Exhibit 3.2(z)
FORM OF LIMITED PARTNERSHIP AGREEMENT
ASHTON WOODS ORLANDO LIMITED PARTNERSHIP
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AGREEMENT OF LIMITED PARTNERSHIP
ASHTON WOODS ORLANDO LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into with effect on
and as of the Effective Date (defined below), by and among each of the General
Partner and the Limited Partners, all as defined below, and who have executed
and delivered this Agreement to be bound thereby with effect on and as of the
Effective Date;
NOW THEREFORE, in consideration of the mutual promises made herein, the parties
hereto agree as follows;
ARTICLE 1 - CERTAIN DEFINITIONS
Unless otherwise expressly provided or unless the context otherwise requires,
the following terms used in this Agreement shall have the following respective
meanings:
1.01 "ACCOUNTANT" means the firm of KPMG or such other firm of independent
certified public accountants selected in accordance with Section 16.02 (b).
1.02 "ACT" means the Revised Uniform Limited Partnership Act as in effect from
time to time in the State of Florida.
1.03 "ADJUSTED CAPITAL ACCOUNT DEFICIT" means with respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such Partner is
obligated to restore to the Partnership pursuant to Section 1.704-1
(b)(2)(ii)(C) of the Treasury Regulations or is deemed to be obligated
to restore pursuant to the penultimate sentence of Section
1.704-2(g)(ii) of the Treasury Regulations or the penultimate sentence
of Section 1.704-2(i)(5) of the Treasury Regulations; and
(b) Debit to such Capital Account the items described in Section
1.7041(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.
1.04 "AFFILIATE" means, when used with reference to a specified person, (1) any
person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
person, (2) a Relative of a specified person who is an individual; (3) any
person that is an officer, director, shareholder, partner, employee or trustee
of, or serves in a similar capacity with respect to, the specified person and
includes a Relative of any such officer, director, shareholder partner, employee
or trustee or the like who is an individual, and (4) any person controlled by
any person designated above. For purposes of the foregoing, "Relative" of an
individual means such individual's ancestors, spouse, lineal descendants,
siblings and the spouses of each ancestor, lineal descendant or sibling, and any
member of the immediate household of such individual.
1.05 "AGREEMENT" or "PARTNERSHIP AGREEMENT" means this Agreement of Limited
Partnership, as amended, modified, supplemented or restated from time to time.
1.06 "ALLAN GROUP" means, collectively, at the Effective Date, each of the
Partners whose name is set forth on the attached Exhibit A under the heading
"Allan Group" and thereafter any Affiliate of any such Partner to whom the whole
or any part of the Partnership Interest held by such Partner on the Effective
Date is transferred or assigned in accordance with the provisions of this
Agreement.
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1.07 "BASE CAPITAL" means, with respect to a Partner, the Base Capital
Contributions of such Partner as adjusted from time to time by:
(a) adding thereto all Profits allocated to such Partner in accordance
with Section 6.04(a)(v) to the extent that the allocation of such
Profits relates to Losses previously allocated in accordance with
Sections 6.04(b)(i) and (ii), and Section 6.04(a)(viii); and
(b) deducting therefrom all Losses allocated to such Partner in accordance
with Sections 6.04(b)(ii) and 6.04(b)(ii) and all distributions to
such Partner in accordance with Section 9.01(i).
The foregoing is intended to comply with the definition of "unreturned capital"
set forth in Treasury Regulation Section 1.514(c)-2, and is to be interpreted
consistently therewith.
1.08 "BASE CAPITAL CONTRIBUTION" means, with respect to a Partner, the amount of
cash set opposite its name on the attached Exhibit A and contributed to the
Partnership in accordance with Section 5.01 (a) (herein collectively referred to
as the "BASE CAPITAL CONTRIBUTIONS").
1.09 "BASE LOAN ADVANCES" means, with respect to a Partner, the outstanding
principal balance from time to time of Loan Advances made to the Partnership by
such Partner from time to time which constitute Base Loans.
1.10 "BASE LOAN INTEREST" means interest at the rate of 12% per annum computed
on a daily basis on the Base Loan Advances of a Partner for the actual number of
days elapsed, divided by 365, and payable both before and after default and
judgement. The yearly rate of interest to which the rate calculated in
accordance with the foregoing provisions of this paragraph is equivalent, is the
rate so determined multiplied by the actual number of days in the calendar year
and divided by 365.
1.11 "BASE LOANS" means with respect to:
(a) the Partners of the Majority Partner Group, the amounts advanced from
time to time by any one or more of such Partners by way of loan to the
Partnership, where the aggregate principal amount of such advances
remaining outstanding and the Unrecovered Priority Capital
Contributions by the Partners of such Partner Group is equal to or
less than $1,200,000.00;
(b) the Partners of the Minority Partner Group, the amounts advanced from
time to time by any one or more of such Partners by way of loan to the
Partnership, where the aggregate principal amount of such advances
remaining outstanding and the Unrecovered Priority Capital
Contributions by the Partners of such Partner Group is equal to or
less than the aggregate of their Percentage Interests of the Base
Loans of the Majority Partner Group; and
(c) where the total of the Percentage Interests held by the Limited
Partners comprising a Partner Group is equal to the total of the
Percentage Interests held by the Limited Partners comprising each of
the other Partner Groups, the amounts advanced from time to time by
any one or more of the Partners by way of loan to the Partnership,
where the aggregate principal amount of such advances remaining
outstanding and the Unrecovered Priority Capital Contributions by such
Partner is equal to or less than the amount that its Percentage
Interest is of $1,200,000.00.
1.12 "BUSINESS DAY" means a day other than a Saturday, Sunday or any day which
is a legal holiday in the State of Florida.
1.13 "CAPITAL ACCOUNT" means, with respect to a Partner, the account of such
Partner to be maintained as described in Article 5 and, for greater certainty,
includes the Base Capital, Priority Capital Contributions and Preferred Capital
Contributions, as from lime to time adjusted in accordance with Article 5 and
otherwise as provided in or contemplated by this Agreement.
1.14 "CAPITAL CONTRIBUTIONS" means the total amount of Base Capital
Contributions, Priority Capital Contributions and Preferred Capital
Contributions.
1.15 "Capital Proceeds" means the net cash proceeds received by the Partnership
from or as a result of a Capital Transaction, after deducting: (i) any expenses
paid in connection therewith; (ii) any amounts applied by the General Partner in
its sole and absolute discretion toward the payment of any indebtedness
(including indebtedness owed to the General Partner) and other obligations of
the Partnership, including payments of principal and interest on mortgages;
(iii) the payment of any other bona fide expenses; and (iv) the establishment of
any reserves by the General Partner in its sole and absolute discretion. If the
proceeds of any Capital Transaction are paid in more than one instalment, each
such instalment shall be treated as a separate Capital Transaction for purposes
of this definition.
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1.16 "CAPITAL TRANSACTION" means any (i) sale or other disposition of the assets
of the Partnership (other than sales in the ordinary course of business); (ii)
financing or refinancing with respect to the assets of the Partnership; and
(iii) casualty insurance proceeds (other than business interruption insurance)
or condemnation awards with respect to the Partnership's assets in excess of
amounts required to be applied to payment of any indebtedness of the Partnership
or expended in repair or restoration.
1.17 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or corresponding provisions of subsequent laws.
1.18 "CONTROL" OR "CONTROLLED" where used in this Agreement to indicate a
relationship to a person, means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities, by contract, or otherwise.
For purposes of the foregoing, a person shall be deemed to hold voting
securities beneficially owned by another person controlled by such first
mentioned person or by an Affiliate of such other person.
1.19 "CUMULATIVE BASE LOAN INTEREST" means the total of the Base Loan Interest
accrued from the date on which each Base Loan Advance was made by the applicable
Partner to the date at which such total is being determined.
1.20 "CUMULATIVE PREFERRED CAPITAL RETURN" means the total of the Preferred
Capital Returns from the date on which each Preferred Capital Contribution was
made by the applicable Partner to the date at which such total is being
determined.
1.21 "CUMULATIVE PREFERRED LOAN INTEREST" means the total of the accrued
Preferred Loan Interest from the date on which each Preferred Loan Advance was
made by the applicable Partner to the date at which such total is being
determined.
1.22 "CUMULATIVE PRIORITY CAPITAL RETURN" means the total of the Priority
Capital Returns from the date on which each Priority Capital Contribution was
made by the applicable Partner to the date at which such total is being
determined.
1.23 "EFFECTIVE DATE" means December 28th, 1997, notwithstanding the actual date
of execution and delivery of this Agreement.
1.24 "FISCAL YEAR" means, for both reporting and federal income tax purposes,
the period from the Effective Date and ending on the immediately following May
31st, and thereafter the 12 month period commencing on June 1st and ending on
May 31st in each calendar year, or such other financial year as may be
determined by the General Partner.
1.25 "FUNDING PARTNER" means a Partner of any of the Other Partnerships that has
any "Loan Advances", "Unrecovered Priority Capital Contributions" and/or
"Unrecovered Preferred Capital Contributions", as provided for in or
contemplated by the Other Partnership Agreements.
1.26 "GENERAL PARTNER" means Ashton Woods Florida L.L.C. (a Nevada limited
liability company) and any person who after the Effective Date becomes a
substitute or additional General Partner in accordance with the provisions of
this Agreement.
1.27 "GREAT GULF GROUP" means, collectively, at the Effective Date, each of the
Partners whose name is set forth on the attached Exhibit A under the heading
"Great Gulf Group" and thereafter any Affiliate of any such Partner to whom the
whole or any part of the Partnership Interest held by such Partner on the
Effective Date is transferred or assigned in accordance with the provisions of
this Agreement.
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1.28 "GROSS ASSET VALUE" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Partner to
the Partnership shall be the gross fair market value of such asset, as
determined by the contributing Partner and the Partnership;
(b) The Gross Asset Values of all Partnership assets shall be adjusted to
equal their respective gross fair market values, as determined by the
General Partner, as of the following times: (i) the acquisition of an
additional interest in the Partnership by any new or existing Partner
in exchange for more than a de minimis Capital Contribution; (ii) the
distribution by the Partnership to a Partner (or an assignee of a
Partner with respect to such Partner's Partnership Interest or any
part thereof) of more than a de minimis amount of Partnership Property
as consideration for an interest in the Partnership; and (iii) upon
the liquidation of the Partnership within the meaning of Section
1.7041(b)(2)(ii)(g) of the Treasury Regulations; provided, however
that the adjustments pursuant to the immediately preceding items (i)
and (ii) shall be made only if the General Partner reasonably
determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Partners and any of
their assignees in the Partnership;
(c) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be the gross fair market value of such asset on the date
of distribution; and
(d) The Gross Asset Values of the assets included in the Partnership
Property shall be increased (or decreased) to reflect any adjustments
to the adjusted basis of such assets pursuant to Code Section 732(d),
Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital
Accounts pursuant to Section 1.704-1(b)(3)(iv)(m) of the Treasury
Regulations. If the Gross Asset Value of any such asset has been
determined or adjusted pursuant to Clause (a), (b) or (c) of this
definition, such Gross Asset Value shall thereafter be adjusted by the
depreciation or amortization taken into account with respect to such
asset for purposes of computing profits and losses.
1.29 "LIMITED PARTNERS" means, on and as of the Effective Date, those persons
whose names and addresses are set forth on the attached Exhibit A, and such
other persons who subsequent to the Effective Date are admitted to the
Partnership as additional or substitute Limited Partners in accordance with the
provisions of this Agreement.
1.30 "LOAN ADVANCES" means, with respect to a Partner, the amount advanced by
way of loan to the Partnership by such Partner from time to time, being the
aggregate amount of the Base Loan Advances and the Preferred Loan Advances of
such Partner.
1.31 "LOSSES" means the aggregate of Net Non-operating Losses and the losses
referred to in and resulting from the calculation of Operating Profits and
Losses.
1.32 "MAJORITY PARTNER GROUP" means, at any time, the Partner Group whose
Partners collectively are entitled to be allocated more than 50% of the Profits
or Losses, as the case may be, pursuant to Section 6.04.
1.33 "METHOD OF ACCOUNTING" means the accrual method of accounting or any other
method of accounting acceptable to the Accountant that the General Partner may
select from time to time which shall be in accordance with generally accepted
accounting principles now or hereafter in effect. All accounting terms not
specifically defined herein shall be construed in accordance with the Method of
Accounting.
1.34 "MINORITY PARTNER GROUP" means, at any time, the Partner Group whose
Partners collectively are entitled to be allocated less than 50% of the Profits
or Losses, as the case may be, pursuant to Section 6.04.
1.35 "NET CASH FLOW" means Net Operating Cash less amounts payable to reduce
Loan Advances and to pay interest thereon as provided for in Article 8 and to
reduce indebtedness of the Partnership ranking subsequent to the Loan Advances.
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1.36 "NET NON-OPERATING LOSSES" means the sum of taxable loss of the Partnership
arising from or as a result of a Capital Transaction.
1.37 "NET NON-OPERATING PROFITS" means the sum of taxable income of the
Partnership arising from or as a result of a Capital Transaction.
1.38 "NET OPERATING CASH" means for any given fiscal year or other accounting
period of the Partnership, all cash received by the Partnership in such fiscal
year or period (including Capital Proceeds), less all disbursements of cash
including, without limitation, disbursements made to the General Partner to
reimburse it for expenses as contemplated in Section 10.09, to pay operating
expenses, reduce the indebtedness of the Partnership ranking in priority to or
pari passu with the Loan Advances and to pay interest on such indebtedness and
amounts used to establish reasonable reserve accounts but excluding any payments
to reduce Loan Advances and to pay interest thereon as provided for in Article 8
and further excluding distributions made pursuant to Section 9.01. The General
Partner acting reasonably shall determine at least semi-annually whether the
reserves of the Partnership are in excess of the amount it reasonably deems
sufficient for the continuing conduct of the business of the Partnership,
including its working capital requirements, and such reserves shall be reduced
by the amount of any such excess and such excess amount shall be added to Net
Operating Cash.
1.39 "NONRECOURSE DEDUCTIONS" has the meaning set forth in Section 1.704-2(c) of
the Treasury Regulations. The amount of Nonrecourse Deductions for a Partnership
fiscal year equals the excess, if any, of the net increase, if any, in the
amount of Partnership Minimum Gain during the fiscal year over the aggregate
amount of any distributions during that fiscal year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum Gain,
determined according to the provisions of Section 1.704-2(c) of the Treasury
Regulations. If the amount of Nonrecourse Deductions during the Partnership
taxable year exceeds the total amount of items of Partnership loss, deduction
and Code Section 705(a)(2)(B) expenditures for the year, then the excess shall
carry forward and shall be treated as an increase in Partnership Minimum Gain
for the immediately succeeding taxable year for the purpose of determining
whether there is a net increase or decrease in Partnership Minimum Gain (and
Nonrecourse Deductions) during that succeeding Partnership taxable year. For
this purpose, the items of Partnership loss, deduction and Section 705(a)(2)(B)
expenditures for the year are determined without any regard to any item that is
treated as a Partnership Nonrecourse Deduction.
1.40 "NONRECOURSE LIABILITIES" means liabilities of the Partnership treated as
"nonrecourse liabilities" under Section 1.704-2(b)(3) of the Treasury
Regulations.
1.41 "OPERATING PROFITS AND LOSSES" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such year or other period, determined in accordance with Section 703(a) of the
Code (for this purpose, all items of income, gain, loss or deduction required to
be separately stated pursuant to Section 703(a)(1) of the Code 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
or otherwise described in Section 705(a)(1)(B) of the Code and not
otherwise taken into account shall be added to such taxable income or
loss;
(b) Any expenditure of the Partnership described in Section 705(a)(2)(B)
of the Code and non-deductible syndication costs described in Section
709 of the Code and not otherwise taken into account shall be
subtracted from such taxable income or loss; and
(c) If the Gross Asset Value of any asset differs from its adjusted basis
for federal income tax purposes at the beginning of such year, in lieu
of depreciation, amortization and other cost recovery deductions,
there shall be taken into account depreciation for such fiscal year or
other period equal to the amount that bears the same ratio to the
Gross Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction bears to the beginning adjusted tax
basis, and in lieu of a gain or loss resulting from disposition of
Partnership property and taken into account in computing taxable
income or loss, there shall be taken into account gain or loss
computed by reference to the Gross Asset Value of such Partnership
property rather than its adjusted basis for federal income tax
purposes.
(d) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to clause (b) or (c) of the definition of Gross
Asset Value, the amount of such adjustment shall be taken into account
as gain or loss from disposition of such asset for purposes of
computing Operating Profits and Losses.
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1.42 "OTHER PARTNERSHIP AGREEMENTS" means, collectively, the Limited Partnership
Agreements entered or to be entered into in respect of the Other Partnerships,
respectively, as amended, modified, supplemented or restated from time to time.
1.43 "OTHER PARTNERSHIPS" means, collectively, Lake Louise Coves Limited
Partnership (to be renamed Isleworth West Limited Partnership) and Butler Coves
Limited Partnership, each formed and registered or to be formed and registered
under the laws of the State of Florida.
1.44 "PARTNER GROUP" means each of the Allan Group, the Great Gulf Group and
each other group of Partners who after the Effective Date is designated in
writing as a Partner Group for purposes of this Agreement.
1.45 "PARTNER MINIMUM GAIN" shall mean an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations.
1.46 "PARTNER NONRECOURSE DEBT" shall have the meaning set forth in Section
1.704-2(b)(4) of the Treasury Regulations.
1.47 "PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Section 1704-2(i)(2) of the Treasury Regulations. The amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership fiscal year equals the excess, if any, of the net increase, if any,
in the amount of Partner Minimum Gain attributable to such Partner Nonrecourse
Debt during that fiscal year over the aggregate amount of any distributions
during that fiscal year to the Partner that bears the economic risk of loss for
such Partner Nonrecourse Debt to the extent such distributions are from the
proceeds of such Partner Nonrecourse Debt and are allocable to an increase in
Partner Minimum Gain attributed to such Partner Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(2) of the Treasury Regulations.
1.48 "PARTNERS" means, collectively, the General Partner and the Limited
Partners. Individually each of them is referred to as a "PARTNER."
1.49 "PARTNERSHIP" means the limited partnership formed and named as provided
for in this Agreement including Sections 2.01 and 2.02 hereof.
1.50 "PARTNERSHIP CAPITAL" means the total amount of all Capital Contributions.
1.51 "PARTNERSHIP INTEREST" means, with respect a Partner, the beneficial
interest owned by such Partner in the Partnership including the Capital Account
and Loan Advances of such Partner and its other rights and entitlements as
provided for in and subject to the provisions of this Agreement, in each case as
the same may from time to time be adjusted or changed as provided for in this
Agreement.
1.52 "PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Sections
1.704-2(b)(2) and (d) of the Treasury Regulations.
1.53 "PARTNERSHIP PROPERTY" means the real property more particularly described
in the attached Exhibit B and any real property which may, subject to the
provisions of this Agreement, from time to time be purchased or otherwise
acquired by the Partnership including, without limitation, all fixtures,
improvements, structures, buildings and the like now or at any time hereafter
located in or on such real property together with all personal property (both
tangible and intangible) which may at any time and from time to time be held,
received or acquired in connection with the said real property and the business
carried on by the Partnership.
1.54 "PERCENTAGE INTEREST" means for a Partner, the percentage that such
Partner's Base Capital Contribution is of the total Base Capital Contributions
of all Partners, which as at the Effective Date is the percentage set forth
opposite such Partner's name in the attached Exhibit A.
1.55 "PERMITTED ENCUMBRANCES" means any mortgages, pledges, charges, security
interests, liens, restrictions, or other encumbrances and interests affecting
any of the Partnership Property and the collective interests of the Partners
therein or affecting the Partnership Interest of a Partner or any part thereof,
in each case where the same is created in connection with any financing
contemplated in Section 7.01.
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1.56 "PERSON" means and includes individuals and the heirs, executors,
administrators, or other legal or personal representatives of an individual,
sole proprietorships, corporations, limited partnerships, general partnerships,
joint stock companies, joint ventures, co-ownerships, co-tenancies,
associations, companies, trusts, trustees, banks, trust companies, pension
funds, land trusts, business trusts, any unincorporated organizations or other
organizations or entities, whether or not legal entities and governments and
agencies and political subdivisions thereof.
1.57 "PREFERRED CAPITAL" means the amounts contributed from time to time by any
one or more of the Partners of a Partner Group to the capital of the Partnership
to the extent that the amounts so contributed by the Partners of such Partner
Group in the aggregate exceed the sum of the Base Capital, the Unrecovered
Priority Capital Contributions and the Base Loan Advances.
1.58 "PREFERRED CAPITAL CONTRIBUTIONS" means, with respect to a Partner, the
amount contributed as capital to the Capital Account of such Partner from time
to time which constitutes Preferred Capital.
1.59 "PREFERRED CAPITAL RETURN" means an amount equal to 25% per annum computed
on a daily basis on the Unrecovered Preferred Capital Contributions of a Partner
for the actual number of days elapsed, divided by 365, compounded annually.
1.60 "PREFERRED LOAN ADVANCES" means, with respect to a Partner, the outstanding
principal balance from time to time of Loan Advances made to the Partnership by
such Partner from time to time which constitute Preferred Loans.
1.61 "PREFERRED LOAN INTEREST" means for each Preferred Loan Advance of a
Partner:
(a) that is equal to or less than $500,000, interest at the rate of 18%
per annum computed on a daily basis on each such Preferred Loan
Advance;
(b) that is greater than $500,000, interest at the rate of 25% per annum
computed on a daily basis on each such Preferred Loan Advance;
in each case, for the actual number of days elapsed, divided by 365, and
payable both before and after default and judgement. The yearly rate of
interest to which the rate calculated in accordance with the foregoing
provisions of this Section 1.61 is equivalent, is the rate so determined
multiplied by the actual number of days in the calendar year and divided by
365.
1.62 "PREFERRED LOANS" means the amounts advanced from time to time by any one
or more of the Partners of a Partner Group by way of loan to the Partnership to
the extent that the outstanding principal balance from time to time of such
advances by the Partners of such Partner Group in the aggregate exceeds the sum
of the Base Capital, the Unrecovered Priority Capital Contributions and the Base
Loan Advances.
1.63 "PRINCIPAL PLACE OF BUSINESS" means 20 North Orange Avenue, Suite 1400,
Orlando, Florida 32801.
1.64 "PRIORITY CAPITAL" means with respect to:
(a) the Partners of the Majority Partner Group, the amounts contributed
from time to time by any one or more of such Partners to the capital
of the Partnership other than to Base Capital, where the aggregate
amount of such contributions remaining outstanding and the Loan
Advances made by the Partners of such Partner Group is equal to or
less than $1,200,000.00;
(b) the Partners of the Minority Partner Group, the amounts contributed
from time to time by any one or more of such Partners to the capital
of the Partnership other than to Base Capital, where the aggregate
amount of such contributions remaining outstanding and the Loan
Advances made by the Partners of such Partner Group is equal to or
less than the aggregate of their Percentage Interests of the
Unrecovered Priority Capital of the Majority Partner Group; and
(c) where the aggregate Percentage Interests held by each of the Partner
Groups is equal to those of each of the other Partner Groups, the
amounts contributed from time to time by any one or more of the
Partners to the capital of the Partnership other than to Base Capital,
where the aggregate amount of such contributions remaining outstanding
and the Loan Advances made by such Partner is equal to or less than
the amount that its Percentage Interest is of $1,200,000.00.
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1.65 "PRIORITY CAPITAL CONTRIBUTIONS" means, with respect to a Partner, the
amounts contributed as capital to the Capital Account of such Partner from time
to time which constitutes Priority Capital.
1.66 "PRIORITY CAPITAL RETURN" means an amount equal to 12% per annum computed
on a daily basis on the Unrecovered Priority Capital Contributions of a Partner
for the actual number of days elapsed, divided by 365, compounded annually.
1.67 "PROFITS" means the aggregate of Net Non-operating Profits and the income
referred to in and resulting from the calculation of Operating Profits and
Losses.
1.68 "SECURITIES ACT OF 1933" means the Securities Act of 1933, as amended from
time to time.
1.69 "TAX MATTERS PARTNER" or "TMP" means the General Partner acting as such in
accordance with the provisions of this Agreement.
1.70 "TRANSFER" means any sale (including, without any limitations, a judicial
sale), assignment, exchange, transfer, gift, devise or bequest, or the mortgage,
pledge, grant of a security interest or lien in, or other encumbrance, whether
voluntary or by operation of law, or any other disposition or type of conveyance
or any agreement(s) to do any of the foregoing, in each case whether by the
Partnership with respect to the Partnership Property, or by a Partner, of the
whole or any part of such Partner's Partnership Interest (which for greater
certainty includes any of such Partner's rights under this Agreement). In
addition to the foregoing, a Transfer shall be deemed to occur or be effected on
a change of control of a Partner, whether such change of control occurs as a
result of such Partner issuing voting securities, amalgamating, merging,
consolidating or in any other manner combining with another person, or effecting
any other procedure, a result of which is to achieve indirectly that which is
not permitted to be effected directly under this Agreement, or such change in
control occurs as a result of a transfer of voting securities by any
shareholder(s) of a Partner, all except and to the extent any change of control
is to any one or more of the Partners comprising the Great Gulf Group or the
Allan Group.
1.71 "TREASURY REGULATIONS" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as they may be amended from
time to time.
1.72 "UNPAID BASE LOAN INTEREST" means an amount equal to the Cumulative Base
Loan Interest with respect to a Partner accrued for all periods to the date as
at which the amount is being determined, less the aggregate amount of all
distributions made to such Partner pursuant to Sections 8.05(c) and (g).
1.73 "UNPAID PREFERRED CAPITAL RETURN" means an amount equal to the Cumulative
Preferred Capital Return with respect to a Partner accrued for all periods to
the date as at which the amount is being determined, less the aggregate amount
of all distributions made to such Partner pursuant to Sections 9.01(i) and (v).
1.74 "UNPAID PREFERRED LOAN INTEREST" means an amount equal to the Cumulative
Preferred Loan Interest with respect to a Partner accrued for all periods to the
date as at which the amount is being determined, less the aggregate amount of
all distributions made to such Partner pursuant to Sections 8.05(a) and (e).
1.75 "UNPAID PRIORITY CAPITAL RETURN" means an amount equal to the Cumulative
Priority Capital Return with respect to a Partner accrued for all periods to the
date as at which the amount is being determined, less the aggregate amount of
all distributions made to such Partner pursuant to Sections 9.01(iii) and
(vii).
1.76 "UNRECOVERED PREFERRED CAPITAL CONTRIBUTIONS" means, with respect to a
Partner, an amount which at the date of determination is equal to the aggregate
amount of all Preferred Capital Contributions made by such Partner reduced by
the aggregate amount of distributions to such Partner pursuant to Sections
9.01(ii) and (vi). The foregoing is intended to comply with the definition of
"unreturned capital" set forth in Treasury Regulation Section 1.514(c)-2, and is
to be interpreted consistently therewith.
1.76 "UNRECOVERED PRIORITY CAPITAL CONTRIBUTIONS" means, with respect to a
Partner, an amount which at the date of determination is equal to the aggregate
amount of all Priority Capital Contributions made by such Partner reduced by the
aggregate amount of distributions to such Partner pursuant to Sections 9.01(iv)
and (viii). The foregoing is intended to comply with the definition of
"unreturned capital" set forth in Treasury Regulation Section 1.514(c)-2, and is
to be interpreted consistently therewith.
Page 10
ARTICLE 2 - FORMATION, NAME, AFFIDAVIT AND ANNUAL REPORT
2.01 FORMATION: The General Partner and the Limited Partners hereby form the
Partnership as a Florida limited partnership pursuant to the provisions of the
Act effective on the Effective Date.
2.02 NAME: The name of the Partnership is "Ashton Woods Orlando Limited
Partnership". The General Partner may change the name of the Partnership and
adopt such trade and fictitious names as it may deem appropriate. Upon such
change, the General Partner shall provide the Limited Partners with notice of
such change.
2.3 AFFIDAVIT OF CONTRIBUTIONS: An affidavit declaring the actual and
anticipated amount contributed to the Partnership by the Limited Partners will
accompany the Certificate of Limited Partnership and amendments thereto to be
filed, as and when applicable, with the Florida Secretary of State.
2.4 ANNUAL REPORT: The General Partner shall cause the Partnership to file an
annual report with the Florida Secretary of State on or before January 1st of
each calendar year, on the form provided from time to time by the Florida
Secretary of State.
ARTICLE 3 - TERM
3.01 The Partnership shall continue until terminated as provided in Article 17.
ARTICLE 4 - CHARACTER & PRINCIPAL PLACE OF BUSINESS
4.01 CHARACTER OF THE BUSINESS: The Partnership is being organized solely for
the purposes of purchasing for investment, or engaging in the business of
development, promotion and sale of, the real properly included in the
Partnership Property and to engage in such other activities related either
directly or indirectly to such business as the General Partner may hereafter
from time to time reasonably determine to be necessary, advisable or convenient
to the promotion or conduct of the said business of the Partnership.
4.02 PRINCIPAL PLACE OF BUSINESS: The Principal Place of Business shall be
maintained as the principal place from which the Partnership conducts its
business until it is changed by the General Partner. The General Partner shall
deliver written notice of a change in the Principal Place of Business to the
Limited Partners substantially contemporaneously with effecting any such change.
The General Partner may establish additional places of business of the
Partnership when and where required by, or desirable for, the Partnership's
business, as the General Partner from time to time determines in its sole
discretion.
ARTICLE 5 - CAPITAL CONTRIBUTIONS
5.01 CONTRIBUTIONS OF PARTNERS:
(A) BASE CAPITAL CONTRIBUTIONS: The General Partner and each of the Limited
Partners have or shall contemporaneously with its execution and delivery of this
Agreement contribute to the Partnership cash in the amount set opposite its name
on the attached Exhibit A, representing its Base Capital Contribution.
(B) PRIORITY CAPITAL CONTRIBUTIONS BY GREAT GULF GROUP: The Limited
Partners comprising the Great Gulf Group have or shall contribute to the
Partnership $1,200,000 as and representing Priority Capital Contributions by
such Limited Partners, each in the proportion which their respective Percentage
Interests are to the total Percentage Interests of the Limited Partners
comprising the Great Gulf Group.
(C) OTHER CAPITAL CONTRIBUTIONS: No Partner has any obligation to make any
Capital Contributions (whether as Priority Capital Contributions, Preferred
Capital Contributions or otherwise) in addition to those provided for in the
foregoing subparagraphs (a) and (b) except as such Partner may, in its sole
discretion, agree to in writing and except as may be provided for pursuant to
the Other Partnership Agreements.
Page 11
5.02 ORDER OF CAPITAL CONTRIBUTIONS: Any amounts being paid to the Partnership
by or on behalf of a Partner as a contribution to the capital of the
Partnership:
(a) in accordance with Section 7.02(b); or
(b) in accordance with a requirement to do so pursuant to any of the Other
Partnership Agreements; or
(c) otherwise;
shall, at the time of such payment, constitute a Priority Capital Contribution
by such Partner unless and until such Partner's Unrecovered Priority Capital
Contributions equal its Percentage Interest of the total Unrecovered Priority
Capital Contributions of the Partners or, if no other Partners then have
Unrecovered Priority Capital, until such payment constitutes a Preferred Capital
Contribution as defined in this Agreement, and the amount of such payment in
excess of the foregoing shall constitute a Preferred Capital Contribution of
such Partner.
5.03 PERCENTAGE INTERESTS: Each Partner's Percentage Interest is set opposite
the name of such Partner in the attached Exhibit A. Such percentage shall be
amended to reflect changes in Percentage Interests as a result of Transfers
permitted by and made in accordance with the provisions of this Agreement. The
General Partner shall amend the Partnership's certificate of registration to
reflect any such changes, as and when required by the Act or otherwise required
by law.
5.04 CAPITAL ACCOUNTS:
(a) Each Partner shall have a capital account which shall be maintained in
accordance with the rules set forth in Section 1.704-1 (b)(2)(iv) of the
Treasury Regulations, which generally require that each capital account be
increased by (i) the amount of money contributed by the Partner to the
Partnership, (ii) the fair market value of property contributed by the Partner
to the Partnership (net of liabilities securing such contributed property that
the Partnership is considered to assume or take subject to under Section 752 of
the Code), and (iii) allocations to the Partner of Partnership income and gain
(or items thereof), including income and gain exempt from tax, and be decreased
by (x) the amount of money distributed to the Partner by the Partnership, (y)
the fair market value of the property distributed to the Partner by the
Partnership (net of liabilities securing such distributed property that the
Partner is considered to assume or take subject to under Section 752 of the
Code), (ii) allocations to the Partner of expenditures of the Partnership
described in Section 705(a)(2)(B) of the Code, and (z) allocations of
Partnership loss and deduction (or items thereof).
(b) Upon a distribution in kind of Partnership property, the Capital Account of
each Partner will be debited or credited with such Partner's allocable share of
gain or loss which would have been recognized by the Partnership had the
property been sold for an amount equal to the fair market value immediately
prior to such distribution.
5.05 WITHDRAWAL FROM CAPITAL ACCOUNTS: Prior to the dissolution and liquidation
of the Partnership, no Partner shall be entitled to withdraw any part of the
Capital Account of such Partner or to receive any distribution from the
Partnership, except as provided in this Agreement.
5.06 LIMITED LIABILITY OF LIMITED PARTNERS: The liability of each of the Limited
Partners shall be limited to the Capital Contribution made or required to be
made by such Limited Partner in accordance with Section 5.01. Save only as
provided in the immediately preceding sentence, the Limited Partners and each of
them shall not have any other liability to contribute money to, or in respect of
the liabilities or obligations of, the Partnership, nor shall the Limited
Partners or any of them be personally liable for any obligations of the
Partnership other than as required by the Act. The Limited Partners and each of
them shall not, unless otherwise agreed in writing and as specifically required
by the provisions of any of the Other Partnership Agreements, be obligated to
make loans to the Partnership.
5.07 NO INTEREST ON CAPITAL CONTRIBUTIONS: No interest or additional share of
Net Cash Flow shall be paid or credited to any of the Partners on their Capital
Accounts or on any undistributed Net Cash Flow or funds left on deposit with the
Partnership, all except as otherwise specifically provided for in and subject to
the provisions of this Agreement.
5.08 GENERAL PROVISIONS: Any person succeeding to the Partnership Interest of
any Limited Partner or a portion thereof shall, upon becoming a substitute
Limited Partner, succeed to the Capital Account of the predecessor Limited
Partner at the date the Transfer became effective to the extent the Transfer
relates to the Partnership Interest or portion thereof transferred to such
substitute Limited Partner.
Page 12
ARTICLE 6 - ALLOCATION OF PROFITS & LOSSES
6.01 MINIMUM GAIN CHARGEBACK: If there is a net decrease in Partnership Minimum
Gain during any fiscal year, each Partner shall be allocated items of income and
gain for such year (and, if necessary, for subsequent years) equal to such
Partner's share of the net decrease in Partnership Minimum Gain during such
year. This Section 6.01 is intended to constitute a "minimum gain chargeback"
within the meaning of Section 1.704-2(f) of the Treasury Regulations and shall
be interpreted consistently therewith.
6.02 PARTNER MINIMUM GAIN CHARGEBACK: Notwithstanding anything to the contrary,
if there is a net decrease in Partner Minimum Gain attributable to a Partner
Nonrecourse Debt during any fiscal year, each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Section 1.704-2(i)(4) of the Treasury Regulations, shall be
specially allocated items of Partnership income and gain for such year (and if
necessary for subsequent years) in an amount equal to such Partner's share of
the net decrease in partner Minimum Gain attributable to such Partner Recourse
Debt, determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations, that is allocable to the disposition of Partnership Property
subject to such Partner Nonrecourse Debt determined in accordance with Section
1.7042(i)(4) of the Treasury Regulations. Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. This Section 6.02 is intended to
comply with the Partner Minimum Gain Chargeback requirement of the Treasury
Regulations and shall be interpreted consistent therewith.
6.03 OTHER ALLOCATION RULES: No allocation deduction or loss shall be made to a
Partner, if it would result in such Partner having an Adjusted Capital Account
Deficit. Notwithstanding any other provisions of this Article, in the event that
any Partner unexpectedly receives an adjustment, allocation or distribution
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury
Regulations that results in such Partner having a negative balance in its
Capital Account in excess of the amount that it is required to restore on the
liquidation of the Partnership, then, to the extent required by Section 1.704-
1(b) of the Treasury Regulations, the Partner shall be allocated items of income
and gain in an amount and manner sufficient to eliminate the deficit balance as
quickly as possible. This Section 6.03 is intended to comply with Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted
consistently therewith.
6.04 PROFITS & LOSSES: Except as otherwise provided in this Agreement including,
without limitation, this Article 6, Profits and Losses shall be determined as at
the end of each fiscal year in accordance with the accounting method followed
for federal income tax purposes, and shall be allocated to the Partners in the
order of priority as follows:
Page 13
(A) PROFITS:
(i) First, to the applicable Partners, to recover in the order of the
following subparagraphs any Losses previously allocated pursuant
to the following subparagraphs, namely (b) (xi), (x) and (ix), in
each case pro rata in the proportion such Partners were,
respectively, previously allocated the Losses being offset. To
the extent any previous allocations of Losses are recovered
pursuant to this subparagraph (a)(i), those previous allocations
of Losses shall be disregarded for purposes of computing
subsequent allocations of such Losses pursuant to this Article 6;
(ii) Second, to the Partners, on account of their respective
Cumulative Preferred Capital Returns on their respective
Preferred Capital Contributions which are in excess of their
respective Percentage Interests of the total Unrecovered
Preferred Capital Contributions, in respect of which Profits have
not been previously allocated, pro rata among such Partners in
the proportions that their respective Preferred Capital
Contributions are in excess of their respective Percentage
Interests of the total Unrecovered Preferred Capital
Contributions, until the cumulative Profits allocated to the
Partners pursuant to this subparagraph (a)(ii) is equal to the
total of the Cumulative Preferred Capital Returns of the Partners
on such excess in respect of which Profits have not been
previously allocated;
(iii) Third, to the applicable Partners, to recover in the order of
the following subparagraphs any Losses previously allocated
pursuant to the following subparagraphs, namely (b)(viii) and
(vii), in each case pro rata in the proportion such Partners
were, respectively, previously allocated the Losses being offset.
To the extent any previous allocations of Losses are recovered
pursuant to this subparagraph (a)(iii), those previous
allocations of Losses shall be disregarded for purposes of
computing subsequent allocations of such Losses pursuant to this
Article 6;
(iv) Fourth, to the Partners, on account of their respective
Cumulative Priority Capital Returns on their respective Priority
Capital Contributions which are in excess of their respective
Percentage Interests of the total Unrecovered Priority Capital
Contributions, in respect of which Profits have not been
previously allocated, pro rata among such Partners in the
proportions that their respective Priority Capital Contributions
are in excess of their respective Percentage Interests of the
total Unrecovered Priority Capital Contributions, until the
cumulative Profits allocated to the Partners pursuant to this
subparagraph (a)(iv) is equal to the total of the Cumulative
Priority Capital Returns of the Partners on such excess in
respect of which Profits have not been previously allocated;
(v) Fifth, to the applicable Partners, to recover in the order of the
following subparagraphs any Losses previously allocated pursuant
to the following subparagraphs, namely (b)(vi), (v), (iv), (iii),
(ii) and (i), in each case pro rata in the proportion such
Partners were, respectively, previously allocated the Losses
being offset. To the extent any previous allocations of Losses
are recovered pursuant to this subparagraph (a)(v), those
previous allocations of Losses shall be disregarded for purposes
of computing subsequent allocations of such Losses pursuant to
this Article 6;
(vi) Sixth, to the Partners, pro rata in the proportion that their
respective Cumulative Preferred Capital Returns in respect of
which Profits have not been previously allocated is to the total
Unrecovered Preferred Capital Contributions of the Partners,
until the cumulative Profits allocated to the Partners pursuant
to this subparagraph (a)(vi) is equal to the total of the
Cumulative Preferred Capital Returns of the Partners in respect
of which Profits have not been previously allocated;
(vii) Seventh, to the Partners, pro rata in the proportion that their
respective Cumulative Priority Capital Returns in respect of
which Profits have not been previously allocated is to the total
Unrecovered Priority Capital Contributions of the Partners, until
the cumulative Profits allocated to the Partners pursuant to this
subparagraph (a)(vii) is equal to the total of the Cumulative
Priority Capital Returns of the Partners in respect of which
Profits have not been previously allocated; and
(viii) Thereafter, to the Partners pro rata in accordance with their
respective Percentage Interests.
Page 14
(B) LOSSES:
(i) First, to the Partners to offset any Profits previously allocated
pursuant to subparagraph (a)(viii) above, pro rata among the
Partners each pro rata in the proportion that it was allocated
its share of the Profits being offset;
(ii) Second, to the Partners pro rata in proportion to their
respective Percentage Interests of the total Base Capital up to
the amount of same;
(iii) Third, to the Partners to offset any Profits previously
allocated pursuant to subparagraph (a)(vii) above, pro rata among
the Partners each in the proportion that it was allocated its
share of the Profits being offset;
(iv) Fourth, to the Partners pro rata in proportion to their
respective Percentage Interests of the Unrecovered Priority
Capital Contributions which are not in excess of their respective
Percentage Interests of the total Unrecovered Priority Capital
Contributions, up to the amount of such pro rata portion;
(v) Fifth, to the Partners to offset any Profits previously allocated
pursuant to subparagraph (a)(vi) above, pro rata among the
Partners each in the proportion that it was allocated its share
of the Profits being offset;
(vi) Sixth, to the Partners pro rata in proportion to their respective
Percentage Interests of the Unrecovered Preferred Capital
Contributions which are not in excess of their respective
Percentage Interests of the total Unrecovered Preferred Capital
Contributions, up to the amount of such pro rata portion;
(vii) Seventh, to the Partners to offset any Profits previously
allocated pursuant to subparagraph (a)(iv) above, pro rata among
the Partners each in the proportion that it was allocated its
share of the Profits being offset;
(viii) Eighth, to the Partners to reduce their respective Priority
Capital Contributions which are in excess of their respective
Percentage Interests of the total Unrecovered Priority Capital
Contributions, pro rata among such Partners in the proportions
that their respective Unrecovered Priority Capital Contributions
are in excess of their respective Percentage Interests of the
total Unrecovered Priority Capital Contributions, up to the
amount of such excess;
(ix) Ninth, to the Partners to offset any Profits previously allocated
pursuant to subparagraph (a)(ii) above, pro rata among the
Partners each in the proportion that it was allocated its share
of the Profits being offset;
(x) Tenth, to the Partners to reduce their respective Preferred
Capital Contributions which are in excess of their respective
Percentage Interests of the total Unrecovered Preferred Capital
Contributions, pro rata among such Partners in the proportions
that their respective Unrecovered Preferred Capital Contributions
are in excess of their respective Percentage Interests of the
total Unrecovered Preferred Capital Contributions, up to the
amount of such excess;
(xi) Thereafter, all remaining Losses shall be allocated to the
General Partner.
To the extent any previous allocations of Profits have been offset pursuant to
subparagraphs (b)(i) through (b)(x), those previous allocations of Profits shall
be disregarded for purposes of computing subsequent allocations pursuant to this
Article 6.
6.05 NONRECOURSE DEDUCTIONS:
(a) Nonrecourse Deductions shall be allocated among the Partners consistent
with Section 704(b) of the Code.
(b) Any Partner Nonrecourse Deductions for any fiscal year or other period
shall be allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt as determined in accordance with Section
1.704-2(i) of the Treasury Regulations.
6.06 GENERAL PROVISIONS: Whenever a proportionate part of Profits or Losses is
credited or charged to a Partner's Capital Account, every item of income, gain,
loss, deduction or credit entering into the computation of the Profits or
Losses, or applicable to the period during which the Profits or Losses are
realized, shall be considered credited or charged, as the case may be, to the
applicable component of such Partner's Capital Account in the same proportion
and in the order of priority and as otherwise provided for in this Article 6.
Page 15
As between a Limited Partner and a transferee of such Limited Partner, unless
otherwise agreed by them and the Management Committee, or with respect to the
Partners upon the admission of a Limited Partner, Profits and Losses for any
fiscal year (or portion thereof, as the case may be) shall be determined by the
Management Committee which determination shall take into consideration but not
be required to made in accordance with the desires of the Limited Partner and
the transferee of such Limited Partner or the Limited Partner being admitted.
6.07 CURATIVE ALLOCATION: The allocations set forth in Sections 6.01, 6.02 and
6.03 (the "REGULATORY ALLOCATIONS") comply with certain requirements of Section
1.704-1 and -2 of the Treasury Regulations. The Regulatory Allocations may not
be consistent with the manner in which the Partners intend to allocate Profits
or Losses or divide Partnership distributions. Accordingly, notwithstanding the
other provisions of this Article 6, but subject to the Regulatory Allocations,
the Profits and Losses and items of income, gain, deduction and losses of the
Partnership may be allocated among the Partners so as to eliminate the effect of
the Regulatory Allocations, and thereby to cause the respective Capital Accounts
of the Partners to be in the amounts in which they would have been if Profits or
Losses and such other amounts of income, gain, deduction and loss had been
allocated without reference to the Regulatory Allocations. The General Partner
shall have discretion to accomplish the result in any reasonable manner.
6.08 TAX ALLOCATIONS: All items of Partnership income, gain, loss and deduction,
including Nonrecourse Deductions, shall be allocated for federal, state and
local income tax purposes by the General Partner, acting reasonably, to and
among the Partners in the same manner that the corresponding items of
Partnership income, gain, loss and deduction are allocated for book purposes,
except as otherwise provided in this Article 6.
6.09 CHARACTER OF GAIN: If the net gain from any disposition of an asset
included in the Partnership Property is capital gain in part and, as the result
of depreciation recapture or otherwise, ordinary income in part, the ordinary
income portion of such gain shall first be allocated to each Partner in the same
proportion as the depreciation allocated to such Partner (or its predecessor)
which gave rise to such ordinary income bears to such deductions allocated to
all Partners (and their predecessor-partners), provided that any allocation
pursuant to this Section shall not exceed the total amount of gain allocated to
such Partner with respect to such disposition. Any ordinary income not allocated
to a Partner because of the proviso clause in the preceding sentence shall be
allocated to the other Partners in the ratio in which each of them generally
share in profits and losses in connection with the event giving rise to the
gain.
6.10 ALLOCATION OF NONRECOURSE DEBT: Solely for purposes of determining a
Partner's proportionate share of excess Nonrecourse Liabilities of the
Partnership within the meaning of Section 1.752-3 of the Treasury Regulations,
the Partner's interest in Partnership profits shall be the Partner's Percentage
Interest.
6.11 ALLOCATION OF INHERENT GAIN IN PROPERTY:
(a) Pursuant to Section 704(c) of the Code, income, gain, loss and
deduction with respect to property contributed by the Partners (or property
whose basis is determined by reference solely to the Partner who contributed
such property) shall be allocated in a manner to take account of the variation
between the tax basis of the property and initial Gross Asset Value in
accordance with the method described in Section 1.704-3 selected by the General
Partner. This Section is intended to comply with Section 704(c) of the Code and
shall be interpreted consistent therewith. Allocations made pursuant to this
Section shall not increase or decrease or otherwise affect the respective
Capital Accounts of the Partners.
(b) In the event the Gross Asset Value of any asset included in the
Partnership Property is adjusted pursuant to Clause (b)(ii) of the definition of
Gross Asset Value, subsequent allocations of income, gain, loss and deduction
with respect to such asset shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes and its Gross Asset
Value in the same manner as under Section 704(c) of the Code and the Treasury
Regulation thereunder. Allocations made pursuant to this Section shall not
increase or decrease or otherwise affect the respective Capital Accounts of the
Partners.
Page 16
ARTICLE 7 - ADDITIONAL FINANCING, ETC.
7.01 EXTERNAL FINANCING: Financing as required by the Business Plan (provided
for in Section 10.03) is to be obtained by the Partnership from external sources
to the fullest extent it is available on commercially reasonable terms, as
approved by the Management Committee.
Any such external financing will, if required by a lender and approved by
Limited Partners who hold in the aggregate at least 51% of the total Percentage
Interests of the Partners, be secured upon the Partnership Interests, will be
without recourse to each Limited Partner except as to their respective
Partnership interests and shall be several and not joint or joint and several
(except as to realization on the Partnership Interests in the event of a
realization by the secured party). However, if such financing is required by a
lender to be with recourse and on a several or joint and several basis among the
Limited Partners and Limited Partners who hold in the aggregate at least 51% of
the total Percentage Interests of the Partners approve such requirement of the
lender, each of the Limited Partners shall enter into such guarantees or
indemnities as the lender may require and be responsible for such portion of
such financing as is equal to the proportion which it's Percentage Interest is
to the total Percentage Interests of the Limited Partners. If the obligations of
the Limited Partners are on a joint and several basis, such obligations will be
subject to mutual indemnification in accordance with Section 18.05 to the end
that the liabilities of each of them as between and amongst themselves will
always be limited as provided in Section 18.05.
Each Limited Partner shall comply, at all times, with all of its obligations
under any external financing and shall provide any information concerning such
Limited Partner which may be required by a lender in connection with any such
financing.
7.02 ADDITIONAL FINANCING BY LIMITED PARTNERS: If external financing
contemplated in Section 7.01 is not available to the Partnership then, subject
to the approval of the Management Committee, Limited Partners may, at their
option, but will not be obligated to, provide the requisite financing to the
Partnership each pro rata in the proportion that their Percentage Interest is to
the total amount of such financing being sought by the Partnership, adjusted to
account for Limited Partners who do not exercise their option to provide such
financing. A Limited Partner shall exercise its said option by delivery to the
Partnership of the funds in the amount of financing it desires to provide to the
Partnership together with its written designation electing to provide such
financing either:
(a) subject to Sections 8.01 and 8.02, by way of a loan to the Partnership
as either a Base Loan Advance or a Preferred Loan Advance, as
applicable, the respective terms of which Loan Advances are provided
for in Article 8; or
(b) subject to Section 5.02, by way of a Capital Contribution as either a
Priority Capital Contribution or a Preferred Capital Contribution, as
applicable.
If any of the Partners provide financing as contemplated in this Section 7.02
and the Limited Partners comprising the Allan Group subsequently determine that
replacement financing from an external source is available from a reputable
financial institution or other reputable person, the terms and conditions of
which are commercially reasonable, do not contain any greater restrictions and
are more favourable than the financing provided by such Partners, then any
nominee of the Allan Group on the Management Committee may cause a meeting of
the Management Committee to be held at which such nominee of the Allan Group
will table the written terms and conditions of such replacement financing. If
such replacement financing is available from a reputable financial institution
or other reputable person and the terms and conditions thereof are commercially
reasonable, do not contain any greater restrictions and are more favourable than
the financing provided by the said Partners, then the Management Committee shall
confirm and approve such replacement financing. On the Management Committee
giving such approval, the General Partner shall use commercially reasonable
efforts to obtain and implement the said replacement financing. Upon obtaining
the said replacement financing, the proceeds will be applied by the Partnership
to repay the outstanding balances of the financing obtained by the Partnership
from the relevant Partners and all other amounts then owing to such Partners in
connection therewith.
Page 17
ARTICLE B - LOAN ADVANCES
8.01 LIMITATIONS RE LOAN ADVANCES: Funds may not be advanced by or on behalf of
a Partner (a "LENDING PARTNER") to the Partnership by way of loan unless and
until:
(a) where any of the other Partners have Unrecovered Priority Capital
Contributions, such Lending Partner's Unrecovered Priority Capital
Contributions are at least equal to such Lending Partner's Percentage
Interest of the total Unrecovered Priority Capital Contributions of
the Partners; and
(b) where any of the other Partners have Unrecovered Preferred Capital
Contributions, such Lending Partner's Unrecovered Preferred Capital
Contributions are at least equal to such Lending Partner's Percentage
Interest of the total Unrecovered Preferred Capital Contributions of
the Partners.
8.02 ORDER OF LOAN ADVANCES: Any funds being advanced to the Partnership by or
on behalf of a Partner to the Partnership by way of loan:
(a) in accordance with Section 7.02(a); or
(b) in accordance with a requirement to do so pursuant to any of the Other
Partnership Agreements;
shall, at the time of such advance, constitute a Base Loan Advance by such
Partner unless and until such Partner's Base Loan Advances equal its Percentage
interest of the total Base Loan Advances of the Partners or, if no other
Partners then have Base Loan Advances, until such advance constitutes a
Preferred Loan Advance as defined in this Agreement, and the amount of such
advance in excess of the foregoing shall constitute a Preferred Loan Advance.
8.03 PAYMENTS RE LOAN ADVANCES: The following are the terms applicable to Loan
Advances:
(a) PREFERRED LOANS - INTEREST & REPAYMENT: The Partnership shall pay
Preferred Loan interest on the Preferred Loan Advances of a Partner
and repay the Preferred Loan Advances, all out of Net Operating Cash
in the priority and as otherwise provided for in Section 8.05, but in
any event on or before the earlier of December 31, 2019 and the date
immediately preceding the date on which the Partnership is dissolved.
(b) BASE LOANS - INTEREST & REPAYMENT: The Partnership shall pay Base Loan
Interest in arrears on the Base Loan Advances of a Partner and repay
the Base Loan Advances, all out of Net Operating Cash in the priority
and otherwise as provided for in Section 8.05, but in any event and
subject to the prior payment of Preferred Loan Advances and Unpaid
Preferred Loan Interest, on or before the earlier of December 31, 2019
and the date immediately preceding the date on which the Partnership
is dissolved.
The obligation to pay interest provided for in each of the immediately preceding
subparagraphs (a) and (b) is subject to the provisions of Section 8.07.
8.04 PROMISSORY NOTES: The General Partner will cause the Partnership to make
and deliver a promissory note to and in the name of a Partner with respect to
each Loan Advance made by such Partner to evidence same, which note shall
contain the terms of the relevant Loan Advance as provided for in this
Agreement. Each such promissory note will be:
(a) delivered to the Partner substantially contemporaneously with the
receipt by the Partnership of the relevant Loan Advance; and
(b) shall be in the form set out in the attached Exhibit C.
At all times while any of the said promissory notes are outstanding, a register
shall be kept by, or on behalf and under the direction of, the General Partner
in which shall be entered the names and addresses of the noteholders and
particulars of the promissory notes held by them respectively and a register of
transfers in which shall be kept particulars of all transfers of the said notes.
Page 18
8.05 PAYMENTS RE LOAN ADVANCES: Distributions of Net Operating Cash may only be
made by the General Partner to the Partners, and each of the Partners shall only
be entitled to receive its share (as determined in accordance with the
provisions of this Agreement) of amounts to be distributed out of Net Operating
Cash, after deduction from such amounts for amounts, if any, owing by such
Partner to the Partnership and as provided for in Article 21, but in priority to
any distributions of Net Cash Flow provided for in Article 9, in payment of Loan
Advances and interest thereon in the following order of priority:
(a) first, on account and in payment of Unpaid Preferred Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Preferred Loan
Interest on their Preferred Loan Advances in excess of their respective
Percentage Interests of the total Preferred Loan Advances are of all such Unpaid
Preferred Loan Interest of the Partners, in an amount equal thereto;
(b) second, on account and in repayment of the Preferred Loan Advances, to the
Partners pro rata in the proportion that their respective Preferred Loan
Advances in excess of their respective Percentage Interests of the total
Preferred Loan Advances are of all such excess Preferred Loan Advances of the
Partners, in an amount equal thereto;
(c) third, on account and in payment of Unpaid Base Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Base Loan
Interest on their Base Loan Advances in excess of their respective Percentage
Interests of the total Base Loan Advances are of all such Unpaid Base Loan
Interest of the Partners, in an amount equal thereto;
(d) fourth, on account and in repayment of the Base Loan Advances, to the
Partners pro rata in the proportion that their respective Base Loan Advances in
excess of their respective Percentage Interests of the total Base Loan Advances
are of all such excess Base Loan Advances of the Partners, in an amount equal
thereto;
(e) fifth, on account and in payment of Unpaid Preferred Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Preferred Loan
Interest on their Preferred Loan Advances that are in proportion to their
respective Percentage Interests of the total Preferred Loan Advances of the
Partners, are of all such Unpaid Preferred Loan Interest, in an amount equal
thereto;
(f) sixth, on account and in repayment of the Preferred Loan Advances, to the
Partners pro rata in the proportion that their respective Preferred Loan
Advances that are in proportion to their respective Percentage Interests of the
total Preferred Loan Advances of the Partners, are of all such Preferred Loan
Advances, in an amount equal thereto;
(g) seventh, on account and in payment of Unpaid Base Loan Interest, to the
Partners pro rata in the proportion that their respective Unpaid Base Loan
Interest on their Base Loan Advances that are in proportion to their respective
Percentage Interests of the total Base Loan Advances of the Partners, are of all
such Unpaid Base Loan Interest, in an amount equal thereto;
(h) eighth, on account and in repayment of the Base Loan Advances, to the
Partners pro rata in the proportion that their respective Base Loan Advances
that are in proportion to their respective Percentage Interests of the total
Base Loan Advances of the Partners, are of all such Base Loan Advances, in an
amount equal thereto;
and shall, subject to Section 9.05, be directed to the applicable Partners at
their respective addresses in accordance with Section 23.01.
8.06 LIMITATION: Notwithstanding the foregoing, no distribution of Net Operating
Cash will be made pursuant to this Article 8 except to the extent and out of
unencumbered cash funds of the Partnership sufficient for the distribution after
taking into account (except in the case of dissolution of the Partnership) the
amounts which should be set aside to provide a reasonable reserve for the
continuing conduct of the business of the Partnership, including its working
capital requirements.
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8.07 LIMITATION RE INTEREST: Each of the obligations to pay interest provided
for in this Agreement including, without limitation, as provided for in this
Article 8 with respect to Loan Advances is subject to the limitation that
payments of such interest shall not be required to the extent that receipt of
any such payment by the payee would be contrary to provisions of law applicable
to such payee (if any) which limit the maximum rate of interest which may be
charged or collected by the payee; provided, however, that nothing herein shall
be construed to limit the payee to presently existing maximum rates of interest
if an increased interest rate is hereafter permitted by reason of applicable
federal or state legislation. In the event that a payor makes any payment of
interest, fees or other charges, however denominated, in respect of a Loan
Advance or other amount or obligation which payment results in the interest paid
to the payee exceeding the maximum rate of interest permitted by applicable law,
any excess over such maximum shall be applied in reduction of the principal
balance owed to the payee as at the date of such payment, or if such excess
exceeds the amount of principal owed to the payee as at the date of such
payment, the difference shall be paid by the payee to the payor.
Page 20
ARTICLE 9 - DISTRIBUTIONS OF NET CASH FLOW
9.01 NET CASH FLOW: Net Cash Flow may only be distributed by the General
Partner. Distributions of Net Cash Flow will be made by the General Partner in
such amounts and at such times as the General Partner in its sole discretion
determines acting reasonably, provided that no distributions of Net Cash Flow
may be made until the Loan Advances and the Unpaid Preferred Loan Interest and
Unpaid Base Loan Interest have been paid pursuant to Article 8.
Subject to the foregoing, distributions of Net Cash Flow may only be made by the
General Partner to the Partners, and each of the Partners shall only be entitled
to receive its share (as determined in accordance with the provisions of this
Agreement) of amounts to be distributed out of Net Cash Flow, after deduction
from such amounts for amounts, if any, owing by such Partner to the Partnership
and as provided for in Article 21, in payment of the following matters and in
the following order of priority:
(i) first, to the Partners, on account of their respective Unpaid Preferred
Capital Returns on their respective Preferred Capital Contributions which
are in excess of their respective Percentage Interests of the total
Unrecovered Preferred Capital Contributions, pro rata among such Partners
in the proportions that their respective Preferred Capital Contributions
are in excess of their respective Percentage Interests of the total
Unrecovered Preferred Capital Contributions, until the amounts distributed
to the Partners pursuant to this subparagraph (i) is equal to the total of
the Unpaid Preferred Capital Returns of the Partners on such excess;
(ii) second, to the Partners to reduce their respective Preferred Capital
Contributions which are in excess of their respective Percentage Interests
of the total Unrecovered Preferred Capital Contributions, pro rata among
such Partners in the proportions that their respective Preferred Capital
Contributions are in excess of their respective Percentage Interests of the
total Unrecovered Preferred Capital Contributions, up to the amount of such
excess;
(iii) third, to the Partners, on account of their respective Unpaid Priority
Capital Returns on their respective Priority Capital Contributions which
are in excess of their respective Percentage Interests of the total
Unrecovered Priority Capital Contributions, pro rata among such Partners in
the proportions that their respective Priority Capital Contributions are in
excess of their respective Percentage Interests of the total Unrecovered
Priority Capital Contributions, until the amounts distributed to the
Partners pursuant to this subparagraph (iii) is equal to the total of the
Unpaid Priority Capital Returns of the Partners on such excess;
(iv) fourth, to the Partners to reduce their respective Priority Capital
Contributions which are in excess of their respective Percentage Interests
of the total Unrecovered Priority Capital Contributions, pro rata among
such Partners in the proportions that their respective Priority Capital
Contributions are in excess of their respective Percentage Interests of the
total Unrecovered Priority Capital Contributions, up to the amount of such
excess;
(v) fifth, to the Partners, pro rata in proportion to their respective
Percentage Interests of the aggregate balance of their Unpaid Preferred
Capital Returns, up to the amount of such balance;
(vi) sixth, to the Partners pro rata in proportion to their respective
Percentage Interests of the aggregate balance of the Unrecovered Preferred
Capital Contributions, up to the amount of such balance;
(vii) seventh, to the Partners, pro rata in proportion to their respective
Percentage Interests of the aggregate balance of their Unpaid Priority
Capital Returns, up to the amount of such balance;
(viii) eighth, to the Partners pro rata in proportion to their respective
Percentage Interests of the balance of the Unrecovered Priority Capital
Contributions, up to the amount of such balance;
(ix) ninth, an amount equal to the balance, if any, of Net Cash Flow remaining
after the foregoing, to the Partners pro rata in proportion to their
respective Percentage Interests;
and shall, subject to Section 9.05, be directed to the applicable Partners at
their respective addresses in accordance with Section 23.01.
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9.02 LIMITATION: Notwithstanding the foregoing, no distribution of Net Cash Flow
will be made except to the extent and out of unencumbered cash funds of the
Partnership sufficient for the distribution after taking into account (except in
the case of dissolution of the Partnership) the amounts which should be set
aside to provide a reasonable reserve for the continuing conduct of the business
of the Partnership, including its working capital requirements.
9.03 DISTRIBUTION OF ASSETS IN KIND: Any assets included in the Partnership
Property may be distributed to any of the Partners in kind, as the Management
Committee may determine pursuant to Section 10.04(b)(v). Any such asset so
distributed shall be valued by the Management Committee to determine the gain or
loss which would have resulted if such asset were sold for cash, and the Capital
Account of the Partner to whom such asset is so distributed shall be adjusted to
reflect how the gain or loss would have been allocated in accordance with the
provisions of this Agreement as such Partner would have been entitled to cash
distributions had such asset been sold at such assigned value.
9.04 DEMAND FOR DISTRIBUTION: No Partner shall be entitled to demand and receive
a distribution of Partnership Property in return for its Capital Contributions.
9.05 DIRECTION RE DISTRIBUTIONS - OTHER PARTNERSHIPS: A Funding Partner may, in
its sole discretion, require by written notice (provided for further below) that
a Partner who:
(a) is not a Funding Partner, or
(b) is a Funding Partner who in respect of any of the Other Partnerships
has "Loan Advances", "Unrecovered Priority Capital Contributions"
and/or "Unrecovered Preferred Capital Contributions" (all as provided
for in the applicable Other Partnership Agreements) in an amount which
is less than its Percentage interest in such Other Partnership of the
total amount of the "Loan Advances", "Unrecovered Priority Capital
Contributions" and/or "Unrecovered Preferred Capital Contributions",
of and as applicable to such Other Partnership and the partners
thereof;
pay all or any part of any payment to be made to such Partner pursuant to
Article 8 and/or any distribution to be made to such Partner (the "UNDERFUNDED
PARTNER") pursuant to either Section 9.01 or Section 17.04 in each case after
the date of delivery of such notice, to such Other Partnership by way of a loan
advance or capital contribution, as applicable in accordance with the provisions
of the Other Partnership Agreement for such Other Partnership and as specified
in such notice accordingly, until the aggregate amount so paid by the
Underfunded Partner to such Other Partnership equals the amount that its
Percentage Interest in such Other Partnership is of the total amount of "Loan
Advances", "Unrecovered Priority Capital Contributions", "Unrecovered Preferred
Capital Contributions", "Unpaid Base Loan Interest" "Unpaid Preferred Loan
Interest", "Unpaid Priority Capital Return" and "Unpaid Preferred Capital
Return" of and as applicable to such Other Partnership and the partners thereof
as provided for in it's Other Partnership Agreement.
The said notice shall be signed by the Funding Partner, addressed and delivered
by it to the Underfunded Partner and the General Partner of each of the
Partnership and the Other Partnership and shall on such delivery, without
further formality, constitute an irrevocable direction by such Underfunded
Partner to the General Partner and the Partnership to pay the said distributions
to the Other Partnership in accordance with such notice and on behalf of such
Underfunded Partner, and the General Partner and the Partnership will comply
with the said notice and direction.
Notwithstanding the foregoing, a Funding Partner may not deliver the notice
provided for above requiring the Underfunded Partner to pay distributions to any
of the Other Partnerships unless the amount of such Funding Partner's "Loan
Advances", "Unrecovered Priority Capital Contributions" or " Unrecovered
Preferred Capital Contributions" is equal to or greater than such Funding
Partner's Percentage Interest of the total amount of "Loan Advances",
"Unrecovered Priority Capital Contributions" or "Unrecovered Preferred Capital
Contributions", all with respect to the applicable Other Partnership and the
partners thereof.
Page 22
ARTICLE 10 - CONTROL & MANAGEMENT
10.01 RIGHTS AND POWERS: The General Partner shall have, except as specifically
limited in this Agreement, full and exclusive authority in the management and
control of the Partnership for the purposes set forth in Section 4.01, and shall
have all the rights and powers which are otherwise conferred by law or are
necessary or advisable for the discharge of its duties to and the management of
the business and affairs of the Partnership. The General Partner shall devote so
much of its time and effort as is appropriate for the effective management and
conduct of the business of the Partnership.
The General Partner agrees to act honestly, in good faith and in accordance with
good business practices in the discharge of its duties to and in its management
of the business and affairs of the Partnership and to exercise the degree of
care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
10.02 EXPRESSLY AUTHORIZED RIGHTS AND POWERS: Without limiting the generality of
Section 10.01, but subject to the provisions of Sections 10.04 and 10.08 and the
Business Plan in effect from time to time, the General Partner is expressly
authorized on behalf of the Partnership to:
(i) procure and maintain with responsible companies such insurance as may
be advisable in such amounts and covering such risks as are deemed
appropriate by the General Partner;
(ii) take and hold any assets included in the Partnership Properly in the
Partnership name, or in the name of a nominee of the Partnership;
(iii) execute and deliver on behalf of and in the name of the Partnership,
or in the name of a nominee of the Partnership, all instruments,
contracts and other documents necessary or incidental to the conduct
of the Partnership's business;
(iv) protect and preserve the Partnership Property and incur indebtedness
in the ordinary course of business;
(v) sell, dispose of, trade, exchange, convey, quit, claim, surrender,
release or abandon, in the ordinary course of carrying on the business
of the Partnership and upon terms and conditions which the General
Partner may negotiate and deem appropriate, personal property included
in the Partnership Property;
(vi) execute and deliver documents and instruments on behalf of the
Partnership in connection with the acquisition and disposition of its
assets, and to execute, terminate, modify, enforce, continue or
otherwise deal with any Partnership indebtedness and security
interests, to sell assets included in the Partnership Property, and to
take any other action with respect to agreements made between the
Partnership and a lender or any Affiliate thereof, all subject to the
limitations of Section 10.08;
(vii) open Partnership bank accounts in which all Partnership funds shall
be deposited and from which all payments by the Partnership shall be
made;
(viii) invest Partnership funds and working capital reserves; and
(ix) possess and exercise any and all rights, powers and privileges of a
general partner under the laws of the State of Florida.
10.03 MANAGEMENT COMMITTEE: A Management Committee of the General Partner having
5 members shall be formed by the General Partner who shall appoint the members
thereof in accordance with the following requirements (the "MANAGEMENT
COMMITTEE"). Three of the members so appointed shall be nominees of the Great
Gulf Group which nominees shall initially be Elly Reisman, Seymour Joffe and
Harry Rosenbaum. The Great Gulf Group may from time to time nominate such other
individuals to be members of the Committee in substitution for any one or more
of the of the members previously nominated by the Great Gulf Group. Two of the
members so appointed shall be a nominees of the Allan Group which nominees shall
initially be William Allan and Russell Allan. The Allan Group may from time to
time nominate such other individuals to be members of the Committee in
substitution for any one or both of the member previously nominated by the Allan
Group.
Page 23
Any vacancy in the Management Committee shall be filled by a nominee of the
Group which nominated the former member of the Committee whose loss of office
created the vacancy within 15 days of the creation of the vacancy. The General
Partner shall fill the vacancy by appointing the said nominee on receipt from
the said Group of its notice stating the name and address of the person who it
nominates to the Committee to fill the vacancy. Copies of such notice shall be
given by the General Partner to the other members of the Committee and to the
person then so appointed a member of the Committee. If a vacancy is not filled
within the said 15 day period, the right to nominate a person to fill such
vacancy shall be deemed to have been waived and the other member(s) of the
Committee appointed on nomination by such Group shall be deemed then to have all
rights, powers and obligations of the former member, in addition to his own such
rights, powers and obligations.
The General Partner shall prepare a Business Plan for each fiscal year of the
Partnership following its second fiscal year, and deliver such Plan to each
member of the Management Committee not later than the 3Oth day following the
start of the fiscal year to which it relates. Each such Business Plan shall
contain in reasonable detail such information (including financial matters such
as cash flow projections, operating and capital budgets) as would be
commercially reasonable in the circumstances relating to the business carried on
by the Partnership. Each Business Plan is subject to the approval of the
Management Committee, as the same may from time to time be amended by variations
approved by the Management Committee.
The General Partner shall make all decisions necessary to implement, and which
are within, the provisions of such Business Plan to the extent that the
decisions so made are within the rights, powers and authority of the General
Partner provided for in this Agreement.
All decisions of the Management Committee, being a committee of the General
Partner, shall be the decisions of and be binding on the General Partner and
each of the Limited Partners. The General Partner will be responsible for the
conduct of and all decisions made by the Management Committee. Each of the Great
Gulf Group and the Allan Group will be responsible to each of the Partners for
the conduct of the member(s) of the Management Committee nominated by such
Group.
A quorum for meetings will be at least 3 members present, at least one of whom
is the nominee of the Allan Group and at least 2 of whom are nominees of the
Great Gulf Group; provided that, and notwithstanding any other provisions of
this Agreement, if no nominee of the Allan Group is present within 30 minutes
following the scheduled time for commencment of a properly called meeting of the
Management Committee then the meeting may with the consent of the other nominees
present (provided that at least 2 of the nominees of the Great Gulf Group are
then present) adjourn the meeting to a date not less than 2 Business Days from
the date for which the meeting was originally called and deliver such notice as
is reasonably practicable in the circumstances of such adjournment to the
nominees of the Allan Group and if no nominee of the Allan Group is present at
the time and date so fixed for the adjourned meeting then the quorum for all
purposes of such adjourned meeting will be any 2 members of the Management
Committee present and who are nominees of the Great Gulf Group.
Meetings of the Management Committee shall be held not less than once in each
quarter of each fiscal year at such times and place as a majority of the members
of the Committee agree to from time to time. Any one member of the Management
Committee may, in addition to meetings held as aforesaid, call a meeting of the
Committee not more than once each calendar month.
All meetings of the Management Committee shall be held at the Principal Place of
Business unless the place for any such meeting is otherwise agreed to as
aforesaid. Any member of the Management Committee may participate in a meeting
of the Committee by means of conference telephone or similar communication
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting by means of such communication
equipment shall constitute attendance and presence at such meeting.
Page 24
Notice of a meeting of the Management Committee shall be given not less than 5
Business Days prior thereto provided that no notice of a meeting shall be
necessary if a meeting is held at which a quorum is present and notice may be
less than 5 Business Days if such meeting is held in furtherance of a meeting
adjourned as a result of no quorum being present as provided for above. Any such
notice may given, if to a member of the Committee nominated by the Great Gulf
Group, to such member at the address for the Great Gulf Group provided for in
Section 23.01, and if to the member nominated by the Allan Group, to such member
at the address for the Allan Group provided for in the said Section.
The powers of the Management Committee may only be exercised either by
resolution at a meeting at which a quorum is present or by resolution in writing
consented to by the signatures of all the members of the Committee. Copies of
all notices of meetings of the Committee and of all minutes of the Committee and
of all resolutions passed by it in accordance with the terms hereof shall be
provided to each member of the Committee.
Subject to the requirements of section 10.04(b), any resolution to be passed or
action to be taken by the Management Committee at a meeting must have the
approval of a majority of the members of the Management Committee present at
such meeting as evidenced either by the affirmative vote, or the prior approval
in writing, of the requisite members of the Committee.
A chairperson and a secretary of the Management Committee shall be elected by
the Committee from amongst its members for such term as the Committee determines
at the time of such election. The chairperson shall chair the meetings of the
Committee at which he is present. In the absence of the chairperson, the members
of the Committee shall choose one of their members to be chair of a meeting. The
secretary shall prepare and distribute the minutes of the meetings of the
Committee to all members of the Committee as soon as practicable after each
meeting. The chairperson shall not have a casting vote.
10.04 MANAGEMENT COMMITTEE SPECIFIC APPROVALS:
(a) ORDINARY APPROVALS: The prior approval of the Management Committee
shall be required for each of the following matters related to the Partnership
to the extent the same is not provided for in the Business Plan as approved by
the Management Committee:
(i) the Transfer of any Partnership Property having a value of more
than $100,000 to any person who is not an Affiliate of any of the
Limited Partners comprising the Great Gulf Group;
(ii) incurring of indebtedness for borrowed money or refinancing of
existing borrowings;
(iii) granting of security against the Partnership Property;
(iv) entering into any agreement providing for the guarantee by the
Partnership of the obligations of any other person;
(v) entering into any agreement with or commitment to any person who
is not a Partner involving the expenditure of more than $100,000
by the Partnership in any fiscal year;
(vi) the settlement of any claim or legal proceeding involving the
payment by the Partnership of more than $100,000;
(vii) the acquisition of any real property from either of the Other
Partnerships;
(viii) change the name of the Partnership;
Page 25
(b) SPECIAL APPROVALS: The prior approval of the Management Committee shall
be required for each of the following matters related to the Partnership whether
or not the same is provided for in the Business Plan as approved by the
Management Committee, such approval to be evidenced either by the affirmative
vote of at least 4 of the 5 members of the Management Committee present at a
meeting of the Committee, or the prior approval in writing of 4 of the 5 members
of the Committee:
(i) the acquisition by the Partnership, or the entering into of any
agreement binding on the Partnership, for the acquisition of any
real property at any time after October 1, 1998, other than from
either of the Other Partnerships or as may be required in the
reasonable opinion of the General Partner for purposes of
development of the then existing Partnership Property,
(ii) the sale, assignment, exchange, transfer, or any other
disposition or type of conveyance of any real property included
in the Partnership Properly, by the Partnership to or with any
person who is an Affiliate of any of the Limited Partners
comprising the Great Gulf Group, or any agreement(s) to do any of
the foregoing, in each case other than with either of the Other
Partnerships;
(iii) the payment of any fee to the General Partner or any of the
Limited Partners comprising the Great Gulf Group which has not
been previously agreed to by the Allan Group;
(iv) the purchase or redemption by the Partnership of any Partnership
Interest. For greater certainty distributions of Net Operating
Cash or Net Cash Flow to the Partners provided for elsewhere in
this Agreement, including Articles 8 and 9 do not constitute a
purchase or redemption of a Partnership Interest;
(v) the distribution in kind to the Partners of any assets included
in the Partnership Property;
(vi) the dissolution of the Partnership and termination of its
business;
(vii) the termination of the Partnership within the meaning of Section
708(b) of the Code;
(viii) the change or reorganization of the Partnership into any other
legal form.
10.05 APPROVALS, CONSENTS, ETC.: Wherever the provisions of this Agreement
provide for an approval by a Partner or a member of the Management Committee of
or consent or agreement to or for any action or document, this Agreement shall
(unless the text hereof expressly states that such approval may be unreasonably
or arbitrarily withheld) be deemed to provide that:
(a) such approval, consent or agreement shall be in writing and shall not
be unreasonably withheld or delayed; and
(b) the Partner or Management Committee Member whose approval, consent or
agreement is requested shall, as soon as reasonably possible after the
receipt of a notice requesting such approval, consent or agreement
give notice to each of the Partners or other Management Committee
Members requesting the same, either that it is giving its approval,
consent or agreement or that it withholds or refuses the same in which
case it shall set forth, in reasonable detail, its reasons for such
withholding or refusal.
10.06 TAX MATTERS PARTNER: The TMP shall act as a liaison between the
Partnership and the Internal Revenue Service in connection with all
administrative and judicial proceedings involving tax controversies of the
Partnership, and shall assume all the rights and duties of a TMP as set forth in
the Code and Treasury Regulations promulgated under the Code. These rights and
duties include, but are not limited to:
(a) the duty to notify and keep all other Partners informed of all
administrative and judicial proceedings, as required by Section
6223(g) of the Code, and to furnish to each Partner, upon written
request, a copy of each notice or other communication received by the
TMP from the Internal Revenue Service;
(b) the obligation to furnish the Internal Revenue Service the names,
addresses, and taxpayer identification numbers of each person who was
a Partner at any time during the taxable year;
(c) the right to settle any claims by the Internal Revenue Service against
the Partnership;
(d) the right to initiate judicial proceedings contesting adverse
determinations by the Internal Revenue Service against the
Partnership;
(e) the right to enter into an agreement to extend the statute of
limitations;
Page 26
(f) the right to employ experienced tax counsel to represent the
Partnership in connection with an audit or investigation of the
Partnership by the Internal Revenue Service, and in connection with
all subsequent administrative and judicial proceedings arising out of
the audit. The fees and expenses of tax counsel shall be a Partnership
expense and shall be paid by the Partnership. The General Partner and
the Limited Partners may, at their expense, employ tax counsel to
represent their respective separate interests; and
(g) the duty to arrange for the preparation and delivery of Partnership
information returns and Schedule K-I's to the Limited Partners.
10.07 NO MANAGEMENT & CONTROL BY LIMITED PARTNERS: None of the Limited Partners
shall participate in the conduct, management or control of the Partnership
business. None of the Limited Partners shall have any right or authority to act
for or bind the Partnership. These powers shall be vested solely and exclusively
in the General Partner.
10.08 CERTAIN LIMITATIONS: Notwithstanding the generality of the foregoing, and
in addition to other acts expressly prohibited by this Agreement or by law, the
General Partner shall not have the authority to:
(a) do any act in contravention of this Agreement;
(b) do any act which would make it impossible for the Partnership to carry
on the business of the Partnership in the ordinary course, except as
expressly provided in this Agreement;
(c) confess a judgement against the Partnership;
(d) execute or deliver any general assignment for the benefit of the
creditors of the Partnership;
(e) possess any of the Partnership Property or assign the Partnership's
rights in specific Partnership Property for other than a Partnership
purpose; and
(f) knowingly or willingly do any act (except an act expressly required by
this Agreement) which would cause the Partnership to become an
association taxable as a corporation.
10.09 REIMBURSEMENT FOR EXPENSES: The General Partner shall be entitled to be
reimbursed for all reasonable expenses incurred by it in connection with the
Partnership Property and the conduct of the Partnership business, including, but
not limited to, all reasonable expenses incurred when acting in the capacity of
TMP and all reasonable expenses related to the organization and start-up of the
Partnership's business.
ARTICLE 11 - ADMISSION & TRANSFER OF PARTNERSHIP INTERESTS
11.01 GENERAL PROVISION: None of the Partners may effect a Transfer of all or
any part of its Partnership Interest and no person shall become an assignee of a
Partner or be admitted to the Partnership as a Partner, in each case except as
permitted in this Article 11 and in Articles 12, 13, 14, 15, 20 and 21. Any
Transfer made in contravention of any of the foregoing specified Articles shall
be null and void.
11.02 ADMISSION OF NEW PARTNERS: The General Partner may from time to time admit
such person(s) to the Partnership to be Limited Partners on such terms as the
Management Committee approves, without requirement for the consent of the then
existing Limited Partners, provided that the terms of such admission affect the
Partnership Interests held by the then existing Limited Partners in all material
respects in the same manner and to the same extent proportionately to the
Percentage Interests then held by such existing Limited Partners and provided
further that immediately following the admission of such person(s) as Limited
Partners the Percentage Interests, Capital Accounts and Loan Advances of the
Partners comprising the Great Gulf Group and the Allan Group represent in the
aggregate at least 51% of the total Percentage interests, Capital Accounts and
Loan Advances of all the Partners. No person may be so admitted as a Limited
Partner unless and until such person executes and delivers to the then existing
Limited Partners and the General Partner this Agreement or a counterpart thereof
agreeing to be bound by all the terms of this Agreement with effect on the date
such person is to become a Limited Partner.
Page 27
11.03 TRANSFER OF PARTNERSHIP INTEREST BY GENERAL PARTNER: The General Partner
may not effect a Transfer of its Partnership Interest or any portion thereof
without the prior approval of the Management Committee. In the event any such
Transfer is consented to, the person acquiring or succeeding to the General
Partner's Partnership Interest shall not have any of the rights of the General
Partner and shall not become or have a right to become a substitute General
Partner unless the said approval of the Management Committee includes such
Committee's approval of such transferee becoming a substitute General Partner.
The Management Committee may, and upon the Withdrawal (defined below) of the
General Partner the Management Committee shall, appoint such person as it
determines to be the General Partner in substitution for the person then acting
as the General Partner. On receipt by a General Partner of notice that the
Management Committee has appointed a substitute General Partner the first
mentioned General Partner shall be deemed to have resigned as such effective on
the date specified in such notice and to have made a Transfer of its Partnership
Interest to the substitute General Partner.
For the purposes of this Section, "WITHDRAWAL" means the dissolution or
liquidation of the General Partner, either voluntary or under a final order of a
court of competent jurisdiction or the death, incapacity, incompetency,
insolvency or bankruptcy of a General Partner. For purposes of this definition,
the insolvency or bankruptcy of a General Partner shall be deemed to occur when
the General Partner files a petition in bankruptcy or voluntarily takes
advantage of any bankruptcy or insolvency laws, or is adjudicated a bankrupt, or
a petition or answer is filed proposing the adjudication of the General Partner
as a bankrupt and the General Partner consents to the filing or otherwise
acknowledge its insolvency.
11.04 TRANSFER OF PARTNERSHIP INTERESTS BY LIMITED PARTNERS: None of the Limited
Partners may effect a Transfer of its Partnership Interest or any portion
thereof and no person may become a substitute Limited Partner, whether pursuant
to a Transfer or otherwise, except with the prior approval of the Management
Committee or as otherwise specifically permitted in accordance with and subject
to the provisions of this Agreement including, without limitation, the
provisions of Section 11.05. Any purported Transfer made contrary to the
provisions of this Agreement will for all purposes relating to the Partnership
and each Partner be wholly ineffective. No Partner may have its Partnership
Interest purchased or redeemed by the Partnership unless the prior approval
thereto of the Management Committee is obtained as required by Section
10.04(b)(iv).
For greater certainty but without limiting the foregoing, no transferee or
assignee who is a transferee or assignee pursuant to a Transfer made contrary to
the provisions of this Agreement shall be constituted as a transferee or as an
assignee of the transferor or assignor Limited Partner's right to receive its
share of distributions out of Net Operating Cash or Net Cash Flow and shall have
no other rights as a Limited Partner, unless the Transfer is specifically
permitted by and made in accordance with the provisions of this Agreement and
unless the transferee or assignee executes and delivers an agreement with the
continuing Partners (satisfactory to them, acting reasonably) pursuant to which
such person is, if applicable, designated as a member of a Partner Group,
becomes bound by and entitled to the benefits of the provisions of this
Agreement to the extent it relates to the Partnership Interest which is the
subject of such Transfer, and all other obligations of the Partner making such
Transfer in connection with the Partnership and this Agreement.
Further, no Transfer of a Partnership Interest may be made unless (i) the
transferee, if an individual, is at least 21 years of age; and (ii) in the
opinion of counsel satisfactory to the General Partner, the Transfer (A) would
not result in the close of the Partnership's taxable year with respect to all
Partners or the termination of the Partnership within the meaning of Section
708(b) of the Code, unless otherwise approved by the Management Committee
pursuant to Section 10.04(b)(vii), (B) would comply with the Securities Act of
1933 and applicable securities laws of all other jurisdictions, and (C) would
not violate any other applicable laws.
Page 28
11.05 LIMITATION RE GREAT GULF GROUP: Notwithstanding the provisions of Section
11.04, the Partners comprising the Great Gulf Group may not effect a Transfer by
way of the sale, assignment, exchange, transfer or any other disposition or type
of conveyance of the whole or any part of their respective Partnership Interests
unless:
(a) immediately following completion of any such Transfer the aggregate
Percentage Interests and the aggregate amount of the Capital Accounts
and Loan Advances of the Partners comprising the Great Gulf Group
represent at least 51% of the total Percentage Interests and at least
51% of the aggregate amount of the Capital Accounts and Loan Advances,
of all the Partners;
(b) such Transfer is to one or more of the Partners comprising the Allan
Group; or
(c) such Transfer is effected in accordance with the provisions of Article
13.
11.06 PERMITTED TRANSFERS: The provisions of Article 11, other than this
Section, are not applicable to any of the following Transfers made in accordance
with the provisions of this Section, such that no approval by the Management
Committee is required to effect any of the following Transfers:
(a) BETWEEN PARTNERS: Transfers made by any one or more of the Partners to
any one or more of the other Partners;
(b) TO AFFILIATES: Transfers made by a Partner to an Affiliate of such
Partner.
Each of the Transfers permitted pursuant and subject to the provisions of this
Section are further subject to the requirement that on or before such Transfer
becoming effective the person to whom such Transfer is made executes and
delivers an agreement with the continuing Partners (satisfactory to them, acting
reasonably) pursuant to which such person becomes bound by and entitled to the
benefits of the provisions of this Agreement to the extent it relates to the
Partnership Interest which is the subject of such Transfer and all other
obligations of the Partner making such Transfer in connection with the
Partnership and this Agreement.
In addition to the foregoing, each Transfer to an Affiliate permitted by this
Section is subject to the following:
(i) the Partner effecting such Transfer shall not be released from any of
its obligations hereunder; and
(ii) the agreement with the continuing Partners required to be executed and
delivered on or before such Transfer becoming effective as provided for
above shall include an obligation by the transferee Affiliate and the
transferor Partner that the transferee Affiliate will remain an Affiliate
of the transferor Partner so long as such transferee is a Partner and that
the transferee will not effect a Transfer of its Partnership Interest to
any person which is not an Affiliate of the transferor Partner without
complying with the applicable provisions of this Agreement including this
Article 11.
Further, no Transfer of a Partnership Interest may be made pursuant to this
Section unless (i) the transferee, if an individual, is at least 21 years of
age; and (ii) in the opinion of counsel satisfactory to the General Partner, the
Transfer (A) would not result in the close of the Partnership's taxable year
with respect to all Partners or the termination of the Partnership within the
meaning of Section 708(b) of the Code unless otherwise approved by the
Management Committee pursuant to Section 10.04(b)(vii), (B) would comply with
the Securities Act of 1933 and applicable securities laws of all other
jurisdictions, and (C) would not violate any other applicable laws.
11.07 CONDITIONS TO CERTAIN TRANSFERS: If any Transfer provided for in Sections
11.05(a) or 11.06(b) is made of a part but not all of the Parntership Interest
held by the transferring Partner (in this Section, the "TRANSFEROR"), it shall
be a condition precedent to such Transfer that the transferee or assignee (in
this Section, the "TRANSFEREE"), agrees in writing with the Transferor and the
other Partners that:
(i) in all matters in which a Partner, by the terms of this Agreement, has
a right, such right will be exercised by the Transferor on behalf of
itself and the Transferee and the other Partners will be entitled to
rely on the actions of the Transferor in that regard as binding on the
Transferee and the Transferor will obtain a power of attorney from the
Transferee to such effect;
(ii) in all matters in which a Partner, by the terms of this Agreement, is
subject to an obligation, prohibition or restriction, such obligation,
prohibition or restriction will be binding upon the Transferee to the
same extent as the Transferor; and the Transferor remains responsible
to the other Partners for the fulfillment of any obligation hereunder
by the Transferee; and
(iii) any notices required to be given hereunder to the Transferee shall be
given to the Transferor and the Transferee.
Page 29
Notwithstanding the foregoing, the Transferor and the Transferee may enter into
a separate agreement governing the manner in which matters between them,
including matters arising from the operation of this Agreement, are to be dealt
with, which agreement may contain provisions by which the Transferee's
Partnership Interest may be re-acquired by the Transferor without such
re-acquisition being subject to the provisions of subparagraphs (i), (ii) and
(iii) of this Section.
If a Transfer by the Transferor relates to all of its Partnership Interest and
the Transferor had previously disposed of a part of its Partnership Interest,
then it shall be a condition precedent to the Transfer that the Transferor
assign to another Partner who is a member of the Group which the Transferor is a
member of immediately prior to such Transfer, all rights and obligations
accruing to the Transferor by virtue of the operation of this Section.
If a Transfer by the Transferor, other than to an Affiliate of such Transferor,
relates to all of its Partnership Interest and the Transferor did not previously
dispose of any part of its Partnership Interest, then it shall be a condition
precedent to the Transfer that the Transferee enter into the written agreement
provided for above to be entered into with the Transferor and the other Partners
with another member of the Group which the Transferor is a member of
immediately prior to such Transfer, and for such purpose all of the foregoing
references to the Transferor shall be considered as a reference to such other
member of such Group.
Unless otherwise agreed to by the Partners comprising the Allan Group, each
person admitted as a Limited Partner in accordance with the provisions of
Section 11.02 shall for the purposes of this Section be deemed to be a
Transferee in connection with a Transfer from a Transferor who is a member of
the Great Gulf Group of all of such Transferor's Partnership Interest on the
basis that such deemed Transferor did not previously dispose of any part of its
Partnership Interest and the provisions of this Section shall apply, mutatis
mutandis, to such person, including as contemplated by and provided for in the
immediately preceding paragraph.
11.08 EFFECTIVENESS OF TRANSFER:
(a) The Transfer in accordance with the provisions of this Agreement by a
Limited Partner or by a transferee of a Limited Partner of all or any part of
its Partnership Interest shall become effective on the first day of the month
following receipt by the General Partner of evidence of completion of the
Transfer in form and substance reasonably satisfactory to the General Partner
and a Transfer fee sufficient to cover all reasonable expenses of the
Partnership connected with the Transfer. The General Partner may, in its sole
discretion, establish an earlier effective date for the Transfer if requested to
do so by the transferor and transferee.
(b) No Transfer of a Partnership Interest which is in violation of this
Article 11 shall be valid or effective, and the Partnership shall not recognize
the same for the purposes of making the allocations required to be made in
accordance with the provisions of Article 6 or the making of distributions in
accordance with the provisions of Articles 8 and 9. The Partnership may enforce
the provisions of this Article 11 either directly or indirectly or through its
agents by entering an appropriate stop transfer order on its books or otherwise
refusing to register or transfer or permit the registration or transfer on its
books of any proposed Transfer(s) not in accordance with this Article 11.
(c) The Partnership shall, from the time Partnership Interests are
registered in the name of the transferee on the Partnership's books in
accordance with the above provisions, pay to the transferee on account of the
Partnership Interests transferred all further distributions, other compensation
or payments, on and subject to the provisions of this Agreement. Until
registration of a Transfer on the Partnership's books, the General Partner may
proceed as if no Transfer has occurred.
Page 30
ARTICLE 12 - BUY/SELL PROVISIONS
12.01 DEFINED TERMS:
For purposes of this Article, the following terms shall have the following
meanings, respectively:
(a) "GROSS SALE PRICE" means the total amount of cash that the Offerors,
in their sole discretion, determine would be received by the
Partnership if all the Partnership Property was sold for cash at its
fair market value.
(b) "OFFEREES SALE PRICE" means the aggregate amount that the Offerees
would receive on a liquidation of the Partnership pursuant to Article
17 if all the Partnership Property was sold for the Gross Sale Price.
(c) "OFFERORS SALE PRICE" means aggregate amount that the Offerors would
receive on a liquidation of the Partnership pursuant to Article 17 if
all the Partnership Property was sold for the Gross Sale Price.
12.02 OFFER: Subject to the provisions of Sections 13.2, 14.08, 15.05 and 21.07,
the Partners of a Partner Group, in each case provided such Partners are acting
together (collectively, the "OFFERORS") shall, subject to the provisions of the
next following paragraph, have the right at any time when no Default has
occurred with respect to any of the Offerors, to deliver to all but not less
than all the Partners of each other Partner Group (the "OFFEREES") the notice
provided for below (the "OFFERING NOTICE"). Upon delivery of an Offering Notice
no further Offering Notices may be delivered until the transaction of purchase
and sale relating to the Offering Notice and provided for in this Article 12 are
completed or otherwise at an end, whereupon the right to deliver an Offering
Notice shall revive.
The Offering Notice shall be signed by the Offerors and shall contain the
following:
(a) the Gross Sale Price, the Offerors Sale Price and the Offerees Sale
Price;
(b) an irrevocable and unconditional offer to purchase from the Offerees
all, but not less than all, of the Partnership Interests owned by each
of the Offerees, for a cash consideration equal to the Offerees Sale
Price allocated proportionately to the Partnership Interests of the
Offerees, respectively; and
(c) an irrevocable and unconditional offer to sell to the Offerees all,
but not less than all, of the Partnership Interests owned by each of
the Offerors, for a cash consideration equal to the Offerors Sale
Price allocated proportionately to the Partnership Interests of the
Offerors, respectively.
Simultaneously with the delivery of the Offering Notice to the Offerees, the
Offerors shall deliver to the Accountant a certified cheque or a bank draft
payable to the Accountant, in trust and in an amount equal to 10% of the
Offerees Sale Price, representing a deposit on account thereof. The Offerors
shall direct the Accountant to place the deposit in an interest bearing account
maintained with, or in a term deposit issued by, a branch or office of Nations
Bank or other bank of comparable size, in either case which is located in
Orlando, Florida. Subject to the terms hereinafter provided, at the Closing
(provided for below) the Accountant shall disburse the said deposit or such
portion thereof to which each of the Offerees is entitled together with all
interest accrued thereon, to the Offerees, proportionately.
12.03 ACCEPTANCE: The Offerees shall have the exclusive and irrevocable option
for 90 clear days from the receipt of the Offering Notice to deliver to each of
the Offerors a written notice, signed by each of the Offerees (the "ACCEPTANCE
NOTICE") stating that the Offerees either:
(a) unconditionally accept the offer to purchase as set forth in Section
12.02(b) and the particulars of the Offerors Interests owned by each
of the Offerees; or
(b) unconditionally accepts the offer to sell as set forth in Section
12.02(c).
Page 32
12.07 FAILURE TO CLOSE: If the purchasing Limited Partners fail to complete the
Closing in accordance with this Agreement and through no default or breach on
the part of the selling Limited Partners (the "FAILED CLOSING") then the
purchasing Limited Partners shall have 7 clear days to cure that breach and
complete the transaction contemplated by this Article and if the purchasing
Limited Partners fail to do so then the selling Limited Partners may by
delivering a written notice to the purchasing Limited Partners and the
Accountant within 10 clear days from the date which is 7 clear days after the
Failed Closing, elect to:
(a) retain the deposit together with all interest accrued thereon, in
which event the Accountant shall forthwith deliver the deposit and
interest to the selling Limited Partners and the agreement of purchase
and sale shall be of no further force and effect and all parties
thereto shall be relieved and forever absolutely discharged from any
further obligations to perform and liability thereunder or by virtue
thereof; or
(b) purchase the Partnership Interests owned by the purchasing Limited
Partners at 85% of the purchase price agreed to be paid by the
purchasing Limited Partners and the provisions of this Agreement
respecting such transaction of purchase and sale shall govern, mutatis
mutandis, on the basis the purchasing Limited Partners have become
bound to sell the Partnership Interests owned by them and the selling
Limited Partners have become bound to purchase the same on the date of
delivery of the notice of election (provided for above).
If no such notice of election is delivered by the selling Limited Partners prior
to the expiry of the said period of 10 clear days then the selling Limited
Partners shall be deemed to have elected to retain the deposit and interest
pursuant to Section 12.07(a).
If the election described in Section 12.07(a) is made or deemed to be made then
the Accountant shall, if it has not already, forthwith disburse the deposit
received by it from the purchasing Limited Partners together with all interest
accrued thereon, to the selling Limited Partners, accordingly.
Each of the Limited Partners acknowledges that the Accountant is bound to comply
with any order, judgement or other directive of a court of competent
jurisdiction affecting the deposits. The Limited Partners agree to jointly and
severally indemnify and save harmless the Accountant against and to forthwith
upon demand pay to the Accountant the amount of any and all liabilities,
damages, claims, costs and expenses (including, without limitation, legal fees
and disbursements) suffered or incurred by the Accountant by reason of its
compliance with such court order, judgement or other directive. It is expressly
agreed by the Limited Partners that the Accountant shall be entitled to the
benefits of this Agreement and to enforce the same in the same manner and to the
same extent as would be applicable if the Accountant was a party to and executed
this Agreement.
12.08 SUSPENSION OF OTHER RIGHTS: On the delivery of an Offering Notice provided
for in Section 12.02, the Transfers permitted by Sections 11.04 and 11.06 and
the provisions contained in Articles 13, 14 and 15 and the right to deliver a
Purchase Notice pursuant to Section 21.03(d) shall be suspended to and until the
Closing or the rights of the Offerors and the Offerees to effect a purchase and
sale as a result of an Offering Notice having been delivered are terminated
whereupon the provisions contained in the said Sections 11.04 and 11.06,
Articles 13, 14 and 15 and Section 21.03(d) shall revive.
Page 33
ARTICLE 13 - MANDATORY SALE PROVISIONS
13.01 MANDATORY SALE: Subject to the provisions of Sections 12.08,15.05 and
21.07, this Article and the provisions of Article 14, the Limited Partners
comprising the Great Gulf Group have the right to require the sale by the
Partners of all the Partnership Interests to any person who is not an Affiliate
of any of the Partners comprising the Great Gulf Group (the "THIRD PARTY
PURCHASER"), which right is exercisable only by the Partners comprising the
Great Gulf Group giving a written notice signed by them to the other Partners
which requires such a sale and is accompanied by a true and complete copy of any
offer or agreement entered into with or delivered by the Third Party Purchaser
(the "SALE AGREEMENT").
The Limited Partners comprising the Great Gulf Group will give or cause to be
given to the Limited Partners comprising the Allan Group a written summary
containing reasonable particulars of the material terms of any proposed sale to
a Third Party Purchaser (which summary may be in the form of a draft letter of
intent or draft Sale Agreement) as soon as reasonably practicable following such
material terms being known by the Limited Partners comprising the Great Gulf
Group, but in any event prior to the Limited Partners comprising the Great Gulf
Group entering into any letter of intent or Sale Agreement (the "TRANSACTION
SUMMARY"). If the Limited Partners comprising the Allan Group desire to meet
with the Limited Partners comprising the Great Gulf Group for the purpose of
discussing such proposed sale they may cause any member of the Management
Committee nominated by them to give written notice requesting such a meeting to
the members of the Management Committee who are the nominees of the Limited
Partners comprising the Great Gulf Group, provided that the said notice for such
a meeting shall set out the date on which it is to be held and shall be given,
if at all, not less than 5 Business Days and not more than 10 Business Days,
before the date of the meeting. Any such meeting will otherwise be held and
conducted as if it were a meeting of the Management Committee but without any
matter being required for its approval or resolution, and the provisions of
Section 10.03 will otherwise apply thereto, mutatis mutandis. The Limited
Partners comprising the Great Gulf Group will cause at least 2 members of the
Committee nominated by the Great Gulf Group to be present at the said meeting.
If the Limited Partners comprising the Allan Group do not cause the said notice
of such a meeting to be given on or before the 5th Business Day following
delivery to them of the Transaction Summary or if no member of the Management
Committee nominated by the Allan Group is present at the time and place
appointed for such meeting, then in either case the Limited Partners comprising
the Allan Group shall be deemed to have and do hereby waive their rights to any
such meeting being held with respect to the proposed sale to which the
Transaction Summary relates.
The Limited Partners comprising the Allan Group will not be bound to comply with
the provisions of this Section unless: (a) the Limited Partners comprising the
Great Gulf Group comply with their obligations contained in the immediately
preceding paragraph; and (b) the terms of the Sale Agreement apply to them in
all material respects the same as such terms apply to the Limited Partners
comprising the Great Gulf Group. Without limiting the foregoing, the purchase
price payable for the Partnership interests owned by the Limited Partners is to
be determined on the same basis for all Limited Partners.
Provided the above requirements of this Section 13.01 are fulfilled, the
Partners will execute and deliver the Sale Agreement and otherwise diligently
proceed in good faith to complete the required sale to the Purchaser in
accordance with the provisions thereof.
13.02 SUSPENSION OF OTHER RIGHTS: On the delivery of a notice provided for in
Section 13.01, the Transfers permitted by Sections 11.04 and 11.06 and the
provisions contained in Articles 12 and 15 and the right to deliver a Purchase
Notice pursuant to Section 21.03(d) shall be suspended unless and until the sale
pursuant to the Sale Agreement is terminated whereupon the provisions contained
in the said Sections 11.04 and 11.06, Articles 12 and 15 and Section 21.03(d)
shall revive.
Page 34
ARTICLE 14 - RIGHT OF FIRST OPPORTUNITY
14.01 SALE OF GREAT GULF GROUP INTERESTS: The Partners comprising the Great Gulf
Group (in this Article 14, collectively called the "VENDORS") may, subject to
the provisions of this Article, enter into a Sale Agreement providing for the
sale of all but not less than all of the Partnership Interests.
The Partnership Interests held by the Vendors intended to be sold pursuant to a
Sale Agreement as contemplated in the immediately preceding paragraph are in
this Article 14 collectively called the "OFFERED INTERESTS".
14.02 OFFER NOTICE: Except as permitted by the provisions of Section 11.06,
prior to the Vendors entering into a Sale Agreement binding them to effect the
sale of the Offered Interests, the Vendors shall first notify each of the
Partners comprising the Allan Group (in this Article 14 collectively called the
"PURCHASERS") of the Vendors' intention to so sell the Offered Interests and
simultaneously offer to sell the Offered Interests to each of the Purchasers in
equal proportions at the price (expressed in money) and on such other terms as
the Vendors would accept with respect to such a sale to any Third Party
Purchaser, provided such terms contain no trade or exchange of property as part
or all of the consideration and contain no term or condition which is so unique
or unusual as to render it incapable of being accepted or performed on a
commercially reasonable basis (other than for monetary reasons) by anyone (the
"OFFER NOTICE").
The Vendors shall not deliver an Offer Notice more than once in any 180 day
period.
14.03 ELECTION TO ACCEPT: Each of the Purchasers shall have the exclusive and
irrevocable option for 15 Business Days from the date of delivery to it of the
Offer Notice to deliver simultaneously to both the Vendors and the other
Purchaser a notice that it unconditionally accepts the offer to sell as set
forth in the Offer Notice and further stating whether or not it agrees to
purchase from the Vendors all of the Offered Interests, if the other Purchaser
does not accept the similar offer set forth in the Offer Notice delivered to
such other Purchaser (the "ACCEPTANCE NOTICE").
The Offered Interests with respect to which a Purchaser does not deliver an
Acceptance Notice accepting the Vendors' offer to sell shall be sold by the
Vendors to the other Purchaser if such other Purchaser agreed in its Acceptance
Notice to purchase all of the Offered Interests.
14.04 BINDING SALE: If the Purchasers or either of them deliver Acceptance
Notice(s) which in the aggregate accept the Vendors' offer to sell all but not
less than all of the Offered interests as set forth in the Offer Notice then the
Vendors' receipt of the same shall effective on the date of such receipt
constitute a binding agreement in accordance with the terms of the Offer Notice
between the Purchaser(s) and the Vendors for the sale of the Offered Interests
at the Closing to such Purchaser(s). in accordance with their respective
proportionate rights.
14.05 PERMITTED SALE TO THIRD PARTY: Subject to the provisions of Section 14.06,
if the Vendors do not receive Acceptance Notice(s) which in the aggregate accept
the offer to sell all but not less than all of the Offered Interests in
accordance with the Offer Notice, or if the Purchasers fail to complete the
Closing (provided for in Section 14.07) of the Offered Interests, then the
Vendors shall, subject to the provisions of this Section, have the right to sell
the Offered Interests and all other Partnership Interests to any Third Party
Purchaser for a period of 180 days after the expiration of the period for
delivery of an Acceptance Notice or the date for completion of such Closing, as
applicable (the "Free Sale Period"), on terms and conditions no less favourable
to the Vendors than the terms and conditions contained in the Offer Notice and
the Purchasers shall be unconditionally bound to comply with the provisions of
Article 13; provided that a binding Sale Agreement for such sale is entered into
by the Vendors with the Third Party Purchaser prior to the expiration of the
Free Sale Period.
14.06 FAILURE TO SELL: If the Vendors do not enter into a binding Sale Agreement
for the sale of all but not less than all of the Partnership Interests on terms
and conditions no less favourable than the terms and conditions contained in the
Offer Notice within the period and as otherwise provided for in Section 14.05,
then the obligations of the Vendors to deliver an Offer Notice in accordance
with this Article shall be reinstated.
Page 35
14.07 CLOSING ARRANGEMENTS:
(a) Any transaction of purchase and sale required to be completed in
accordance with the provisions of Section 14.04 shall be completed at noon on
the day 30 clear days subsequent to the latest date upon which the Vendors and
the Purchaser(s) have become bound to the purchase and sale of the Offered
interests (or on the Business Day next following if the day of completion is not
a Business Day) and such completion (called the "CLOSING") shall take place at
the Principal Place of Business or at such other place or date as the Vendors
and the Purchaser(s) may in writing agree upon.
(b) The provisions contained in Article 22 shall apply mutatis mutandis to
this Article 14.
14.08 SUSPENSION OF OTHER RIGHTS: On the Vendors delivering a notice provided
for in Section 13.01 to the Purchasers, the Transfers permitted by Sections
11.04 and 11.06 and the provisions contained in Articles 12 and 15 and the right
to deliver a Purchase Notice pursuant to Section 2103(d) shall be suspended to
and until the sale of the Offered Interests set out in the Offer Notice is
completed or the rights of the Vendors to effect a sale in accordance with the
provisions of Section 14.05 are terminated whereupon the provisions contained in
the said Sections 11.04 and 11.06, Articles 12 and 15 and Section 21.03(d) shall
revive.
14.09 CONTINUED RIGHTS OF PURCHASERS: If any of the Purchasers fail to complete
a Closing provided for in Section 14.04 then at the sole option of the Vendors,
exercisable by delivery of written notice to the Purchasers, any binding
agreement provided for in Section 14.04 may be terminated by the Vendors. On
delivery by the Vendors of the said notice the Purchasers shall cease to be
entitled to the benefits of this Article and the Vendors shall cease to be bound
by their respective obligations under such provisions as they relate to the
Purchasers whereupon the provisions of Section 14.05 shall apply and for such
purpose the Vendors will be deemed not to have received Acceptance Notice(s)
which in the aggregate accept the offer to sell all but not less than all of the
Offered Interests in accordance with the Offer Notice.
ARTICLE 15 - MANDATORY PURCHASE RE DISSOLUTION
15.01 OFFERING NOTICE: If the Partners comprising the Great Gulf Group (in this
Article 15, collectively called the "OFFERORS") desire to effect the dissolution
of the Partnership or to change or reorganize the Partnership into any other
legal form (such dissolution, change or reorganization is in this Article 15
called the "TRIGGER EVENT"), then not less than 90 days prior to such proposed
Trigger Event being presented for the approval of the Management Committee as
contemplated in Sections 10.04(b)(v) and (vi) the Offerors may deliver a notice
to each of the Partners comprising the Allan Group (in this Article 15,
collectively called the "OFFEREES") the contents of which notice shall include
the same information as an Offering Notice given pursuant to Section 12.02
together with a statement of the Offerors' desire to implement the Trigger Event
and of the Offerors' requirement that if the members of the Management Committee
nominated by the Offerees do not approve of such Trigger Event on it being
presented for approval by the Management Committee as aforesaid, then the
aforesaid notice is to constitute an Offering Notice as if delivered pursuant to
Section 12.02.
15.02 APPLICATION OF ARTICLE 12: If the members of the Management Committee
nominated by the Offerees do not approve of the said Trigger Event on it being
presented for approval by the Management Committee as aforesaid, then the notice
delivered by the Offerors in accordance with Section 15.01 shall constitute and
be deemed to be an Offering Notice as if the same was delivered pursuant to
Section 12.02 by the Partners comprising the Great Gulf Group as the Offerors to
the Partners comprising the Allan Group as the Offerees, and the provisions of
Article 12 shall apply with respect thereto, mutatis mutandis except as
otherwise provided for in this Article 15. For the purposes of this Article 15,
the Offerors shall not be required to deliver and pay the deposit provided for
in Section 12.02.
Page 36
15.03 ACCEPTANCE: For purposes of this Article 15, the provisions of Section
12.03 shall apply on the basis that the Offerees received the Offering Notice on
day the Trigger Event is approved by the Management Committee and the Offerees
shall have the exclusive and irrevocable option for 10 clear days from such
deemed date of receipt of the Offering Notice to deliver an Acceptance Notice to
each of the Offerors, all otherwise on and subject to the provisions of Section
12.03. Accordingly, all references in Article 12 to the period of 90 clear days
provided for in Section 12.03 shall, for purposes of this Article 15, be read as
meaning the period of 10 clear days provided for in this Section 15.03.
15.04 PAYMENT OF PURCHASE PRICE: If one or more of the Offerees are the
purchasing Limited Partners, then such purchaser shall pay the purchase price to
the Offerors (as the selling Limited Partners) by way of bank draft or certified
cheque (inclusive of the deposit provided for in Section 12.03 and all interest,
if any, accrued thereon) at the Closing (provided for in Section 12.06).
If the Offerors are the purchasing Limited Partners, then such purchasers shall
pay the purchase price, without interest, to the Offerees (as the selling
Limited Partners) by way of bank draft or certified cheque immediately on
receipt by the Offerors of the proceeds of liquidation to be distributed to the
Offerors, respectively, in accordance with the provisions of Section 17.04 to
and until the purchase price is paid in full. If the said proceeds of
liquidation are not sufficient to pay the purchase price in full to the Offerees
then the Offerors will pay the outstanding balance of the purchase price to the
Offerees immediately upon the proceeds of liquidation to which the Offerees are
entitled being distributed to the Offerees, respectively, in accordance with the
provisions of Section 17.04 and in any event prior to the filing by the General
Partner of the Certificate of Cancellation with the Secretary of State required
to be filed by it pursuant to Section 17.03. The statement provided for in
Section 17.05 will be delivered to the Offerees substantially contemporaneously
with the delivery of such statement to the Limited Partners.
15.05 SUSPENSION OF OTHER RIGHTS: On the delivery by the Offerors of a notice
provided for in Section 15.01, the Transfers permitted by Sections 11.04 and
11.06 and the provisions contained in Articles 12 (otherwise than by virtue of
Section 15.02), 13 and 14 and the right to deliver a Purchase Notice pursuant to
Section 21.03(d) shall be suspended to and until the Closing or the rights of
the Offerors and the Offerees to effect a purchase and sale as a result of an
Offering Notice having been delivered are terminated, whereupon the provisions
contained in the said Sections 11.04 and 11.06, Articles 12, 13 and 14 and
Section 21.03(d) shall revive.
ARTICLE 16 - BOOKS OF ACCOUNT, FINANCIAL REPORTS, RECORDS,
BANKING & ACCOUNTING DECISIONS
16.01 BOOKS OF ACCOUNT: The General Partner shall keep or cause to be kept
adequate books of account of the Partnership according to its Method of
Accounting in which shall be recorded and reflected all of the contributions to
the capital of the Partnership and all of the expenses and transactions of the
Partnership. These books of account shall be kept at 250 Lesmill Road, Don
Mills, Ontario, Canada but shall as and when required by law or by any
governmental agency or lender be made available at the Principal Place of
Business. The Limited Partners and their authorized representatives shall have
at all times during normal business hours, free access to and the right to
inspect and copy, at their expense, the books of account of the Partnership.
16.02 FINANCIAL REPORTS:
(a) As soon as practicable after the close of each fiscal year, but in no
event later than 120 days after the close of any fiscal year, the General
Partner shall deliver to each Partner (i) an unaudited annual financial
statements of the Partnership for that fiscal year, including a balance sheet, a
profit and loss statement, a statement showing distributions and allocations to
the Partners and such other information as the General Partner deems necessary
or advisable to deliver, accompanied by a report of the Partnership's
independent certified public accountants, and (ii) all information and documents
as may be necessary, in the opinion of the General Partner, for the preparation
by each Partner of his federal and state income or other tax returns, including
a Schedule K-1. All annual statements shall be prepared in accordance with the
Partnership's Method of Accounting. The annual statements shall also be provided
to any person who was a Partner at any time during the year covered by the
annual statements.
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(b) The Partnership's accountants shall be KPMG or such other firm of
independent certified public accountants as may be selected by the General
Partner from time to time (the "ACCOUNTANT").
(c) The General Partner shall cause the Accountant to prepare or review the
federal, state and local tax returns of the Partnership for each fiscal year
and shall timely file these returns, completed in accordance with the Method of
Accounting.
(d) In the case of a Transfer of a Partnership Interest by sale or
exchange, the death of a Partner or the distribution of Partnership Property, on
receipt by the Partnership of the written request of the transferee Partner and
subject to the approval of the Management Committee, which approval shall not be
unreasonably withheld, the Partnership will make an election under Section 754
of the Code to adjust the basis of the Partnership Property with respect to a
transferee who acquires a Partnership Interest from an existing Partner. On such
an occurrence the Capital Accounts shall be adjusted in accordance with Section
1.704-1(b)(2)(iv)(m) of the Treasury Regulations. Because of the significant
accounting difficulties and extra expense to the Partnership which may be
involved if this election is made, the transferee Partner who requests the
election will be required to pay all administrative and accounting expenses
incurred in connection with the election.
16.03 RECORDS: The General Partner shall keep or cause to be made available at
the Principal Place of Business when required by a Limited Partner or other
person entitled to inspect, the following Partnership documents:
(a) a current list of the full name and last known business or residence
address of each Partner, separately identifying in alphabetical order
the General Partner and the Limited Partners;
(b) copies of the Certificate of Limited Partnership and all amendments
thereto, and executed copies of any powers of attorney pursuant to
which any such amendment to the Certificate was executed;
(c) copies of the Partnership's federal, state and local income tax
returns and reports for the three most recent taxation years.
(d) copies of the Partnership Agreement and all powers of attorney
pursuant to which any amendment to this Agreement may be executed, the
Partnership's financial reports described in Section 16.02 and all
financial statements for the three most recent fiscal years.
16.04 BANKING: The funds of the Partnership shall be deposited into the
account(s) maintained for the Partnership with such bank(s) as the General
Partner deems appropriate. Only the General Partner or its duly authorized
agents shall withdraw any of the said funds from any of the said accounts. All
amounts generated by or otherwise derived from the Partnership Property or
otherwise for the account of the Partnership shall be deposited (in the form
received) into the said bank accounts and the payment of all costs, expenses and
other amounts relating to the Property shall be paid by way cheque drawn on such
accounts. The General Partner shall transact all of the banking business
necessary or desirable for the rendering of the accounting and administrative
functions which shall include the responsibility of the General Partner for
management of cash balances from time to time in the bank accounts of the
Partnership.
16.05 ACCOUNTING DECISIONS: All decisions as to accounting matters, except as
specifically provided to the contrary herein, shall be made by the General
Partner in accordance with the Method of Accounting. These decisions must be
acceptable to the Accountant, and the General Partner may rely upon the advice
of the Accountant as to whether such decisions are in accordance with the Method
of Accounting.
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ARTICLE 17 - DISSOLUTION & TERMINATION
17.01 DISSOLUTION OF PARTNERSHIP: The term of the Partnership commenced on the
date of filing of the Certificate of Limited Partnership and shall be dissolved
and its business shall terminate on the date of the earliest occurrence of any
of the following events:
(a) the close of business on December 31, 2019;
(b) the date which the Management Committee approves in accordance with
Sections 10.04(b)(vi) or 10.04(b)(vii) as the effective date of the
dissolution of the Partnership and to terminate the Partnership's
business;
(c) the date which the Partners unanimously approve as the effective date
of the dissolution of the Partnership and to terminate the
Partnership's business;
(d) the Partnership becomes insolvent or bankrupt. For the purposes of
this subparagraph (d), the insolvency or bankruptcy of the Partnership
shall be deemed to occur when (i) the Partnership: (A) files a
petition in bankruptcy, or (B) voluntarily takes advantage of any
bankruptcy or insolvency laws, or (C) is adjudicated a bankrupt, or
(D) makes an assignment for the benefit of creditors; (ii) within 90
days after commencement of any proceeding against the Partnership
seeking reorganization, liquidation or similar relief, the proceeding
has not been dismissed; (iii) the Partnership appoints a receiver or
trustee for all or a part of its assets, business or property, or (iv)
a petition or answer is filed proposing the adjudication of the
Partnership as a bankrupt and the Partnership or the General Partner
on its behalf, acting reasonably, consents to such filing or otherwise
acknowledges its insolvency; or
(e) the occurrence of any event which, under the Act, causes the
dissolution of a Florida limited partnership, and the Management
Committee does not approve of the continuation of the Partnership in
accordance with Section 17.02.
The Partnership shall continue to exist following the happening of any of the
foregoing events solely for the purpose of winding up its affairs in accordance
with the Act and any other applicable laws.
17.02 SUCCESSOR PARTNERSHIP: If the Partnership is dissolved or to be dissolved,
the Management Committee may approve the continuation of the business of the
Partnership and reconstitute the Partnership as a successor limited partnership
with one or more new General Partner(s) having the capacity to serve and who are
able to meet any requirements then imposed by the Code or any rulings or
regulations under the Code with respect to general partners of limited
partnerships in order that the Partnership not become an association taxable as
a corporation. If the Management Committee exercises the right to continue the
business of the Partnership, the person(s) appointed by them as the new General
Partner(s) and the Limited Partners shall execute and acknowledge an Agreement
of Limited Partnership on substantially the same provisions as those contained
in this Agreement, and the General Partner(s) shall execute, acknowledge and
file a Certificate of Limited Partnership. The new General Partner(s) shall
indicate acceptance of the appointment by the execution of the Agreement of
Limited Partnership and the Certificate of Limited Partnership.
17.03 PROCEDURE ON LIQUIDATION: Unless the business of the Partnership is
continued pursuant to the provisions of this Agreement, upon the dissolution of
the Partnership, the General Partner or the person or persons required by law to
wind up the Partnership's affairs shall cause the cancellation of the
Certificate of Limited Partnership pursuant to Section 620.113 of the Act and
shall liquidate the assets of the Partnership and apply the proceeds of
liquidation in the order of priority provided in Section 17.04 for the fiscal
year of liquidation. A reasonable time shall be allowed for the orderly
liquidation of the assets of the Partnership and the discharge of its
liabilities to enable the General Partner to minimize any losses that might
otherwise occur in connection with the liquidation. The General Partner may
continue to operate and maintain the business and the Partnership Property after
the occurrence of an event requiring dissolution of the Partnership for so long
as is reasonably required in the circumstances in order to wind up the affairs
of the Partnership in an orderly fashion. Upon liquidation and winding up of the
Partnership, unsold Partnership Property shall be valued to determine the gain
or loss which would have resulted if the Partnership Property were sold, and the
Capital Accounts of the Partners which have been maintained in accordance with
this Agreement shall be adjusted to reflect how the gain or loss would have been
allocated if such Partnership Property had been sold at its assigned values. In
all events the liquidation shall be conducted in accordance with Section 1.704-1
(b)(2)(ii)(b)(2) of the Treasury Regulations.
Page 39
Upon completion of the liquidation of the Partnership and distribution of the
proceeds, the General Partner shall file a Certificate of Cancellation with the
Secretary of State.
All books and records of the Partnership shall be delivered to the General
Partner upon liquidation, which shall retain the books and records for a period
of not less than 7 years and shall make the books and records available to the
Limited Partners for inspection and copying at its principal business office
during reasonable business hours.
17.04 LIQUIDATION PROCEEDS: The proceeds from the liquidation of the assets of
the Partnership and the collection of the receivables of the Partnership
together with the assets distributed in kind shall be distributed in payment or
satisfaction of the following matters and in the following order of priority:
(a) first, and in priority to payment of Loan Advances and interest
thereon pursuant to Article 8, to payment of debts and liabilities of
the Partnership which are due and owing, except any expenses or debts
which may be deferred in accordance with any agreement providing for
their deferral to the extent the Partnership expects to subsequently
receive proceeds which can be used to satisfy the expenses and debts;
(b) second, to the setting up of reserves as determined by the General
Partner for the purpose of disbursing the reserves in payment of any
contingent liabilities or obligations of the Partnership, and, at the
expiration of the reserve period, the balance of the reserves, if any,
shall be distributed as liquidating proceeds received at the end of
the reserve period;
(c) third, to the Partners in payment of Loan Advances and interest
thereon in accordance with the provisions of Article 8;
(d) fourth, to the Partners in accordance with the provisions of Section
9.01;
17.05 LIQUIDATION STATEMENT: Each Partner shall be furnished with a statement
prepared by the General Partner or the Accountant setting forth the assets and
liabilities of the Partnership as at the date of liquidation.
ARTICLE 18 - LIABILITY & INDEMNIFICATION OF PARTNERS,
OUTSIDE ACTIVITIES & WARRANTIES OF PARTNERS
18.01 RETURN OF CAPITAL CONTRIBUTION: The General Partner shall not be
personally liable for the return of all or any part of the Capital Contributions
of the Limited Partners. Any such return shall be made solely from Partnership
Property.
18.02 GP LIABILITY FOR ACTS OR OMISSION: From and after the Effective Date, the
performance or omission of any act by the General Partner or its Affiliates,
including any act in its capacity as TMP, in the good faith belief that such
person was acting within the scope of its authority under this Agreement on
behalf of the Partnership or in furtherance of the Partnership's interests,
shall not subject the General Partner or its Affiliates to any liability to the
Partnership or the Partners. The foregoing shall not relieve the General Partner
or any of its Affiliates from liability for gross negligence, fraud or wilful
misconduct.
18.03 INDEMNIFICATION OF GENERAL PARTNER: From and after the Effective Date, the
Partnership shall indemnify and hold harmless the General Partner (including any
person who has served as General Partner) and its Affiliates from and against
any claim, loss, expense, liability, action or demand incurred by any of the
General Partner and its Affiliates in respect of any omission to act or for any
act performed by any of them, including any act or omission performed in the
General Partner's capacity as TMP, in the good faith belief that such person was
acting or refraining from acting within the scope of its authority under this
Agreement on behalf of the Partnership or in furtherance of the Partnership's
interests, including, without limitation, reasonable fees and expenses of
litigation and appeal (including, without limitation, reasonable fees and
expenses of attorneys engaged in defence of any act or omission), except that
the foregoing indemnity shall not extend to claims, losses, expenses,
liabilities, actions or demands incurred by reason of the gross negligence,
fraud or wilful misconduct of the General Partner or any of its Affiliates.
Page 40
18.04 LIMITED PARTNERS' "INTERNAL" LIABILITY: Unless otherwise specifically
provided in this Agreement, the Limited Partners shall be liable to each other
for their respective obligations and liabilities under this Agreement, as
follows:
(a) each of the Partners comprising the Great Gulf Group will be jointly
and severally liable, as between and amongst themselves, for an amount
which is equal to the aggregate of their Percentage Interests of the
liability of any one or more of the Partners comprising the Great Gulf
Group to any one or more of the Partners comprising the Allan Group;
and
(b) each of the Partners comprising the Allan Group will be jointly and
severally liable, as between and amongst themselves, for an amount
which is equal to the aggregate of their Percentage Interests of the
liability of any one or more of the Partners comprising the Allan
Group to any one or more of the Partners comprising the Great Gulf
Group.
18.05 MUTUAL INDEMNIFICATION: If the Limited Partners are jointly, or jointly
and severally liable for any obligations (including under any guarantee), or
deemed statutorily, by common law, or by judgement of a court or other tribunal
or board having jurisdiction to be jointly or jointly and severally liable for
any obligations, in each case where such obligations relate to the Partnership
or the Partnership Property, the respective liability of each of the Limited
Partners, as between themselves, shall be limited in accordance with their
respective Percentage Interests and be as more particularly provided in Section
18.04.
In the event that, notwithstanding the foregoing provisions of this Section, any
Limited Partner (hereinafter in this Section called the "NON-DEFAULTING PARTY")
shall in fact pay moneys pursuant to any demand from any third party under any
liability in any amount(s) in excess of its Percentage Interest thereof as
aforesaid (the others of the Limited Partners which shall have paid no money or
shall not have paid its Percentage Interest thereof as aforesaid, being referred
to in this Section as the "DEFAULTING PARTIES"), each of the Defaulting Parties
shall pay to the Non-Defaulting Party its Percentage Interest of the excess
amount of money so paid by the Non-Defaulting Party on demand as aforesaid,
together with accrued interest thereon from the date the Non-Defaulting Party
paid such money to the date that such Defaulting Party repays such money to the
Non-Defaulting Party at the rate of 5% per annum in excess of the Prime Rate as
published from time to time by the Wall Street Journal, provided that the
obligation to pay such interest shall be subject to the provisions of Section
8.07.
Each of the Limited Partners (herein called the "INDEMNIFYING PARTNER") hereby
indemnifies and shall forever save harmless each other Limited Partner (herein
called the "INDEMNIFIED PARTNER") within 10 days of written demand being made
therefor by an Indemnified Partner, to the extent of that portion of all moneys
which the Indemnified Partner has paid or may be required to pay or liability to
which it is or may become subject by reason of any such joint or joint and
several liability or by reason of any actions, proceedings, liability, claims,
damages, costs and expenses in relation thereto or arising therefrom, which is
in excess of such Indemnified Partner's Percentage Interest of such moneys or
liability and which has been paid or incurred by such Indemnified Partner.
18.06 OUTSIDE ACTIVITIES OF PARTNERS: Save and except only as provided in
Section 18.07, nothing restricts or shall be deemed to restrict in any way the
right of any Partner or any of its Affiliates to engage in any activity or
possess any interest in any business, venture or other person, in each case of
any nature, whether independently or with any other person (including any other
Partner) including, without limitation, the acquisition, ownership, development,
management, operation, brokerage and sale of real property, whether or not
adjacent to or competitive with the real property included in the Partnership
Property. Subject only to the provisions of Section 18.07, no Partner will have
any liability or obligation to account to the Partnership or any other Partner
in any way for such other activities or interests or for the profits, proceeds,
benefits or other advantages derived from such other activities or interests. A
Partner shall not by reason of owning its Partnership Interest have any interest
in any other property owned by any other Partner or any business or venture
engaged in by any other Partner, whether or not similar to the business of the
Partnership.
Page 41
18.07 OTHER PROPERTIES: For purposes of this Section 18.07, "TARGET PROPERTY"
means any real property or any interest in any real property which is located
within the area designated as Lakeside Villages (also designated as Villages of
Lakeside) in the vicinity of Orlando, Florida. If any one or more Partners or
any of their respective Affiliates, acquire or receive any Target Properly
(whether by way of beneficial ownership, an interest in the revenues to be
derived therefrom or any other interest directly or indirectly in any other
manner whatsoever) such acquisition or receipt shall be and is hereby deemed to
be made on behalf of the Partnership and the Target Property shall constitute
Partnership Property which the said Partner(s) or applicable Affiliates are
holding in trust exclusively for the Partnership. Each Partner whose Affiliate
so acquires or receives any Target Property shall ensure that such Affiliate
holds the same on and subject to the provisions of this Agreement For greater
certainty, the receipt of commercially reasonable brokerage commissions for the
sale of a Target Property shall not constitute an interest in the revenues to be
derived from a Target Property nor shall such receipt constitute any other
interest directly or Indirectly in any other manner whatsoever in a Target
Property.
The Partner(s) who or whose Affiliate(s) acquire or receive any Target Property
shall give written notice of the proposed acquisition or receipt by it or its
Affiliate(s), as applicable (including reasonable particulars thereof), to the
Management Committee prior to completion of the proposed acquisition or receipt
thereof.
The Management Committee shall have the right in its sole discretion to
determine within 45 days of receipt of the written notice provided for above,
that the Partnership does not desire the proposed acquisition or receipt of the
Target Property to be made on behalf and at the cost of the Partnership and:
(a) if the Management Committee does so determine, then the said Partner
may or, if applicable, may permit its Affiliate to, proceed to
complete the proposed acquisition for its own account and not in trust
for the Partnership or otherwise as Partnership Property and the
Partnership shall cease to have any rights with respect to the said
Target Property; and
(b) if the Management Committee does not so determine, then each Partner
or, if applicable, its Affiliate(s), who proceeds to acquire the said
Target Property will hold the same as Partnership Property in trust
for, and fully account to the Partnership in respect of, such Target
Property.
Any determination to be made by the Management Committee as contemplated in
this Section shall:
(i) if the Partner giving the notice of the proposed acquisition to the
Management Committee is a member of the Great Gulf Group, be either by
the affirmative vote of at least 4 of the 5 members of the Management
Committee present at a meeting of the Committee, or the written
approval of at least 4 of the 5 members of the Committee; and
(ii) if the Partner giving the notice of the proposed acquisition to the
Management Committee is a member of the Allan Group, be either by the
affirmative vote of at least 3 of the 5 members of the Management
Committee present at a meeting of the Committee, or the written
approval of at least 3 of the 5 members of the Committee.
18.08 WARRANTIES OF PARTNERS: Each of the Partners represents and warrants to
each of the other Partners that other than as provided for in this Agreement:
(a) it is the absolute and beneficial owner of it's Partnership interest,
with a good and marketable title thereto, free and clear of all
mortgages, liens, charges, security interests, adverse claims, pledges
and other encumbrances or rights of others whatsoever; and
(b) no person has any agreement or option or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming an
agreement or option for the purchase of or to otherwise acquire from
such Partner it's Partnership Interest or any part thereof or interest
therein.
Page 42
ARTICLE 19 - SPECIAL POWER OF ATTORNEY
19.01 APPOINTMENT: Subject to the restrictions of Sections 10.04 and 10.08, each
of the Limited Partners, by its execution of this Agreement hereby irrevocably
makes, constitutes and appoints the General Partner and any successor or
substituted General Partner or agent(s) duly appointed in accordance with the
provisions of this Agreement, its true and lawful attorney-in-fact for it and in
its name, place and stead and for its use and benefit, from time to time:
(a) to make, file and record all agreements amending this Agreement, as
now or hereafter amended, that may be appropriate to reflect or
effect, as the case may be:
(i) a change of the name or the location of the Principal Place of
Business;
(ii) the Transfer or acquisition of any Partnership Interest by a
Partner in any manner permitted by this Agreement;
(iii) a person becoming a substituted or additional Limited Partner as
permitted by this Agreement;
(iv) a change in any provision of this Agreement effected by the
exercise by any person of any right or rights hereunder;
(v) a correction of a scrivener's error; and
(vi) the dissolution and termination of the Partnership pursuant to
this Agreement;
(b) to make certificates, affidavits, instruments and documents required
by, or appropriate under, the laws of Florida in connection with the
use of the name of the Partnership by the Partnership; and
(c) to make certificates, instruments, and documents which the Limited
Partners are required to make, or which are appropriate for the
Limited Partner to make, under the laws of Florida to reflect:
(i) any changes in or amendments to this Agreement, or pertaining to
the Partnership, of any kind referred to in this Section 19.01;
and
(ii) any other changes in or amendments to this Agreement, but only if
and when the consent thereto has been obtained from the Limited
Partners as required by Section 23.11.
Each of the agreements, certificates, affidavits, instruments and documents made
pursuant to paragraph (a) through (c) of this Section shall be in the form that
the General Partner and counsel for the Partnership deem appropriate. The powers
conferred by this Section to make agreements, certificates, affidavits,
instruments and documents shall be deemed to include without limitation the
powers to sign, execute, acknowledge, swear to, verify, deliver, file, record or
publish them.
19.02 IRREVOCABILITY/EXERCISE: The power of attorney granted pursuant to Section
19.01:
(a) is a special power of attorney coupled with an interest and is
irrevocable;
(b) may be exercised by the General Partner as attorney-in-fact; and
(c) shall survive the Transfer by a Limited Partner of its Partnership
Interest or any part thereof, except that where the purchaser,
transferee or assignee of such Partnership Interest with the consent
of the General Partner is admitted as a substituted Limited Partner,
the power of attorney shall survive the Transfer for the sole purpose
of enabling the attorney-in-fact to execute, acknowledge and file any
agreement, certificate, instrument or document necessary to effect the
substitution.
Page 43
ARTICLE 20 - SECURITY
20.01 CROSS CHARGE: To secure the due payment of all monies and interest thereon
(including interest on overdue amounts) being from time to time owing by a
Limited Partner to the others and the performance of its obligations contained
in this Agreement, each Limited Partner (hereinafter called the "MORTGAGOR
PARTNER") hereby mortgages and charges as and by way of a fixed and specific
mortgage and charge and grants a security interest to and in favour of the
others (each of which is hereinafter called the "MORTGAGEE PARTNER"), their
respective successors, and permitted assigns, in and against all the right,
title and interest of the Mortgagor Partner, both present and future, in and to
the Partnership Interest owned by such Mortgagor Partner, including
distributions to which such Partnership Interest may become entitled pursuant to
this Agreement (collectively, the "COLLATERAL"); TO HAVE AND TO HOLD the
Collateral and all rights and revenues hereby assigned and all rights hereby
conferred to the Mortgagee Partner, its successors and permitted assigns
forever, but in trust nevertheless for the uses and purposes and with the powers
and authorities and subject to the terms and conditions mentioned and set forth
in this Article (the mortgages, charges and security interest hereby constituted
being collectively called the "SECURITY"), provided that prior to the occurrence
of a Default by a Mortgagor Partner hereunder, the Mortgagor Partner shall have
quiet possession of the Collateral, subject to all provisions of this Agreement,
but on and after the occurrence of such Default the Mortgagee Partner shall have
quiet possession of the Collateral. The Security shall cease to have any force
or effect on the Mortgagor Partner ceasing to own a Partnership Interest, the
dissolution of the Partnership or on termination of this Agreement, whichever
shall first occur and provided always that such occurrence is in accordance with
the provisions of this Agreement and applicable law.
20.02 PERSON ENTITLED TO ENFORCE: The Mortgagee Partner for the time being is
the person entitled to the benefit of, and to enforce, and to give a discharge
of the Security.
20.03 SUBORDINATION: The Security is subject and subordinate to, and is hereby
postponed in priority to, all Permitted Encumbrances but only to the extent
required by the terms of such Permitted Encumbrances, and the Mortgagee Partner
will execute and deliver such acknowledgements, subordinations and postponements
as may from time to time be required to confirm the priority of any such
Permitted Encumbrances.
20.04 FURTHER ASSURANCES: The Mortgagor Partner, at the request and expense of
the Mortgagee Partner, will execute, deliver, and register in the appropriate
offices of public record, in the appropriate registrable form such documents or
instruments appropriate to subject the Collateral to the Security and for the
due protection of the Security against claims by all subsequent transferees or
encumbrancers other than under Permitted Encumbrances. Each Security shall,
notwithstanding its date of execution or delivery, priority of registration or
otherwise, be deemed to rank pari passu with each other Security if more than
one Mortgagee Partner is proceeding to realize on the Partnership Interest of a
Partner. For purposes hereof one or more Mortgagee Partners may appoint a
trustee and/or agent to hold and effect the registration of the Security on its
or their behalf against any one or more Mortgagor Partners, provided that such
appointment shall be wholly subject to the provisions of this Agreement
including, without limitation, this Article 20.
20.05 ENFORCEMENT: Whenever the Mortgagee Partner becomes entitled to exercise
any of its remedies under the Security, the Mortgagee Partner may realize upon
the Security and enforce its rights by any or all of the remedies herein
expressly provided, and any additional remedies available to a mortgagee and
secured party at law or in equity, including without limitation the following:
(a) take possession of the Collateral, including the right to have,
receive, demand, collect, and sue for all amounts which are from time
to time owing in respect of the Collateral;
(b) sale of the Collateral (including the right of such Mortgagee Partner
to bid at and become the purchaser at such sale) subject to the
purchaser entering into an agreement with the continuing Partners
assuming the obligations of the Mortgagor Partner under this
Agreement, in form satisfactory to the continuing Partners, acting
reasonably;
(c) filing of proofs of claim and other documents to establish its claims
in any proceedings relating to the Mortgagor Partner; and
(d) all rights and remedies of a secured party under the Uniform
Commercial Code, as in effect from time to time in the State of
Florida.
Such remedies may be exercised from time to time separately or in combination
and are in addition to and not in substitution for any rights of the Mortgagee
Partner, however created.
Page 44
ARTICLE 21 - DEFAULT
21.01 EVENTS OF DEFAULT: For the purposes of this Article 21, any of the
following circumstances is a default under this Agreement (hereinafter called a
"DEFAULT") with respect to a Partner:
(a) if it shall be in default in the payment of any moneys required to be
paid by it under this Agreement and such default continues for a
period of 10 days after written notice thereof has been given by any
other Partner; or
(b) if it is in default under any of the provisions of this Agreement
(other than provisions requiring the payment of monies) and such
default shall continue for a period of 30 days after written notice
thereof has been given by any other Partner, or such longer period
(not to exceed 90 days) as may be required to cure such default
provided that reasonable steps are taken with all due diligence to
cure such default; or
(c) if any Default has occurred with respect to such Partner under any of
the Other Partnership Agreements; or
(d) if any Partner dissolves or goes into liquidation, either voluntary or
under a final order of a court of competent jurisdiction or becomes
insolvent or bankrupt. For the purposes of this subparagraph (d), the
insolvency or bankruptcy of a Partner shall be deemed to occur when
(i) such Partner: (A) files a petition in bankruptcy, or (B)
voluntarily takes advantage of any bankruptcy or insolvency laws, or
(C) is adjudicated a bankrupt, or (D) makes an assignment for the
benefit of creditors; (ii) within 90 days after commencement of any
proceeding against the Partner seeking reorganization, liquidation or
similar relief, the proceeding has not been dismissed; (iii) the
Partner appoints a receiver or trustee for all or a part of its
assets, business or property, or (iv) a petition or answer is filed
proposing the adjudication of the Partner as a bankrupt and the
Partner consents to the filing or otherwise acknowledges its
insolvency; or
(e) if a liquidator, receiver, receiver and manager, or trustee in
bankruptcy be appointed to or of the Partnership Interest of any
Partner or any part thereof with the consent or acquiescence of such
Partner, or if appointed without the consent or acquiescence of such
Partner, if such appointment shall remain unvacated and unstayed for
60 days after the date of any such appointment or such longer period
as is reasonable (but not in any event exceeding 120 days) provided
that throughout such period the Partner is acting with all due
diligence to cure such default; or
(f) if, except pursuant to Article 20, an encumbrancer takes possession of
a Partner's Partnership Interest or any substantial part thereof, or
if a distress or execution or any similar process be levied or
enforced on or against such Partnership Interest and the same remains
unsatisfied for the shorter of a period of 30 days or such period as
would permit the same to be sold; provided that such process is not in
good faith being diligently disputed by the Partner and, in that
event, provided further that non-payment shall not in the reasonable
opinion of any other Partner jeopardize the title to the said
Partnership Interest or the Security or in any way impair the
Security, and provided further that, if the Partner shall desire to
contest the same, it shall also give security which, in the absolute
discretion of the other Partners shall be deemed sufficient to pay in
full the amount claimed in the event it shall be held to be a valid
claim; or
(g) if any financing required to be obtained pursuant to this Agreement is
not obtainable as a result of the financial condition of such Partner;
or
(h) if such Partner defaults in any covenant or representation made by it
with respect only to itself under any financing of the Partnership
and/or the Partnership Property and all cure periods have elapsed
without such default being cured by such Partner or waived by the
creditor.
In this Article 21, the Partner which has defaulted is called the "DEFAULTING
PARTY" and each other Partner which is not in default is called the
"NON-DEFAULTING PARTY". In the event of the occurrence of more than one of the
circumstances set forth in Subsections 21.01 (a) to (h), inclusive, with respect
to the applicable Partner each such circumstance shall be deemed to be a
separate Default.
Page 45
21.02 GROUP DEFAULT: Notwithstanding the provisions set out in Section 21.01, if
any Partner which is a member of one of the Great Gulf Group or the Allan Group
(in either case, the "SUBJECT GROUP") is the Defaulting Party, then:
(a) if the Default is a non-monetary default or an event of default under
Section 21.01(b), (c), (e) or (f), the other Partners comprising the
Subject Group, upon the expiry of the grace period provided for in
Section 21.01 shall have a further period of 10 days to cure such
default and upon the expiry of said 10 day period, the provisions of
Section 21.03 shall apply with respect to all of the Partners
comprising such Group if no cure has been effected, it being
acknowledged and agreed that the purchase of all the Partnership
interest of the Defaulting Party by the other Partners comprising such
Group and the curing by them of such Default shall be considered to be
a cure; and
(d) if the Default is a monetary default, the Subject Group as a whole
shall be deemed to be in default upon the expiry of the time limit to
cure such Default set out in subsection 21.01 (a).
21.03 REMEDIES OF A NON-DEFAULTING PARTY: If a Default in respect of any Partner
shall have occurred, until such Default is cured, any Non-Defaulting Party shall
have the right to:
(a) bring any proceedings in the nature of specific performance,
injunction, or other equitable remedy, it being acknowledged by the
parties hereto that damages at law may be an inadequate remedy for a
default or breach of this Agreement; and/or
(b) remedy such Default and any other default of the Defaulting Party
under this Agreement or under any other agreements entered into by or
on behalf of the Partnership, and shall be entitled on demand to be
reimbursed by the Defaulting Party for any monies expended to remedy
any such Default and any other expenses incurred by the Non-Defaulting
Party, together with interest at 5% above the Prime Rate as published
from time to time by the Wall Street Journal (which obligation to pay
interest is subject to the provisions of Section 8.07); and in
addition the Defaulting Party hereby irrevocably directs that all
amounts payable by the Partnership to it pursuant to this Agreement
shall be paid to the Non-Defaulting Party to the extent necessary to
reimburse the Non-Defaulting Party for such moneys with interest as
aforesaid; and/or
(c) bring any action at law as may be necessary or advisable in order to
recover damages; and/or
(d) arrange, upon written notice to the Defaulting Party and the other
Partners for a determination as provided in Section 21.05 hereof of
the Fair Market Value of the Defaulting Party's Partnership Interest
as at the month end prior to the giving of the notice requiring the
determination, and either contemporaneously therewith or after such
determination if it so desires, give written notice (the "PURCHASE
NOTICE") to the Defaulting Party and the other Non-Defaulting
Party(ies) that the Non-Defaulting Party elects to purchase the
Defaulting Party's Partnership Interest at a price equal to 85% of the
Fair Market Value of such Interest as so determined; and to purchase
such Interest at such price, in which event the Defaulting Party shall
sell and the Non-Defaulting Party shall purchase such Partnership
Interest on the terms set out in Sections 21.05 and 21.06 hereof.
There shall be credited against such purchase price (i) the amounts
necessary to reimburse the Non-Defaulting Party for remedying the
said Default together with interest at 5% above the Prime Rate as
published from time to time by the Wall Street Journal (which
obligation to pay interest is subject to the provisions of Section
8.07) and (ii) all costs incurred in determining the Fair Market Value
of the Partnership Interest being purchased.
Any such purchase is intended as an absolute purchase and is not a transaction
by way of security and does not constitute foreclosure or retention of the
Interest or give rise to any equitable rights of redemption in favour of the
Defaulting Party.
Upon receiving a Purchase Notice, the other Partners shall not be entitled to
dispute the determination of Fair Market Value, but shall have the right, within
10 Business Days of the initial delivery of a Purchase Notice, to give a
Purchase Notice to the Defaulting Party and the Non-Defaulting Party who gave
the Purchase Notice, in which event each such Non-Defaulting Party who gave a
Purchase Notice shall be entitled to purchase such proportion of the Defaulting
Party's Partnership Interest as that Non-Defaulting Party's Percentage Interest
bears to the aggregate Percentage Interests of all Non-Defaulting Parties which
have given a Purchase Notice or as they may otherwise agree.
Page 46
Notwithstanding anything to the contrary herein contained, if the Defaulting
Party is a member of either the Great Gulf Group or the Allan Group then the
other members of such Group, as applicable, shall have first rights to purchase
the Partnership Interest of such Defaulting Party by so indicating in its
Purchase Notice. If one or more of such other members of the relevant Group give
a Purchase Notice in which it/they indicate(s) that it is exercising its first
rights in accordance with this Section, then the other Partners shall be deemed
not to have delivered a Purchase Notice.
A Non-Defaulting Party may exercise the option provided for in subsection
21.03(d) at any time after a Default has occurred and so long as such Default is
continuing.
21.04 DISTRIBUTIONS: If a Default shall have occurred and be continuing, then
until such Default has been cured, all distributions to which the Defaulting
Party would otherwise be entitled shall first be paid to Non-Defaulting Parties
in accordance with the provisions of Section 21.03(b) to the extent amounts have
been advanced (including interest accrued thereon) on behalf of the Defaulting
Party and the balance if any shall be deposited by the Partnership or the
General Partner on its behalf in an interest-bearing trust account at a
chartered bank pending the curing of the Default and be applied in payment of
the Defaulting Party's liabilities to the Partnership or the Non-Defaulting
Parties.
21.05 DETERMINATION OF FAIR MARKET VALUE: The Defaulting Party and a
Non-Defaulting Party or Parties which has sent a Purchase Notice will negotiate
in good faith for a period of 10 days after the Defaulting Party's receipt of
the Purchase Notice in an attempt to agree upon the Fair Market Value of the
Defaulting Party's Partnership Interest. If the Defaulting Party and the
Non-Defaulting Party or Parties are unable to so agree within such 10 day period
then each of them shall, within 10 days of the date by which they were to have
agreed on the Fair Market Value of the Defaulting Party's Partnership Interest,
appoint a qualified appraiser who is not an Affiliate of any of them, with not
less than 10 years experience in the practice of residential and commercial real
property valuation. Each of the Defaulting Party(ies) and the Non-Defaulting
Party(ies) shall then, within 10 days of the appointment of such appraisers
submit to both of them in writing its estimate of the Fair Market Value of the
Defaulting Party's Partnership Interest. The appraisers shall be instructed to
select the estimate which in their opinion is closest to the actual Fair Market
Value of the Defaulting Party's Partnership Interest (determined by the
appraisers acting as experts and not as arbitrators) and to advise the
Defaulting Party and the Non-Defaulting Party(ies) of their selection within 30
days of the later of their receipt of the Defaulting Party's and the
Non-Defaulting Party's estimate. The estimate selected by the appraisers shall
be deemed to be the Fair Market Value of the Defaulting Party's Partnership
Interest. If the two appraisers are unable to agree on the estimate of Fair
Market Value of the Defaulting Party's Partnership Interest which they are to
select within the 30 day period, then they shall, within 10 days of the
expiration of such 30 day period, appoint a third appraiser who is not an
Affiliate of any of the Defaulting Party and the Non-Defaulting Party(ies) and
the other two appraisers and who shall, acting alone, select the estimate of
Fair Market Value of the Defaulting Party's Partnership Interest which in his
opinion is closest to the actual Fair Market Value of the Defaulting Party's
Partnership Interest within 15 days of his appointment.
In the event that one party fails to select an appraiser or fails to submit an
estimate of Fair Market Value in accordance with the foregoing, the other
party's estimate of the Fair Market Value of the Defaulting Party's Partnership
Interest shall be final and binding on all parties.
The appraisers shall have access to the Partnership's books and records and the
Defaulting Party and the Non-Defaulting Party will co-operate with the
appraisers and provide all information and documents requested by them.
Page 47
21.06 CLOSING ARRANGEMENTS:
(a) Any transaction of purchase and sale required to be completed in accordance
with the foregoing provisions of this Article 21 shall be completed at noon on
the day 90th clear day after the first delivery by a Non-Defaulting Party of a
Purchase Notice pursuant to Section 21.03(d) or, if the Fair Market Value of the
Defaulting Party's Partnership interest has not been determined, 90 clear days
after determination of the Fair Market Value of the Defaulting Party's
Partnership Interest pursuant to Section 21.05 (or on the Business Day next
following if the day of completion is not a Business Day) and such completion
(called the "CLOSING") shall take place at the Principal Place of Business or at
such other place or date as the Defaulting Party and the Non-Defaulting Party
may in writing agree upon. The Non-Defaulting Party may, subject to compliance
with subsection 21.05, advance the date for the Closing determined in accordance
with the foregoing, to any earlier date on not less than 10 Business Days prior
notice to the Defaulting Party.
(b) The provisions contained in Article 22 shall apply mutatis mutandis to the
sale of a Defaulting Party's Partnership Interest pursuant to this Article 21.
21.07 SUSPENSION OF OTHER RIGHTS: On the delivery by a Non-Defaulting Party of a
Purchase Notice provided for in Section 21.03(d), the Transfers permitted by
Sections 11.04 and 11.06 and the provisions contained in Articles 12,13,14 and
15 shall be suspended to and until the Closing or the rights of the Non-
Defaulting Parties and the Defaulting Party to effect a purchase and sale as a
result of a Purchase Notice having been delivered are terminated, whereupon the
provisions contained in the said Sections 11.04 and 11.06, Articles 12,13,14 and
15 shall revive.
21.08 LOSS OF PARTICIPATION: Upon a Partner becoming a Defaulting Party and
notwithstanding any other provisions of this Agreement, it shall have no right
to participate in any decision-making with respect to the Partnership, provided,
however, that no such approval, action, step, decision or proceeding may be
made, given or taken unless the Defaulting Party is given notice of such
proposed approval, action, step, decision or proceeding, and the Defaulting
Party is given the right to attend any meeting, solely for information purposes,
but with no right to participate in the deliberations or decision with respect
thereto.
ARTICLE 22 - GENERAL CLOSING PROVISIONS
22.01 APPLICATION TO OTHER SECTIONS: Except as otherwise expressly provided for
in this Agreement, the provisions of this Article 22 shall apply, mutatis
mutandis, to any Transfer pursuant to Articles 12,14, 15 and 21.
22.02 VENDOR'S DEBT TO PARTNERSHIP: If, at the Closing the vendor is indebted to
the Partnership in an amount recorded in the books of the Partnership and
verified by the Accountant then the indebtedness shall, at the exclusive option
of the purchaser, either be fully repaid and discharged on or before the Closing
by the vendor or the purchaser shall, out of the purchase price, pay, satisfy
and discharge all or any portion of such indebtedness, and receive and take
credit against the purchase price for the amount so paid on account of the
indebtedness and the vendor hereby agrees to same. The amount so deducted, if
any, shall reduce payments on account of the purchase price required to be made
(as provided for elsewhere in this Agreement) in inverse order of maturity.
22.03 RELEASE OF GUARANTEES, ETC:
(a) If, at the Closing the vendor or any person for or on behalf of the vendor,
has any guarantees, securities or covenants lodged with any person or bank to
secure an indebtedness, liability or obligation of the Partnership, then the
purchaser shall use its best efforts to deliver-up, or cause to be delivered-up,
to the vendor, and cancel or cause to be cancelled, such guarantees, securities
and/or covenants upon the Closing and to the extent applicable, the Partnership
shall co-operate with respect thereto.;
(b) If, notwithstanding the exercise of "best efforts" the release of any such
guarantees, securities or covenants is not obtained, then the purchaser shall
deliver to the vendor and/or the person(s) which shall have provided such
guarantee, security or covenant, an indemnity in writing in form reasonably
satisfactory to the vendor indemnifying each of them and their respective heirs,
executors, administrators, successors and assigns from any and all claims,
demands, expenses, damages, liabilities and suits, paid, suffered or incurred by
them with respect to and as a result of the terms of such guarantee, security or
covenant.
Page 48
22.04 PAYMENT, DOCUMENTS, ETC. FOR CLOSING: At the Closing:
(a) each purchaser shall assume, from and after the Closing, all obligations and
liabilities of the vendor in connection with the Partnership Interest or portion
thereof being acquired which have arisen pursuant to the provisions of this
Agreement and shall indemnify the vendor in connection therewith. At the
Closing, all amounts due by the vendor to a purchaser (including, without
limitation, any amount referred to in Sections 18.05 and/or 21.03 and any amount
necessary to reimburse the purchaser for remedying any Default of the vendor)
shall be settled and set-off or paid in full.
(b) each purchaser shall pay to the vendor the required amount of the purchase
price payable on Closing in cash, bank draft or by certified cheque, and as
evidence of the unpaid balance, if any, of the purchase price, deliver to the
vendor a promissory note for such unpaid balance which note shall be drawn in
accordance with the provisions of this Agreement relating to the payment of the
said unpaid balance of the purchase price.
There shall be deducted from the purchase price payable by a purchaser to a
vendor as otherwise determined in accordance with the provisions of this
Agreement, all amounts owing by the vendor to such purchaser together with the
amount of any liabilities of a vendor assumed by the purchaser at Closing
(provided that the appropriate release for such liability is received by the
vendor) and/or which are subject to a right of set-off as provided for in
Section 22.02(a). The vendor shall, on request of a purchaser, effect the
discharge of any security then outstanding (other than security constituting
Permitted Encumbrances) to the extent the Partnership Interest of the vendor
constitutes collateral under such security.
(c) the vendor shall deliver an assignment from the vendor to the purchaser(s)
of the vendor's Partnership Interest, together with such instruments and
documents, consents and acknowledgements (in each case to be reasonably
satisfactory to the purchaser(s)) as may be necessary or reasonably desirable to
give effect to the sale and transfer of such Partnership Interest (collectively,
the "TRANSFER DOCUMENTS").
The Transfer Documents shall be legally sufficient to convey the Partnership
Interest of the vendor to the purchaser(s).
(d) do all other things required in order to effectively convey and deliver
title to the Partnership Interest to the purchaser free and clear of any and all
liens, claims, security interests and any other encumbrances of others
whatsoever and to fully comply with the intent of this Agreement; however, if
contrary to the provisions hereof the Partnership Interest is not free and clear
of all encumbrances of others, the purchaser (without prejudice to any other
right which it may have) may at its sole option complete the purchase of the
Partnership Interest subject to such encumbrances, in which case the purchaser
shall assume all obligations and liabilities with respect to such encumbrances.
The purchaser shall receive and take credit against the purchase price for the
amount so assumed and the vendor hereby agrees to same. The amount so deducted,
if any, shall reduce payments on account of the purchase price required to be
made (as may be provided for elsewhere in this Agreement) in order of maturity.
22.05 PURCHASER AS VENDOR'S ATTORNEY: If, at the Closing, the vendor shall fail
to deliver the Transfer Documents to the purchaser, the purchaser shall be and
is hereby irrevocably constituted as the duty appointed agent and lawful
attorney of the vendor with full power to prepare, execute, complete and deliver
in the name and on behalf of such vendor, all such assignments and other
documents as may be necessary to effectively transfer and assign the vendor's
Partnership Interest or part thereof being sold to the purchaser, and upon
delivery to the Partnership of such Transfer Documents, the Partnership may
receive the said purchase price and shall thereupon cause the name of the
purchaser to be entered in the register as holder of the said Partnership
Interest and shall hold the said purchase price in trust for the vendor. The
receipt of the Partnership for the said purchase price shall be good discharge
to the purchaser and after its name has been entered in the register in
purported exercise of the aforesaid power, the validity of the proceedings shall
not be questioned by any person. Such appointment and power of attorney shall
not be revoked by the dissolution, winding-up, bankruptcy or insolvency of the
vendor and the vendor hereby ratifies and confirms and agrees to ratify and
confirm all that the purchaser may lawfully do or cause to be done by virtue of
the provisions hereof. The vendor hereby irrevocably consents to the assignment
and transfer of its Partnership Interest or part thereof made pursuant to the
provisions of this Section.
22.06 APPROVAL OF TRANSFER: Effective as at the Closing and provided the
transfer or assignment of the Partnership Interest is permitted pursuant to the
provisions of this Agreement, the General Partner shall effect registration of
the required transfer of the Partnership Interest.
Page 49
ARTICLE 23 - MISCELLANEOUS PROVISIONS
23.01 NOTICES: Any notice, payment, demand or other communication required or
permitted to be given by any provision of this Agreement shall be in writing and
shall be effectively given if delivered, sent by facsimile or, if postal
services are then operating regularly, sent by prepaid registered or certified
mail, to the respective addresses and facsimile numbers of a Partner as set
forth opposite its name in the attached Exhibit A or to such other address or
facsimile number as any Partner may from time to time specify by written notice
to the Partnership. Any notice may at any time be waived by the person entitled
to receive the notice.
Notwithstanding the foregoing, all payments to be made by the Partnership to a
Partner shall be sent to such address or deposited directly into such bank
account maintained by such Partner, in the United States as such Partner
requests and failing such request shall be sent to the address of such Partner
as set forth opposite its name in the attached Exhibit A.
Any such notice or other communication shall be deemed to have been given and
received for all purposes: (a) when delivered, on the day the notice or other
communication is delivered personally to the party or to an officer of the party
to whom the same is directed; (b) if sent by facsimile, on the day transmitted
provided such transmission occurs prior to 4:00 p.m. on a Business Day and
otherwise it will be deemed to have been given and received on the next Business
Day after transmission; and (c) if mailed as aforesaid, 5 Business Days
following the day on which it is post marked; provided, however, that in the
event of an interruption of normal mail service it shall be deemed to have been
given and received on the 5th Business Day following the day on which normal
mail service is restored.
23.02 NOTICE OF CLAIMS: Each of the Partners shall notify the others of any
notice, document, claim, demand, right or cause of action asserted, threatened
or instituted against it (other than by a Partner or the Partnership) which
could adversely affect the Partnership Interest of any other Partner or which
involves the performance of this Agreement or the Partnership (including any of
the Partnership Property). Any such notification to the other Partners shall
include delivery of a copy the relevant notice, claim or other document.
23.03 CERTIFICATES OF COMPLIANCE: Each Partner shall, within 10 days of written
demand signed by the Partnership or any other Partner, execute and deliver to a
third party designated by the Partnership or such other Partner a certificate
addressed to such third party stating whether such Partner is aware of any
defaults on the part of the Partnership or the other Partner who requested the
certificate, or of the initiation of any of the purchase and sale procedures
described in Articles 11, 12, 13, 14, 15, 20 or 21 by any Partner, and any other
information as to compliance herewith as may reasonably be requested.
23.04 RIGHTS OF PARTNERS INDEPENDENT: The rights available to the Partnership
and the Partners under this Agreement and at law shall be deemed to be several
and not dependent on each other, and each such right shall be accordingly
construed as complete in itself and not by reference to any other such right.
Any one or more of such rights may be exercised separately or in any combination
by the Partnership or by a Partner, as applicable, from time to time, and no
such exercise shall exhaust the rights or preclude any other Partner from
exercising any one or more of such rights or combination thereof from time to
time thereafter or simultaneously.
23.05 CONFIDENTIALITY: Each of the Partners shall keep in strict confidence and
shall not disclose to any person who is not a party hereto, any and all
information obtained with respect to the Partnership, the Partnership Property
and the Partners unless and until the written consent of the Partners is
obtained or such disclosure is required for purposes of enforcement of the
provisions of this Agreement or the exercise of the rights of a Partner
hereunder.
All reports and other information referable to the Partnership or the
Partnership Property received by the Partners or any officers, directors,
shareholders or other representative of a Partner shall be considered to have
been received on an absolutely confidential basis and accordingly shall not be
disclosed to any other person whatsoever, save and except only as permitted in
the immediately preceding paragraph.
Page 50
23.06 SECTION AND OTHER CAPTIONS: Section and other captions contained in this
Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of any part of
this Agreement. The division of this Agreement into Articles, Sections,
subsections, paragraphs and subparagraphs and the insertion of headings and an
index is for the convenience of reference only and shall not affect the
construction or interpretation of this Agreement. All references in this
Agreement to Articles or Sections are to the relevant Articles or Sections of
this Agreement, unless otherwise stated.
23.07 "IN THIS AGREEMENT", "HEREOF", "HEREIN", ETC.: The terms "in this
Agreement", "hereof", "herein", "hereto" "hereunder" and similar expressions
refer to this Agreement in its entirety (as the same may be amended or restated
from time to time) and not to any particular Article, Section or other portion
hereof, unless the context clearly indicates the contrary.
23.08 SEVERABILITY: Every provision of this Agreement is intended to be
severable. If one or more of the provisions of this Agreement or the application
thereof to any person or circumstance is determined to any extent to be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality or enforceability of the remaining provisions hereof or the application
thereof to persons or circumstances other than those as to which it is held to
be invalid, illegal or unenforceable, shall not be affected or impaired thereby.
All paragraphs and subparagraphs hereof are declared to be separate and distinct
provisions of this Agreement.
23.09 BUSINESS DAYS: Whenever any payment to be made hereunder shall be stated
to be due or any action to be taken hereunder shall be stated to be required to
be taken on a day other than a Business Day, such payment shall be made or such
action shall be taken on the next following Business Day, and in the case of
payment of a monetary amount, the extension of time shall be included for the
purposes of computation of interest, if any, to be paid thereon.
23.10 CALCULATION OF INTEREST & FEES: In calculating the amount of any interest
payable hereunder, any period for which such amounts are to be calculated shall
include the first day thereof and exclude the last day thereof, provided payment
is made on such day.
23.11 AMENDMENTS: The General Partner may submit to the Partners in writing by
registered or certified mail the text of any proposed amendment to this
Agreement and a statement by the proposer of the purpose of the amendment. Any
amendment shall be adopted if, within 90 days after the mailing of the amendment
to all Partners, the General Partner shall have received written approval of the
amendment from Partners having in the aggregate Percentage Interests: (i) of
more than 50% of all the Percentage Interests held by the Partners comprising
the Great Gulf Group, and (ii) of more than 50% of all the Percentage Interests
held by the Partners comprising the Allan Group. A written approval may not be
withdrawn or voided once it is filed with the General Partner. A Partner filing
a written objection may thereafter file a valid written approval. The date of
adoption of an amendment to this Agreement made pursuant to this Section shall
be the date on which the General Partner shall have received the requisite
written approvals.
A proposed amendment which is not adopted may be resubmitted. If a proposed
amendment is not adopted, a written approval received with respect to the
amendment shall become void and shall not be effective with respect to any
resubmission of the proposed amendment.
Notwithstanding the foregoing provisions of this Section, no amendment may,
without the prior written approval of all Partners, (i) enlarge the obligations
of any Partner under this Agreement, (ii) enlarge the liability of the General
Partner to the Limited Partners, (iii) amend this Section, (iv) alter the
Partnership in a manner that will result in the Partnership no longer being
classified as a "partnership" for federal income tax purposes or (v) reduce any
requirements for the prior approval of the Limited Partners set forth in this
Agreement.
Page 51
23.12 GOVERNING LAW: This Agreement and the rights of the Partners shall be
governed by and performed, interpreted and enforced exclusively in accordance
with the laws of the State of Florida including the federal laws of the United
States applicable therein, and the Act as now in effect shall govern and
supersede any provision of this Agreement which would otherwise be in violation
of the Act
23.13 WAIVER OF ACTION FOR PARTITION: Each of the Partners irrevocably waives,
during the term of the Partnership and during the period of its liquidation
following any dissolution, any right which the Partner may have to maintain an
action for partition with respect to any assets of the Partnership.
23.14 COUNTERPART EXECUTION: This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All counterparts shall be construed together and shall constitute one
Agreement.
23.15 PARTIES IN INTEREST:, Every provision contained in this Agreement shall be
binding upon and, subject to the provisions contained in Article 11, inure to
the benefit of and be enforceable by the successors and assigns of the parties
but only to the extent that they are permitted successors and assigns pursuant
to the terms hereof.
23.16 INTEGRATED AGREEMENT: This Agreement (including the Schedules hereto) and
all other agreements, instruments and documents delivered pursuant to, or
provided for in, this Agreement constitute the whole and entire agreement and
understanding of the parties hereto with respect to the matters contemplated or
provided herein and supersedes and replaces all prior agreements and
understandings, whether written or oral, governing the rights and obligations
between and amongst the Partners or any of them in connection with the
Partnership. There are no restrictions, promises, covenants, representations,
warranties, undertakings or agreements, whether written, oral, collateral or
otherwise, with respect to the matters contemplated or provided for herein other
than those expressly set forth or otherwise expressly provided for herein.
23.17 NO ORAL MODIFICATION: No consent, modification or waiver of this Agreement
or any part of it shall be valid or effective unless in writing and signed by
the party or parties sought to be charged; and no waiver of any condition,
breach of or default in the performance by a party or parties of its or their
obligations under this Agreement shall be deemed or construed to be a waiver of
any other condition, breach of or default in the performance by such party or
parties of its or their obligations under this Agreement. For greater certainty,
failure on the part of a party hereto to complain of any breach or default by,
or of any act or failure to act of, any one or more of the other parties hereto
or to declare the other party or parties hereto in default, irrespective of how
long such failure continues, shall not constitute a waiver by such party of its
rights hereunder. The giving of a consent or waiver by a party hereto in any one
instance shall not limit or waive the necessity to obtain such party's consent
or waiver in any future instance.
23.18 FURTHER ASSURANCES: Each of the parties shall at all times and from time
to time, forthwith upon every reasonable request to do so by any other party,
make, do, execute and deliver, further and other acts, deeds, things, documents,
Instruments, conveyances and assurances whatsoever for more effectually
implementing and carrying out the true intent and meaning of this Agreement
23.19 TIME OF THE ESSENCE: Time shall be deemed to be of the essence with
respect to all time limits provided for in this Agreement.
23.20 NUMBER AND GENDER: In construing this Agreement, where the context so
requires or indicates, words in the singular shall include the plural and
vice-versa, and words importing the feminine shall include the masculine and the
neuter and vice-versa, and the rest of the sentence shall be construed as if the
grammatical and terminological changes thereby rendered necessary had been made.
Page 52
IN WITNESS WHEREOF each of the undersigned has duly executed and delivered this
Agreement of Limited Partnership and, notwithstanding the actual date of such
execution and delivery agrees to be bound by this Agreement with effect on and
as of the Effective Date.
ASHTON WOODS FLORIDA L.L.C. ELLY NEVADA, INC.
Per: Per:
- ------------------------------------- ----------------------------------------
Authorized Signing Officer Authorized Signing Officer
NORMAN NEVADA, INC. LARRY NEVADA, INC.
Per: Per:
- ------------------------------------- ----------------------------------------
Authorized Signing Officer Authorized Signing Officer
BRUCE NEVADA, INC. HARRY NEVADA, INC.
Per: Per:
- ------------------------------------- ----------------------------------------
Authorized Signing Officer Authorized Signing Officer
SEYMOUR NEVADA, INC. HAYDN NEVADA, INC.
Per: Per:
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Authorized Signing Officer Authorized Signing Officer
GRANT-ALLAN ENTERPRISES INC. R.A. INVESTMENT HOLDINGS INC.
Per: Per:
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Authorized Signing Officer Authorized Signing Officer