent of General Partner; Effect of Approval. Any matter
specified in Section 8.1 that the Limited Partners have Consented to shall
be taken only if the General Partner also Consents thereto, except that the
General Partner shall exercise the option to terminate the Operator for
failure to maintain revenues under the _________________________________ if
such failure occurs and the Limited Partners direct a termination. Upon
the approval of any Partnership matter as provided in this Section 8.2, the
General Partner shall be authorized and directed to conclude the matter so
approved, and all Partners, including Partners who may have been opposed to
the matter, shall be bound to conclude that matter and to execute any
documents and take any other actions in furtherance thereof as the General
Partner may deem necessary or desirable.
8.3 Meetings of Partners. Partnership meetings shall be held at
the Partnership's principal executive office and shall be held only when
called by the General Partner or, for any matter on which the Limited
Partners may vote, by Limited Partners representing not more than ten
percent of the aggregate Percentage Interests held by Limited Partners.
Not less than ten nor more than sixty days' notice of a meeting shall be
given in accordance with the provisions of Section 12.9. Any action that
may be taken at a Partnership meeting may be taken without a meeting by
written consent. The record date for determining Partners entitled to give
written consent to Partnership action without a meeting shall be the day on
which the first written consent is given.
8.4 Limitation on Liability. The liability of each Limited
Partner shall be limited to the amount of its total Contribution as and
when payable under the provisions of this Agreement. Except as required by
law or pursuant to Section 4, a Limited Partner shall not have any
liability to contribute money to the Partnership, shall not be personally
liable for any obligations of the Partnership, and shall not be obligated
to make loans to the Partnership.
8.5 Indemnification of Limited Partners. The Partnership shall
indemnify each Limited Partner against any liability, loss or expense,
including, without limitation, reasonable attorneys' fees, litigation
costs, settlement amounts and judgments, it may incur related to the
ownership of Partnership Property or the conduct of the Partnership's
business other than (a) taxes imposed on or measured by the net income of
such Limited Partner and (b) liabilities, losses or expenses (i) caused by
(A) the willful misconduct, bad faith or gross negligence of such Limited
Partner or its officers, directors, employees or agents, or (B) the failure
of such Limited Partner to make a contribution required to be made by it
pursuant to Section 4.1 or to comply with Section 8.2, or (ii) arising out
of conduct by such Limited Partner (or any officer, director, employee or
agent thereof) in contravention of this Agreement that renders such Limited
Partner liable as a general partner. The indemnity contained in this
Section 8.5 shall be recoverable solely from the assets of the Partnership
and shall not be recoverable from any Partner) (including the General
Partner).
8.6 No Liability of Officers, etc. Under no circumstances shall
any officer, director or employee of any Limited Partner be liable to any
other Partner other than for conduct constituting willful misconduct or
gross negligence.
SECTION 9: RECORDS, REPORTS AND ACCOUNTS
9.1 Books and Records. The General Partner shall keep adequate
books and records, setting forth a true and accurate account of all
business transactions arising out of or in connection with the conduct of
the Partnership's business, at the Partnership's principal executive
office, including each of the following Partnership documents:
(a) A current list of the full name and last known business
or residence address of each Partner separately identifying the status of
the Partner as a General Partner or a Limited Partner, together with the
Contributions and Percentage Interest of each Partner and any amounts each
Partner has agreed to contribute in the future.
(b) A filed copy of the Partnership's certificate of
limited partnership and all certificates of amendment thereto, together
with executed copies of any powers of attorney pursuant to which any
certificate has been executed.
(c) Copies of the Partnership's federal, state and local
income tax or information returns and reports, if any, for the six most
recent fiscal years.
(d) An original copy of this Agreement and all amendments
hereto.
(e) Financial statements of the Partnership for the six
most recent fiscal years.
(f) The Partnership's books and records for at least the
current and past three fiscal years.
9.2 Delivery to Limited Partner. Upon the request of a Limited
Partner, the General Partner shall promptly deliver to the requesting
Limited Partner, at the Partnership's expense, a copy of the information
required to be maintained by paragraphs (a), (b) or (d) of Section 9.1.
9.3 Inspection by Limited Partner. Each Limited Partner has the
right, upon reasonable request, (a) to inspect and copy during normal
business hours any of the Partnership records required to be maintained
pursuant to Section 9.1, and (b) to obtain from the General Partner,
promptly after becoming available, a copy of the Partnership's federal,
state and local income tax or information returns for each year.
9.4 Reports. The General Partner shall cause to be sent each
Partner:
(a) Monthly Statements: within 25 days after the end of
each fiscal month of the Partnership, a statement of income and expense for
such month and for the fiscal year to date, and a balance sheet
substantially in the form of Exhibit B attached hereto; and
(b) Annual Statements: within 45 days after the end of
each fiscal year of the Partnership, a copy of: (i) a balance sheet of the
Partnership as of the end of that year, and (ii) statements of income and
cash flow of the Partnership for that year, setting forth in each case in
comparative form the figures for the previous fiscal year (if any) and
accompanied by an opinion of the Partnership Accountants stating that such
financial statements of the Partnership present fairly the financial
condition of the Partnership and have been prepared in accordance with GAAP
(except for changes in application in which such accountants concur); and
9.5 Tax Returns and Elections. The General Partner shall send to
each Partner, within 60 days after the end of each taxable year, the
information necessary for the Partner to complete its federal, state and
local income tax returns. The information shall include a copy of the
Partnership's federal, state and local income tax or information returns
for the taxable year. Unless all of the Limited Partners shall otherwise
agree, the General Partner shall make all income tax elections in the
manner that has the effect of maximizing the after-tax return to the
Limited Partners (assuming for this purpose that the Limited Partners are
fully taxable on a current basis and can utilize all income tax benefits on
a current basis).
9.6 Bank and Money Market Accounts. The Partnership shall keep
its cash funds in bank or money market accounts in its name at one or more
banks or other financial institutions that the General Partner may select:
provided, however, that such institution (a) shall be organized under the
laws of the United States or any state thereof, and (b) shall have a
combined capital, surplus and undivided profits of at least
$________________. The funds in any account may be withdrawn on the sole
signature of the General Partner. Partnership funds shall not be
commingled with funds of any other Person and shall be used only for
Partnership purposes.
9.7 Annual Audit. The Partnership Accountants shall be a firm of
independent certified public accountants selected by the General Partner
and acceptable to the Limited Partner. The Partnership Accountants shall
audit each year the Partnership's books and records.
9.8 Notification. The General Partner shall send each Limited
Partner a notice of any litigation to which the Partnership is a party.
SECTION 10: DISPOSITION OF PARTNERSHIP INTERESTS
10.1 Generally.
10.1.1 No Changes Except Pursuant to this Section. No Partner
shall withdraw from or transfer any interest in the Partnership, and no
Person shall become an Assignee or be admitted to the Partnership as a
substituted or additional General Partner or as a substituted or additional
Limited Partner, except as provided in this Section 10. Any Transfer made
in violation of this Section 10 shall be void.
10.1.2 Notice of Terminating Event. Each Partner or its legal
representative or successor shall notify the Partnership promptly, but in
no event later than 30 days, after the occurrence of a Terminating Event
with respect to the Partner.
10.1.3 Confirmation of Transfer of Interest. Each Partner who
transfers an interest in the Partnership as permitted by this Section 10
shall provide written confirmation of such Transfer to the General Partner
within 30 days after the Transfer or, if earlier, by January 15 of the
calendar year following the calendar year in which the Transfer occurred.
This written confirmation shall include (a) the names and addresses of the
transferor and the transferee, (b) the taxpayer identification number of
the transferor and, if known, of the transferee, (c) the date of the
Transfer, and (d) the terms and conditions of the Transfer.
10.1.4 Interest Certificates. The Interests shall be
evidenced by registered Certificates in the form of Exhibit C hereto (the
"Certificates"), numbered from 1 upwards. Each Certificate shall be
executed by an authorized officer of the General Partner. No Certificate
shall be valid or obligatory for any purpose or entitled to any benefit
hereunder unless and until executed in the manner prescribed by this
Section 10.1.4.
10.1.5 Certificate Register. Books for the
registration and for the transfer of Certificates (the "Certificate
Register") shall be kept by the General Partner which is hereby appointed
the registrar. On the request of any pledgee or holder of a security
interest in any Interest, the General Partner will conspicuously note on
the Certificate Register that the Certificate evidencing such Interest is
subject to a security interest in favor of such pledgee or secured party;
provided, however, such conspicuous note shall be eliminated from the
Certificate Register upon the holder of the related Certificate providing
the General Partner with a release or termination of the security interest
signed by the holder of the security interest reflected in such Certificate
Register. Upon surrender for transfer of a Certificate at the principal
office of the Partnership, duly endorsed for transfer or accompanied by an
assignment duly executed by the registered owner or the attorney of such
registered owner duly authorized in writing, the General Partner shall
execute and deliver in the name of the transferee or transferees a new
fully registered Certificate or Certificates for like aggregate Interests;
provided, however, if the Certificate Register concerning any Certificate
which is surrendered for transfer is conspicuously noted as being subject
to a security interest, the Certificate Register concerning the new fully
registered Certificate or Certificates in the name of the transferee or
transferees shall be similarly noted, unless a release or termination of
the security interest with respect to the Interest transferred shall have
been delivered to the General Partner signed by the holder of the security
interest reflected in the Certificate Register. Certificates may be
exchanged at the principal office of the Partnership for Certificates of
like aggregate Interests bearing numbers not then outstanding. The General
Partner shall require the payment, by any Limited Partner or its successor
requesting transfer or exchange of Certificates, of any tax, trustee's fee,
legal fees, fee or other governmental charge required to be paid with
respect to such transfer.
10.1.6 Lost Certificates. In the event that any
Certificate is mutilated, lost, stolen or destroyed, a new Certificate may
be executed on behalf of the General Partner; provided that the General
Partner shall have received indemnity from the registered owner or pledgee
of the registered owner of the Certificate satisfactory to it and provided
further, in case of any mutilated Certificate, that such mutilated
Certificate shall first be surrendered to the General Partner, and in the
case of any lost, stolen or destroyed Certificate, that there shall be
first furnished to the General Partner evidence of such loss, theft or
destruction satisfactory to the General Partner.
10.1.7 Covenants; Legend.
(a) Each Limited Partner hereby represents,
covenants and agrees with the Partnership for the benefit of the
Partnership and all Partners that (i) he is not currently making a market
in Interests and will not in the future make a market in Interests, (ii) he
will not transfer, assign or otherwise convey his Interests on an
established securities market, a secondary market (or the substantial
equivalent thereof) within the meaning of Code Section 7704(b) (and any
regulations, proposed regulations, revenue rulings, or other official
pronouncements of the Internal Revenue Service or Treasury Department that
may be promulgated or published thereunder), and (iii) in the event such
Regulations, revenue rulings, or other pronouncements treat any or all
arrangements which facilitate the selling of partnership interests and
which are commonly referred to as "matching services" as being a secondary
market or substantial equivalent thereof, he will not transfer any Interest
through a matching service that is not approved in advance by the
Partnership. Each Limited Partner further agrees that he will not transfer
any Interest to any Person unless such Person agrees to be bound by this
Section 10 and to transfer such Interests only to Persons who agree to be
similarly bound. The Partnership shall, from time to time and at the
request of a Limited Partner, consider whether to approve a matching
service and shall notify all Partners of any matching service that is so
approved.
(b) Each Limited Partner hereby agrees that
the following legend may be placed upon any counterpart of this Agreement,
the Certificates or any other document or instrument evidencing ownership
of Interests:
The Partnership Interests represented by this
document have not been registered under any securities laws and the
transferability of such Interests is restricted. Such Interests may not be
sold, assigned or transferred, nor will any assignee, vendee, transferee or
endorsee thereof be recognized as having acquired any such Interests by the
issuer for any purposes, unless (1) a registration statement under the
Securities Act of 1933, as amended, with respect to such Interests shall
then be in effect and such transfer has been qualified under all applicable
state securities laws, (2) the availability of an exemption from such
registration and qualification shall be established to the satisfaction of
counsel to the Partnership or (3) such sale, assignment or transfer is made
pursuant to the foreclosure of a security interest or pledge granted in
connection with the Loan Agreement as defined in the Limited Partnership
Agreement of __________ Limited Partnership ("Partnership Agreement").
The Interests represented by this document are
subject to further restriction as to their sale, transfer, hypothecation,
or assignment as set forth in the Partnership Agreement. Said restriction
provides, among other things, no vendee, transferee, assignee, or endorsee
of a Limited Partner shall have the right to become a substituted Limited
Partner except by compliance with Section 10 thereof.
10.2 General Partner.
10.2.1 Transfers. The General Partner shall not transfer its
Partnership interest as General Partner to any Person without the consent
of the Limited Partner in its sole discretion.
10.2.2 Terminating Events. Upon the occurrence of a
Terminating Event with respect to the General Partner, if the Partners
elect to continue the Partnership pursuant to Section 11.2, the terminated
General Partner's interest shall be converted to a Limited Partner's
interest with the same Percentage Interest and Capital Account; provided,
however, that the terminated General Partner shall not be entitled to vote
on the admission, compensation or extent of Partnership interest of its
successor General Partner and the Partnership interest of the terminated
General Partner shall be diluted, on a pro rata basis with all of the other
Limited Partners' Partnership interests, to provide compensation or a
Partnership interest, or both, to its successor; and provided, further,
that if such Terminating Event is the removal of the General Partner for
cause pursuant to Section 10.2.5, the Partnership shall be entitled to set
off against distributions to which such terminated General Partner might
otherwise be entitled under this Agreement all damages suffered by the
Partnership (including, without limitation, the reasonable costs and
expenses of removal and substitution of the General Partner) arising out of
the act or omission of the terminated General Partner (acting in any
capacity) or any Subsidiary or Affiliate thereof, with respect to this
Agreement or any other agreement relating to the Facility, giving rise to
such removal.
10.2.3 Additional General Partner. Except as provided in this
Agreement or as the Act may require, no additional General Partner shall be
admitted to the Partnership.
10.2.4 Withdrawal. The General Partner shall not resign or
withdraw capital from the Partnership.
10.2.5 Removal. The Limited Partners may not remove the
General Partner except for cause. For purposes of this Section 10.2.5,
"cause" shall mean (a) the commission of any act by the General Partner (or
any of its directors, officers, employees or agents purporting to act on
the General Partner's behalf in his or her capacity as such) that
constitutes willful misconduct, bad faith or gross negligence; or (b) the
breach by the General Partner of any material provision of this Agreement
and the General Partner's failure to cure such breach within 30 days after
notice thereof by a Limited Partner, or, with respect to any breach that is
not reasonably capable of cure within 30 days, the General Partner's
failure to take steps to cure such breach within such 30-day period and
thereafter to prosecute such cure to completion with reasonable diligence.
10.3 Limited Partners.
10.3.1 Transfers. A Limited Partner may transfer its
Partnership Interest at any time: (a) subject to the limitations set forth
in Section 10.3.3, to any Partner, or (b) subject to the right of first
refusal set forth in Section 10.7 and to the limitations set forth in
Section 10.3.3, to any Person of its choice, in whole or in part and only
in accordance with this Section 10.3.1. If the General Partner receives a
notice of assignment effected in compliance with the preceding sentence
signed by both the transferring Limited Partner and its Assignee, the
Assignee shall become entitled to receive the transferring Limited
Partner's share of Profits, Losses and distributions and shall succeed to
the transferring Limited Partner's Capital Account as of the end of the day
on which the General Partner receives the notice; provided, however, that
an Assignee shall become a Substitute Limited Partner only with the General
Partner's approval and upon satisfaction of the conditions for
substitutions set forth in Section 10.5.
10.3.2 Terminating Events.
(a) Election. Upon the occurrence of a Terminating Event
with respect to a Partner (other than the removal of the General Partner
for cause pursuant to Section 10.2.5), the Partnership may elect to
purchase its Partnership interest by written notice to the terminated
Partner's successor or legal representative within 15 days of the
Terminating Event, in accordance with the procedures and principles set
forth in Section 10.3.2(b).
(b) Purchase of Partnership Interest. If the Partnership
elects to purchase the terminated Partner's Partnership interest, the
Partnership shall pay the terminated Partner or its successor or legal
representative the fair market value of its Partnership interest,
determined by agreement between the terminated Partner's successor or legal
representative and the Partnership or, if they cannot agree, by an
appraisal. In such event, (i) the first two appraisers shall be chosen,
respectively, by the terminated Partner's successor or legal representative
and the General Partner (or the successor general partner in the event the
terminated partner is the General Partner), and (ii) the terminated Partner
or its successor (or estate, as the case may be) shall pay one-half of the
fees and expenses of the appraisers, and the Partnership shall pay the
other half. Payment of the purchase price may, at the Partnership's
option, be made by the Partnership's unsecured promissory note, which shall
bear interest at the minimum rate required under the federal income tax
laws to avoid imputed interest or original issue discount. Principal and
interest shall be payable in three equal annual installments commencing on
the first anniversary date of the Term Loan Note. Such note shall provide
for attorneys' fees in the event of suit, prepayment without penalty and
acceleration upon default or dissolution of the Partnership, and the
Indebtedness evidenced thereby shall be subordinated.
(c) No Purchase. If the Partnership elects not to purchase
the Partnership interest of a terminated Partner, the legal representative
or successor of the terminated Partner (other than a trustee in bankruptcy)
shall, upon submission to the General Partner of (i) certified evidence of
the Terminating Event and the successor's authority and (ii) a copy of this
Agreement executed by the successor, become a Substitute Limited Partner in
the place of the terminated Partner as of the end of the day on which the
General Partner receives the documents required by this Section 10.3.2(c),
unless pursuant to Section 10.5 the General Partner shall in its sole
discretion withhold its Consent to admission of such Person as a Substitute
Limited Partner.
10.3.3 Prohibited Transfers. Notwithstanding anything else
contained in this Agreement, no Transfer shall be permitted that (a) is not
supported by an opinion of counsel, or other acceptable evidence reasonably
satisfactory in form and substance to the Tax Matters Partner, that such
transfer will not (i) have adverse federal income tax consequences to the
Partnership or any Partner (other than the Terminated Partner) or
(ii) result in a violation of the securities laws of the United States of
America, including without limitation the Securities Act of 1933, or of the
securities laws of any state which may be applicable thereto; (b) would
result in any one Person (whether a Partner, including the transferor
Partner, or an Assignee) having a Percentage Interest of less than five but
more than zero percent; or (3) would result in the violation of any pledge
or security interest which has been registered or noted in the Certificate
Register.
10.3.4 Withdrawal by Limited Partner. A Limited Partner may
not withdraw capital from the Partnership.
10.4 Binding on Successors. Subject to the provisions of this
Section 10, the rights and obligations of the Partners under this Agreement
shall inure to the benefit of and bind their respective heirs, successors
and assigns.
10.5 Conditions to Substitutions. An Assignee shall not be
entitled to vote on Partnership matters and shall not have any other rights
of a Partner other than the right to Profits, Losses and distributions,
unless and until the General Partner Consents to the admission of the
Assignee as a Substitute Limited Partner pursuant to this Section 10.5. An
Assignee shall become a Substitute Limited Partner and the General Partner
hereby consents to such substitution at the time the Assignee (a) pays all
Partnership Expenses in connection with its substitution; (b) submits a
duly executed instrument of assignment, in a form satisfactory to the
General Partner, (i) specifying the Partnership interest assigned to it and
(ii) setting forth the assigning Partner's intention that the Assignee
succeed to the assigning Partner's Partnership interest; and (c) executes a
copy of this Agreement. The General Partner also may require, as a
condition to the admission of a Substitute Limited Partner, that the
Assignee submit an opinion of counsel, reasonably satisfactory in form and
substance to the General Partner, stating that the Assignee's admission as
a Substitute Limited Partner will not (x) violate any state or federal
securities laws or (y) adversely affect the Partnership's tax status or
have any adverse tax consequences as to any Partner. The General Partner,
the admission of a Substitute Limited Partner shall be effective as of the
close of the day on which all of the conditions specified in this Section
10.5 have been satisfied.
10.6 No Release or Waiver. Neither the provisions of, nor
consummation of the transactions contemplated by, this Section 10 shall
constitute a release or waiver of any claims or rights which the
Partnership or any Partner may have against the Partnership or any of the
Partners as a consequence of a breach of this Agreement.
10.7 Right of First Refusal.
(a) Offer. Before any Limited Partner transfers its
Partnership interest pursuant to Section 10.3.1(a), that Partner (the
"Selling Partner") shall notify the General Partner in writing that the
Selling Partner wants to transfer its Partnership interest. The notice
shall contain a full and complete designation of the price at and terms on
which the Selling Partner is proposing for Transfer of its Partnership
interest.
(b) Acceptance. The partnership, within 60 days of receipt
of the notice described in Section 10.7(a) (the "Initial Offer Period"),
shall have the right to purchase the Selling Partner's partnership interest
at the price and on the terms stated in the notice. If the partnership
elects not to exercise its right to purchase, the General Partner shall
promptly notify the other Partners in writing of the Selling Partner's
intent to transfer its Partnership interest and the price and terms of the
Transfer. The Partners other than the Selling Partner, subject to Section
10.3.3, shall have the right, exercisable by written notice to the General
Partner during an additional period of 30 days (the "Additional Offer
Period"), to purchase the Selling Partner's Partnership interest at the
price and on the terms stated in the Selling Partner's notice to the
General Partner. If the other Partners elect not to exercise their right
to purchase, the Selling Partner may transfer its partnership interest for
a price and on terms no less favorable to the Selling Partner than those
described in the notice for a period of 180 days following the end of the
Additional Offer Period. If the Selling Partner does not complete the
Transfer of its partnership interest during this period, the provisions of
this Section 10.7(b) shall again apply to any later Transfer. If more than
one Partner decides to purchase the Selling Partner's Partnership interest,
the accepting Partners, subject to Section 10.3.3, shall each purchase
shares of the Selling Partner's Partnership interest in proportion to their
respective Percentage Interests.
(c) Rights of Buyer. A purchaser of all or any portion of
the Selling Partner's partnership interest, other than the Partnership or
an existing Partner, shall be an Assignee and shall become a Substitute
Limited Partner only with the General Partner's approval and upon
satisfaction of the requirements of Section 10.5. If the purchaser is the
General Partner, it shall become a Limited Partner to the extent of the
Partnership interest it acquires.
SECTION 11: DISSOLUTION AND WINDING UP
11.1 Dissolution. The Partnership shall dissolve upon the first to
occur of the following dates and events:
(a) February 2, 2025.
(b) A Majority Vote of all Partners and the Consent of the
General Partner to dissolve.
(c) Subject to the provisions of Section 11.2, the
occurrence of a Terminating Event with respect to the General Partner or
the General Partner ceasing to be the General Partner.
(d) The entry of a decree of judicial dissolution under the
Act by a court of competent jurisdiction.
(e) The sale of all or substantially all of the Partnership
Property.
11.2 Continuation. Upon the occurrence of a Dissolution pursuant
to clause (c) of Section 11.1, the Limited Partners may elect to continue
the Partnership's business and to admit a new General Partner by the
unanimous written Consent of the Limited Partners. Expenses relating to
the Partnership's continuation shall constitute Partnership Expenses.
11.3 Distributions on Dissolution. Upon the Partnership's
dissolution, if the Partnership is not continued pursuant to Section 11.2,
then the Partnership's business shall be wound up and the Partnership
Property shall be liquidated. Partnership Property and cash of the
Partnership in the course of the liquidation shall be applied and
distributed in the following order:
(a) Payment to creditors of the Partnership, including
Partners and their Subsidiaries and Affiliates, in the order of priority
provided by law. In the discretion of the General Partner, reserves may be
established to meet any contingent obligations or liabilities and, if and
when such contingencies shall cease to exist, any remaining assets in such
reserves shall be distributed as provided in this Section 11.3.
(b) Distributed to the Partners in accordance with the
positive balances in their Capital Accounts. For purposes of distributions
to Partners, positive Capital Account balances shall be determined after
taking into account all appropriate Capital Account adjustments for the
fiscal year in which the liquidation occurs (other than the adjustments
required by the distributions themselves), with any Partnership Property
distributed in kind being deemed to have been sold by the Partnership for
its fair market value and any Profits or Losses realized or sustained upon
dispositions (or deemed dispositions) of Partnership Property by the
partnership being allocated in accordance with Section 5. Payment by the
Partnership with respect to the balances of the Partner's Capital Accounts
shall be made by the end of that fiscal year or, if later, within 90 days
after the date of the liquidation. The Limited Partners shall not be
required to restore any negative balances in their Capital Accounts.
SECTION 12: MISCELLANEOUS
12.1 Inconsistency with Loan Agreement. Any provision of this
Partnership Agreement to the contrary notwithstanding, until all
Obligations as defined in the Loan Agreement have been paid in full,
neither the General Partner nor the Limited Partner may or shall take any
step or exercise any power under this Agreement which would create, with
the passage of time and the giving of notice, if required, an Event of
Default as defined in the Loan Agreement or any other Transaction Document.
12.2 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and in no way shall restrict or
otherwise modify any of the terms or provisions hereof.
12.3 Time of Essence. All times and dates in this Agreement shall
be of the essence.
12.4 Entire Agreement. This Agreement comprises the entire
understanding and agreement among the Partners and supersedes all prior and
contemporaneous discussions, negotiations, agreements and communications
among any of the Partners, whether oral or written, with respect to the
subject matter of this Agreement.
12.5 Amendment. This Agreement may be amended only upon the
affirmative vote or Consent of the Partners as provided in Section 8.
12.6 Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State
of _______________ as applied to contracts among residents of
_________________ wholly to be performed within that State. The parties
agree that any dispute arising in connection with this Agreement may be
resolved in the state or federal courts located in Oklahoma County,
Oklahoma or _________________ County, ______________, and each party hereby
submits to the jurisdiction of those courts.
12.7 Attorneys' Fees. If any Partner seeks to enforce its rights
under this Agreement by legal proceedings or otherwise, the non-prevailing
party shall pay the prevailing party's costs and expenses, including,
without limitation, reasonable attorneys' fees.
12.8 Severability. If any provision of this Agreement is
determined to be unenforceable for any reason, it shall be adjusted rather
than voided, if possible, to achieve the intent of the parties. In any
event, all of the other provisions shall be deemed valid and enforceable to
the greatest possible extent.
12.9 Terminology. In this Agreement, the masculine, feminine or
neuter gender, and the singular or plural number, shall each include the
others whenever the context so indicates.
12.10 Notices. Any notice or other communication required or
permitted to be given under this Agreement shall be in writing, and shall
be deemed effective upon receipt after mailing by first- class registered
or certified mail return receipt requested, postage pre-paid, or upon
personal delivery or dispatch by telegram, telex (with confirmed answer
back), facsimile transmission or other written telecommunication, addressed
to the Partnership at its principal executive office or to the Partners at
their respective addresses appearing on the Partnership's books from time
to time. The foregoing addresses may be changed by notice given as
provided in this Agreement.
12.11 Counterparts. This Agreement may be signed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same agreement.
12.12 Cross-References. All cross-references in this Agreement,
unless specifically stated otherwise, refer to provisions of this
Agreement.
12.13 Further Assurances. Each Partner shall execute, with
acknowledgment or affidavit if required, all documents and writings
reasonably necessary or desirable for the formation of the Partnership and
the achievement of its purpose. Each Partner hereby represents and
warrants that the individual signing this Agreement on its behalf is duly
authorized to execute and deliver this Agreement on behalf of such Partner.
12.14 No Partition. No Partner nor any legal representative,
successor, heir or assignee of any Partner shall have the right to
partition the Partnership Property or any part thereof or interest therein,
or to file a complaint or institute any proceeding at law or in equity to
partition the Partnership Property or any part thereof or interest therein.
Each Partner, for itself and its legal representatives, heirs, successors
and assigns, hereby waives any such rights. The Partners intend that
during the term of this Agreement, the rights of the Partners and their
successors in interest, as among themselves, shall be governed solely by
the terms of this Agreement and, to the extent consistent with this
Agreement, by the Act.
12.15 Waiver. No waiver of any provision of this Agreement shall be
deemed effective unless contained in a writing signed by the party against
whom the waiver is sought to be enforced. No failure or delay by any party
in exercising any right, power or remedy under this Agreement shall operate
as a waiver of any such right, power or remedy, and no waiver of any breach
or failure to perform shall be deemed a waiver of any subsequent breach or
failure to perform or of any other right arising under this Agreement.
12.16 Not for Benefit of Creditors. The provisions of this
Agreement are intended only for the regulation of relations among Partners,
putative Partners and the Partnership. This Agreement is not intended for
the benefit of non-Partner creditors and does not grant any rights to
non-Partner creditors.
12.17 Other States. If the Partnership's business is carried on or
conducted in states other than the State of ________________, then each
Partner shall execute any document that the General Partner may require or
request in order that the General Partner may legally qualify the
Partnership to transact business in the other states. The General Partner
may, from time to time, designate a Partnership office or principal place
of business in any other state.
12.18 Withholding. The General Partner shall comply with any income
tax withholding obligations that may be imposed from time to time by the
Code with respect to distributions to Partners.
12.19 Representations of Limited Partners. The Limited Partner
represents to the General Partner that it is an sophisticated investor
capable of protecting its interests in this transaction and that it is
acquiring its Partnership interest for its own account for investment and
not with a view to or for sale in connection with any distribution of such
Partnership interest (but subject, nevertheless, to any requirement of law
that the disposition of its property remain within its control at all
times).
12.20 Exhibits. The following Exhibits are attached hereto and
incorporated herein by this reference:
EXHIBIT A Rules Under Treasury Regulations Section 1.704-1(b)
EXHIBIT B Form of Monthly Report
EXHIBIT C Form of Certificate
IN WITNESS WHEREOF, each of the Partners has executed this Agreement
as of the date first written above.
GENERAL PARTNER
___________________________
By:_______________________
Name:
Title:
LIMITED PARTNER
LSB HOLDINGS, INC.
By:_______________________
Name:
Title:
EXHIBIT A
RULES UNDER TREASURY REGULATIONS SECTION 1.704-1
Determination of Tax Book Value.
(a) The Tax Book Value of an asset shall be its adjusted basis for
federal income tax purposes, except as follows:
(b) The Tax Book Value of an asset contributed by a Partner to the
Partnership shall be its fair market value. The Net Book Value of such
asset shall be its Tax Book Value net of liabilities secured by the asset
to the extent the Partnership is considered to assume or take subject to
the liability under Section 752 of the Code, in accordance with the rules
set forth in Treasury Regulations Section 1.704-1(b).
(c) The Tax Book Value of each item of Partnership Property shall be
adjusted to equal its fair market value, as reasonably determined by the
Tax Matters Partner in good faith in accordance with Treasury Regulations
Section 1.704-1(b)(2)(iv)(f), as of the following times: (i) The
acquisition of an additional interest in the Partnership by any new or
existing Partner in exchange for more than a de minimis Contribution to the
Partnership's capital, (ii) the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership Property, (iii) the
liquidation of the Partnership within the meaning of Treasury Regulation
Section 1.704-1(b)(2)(ii)(g), and (iv) any time that the Tax Matters
Partner determines in good faith that such adjustment is needed to fairly
reflect the interests of the Partners and is in compliance with Section
704(b) and the Regulations thereunder.
(d) If the Tax Book Value of an item of Partnership Property has been
determined or adjusted pursuant to paragraph (b) or (c), it shall
thereafter be adjusted in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(g) by the depreciation, depletion, amortization, other
cost recovery deductions and gain or loss as computed for book purposes
with respect to that asset.
Determination of Profits and Losses.
Profits and Losses for each fiscal year or other period shall be an
amount equal to the Partnership's taxable income or loss for that year
determined in accordance with Code Section 703(a), including for this
purpose all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1), with the following
adjustments:
(a) Any income of the Partnership that is exempt from federal income
tax shall be added.
(b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Treasury Regulations Section 1.704-1(b)(2)(iv)(i) shall be subtracted.
(c) Gain or loss resulting from any disposition of Partnership
Property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Tax Book Value of
the property disposed of.
(d) Depreciation, amortization, and other cost recovery deductions
shall be taken into account by reference to the Tax Book Value of an item
of Partnership Property, but if the Tax Book Value of an item of
Partnership Property differs from its adjusted tax basis at the beginning
of the year, the allowable tax deduction with respect to that item shall be
deemed to be an amount which bears the same ratio to the Tax Book Value of
the item as the deduction computed for tax purposes with respect to the
item for that year or period bears to its beginning adjusted tax basis
(except that if such property has a zero adjusted basis, the book
depreciation, depletion, or amortization may be determined under any
reasonable method selected by the General Partner).
Special Rules for Credit and Recapture Allocations.
(a) Any federal tax credit shall be allocated among the Partners, in
accordance with their Percentage Interests, as of the date the property
giving rise to the credit is placed in service.
(b) If the adjusted tax basis of any property that has been placed in
service by the Partnership is increased pursuant to the Code, such increase
shall be allocated among the Partners in the same proportions as the tax
credit that is recaptured with respect to the property is shared among
them.
(c) Any reduction, pursuant to the Code, in the adjusted tax basis
(or cost) of Partnership Property shall be allocated among the Partners in
the same proportions as the basis (or cost) of the property is allocated
under the Code.
General Rules for Maintaining Capital Accounts.
Required increases to Capital Accounts:
1. The amount of money contributed by the Partner to the
Partnership.
2. The Net Book Value of any asset contributed by the Partner to the
Partnership.
3. Allocations to the Partner of Partnership income and gain (or
items thereof), including income and gain exempt from tax and income and
gain described in paragraph (2)(iv)(g) of Treasury Regulations Section
1.704-1(b), but giving effect to paragraph (4) (i) of Treasury Regulations
Section 1.704-1(b).
Required Decreases in Capital Accounts:
1. The amount of money distributed to the Partner by the
Partnership.
2. The Tax Book Value of property distributed to the Partner by the
Partnership (net of liabilities securing the distributed property that the
Partner is considered to assume or take subject to under Code Section 752).
3. Allocations to the Partner of Partnership expenditures described
in Section 705(a)(2)(b).
4. Allocations of Partnership loss and deduction (or items thereof),
including items of loss and deduction described in paragraph (2)(iv)(g) of
Treasury Regulations Section 1.704-1(b), but excluding items described in 3
above and giving effect to paragraph (4)(i) or (4)(iii) of Treasury
Regulations Section 1.704-1(b). Capital accounts must be otherwise
adjusted in accordance with additional rules set forth in Treasury
Regulations Section 1.704-1(b).
Special Rules for Maintaining Capital Accounts.
1. A Partner who has more than one interest in the Partnership
shall have a single capital account that reflects all of the Partner's
interests, whether general or limited and regardless of the time and manner
in which the interests were acquired.
2. Pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(g)(2), unrealized income or deductions with respect to
accounts receivable, accounts payable or other accrued but unpaid items
that have an adjusted tax basis that differs from their book value shall be
treated under rules and principles analogous to those that apply to book
and tax value differences for depreciation, depletion, amortization and
gain or loss.
3. In the event the Tax Book Value of Partnership Property is
adjusted pursuant to this Exhibit A, the Capital Accounts of all Partners
shall be adjusted simultaneously pursuant to the allocation provisions of
Section 5 to reflect the aggregate net adjustment as if the Partnership
recognized gain or loss equal to the amount of such aggregate net
adjustment.
4. If any interest in the Partnership is transferred in accordance
with this Agreement, the transferee shall succeed to the Capital Account of
the transferor to the extent it relates to the transferred interest.
5. If the Tax Matters Partner reasonably determines in its good
faith judgment that it is necessary or desirable to modify the manner in
which the Capital Accounts are determined or maintained in order to comply
with Treasury Regulations Section 1.704-1(b), the Tax Matters Partner shall
make the appropriate modification, provided that the modification is not
likely to have a material effect on the amount distributable to any Partner
upon the dissolution of the Partnership.
EXHIBIT B
FORM OF MONTHLY REPORT
BALANCE SHEET
ASSETS
CURRENT ASSETS
Cash
Accounts Receivable
Prepaid Insurance
TOTAL CURRENT ASSETS
FIXED ASSETS
Cost of Assets
Accum. Depreciation
TOTAL FIXED ASSETS
OTHER ASSETS
Organizational Costs
Acc. Amort. Org. Cost
TOTAL OTHER ASSETS
TOTAL ALL ASSETS
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts Payable
TOTAL CURRENT LIABILITIES
EQUITY
Retained Capital
Distributions
Capital
Net Income (Loss)
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
EXHIBIT B
FORM OF MONTHLY REPORT
INCOME STATEMENT
OPERATING REVENUES
________________________ Revenue
Interest Income
Misc. Income
TOTAL NET REVENUES
GENERAL OPERATING EXPENSES
Maintenance
Outside Services
Insurance Expense
Accounting Fees
Bank Charges
Depreciation
Amortization Organiz. Costs
Interest
Misc. Expense
TOTAL EXPENSES
NET INCOME (LOSS)
EXHIBIT C
FORM OF CERTIFICATE
THE PARTNERSHIP INTERESTS REPRESENTED BY THIS DOCUMENT
HAVE NOT BEEN REGISTERED UNDER ANY SECURITIES LAWS AND THE
TRANSFERABILITY OF SUCH INTERESTS IS RESTRICTED. SUCH
INTERESTS MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED, NOR WILL
ANY ASSIGNEE, VENDEE, TRANSFEREE OR ENDORSEE THEREOF BE
RECOGNIZED AS HAVING ACQUIRED ANY SUCH INTERESTS BY THE ISSUER
FOR ANY PURPOSES, UNLESS (1) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH
INTERESTS SHALL THEN BE IN EFFECT AND SUCH TRANSFER HAS BEEN
QUALIFIED UNDER ALL APPLICABLE STATE SECURITIES LAWS, (2) THE
AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION SHALL BE ESTABLISHED TO THE SATISFACTION OF
COUNSEL TO THE PARTNERSHIP OR (3) SUCH SALE, ASSIGNMENT OR
TRANSFER IS MADE PURSUANT TO THE FORECLOSURE OF A PLEDGE OR
SECURITY INTEREST GRANTED IN CONNECTION WITH THE LOAN AGREEMENT
AS DEFINED IN THE LIMITED PARTNERSHIP AGREEMENT OF
__________________ LIMITED PARTNERSHIP ("PARTNERSHIP
AGREEMENT").
THE INTERESTS REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO
FURTHER RESTRICTION AS TO THEIR SALE, TRANSFER, HYPOTHECATION,
OR ASSIGNMENT AS SET FORTH IN THE PARTNERSHIP AGREEMENT. SAID
RESTRICTION PROVIDES, AMONG OTHER THINGS, NO VENDEE,
TRANSFEREE, ASSIGNEE, OR ENDORSEE OF A LIMITED PARTNER SHALL
HAVE THE RIGHT TO BECOME A SUBSTITUTED LIMITED PARTNER EXCEPT
BY COMPLIANCE WITH SECTION 10 THEREOF.