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EXHIBIT 10(d)
LIMITED PARTNERSHIP AGREEMENT
OF
EQUUS GAMING COMPANY L.P.
a Virginia limited partnership
THIS AGREEMENT, dated as of the 1st day of August (the "Agreement
Date"), 1994, by and between Interstate General Company L.P. ("IGC"), a
Delaware limited partnership, as General Partner and as a Limited Partner; and
Interstate Business Corporation ("IBC"), a Delaware corporation, as a Limited
Partner;
W I T N E S S E T H:
WHEREAS, the parties hereto entered into that certain Partnership
Agreement of Equus Gaming Company, dated September 17, 1993 (the "General
Partnership Agreement"), for the purpose of forming a general partnership (the
"Original Partnership") under the laws of the Commonwealth of Virginia to
engage in the business described therein;
WHEREAS, the General Partnership Agreement was amended by a First
Amendment thereto, dated October 15, 1993, and a Second Amendment thereto,
dated December 6, 1993, and was amended and restated by the Amended and
Restated Partnership Agreement, dated December 29, 1993; and
WHEREAS, IGC and IBC now desire to convert the Original Partnership
into a limited partnership for the purpose of engaging in the business
described herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto hereby agree as follows:
1. Reorganization of Partnership.
The parties hereby convert the Original Partnership, as previously
established by them pursuant to the General Partnership Agreement, the First
and Second Amendments thereto, and the Amended and Restated Partnership
Agreement, into a limited partnership (the "Partnership"). The Partnership
shall be governed by the Act (as hereinafter defined), in accordance with the
provisions of this Agreement. The parties hereby convert their general
partnership interests in the Original Partnership into the limited and general
partnership interests described in section 7 of this Agreement. The rights and
liabilities of the Partners (as hereinafter defined) shall be as provided in
the Act except as herein otherwise expressly provided.
2. Name.
2.1 The name of the Partnership is "Equus Gaming Company L.P."
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2.2 The Partnership business shall be conducted under such names as
the General Partner (as hereinafter defined) may from time to time deem
necessary or advisable, provided that appropriate amendments to this Agreement
and/or necessary filings under applicable assumed or fictitious name statutes
are first obtained.
3. Offices and Registered Agent.
3.1 The registered office of the Partnership shall be located at
P.O. Box 392, Middleburg, Virginia, 22117, or at such other place as the
General Partner may from time to time designate by notice to the Partners.
3.2 The Partnership may have such additional offices as the General
Partner may from time to time deem necessary or advisable.
3.3 The General Partner, in its sole and absolute discretion, may
select any Person (as hereinafter defined) permitted by applicable law to act
as registered agent for the Partnership in each jurisdiction in which it is
necessary or appropriate for the Partnership to have a registered agent and may
replace any such Person from time to time.
4. Purpose of the Partnership.
The purpose and business of the Partnership shall be to hold
interests in Housing Development Associates S.E. ("HDA"), a Puerto Rico special
partnership; to organize and hold interests in Virginia Jockey Club, Inc., a
Virginia corporation, and to hold interests in other companies that have an
interest in horse racing ventures; to foster the financing and development of
the business of those entities in which the Partnership holds interests, and to
engage in any and all activities incidental or related to the foregoing and any
other activities permitted to be engaged in by a partnership organized under
the Act.
5. Term.
The Partnership shall be of indefinite duration, but may be
terminated as hereinafter provided.
6. Certain Defined Terms.
Certain terms used in this Agreement shall have the following
meanings:
6.1 "Act" shall mean the Virginia Revised Uniform Limited
Partnership Act.
6.2 "Agreed Value" shall mean, with respect to property, the fair
market value of that property on the date it is contributed to the Partnership,
as determined by the General Partner in good faith and by reasonable methods
(including the employment of independent professional appraisers).
6.3 "Agreement" shall mean this Limited Partnership Agreement of
Equus Gaming Company L.P., as the same may be amended from time to time.
6.4 "Capital Account" shall mean that certain capital account
maintained by the Partnership for each Partner in its capacity as a Partner in
accordance with Section 8.1 hereof.
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6.5 "Capital Contribution" shall mean the sum of cash and the Agreed
Value of other property, if any, contributed to the Partnership by each Partner
in accordance with Section 7 and otherwise. Any reference in this Agreement to
the Capital Contribution of a Partner shall include the contributions to the
capital of the Partnership made by any predecessor in interest of such Partner.
6.6 "Cash Reserve" shall be any reserve fund which may be
established and maintained by the General Partner, in its reasonable good faith
judgment, for the conduct of the business of the Partnership, provided that
such fund is in keeping with generally accepted accounting practices and never
exceeds amounts reasonably necessary for anticipated debt service, future
capital expenditures, repairs, replacements, taxes, contingent liabilities and
the like. If the Cash Reserve is drawn down it may be replenished in
accordance with the preceding limitations.
6.7 "Code" shall mean the Internal Revenue Code of 1986, as amended
(or any corresponding provision or provisions of succeeding law).
6.8 "Fiscal Year" shall mean an annual accounting period ending
December 31 of each year during the term of the Partnership; provided, however,
that the last such Fiscal Year shall be the period beginning on January 1 of
the calendar year in which the final liquidation and termination of the
Partnership is completed and ending on the date such final liquidation and
termination is completed. To the extent any computation or other provision
hereof provides for an action to be taken on a Fiscal Year basis, an
appropriate proration or other adjustment shall be made in respect of the first
or final Fiscal Year to reflect that such period is less than a full calendar
year period.
6.8 "General Partnership Interest" shall mean the Partnership
Interest at a General Partner held in its capacity as a General Partner.
6.9 "Limited Partnership Interest" shall mean the Partnership
Interest of a Partner held in its capacity as a Limited Partner.
6.10 "Partner" shall mean IGC and IBC and any Person who becomes a
substitute Partner pursuant to Section 11 hereof. "General Partner" shall mean
any Person (i) who is identified as such in the first sentence of this
Agreement and any other person or entity that has become a General Partner
pursuant to the terms of this Agreement, and (ii) who has not, at any given
time, ceased to be a General Partner pursuant to the terms of this Agreement.
"Limited Partner" shall mean any person (I) who is identified as such in the
first sentence of this Agreement and any other Person that has become a Limited
Partner pursuant to the terms of this Agreement, and (II) who, at any given
time, holds an interest in the Partnership.
6.11 "Partnership Interest" shall mean the ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all distributions and any other benefits to which such
Partner may be entitled as provided in this Agreement and the Act, together
with the obligations of such Partner to comply with all the provisions of this
Agreement and the Act.
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6.12 "Percentage Interest" shall mean, as of the Agreement Date, the
respective total percentage interest(s) held by each Partner as set forth in
Section 7.2 (including all interests held either as a General Partner or as a
Limited Partner). Thereafter, the General Partner may adjust the Partners'
respective Percentage Interests to reflect each Partner's interest in the
Partnership.
6.13 "Percentage Limited Partnership Interest" shall mean for each
Limited Partner a percentage determined by dividing the Percentage Interest of
such Limited Partner (excluding any parties of such Percentage Interest
attributable to a General Partnership Interest by 100 minus the aggregate
Percentage Interest of all General Partners (excluding any portion of such
Percentage Interest attributable to any Limited Partnership Interest held by
such General Partners).
6.14 "Person" shall mean any human being, organization, corporation,
partnership, joint venture, association, labor organization, legal
representative, federal, state or local governmental agency, court authority or
other legal entity whatsoever.
6.15 "Profits" or "Loss" shall mean, for any fiscal year, the net
income or net loss, respectively, of the Partnership as reported by the
Partnership for federal income tax purposes, except that (i) items of income,
gain, loss, and deduction relating to property contributed to the Partnership
shall be computed as if the basis of the property to the Partnership at the
time of contribution were equal to its Agreed Value on that date (for purposes
of this clause (i), the amount of any depreciation, amortization, or other cost
recovery deduction allowable for any period with respect to Property
contributed to the Partnership shall be an amount that bears the same ratio to
the Agreed Value of the Property on the date of contribution as the federal
income tax depreciation, amortization, or other cost recovery deduction bears
to the adjusted tax basis of the Property on the date of contribution), (ii)
any income of the Partnership that is exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses shall be added to
such taxable income or loss, and any related expenses not allowed as a
deduction pursuant to Code Section 265 shall be subtracted from such taxable
income or loss, and (iii) 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 Treas. Reg. Section 1.704-1(b) and not otherwise taken into account
under this Section shall be subtracted from such income or loss.
Profits and Losses shall include, where the context requires, related
federal income tax items such as capital gain or loss, tax preferences,
investment interest, depreciation, cost recovery, depreciation recapture, and
cost recovery recapture. Except as otherwise provided in the regulations
issued under Code Section 704(b), such amounts shall be computed without taking
into account any basis adjustment resulting from an election under Section 754
of the Code.
If there has been an adjustment to the Partners' Capital Accounts
pursuant to Section 8.1(e) to reflect the unrealized income, gain, loss, or
deduction inherent in Partnership property: (I) depreciation, amortization, or
other cost recovery deductions with respect to such property for each fiscal
year or other period shall equal an amount which bears the same ratio to the
fair market value of such property on the date of such adjustment as the
federal income tax depreciation, amortization, or other cost recovery
deductions for such year or other period bears to the adjusted tax basis of
such property on such date; and (II) gain or loss resulting from any
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disposition of such property with respect to which gain or loss is recognized
for federal income tax purposes shall be computed under this sentence as if
such property had an adjusted basis on the date of such adjustment equal to its
fair market value on such date and all subsequent adjustments for depreciation,
amortization, or other cost recovery deductions were made in accordance with
clause (I) of this sentence.
The term "Profits" shall mean a net positive amount and the term
"Losses" shall mean a net negative amount for the Partnership fiscal year
determined after making the adjustments described above.
6.16 "Property" shall mean all of the Partnership's right, title and
interest in and to, and shall include, any real or personal property interests
(tangible and intangible) owned by the Partnership.
6.17 "Transfer" shall mean any sale, transfer, exchange, assignment,
pledge, gift, or any contract for the foregoing; any voting trust or other
agreement or arrangement respecting the transfer of voting rights or any other
beneficial interest in a Partnership Interest.
7. Capital Contributions and Partnership Interests.
7.1 In consideration for their interests in the Original
Partnership, each Partner has previously contributed $100 to the Original
Partnership.
7.2 On the Agreement Date:
(a) IGC will contribute or cause to be contributed to the
Partnership a 40.65% interest (the "IGC Profits Interest")
in HDA's profits now held by Interstate General Properties
Limited Partnership S.E. ("IGP"). IGP will retain a 1%
interest in HDA's profits and its full 41.65% interest (the
"IGC Capital Interest") in HDA's capital. In return, IGC
will receive a 60.25% Percentage Interest as a Limited
Partner and a 1% Percentage Interest as a General Partner.
(b) IBC will contribute to the Partnership its entire 26.35%
interest (the "IBC Interest") in HDA. In return, IBC will
receive a 38.75% Percentage Interest as a Limited Partner.
8. Capital Accounts.
8.1 Maintenance of Capital Accounts.
(a) The Partnership shall maintain a separate Capital Account for
each Partner in accordance with this Section 8.1.
(b) A Partner's Capital Account shall be credited with (i) the
amount of any cash contributed to the Partnership by or on behalf of such
Partner, (ii) the Agreed Value of any property other than cash contributed to
the Partnership by or on behalf of such Partner, (iii) allocations to such
Partner of Partnership Profits (or items thereof) pursuant to Section 9.1, (iv)
the amount of any Partnership liabilities assumed by such Partner or which are
secured by any property distributed to such Partner, and (v) any other item
required to be credited for proper maintenance of capital accounts by the
Treasury regulations under Section 704(b) of the Code.
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(c) A Partner's Capital Account shall be debited with (i) the amount
of any cash and the fair market value of property other than cash that is
distributed to such Partner, all as may be determined in accordance with this
Agreement, (ii) allocations to such Partner of Partnership Losses (or items
thereof) pursuant to Section 9.1, (iii) the amount of any liabilities of such
Partner assumed by the Partnership or which are secured by any property
contributed by such Partner to the Partnership, and (iv) any other item
required to be debited for proper maintenance of capital accounts by the
Treasury regulations under Section 704(b) of the Code.
(d) If any property other than cash is distributed to a Partner, the
Capital Accounts of the Partners shall be adjusted to reflect the manner in
which gain or loss that has not previously been reflected in the Capital
Accounts would be allocated among the Partners under Section 9.1 if the
distributed property had been sold by the Partnership for a price equal to its
fair market value on the date of distribution. See Section 8.1(c)(i) for
additional adjustments to be made to the distributee Partner's Capital Account.
(e) The General Partner may, upon the occurrence of one of the
events described in Section 8.1(e)(ii), increase or decrease the Capital
Accounts of the Partners in accordance with Section 8.1(e)(i) to reflect a
revaluation of Partnership property.
(i) Any adjustments made under this Section 8.1(e) shall
reflect the manner in which the unrealized income, gain, loss,
or deduction inherent in Partnership property (to the extent
that it has not been reflected in the Capital Account
previously) would be allocated among the Partners under Section
9.1 if the Partnership had sold all of its property for its fair
market value on the date of adjustment. The adjustments
described in this Section 8.1(e)(i) shall be based on the fair
market value of Partnership property on the date of adjustment.
(ii) The General Partner may make the Capital Account
adjustments described in this Section 8.1(e) upon the occurrence
of the following events: (A) a contribution of money or other
property (other than a de minimis amount) to the Partnership by
a new or existing Partner as consideration for an interest in
the Partnership; (B) a distribution of money or other property
(other than a de minimis amount) by the Partnership to a
retiring or continuing Partner as consideration for an interest
in the Partnership; or (C) the liquidation of the Partnership.
(iii) The adjustments described in this Section 8.1(e) are
intended to comply with Treas. Reg. Section 1.704-1(b)(2)(iv)(f)
and shall be interpreted consistently with such regulation to
effectuate such intent. See the definition of "Profits and
Losses" for special rules for the computation of Profits and
Losses in the case of an adjustment under this Section 8.1(e).
(f) In the event of a permitted transfer of a Partnership Interest
in accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent it relates to the
transferred Partnership Interest.
8.2 No Interest on or Right to Withdraw Capital
Contributions.
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No interest shall be paid by the Partnership on capital contributions
or on the balance in any capital account and no Partner shall have the right to
withdraw his capital contribution or to demand or receive a return of his
capital contribution.
9. Profits, Losses, and Tax Allocations.
9.1 Profits, Losses, and Tax Allocations.
(a) Allocation of Profits. Except as otherwise provided in the
Agreement, items of income and of gain and Profits of the Partnership for each
fiscal year shall be determined as of the end of such fiscal year and allocated
to the Partners as follows:
(i) First, if any Limited Partner unexpectedly receives an
adjustment, allocation, or distribution of the type contemplated
by Treas. Reg. Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6) that
causes or increases a deficit in such Limited Partner's Capital
Account balance, items of Partnership income and gain entering
into the computation of Profits and Losses shall be allocated to
all such Limited Partners in proportion to such deficits being
offset to eliminate such deficits as quickly as possible. It is
the intent of the Partners that this Section 9.1(a)(i)
constitute a qualified income offset provision under Treas. Reg.
Section 1.704-1(b)(2)(ii)(d) and be interpreted consistently
with such regulation to effectuate such intent.
(ii) Second, Profits less any items allocated under section
9.1(a)(i) shall be allocated to each General Partner to the
extent necessary to offset any previous allocations of Loss to
such General Partner pursuant to the last sentence of Section
9.1(b).
(iii) Third, Profits less any amounts allocated under Sections
9.1(a)(i) and 9.1(a)(ii) shall be allocated to the Partners in
proportion to each Partner's Percentage Interest.
(b) Allocation of Losses. Except as otherwise provided in this
Agreement, items of expense, deduction and loss and the Losses of the
Partnership for each fiscal year shall be determined as of the end of such
fiscal year, and shall be allocated to the Partners in proportion to each
Partner's Percentage Interest, provided, however, Losses shall not be allocated
to any Limited Partner to the extent such Losses would cause or increase a
deficit in such Limited Partner's Capital Account balance. Any Losses that
cannot be allocated to a Limited Partner under the preceding sentence (due to
the deficit Capital Account balance restrictions) shall be allocated to the
General Partner.
(c) Curative Allocations. The qualified income offset allocations
under Section 9.1(a)(i) are intended to comply with certain requirements of the
Treasury regulations under Code Section 704(b). Notwithstanding any other
provision of this Section 9.1 (other than the qualified income offset
allocations), the qualified income offset allocations under Section 9.1(a)(i)
shall be taken into account in allocating other items of income, gain, loss and
deduction among the Partners so that, to the extent possible, the net amount to
each Partner of such allocations together with such qualified income offset
allocations shall be equal to the net amount that would have been allocated to
each such Partner if such qualified income offset Allocations had not occurred.
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This Section 9.1(c) is intended to minimize to the extent possible and to the
extent necessary any economic distortions which may result from application of
the qualified income offset allocations and shall be interpreted in a manner
consistent therewith.
(d) Tax Allocations. All items of income, gain, loss, and
deduction, and all tax preferences, depreciation, accelerated cost recovery
system deductions and investment interest and other tax items of the
Partnership for each fiscal year (collectively referred to as "Partnership Tax
Items") shall be allocated for tax purposes to the Partners in accordance with
this Section 9.1(d).
(i) Except as provided in Sections 9.1(d)(ii) and 9.1(d)(iii),
Partnership Tax Items shall be allocated for tax purposes in
accordance with the allocations of items of income, gain, loss,
deduction, Profits, and Losses under Section 9.1(a) through (c).
For purposes of the preceding sentence, an allocation to a
Partner of a share of Profits or Losses shall be treated as an
allocation to such Partner of the same share of each Partnership
Tax Item that is taken into account in computing such Profits or
Losses.
(ii) Gain or loss upon sale or other disposition of any
property contributed to the Partnership or any depreciation,
amortization, or other cost recovery deduction allowable with
respect to the basis of property contributed to the Partnership
shall be allocated for tax purposes among the contributing and
non-contributing Partners so as to take into account the
difference between the adjusted tax basis and the Agreed Value
of the property on the date of its contribution to the extent
permitted by Treas. Reg. Section 1.704-3 or such superseding
regulations as may be promulgated in accordance with Section
704(c) of the Code. In making allocations pursuant to the
preceding sentence, the General Partner is authorized to apply
any method or convention required or permitted by Section 704(c)
of the Code; provided, however, that the General Partner shall
select such method or convention as, in its opinion, will take
such variation fully into account and that will permit interests
in the Partnership to be publicly traded at some future time
(taking into account the need for publicly traded interests to
be fungible).
(iii) Except as provided in Section 9.1(d)(ii), if there has
been an adjustment to the Partners' Capital Accounts pursuant to
Section 9.1(e) to reflect the unrealized income, gain, loss, or
deduction inherent in Partnership property, Partnership Tax
Items with respect to such property shall be allocated to the
Partners for tax purposes so as to take into account the
difference between the adjusted tax basis of such property and
the value at which it is reflected in the Partners' Capital
Accounts in the same manner as variations between the adjusted
tax basis and fair market value of property contributed to the
Partnership are taken into account in determining the Partners'
allocations of Partnership Tax Items under Section 9.1(d)(ii),
including the requirement that the General Partner shall select
such method or convention as, in its opinion, will take such
variation fully into account and that will permit interests in
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the Partnership to be publicly traded at some future time
(taking into account the need for publicly traded interests to
be fungible).
(iv) In implementing the election under Section 754 of the
Code, the General Partner shall select such methods or
conventions that are required or permitted under the Code that
will properly reflect each Partner's interest in the Partnership
and that will permit interests in the Partnership to be publicly
traded at some future time (taking into account the need for
publicly traded interests to be fungible).
(v) In the event of any changes in any Partner's Partnership
Interest during the fiscal year, then for purposes of this
Section 9, the General Partner shall take into account the
requirements of Code Section 706(d) and shall have the right to
select any method or convention of determining the varying
interests of the Partners during the year which satisfies Code
Section 706(d) and that will permit interests in the Partnership
to be publicly traded at some future time (taking into account
the need for publicly traded interests to be fungible).
9.2 Allocation Savings Provision. The allocation method set forth
in this Section 9 is intended to allocate Profits and Losses (and items
thereof) to the Partners for federal income tax purposes in accordance with
their economic interests in the Partnership and to permit interests in the
Partnership to be publicly traded at some future time (taking into account the
need for publicly traded interests to be fungible), while complying with the
requirements of the Code, including Section 704 and the Treasury Regulations
promulgated thereunder. If in the opinion of the General Partner, the
allocation of Profits or Losses (or items thereof) pursuant to the provisions
of this Section 9 will not (1) satisfy the requirements of Code Section 704 or
the Treasury Regulations thereunder, (2) comply with any other provisions of
the Code or Treasury Regulations, (3) permit the interests of the Partnership
to be publicly traded at some future time (taking into account the need for
publicly traded interests to be fungible), or (4) properly take into account
each Partner's interest in the Partnership, then notwithstanding anything to
the contrary contained in the preceding provisions of this Section 9, Profits
and Losses (or items thereof) shall be allocated in such manner as the General
Partner in its sole and unrestricted discretion determines to be required so as
to reflect properly items (1), (2), (3), or (4) of this sentence, as the case
may be, and the General Partner shall have the right to amend this Agreement
without action by the Partners to reflect any such change in the method of
allocating Profits and Losses (or items thereof).
10. Distributions.
10.1 Distributions. Distributions in cash or in kind may be made in
the discretion of the General Partner. Except with respect to the LDA
Receivable (as defined in Section 10.3) or except as provided in Section 17.2,
all such distributions shall be made in proportion to Partners' Percentage
Interests. Distributions in kind shall be treated as provided in Section 17.3
as if such distribution were made pursuant to a liquidation.
10.2 Amounts Withheld. All amounts withheld pursuant to the Code or
any provision of any state or local tax law with respect to any payment or
distribution to the Partnership or the Partners shall be treated as amounts
distributed to the Partners pursuant to this Section 10 for all purposes under
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this Agreement. The General Partner may allocate any such amounts among the
Partners in any manner that is in accordance with applicable law.
10.3 Distribution of LDA Receivable. The LDA Receivable shall be
distributed exclusively to the Limited Partners ratably in proportion to each
Limited Partner's respective Percentage Limited Partnership Interest. For
purposes of this Agreement the term "LDA Receivable" shall mean an
approximately $13.2 million note receivable ($11.9 million principal plus $1.3
million in accrued and unpaid interest) payable by Land Development Associates
S.E. to HDA.
11. Withdrawals and Transfers of Partnership Interests.
11.1 General Partners.
(a) Withdrawal or Transfer.
(i) A General Partner may not voluntarily withdraw from the
Partnership or make a Transfer of its Partnership Interest as a
General Partner unless:
(A) In the case of a Transfer, the transferee of such
Partnership Interest provides written confirmation of its
agreement to purchase or succeed to such Partnership Interest as
a General Partner, to be bound by the terms and provisions of
this Agreement, and to accept the responsibility for the
management and control of the Partnership as a substitute
General Partner; and
(B) All the Limited Partners consent to such withdrawal or
Transfer and to the admission of the proposed successor General
Partner as a substitute General Partner.
(ii) Upon the occurrence of the foregoing conditions specified
in subsection 11.1(a)(i) of this Agreement, the General Partner
may withdraw from the Partnership effective on at least thirty
(30) days' advance written notice to the other Partners, such
withdrawal to take effect on the date specified in such notice,
provided that such withdrawal shall take effect immediately
after the transferee or successor General Partner, if any, has
been admitted to the Partnership as a substitute General
Partner. The General Partner shall have no liability to the
Partnership or the other Partners on account of any withdrawal
in accordance with the terms of this Section 11.1(a).
(b) Limitations on Withdrawal of the General Partner and Election of
a Successor General Partner. Notwithstanding the provisions of Section
11.1(a), a General Partner may not voluntarily withdraw from the Partnership or
make a Transfer of its Partnership Interest pursuant to Section 11.1(a) to the
extent that the action in question (i) would cause the loss of limited
liability of the Limited Partners under this Agreement, (ii) would cause the
Partnership to be treated as an association taxable as a corporation for
federal income tax purposes, or (iii) would result in the termination of the
Partnership within the meaning of section 708(b) of the Code. The remaining
and successor General Partners, as a group, shall have a continuing interest of
at least one percent (1%) in each material item of Partnership income, gain,
loss, deduction, or credit.
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(c) Admission of a Successor General Partner. A successor General
Partner or the transferee of all or any portion of the Partnership Interest of
a General Partner pursuant to Section 11.1(a) shall be admitted to the
Partnership as a General Partner (in the place, in whole or in part, of the
transferor or former General Partner), effective as of the date that an
amendment to this Agreement, adding the name of such successor General Partner
and other required information, is recorded pursuant to the Act (which
admission, in the event the successor General Partner is in the place in whole
of the transferor or former General Partner, shall be immediately prior to the
withdrawal of such transferor or former General Partner), and upon receipt by
the Partnership of all of the following:
(i) the successor General Partner's acceptance of, and
agreement to be bound by, all of the terms and provisions of
this Agreement, in form and substance satisfactory to the
Partnership;
(ii) evidence of the authority of such successor General Partner
to become a General Partner and to be bound by all of the terms
and conditions of this Agreement;
(iii) the written agreement of the successor General Partner to
continue the business of the Partnership in accordance with the
terms and provisions of this Agreement; and
(iv) such other documents or instruments as may be required in
order to effect the admission of the successor General partner
as a General Partner under this Agreement.
(d) Admission of Additional General Partner. An additional General
Partner can be admitted with the consent of the existing General Partner and
upon the terms and conditions set by the existing General Partner, including
satisfaction of all of the requirements set forth in Section 11.1(c) for the
admission of a successor General Partner.
(e) Amendment of Agreement and Certificate of Limited Partnership.
This Agreement and the certificate of limited partnership of the Partnership
shall be amended to reflect the withdrawal or succession of a General Partner
or the admission of a new General Partner.
11.2 Transfers of Interests by Limited Partners.
(a) A Limited Partner may Transfer all or a portion of its
Partnership Interest subject to the written consent of the General Partner
which may be granted or withheld at the sole discretion of the General Partner,
and subject to the satisfaction of the following conditions:
(i) Each Transfer shall be effective as of the day on which the
General Partner consents in writing to such Transfer;
(ii) No Transfer shall be made unless, in the opinion of the
General Partner, such Transfer will not result in the
termination of the Partnership for purposes of the then
applicable provisions of the Code;
(iii) No Transfer shall be made unless, in the opinion of the
General Partner, such Transfer will not jeopardize any license
or any application therefor held by the Partnership; and
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(iv) No Transfer shall be made unless, in the opinion of the
General Partner, registration is not required under applicable
general and state securities laws with respect thereto or as a
result thereof.
(b) Any Transfer pursuant to the terms hereof (including
obtaining the written consent of the General Partner and satisfaction of all of
the conditions set forth in Section 11.2(a)) shall confer upon the transferee
the right to become a substitute Limited Partner. Unless a transferee becomes
a substitute Limited Partner, such transferee shall have no right to
participate in the management or administration of the Partnership's business
or affairs, or to require any information or account of Partnership
transactions, or to inspect the Partnership's books and records. A transferee
who does not become a substitute Limited Partner shall only be entitled to
receive the share of distributions, income, and losses to which the
transferring Limited Partner would otherwise be entitled.
12. Tax Elections.
12.1 The Partnership shall elect, pursuant to Section 754 of the
Code, to adjust the basis of the Partnership's property with respect to an
assignment of all or part of a Partnership Interest by sale or exchange or on
death of a Partner. The General Partner shall implement the election under
Section 754, and make any resulting adjustments to basis in accordance with
section 9.1(d)(iv). Upon request of the General Partner, each Partner shall,
at its own expense, within thirty (30) days of such request, furnish to the
Partnership such information as is reasonably necessary to accomplish the
adjustments in basis provided for under the Section 754 election.
12.2 The General Partner shall cause the Partnership to make or
revoke all other tax elections provided for under the Code. Each Partner who
transfers all or any portion of its Partnership Interest shall furnish the
Partnership with all information required to enable the Partnership to fulfill
any federal income tax reporting requirements imposed with respect to such
transfer.
13. Management and Operation of Business.
13.1 The initial General Partner of the Partnership shall be IGC.
13.2 Except as otherwise expressly limited, restricted or
prohibited, the General Partner shall have and may exercise on behalf of the
Partnership all rights necessary, proper, convenient or advisable to effectuate
and carry out the purpose, business and objectives of the Partnership. Such
powers shall include, without limitation, the power to:
(a) acquire, hold, construct, lease and dispose of assets;
(b) create, by grant or otherwise, easements and servitudes relating
to the Partnership's property;
(c) employ and dismiss from employment any and all employees,
agents, independent contractors, real estate managers, brokers,
attorneys, and accountants;
(d) let or lease all or any portion of any Partnership property for
any purpose and whether or not the portion so leased is to be
occupied by the lessee, or, in turn, subleased in whole or in
part to others;
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(e) construct, alter, improve, repair, raze, replace, or rebuild any
property;
(f) obtain replacements of any mortgage or mortgages related in any
way to the property owned by the Partnership, and to repay in
whole or in part, refinance, recast, modify, consolidate, or
extend any mortgages affecting any such property;
(g) take such action on behalf of the Partnership as may be
necessary to acquire real or personal property for the
Partnership as the Partners deem advisable or beneficial to the
purposes and goals of the Partnership;
(h) sell or exchange Partnership property; provided, however, that
the sale of all or substantially all of the assets of the
Partnership may be authorized only in accordance with the terms
of Section 14 hereof;
(i) be reimbursed for all expenses incurred in conducting and in
furtherance of the Partnership business, for all taxes paid by
the General Partner in connection with the Partnership business
and on behalf of the Partnership, and for all costs associated
with the development, organization, and initial operation of the
Partnership;
(j) do any and all of the foregoing at such a price, rental or
amount, for cash, securities, or other property and upon those
terms as the General Partner deems proper;
(k) deposit Partnership funds in an account or accounts to be
established from time to time in such financial institutions
(including any state or federally chartered bank or savings and
loan association), and shall be authorized to withdraw and shall
authorize the withdrawal of those funds;
(l) place record title to any property in the name of the
Partnership or in the name of a nominee or trustee for the
purpose of mortgage financing or any other convenience or
benefit of the Partnership;
(m) institute and defend actions at law or in equity;
(n) keep, or cause to be kept, full and accurate records of all
transactions of the Partnership;
(o) cause to be prepared and thereafter timely file (including any
applicable extensions), all tax returns and reports for the
Partnership and, in connection therewith, make any elections
that the Partners deem advisable, including but not limited to
the election referred to in Section 754 of the Code, and act as
"tax matters partner" for the Partnership within the meaning of
Sections 6221 through 6232 of the Code; and
(p) execute, acknowledge, and deliver any and all instruments to
effectuate any and all of the foregoing.
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13.3 Anything in this Agreement to the contrary notwithstanding, the
General Partner shall not cause or permit the Partnership to take any of the
following actions without the written agreement of the Partners:
(a) incur or assume any indebtedness other than indebtedness
incurred in the ordinary course of business;
(b) create or incur any lien upon the Partnership's assets other
than trade debt incurred in the ordinary course of business;
(c) guarantee or otherwise in any way become responsible for the
obligations or indebtedness of any other person.
13.4 Notwithstanding anything contained in Section 13.3 hereof to
the contrary, the General Partner shall be authorized to engage the management
services of any Person or Persons (provided such Person or Persons have the
requisite skill and ability), subject to the oversight and control of the
Partnership.
13.5 In addition to other acts expressly prohibited or restricted
herein or by law, the General Partner shall be expressly prohibited from the
following:
(a) doing any act in contravention of this Agreement;
(b) doing any act which, to the best of its present knowledge, would
make it impossible to carry on the ordinary business of the
Partnership;
(c) confessing a judgment against the Partnership in connection with
any threatened or pending legal action;
(d) possessing or in any manner dealing with the assets of the
Partnership or assigning the rights of the Partnership in the
assets of the Partnership for other than Partnership purposes;
(e) commingling the funds of the Partnership with the funds of any
other Person; and
(f) entering into any transaction on terms no less favorable to the
Partnership than would otherwise be obtained by two
disinterested parties on an arms-length basis.
14. Sale of All or Substantially All of the Assets of the Partnership.
The Partnership may not sell, mortgage, pledge, encumber or dispose
of any substantial Partnership asset or property, or any substantial portion of
any Partnership asset or property without the prior written consent of all of
the Partners.
15. Reserves.
In addition to the specific long term Cash Reserves provided for in
Section 6.7, the General Partner may cause the Partnership to create such short
term reserves or running cash balances for such purposes as it determines to be
in the best interests of the Partnership.
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16. Dissolution of the Partnership.
The Partnership shall be dissolved and terminated and its business
wound up on the occurrence of any one of the following events:
(a) the filing by, on behalf of, or against the Partnership of any
petition or pleading, voluntary or involuntary, to declare it
bankrupt under any bankruptcy law or act, or the commencement in
any court of any proceeding, voluntary or involuntary, to
declare it insolvent or unable to pay its debts, or the
appointment by any court or supervisory authority of a receiver,
trustee or other custodian of the Property, assets or business
of the Partnership or the assignment by the Partnership of all
or any part of its Property or assets for the benefit of
creditors if any said action, proceeding or appointment is not
dismissed, vacated or otherwise terminated within thirty
(30) days of its commencement; and
(b) any other event resulting in the dissolution or termination of
the Partnership under the laws of the Commonwealth of Virginia.
17. Distribution Upon Dissolution.
17.1 Negative Capital Account. Upon the dissolution of the
Partnership, any General Partner who has a negative balance in his Capital
Account, as determined after taking into account all Capital Account
adjustments for the Partnership fiscal year during which such dissolution
occurs, shall be obligated to contribute to the Partnership by the end of such
fiscal year (or, if later, within 90 days after the date of such dissolution)
an amount such that the balance in his Capital Account is zero, and such
contributed amount is to be applied and distributed as provided in Section
17.2. The General Partner's obligation to make a contribution with respect to
a negative Capital Account balance under the preceding sentence shall not apply
to benefit creditors with respect to nonrecourse obligations of the
Partnership. No Limited Partner shall have any obligation to pay any amount to
the Partnership on account of a negative Capital Account balance.
17.2 Dissolution and Liquidation. Unless the business of the
Partnership is continued, upon the dissolution of the Partnership, the General
Partner or the Persons required by law to wind up the Partnership's affairs
shall liquidate the assets of the Partnership and apply and distribute the
proceeds of such liquidation as follows, unless otherwise required by law:
(a) First, to payment of debts and liabilities of the Partnership
and the expenses of winding up;
(b) Second, to the setting up of reasonable reserves for any
contingent liabilities or obligations of the Partnership, provided that any
such reserves shall be held for such period as the General Partner or other
Persons so distributing shall deem advisable for the purpose of disbursing such
reserves in payment of such liabilities or obligations and, at the expiration
of such period, the balance of such reserves, if any, shall be distributed as
hereinafter provided;
(c) Third, to the Partners in accordance with their positive Capital
Account balances, as adjusted pursuant to Section 9.1 for all Partnership
operations up to and including such liquidation.
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(d) Fourth, any additional amounts shall be distributed in
proportion to the Partners' respective Percentage Interests.
17.3 Distributions in Kind. If the General Partner or the Persons
required by law to wind up the Partnership's affairs shall determine that a
portion of the Partnership's assets should be distributed in kind to the
Partners, the General Partner or such Persons, as the case may be, shall obtain
an appraisal as of a date reasonably close to the date of liquidation. The
Capital Accounts shall be adjusted as provided in Section 8.1(d) to reflect
each Partner's share of the unrealized appreciation (or loss) with respect to
any such assets distributed in kind and the distribution of any such assets (or
portions thereof as tenants in common) in kind to a Partner shall be considered
a distribution of an amount equal to the assets' appraised fair market value
(or portions thereof) for purposes of Section 8.1(c)(i).
17.4 A reasonable time shall be allowed for the orderly liquidation
of the assets of the Partnership and the discharge of liabilities.
17.5 By no later than one hundred twenty (120) days after the
dissolution and termination of the Partnership, each of the Partners shall be
furnished with statements similar, so far as may be practicable, to those set
forth in Section 18.2 of this Agreement prepared by the certified public
accountant or bookkeeper for the Partnership as of and for the period ending
with the date of complete liquidation.
18. Books of Account, Records and Reports.
18.1 Proper and complete records and books of account shall be kept
by the General Partner in which shall be entered fully and accurately all
transactions and such other matters relating to the Partnership's business as
are usually entered into records and books of account maintained by persons
engaged in businesses of a like character. The books and records shall at all
times be maintained at the business office of the Partnership, and shall be
open to the reasonable inspection and examination of any Partner or its duly
authorized representatives during reasonable business hours.
18.2 Within ninety (90) days after the end of each Fiscal Year of
the Partnership, the General Partner shall send to each Person who was a
Partner at any time during such year such tax information, including, without
limitation, Federal Tax Schedule K-1, as shall be reasonably necessary for the
preparation by such Person of its federal income tax return. This period shall
be automatically extended by the period of any delay beyond the control of the
General Partner resulting from the failure of a third party to provide required
tax information to the Partnership in a timely manner.
19. Notices.
All notices under this Agreement shall be in writing and shall be
deemed to have been given when delivered personally, or mailed by certified or
registered mail, postage prepaid, return receipt requested. Notices to the
Partnership shall be delivered at, or mailed to, its principal office. Notices
to a Partner shall be delivered to such Partner, or mailed to the last address
furnished by it for such purposes to the General Partner. Each Partner shall
give notice of a change of address to the Partnership in the manner provided in
this Section.
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20. Amendments.
This Agreement may be amended upon the written consent of all the
Partners.
21. Meetings, Consents and Voting.
A meeting of the Partnership to consider any matter with respect to
which the Partners may vote as set forth in this Agreement may be called by any
Partner. Upon receipt of a notice requesting a meeting by such Partner and
stating the purpose of the meeting, the General Partner shall, within ten (10)
days thereafter, give notice of a meeting of the Partnership to be held at a
time and place convenient to the Partners as determined by written agreement of
the Partners on a date not earlier than fifteen (15) days nor later than sixty
(60) days after receipt by the General Partner of the notice requesting a
meeting. The notice of the meeting shall set forth the time, date, location
and purpose of the meeting.
22. Additional Documents.
Each party hereto agrees to execute and acknowledge all documents and
writings which the Partners may deem necessary or expedient in the creation of
this Partnership and the achievement of its purposes.
23. Survival of Rights.
Except as herein otherwise provided to the contrary, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, their
successors and assigns.
24. Interpretation and Governing Law.
When the context in which words are used in this Agreement indicates
that such is the intent, words in the singular number shall include the plural,
and vice versa, the masculine gender shall include the neuter or female gender,
and "or" is used in the inclusive sense. Headings or titles contained herein
are inserted only as a matter of convenience and in no way define, limit,
extend or interpret the scope of this Agreement or any particular Section
hereof. This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Virginia, without giving regard to the conflict of
law provisions thereof.
25. Severability.
If any provision, sentence, phrase or word of this Agreement or the
application thereof to any person or circumstance shall be held invalid, the
remainder of this Agreement, or the application of such provision, sentence,
phrase or word to persons or circumstance, other than those as to which it is
held invalid, shall not be affected thereby.
26. Agreement in Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument. In addition, this Agreement may contain more than one counterpart
of the signature page and this Agreement may be executed by the affixing of the
signatures of each of the Partners to one of such counterpart signature pages;
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all of such signature pages shall be read as though one, and they shall have
the same force and effect as though all of the signers had signed a single
signature page.
27. Third Parties.
The agreements, covenants and representations contained herein are
for the benefit of the parties hereto inter se and are not for the benefit of
any third parties including, without limitations, any creditors of the
Partnership.
28. Prior Agreements.
This Agreement shall in all respects replace and supersede the
Amended and Restated Partnership Agreement as and from the date first above
written.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
GENERAL PARTNER:
INTERSTATE GENERAL COMPANY L.P., a
Delaware limited partnership
By: Interstate General
Management Corporation,
its managing general
partner
By: /s/ Donald G. Blakeman
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Title: Executive Vice President
LIMITED PARTNERS:
INTERSTATE GENERAL COMPANY L.P., a
Delaware limited partnership
By: Interstate General
Management Corporation,
its managing general
partner
By: /s/ Donald G. Blakeman
----------------------------------
Title: Executive Vice President
INTERSTATE BUSINESS CORPORATION, a
Delaware corporation
By: /s/ Gretchen Gronau
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Title: Assistant Treasurer