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Agreement of Limited Partnership - VFCC Project Brave.rtf
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PROJECT BRAVE LIMITED PARTNERSHIP
AGREEMENT OF LIMITED PARTNERSHIP
DATED AS OF
JULY 1, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I....................................................................2
FORMATION AND PURPOSE........................................................2
1.1 FORMATION; CONTINUATION..................................................2
1.2 DEFINITIONS..............................................................2
1.3 NAME.....................................................................2
1.4 REGISTERED OFFICE; OTHER OFFICES.........................................2
1.5 TERM.....................................................................3
1.6 PURPOSE OF PARTNERSHIP...................................................3
1.7 INVESTMENT GUIDELINES....................................................4
ARTICLE II ADMISSION OF ADDITIONAL LIMITED PARTNERS.........................4
2.1 ADMISSION................................................................4
2.2 [RESERVED]...............................................................4
2.3 ADMISSION AMENDMENTS.....................................................4
ARTICLE III PARTNERSHIP CAPITALIZATION......................................5
3.2 [RESERVED]...............................................................5
3.3 NO INTEREST ON CONTRIBUTIONS.............................................5
3.4 LOANS....................................................................5
ARTICLE IV CAPITAL CONTRIBUTIONS............................................6
4.1 CAPITAL CONTRIBUTIONS....................................................6
4.2 NO CALLED CONTRIBUTIONS..................................................6
ARTICLE V DISTRIBUTIONS.....................................................6
5.1 AVAILABLE CASH DISTRIBUTION DATES........................................6
5.2 DISTRIBUTION INTENT; CERTAIN DEFINITIONS.................................6
5.3 NO IN-KIND DISTRIBUTIONS.................................................6
5.4 DISTRIBUTIONS UPON DISSOLUTION...........................................7
5.5 [RESERVED]...............................................................7
5.6 WITHHOLDING FROM DISTRIBUTIONS...........................................7
ARTICLE VI POWERS AND DUTIES OF THE GENERAL PARTNER.........................7
6.1 MANAGEMENT OF THE PARTNERSHIP............................................7
6.2 REPRESENTATION OF GENERAL PARTNER........................................7
6.3 POWERS OF THE GENERAL PARTNER............................................8
6.4 DUTIES OF THE GENERAL PARTNER; LIMITATION OF LIABILITY...................9
6.5 NO OTHER ACTIVITIES OF THE GENERAL PARTNER...............................9
6.6 MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENTS.......................10
6.7 RELIANCE ON AUTHORITY OF THE GENERAL PARTNER............................10
6.8 LIMITATIONS ON AUTHORITY OF THE GENERAL PARTNER.........................10
6.9 INDEMNIFICATION.........................................................12
6.10 EXPENSES OF THE GENERAL PARTNER........................................12
6.11 REMOVAL OF THE GENERAL PARTNER.........................................12
6.12 EXPENSES OF THE PARTNERSHIP............................................13
ARTICLE VII POWERS, RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.............13
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ARTICLE VIII................................................................14
[RESERVED]..................................................................14
ARTICLE IX MEETINGS OF PARTNERS; VOTING....................................14
9.1 MEETINGS................................................................14
9.2 PLACE OF MEETINGS.......................................................14
9.3 NOTICE OF MEETINGS......................................................14
9.4 MEETING OF ALL PARTNERS.................................................15
9.5 QUORUM..................................................................15
9.6 MANNER OF ACTING........................................................15
9.7 AMENDMENT...............................................................15
9.8 PROXIES.................................................................16
9.9 ACTION BY PARTNERS WITHOUT A MEETING....................................16
9.10 WAIVER OF NOTICE.......................................................16
9.11 MEETING BY TELEPHONE; ACTION BY CONSENT................................16
ARTICLE X ACCOUNTING, BOOKS AND RECORDS....................................16
10.1 ACCOUNTING METHODS.....................................................16
10.2 BOOKS AND RECORDS......................................................17
10.3 FINANCIAL REPORTS AND TAX RETURNS......................................17
10.4 GENERAL INFORMATION....................................................17
10.5 ADJUSTMENT OF TAX BASIS................................................18
10.6 CONTROVERSIES WITH INTERNAL REVENUE SERVICE............................18
ARTICLE XI..................................................................18
CAPITAL ACCOUNTS; ALLOCATIONS; TAX DISTRIBUTIONS............................18
11.1 MAINTENANCE OF CAPITAL ACCOUNTS........................................18
11.2 ALLOCATION OF PROFITS AND LOSSES.......................................19
11.3 TAX ITEMS; CONTRIBUTED AND REVALUED PROPERTY...........................20
ARTICLE XII DISQUALIFICATION AND WITHDRAWAL OF PARTNERS....................20
12.1 DISQUALIFICATION.......................................................20
12.2 WITHDRAWAL OF PARTNERS.................................................21
12.3 PAYMENT TO PARTNERS UPON WITHDRAWAL....................................22
ARTICLE XIII TRANSFER AND ASSIGNMENT OF PARTNERSHIP INTEREST...............22
13.1 GENERAL PROHIBITION....................................................22
13.2 PERMITTED TRANSFERS....................................................22
13.3 UNAUTHORIZED TRANSFERS.................................................23
ARTICLE XIV DISSOLUTION AND LIQUIDATION OF PARTNERSHIP.....................23
14.1 DISSOLUTION............................................................23
14.2 LIQUIDATION............................................................24
14.3 NO FURTHER CLAIM.......................................................25
ARTICLE XV..................................................................25
POWER OF ATTORNEY...........................................................25
ARTICLE XVI.................................................................25
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DEFINITIONS.................................................................25
16.1 DEFINITIONS IN GENERAL.................................................25
16.2 CERTAIN DEFINITIONS....................................................26
ARTICLE XVII................................................................30
MISCELLANEOUS...............................................................30
17.1 ADDITIONAL DOCUMENTS...................................................30
17.2 APPLICABLE LAW.........................................................30
17.3 NOTICES................................................................30
17.4 ENTIRE AGREEMENT.......................................................31
17.5 EXTENSION NOT A WAIVER.................................................31
17.6 CREDITORS NOT BENEFITED................................................31
17.7 SEVERABILITY...........................................................31
17.8 SUCCESSORS.............................................................31
17.9 COUNTERPARTS...........................................................32
17.10 SECTION HEADINGS......................................................32
17.11 TIME..................................................................32
17.12 PRONOUNS..............................................................32
17.13 ACCEPTANCE OF PRIOR ACTS BY NEW PARTNER...............................32
17.14 PARTNERSHIP PROPERTY..................................................32
17.15 WAIVER OF ACTION FOR PARTITION........................................32
Exhibit A Partners
Exhibit B Regulatory Allocations
Exhibit C Form of Management Agreement
Exhibit D Form of Administrative Services Agreement
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PROJECT BRAVE LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP (the "AGREEMENT") is made and
entered into as of the 1st day of July, 2000, by and between FIFS ACQUISITION
FUNDING COMPANY, L.L.C. ("FAFC") a Delaware liability company as the "GENERAL
PARTNER" and FIRST UNION INVESTORS, INC., a corporation organized under the laws
of Delaware (the "LIMITED PARTNER").
WHEREAS, General Partner heretofore entered into that certain Loan and
Security Agreement, dated as of October 2, 1998 (the "BRIDGE AGREEMENT") by and
among General Partner, as the borrower, Auto Lenders Acceptance Corporation, as
servicer and seller, VFCC, First Union Securities, Inc., as deal agent and
documentation agent, and First Union National Bank, as liquidity agent; and
WHEREAS, pursuant to the Bridge Agreement, the General Partner incurred
certain indebtedness (the "BRIDGE DEBT") and secured such Bridge Debt with a
pledge of the Collateral (as defined in the Indenture, as described below); and
WHEREAS, inasmuch as a DE FACTO partnership with respect to the ownership
of the Collateral may have been created solely for federal income tax purposes
pursuant to certain term sheets and other documents executed and/or delivered at
the time of, or in connection with, the execution and delivery of the Bridge
Agreement, which partnership's rights in said Collateral were and are subject to
the rights of the lenders under the Bridge Agreement, it being the intent of the
parties to the Bridge Agreement and such partnership that the Bridge Agreement
create a debtor/creditor relationship between the General Partner and the
lenders under the Bridge Agreement and that the Bridge Agreement provide
temporary financing of said Collateral; and
WHEREAS, the parties to the Bridge Agreement have agreed that,
contemporaneously with the formation of this partnership (the "PARTNERSHIP"),
the General Partner will transfer, subject to Bridge Debt, the Collateral to the
Partnership in exchange for its Partnership interest; and
WHEREAS, the Partnership will issue certain asset-backed notes (the
"NOTES") under that certain Indenture dated as of August 8, 2000 by and among
the Partnership, First Union National Bank, as paying agent and Wells Fargo Bank
Minnesota, National Association, as trustee (the "INDENTURE") the proceeds of
which to be used to extinguish the Bridge Debt.
NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants and agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby covenant and agree as follows:
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W I T N E S S E T H:
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ARTICLE I
FORMATION AND PURPOSE
1.1 FORMATION; CONTINUATION.
(a) The Partners hereby acknowledge that the Partnership was formed on or
about August 8, 2000 by the filing of the Certificate of Limited Partnership
(the "CERTIFICATE") with the Secretary of State of Delaware with terms and
conditions thereof and as specified herein and the existence thereof
established. The Partners agree to continue the Partnership as a limited
partnership pursuant to the Act and other relevant laws of the State of Delaware
for the purposes the fifth recital hereof and further enumerated in SECTION 1.6
and upon the terms and conditions set forth in this Agreement.
(b) The Partners further acknowledge that solely for purposes of federal
and state income taxation from and after October 2, 1998 to the date hereof the
respective interests of the parties in and with respect to the Collateral and
any earnings thereon or proceeds therefrom (subject to the rights of the lenders
under the Bridge Agreement) shall be and has been determined on the basis of a
partnership with terms and provisions identical to the terms and conditions
hereof (with FAFC constituting the sole general partner thereof).
1.2 DEFINITIONS
Certain capitalized terms not otherwise defined in the body of this
Agreement are defined in ARTICLE XVI and the Indenture.
1.3 NAME.
The name of the Partnership shall be, and the business of the Partnership
shall be conducted under, the firm name: PROJECT BRAVE LIMITED PARTNERSHIP,
unless the General Partner changes the Partnership's name or implements a
different trade name for the business of the Partnership.
1.4 REGISTERED OFFICE; OTHER OFFICES.
(a) The registered office of the Partnership in the State of Delaware and
the office at which the records of the Partnership are maintained, is located at
1013 Centre Road, Wilmington, Delaware 19805, and its registered agent for
service of process, located at that address is Corporation Service Company. This
office may be changed, at any time and for any reason, by the General Partner or
the registered agent pursuant to the applicable provisions of the Act.
Notwithstanding the foregoing, the Partnership shall continuously maintain a
registered office in
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Delaware. The General Partner may designate a different registered agent for the
Partnership by giving written notice to the Partners and by filing an
appropriate amendment to the Certificate.
(b) An office of the Partnership shall be maintained at the principal
office and principal place of business of the General Partner, which is
currently located at 675 Bering Drive, Suite 710, Houston, TX 77057. The
Partnership may have such additional offices at such other places as the General
Partner shall deem advisable. In establishing additional offices of the
Partnership, the General Partner shall do so in such a manner as to preserve the
limited liability of the Limited Partner pursuant to the laws of any
jurisdiction in which any such office may be established.
1.5 TERM.
The term of this Partnership shall continue from the date of its formation
until the date which is three (3) years after the earlier of (i) the date on
which the final payment is received on all of the Collateral and (ii) the date
on which the last item of Collateral is liquidated or otherwise disposed of,
unless sooner terminated.
1.6 PURPOSE OF PARTNERSHIP.
The purposes of the Partnership shall be:
(a) to acquire, hold, transfer, enforce its rights as obligee under, and
liquidate all Contracts, NIM Collateral, and Servicing Strips (the "ASSETS") (as
the same may be amended, modified, supplemented, restated or replaced from time
to time to achieve, among other things, gains, income, cash flow and other
benefits;
(b) to maintain all Contract Files, Charged Off Contract Lists and
Contract Lists, and all right, title, and interest of the Partnership in and to
the documents, agreements and instruments included in the Contract Files,
including, without limitation, rights of recourse of the Partnership against the
Seller;
(c) to maintain all Insurance Policies and all rights of the Issuer
in all Insurance Policies;
(d) to structure, implement and obtain the financing required for the
investment in or acquisition of the Assets or the refinancing thereof;
(e) to maintain all security interests, Liens, guaranties, mortgages and
other encumbrances in favor of or assigned or transferred to the Partnership in
and to the Assets and Financed Vehicles, and all accessions thereto and
replacements thereof;
(f) to enter into one or more Hedge Transactions with respect to
indebtedness of the Partnership; and
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(g) to purchase, sell, possess, transfer, lease, license, or otherwise
deal in, and to exercise all rights, powers, privileges and other incidents of
ownership or possession with respect to Contracts and other property, whether
real or personal, tangible or intangible;
(h) to open, maintain, and close bank accounts, including to draw checks
or other orders for the payment of moneys;
(i) to file or cause to be filed financing or continuation statements in
order to establish and maintain secured creditor status for the Partnership in
the Assets; and
(j) to enter into, make and perform all contracts, agreements and other
undertakings and to take any action as may be necessary or advisable or
incidental to the carrying out of the foregoing purposes.
All such activities of the Partnership shall be referred to as the Partnership's
"Business."
1.7 INVESTMENT GUIDELINES.
The Partnership shall invest in or acquire the Assets and any other
securities, receivables or other assets investments selected by the General
Partner (hereinafter collectively referred to as the "PARTNERSHIP ASSETS"),
subject to Three-Fourths Approval (as defined in SECTION 16.2) of the Limited
Partners. The General Partner may transfer or dispose of (other than by
collection of or otherwise in accordance with the Basic Documents) any Asset
subject to Three-Fourth Approval of the Limited Partners.
ARTICLE II
ADMISSION OF ADDITIONAL LIMITED PARTNERS
2.1 ADMISSION.
The General Partner shall have the authority to admit Persons as
additional limited partners pursuant to the Act subject to Three-Fourths
Approval of the Limited Partners.
2.2 [RESERVED]
2.3 ADMISSION AMENDMENTS.
If the General Partner deems it to be necessary or desirable, an admission
amendment to the Certificate may be filed by the Partnership confirming each
additional Limited Partner's admission to the Partnership. Additionally, upon
the admission of each additional Limited Partner to the Partnership, the General
Partner shall execute an amendment to this Agreement modifying EXHIBIT A as
appropriate to reflect the admission of such Limited Partner.
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ARTICLE III
PARTNERSHIP CAPITALIZATION
3.1 CAPITAL CONTRIBUTION OBLIGATION.
(a) Each Partner agrees to make the contributions to the capital of the
Partnership set forth in SECTION 4.1 of this Agreement. All payments, transfers
of property, rendering of services and other transfers to the Partnership in
respect of a subscribed Interest shall constitute contributions to the capital
of the Partnership (each, a "CAPITAL CONTRIBUTION").
3.2 [RESERVED].
3.3 NO INTEREST ON CONTRIBUTIONS.
No Partner shall have any right or entitlement to receive interest on any
Capital Contribution.
3.4 LOANS.
(a) Except as otherwise expressly provided herein, the Partnership may not
directly borrow or incur any indebtedness other than the Notes for any purpose,
including to acquire or carry any Partnership Asset or pledge or otherwise use
any Partnership Asset as security for any other indebtedness of the Partnership.
(b) In the event that the General Partner determines that the Partnership
requires funds to pay any expenses of the Partnership incurred in connection
with the management and operation of the Partnership for the purposes authorized
hereunder in excess of amounts available on hand and amounts expected to be
received before the due date of the payment of such expenses, the Partnership
may borrow such funds from any Person on a short-term basis, including one or
more of the Partners, subject to Two-Thirds Approval of the Limited Partner.
(c) If the Partnership borrows money, other than as a result of its
issuance of the Notes, from any Partner pursuant to SECTION 3.4(B), such loan
shall bear interest at a commercially reasonable rate. The Partnership shall pay
all principal and interest of the loan payable pursuant to the terms thereof
before making any distribution to the Partners under the provisions of this
Agreement. If any funds are available for payment of amounts due pursuant to
loans referred to in this Section 3.4(c), but such funds are not adequate to pay
all such amounts due in full, payment shall be made pro rata according to the
respective amounts due (including both principal and interest) on all such
Partner loans. Except as otherwise provided in this Agreement, any Partner who
lends money to the Partnership hereunder, except by holding or purchasing Notes,
shall be deemed a general creditor of the Partnership and not a Partner for the
purpose of repaying principal and interest of any such loan.
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ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 CAPITAL CONTRIBUTIONS.
On or before the Closing, each initial Partner shall make its Capital
Contribution to the Partnership. Pursuant to the Transfer and Servicing
Agreement (as defined in the Indenture), the General Partner will, on or before
the Closing, transfer certain property identified more fully in the Transfer and
Servicing Agreement to the Partnership in respect of the General Partner's
Interest. The initial Limited Partner will receive its Interest in consideration
of the rendering to the Partnership by the initial Limited Partner or one or
more of its affiliates certain services in connection with the structuring of
certain financing transactions on behalf of the Partnership. The Partners agree
that the respective Capital Contributions of the General Partner and the initial
Limited Partner entitle the General Partner to a 70% interest in the capital of
the Partnership and entitle the initial Limited Partner to a 30% interest in the
capital thereof. A Partner's share in the profits of the Partnership shall
correspond to its respective capital account.
4.2 NO CALLED CONTRIBUTIONS.
The General Partner shall have no authority to require further capital
contributions from any Partner for any reason whatsoever.
ARTICLE V
DISTRIBUTIONS
5.1 AVAILABLE CASH DISTRIBUTION DATES.
The Partnership shall distribute all of its Available Cash, if any, from
time-to-time (each date of a distribution being hereinafter referred to as a
"DISTRIBUTION DATE") but no less frequently than monthly, and all Available Cash
for any Fiscal Year shall be distributed not later than 30 days after the end of
the final quarter in each Fiscal Year (as defined in SECTION 10.1).
5.2 DISTRIBUTION INTENT; CERTAIN DEFINITIONS.
The Partners intend that the aggregate distributions from the Partnership
pursuant to SECTION 5.1 (the "DISTRIBUTIONS") shall be made to Partners in
proportion to their Percentage Interests in the Partnership.
5.3 NO IN-KIND DISTRIBUTIONS.
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The Partnership may not distribute property other than Available Cash
prior to the dissolution of the Partnership, and any distributions shall
otherwise be made in the same manner prescribed in SECTION 5.2.
5.4 DISTRIBUTIONS UPON DISSOLUTION.
Upon the dissolution of the Partnership, the Partnership shall distribute
its assets, including the proceeds from the liquidation of its assets pursuant
to SECTION 14.2 of this Agreement, after payment or provision for amounts
described in SECTION 14.2(A) and SECTION 14.2(B) of this Agreement, to the
Partners in proportion to their respective positive Capital Account balances.
5.5 [RESERVED].
5.6 WITHHOLDING FROM DISTRIBUTIONS.
The Partnership may withhold from distributions or with respect to
allocations and pay over to any federal, state or local government any amount
required to be withheld pursuant to the Code or any provision of any other
federal, state, or local law and may allocate any such amounts among the
Partners in any manner that is in accordance with applicable law. All amounts
withheld pursuant to the Code or any provision of any state or local tax law
with respect to any payment, distribution or allocation to the Partnership or to
the Partners shall be treated as amounts distributed to the Partners pursuant to
this ARTICLE V for all purposes of the Agreement.
ARTICLE VI
POWERS AND DUTIES OF THE GENERAL PARTNER
6.1 MANAGEMENT OF THE PARTNERSHIP.
The Partners agree that the assets, affairs and operations of the
Partnership shall be managed exclusively by FAFC, as General Partner, or by its
agents. No Limited Partner shall have any part in or shall interfere in any
manner with the management or control of the Partnership or shall have any
authority or right to act on behalf of the Partnership or to bind the
Partnership in connection with any matter, except as otherwise expressly
provided herein.
6.2 REPRESENTATION OF GENERAL PARTNER.
The General Partner represents to the Limited Partner that, as of the date
of formation of the Partnership, the fair market value of the Collateral, which
is being contributed to the Partnership, equals the adjusted basis of the
General Partner in the Collateral for federal income tax purposes.
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6.3 POWERS OF THE GENERAL PARTNER.
Except as otherwise expressly provided herein, all references herein to
any action to be taken by the Partnership shall mean action taken in the name of
the Partnership and on its behalf by the General Partner or its agents. The
General Partner shall have the power by itself and shall be authorized and
empowered on behalf and in the name of the Partnership to carry out any and all
of the objectives and purposes of the Partnership and to perform all acts and
enter into and perform all contracts and other undertakings that it may in its
sole discretion deem necessary or advisable or incidental thereto, all in
accordance with and subject to the other terms of this Agreement. Without
limiting the generality of SECTION 1.6, but subject to the limitations imposed
by this Agreement and by any non-waivable provision of applicable law, the
General Partner shall have the authority of a "general partner" pursuant to the
Act, including, without limitation, the authority to take the following actions
on behalf of the Partnership in its name or through its agents:
(a) To execute all agreements and other documents necessary to implement
the purpose of the Partnership, to take such action as may be necessary to
consummate the transactions contemplated thereby, and to make all reasonably
necessary arrangements to carry out the Partnership's obligations in connection
therewith;
(b) To make all decisions concerning the origination, investigation,
selection, negotiation, structuring, commitment to and monitoring of Partnership
Assets and to otherwise generally advise the Partnership with respect to all
investment decisions;
(c) [RESERVED];
(d) [RESERVED];
(e) To sell, exchange or otherwise dispose of any assets of the
Partnership other than the Partnership Assets;
(f) To borrow money and incur other obligations in compliance with the
provisions of this Agreement;
(g) To draw, make, accept, endorse, sign and deliver any notes, drafts or
other negotiable instruments or commercial paper;
(h) To prepay, in whole or in part, refinance, recast, increase, modify,
consolidate or extend any mortgage or security interest affecting any
Partnership Assets of the Partnership;
(i) To establish, maintain and draw upon checking, savings and other
accounts in the name of the Partnership in such bank or banks as the General
Partner may from time to time select, and to designate others to draw upon any
such accounts;
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(j) To oversee and discharge agents of the Partnership;
(k) To compromise any claim or liability due to the Partnership;
(l) To execute, acknowledge or verify, and file any notifications,
applications, statements and other filings that the General Partner considers
necessary or desirable to be filed with any state or federal securities
administrator or commission;
(m) To make any tax elections to be made by the Partnership under
Regulations section 1.703-1(b) (relating to tax elections made by partnerships);
(n) To employ one or more trade names in the operation of the Partnership;
(o) To execute, acknowledge or verify, and deliver any and all instruments
that the General Partner considers necessary or desirable to effectuate any of
the foregoing;
(p) To execute hedging contracts in respect of Notes issued by the
Partnership;
(q) [RESERVED];
(r) To do any or all of the foregoing, discretionary or otherwise, through
agents selected by the General Partner and compensated or uncompensated by the
Partnership; and
(s) To do any or all of the foregoing upon such other terms and conditions
as the General Partner, in its discretion, determines in good faith to be
necessary, desirable or appropriate, whether in the ordinary course of business
or otherwise.
6.4 DUTIES OF THE GENERAL PARTNER; LIMITATION OF LIABILITY.
The General Partner shall act in good faith and in the best interest of
the Partnership and with such care as an ordinarily prudent person in a like
position would use under similar circumstances. The General Partner shall have
no liability to the Partnership or any Partner for any loss suffered by the
Partnership or any Partner that arises out of any act or omission by the General
Partner, if the General Partner performs its duty in compliance with the
standard set forth in the immediately preceding sentence, except material loss
or damage resulting from breach of fiduciary duty, a willful breach of this
Agreement, misconduct, violation of applicable securities laws, negligence or
malfeasance.
6.5 NO OTHER ACTIVITIES OF THE GENERAL PARTNER.
The General Partner covenants that it shall not be or become in the future
engaged or associated in some other manner with other businesses and activities
of any sort whatsoever but shall devote its attention solely to the activities
of the Partnership.
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6.6 MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENTS.
(a) The Partnership and each Limited Partner acknowledges that the General
Partner has executed on behalf of the Partnership that certain Management
Agreement dated of even date herewith (the "MANAGEMENT AGREEMENT") in the form
attached hereto as EXHIBIT C, by and between the General Partner and First
Investors Financial Services, Inc. (the "MANAGER") pursuant to which the Manager
has agreed to provide certain management services on behalf of the General
Partner hereunder. The Manager has agreed to perform such management services in
an amount as may be agreed upon from time to time by and among the Managing
Agent (as defined in the Management Agreement), the General Partner and as
approved in writing by the Deal Agent.
(b) The Partnership and each Limited Partner acknowledges that the General
Partner has executed on behalf of the Partnership that certain Administrative
Services Agreement dated of even date herewith (the "ADMINISTRATIVE SERVICES
AGREEMENT") in the form attached hereto as Exhibit D by and between the
Partnership and First Union Securities, Inc. (the "ADMINISTRATOR") pursuant to
which the Partnership has agreed to pay certain ongoing fees for certain
services performed for the Partnership in connection with the Partnership
Assets. Any such servicing fees as determined thereunder earned by the
Administrator shall be paid directly to the Administrator. Any such fees that
are not paid when earned shall be paid as soon as free cash is available
therefor and, in any event, prior to the making of any distributions in respect
of Partnership Interests.
(c) The General Partner shall not receive from the Partnership any other
compensation for its service unless all Partners approve such compensation;
provided that the foregoing shall not limit the General Partner's rights with
respect to its Interest as expressly provided for in this Agreement, including,
without limitation, the General Partner's rights to receive distributions on its
Partnership interest.
6.7 RELIANCE ON AUTHORITY OF THE GENERAL PARTNER.
No Person dealing with the General Partner shall be required to determine
its authority to make any undertaking on behalf of the Partnership or to
determine any fact or circumstance bearing upon the existence of such authority.
No purchaser of any property or interest owned by the Partnership shall be
required to determine the sole and exclusive authority of the General Partner to
execute and deliver, on behalf of the Partnership, any and all documents and
instruments in connection therewith or to see to the application or distribution
of revenues or proceeds paid or credited in connection therewith, unless such
purchaser shall have received written notice affecting the same.
6.8 LIMITATIONS ON AUTHORITY OF THE GENERAL PARTNER.
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(a) Notwithstanding anything to the contrary set forth in this Agreement
(other than the provisions of SECTION 6.6) without the written consent or
ratification of the specific act by all Partners, the General Partner shall have
no authority to:
(i) do any act in contravention of the provisions of this Agreement or of
the Certificate, as amended from time to time;
(ii) do any act (other than sell, exchange or otherwise dispose of
Partnership property not constituting Partnership Assets) which would materially
alter the ordinary business of the Partnership, including, without limitation
any financing or disposition of Partnership Assets except as contemplated by the
Indenture;
(iii) knowingly perform any act that would cause any Limited Partner to be
treated as a general partner in any jurisdiction;
(iv) possess Partnership property, or assign rights in specific
Partnership property, for other than a Partnership purpose; or
(v) do any act, except as set forth in this Agreement, which it is
prohibited from doing under the Act without such consent or ratification;
(vi) except as authorized under the Indenture with respect to the Notes,
to deed as security, mortgage, pledge or grant security interests in, or
otherwise encumber, any Partnership Asset; or
(vii) incur any material indebtedness or enter into any material contract
or other obligation except as expressly authorized under the Indenture or by
Three-Fourths Approval of the Limited Partners.
(b) The General Partner shall at all times be, or have a member (the
"INDEPENDENT MEMBER") which is, a corporation having a board of directors at
least one member of which is a director (each an "INDEPENDENT DIRECTOR") who is
not and, for the immediately preceding two year period, was not (i) a director
(other than an Independent Director), officer of employee of the Partnership;
(ii) a director, officer or employee of First Investors Financial Services
Group, Inc. (the "FIFSG") or any of its affiliates; (iii) a supplier,
independent contractor or any other person who derives more than 15% of its
gross revenues from its activities with the Partnership, FIFSG and/or any
affiliate of the foregoing; (iv) a holder (directly or indirectly) of more than
5% of any beneficial interests in the assets of the Partnership or more than 5%
of the voting securities of FIFSG or any affiliate of the foregoing; (v) a
person controlling any such director, officer, employee, supplier, independent
contractor, holder or any other person meeting the criteria set forth in clauses
(i), (ii), (iii) or (iv) of this clause (b) or (vi) a member of the immediate
family of any person meeting the criteria set fourth in clauses (i), (ii),
(iii), (iv) or (v) of this clause (b).
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(c) The General Partner will not, without the unanimous vote of (i) either
the board of directors of the General Partner or the board of directors of each
of the members of the General Partner (which vote shall include, with respect to
the Independent Member, the vote of the Independent Director) and (ii) each
other Partner (A) dissolve or liquidate, in whole or in part, or institute
proceedings to have the Partnership adjudicated bankrupt or insolvent, (B)
consent to the institution of bankruptcy or insolvency proceedings against the
Partnership, (C) file a petition seeking or consent to reorganization or relief
under any applicable federal or state law relating to bankruptcy, (D) consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Partnership or a substantial part of its
property, (E) make a general assignment for the benefit of creditors of the
Partnership, (F) admit in writing the Partnership's inability to pay its debts
generally as they become due, (iii) take any partnership action in furtherance
of the actions set forth in clauses (A) through (F) of this paragraph, PROVIDED,
HOWEVER, that no director may be required by any stockholder of the General
Partner (or by any stockholder of any member of the General Partner) to consent
to the institution of bankruptcy or insolvency proceedings against the
Partnership so long as it is solvent.
6.9 INDEMNIFICATION.
The Partnership shall not indemnify, defend or hold the General Partner,
its employees, partners, harmless from, against and in respect of any
liabilities, damages, losses, costs or expenses incurred by such Person as a
result of any act or omission by such Person.
6.10 EXPENSES OF THE GENERAL PARTNER.
Except to the extent limited by the Management Agreement, the Partnership
but not any Limited Partner shall bear and be charged with all of the following
costs and expenses of the Partnership's activities occurring after, and only to
the extent such costs and/or expenses are incurred after, the Closing Date: (a)
all administrative and overhead expenses (including but not limited to salaries,
rent, travel, furniture and equipment) incurred in managing the Partnership; and
(b) other miscellaneous administrative expenses of the General Partner (to the
extent not otherwise reimbursed) (hereinafter collectively referred to as the
"GENERAL PARTNER EXPENSES"). The General Partner shall be entitled to be
reimbursed by the Partnership for the foregoing costs and expenses to the extent
(i) the same are limited above or (ii) the same have theretofore been authorized
pursuant to the annual budget of the Partnership.
6.11 REMOVAL OF THE GENERAL PARTNER.
(a) Upon the occurrence of Cause (as defined below), the Limited Partners,
by the Three-Fourths Approval may remove the General Partner. For purposes of
the preceding sentence, "Cause" means a finding by any court of competent
jurisdiction or an arbitrator selected by the parties, or an admission by the
General Partner in a settlement of a lawsuit, of material loss or damage
resulting from the breach of fiduciary duty, a willful breach of this
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Agreement, intentional misconduct, a knowing violation of applicable securities
law, gross negligence or willful malfeasance.
(b) Upon the removal of the General Partner pursuant to SECTION 6.11(A),
the Partnership shall dissolve and thereafter conduct only activities necessary
to wind up its affairs in accordance with the provisions of ARTICLE XIV, unless
contemporaneously with the removal of the General Partner, the Limited Partners,
with Two-Thirds Approval of the Limited Partners, vote in writing to continue
the Partnership and to elect a successor general partner to operate the
Partnership business and to serve as and to perform the duties of the General
Partner. If a decision to continue the Partnership is made, then:
(i) The General Partner shall automatically thereafter become a
Limited Partner, and the Partnership Interest which it formerly held as a
General Partner shall thereafter be held by it as a Limited Partner.
(ii) Any new general partner(s) shall have the same rights, duties
and obligations as the General Partner has in the Partnership and shall
receive such Partnership Interest and compensation as the partners
selecting him may determine, provided, however, such new general
partner(s) shall not succeed to the Partnership Interest of the General
Partner.
6.12 EXPENSES OF THE PARTNERSHIP.
Except for out-of-pocket costs and expenses incurred in connection with
the organization of the Partnership and the issuance of Interests, including
legal, accounting, tax, capital raising and other organizational expenses and
start-up expenses ("ORGANIZATIONAL EXPENSES"), which Organizational Expenses
shall be paid by the Partners as they may agree, the Partnership shall pay all
expenses incurred in the operation of the Partnership that have been authorized
in the manner described in SECTION 6.10 hereof, including, without limitation:
(a) all legal, auditing, tax, consulting and accounting expenses (including
expenses associated with the preparation of the Partnership's financial
statements, tax returns, and other reports to the Partners); (b) taxes,
brokerage, registration, custodial, insurance, indemnification, and other
expenses associated with the acquisition, holding and disposition of Partnership
Assets (to the extent not reimbursed); not consummated;(c) fees payable under
the Administrative Services Agreement; (d) extraordinary expenses (such as
litigation, if any); and (e) the expenses of liquidating the Partnership. Except
to the limited extent provided above, the foregoing shall constitute, once
incurred, liabilities of the Partnership.
ARTICLE VII
POWERS, RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Except as expressly set forth herein, no Limited Partner shall take part
in, or interfere in any manner with, the conduct or control of the Partnership
business and no Limited Partner shall
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have any right or authority to act or sign for, or to obligate the Partnership,
but a Limited Partner shall have all the rights of a limited partner required
pursuant to the Act. No Limited Partner shall at any time be entitled to
withdraw all or any part of its Capital Contributions except to the extent it is
entitled to distributions pursuant to the provisions of ARTICLE V. No Limited
Partner shall have any right to demand and receive any property other than cash
in return for its contributions, and, prior to the dissolution and liquidation
of the Partnership pursuant to ARTICLE XIV, its right to receive, from time to
time, distributions of cash shall be limited to the rights set forth in ARTICLE
V.
ARTICLE VIII
[RESERVED]
ARTICLE IX
MEETINGS OF PARTNERS; VOTING
9.1 MEETINGS.
The General Partner shall annually call a meeting of the Partners for the
conduct of general business, including the approval of the budget of the
Partnership. The General Partner also may call special meetings of Partners, for
any purpose or purposes, unless otherwise prescribed by statute. The General
Partner shall call a special meeting of the Partners upon the written request of
Partners holding at least thirty percent (30%) of the Interests held by all
Partners. The Partners shall hold any meeting at such time and place and on the
date specified in the notice of the meeting.
9.2 PLACE OF MEETINGS.
The Partners may hold meetings of Partners within or outside the State of
Delaware.
9.3 NOTICE OF MEETINGS.
The Partnership shall give written notice of special meetings of Partners
stating the place, date, and hour of the meeting not fewer than ten (10) nor
more than thirty (30) days before the date of the meeting, either personally or
by mail, by or at the direction of the General Partner or Person calling or
requiring the call of the meeting, to each Partner entitled to vote at such
meeting. Notice of a meeting may be waived by an instrument in writing executed
before or after the meeting. The waiver need not specify the purpose of the
meeting or the business transacted. Attendance at such meeting in person or by
proxy shall constitute a waiver of notice thereof. Notice of any special meeting
of Partners shall state the purpose or purposes for which the meeting is called.
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9.4 MEETING OF ALL PARTNERS.
If all of the Partners shall meet at any time and place, either within or
outside of the State of Delaware, and consent to the holding of a meeting at
such time and place, such meeting shall be valid without call or notice, and at
such meeting any lawful action may be taken.
9.5 QUORUM.
Except as otherwise herein provided, at all meetings of Partners, Partners
holding Interests representing eighty percent of the Percentage Interests held
by all Partners shall constitute a quorum for the transaction of business. At
any meeting held for the purposes described in section 6.10 hereof, only the
Limited Partners shall be treated as the partners for purposes of this Article
IX. In the absence of a quorum at any such meeting, Partners holding a majority
of the Interest represented at the Meeting, may adjourn the meeting from time to
time for a period not to exceed sixty (60) days without further notice. If at
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each Partner of record entitled to
vote at the meeting. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. The Partners present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal during such meeting of members whose absence would cause less than a
quorum to be present.
9.6 MANNER OF ACTING.
If a quorum is present, the affirmative vote of Partners holding Interests
representing eighty percent of the Percentage Interests of all Partners there
present, and entitled to vote shall be the act of the Partners, unless the vote
of a greater or lesser proportion or number shall be otherwise required by the
Act, or by this Agreement. Unless otherwise expressly provided in this Agreement
or required under applicable law, Partners who hold Interests entitled to vote
and who have an interest (economic or otherwise) in the outcome of any
particular matter upon which the Partners vote or consent may vote or consent
upon any such matter and their vote or consent, as the case may be, shall be
counted in the determination of whether the requisite matter was approved by the
Partners.
9.7 AMENDMENT.
In addition to specific requirements for Partner action elsewhere in this
Agreement, the Partners may amend this Agreement by the consent of the General
Partner and Two-Thirds Approval of the Limited Partners, PROVIDED that the
affirmative vote of each Limited Partner adversely affected shall be necessary
to adopt any amendment that has the effect of reducing the rights or privileges
of a Limited Partner's Interest with respect to other Limited Partner's
Interests; PROVIDED, FURTHER that the vote of all Partners is required to amend
SECTIONS 6.8 (B) and (C) hereof and any such amendment shall be made only with
the affirmative vote of the Independent Director of the Independent Member.
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9.8 PROXIES.
At all meetings of Partners, a Partner may attend and vote in person or by
proxy executed in writing by the Partner or by a duly authorized
attorney-in-fact. Such proxy shall be delivered to the General Partner before or
at the time of the meeting. No proxy shall be valid after eleven months from the
date of its execution, unless otherwise provided in the proxy.
9.9 ACTION BY PARTNERS WITHOUT A MEETING.
Action required or permitted to be taken at a meeting of Partners may be
taken without a meeting if the action is evidenced by one or more written
consents describing the action taken, signed by the Partners holding eighty
percent of the Interests held by Partners that would be entitled to constitute a
quorum with respect to such action, or such greater number as may be required to
approve such action, with such consents to be delivered to the General Partner
of the Partnership for inclusion in the minutes or for filing with the
Partnership records with a copy of such consent transmitted to all Partners
within ten (10) days after such action becomes effective. Action taken under
this SECTION 9.9 shall be effective when the requisite number of Partners
required to approve such action have signed the consent, unless the consent
specifies a different effective date. The record date for determining Partners
entitled to take action without a meeting shall be the date the first Partner
signs a written consent.
9.10 WAIVER OF NOTICE.
When any notice is required to be given to any Partner, a waiver thereof
in writing signed by the person entitled to such notice, whether before, at, or
after the time stated therein, shall be equivalent to the giving of such notice.
9.11 MEETING BY TELEPHONE; ACTION BY CONSENT.
Partners may attend and participate in meetings either in person, by
proxy, or by means of conference telephones or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting by proxy or by means of such communications
equipment shall constitute presence in person at any meeting. Attendance in
person at such meeting shall constitute a waiver of notice thereof.
ARTICLE X
ACCOUNTING, BOOKS AND RECORDS
10.1 ACCOUNTING METHODS.
The accounting for the Partnership shall initially be on the accrual basis
of accounting for tax purposes. The General Partner may make any changes of
accounting method that it shall
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deem advisable at any time and from time to time and the Partnership's "Fiscal
Year" shall commence on May 1 and end on April 30, succeeding unless the General
Partner determines that another Fiscal Year is appropriate or unless another
Fiscal Year is required by the Code, in each case provided that the General
Partner shall first have indemnified the Limited Partners against any added cost
or tax expense as a result of such change. With respect to the arrangement
described in SECTION 1.1(B) hereof, the First Fiscal Year shall be deemed to
have commenced on October 2, 1998 and ended on April 30, 1999, and successive
fiscal years shall commence on the May 1 next succeeding the close of the
preceding fiscal year.
10.2 BOOKS AND RECORDS.
The Partnership shall keep or cause to be kept, at the Partnership's
expense, full, complete and accurate books of account and other records showing
the assets, liabilities, costs, expenditures, and receipts of the Partnership,
the Capital Contributions of the Partners, Profits, Losses, items of income,
gain, loss and deduction, Available Cash, the respective Capital Accounts of the
Partners and such other matters as the General Partner shall deem appropriate.
Such books of account shall be the property of the Partnership, shall be kept
initially in accordance with the accrual basis of tax accounting consistently
applied, and shall be open to the reasonable inspection and examination of the
Partners or their duly authorized representatives. The books of account shall be
maintained at the principal office of the Partnership.
10.3 FINANCIAL REPORTS AND TAX RETURNS.
As soon as practicable after the end of each Fiscal Year, the Partnership
shall cause to be prepared a full, detailed and complete set of financial
statements of the Partnership for such Fiscal Year, prepared in accordance with
the accrual basis of accounting consistently applied. audited by a nationally
recognized accounting firm, as determined by the General Partner. In addition,
the General Partner shall prepare and deliver to the Limited Partners an annual
report of the activities of the Partnership, which shall include all expenses of
and fees received by the General Partner. The Partnership shall also cause the
preparation of the Partnership's income tax returns as soon as practicable after
the end of the Fiscal Year; provided that the General Partner will use
reasonable efforts to cause such returns to be prepared for each Fiscal Year.
The Partnership shall deliver copies of such financial statements, and Schedule
K-1 of Form 1065 (or a comparable schedule) to the Partners as soon as
practicable after they are completed after the end of each Fiscal Year. For
income tax returns that are to be filed with respect to the arrangement
described in SECTION 1.1(B) hereof, the General Partner will cause the
preparation of said returns as soon as reasonably practicable and see to their
prompt filing with respect to such returns, the General Partner shall deliver
copies of Schedule K-1 and Form 1065 (or comparable form) to the Partners not
later than September 1, 2000.
10.4 GENERAL INFORMATION.
The General Partner shall keep all of the Partners informed generally of
its transactions on behalf of the Partnership and shall furnish to the Partners,
from time to time, information
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regarding the activities and business of the Partnership and copies of
investment papers with respect to Partnership Assets. The General Partner shall
prepare and deliver quarterly reports of the activities of the Partnership and
its Partnership Assets.
10.5 ADJUSTMENT OF TAX BASIS.
In the event of a transfer of a Partnership Interest in accordance with
the terms of this Agreement or a distribution of Partnership Property in
exchange for the Interest of a Partner, when the result will be an increase in
the tax basis of the Partnership property, the Partnership may, but shall have
no obligation to, elect pursuant to Section 754 of the Code to adjust the basis
of the Partnership property.
10.6 CONTROVERSIES WITH INTERNAL REVENUE SERVICE.
(a) In the event of any controversy with the Internal Revenue Service
("IRS") or any other taxing authority involving the Partnership or any Partner
the outcome of which may adversely affect the Partnership, directly or
indirectly, or the amount of the allocation of income, gain, loss, deduction, or
credit of the Partnership to a Partner, the General Partner shall have the
authority to cause the Partnership to incur expenses it deems necessary or
advisable in the interest of the Partnership in connection with any such
controversy, including, without limitation, attorneys' and accountants' fees.
The General Partner will promptly send to each Partner a copy of all
correspondence sent to or received from the IRS by the Partnership.
(b) The General Partner is hereby designated as the Partnership's "Tax
Matters Partner" under Code section 6231(a)(7) and shall have all of the powers
and responsibilities of such position as provided in the Code provided it: (i)
shall promptly furnish the IRS with information sufficient to cause each Partner
to be treated as a "notice partner" as defined in Code section 6231(a)(8); and
(ii) shall not file any action or suit or extend any statute of limitations
relating to Partnership tax matters without first giving notice to each Partner.
Expenses incurred by the Tax Matters Partner, in its capacity as such, will be
Partnership Expenses.
ARTICLE XI
CAPITAL ACCOUNTS; ALLOCATIONS; TAX DISTRIBUTIONS
11.1 MAINTENANCE OF CAPITAL ACCOUNTS.
The Partnership shall maintain an account (a "CAPITAL ACCOUNT") for each
Partner as part of its books and records. The Partnership shall determine each
Partner's Capital Account in accordance with the following:
(a) The Partnership shall credit to each Partner's Capital Account (i) the
amount of cash and the fair market value of property contributed by the Partner
to the Partnership as a Capital Contribution and (ii) the Partner's distributive
share of the Partnership's Profits and any
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items in the nature of income or gain that the Partnership specially allocates
pursuant to this ARTICLE XI, and (iii) the amount of any Partnership liabilities
that the Partner voluntarily assumes or that any property distributed to the
Partner secures.
(b) The Partnership shall debit to each Partner's Capital Account (i) the
amount of cash (and the Gross Asset Value of property, if any, other than cash
distributed by the Partnership to the Partner pursuant to ARTICLE V), (ii) the
Partner's distributive share of the Partnership's Losses and any items in the
nature of expenses or losses that the Partnership specially allocates pursuant
to this ARTICLE XI, and (iii) the amount of the Partner's liabilities that the
Partnership assumes or that any property contributed by the Partner to the
Partnership secure.
(c) In the event that a Partner transfers all or a portion of its Interest
in accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent that the Capital Account
relates to the transferred Interest.
(d) In determining the amount of any liability for purposes of computing a
Partner's Capital Account, the Partnership shall take into account Code section
752(c) (relating to limitations on the amount of liabilities) and any other
applicable provisions of the Code and Regulations.
The Partnership intends that the foregoing provisions and the other
provisions of this Agreement relating to the maintenance of Capital Accounts
have substantial economic effect and otherwise comply with Regulations section
1.704-1(b) (relating to requirements for maintaining capital accounts), The
Partnership shall interpret and apply such provisions in a manner consistent
with such Regulations and the provisions of Exhibit B hereto.
11.2 ALLOCATION OF PROFITS AND LOSSES.
The Partnership shall allocate Profits or Losses for each Accounting
Period in the following manner:
(a) The Partnership shall allocate Profits-
(i) first, to the Partners in proportion to their respective
Percentage Interests until the aggregate Profits allocated pursuant to
this SECTION 11.2(A)(I) for the current Accounting Period and all prior
Accounting Periods are equal to the aggregate Losses allocated pursuant to
SECTION 11.2(B)(II) for all prior Accounting Periods; and
(ii) thereafter, seventy percent (70%) to the General Partner and
thirty percent (30%) to all Limited Partners in proportion to their
respective Percentage Interests.
(b) The Partnership shall allocate Losses (subject to the
eliminations of Section 704 of the Code) -
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(i) first, seventy percent (70%) to the General Partner and thirty
percent (30%) to all Limited Partners in proportion to their respective
Percentage Interests until the aggregate Losses allocated pursuant to this
SECTION 11.2(B)(I) for the current Accounting Period and all prior
Accounting Periods are equal to the aggregate Profits allocated pursuant
to SECTION 11.2(A)(II) for all prior Accounting Periods; and
(ii) thereafter, to the Partners in proportion to their
respective Percentage Interests.
11.3 TAX ITEMS; CONTRIBUTED AND REVALUED PROPERTY.
(a) Except as provided in SECTION 11.3(B), any allocation to a Partner of
a portion of the Profits, Losses or items of income, gain, loss or deduction for
an Accounting Period is deemed to be an allocation to that Partner of the same
proportionate part of each item of income, gain, loss, deduction or credit that
is earned, realized or available by or to the Partnership for federal income tax
purposes.
(b) For federal income tax purposes, any income, gain, loss or deduction
with respect to a Partnership Asset contributed by a Partner to the Partnership
that has a fair market value different from its adjusted basis for federal
income tax purposes is allocated among the Partners in accordance with Code
section 704(c) (relating to special tax allocations with respect to contributed
property) and Regulations section 1.704-3, using any method prescribed in
Regulations section 1.704-3 determined by the General Partner. With respect to
any Partnership asset that is revalued pursuant to the terms of this Agreement,
subsequent allocations of income, gain, loss and deduction with respect to the
asset shall take into account any variation between the adjusted basis of such
asset for federal income tax purposes and its fair market value at the time of
revaluation in the same manner as under Code section 704(c) and Regulations
section 1.704-3, using any method prescribed therein as determined by the
General Partner.
ARTICLE XII
DISQUALIFICATION AND WITHDRAWAL OF PARTNERS
12.1 DISQUALIFICATION.
(a) The disqualification (as defined in SECTION 12.1(C)) of a Limited
Partner shall not dissolve the Partnership. Upon the disqualification of a
Limited Partner, the successor-in-interest of such Limited Partner shall become
a transferee of the Limited Partner and be credited or charged with or paid, as
the case may be, all further allocations and distributions on account of the
Partnership Interest of such Limited Partner; provided, HOWEVER, that no such
transferee shall become a substituted Limited Partner without first obtaining
the written consent of the General Partner, which consent will not be
unreasonably withheld.
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(b) If the General Partner becomes disqualified, the Partnership shall
dissolve and thereafter conduct only activities necessary to wind up its affairs
in accordance with the provisions of ARTICLE XIV, unless, within ninety (90)
days after the disqualification, retirement or withdrawal of the General
Partner, Limited Partners owning Interests representing Two-Thirds Approval of
the Limited Partners vote in writing to continue the Partnership and to elect a
successor general partner(s) to operate the Partnership business and to serve as
and to perform the duties of the General Partner. If a decision to continue the
Partnership is made, then:
(i) The General Partner shall automatically thereafter become a
Limited Partner, and the Partnership Interest which it formerly held as a
General Partner shall thereafter be held by it as a Limited Partner.
(ii) Any new general partner(s) shall have the same rights, duties
and obligations as the General Partner has in the Partnership and shall
receive such Partnership Interest and compensation as the partners
selecting him may determine.
(c) For the purposes of this Agreement, a Partner shall be deemed to be
"disqualified" upon the occurrence of any of the following events:
(i) if the Partner is a natural person, upon his death, his
adjudication as an incompetent, his becoming bankrupt or adjudicated
insolvent, or his making an assignment for the benefit of creditors; or
(ii) if the Partner is not a natural person, upon its voluntary
dissolution or liquidation, its becoming bankrupt or adjudicated
insolvent, its making an assignment for the benefit of creditors, or its
becoming subject to involuntary reorganization or liquidation proceedings.
12.2 WITHDRAWAL OF PARTNERS.
(a) Except as expressly provided for in this Agreement, no Limited Partner
shall be permitted to withdraw from the Partnership or to withdraw any portion
of its Capital Account. A Limited Partner may request the right to withdraw from
the Partnership if a violation of any law, regulation or order to which such
Limited Partner is subject is likely to result without such withdrawal,
provided, that the right to withdraw shall be granted by the General Partner in
its sole discretion and shall require the General Partner's written consent; and
provided, further, that (i) any such Limited Partner shall remain liable to the
Partnership to the extent of any breach of a representation, warranty or
covenant made by such Limited Partner to the Partnership arising out of or
relating to such withdrawal, and (ii) any such Limited Partner shall receive
upon withdrawal the fair market value of its Interest as determined and paid out
pursuant to SECTION 12.3 below.
(b) The General Partner may cause a Limited Partner to withdraw, if, in
the reasonable good faith judgment of the General Partner, based upon written
advice of counsel acceptable to the Limited Partner, such Limited Partner's
Interest is (i) likely to cause the Fund's
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assets to be deemed "plan assets" for purposes of the regulations under ERISA;
or (ii) the Partnership or any Partner is reasonably likely to be subject to any
requirement to register under the 1940 Act; or (iii) likely to result in a
significant delay, extraordinary expense or material adverse effect on the
Partnership or any of its affiliates, any Partnership Asset.
12.3 PAYMENT TO PARTNERS UPON WITHDRAWAL.
Upon the withdrawal of a Limited Partner, the General Partner shall issue
to the Limited Partner a nonrecourse, non-interest bearing promissory note, with
principal payable not later than five years after the date of such promissory
note. The principal amount of such promissory note shall be equal to the Limited
Partner's Capital Account (determined after giving effect to any adjustments to
the Gross Asset Value of the Partnership's assets pursuant to SECTION
16.2(O)(III) as a result of the liquidation of the Limited Partner's Interest).
The issuance of such promissory note shall be the sole consideration for such
Limited Partner's Interest as a result of such withdrawal.
ARTICLE XIII
TRANSFER AND ASSIGNMENT OF PARTNERSHIP INTEREST
13.1 GENERAL PROHIBITION.
A Limited Partner may assign, convey, sell, hypothecate, transfer, pledge,
encumber, dispose or otherwise alienate all or any part of its Partnership
Interest. The General Partner may not assign, convey, sell, transfer, or
otherwise dispose all or any part of its Partnership Interest. However, the
General Partner may, subject to the provisions of the Transfer and Servicing
Agreement (as defined in the Indenture), hypothecate, pledge or otherwise
encumber all or any part of its Interest; PROVIDED, however, that any such party
to whom such hypothecation or pledge is made or for whose benefit the
encumbrance is made shall in no event be entitled to exercise any of the duties
or responsibilities or possess any of the rights of the General Partner, and
such party's interest in the General Partner's Interest shall in no event exceed
the interest of an unadmitted transferee of an Interest as set forth in the last
sentence of Section 13.2 hereof.
13.2 PERMITTED TRANSFERS.
Notwithstanding the provisions of SECTION 13.1, no transferee of the
Interest of a Partner shall become a substituted Partner until the following
conditions have been satisfied:
(a) the transferee shall have executed a written agreement, in form and
substance reasonably satisfactory to the General Partner, to assume all of the
duties and obligations of the transferor Partner under this Agreement and to be
bound by and subject to all of the terms and conditions of this Agreement;
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(b) the transferee shall have executed a power of attorney substantially
identical to that contained in ARTICLE XV, and shall execute and swear to such
other documents and instruments as the General Partner may deem necessary to
effect the admission of the transferee as a Partner; and
(c) the transferee shall have paid the reasonable expenses incurred by the
Partnership in connection with the admission of the transferee to the
Partnership.
A transferee who does not become a substituted Partner shall be entitled
to receive only that portion of the distributions or allocations to which its
transferor would otherwise be entitled, and such transferee shall not be
entitled to vote on any question regarding the Partnership.
13.3 UNAUTHORIZED TRANSFERS.
(a) Any purported transfer of an Interest not expressly permitted by this
ARTICLE XIII shall be null and void and of no effect whatsoever, provided that,
(i) if a court of competent jurisdiction issues a final judgment requiring the
Partnership to recognize such transfer, or (ii) if the Partnership in its sole
discretion elects to recognize such transfer, the transferee shall have only the
rights of an unadmitted transferee of Interest, as set forth in the last
sentence of SECTION 13.2 above.
(b) In the event of a transfer or purported transfer not permitted by this
ARTICLE XIII, the transferor (or purported transferor) and the transferee (or
purported transferee) shall indemnify and hold harmless the Partnership and the
other Partners from all cost, liability, and damage that any of the Partnership
or such Partners may incur, including, without limitation, any incremental tax
liability, or any professional fees and costs, as a result of such transfer or
purported transfer and efforts to enforce this Agreement and this indemnity.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
14.1 DISSOLUTION.
The Partnership shall be dissolved upon the happening of any of the
following events:
(a) a determination by the General Partner based on an opinion of counsel
selected by the Limited Partners that such dissolution and termination is
necessary (i) because there has been a materially adverse change in applicable
law or regulations, or (ii) in order to avoid violations of (or registrations
under) the 1940 Act, or ERISA;
(b) the sale or other disposition of all or substantially all of the
Partnership Assets;
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(c) the failure to select a new General Partner and to elect to continue
the Partnership, after the removal of the General Partner in accordance with the
provisions of SECTION 6.10;
(d) the failure to select a new General Partner and to elect to continue
the Partnership, after the disqualification of the General Partner in accordance
with the provisions of SECTION 12.1;
(e) the expiration of the term of the Partnership as set forth in
SECTION 1.5; or
(f) the election to terminate the Partnership by the General Partner and
Three-Fourths Approval of Limited Partners.
14.2 LIQUIDATION.
Upon dissolution of the Partnership for any reason, the Partnership
immediately shall commence to wind-up its affairs. During such liquidation, the
allocation of Profits, Losses and other items and distributions of Available
Cash shall continue in the same proportions as before the dissolution. Except as
otherwise provided in this SECTION 14.2, the General Partner shall cause the
liquidation and winding up of the Partnership in accordance with this SECTION
14.2. Notwithstanding the foregoing sentence, if the General Partner is
disqualified (pursuant to SECTION 12.1), the Limited Partner shall select a
liquidating trustee to cause the liquidation and winding up of the Partnership;
or, if the General Partner has not been disqualified and the General Partner so
elects, the General Partner shall designate a liquidating trustee, who, after
its approval by the Limited Partner, shall cause the liquidation and winding up
of the Partnership in accordance with this Agreement. A reasonable period of
time shall be allowed for the orderly termination of the Partnership business,
discharge of its liabilities and distribution or liquidation of the remaining
assets so as to enable the Partnership to minimize the normal losses attendant
upon the liquidation process. A full accounting of the assets and liabilities of
the Partnership shall be taken, and the statements thereof shall be furnished to
each Partner within forty-five (45) days after the dissolution. Such accounting
and statement shall be prepared by the General Partner or by the liquidating
trustee selected in accordance with this SECTION 14.2. The Partnership property
and assets or the proceeds from the liquidation thereof shall be applied in the
following order of priority:
(a) Payment of the debts and liabilities of the Partnership, in the
order of priority provided by law and payment of the expenses of liquidation;
(b) Setting up of such reserves as the General Partner or liquidating
trustee may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership or any obligation or liability not
then due and payable; provided, HOWEVER, that any such reserve shall be paid
over by the General Partner or liquidating trustee to an escrow agent, to be
held by such escrow agent for the purpose of disbursing such reserves in payment
of such liabilities, and, at the expiration of such escrow period as the General
Partner or liquidating trustee shall deem advisable, to distribute the balance
thereafter remaining in the manner hereinafter provided;
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(c) Distribution PRO RATA to each Partner of the balance (if positive) in
such Partner's Capital Account, adjusted to the date of payment; and
(d) Distribution of the balance, if any, pro rata to the Partners in
accordance with SECTION 5.2.
14.3 NO FURTHER CLAIM.
In the event that the assets of the Partnership available for distribution
are not sufficient to satisfy in full the rights of the Partners as hereinabove
set forth in this ARTICLE XIV, the Partners shall not have any further right or
claim against the General Partner or any other Person(s) with respect to such
rights.
ARTICLE XV
POWER OF ATTORNEY
Each Partner hereby irrevocably constitutes and appoints the General
Partner as its true and lawful agent and attorney-in-fact, with full power of
substitution, in its name, place and stead, to make, execute and acknowledge,
swear to, record and publish and file:
(a) A Certificate of Limited Partnership under the laws of the State
of Delaware;
(b) Any other instruments with respect to the Partnership which may be
required to be filed under the laws of any state or of the United States, or
which the General Partner shall deem advisable to file to carry out the purposes
of the Partnership; and
(c) All documents which may be required to effectuate the dissolution
and termination of the Partnership.
The foregoing power of attorney is coupled with an interest, shall be
irrevocable and shall survive the death, incompetency, dissolution, merger,
consolidation, bankruptcy or insolvency of each of the Partners. The Partners
shall execute and deliver to the General Partner, within five (5) days after
receipt of the General Partner's request therefor, such further designations,
powers of attorney and other instruments as the General Partner deems necessary
to carry out the purposes of this Agreement.
ARTICLE XVI
DEFINITIONS
16.1 DEFINITIONS IN GENERAL.
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This ARTICLE XVI sets forth the definitions of certain terms used in this
Agreement. Terms defined elsewhere in this Agreement shall have for all purposes
of this Agreement the meanings set forth elsewhere in this Agreement.
16.2 CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings set forth in this SECTION 16.2.
(a) "Accounting Period" means any period (i) beginning with the later of
(A) the date of this Agreement or (B) the close of an Accounting Period and (ii)
ending with the earlier of (A) the close of a Fiscal Year of the Partnership,
(B) a variation of the Partners' Interests, or (C) any other period for which
the General Partner determines that a closing of the books of the Partnership is
appropriate. With respect to the arrangement described in SECTION 1.1(B) hereof,
said term also means any period beginning on October 2, 1998 and ending at the
earliest to occur of the events listed in clause (ii) above and each successive
period, with the last thereof ending on April 30, 2000.
(b) "Act" shall mean the Delaware Revised Uniform Limited Partnership Act,
6 Del. C.ss.17-101 et seq., as it may be hereafter amended.
(c) "Assets" shall have the meaning ascribed to it in SECTION 1.6(A)
hereof.
(d) "Available Cash" means, at any time, cash and cash equivalents in
excess of an amount that the General Partner determines to be a reasonable
reserve for the payment of any other costs and expenses incident to the purposes
of the Partnership which are anticipated to be incurred, or to become due and
payable, or both, in the future and for which cash sufficient to pay the costs
and expenses at the time they become due and payable may not be generated by the
Partnership.
(e) "Closing" shall mean August 8, 2000.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Disposition Proceeds" mean all cash receipts of the Partnership
arising from a refinancing, sale or other disposition or collection of all or
any part of a Partnership Asset, after payment of or allowance for the following
items in the priority provided by law or any applicable agreement or undertaking
of the Partnership:
(i) payment to the extent applicable of all amounts required to be
disbursed in connection with such refinancing, sale or other disposition,
including without limitation related sales or other commissions;
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(ii) payment of all debts and obligations of the Partnership then
due related to the particular refinancing, sale or other disposition, or
required by any agreement to which the Partnership is a party;
(iii) establishment of reasonable cash reserves considered
appropriate by the Partnership to provide for the payment of liabilities,
costs, and expenses, contingent or otherwise, with respect to the
disposition of such Asset, including, without limitation, legal,
accounting or other expenses attributable to such disposition; and
(iv) payment of all other debts and obligations of the
Partnership then due.
(h) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(i) "ERISA Investor" shall mean an entity the investment, management or
disposition of the assets of which is subject to the fiduciary responsibility
provisions of Part 4 of Title I of ERISA or the prohibited transaction excise
tax of Code section 4975.
(j) "Gross Asset Value" with respect to any Partnership asset means the
value placed on the asset in connection with the maintenance of Capital Accounts
and shall be that asset's adjusted basis for federal income tax purposes except
as follows:
(i) The initial Gross Asset Value of assets contributed to the
capital of the Partnership by a Partner shall be the gross fair market
value of the contributed assets on the date of contribution.
(ii) The Partnership shall increase or decrease the Gross Asset
Value of Partnership assets to reflect any adjustments to the adjusted
basis of the assets pursuant to Code section 734(b) or 743(b), but only to
the extent that Partnership must take the adjustments into account in
determining Capital Accounts pursuant to Regulations section
1.704-1(b)(2)(iv)(m); provided, however, that the Partnership shall not
adjust the Gross Asset Values of Partnership assets pursuant to this
paragraph to the extent that the Partnership determines that an adjustment
pursuant to paragraph (iii) below is appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
paragraph;
(iii) The Partnership shall adjust the Gross Asset Value of all
Partnership assets to equal their respective gross fair market values upon
the occurrence of any of the following events: (A) distribution by the
Partnership to a Partner of more than a DE MINIMIS amount of Partnership
assets as consideration for all or a portion of a Partner's Interest; and,
(B) the liquidation of the Partnership within the meaning of Regulations
section 1.704-1(b)(2)(ii)(g);
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(iv) The Gross Asset Value of any Partnership asset shall be
adjusted by any Depreciation taken into account with respect to such
Partnership asset for purposes of computing Profits and Losses; and,
(v) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be adjusted to the gross fair market value of the asset
on the date of distribution.
For all purposes of this Agreement, the General Partner in its sole
discretion shall determine the fair market value of Partnership assets or
the method of determining such fair market value.
(k) "Independent Director" has the meaning given to such term in Section
6.8(b).
(l) "Independent Member" has the meaning given to such term in Section
6.8(b).
(m) "Partner" shall mean either or both the General Partner or the Limited
Partner, as the context may require.
(n) "Partnership Interest" or "Interest" shall mean a Partner's ownership
interest in the Partnership, including any and all benefits to which such
Partner is entitled pursuant to this Agreement, together with all obligations of
such Partner to comply with the terms and conditions of this Agreement.
(o) "Percentage Interest" shall mean, with respect to any General Partner,
the percentage portion of the aggregate of the Partnership Interests of all
General Partners owned by such General Partner and with respect to any Limited
Partner, the percentage portion of the aggregate of the Partnership Interests of
all Limited Partners owned by such Limited Partner.
(p) "Person" means an individual, partnership, joint venture, association,
corporation, trust or any other legal entity.
(q) "Profits" or "Losses" means the Partnership's taxable income or loss
determined in accordance with Code section 703(a) for each of its Accounting
Periods, with the following adjustments:
(i) The Partnership shall (A) add to its taxable income or loss any
of its income that is exempt from federal income tax and not otherwise
taken into account in computing Profits or Losses, and (B) subtract from
its taxable income or loss any expenditures under Code section
705(a)(2)(B) (or treated as such an expenditure pursuant to Regulations
section 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
determining Profits or Losses.
(ii) In the event that the Partnership adjusts the Gross Asset Value
of any Partnership asset pursuant to paragraph (ii), (iii) or (iv) of the
definition of Gross Asset
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Value, the Partnership shall take into account the amount of such
adjustment as gain or loss from the disposition of such asset for purposes
of computing Profits or Losses.
(iii) The Partnership shall compute gain or loss resulting from any
disposition of any Partnership asset, with respect to which the
Partnership recognizes gain or loss for federal income tax purposes, by
reference to the Gross Asset Value of the Partnership asset disposed of,
notwithstanding that the adjusted tax basis of such Partnership asset
differs from its Gross Asset Value.
(iv) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or
loss, the Partnership shall take into account Depreciation for such
Accounting Period.
(v) For purposes of computing Profits or Losses, to the extent that,
as a result of a distribution to a Partner other than in liquidation of
all of the Partner's Interest, Regulations section 1.704-1(b)(2)(iv)(m)(4)
requires an adjustment to the adjusted tax basis of any Partnership asset
pursuant Code section 734(b) or Code section 743(b) to be taken into
account in determining a Partner's Capital Account, the Partnership shall
treat the amount of the adjustment as an item of gain (to the extent the
adjustment increases the tax basis of the asset) or loss (to the extent
the adjustment decreases the tax basis of the asset) from the disposition
of the asset.
(vi) Notwithstanding any other provision of this definition, in
computing Profits or Losses, the Partnership shall not take into account
any item of income, gain, expense or loss that it specially allocates
pursuant to ARTICLE XI. The Partnership shall use rules analogous to those
set forth in this definition to determine the amount of items of income,
gain, deduction or loss available for allocation pursuant to ARTICLE XI.
(r) "Regulations" means Income Tax Regulations promulgated by the U.S.
Department of Treasury under the Code, as such Regulations may be amended from
time to time (including corresponding provisions of succeeding Regulations).
(s) "Securities" means all types of equity and equity-related securities,
including, without limitation, all classes of capital stock, partnership
interests, joint venture interests, beneficial interests and all other forms of
ownership and equity related interests and rights to share in income, profits
and proceeds ("STOCK"); options, warrants, agreements to acquire, puts, calls,
rights to purchase or acquire and all other instruments convertible into or
exercisable or exchangeable for Stock ("OPTIONS"); and bonds, notes, debentures,
and all other instruments representing debt obligations; PROVIDED that such debt
obligations are convertible into or exercisable or exchangeable for or are
otherwise issued in conjunction with the issuance or transfer of Stock or
Options.
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(t) "Three-Fourths Approval" of the Limited Partners shall mean the
affirmative consent or approval of Partners owning Interests representing
seventy-five percent (75%) of the Percentage Interests of all Limited Partners.
(u) "Two-Thirds Approval" of the Limited Partners shall mean the
affirmative consent or approval of Partners owning Interests representing
sixty-six and two-thirds percent (66-2/3%) of the Percentage Interests of all
Limited Partners.
(v) Other capitalized terms that are not defined herein shall have the
meaning ascribed hereto in the Indenture.
ARTICLE XVII
MISCELLANEOUS
17.1 ADDITIONAL DOCUMENTS.
At any time and from time to time after the date of this Agreement, upon
the request of the General Partner, the Partners shall do and perform, or cause
to be done and performed, all such additional acts and deeds, and shall execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
all such additional instruments and documents, as may be required to best
effectuate the purposes and intent of this Agreement provided, however, no
Partner shall, unless such Partner agrees in writing, have any obligation to
provide any funds or property to or on behalf of the Partnership or the General
Partner.
17.2 APPLICABLE LAW.
This Agreement shall be governed by, construed under, and enforced and
interpreted in accordance with, the laws of the State of Delaware.
17.3 NOTICES.
All notices required under this Agreement shall be in writing. Any such
notice shall be deemed to have been duly given when actually delivered, or when
delivered to a nationally recognized commercial courier for next day delivery,
or when deposited in the United States Mail, Certified Mail, Return Receipt
Requested, with all postage prepaid, to the address for each party set forth
below its execution of this Agreement, or when transmitted by facsimile to the
telecopy number for each party set forth below its execution of this Agreement.
Rejection or other refusal to accept, or inability to deliver because of changed
address of which no notice was given, shall be deemed to be receipt of such
notice, request, demand, tender, or other communication. Any party, by written
notice to the others in the manner herein provided, may designate an address
different from that stated above.
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17.4 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties and
supersedes any prior understanding or agreement between them respecting the
subject matter hereof. There are no representations, arrangements,
understandings or agreements, oral or written, between the parties hereto
relating to the subject matter of this Agreement, except those fully expressed
herein. No change or modification of this Agreement or waiver of any provision
hereof shall be valid or binding on the parties hereto, unless such change,
modification or waiver shall be in writing and signed by or on behalf of the
parties hereto, and no waiver on one occasion shall be deemed to be a waiver of
the same or any other provision hereof in the future.
17.5 EXTENSION NOT A WAIVER.
No delay or omission in the exercise of any power, remedy or right herein
provided or otherwise available to a Partner or the Partnership shall impair or
affect the right of such Partner or the Partnership thereafter to exercise the
same. Any extension of time or other indulgence granted to a Partner hereunder
shall not otherwise alter or affect any power, remedy or right of any other
Partner or of the Partnership, or the obligations of the Partner to whom such
extension or indulgence is granted.
17.6 CREDITORS NOT BENEFITED.
Nothing contained in this Agreement is intended or shall be deemed to
benefit any creditor of the Partnership or of any Partner, and no creditor of
the Partnership shall be entitled to require the Partnership or the Partners to
solicit or accept any Capital Contribution for the Partnership or to enforce any
right which the Partnership or any Partner may have against any Partner under
this Agreement or otherwise.
17.7 SEVERABILITY.
If any portion of this Agreement is held illegal or unenforceable, the
Partners hereby covenant and agree that such portion or portions are absolutely
and completely severable from all other provisions of this Agreement and such
other provisions shall constitute the agreement of the Partners with respect to
the subject matter hereof.
17.8 SUCCESSORS.
Subject to the provision hereof imposing limitations and conditions upon
the transfer, sale or other disposition of the Interests of the Partners in the
Partnership, all the provisions hereof shall inure to the benefit of and be
binding upon the heirs, successors, legal representatives and assigns of the
parties hereto.
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17.9 COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall for
all purposes be deemed an original, and all of such counterparts shall together
constitute one and the same agreement.
17.10 SECTION HEADINGS.
Section and other headings contained in this Agreement are for reference
purposes only and are in no way intended to define, interpret, describe or
limited the scope, extent or intent of this Agreement or any provision hereof.
References to "Article," "Section" or "Subsection," without further indication,
shall be references to the designated provision of this Agreement.
17.11 TIME.
Time is of the essence with respect to this Agreement.
17.12 PRONOUNS.
All pronouns and other words of designation used in this Agreement in
reference to any Partner shall include the neuter, masculine and feminine
genders and the singular and the plural, as the context requires.
17.13 ACCEPTANCE OF PRIOR ACTS BY NEW PARTNER.
Each Person becoming a Partner, by becoming a Partner, ratifies, affirms
and confirms and agrees to be bound by all actions duly taken by the
Partnership, pursuant to the terms of this Agreement, prior to the date such
Person becomes a Partner.
17.14 PARTNERSHIP PROPERTY.
The legal title to the real or personal property or interest therein now
or hereafter acquired by the Partnership shall be owned, held or operated in the
name of the Partnership, and no Partner, individually, shall have any ownership
of such property.
17.15 WAIVER OF ACTION FOR PARTITION.
Each of the Partners irrevocably waives any right that it may have to
maintain any action for partition with respect to any of the Partnership
property.
IN WITNESS WHEREOF, the Partners have executed, sealed, sworn to and
delivered this Agreement, the day and year first written above.
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GENERAL PARTNER:
FIFS ACQUISITION FUNDING COMPANY, L.L.C.,
a Delaware Limited Liability Company
By: FIALAC Holdings, Inc., a member
By: _____________________________________
Name: __________________________________
Title: __________________________________
(CORPORATE SEAL)
INITIAL ADDRESS FOR NOTICES:
c/o FIFS Acquisition Funding Company, LLC
675 Bering Drive, Suite 710
Houston, TX 77057
Fax: 713-977-0657
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SIGNATURE PAGE FOR ADDITIONAL LIMITED PARTNER
IN WITNESS WHEREOF, the Partners have executed, sealed, sworn to and
delivered this Agreement, the day and year first written above.
LIMITED PARTNER;
FIRST UNION INVESTORS, INC., a
corporation organized under the laws of
North Carolina
By: _____________________________________
Name:____________________________________
Title: __________________________________
INITIAL ADDRESS FOR NOTICES
FIRST UNION INVESTORS, INC.
One First Union Center, TW-9
Charlotte, North Carolina 28288
Attention: John Foxgrover, Director
Fax: 704-383-1085
WITH A COPY TO:
Kilpatrick Stockton LLP
One First Union Center, 35th Floor
Charlotte, North Carolina 28202
Attention: Robert J. Hahn, Esq.
Fax: 704-338-5125
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EXHIBIT A
List of Partners
GENERAL PARTNER(S)
FIFS Acquisition Funding Company, LLC
LIMITED PARTNER(S)
First Union Investors, Inc.
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EXHIBIT B
REGULATORY ALLOCATIONS
1. Regulations Section 1.704-2 (relating to the maintenance of capital
accounts for purposes respecting tax allocations) applies special rules to
certain deductions of Losses (and other items) that would cause or increase a
deficit in a Partner's Capital Account. Accordingly, to comply with those
Regulations, prior to making any allocations pursuant to SECTION 11.2, the
Partnership shall make the following allocations:
(a) Minimum Gain Chargeback. If a net decrease in Partnership Minimum Gain
occurs during a Accounting Period, determined pursuant to Regulations section
1.704-2(d), the Partnership shall allocate items of income and gain (as defined
in Regulations section 1.704-2(f)(6) and 1.704-2(j)(2)) to the Partners for the
Accounting Period (and, if necessary, subsequent Accounting Periods) in the
amounts and in the manner determined in accordance with Regulations section
1.704-2(f). The Partners intend that this Paragraph (a) comply with the minimum
gain chargeback requirement in Regulations section 1.704-2(f) and that it shall
be interpreted consistently therewith.
(b) Partner Nonrecourse Debt Minimum Gain Chargeback. If a net decrease in
Minimum Gain attributable to a Partner Nonrecourse Debt, determined pursuant to
Regulations section 1.704-2(i)(3), occurs during a Accounting Period, the
Partnership shall allocate items of Partnership income and gain (as defined in
Regulations section 1.704-2(j)(2)) to the Partners for the Accounting Period
(and, if necessary, subsequent Accounting Periods) in an amount and in the
manner determined in accordance with Regulations section 1.704-2(i). The
Partners intend that this Paragraph (b) comply with the minimum gain chargeback
requirement in Regulations section 1.704-2(i) and that it shall be interpreted
consistently therewith.
(c) Nonrecourse Deductions. The Partnership shall allocate all
Nonrecourse Deductions to the Partners pro rata in proportion to their
respective Percentage Interests.
(d) Partner Nonrecourse Deductions. The Partnership shall allocate any
Partner Nonrecourse Deductions to the Partner who bears the risk of loss with
respect to the loan to which the deductions are attributable, pursuant to the
provisions of Regulations section 1.704-2(i).
(e) Qualified Income Offset. In the event that any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that cause a deficit balance in
such Partner's Capital Account, the Partnership shall allocate items of
Partnership income and gain to that Partner in an amount and manner sufficient
to eliminate the deficit balance as quickly as possible, provided that the
Partnership shall make
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an allocation pursuant to this Paragraph (e) only if and to the extent that a
Partner would have a deficit Capital Account balance after the Partnership makes
all other allocations provided for in ARTICLE XI as if this Paragraph (e) were
not in the Agreement. For purposes of any allocation pursuant to the preceding
sentence, in determining any deficit balance in a Partner's Capital Account, the
Partnership shall (a) reduce the Partner's Capital Account by expected
adjustments, allocations or distributions described in Regulations sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6), and (b) increase the Partner's Capital
Account by (i) the Partner's share of Minimum Gain, and (ii) any amount that the
Partner must restore to the deficit balance of his Capital Account or that
Regulations section 1.704-1(b)(2)(ii)(c) deems the Partner to restore to the
deficit balance of his Capital Account.
(f) Gross Income Allocation. In the event that any Partner has a deficit
balance in its Capital Account as of the end of any Accounting Period in excess
of the sum of (a) the amount such Partner is obligated to restore to the capital
of the Partnership pursuant to any provision of this Agreement, or that such
Partner is deemed to be obligated to restore pursuant to Regulations section
1.704-1(b)(2)(ii)(c)(1) and (2), and (b) such Partner's share of Minimum Gain,
then the Partnership shall allocate to each such Partner items of income and
gain for such Accounting Period and subsequent Accounting Periods, if necessary,
in an amount and manner sufficient to eliminate as quickly as possible such
Capital Account deficit. The Partnership shall make an allocation pursuant to
this Paragraph (f) if and only to the extent that such Partner would have such
an excess deficit balance in its Capital Account after the Partnership
tentatively has made all other allocations pursuant to ARTICLE XI as if
Paragraph (e) and this Paragraph (f) were not in this Agreement.
(g) Section 754 Adjustments. To the extent that the Partnership makes an
election pursuant to Code section 754, the amount of any adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code section 734(b) or
743(b) that is required, pursuant to Regulations section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases the basis of the asset), and the gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Regulations section.
(h) Curative Allocations. The Partnership intends that the foregoing
allocations comply with certain requirements of the Regulations. The Partnership
also intends that, to the extent possible, the Partnership offset all foregoing
allocations either with other foregoing allocations or with special allocations
pursuant to this Paragraph (h). Therefore, notwithstanding any other provisions
of ARTICLE XI (other than the foregoing allocations), the Partnership shall make
such offsetting special allocations in whatever manner it determines appropriate
so that, after it makes the offsetting allocations, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account balance
the Partner would have had if the foregoing
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allocations were not part of the Agreement and the Partnership allocated all
items pursuant to the remaining paragraphs of ARTICLE XI. In exercising its
discretion pursuant to this Paragraph (h), the Partnership shall take into
account future allocations under Paragraph (a) or (b) that, although not yet
made, are likely to offset other allocations previously made under Paragraph (c)
or (d).
2. For purposes of this Exhibit B, the following terms not otherwise
defined in the Agreement shall have the definitions set forth below:
(a) "Minimum Gain" shall mean the sum of Partnership Minimum Gain and
Partner Nonrecourse Debt Minimum Gain. A Partner's share of Minimum Gain shall
be the sum of its share of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain.
(b) "Nonrecourse Debt" shall mean Partnership Nonrecourse Debt and Partner
Nonrecourse Debt.
(c) "Nonrecourse Deductions" shall have the meaning specified in, and
shall be determined in accordance with, Regulations section 1.704-2(b)(1).
(d) "Partner Nonrecourse Debt" shall have the meaning specified in
Regulations section 1.704-2(b)(4).
(e) "Partner Nonrecourse Debt Minimum Gain" shall have the meaning
specified in, and shall be determined in accordance with, Regulations section
1.704-2(i)(3).
(f) "Partner Nonrecourse Deductions" shall have the meaning specified in,
and shall be determined in accordance with, Regulations section 1.704-2(i)(2).
(g) "Partnership Minimum Gain" shall have the meaning specified in and
shall be determined in accordance with Regulations sections 1.704-2(b)(2) and
1.704-2(d).
(h) "Partnership Nonrecourse Debt" shall mean any Partnership liability
described in Regulations section 1.704-2(b)(3) that is not a Partner Nonrecourse
Debt.
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EXHIBIT C
MANAGEMENT AGREEMENT
[SEE TAB A 10]
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EXHIBIT D
ADMINISTRATIVE SERVICES AGREEMENT
[SEE TAB A 9]
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