Exhibit 3.28c
AGREEMENT OF LIMITED PARTNERSHIP
OF
REDI-MIX, L.P.
.
.
.
AGREEMENT OF LIMITED PARTNERSHIP
OF
REDI-MIX, L.P.
TABLE OF CONTENTS
Page
----
ARTICLE 1................................................................ 1
1.1 Definitions..................................................... 1
1.2 References...................................................... 7
ARTICLE 2................................................................ 7
2.1 Formation of the Limited Partnership............................ 7
2.2 Partnership Name................................................ 7
2.3 Purpose......................................................... 7
2.4 Principal and Registered Office................................. 7
2.5 Term of the Partnership......................................... 7
ARTICLE 3................................................................ 7
3.1 Initial Capital Contribution of General Partner................. 8
3.2 Initial Capital Contribution of Limited Partners................ 8
3.3 Authorization of Partner Loans.................................. 8
3.4 Additional Capital Contributions................................ 8
ARTICLE 4................................................................ 8
4.1 Distribution of Net Cash Flow................................... 8
4.2 Distribution of Net Proceeds of a Capital Transaction........... 8
4.3 Return of and Interest on Capital Contributions................. 8
4.4 Payments........................................................ 8
4.5 In-Kind Distributions........................................... 9
4.6 Allocations of Net Profit and Net Loss.......................... 9
i
4.7 Partnership Minimum Gain Chargeback............................. 10
4.8 Minimum Gain Chargeback for Partner Nonrecourse Debt............ 10
4.9 Qualified Income Offset......................................... 10
4.10 Limit on Loss Allocations....................................... 11
4.11 Net Loss from Partner Nonrecourse Debt.......................... 11
4.12 Nonrecourse Deductions.......................................... 11
4.13 Code Section 754 Adjustments.................................... 11
4.14 Reversal of Mandatory Allocations............................... 11
4.15 Compliance with Code............................................ 11
4.16 Tax Allocations -- Code Section 704(c).......................... 11
4.17 Allocation on Transfer.......................................... 12
4.18 Minimum Interest of General Partner............................. 12
ARTICLE 5................................................................ 12
5.1 Capital Accounts................................................ 12
5.2 Adjustment for In-Kind Distributions............................ 12
5.3 Property Revaluation............................................ 13
5.4 Interpretation.................................................. 13
5.5 Obligation to Repay or Restore.................................. 13
5.6 Tax Elections................................................... 14
ARTICLE 6................................................................ 14
6.1 Operating Expenses and Reimbursements........................... 14
ARTICLE 7................................................................ 14
7.1 Admission of Additional Partners................................ 14
7.2 Assignment or Transfer of Partnership Interests................. 14
ARTICLE 8................................................................ 14
ii
8.1 Powers of General Partner....................................... 14
8.2 Authority as to Third Persons................................... 17
8.3 Compensation and Expenses of the General Partner................ 17
8.4 Covenants of the General Partner................................ 17
8.5 Limitations on Authority........................................ 18
8.6 No Withdrawal From Partnership.................................. 18
8.7 Officers........................................................ 18
ARTICLE 9................................................................ 18
9.1 Dissolution..................................................... 18
9.2 Continuation.................................................... 18
9.3 Events Affecting a Limited Partner.............................. 19
9.4 Liquidation Procedures.......................................... 19
9.5 Termination..................................................... 20
9.6 No Petition for Dissolution..................................... 20
9.7 Compliance with Timing Requirements of Treasury Regulations..... 20
ARTICLE 10............................................................... 20
10.1 Financial and Tax Accounting and Reports........................ 20
10.2 Valuation....................................................... 20
10.3 Supervision; Inspection of Books................................ 20
10.4 Consent in Lieu of Meeting...................................... 21
10.5 Withholding..................................................... 21
ARTICLE 11............................................................... 21
11.1 Execution and Filing of Documents............................... 21
11.2 Other Instruments and Acts...................................... 21
11.3 Binding Agreement............................................... 21
iii
11.4 Governing Law................................................... 21
11.5 Notices......................................................... 21
11.6 Power of Attorney............................................... 22
11.7 Amendment....................................................... 22
11.8 Entire Agreement................................................ 23
11.9 Titles; Subtitles............................................... 23
11.10 Exculpation..................................................... 23
11.11 Indemnification of the General Partner.......................... 23
11.12 Limitation of Liability of the Limited Partners................. 23
11.13 Ambiguities..................................................... 23
11.14 No Right to Partition........................................... 24
iv
AGREEMENT OF LIMITED PARTNERSHIP
OF
REDI-MIX, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP, made and entered into as of this
_____ day of April, 1999, by and between Redi-Mix Management, Inc., a Texas
corporation (the "General Partner") and Atlas Investments Inc., a Nevada
corporation (the "Limited Partner").
NOW, THEREFORE, the General Partner and the Limited Partner hereby agree to
the terms and conditions of this Agreement of Limited Partnership as follows:
ARTICLE 1.
DEFINITIONS; REFERENCES
1.1 Definitions. Unless the context requires otherwise, the following terms
shall have the meanings specified in this Section 1.1:
1.1.1 Act: The Texas Revised Limited Partnership Act.
1.1.2 Additional Capital Contributions: The additional capital
contributions described in Section 3.4.
1.1.3 Adjusted Capital Account Deficit: With respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the
end of the relevant taxable year, after giving effect to the following
adjustments:
(a) Credit to such Capital Account any amounts which such Partner (1)
is obligated to restore to the Partnership upon liquidation of
its interest in the Partnership (or which is so treated pursuant
to Regulations Section 1.704-1(b)(2)(ii)(c)) pursuant to the
terms of this Agreement or under state law or (2) is deemed to be
obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (3) the
Partner's share (as determined under Code Section 752) of any
recourse indebtedness of the Partnership to the extent that such
indebtedness could not be repaid out of the Partnership's assets
if all of the Partnership's assets were sold at their respective
Book Values as of the end of the Fiscal Year or other period and
the proceeds from the sales were used to pay the Partnership's
liabilities; and
(b) Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Regulations and shall be interpreted consistently therewith.
For purposes of clause (a)(3) above, the amounts computed pursuant to
clause (a)(1) above for each Partner shall be
1
considered to be proceeds from the sale of the assets of the
Partnership to the extent such amounts would be available to satisfy
(directly or indirectly) the indebtedness specified in clause (a)(3).
1.1.4 Affiliate: With respect to any Person, a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with the Person in question.
As used herein, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting securities or interests, by contract, or otherwise.
1.1.5 Agreement: This Agreement of Limited Partnership of Redi-Mix, L.P.
and any amendments hereto.
1.1.6 Bankruptcy: A Person shall be deemed bankrupt if:
(a) any proceeding is commenced against such Person as "debtor" for
any relief under bankruptcy or insolvency laws, or laws relating
to the relief of debtors, reorganizations, arrangements,
compositions, or extensions and such proceeding is not dismissed
within sixty (60) days after such proceeding has commenced, or
(b) such Person commences any proceeding for relief under bankruptcy
or insolvency laws or laws relating to the relief of debtors,
reorganizations, arrangements, compositions, or extensions.
1.1.7 Book Value: With respect to any asset, the asset's adjusted basis for
federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed (or deemed
contributed under Regulations Section 1.708-1(b)(1)(iv)) by a
Partner to the Partnership shall be the asset's gross fair market
value at the time of the contribution;
(b) the Book Value of all Partnership assets shall be adjusted to
equal their respective gross fair market values, as determined by
the General Partner in its reasonable judgment:
(i) if the General Partner reasonably determines an adjustment
is necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership as of (1) the
acquisition of an additional interest in the Partnership by
any new or existing Partner in exchange for more than a de
minimis capital contribution, or (2) the distribution by the
Partnership to a Partner of more than a de minimis amount of
Partnership property as consideration for an interest in the
Partnership; and
2
(ii) as of the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g);
(c) the Book Value of any Partnership asset distributed to any
Partner will be the gross fair market value of the asset on the
date of distribution; and
(d) the Book Values of Partnership assets will be increased or
decreased to reflect any adjustment to the adjusted basis of the
assets under Code Sections 734(b) or 743(b), but only to the
extent that the adjustment is taken into account in determining
Capital Accounts under Regulations Section 1.704-1(b)(2)(iv)(m),
provided that Book Values will not be adjusted hereunder to the
extent that the General Partner determines that an adjustment
under clause (b) is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment under
this clause (d).
After the Book Value of any asset has been adjusted under clause (a),
clause (b) or clause (d) above, Book Value will be adjusted by the
Depreciation taken into account with respect to the asset for purposes
of computing Net Profit and Net Loss.
1.1.8 Capital Account: The capital account of a Partner established and
maintained in accordance with Section 5.1.
1.1.9 Capital Contributions: With respect to any Partner, the amount of
money actually contributed (or deemed contributed pursuant to
Regulations Section 1.704-1(b)(2)(iv)(c)) to the Partnership and the
initial Book Value of any property (other than money) contributed to
the Partnership with respect to the interest in the Partnership held
by that Partner (net of any liabilities secured by such property that
the Partnership is considered to assume or to take subject to Code
Section 752). Any reference in this Agreement to the Capital
Contribution of a Partner will include a Capital Contribution made by
any prior Partner with respect to the Partnership interest of the
Partner.
1.1.10 Capital Transaction: The sale, exchange or other disposition of all
or any portion of the property of the Partnership other than in the
ordinary course of business of the Partnership. Capital Transactions
include the financing or refinancing of Partnership property which
creates excess funds not needed for Operations and which funds, in the
opinion of the General Partner, are available for distribution to the
Partners.
1.1.11 Code: The United States Internal Revenue Code of 1986, as now
existing or hereafter amended. References to sections of the Code
include successor provisions to those sections.
1.1.12 Depreciation: For each taxable year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for the year or other period,
except that if the Book Value of an asset
3
differs from its adjusted basis for federal income tax purposes at the
beginning of the year or other period, Depreciation will be an amount
which bears the same ratio to the beginning Book Value as the federal
income tax depreciation, amortization or other cost recovery deduction
for the year or other period bears to the beginning adjusted tax
basis, provided that if the federal income tax depreciation,
amortization, or other cost recovery deduction for the year or other
period is zero, Depreciation will be determined with reference to the
beginning Book Value using any reasonable method selected by the
General Partner.
1.1.13 Fiscal Year: The period commencing on January 1 of each year and
ending on December 31 of such year.
1.1.14 General Partner: Redi-Mix Management, Inc., a Texas corporation.
1.1.15 Gross Income: For each Fiscal Year or other period, an amount equal
to the Partnership's gross income as determined for federal income tax
purposes for such Fiscal Year or period but computed with the
adjustments specified in Section 1.1.20(a) and (c).
1.1.16 Initial Capital Contributions: The Capital Contributions of the
General Partner made pursuant to Section 3.1 and the Limited Partners
made pursuant to Sections 3.2 and 3.3.
1.1.17 Limited Partner: Atlas Investments Inc., a Nevada corporation, and
each Person who is admitted to the Partnership as a Limited Partner
and shown as a Limited Partner on the books and records of the
Partnership.
1.1.18 Net Cash Flow: All cash funds from operations of the Partnership on
hand or on deposit from time to time after (i) payment of all
operating expenses payable as of the date in question, (ii) provision
for payment of all outstanding and unpaid Partnership obligations due
and payable as of the date in question or within sixty (60) days
thereafter, and (iii) the establishment of such reasonable reserves as
the General Partner, in its sole discretion, deems appropriate for the
operating needs of the Partnership. "Net Cash Flow" shall not include
or reflect any proceeds received or expenses incurred in connection
with a Capital Transaction.
1.1.19 Net Proceeds of a Capital Transaction: The net proceeds received by
the Partnership in connection with a Capital Transaction after payment
of all costs and expenses incurred by the Partnership in connection
with such Capital Transaction, including, without limitation, brokers'
commissions, loan fees, other closing costs, the cost of any
alteration, improvement, restoration or repair of Partnership assets
necessitated by or incurred in connection with such Capital
Transaction, any reserves that the General Partner believes in good
faith should be established and the payment of any loans owed by the
Partnership to any of the Partners, plus any other loans that should
be appropriately paid, as determined by the General Partner in its
reasonable discretion.
4
1.1.20 Net Profit and Net Loss: For each Fiscal Year or other period, an
amount equal to the Partnership's taxable income or loss for such
Fiscal Year or period, determined in accordance with Code Section
703(a) (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or loss) with the following
adjustments:
(a) any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Net Profit
or Net Loss shall be added to such taxable income or loss;
(b) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
under Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise
taken into account in computing Net Profit or Net Loss shall be
subtracted from such taxable income or loss;
(c) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Book Value of such property notwithstanding that the Book Value
of such asset differs from its adjusted tax basis;
(d) gain or loss resulting from any adjustment pursuant to Section
1.1.7(b) shall be taken into account as gain or loss from
disposition of the asset for purposes of computing Net Profit or
Net Loss hereunder;
(e) gain or loss resulting from any adjustment attributable to an
in-kind distribution of assets to any Partner pursuant to
Sections 5.2 shall be taken into account as gain or loss from
disposition of the asset for purposes of computing Net Profit or
Net Loss hereunder;
(f) in lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing taxable income or
loss, there shall be taken into account Depreciation for such
Fiscal Year or other period as determined under Regulations
Section 1.704-1(b)(2)(iv)(g)(3);
(g) the amount of any Gross Income specially allocated to the
Partners pursuant to Sections 4.7 through 4.9 and 4.14 shall not
be included as income or revenue; and
(h) any amount allocated pursuant to Sections 4.11 through 4.14 shall
not be included as a gain, loss or deduction.
1.1.21 Net Profit and Net Loss from Capital Transactions: Net Profit and
Net Loss including only those items of income, gain, loss and
deduction relating to Capital Transactions.
5
1.1.22 Net Profit and Net Loss from Operations: Net Profit and Net Loss
excluding those items of income, gain, loss and deduction related
solely to Capital Transactions.
1.1.23 Nonrecourse Deductions: Losses, deductions or Code Section
705(a)(2)(B) expenditures attributable to Nonrecourse Liabilities of
the Partnership. The amount of Nonrecourse Deductions for any Fiscal
Year or other period shall be determined in accordance with the
provisions of Regulations Section 1.704-2(c).
1.1.24 Nonrecourse Liability: A nonrecourse liability as defined in
Regulations Section 1.752-1(a)(2).
1.1.25 Operations: All operations and activities of the Partnership other
than those related to or consisting of a Capital Transaction.
1.1.26 Partner: A Partner of the Partnership, including the General Partner
and the Limited Partner.
1.1.27 Partner Nonrecourse Debt: Any Nonrecourse Liability of the
Partnership for which any Partner or related person bears the economic
risk of loss under Regulations Section 1.752-2.
1.1.28 Partner Nonrecourse Debt Minimum Gain: The minimum gain attributable
to Partner Nonrecourse Debt as determined under Regulations Section
1.704-2(i)(3).
1.1.29 Partner Nonrecourse Deductions: Partnership losses, deductions or
Code Section 705(a)(2)(B) expenditures attributable to a particular
Partner Nonrecourse Debt. The amount of Partner Nonrecourse Deductions
for any Fiscal Year or other period shall be determined in accordance
with the provisions of Regulations Section 1.704-2(i)(2).
1.1.30 Partnership: Redi-Mix, L.P., a Texas limited partnership.
1.1.31 Partnership Certificate: The certificate of limited partnership of
the Partnership filed in conformance with the Act.
1.1.32 Partnership Minimum Gain: The amount computed under Regulations
Section 1.704-2(d)(l) with respect to the Partnership's Nonrecourse
Liabilities.
1.1.33 Partnership Percentage or Percentages: The percentages of the
Partners as follows:
General Partner .1%
Limited Partner 99.9%
1.1.34 Partnership Term: The period of duration of the Partnership, as set
forth in Section 2.5.
1.1.35 Person: Any individual, partnership, corporation, trust or other
legal entity.
6
1.1.36 Regulations: The Income Tax Regulations promulgated under the Code,
as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
1.1.37 Tax Matters Partner: The General Partner.
1.1.38 Transfer: Any sale, assignment, transfer, lease or other disposal of
property, including without limitation, an interest in the
Partnership.
1.2 References. Unless otherwise specified herein, references in this Agreement
to "Section," "Subsection," "Article," or "Exhibit" refer to the sections,
subsections, articles, or exhibits in this Agreement.
ARTICLE 2.
FORMATION, NAME, PURPOSE, REGISTERED OFFICE,
REGISTERED AGENT AND TERM
2.1 Formation of the Limited Partnership. The General Partner and the Limited
Partner hereby form the Partnership as a limited partnership pursuant to
and in accordance with the provisions of the Act.
2.2 Partnership Name. The business of the Partnership will be conducted under
the name Redi-Mix, L.P. or such other name or names as the General Partner
may determine.
2.3 Purpose. The purpose of the Partnership is to (i) manufacture and
distribute concrete and related products, (ii) own, manage, operate,
mortgage, sell and otherwise deal with the assets of the Partnership; and,
(iii) engage in such other activities as the General Partner shall deem
appropriate, to the extent such activities may be carried on under
applicable law and are not prohibited by the terns and provisions of this
Agreement.
2.4 Principal and Registered Office. The principal office of the Partnership is
at 1445 MacArthur, Ste. 136, Carrollton, Texas 75007. The General Partner
has a business office at the Partnership's principal office. The registered
office of the Partnership is at 1445 MacArthur Drive, Suite 136,
Carrollton, Texas 75007, and John C. Miller is the registered agent of the
Partnership. The General Partner may change the principal or registered
office or registered agent of the Partnership from time to time. The
General Partner may establish, maintain and abandon one or more additional
places of business for the Partnership.
2.5 Term of the Partnership. The term of the Partnership shall commence upon
the filing and recording of the Partnership Certificate, and shall continue
until December 31, 2050, unless earlier terminated pursuant to the terms of
this Agreement.
ARTICLE 3.
CAPITAL CONTRIBUTIONS; PARTNER LOANS
7
3.1 Initial Capital Contribution of General Partner. The General Partner has
contributed $1.00 to the Partnership. The General Partner shall not
otherwise be required to make additional contributions to the Partnership
except as provided in Sections 3.4 and 5.5.
3.2 Initial Capital Contribution of Limited Partners. The Limited Partner has
contributed $999.00 to the Partnership hereto. The Limited Partner shall
not be required to make additional contributions to the Partnership except
as specified in Sections 3.4 and 5.5.
3.3 Authorization of Partner Loans. Subject to the limitations herein and to
other agreements of the Partnership, the General Partner from time to time
may cause the Partnership to borrow required amounts from one or more
Partners or their Affiliates. Loans made by Partners or Affiliates under
this Section 3.3 will not be considered a contribution to the capital of
the Partnership, but will constitute indebtedness of the Partnership to the
advancing Partner or Affiliate, payable from the first available net cash
flow of the Partnership unless otherwise agreed by the lending Partner or
Affiliate and, to the extent still unpaid, upon the termination and
liquidation of the Partnership. Each loan by a Partner or Affiliate will
bear simple interest compounded annually on the unpaid principal balance at
the interest rate approved by the General Partner. The Partners will not be
personally liable for loans made by Partners or Affiliates under this
Section 3.3 or be obligated to make contributions to the capital of the
Partnership to repay those loans. Loans made by Partners or Affiliates
under this Section 3.3 will be payable only from the assets of the
Partnership.
3.4 Additional Capital Contributions. The Partners may make Additional Capital
Contributions to the Partnership from time to time as may be required to
meet the demands of the business of the Partnership. The Partners shall
contribute such Additional Capital Contributions in cash in proportion to
the Partners' Partnership Percentages.
ARTICLE 4.
DISTRIBUTIONS AND ALLOCATIONS
4.1 Distribution of Net Cash Flow. Net Cash Flow shall be distributed among the
Partners in accordance with their Partnership Percentages at such times and
in such amounts as shall be determined by the General Partner.
4.2 Distribution of Net Proceeds of a Capital Transaction. Net Proceeds of a
Capital Transaction shall be distributed among the Partners in accordance
with their Partnership Percentages at such times and in such total amounts
as shall be determined by the General Partner.
4.3 Return of and Interest on Capital Contributions. No Partner is entitled to
the return of his Capital Contributions or his Capital Account or to be
paid interest in respect of either his Capital Account or any Capital
Contribution made by him to the Partnership except as provided in this
Agreement.
4.4 Payments. The amount of any distribution or payment to a Partner whether
pursuant to Article 4 or Article 9 hereof may be made in cash or in-kind or
partially in cash and
8
partially in-kind in the reasonable discretion of the General Partner or
the liquidating trustees, as the case may be, less reasonable reserves
established in the reasonable discretion of the General Partner or the
liquidating trustees, as the case may be, for known or unknown liabilities
of the Partnership.
4.5 In-Kind Distributions. All distributions of assets in-kind shall be made at
Book Value as determined pursuant to Section 5.3 and shall be distributed
to the Partners in the same manner as a distribution of Net Proceeds of a
Capital Transaction would have been made if such assets had been sold. The
Net Profit or Net Loss resulting from distribution will be allocated in
accordance with Section 4.6.3 or Section 4.6.4, as the case may be.
4.6 Allocations of Net Profit and Net Loss.
4.6.1 Net Profit From Operations.
(a) If any Net Loss has been allocated to the Partners pursuant to
Section 4.6.2 or Section 4.6.4, then Net Profit from Operations
shall first be allocated to the Partners, in the same proportions
as such Net Loss was allocated, until each Partner's Capital
Account balance equals what it would have been had there been no
such allocation of Net Loss.
(b) After any allocation required pursuant to Section 4.6.1(a), Net
Profit from Operations shall be allocated among the Partners in
accordance with their Partnership Percentages.
4.6.2 Net Loss From Operations.
(a) If any Net Profit has been allocated to the Partners pursuant to
Section 4.6.1 or Section 4.6.3, then Net Loss from Operations
shall first be allocated to the Partners, in the same proportions
as such Net Profit was allocated, until each Partner's Capital
Account balance equals what it would have been had there been no
such allocation of Net Profit.
(b) After any allocation required pursuant to Section 4.6.2(a) Net
Loss from Operations shall be allocated among the Partners in
proportion to their Capital Accounts until such Capital Account
balances equal zero.
(c) After any allocation required pursuant to Section 4.6.2(b), Net
Loss from Operations shall be allocated to the General Partner.
4.6.3 Net Profit From Capital Transactions.
(a) If any Net Loss has been allocated to the Partners pursuant to
Section 4.6.2 or Section 4.6.4, then Net Profit from Capital
Transactions shall first be allocated to the Partners, in the
same proportions as such Net Loss was allocated, until each
Partner's Capital Account balance equals what it would have been
had there been no such allocation of Net Loss.
9
(b) After any allocation required pursuant to Section 4.6.3(a), Net
Profit from Capital Transactions shall be allocated among the
Partners in accordance with their Partnership Percentages.
4.6.4 Net Loss From Capital Transactions.
(a) If any Net Profit has been allocated to the Partners pursuant to
Section 4.6.1 or Section 4.6.3, then Net Loss from Capital
Transactions shall first be allocated to the Partners, in the
same proportions as such Net Profit was allocated, until each
Partner's Capital Account balance equals what it would have been
had there been no such allocation of Net Profit.
(b) After any allocation required pursuant to Section 4.6.4(a) Net
Loss from Capital Transactions shall be allocated among the
Partners in proportion to their Capital Accounts until such
Capital Account balances equal zero.
(c) After any allocation required pursuant to Section 4.6.4(b), Net
Loss from Capital Transactions shall be allocated to the General
Partner.
4.7 Partnership Minimum Gain Chargeback. Notwithstanding any other provision of
this Agreement to the contrary, if in any Fiscal Year or other period there
is a net decrease in the amount of the Partnership Minimum Gain, then each
Partner shall first be allocated items of Gross Income for such year (and,
if necessary, subsequent years) in an amount equal to such Partner's share
of the net decrease in such Minimum Gain during such year (as determined
under Regulations Section 1.704-2(g)(2)); provided, however, if there is
insufficient Gross Income in a year to make the allocation specified above
for all Partners for such year, the Gross Income shall be allocated among
the Partners in proportion to the respective amounts they would have been
allocated had there been an unlimited amount of Gross Income for such year.
4.8 Minimum Gain Chargeback for Partner Nonrecourse Debt. Notwithstanding any
other provision of this Agreement to the contrary other than Section 4.7,
if in any year there is a net decrease in the amount of the Partner
Nonrecourse Debt Minimum Gain, then each Partner shall first be allocated
items of Gross Income for such year (and, if necessary, subsequent years)
in an amount equal to such Partner's share of the net decrease in such
Minimum Gain during such year (as determined under Regulations Section
1.704-2(i)(4)); provided, however, if there is insufficient Gross Income in
a year to make the allocation specified above for all Partners for such
year, the Gross Income shall be allocated among the Partners in proportion
to the respective amounts they would have been allocated had there been an
unlimited amount of Gross Income for such year.
4.9 Qualified Income Offset. Notwithstanding any other provision of this
Agreement to the contrary (except Sections 4.7 and 4.8 which shall be
applied first), if in any Fiscal Year or other period a Partner
unexpectedly receives an adjustment, allocation or distribution described
in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Partner
will be specially allocated items of Gross Income in an amount and manner
sufficient to
10
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Partner as quickly as possible.
4.10 Limit on Loss Allocations. Notwithstanding the provisions of Section 4.6.2,
4.6.4 or any other provision of this Agreement to the contrary, Net Loss
(or items thereof) shall not be allocated to a Partner if such allocation
would cause or increase such Partner's Adjusted Capital Account Deficit and
shall be reallocated to the other Partners, subject to the limitations of
this Section 4.10.
4.11 Net Loss from Partner Nonrecourse Debt. Any Net Loss or deductions
attributable to Partner Nonrecourse Debt shall be allocated to the Partner
who bears the economic risk of loss with respect to such debt.
4.12 Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or other
period shall be allocated among the Partners in accordance with their
Partnership Percentages.
4.13 Code Section 754 Adjustments. To the extent an adjustment to the adjusted
tax basis of any Partnership asset under Code Sections 734(b) or 743(b) is
required to be taken into account in determining Capital Accounts under
Regulations Section 1.704-1(b)(2)(iv)(m), the amount of the adjustment to
the Capital Accounts will be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases the
basis), and the gain or loss will be specially allocated to the Partners in
a manner consistent with the manner in which their Capital Accounts are
required to be adjusted under Regulations Section 1.704-1(b)(2)(iv)(m).
4.14 Reversal of Mandatory Allocations. In the event that any Gross Income or
Net Loss is allocated pursuant to Section 4.7 through 4.10, subsequent
Gross Income, Net Profit or Net Loss (or items thereof) will first be
allocated (subject to Sections 4.7 through 4.10) to the Partners in a
manner which will result in each Partner having a Capital Account balance
equal to that which would have resulted had the original allocation of
Gross Income or Net Loss (or items thereof) pursuant to Sections 4.7
through 4.10 not occurred.
4.15 Compliance with Code. The foregoing provisions of this Agreement relating
to the allocation of Net Profit and Net Loss are intended to comply with
Regulations under Section 704(b) of the Code and shall be interpreted and
applied in a manner consistent with such Regulations.
4.16 Tax Allocations -- Code Section 704(c). In accordance with Code Section
704(c) and the related Regulations, income, gain, loss and deduction with
respect to any property contributed to the capital of the Partnership,
solely for tax purposes, will be allocated among the Partners so as to take
account of any variation between the adjusted basis to the Partnership of
the property for federal income tax purposes and the initial Book Value of
the property. If the Book Value of any Partnership asset is adjusted under
Section 1.1.7, subsequent allocations of income, gain, loss and deduction
with respect to that asset will take account of any variation between the
adjusted basis of the asset for federal income tax purposes and its Book
Value in the same manner as under Code Section 704(c) and the related
Regulations. Any elections or other decisions relating to
11
allocations under this Section 4.16 will be made in any manner that the
General Partner determines reasonably reflects the purpose and intention of
this Agreement. Allocations under this Section 4.16 are solely for purposes
of federal, state and local taxes and will not affect, or in any way be
taken into account in computing, any Partner's Capital Account or share of
Net Profit, Net Loss or other items or distributions under any provision of
this Agreement.
4.17 Allocation on Transfer. If any interest in the Partnership is transferred,
or is increased or decreased by reason of the admission of a new Partner or
otherwise, during any Fiscal Year, the Partnership shall make an interim
closing of its books as of the effective date of such date of transfer or
admission and shall allocate Net Income or Net Loss or items. thereof based
on such interim closing. All transfers of interests or admissions or
exclusions of Partners occurring at any time during a month shall be deemed
effective as of the opening of business on the first day of the subsequent
month.
4.18 Minimum Interest of General Partner. Notwithstanding any indication to the
contrary, the General Partner's interest in each item of Partnership
income, gain, loss, deduction and credit shall be not less than .1%, except
as otherwise required pursuant to Section 704(b) or Section 704(c) of the
Code.
ARTICLE 5.
CAPITAL ACCOUNTS
5.1 Capital Accounts. A separate capital account ("Capital Account") shall be
maintained for each Partner. There shall be credited to each Partner's
Capital Account the amount of any cash actually contributed by such Partner
to the capital of the Partnership (or deemed contributed pursuant to
Regulations Section 1.704-1(b)(2)(iv)(c)), the Book Value of any property
contributed by such Partner to the capital of the Partnership (net of any
liabilities secured by such property that the Partnership is considered to
assume or to take subject to under Code Section 752), such Partner's share
of the Net Profit (and all items in the nature of income or gain that are
specially allocated to the Partner under Article 4 hereof) of the
Partnership and the amount of any Partnership liabilities that are assumed
by the Partner or secured by any Partnership property distributed to the
Partner. There shall be charged against each Partner's Capital Account the
amount of all cash distributed to such Partner by the Partnership (or
deemed distributed pursuant to Regulations Section 1.704-1(b)(2)(iv)(c)),
the Book Value of any property distributed to such Partner by the
Partnership (net of any liability secured by such property that the Partner
is considered to assume or take subject to under Code Section 752), such
Partner's share of the Net Loss (and all items in the nature of deduction
or loss that are specially allocated to the Partner under Article 4 hereof)
of the Partnership and the amount of any liabilities of the Partner assumed
by the Partnership or which are secured by any property contributed by the
Partner to the Partnership.
5.2 Adjustment for In-Kind Distributions. If the Partnership at any time
distributes any of its assets in-kind to any Partner, the Capital Account
of each Partner shall be adjusted as contemplated by Section 4.5, as
applicable, to account for that Partner's allocable share
12
(as determined under Article 4 above) of the Net Profit or Net Loss that
would have been realized by the Partnership had it sold the assets
distributed for their respective fair market values immediately prior to
their distribution.
5.3 Property Revaluation. The Capital Accounts shall be adjusted to reflect a
revaluation of Partnership property to its fair market value on the date of
adjustment upon the occurrence of any of the following events:
5.3.1 an increase in any new or existing Partner's Partnership Percentage
resulting from the contribution of money or property by such Partner
to the Partnership including a conversion of debt into Partnership
interests,
5.3.2 any reduction in a Partner's Partnership Percentage resulting from a
distribution to such Partner in consideration of all or part of his
Partnership interest, unless such distribution is pro rata to all
Partners in accordance with their respective Partnership Percentages,
and
5.3.3 whenever else allowed under Regulations Section 1.704-1(b)(2)(iv)(f).
The adjustments to Capital Accounts shall reflect the manner in which the
unrealized Net Profit or Net Loss inherent in the property would be
allocated if there were a disposition of the Partnership's property at its
fair market value on the date of adjustment.
5.4 Interpretation. It is the intention of the Partners that the Capital
Accounts be maintained strictly in accordance with the capital account
maintenance requirements of Regulations under Code Section 704(b). The
foregoing provisions and the other provisions of this Agreement relating to
the maintenance of the Capital Accounts are intended to comply with such
Regulations and shall be interpreted and applied in a manner consistent
with such Regulations and any amendment or successor provision thereto. The
General Partner also shall make any appropriate modifications if
unanticipated events might otherwise cause this Agreement not to comply
with the Regulations, so long as such changes would not cause a material
change in the relative economic benefits of the Partners under this
Agreement.
5.5 Obligation to Repay or Restore. If the Limited Partner has received
distributions of Net Cash Flow or Net Proceeds of a Capital Transaction, it
may be obligated under the Act to repay or restore to the Partnership all
or a portion of the amount received if such distributions cause the fair
market value of the Partnership's assets to be less than the Partnership's
liabilities. Subject to the foregoing requirement, the Limited Partner
shall not be required to pay to the Partnership or to any other Partner any
deficit or negative balance which may exist from time to time in its
Capital Account; provided, however, in the event the Limited Partner
erroneously receives distributions in excess of his interest in such
distributions as specified in Sections 4.1, 4.2 and 4.3 hereof ("Excess
Distributions"), then, as between the Partners but not for the benefit of
other Persons, such Partner shall be indebted to the Partnership for such
Excess Distributions, and such indebtedness shall be payable on terms or on
demand as may be prescribed by the General Partner. The General Partner
shall contribute, prior to the dissolution and
13
liquidation of the Partnership, an amount equal to the lesser of (a) an
amount which will cause the total Capital Contributions made by the General
Partner during the Partnership Term to equal one-tenth of one percent (.1%)
of the total Capital Contributions made to the Partnership (including the
Capital Contribution to be made by the General Partner pursuant to this
Section 5.5), or (b) the deficit balance in its Capital Account as of the
date of such dissolution and liquidation.
5.6 Tax Elections. The General Partner is authorized, in its reasonable
discretion, to make all elections permitted or required of the Partnership
under Regulations Section 1.704-1, Code Section 754 and any other
provisions of the Code.
ARTICLE 6.
OPERATING EXPENSES
6.1 Operating Expenses and Reimbursements. The Partnership shall bear (or
reimburse the General Partner for its payment of) all costs and expenses of
every kind and description incurred in connection with the organization,
operation, liquidation and dissolution of the Partnership including, but
not limited to, travel expenses, fees of consultants, accountants, and
attorneys, fees and expenses of the preparation of quarterly unaudited
financial statements, the annual audit, if any, and tax returns of the
Partnership, interest on indebtedness of the Partnership, and fees and
expenses incurred in any litigation by or against the Partnership.
ARTICLE 7.
ADMISSION OF PARTNERS; ASSIGNMENT OF INTERESTS
7.1 Admission of Additional Partners. Without the written consent of all
Partners, no additional partners shall be admitted to the Partnership.
7.2 Assignment or Transfer of Partnership Interests. Without the written
consent of all Partners, no Partner shall sell, assign, pledge, mortgage,
or otherwise dispose of or Transfer, in whole or in part, its Partnership
interest or its share of the Partnership's capital, assets or property or
enter into any agreement, the result of which would be for another Person
to become directly or indirectly interested in the Partnership.
ARTICLE 8.
MANAGEMENT DUTIES AND RESTRICTIONS
8.1 Powers of General Partner.
8.1.1 General Authority of the General Partner. The business and affairs of
the Partnership will be managed exclusively by the General Partner.
Except as otherwise expressly provided in this Agreement with respect
to matters requiring the approval of the Limited Partner, all
determinations relating to the business and affairs of the Partnership
will be made by the General Partner in its sole discretion
14
and will not give rise to any right or claim by any Partner or the
Partnership unless made in violation of an express provision of this
Agreement. Except as otherwise provided herein, the General Partner
will have complete authority to take, in its own name or in the name
of the Partnership, any action that the General Partner determines to
be appropriate under this Agreement or for the conduct of the business
of the Partnership, including without limitation the actions specified
in Section 8.1.2. All decisions and actions taken by the General
Partner under the authority of this Section 8.1 will be binding upon
all of the Partners and the Partnership.
8.1.2 Specific Authority of General Partner. Except as otherwise expressly
set forth in this Agreement, the General Partner shall have all rights
and powers of a general partner under the Act. Subject to the
limitations contained in Section 8.1.3, the authority of the General
Partner to manage the business and affairs of the Partnership will
include complete authority:
(a) To acquire, dispose of, lease or exchange assets of the
Partnership;
(b) To borrow money or otherwise create or assume indebtedness for
the Partnership;
(c) To create an Encumbrance on all or any part of the Partnership's
assets in order to secure loans or advances to or assumed by the
Partnership or any Person in which the Partnership has a direct
or indirect interest, or any obligation of the Partnership or any
Person in which the Partnership has a direct or indirect
interest, or for any other Partnership purpose;
(d) To execute and deliver for the Partnership agreements and other
instruments (including, without limitation, instruments creating
an Encumbrance on Partnership assets) for any purpose authorized
by clause (c), including without limitation agreements and
instruments in connection with loans or the Transfer of assets of
the Partnership;
(e) To collect all income of the Partnership and to satisfy all
obligations of the Partnership, including without limitation
expenses of the General Partner relating to the Partnership
described in Article 6 and Section 8.4 and the indemnification
obligations arising under Section 11.11;
(f) To prepare or cause to be prepared and file all tax returns for
the Partnership (but not the tax returns or other reports of the
Partners);
(g) To make all tax elections for the Partnership, including without
limitation any special basis adjustments under Section 754 of the
Code, provided that the Partner requesting any Section 754
election must agree to reimburse the Partnership for any costs
incurred by the Partnership in making the election or in
maintaining or preparing any additional records or reports in
connection with the election;
15
(h) To prosecute, defend and settle legal, arbitration or
administrative proceedings on behalf of or against the
Partnership;
(i) To manage and maintain the assets of the Partnership or any
Person in which the Partnership has a direct or indirect
interest;
(j) To establish separate bank accounts for the deposit of monies
received on behalf of the Partnership and to disburse all funds
on deposit on behalf of the Partnership in amounts and at times
as required in connection with the business of the Partnership;
(k) To procure and maintain insurance against risks and in amounts
determined to be appropriate by the General Partner, including
without limitation insurance under which the General Partner and
its partners, agents and affiliates are insureds;
(l) To advance funds of the Partnership to any Person in which the
Partnership has a direct or indirect interest;
(m) To do or cause to be done any other act which the General Partner
considers to be appropriate to carry out any of its powers or in
furtherance of the purposes or character of the Partnership;
(n) To establish such reserves from Partnership funds as the General
Partner, in its sole discretion, may deem necessary or advisable
for Partnership operations and for the payment of Partnership
obligations;
(o) To exercise all rights, powers, privileges and other incidents of
ownership or possession with respect to any Partnership assets,
including, without limitation, voting equity or debt securities
held by the Partnership;
(p) To consult with legal counsel, independent public accountants,
real estate brokers and other consultants selected by the General
Partner on behalf of the Partnership;
(q) To take all action which may be necessary or appropriate for the
continuation of the Partnership's valid existence as a limited
partnership under the laws of the State of Texas and of each
other jurisdiction in which such existence is necessary to
protect the limited liability of the Limited Partner or to enable
the Partnership to conduct the business in which it is engaged;
(r) To resolve, in its sole discretion, any ambiguity regarding the
application of any provision of this Agreement in the manner it
deems equitable, practicable and consistent with this Agreement
and applicable law; and,
16
(s) To do such other acts as the General Partner may deem necessary
or advisable, or as may be incidental to or necessary for the
conduct of the business of the Partnership.
8.1.3 Actions Requiring Limited Partner Approval. Notwithstanding Section
8.1.2, the General Partner may not, without the written consent of the
Limited Partner take or commit to take any of the following actions:
(a) Transfer all or substantially all of the Partnership's assets,
whether in one transaction or a series of related transactions;
(b) Effect the reorganization, merger or consolidation of the
Partnership with any other entity.
(c) Any act in contravention of this Agreement;
(d) Any act which would make it impossible to carry on the ordinary
business of the Partnership, other than a Transfer of all or
substantially all of the assets of the Partnership authorized
under Section 8.1.3(a) or a reorganization, merger or
consolidation authorized under Sections 8.1.3(b);
(e) Confess a judgment against the Partnership except in connection
with the settlement of an action or proceeding; or,
(f) Incur any debt, on behalf of the Partnership or otherwise, for
which the Limited Partner shall be directly or personally liable
to any extent.
8.2 Authority as to Third Persons. Notwithstanding Section 8.1.3, the signed
statement of the General Partner reciting that it has the authority or
necessary approval of the Limited Partner for any action, as to any third
Person, will be conclusive evidence of the authority of the General Partner
to take that action and of compliance with Section 8.1.3, if applicable.
The Limited Partner will promptly execute instruments determined by the
General Partner to be appropriate to evidence the authority of the General
Partner to consummate any transaction permitted by this Agreement.
8.3 Compensation and Expenses of the General Partner. The General Partner will
not receive any compensation from the Partnership for serving as General
Partner, but all expenses incurred by the General Partner in connection
with its service as General Partner (including without limitation charges
for legal, accounting, data processing, administrative, executive, tax and
other services rendered) will be paid or promptly reimbursed by the
Partnership. Nothing contained in this Section 8 is intended to affect the
distributions to the General Partner or the amounts that may be payable to
the General Partner by reason of its interest in the Partnership.
8.4 Covenants of the General Partner. The General Partner shall devote such
time, effort, and attention as may be reasonably necessary, advisable, or
appropriate to manage and direct the operations, business and affairs of
the Partnership.
17
8.5 Limitations on Authority. The authority of the General Partner over the
conduct of the operations, business, and affairs of the Partnership shall
be subject only to the Act and such further limitations as are expressly
stated in this Agreement.
8.6 No Withdrawal From Partnership. Except as contemplated by this Agreement,
no Partner may withdraw from the Partnership at any time.
8.7 Officers. The General Partner may, from time to time, designate one or more
individuals to be an officer of the Partnership. Any officer so designated
shall have such authority and perform such duties as the General Partner
may, from time to time, delegate to such officer. Each officer shall hold
office until the earlier to occur of his or her death, disability,
resignation, removal by the General Partner or replacement by the General
Partner. The salaries or other compensation, if any, of any officer of the
Partnership shall be fixed from time to time by the General Partner.
Subject to any contractual requirements, any officer may resign as such as
any time. Such resignation shall be made in writing and shall take effect
at the time specified therein, or if no time be specified, at the time of
its receipt by the General Partner. The acceptance of a resignation shall
not be necessary to make it effective, unless expressly so provided in the
resignation. Any officer may be removed as such, either with or without
cause, by the General Partner whenever in its judgement the best interests
of the Partnership will be served thereby. Designation of an officer shall
not of itself create contract rights. Any vacancy occurring in any officer
position of the Partnership may be filled by the General Partner.
ARTICLE 9.
DISSOLUTION OF THE PARTNERSHIP
9.1 Dissolution. The Partnership shall be dissolved upon the happening of any
of the following events:
9.1.1 the expiration of the Partnership Term;
9.1.2 with the prior consent of the General Partner and the Limited
Partner;
9.1.3 an "Event of Withdrawal," as defined in the Act, of the General
Partner; and
9.1.4 the entry of a decree of judicial dissolution under Section 8.02 of
the Act.
9.2 Continuation. Upon the occurrence of an event identified in Section 9.1.1
or 9.1.3, the business of the Partnership will be continued if within 90
calendar days the Limited Partner elects by written action to continue the
business of the Partnership and designate one or more Persons to be a
General Partner of the Partnership. If the business of the Partnership is
continued, the interest of the General Partner will be converted to that of
a limited partner. If the Limited Partner fails to continue the
Partnership's business as provided in this Section 9.2, the Partnership
will be liquidated under Section 9.4.
18
9.3 Events Affecting a Limited Partner. The Bankruptcy, liquidation,
dissolution, reorganization, merger, sale of substantially all the stock or
assets of, or other change in the ownership or nature of the Limited
Partner shall not dissolve the Partnership.
9.4 Liquidation Procedures.
9.4.1 Upon dissolution of the Partnership the General Partner or, if there
is no General Partner, such Person or Persons as the Limited Partner
shall designate as liquidating trustees shall commence immediately to
wind up the affairs of the Partnership. The General Partner or such
liquidating trustees shall use their best judgment as to when to
dispose of the Partnership's assets or to make distributions in-kind
in order to maximize the return to the Partners from such assets.
9.4.2 The assets of the Partnership remaining after payment of the costs
and expenses of winding up shall be applied in the following priority:
(a) To payment of the costs and expenses of the winding up,
liquidation and termination of the Partnership;
(b) To the creditors of the Partnership, other than Partners, all
amounts due them from the Partnership in the order of priority
established by law;
(c) To the Partners, all amounts due them in repayment of any loans
to the Partnership pursuant to Section 3.3;
(d) To the establishment of any reserves deemed appropriate by the
General Partner or liquidating trustees for any liabilities or
obligations of the Partnership, which reserves will be held for
the purpose of paying liabilities or obligations and, at the
expiration of a period the General Partner or liquidating
trustees deems appropriate, will be distributed in the manner
provided in Section 9.4.2(e); and,
(e) To the payment to the Partners of the positive balances in their
respective Capital Accounts, pro rata, in proportion to the
positive balances in those Capital Accounts after giving effect
to all allocations and distributions under Article 4 for all
prior periods, including the period during which the process of
liquidation occurs.
If the General Partner or the liquidating trustees, in their sole
discretion, deem it not feasible or desirable to liquidate to each
Partner its allocable share of each asset to be distributed in-kind,
the General Partner or the liquidating trustees may allocate and
distribute specific assets to one or more Partners as the General
Partner or the liquidating trustees shall reasonably determine to be
fair and equitable, taking into consideration, among other things, the
value of the assets, the indebtedness secured by the assets and the
tax consequences of the proposed distribution upon each of the
Partners. Any distributions in-kind shall be subject
19
to such conditions relating to the disposition and management thereof
as the General Partner or the liquidating trustees deem reasonable and
equitable.
9.5 Termination. The Partnership shall terminate when all property owned by the
Partnership has been disposed of, and any proceeds from the sale or other
disposition of all of the Partnership property, after payment of or
provision for all liabilities to creditors of the Partnership, has been
distributed to the Partners.
9.6 No Petition for Dissolution. The Partners agree that irreparable damage
would be done to the goodwill and reputation of the Partnership if any
Partner should bring an action in any court to dissolve the Partnership and
to have a liquidator or receiver for the Partnership appointed. Care has
been taken in this Agreement to provide what the parties feel is fair and
just payment in liquidation of the interest of all Partners. Accordingly,
each Partner hereby waives and renounces its right to file or pursue any
such petition for dissolution of the Partnership or the partition of any
Partnership property, or to seek the appointment by any court of a
liquidator or receiver for the Partnership.
9.7 Compliance with Timing Requirements of Treasury Regulations.
Notwithstanding anything in this Article 9 to the contrary, in the event
the Partnership is "liquidated." within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), distributions will be made to the Partners who have
positive Capital Account balances pursuant to Section 9.4 in a manner that
complies with Regulations Section 1.704-1(b)(2)(ii)(b)(2). However, a
liquidation occurring as a result of a Partnership termination, as defined
in Section 708(b)(1)(B) of the Code, will not require an actual
distribution of Partnership assets, but will instead be treated as a
constructive liquidation and reformation in the manner described in
Regulations Section 1.708-1(b)(1)(iv).
ARTICLE 10.
FINANCIAL ACCOUNTING AND REPORTS
10.1 Financial and Tax Accounting and Reports. The tax returns of the
Partnership shall be filed on an accrual basis. The General Partner shall
cause the Partnership's tax returns to be prepared and a Schedule K-1 or
any successor form to be prepared and delivered in a timely manner to each
of the Partners. In the event of an income tax audit of the Partnership or
any judicial or administrative proceeding in connection with the income tax
returns of the Partnership, the Tax Matters Partner shall be authorized to
act for and, to the extent provided by the Code, its decision shall be
binding upon the Partnership and the Partners. The books and records of the
Partnership shall be kept in accordance with the accrual method of
accounting.
10.2 Valuation. The valuation of the assets of the Partnership for the purpose
of valuing distributions in-kind made pursuant to Section 4.5 or Section
9.4 of this Agreement and for any other purpose shall be the fair market
value as determined by the General Partner in good faith, and such
determination will be binding on the Partners.
10.3 Supervision; Inspection of Books. Proper and complete books of account of
the business of the Partnership shall be kept under the supervision of the
General Partner at the
20
principal place of business of the Partnership. Such books shall be open to
inspection by the Limited Partner, or its accredited representatives, at
any reasonable time during normal business hours.
10.4 Consent in Lieu of Meeting. Any action which may be taken by the Partners
at a meeting may be effected through the execution of written consents by
the requisite Partnership Percentage of the Partners.
10.5 Withholding. Notwithstanding any provision in this Agreement to the
contrary, the General Partner may withhold from any distribution or amount
due to the Limited Partner any amounts required to be withheld pursuant to
any applicable federal, state, or local tax requirements, with such
withheld amount treated as if it was distributed to the Limited Partner.
The determination of the General Partner as to the necessity of such
withholding shall be binding upon the Limited Partner.
ARTICLE 11.
OTHER PROVISIONS
11.1 Execution and Filing of Documents. The General Partner and the Limited
Partner (or the General Partner as the Limited Partner's attorney-in-fact)
shall execute and file such certificates and other documents as may be
required by the Act and other applicable laws. The General Partner shall
cause the Partnership to be qualified, formed, reformed or registered under
the limited partnership laws, assumed or fictitious name statutes or
similar laws in any jurisdiction in which the Partnership owns property or
transacts business if such qualification, formation, reformation or
registration is necessary in order to protect the limited liability of the
Limited Partner or to permit the Partnership lawfully to own property or
transact business as a limited partnership. The General Partner shall
execute, file and publish all such certificates, notices, statements or
other instruments appropriate to conduct the business of the Partnership
and to maintain the limited liability of the Limited Partner.
11.2 Other Instruments and Acts. The Partners agree to execute any other
instruments or perform any other acts that are or may be necessary to
effectuate and carry on the Partnership created by this Agreement.
11.3 Binding Agreement. This Agreement shall be binding upon and inure to the
benefit of the permitted transferees, successors, assigns, and legal
representatives of the Partners.
11.4 Governing Law. This Agreement shall be governed by and construed under the
laws of the State of Texas, without giving effect to the principles of
conflict of laws.
11.5 Notices. Any notice or other communication that one Partner desires to give
to another Partner or the Partnership or that the Partnership desires to
give to a Partner shall be in writing, and shall be deemed effectively
given upon (i) personal delivery, (ii) transmission by facsimile or (iii)
the third business day following deposit in any United States mail box, by
registered or certified mail, postage prepaid, addressed, in the case of a
Partner, to the Partner at the address shown on the books and records of
the Partnership
21
or at such other address as a Partner may designate by fifteen (15) days'
advance notice to the other Partners and, in the case of the Partnership,
to its principal office designated in Section 2.4.
11.6 Power of Attorney. The Limited Partner appoints the General Partner its
attorney-in-fact, with full power of substitution and re-substitution, to
execute in the Limited Partner's name and deliver:
(a) A Partnership Certificate and any amendments to the Partnership
Certificate that the General Partner deems appropriate;
(b) Any instrument that the General Partner deems appropriate in
order to qualify the Partnership to do business in any
jurisdiction and any other instrument relating to the
qualification or registration of the Partnership or the use of an
assumed or fictitious name that the General Partner deems
appropriate;
(c) All certificates and other instruments that may be appropriate to
effect the dissolution and termination of the Partnership under
Article 9;
(d) All reports, forms and schedules that the General Partner
determines appropriate to file with any governmental body in
connection with any Partnership activity;
(e) Any amendment to this Agreement appropriate to reflect the
Transfer of a Partnership interest permitted by this Agreement,
or the admission to, or withdrawal from, the Partnership of a
Partner permitted by this Agreement, the conversion of a General
Partner interest into a Limited Partner interest as provided in
this Agreement or any Capital Contribution permitted by this
Agreement; and,
(f) Any amendment to this Agreement authorized under Section 11.7.
The power of attorney granted under this Section 11.6 is coupled with an
interest and is irrevocable and will survive the death, dissolution,
bankruptcy and withdrawal from the Partnership of any Partner or the
Transfer of its Partnership interest.
11.7 Amendment.
11.7.1 Except for such amendments as result from the operation of the
various provisions of this Agreement, this Agreement may be amended
only with the written consent of the Limited Partner and the General
Partner.
11.7.2 The General Partner, acting alone, may make ministerial changes in
the Partnership Agreement for the purpose of correcting errors and
inconsistencies and to comply with federal, state and local rules,
regulations and laws, provided that the liability of the Limited
Partner for Partnership debts shall not be increased
22
by such amendment nor shall the right of the Limited Partner to
Partnership allocations or distributions be adversely affected
thereby.
11.8 Entire Agreement. This Agreement shall constitute the entire agreement of
the Partners and supersede all prior agreements between the Partners with
respect to the Partnership.
11.9 Titles; Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and shall not be considered in the interpretation of
this Agreement.
11.10 Exculpation. Neither the General Partner, nor any of its officers,
directors, employees, agents, or Affiliates, shall be liable to the Limited
Partner or the Partnership for any action taken or failure to act on behalf
of the Partnership within the scope of authority conferred on the General
Partner by this Agreement, or by law, or done in reliance in good faith on
the opinion of legal counsel, except in the case of (i) its willful breach
of a material provision of the Act or this Agreement; (ii) the breach of
its fiduciary responsibilities to the Partnership or the Limited Partner;
or, (iii) its gross negligence in connection with the business and affairs
of the Partnership.
11.11 Indemnification of the General Partner. The Partnership, to the extent of
its assets legally available for that purpose, will indemnify and hold
harmless the General Partner and any partner, shareholder, director,
officer, agent, affiliate and professional or other advisor of the General
Partner (collectively, the "Indemnified Persons"), from and against any and
all loss, damage, expense (including without limitation reasonable fees and
expenses of attorneys and other advisors and any court costs incurred by
any Indemnified Person) or liability by reason of anything any Indemnified
Person does or refrains from doing for, or in connection with the business
or affairs of, the Partnership, except to the extent that the loss, damage,
expense or liability results from (a) the Indemnified Person's gross
negligence, willful misconduct or knowing violation of law, or (b) the
Indemnified Person's breach of any fiduciary responsibilities to the
Partnership or the Limited Partner. These indemnification rights are in
addition to any rights the Indemnified Persons may have against third
parties.
Notwithstanding anything in this Agreement to the contrary, no Partner
shall be obligated to contribute any amount to the Partnership in order to
satisfy the Partnership's indemnification obligations under this Section
11.11, such obligations being limited at all times to the assets of the
Partnership.
11.12 Limitation of Liability of the Limited Partners. No Limited Partner shall
be bound by, or be personally liable for, the expenses, liabilities, or
obligations of the Partnership in excess of its Capital Contributions to
the Partnership plus such additional amounts determined pursuant to Section
5.5.
11.13 Ambiguities. The General Partner shall have full power and authority to
resolve questions of interpretation and construction arising under this
Agreement, and its resolution of such ambiguities or questions shall be
final and binding on the Partnership and all of its Partners and their
permitted transferees, successors, assigns and legal representatives.
23
11.14 No Right to Partition. Each Partner hereby irrevocably waives any and all
rights that it may have to maintain or institute an action for partition of
the Partnership assets.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK.]
24
IN WITNESS WHEREOF, the Partners have executed this Agreement as of the
date first above written.
GENERAL PARTNER:
REDI-MIX MANAGEMENT, INC.,
a Texas corporation
By: [signed]
------------------------------------
Name: Gerald A. Berkhold
Title: President
LIMITED PARTNER:
ATLAS INVESTMENTS INC.,
a Nevada corporation
By: [signed]
------------------------------------
Name: Ronald L. Graham
Title: Vice President
25