SENTINEL FINANCING LTD., L.P.
LIMITED PARTNERSHIP AGREEMENT
THIS LIMITED PARTNERSHIP AGREEMENT ("Agreement") is entered
into by and among SENTINEL ACCEPTANCE CORPORATION, a Florida Corporation (the
"General Partner"), and SENTINEL ACCEPTANCE LTD., L.P., A FLORIDA LIMITED
PARTNERSHIP ("Limited Partner"). (The Limited Partner and General Partner
collectively are referred to as "Partner" or "Partners.")
W I T N E S S E T H:
1. FORMATION. The General Partner and the Limited Partner
hereby form a Limited Partnership (the "Partnership" or the "Limited
Partnership") under the Uniform Limited Partnership Act of the State of Florida
("Florida Act"). The Partnership intends to be treated as a partnership for
federal income tax purposes under the default classification rules set forth in
Treasury Regulation Section 301.7701-3(a). The business of the Limited
Partnership shall be conducted under the name "SENTINEL FINANCING LTD., L.P."
2. PLACE OF BUSINESS. The principal place of business of the
partnership shall be at 000 Xx. Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxxxxx,
Xxxxxxx 00000 or at such other place as the General Partner from time to time
shall designate in writing. The Partnership may also maintain such other
offices at such other places as the General Partner may deem advisable. The
address of the General Partner is the principal place of business of the
Partnership. The General Partner may change its address at any time from time
to time.
3. TERM OF THE PARTNERSHIP. The term of the Partnership shall
commence with the filing of the Certificate of Limited Partnership in accordance
with the Florida Act until December 31, 2014, unless sooner terminated.
4. PURPOSE AND BUSINESS OF PARTNERSHIP. The Partnership is a
single purpose business entity formed for the sole purpose of issuing up to an
aggregate of $15,000,000 principal amount of 12% Secured Notes due 2002, the
proceeds of which shall be used for the purchase, collection and servicing of
financing contracts originated by automobile dealers. The Partnership shall be
empowered to do any and all acts and things necessary, appropriate, proper,
advisable, incidental to or convenient for the
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furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership.
5. PARTNERS' DISTRIBUTIVE SHARE. Unless otherwise stated in
this Partnership Agreement, all items of income, gain, loss deduction or credit
shall be allocated as follows:
5.1 ALLOCATIONS TO LIMITED PARTNERS. Unless otherwise
specifically allocated in this agreement, the Limited Partner's distributive
share of all items of income, gain, loss, deduction or credit shall be 99%.
5.2 ALLOCATIONS TO GENERAL PARTNER. The General
Partner's distributive share of all items of income, gain, loss, deduction or
credit not otherwise specifically allocated in this Agreement shall be one
percent (1%).
6. CAPITAL CONTRIBUTIONS.
6.1 GENERAL PARTNER. The General Partner shall
contribute its services, skill and expertise in the acquisition and
management of the Partnership business; in addition the General Partner shall
contribute $40.00. From time to time, as necessary, the General Partner shall
contribute to the Partnership property or other consideration in such form as
permitted under the Florida Act such that its total capital contribution as
General Partner shall remain equal to at least 1% of the total capital
contribution (as defined in Section 6.2, and based on amounts credited to
Capital Accounts) to the Partnership.
6.2 THE LIMITED PARTNER. The Limited Partner's
capital contribution shall be $4,000.00.
6.3 NO RETURN OF CAPITAL CONTRIBUTIONS. No Partner
shall have the right to demand or receive the return of a capital contribution
or Capital Account (as defined in Section 7.1) to the Partnership, or to receive
any distribution from the Partnership except as otherwise provided in this
Agreement, or pursuant to the Florida Act.
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7. CAPITAL ACCOUNTS.
7.1 MAINTENANCE OF CAPITAL ACCOUNTS. The General
Partner shall maintain an individual Capital Account for each Partner in
accordance with Section 704(b) of the Internal Revenue Code. The Capital Account
of each Partner will reflect the amount of such Partner's initial contribution
to the capital of the Partnership, and shall be increased by (i) any additional
capital contributions to the Partnership, (ii) net profits allocated to the
Partner, and (iii) the Partner's share of all Partnership income or profits, if
any, not otherwise taken into account in this Section 7.1 and shall be decreased
by (x) any distributions made to the Partner by the Partnership, (y) net losses
allocated to the Partner, and (z) the Partner's share of all other Partnership
losses, if any, not otherwise taken into account under this Section 7.1.
8. CASH DISTRIBUTIONS BY THE PARTNERSHIP.
8.1 CASH AVAILABLE FOR DISTRIBUTION. Cash Available For
Distribution (as defined in Section 8.2) may be distributed from time to time
quarterly or at the end of any fiscal year to the Partners at the discretion of
the General Partner; provided, however, that no distribution of Cash Available
For Distribution may be made unless at the fiscal quarter or fiscal year end, as
applicable, the Partnership's net receivables as reflected on the Company's
balance sheet for such fiscal quarter or fiscal year end immediately
preceding the fiscal quarter in which the distribution is to be made exceeds
110% of the principal amount of the Notes issued and outstanding. Cash
Available For Distribution shall be distributed one percent (1%) to the General
Partner and ninety-nine percent (99%) to the Limited Partner, and among the
Limited Partners, in accordance with their distributive share as provided in
Section 5.1.
8.2 CASH AVAILABLE FOR DISTRIBUTION means the remaining
cash and other assets available for distribution to the Partners after payment
or satisfaction of the following: (a) all Partnership liabilities for ordinary
and necessary expenses then due and owing to the persons other than the
Partners; (b) all payments currently due on the Notes; (c) the current cost of
acquiring assets; and (d) such reserves as may be determined by the General
Partner to be reasonably necessary for the operation of the Partnership
business.
9. ALLOCATION OF INCOME AND LOSS.
9.1 ORDINARY ALLOCATIONS OF INCOME AND LOSS.
(a) LOSS. Subject to the provisions of Section
9.2, losses shall be allocated as follows: The General Partner shall be
allocated 1% of all loss items, and the Limited Partner shall be allocated
items of loss in accordance with its distributive share allocations in
Section 5, above. Partnership net losses allocated to any Partner pursuant to
this Agreement shall not exceed the maximum amount of net losses that can be so
allocated without causing the Capital Account of such Partner to
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have a deficit Capital Account balance determined with the reductions specified
in Treasury Regulation Section 1.704-l(b)(2)(ii)(d)(4), (5) and (6) which
exceeds the sum of (i) the amount of such deficit the Partner is obligated to
restore, and (ii) the amount of such deficit the Partner is deemed to be
obligated to restore pursuant to the penultimate sentence of Treasury Regulation
Sections 1.704-2(g)(1) and 1.704-2(i)(5).
(b) INCOME. Except as provided in Section 9.02
hereof, income shall be allocated in accordance with the distributive share
allocations to the Limited Partner and General Partner set forth in Section 5.
These allocations are intended to provide the General Partner with a material
interest in the Partnership as defined in Rev. Proc. 89-12.
(c) DETERMINATION OF NET INCOME AND NET LOSSES.
Net income and net losses shall be determined in accordance with the
Partnership's books and records.
9.2 COMPLIANCE WITH SECTION 704(b) REQUIREMENTS.
(a) QUALIFIED INCOME OFFSET. Notwithstanding any
other provision of this Agreement, except Section 9.2(b) hereof, in the event
any Partner unexpectedly receives an adjustment allocation or distribution
described in Treasury Regulation Section 1.704(b)(2)(ii)(d)(4), (5) or (6) which
results in such Partner having a deficit Capital Account balance (after giving
effect to Treasury Regulation Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6)), or
otherwise has a deficit Capital Account balance which exceeds the sum of (i) the
amount of such deficit the Partner is obligated to restore, and (ii) the amount
of such deficit the Partner is deemed to be obligated to restore pursuant to the
penultimate sentence of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2
(i)(5), such Partner shall be specially allocated items of Partnership Income in
an amount and manner sufficient to eliminate, to the extent required by the
Regulations, the deficit in such Partner's Capital Account as quickly as
possible. Any special allocation made under this Section 9.2(a) shall be taken
into account for purposes of determining subsequent allocations of income and
loss, so that the total allocations will, to the extent possible, equal the
allocations that would have been made if this Section 9.2(a) had not previously
applied.
(b) MINIMUM GAIN. Notwithstanding any other
provision of this Agreement, if there is a net decrease in the Partnership's
minimum gain (as such term is defined in Treasury Regulation Section 1.704-2(d))
during any fiscal year, each Partner shall be specially allocated items of
Partnership income for such year (and subsequent years if necessary) in an
amount and in the manner set forth in Treasury Regulation Section 1.704-2(g)(2)
and otherwise in accordance with Treasury Regulation Section 1.704-2(f). This
Section 9.2(b) is intended to comply with the minimum gain chargeback
requirements of Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith. Any special allocations made under this Section 9.2(b)
shall be taken into account for purposes of determining subsequent
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allocations of income and loss so that the total allocations will, to the extent
possible, equal the allocations that would have been made if this Section 9.2(b)
had not previously applied.
(c) PARTNER NONRECOURSE DEDUCTION. Any item of
Partner Nonrecourse Deduction (as hereinafter defined) with respect to a Partner
Nonrecourse Debt (as hereinafter defined) shall be allocated to the Partner who
bears the economic risk of loss of the Partner Nonrecourse Debt in accordance
with Treasury Regulation Section 1.704-2(i). The term "Partner Nonrecourse
Deduction" has the meaning provided in Treasury Regulation Section
1.704-2(i)(2). The term "Partner Nonrecourse Debt" has the meaning provided in
Regulation Section 1.704-2(b)(4). Subject to Section 9.2(b) hereof, but
notwithstanding any other provision of this Agreement, in the event that there
is a net decrease in minimum gain attributable to partner nonrecourse debt
(hereinafter referred to as "Partner Nonrecourse Minimum Gain") during any
fiscal year of the Partnership, then, each Partner with a share of Partner
Nonrecourse Minimum Gain at the beginning of such year shall be allocated items
of Partnership Income for such year (and subsequent years if necessary) in
proportion to, and to the extent of, an amount equal to such Partner's share
(determined in a manner consistent with Treasury Regulation Section
1.704-2(g)(2)) of the net decrease in Partner Nonrecourse Minimum Gain. Any
special allocations made under this Section 9.2(c) shall be taken into account
for purposes of determining subsequent allocations of income and loss so that
the total allocations will, to the extent possible, equal the allocations which
would have been made if this Section 9.2(c) had not previously applied.
10. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.
10.1 CONTROL AND LIMITED LIABILITY.
(a) No Limited Partner shall take part in the
management or control of Partnership business or transact any business on behalf
of the Partnership and shall have no power to sign for or bind the Partnership.
(b) If a Limited Partner receives the return of
any part of his capital contribution without violation of the Partnership
Agreement, he is liable to the Partnership for the period of one (1) year
thereafter for the amount of the returned capital contribution, but only to the
extent necessary to discharge the Partnership's liabilities to creditors who
extended credit to the Partnership during the period the capital contribution
was held by the Partnership.
(c) No Limited Partner shall be liable for any
debt or obligation of the Partnership in excess of such Limited Partners'
capital contribution. However, if a Limited Partner acts in such a way that
persons who transact business with the Partnership reasonably believe, based
upon the Limited Partners' conduct, that the Limited Partner is a General
Partner, then such Limited Partner shall be held liable
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in obligations only to those persons who reasonably believe the Limited Partner
to be the General Partner.
10.2 LIMITED DISTRIBUTIONS. No salaries shall be paid to
any Limited Partner, nor shall any Limited Partner have a drawing account. No
Limited Partner shall be entitled to the return of his capital contribution,
except to the extent that distributions made pursuant to this Agreement may be
considered as such by law and except upon termination of the Partnership as
provided in this Agreement. No Limited Partner shall be entitled to receive
interest on his capital contribution.
10.3 WITHDRAWAL OF LIMITED PARTNERS. Except as otherwise
provided by this Agreement, no Limited Partner will be entitled to withdraw any
of his capital contributions or withdraw or retire from the Partnership prior to
the dissolution and liquidation of the Partnership. An individual Limited
Partner may withdraw upon reaching the age of 65 retirement ("Retirement"). Any
voluntary withdrawal at Retirement by a Limited Partner shall be effective upon
such Limited Partner providing to the General Partner in writing notice of such
Partner's withdrawal 60 days before the date of such Partner's planned
withdrawal date. Subject to Section 10.5, the withdrawal of a Limited Partner
for Retirement, shall not dissolve the Partnership, so long as such withdrawal
or transfer does not violate the provisions set forth in Section 11 of this
Agreement.
10.4 DEATH, ETC., OF LIMITED PARTNER.
(a) The death, incompetency, insolvency or
bankruptcy of an individual Limited Partner shall not dissolve or terminate
the Partnership, except as provided in Section 10.5. In the event of such
death, incompetency or bankruptcy, the executor, administrator, guardian,
trustee or other personal representative (the "representative") of the
deceased, incompetent or bankrupt Partner shall be deemed to be the assignee
of such Limited Partners' interest ("Interest") and may become a substitute
limited partner upon the terms and conditions set forth in Section 11.1. The
estate, representative, heirs, and distributees, as the case may be, of such
a deceased, incompetent or bankrupt Limited Partner shall be liable for all
of his liabilities and obligations to the Partnership.
(b) Any person who acquires in any manner
whatsoever any interest in the Partnership, irrespective of whether such person
has accepted and adopted in writing the terms and provisions of this Agreement,
shall be deemed by the acceptance of the benefits of the acquisition thereof to
have agreed to be subject to and to be bound by all the obligations of this
Agreement that any predecessor in interest of such person was subject to and
bound by all the obligations of this Agreement that any predecessor in interest
of such person was subject to or bound by.
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11. ASSIGNMENT BY PARTNERS.
11.1 GENERALLY. Provided that such action is in
compliance with applicable state or federal securities laws and any other
applicable laws and other agreements to which the Partnership is a party or by
which the Partnership or any Partnership property may be bound or subject, and
upon approval by the General Partner, and the remaining Limited Partners, a
Limited Partner may assign, hypothecate, or transfer all or part of his
partnership interest ("Interest"), to become effective as of the first day of
the calendar month following the month in which such assignment, hypothecation,
or transfer is executed. Such assignment, hypothecation, or transfer shall not
release the Limited Partner transferring an Interest from the obligations under
this Agreement, nor shall it constitute the transferee a substitute Limited
Partner; such transaction shall be an economic assignment as defined herein.
The assignee may become a Limited Partner when the assignee delivers to the
General Partner: (i) a counterpart of this Agreement executed by the assignee
whereby the assignee evidences the intention to become a Limited Partner, and to
be bound by the provisions of this Agreement; and (ii) an opinion of legal
counsel acceptable to the General Partner that the proposed transfer does not
violate applicable state or federal securities laws and any other applicable
laws. In any event, any release of any Limited Partner transferring an Interest
under this Agreement shall be subject to the provisions of Sections 620.117 and
620.136 of the Florida Act.
11.2 LIMITATIONS. Except as provided in this Agreement,
no assignment, hypothecation, or transfer of all or any part of any Interest
(including, without limitation, any rights to income or other attributes of any
Interest) shall be made by any of the Partners and the Partnership will not
recognize any such attempt. No additional interests in Partnership capital and
profits will be issued by the Partnership, if, in the opinion of counsel to the
Partnership, when added to the total of all interests in Partnership capital and
profits sold, exchanged, or issued within a period of twelve consecutive months
prior thereto, such sale, exchange, or issuance could result in the
Partnership's not being taxed as a Partnership, or the Partnership's being
terminated for tax purposes under the Internal Revenue Code.
11.3 ECONOMIC ASSIGNMENT. An assignee who does not
become a substitute Limited Partner as provided in Section 11.1 has no right to
require any information or accounting for Partnership transactions, to inspect
the Partnership books, to seek judicial dissolution, to receive allocations and
distributions the assignor may otherwise have received, or to exercise any
voting or consensual rights, all of which shall be recognized by the Partnership
as rights solely of the assignor.
11.4 PAYMENT AFTER ASSIGNMENT. The Partnership shall,
after the effective date of any assignment, hypothecation, or transfer in
accordance with Section 11.1, make all further allocations and distributions in
respect of the Interest so assigned, to the assignee from the date such Interest
is transferred on the books of the Partnership after compliance with the
foregoing provisions.
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11.5 ACCOUNTABILITY TO ASSIGNEES. No assignment,
hypothecation, or transfer to more than one party, including assignment,
hypothecation, or transfer of less than all of a Limited Partners' rights
hereunder, shall require the Partnership to account to more than one party. The
assignees or transferees shall designate in writing one party to act as their
representative in all Partnership matters.
11.6 ALLOCATION. In the event of an assignment of an
Interest in accordance with Section 11.1, allocation of items of Partnership
income, gain, loss, deduction, and credit between the assignor and the assignee
shall be based on the number of days in the particular year during which each
such Limited Partnership Interest is held according to Partnership records, or
on any other basis deemed reasonable by the General Partner consistent with
applicable United States Treasury Regulations. Each Limited Partner shall be
entitled to such allocation of income, gain, loss, deduction, and credit in
computing taxable income or tax liability to the exclusion of any other party.
12. RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER.
12.1 MATERIAL DECISIONS. The General Partner shall have
full, exclusive and complete power and authority to make all material decisions
regarding the Partnership. Such material decisions shall include, but not be
limited to the following:
(a) Ratification of any agreement committing any
of the Partnership's assets;
(b) Ratification of any contract the duration of
which exceeds nine (9) months;
(c) Ratification of any material deviation in the
Partnership's credit policies;
(d) Ratification of any material deviation in
collection/enforcement policies;
(e) Ratification of any material modification in
the dealer manuals;
(f) Ratification of any material deviation in the
structure of the marketing goals and any marketing representative agreement of
the Partnership;
(g) Ratification of a compensation package for
any employee of the Partnership;
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(h) Determination of Cash Available For
Distribution;
(i) Determination of employment of professionals
to assist in the business of the Partnership, including, but not limited to,
attorneys, accountants, auditors, and bookkeepers; and
(j) Selection of a servicer and ratification of
any servicing agreement.
12.2 GENERAL. In accordance and in addition to the
above, the General Partner shall have full, exclusive, and complete power and
authority to manage, control, administer, and operate the business and affairs
of the Partnership and to do or cause to be done any and all acts deemed by the
General Partner to be necessary or appropriate. The scope of such power and
authority shall encompass all matters in any way connected with such business or
incidental thereto, including without limitation, the power and authority:
(a) To purchase or otherwise acquire personal
property or lease real property deemed necessary or desirable to conduct the
business of the Partnership.
(b) To borrow money; to conduct the business
activities of the Partnership; from time to time, without limitation as to
amount, to draw, make, and issue promissory notes and other such instruments and
evidences of indebtedness, and to secure the payment of the sums so borrowed; to
mortgage, pledge, or assign in trust all or any part of the Partnership
properties or the proceeds and revenues therefrom; and to engage in other
financial arrangements deemed necessary or desirable.
(c) To enter into any joint venture, general
partnership, or limited partnership agreement or other contractual arrangement
for sharing of profits in furtherance of any of the other activities specified
in this Agreement.
(d) To acquire, maintain, develop, operate,
manage, and defend the Partnership assets, and to do any and all other things
necessary or desirable in the conduct of Partnership business.
(e) To manage the Partnership and render such
services as are necessary or desirable, including investigation and evaluation
of investment opportunities for the Partnership; negotiation with sellers of
Interests or other persons, including any Partner, from whom such investments
are to be acquired; and the negotiation with operators and others, including any
Partner, in connection therewith; negotiation with sellers of products or
services offered to the Partnership; negotiation with purchasers of assets owned
by the Partnership; and general supervision of the properties and operations of
the Partnership; to incur obligations or make payments on
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behalf of the Partnership in the name of the Partnership; advance any funds to
or on behalf of the Partnership, in which case the General Partner shall be
entitled to reimbursement by the Partnership.
(f) To enter into agency or independent
contractor agreements providing for the operation and management of Partnership
assets, and Partnership affairs; employ suitable agents, custodians, counsel,
accountants, contractors, architects, and engineers, but no such employment
shall absolve the General Partner from its responsibilities and obligations to
manage and control the business and assets of the Partnership.
(g) To sell, assign, convey, or otherwise dispose
of in the ordinary course of business, for such consideration and upon such
terms and conditions as the General Partner may determine, any part of the
Partnership assets, any interest therein, or any interest payable therefrom and,
in connection therewith, to execute and deliver such deeds, assignments, and
conveyances containing such warranties as the General Partner may determine
appropriate.
(h) To pay property taxes, all local, state, and
federal governmental charges and other amounts, charges, and assessments
necessary or appropriate to the maintenance or operation of any Partnership
properties.
(i) To make such classifications, determinations,
and allocations as the General Partner may deem advisable, for tax purposes and
otherwise, subject to the terms and provisions of this Agreement.
(j) To incur, on behalf of the Partnership,
expenses in causing to be rendered by third parties certain necessary services
for, to, or on behalf of the Partnership.
(k) To take such other action and perform such
other acts as may be necessary or desirable for the conduct of Partnership
business or to effect any powers accorded to any General Partner under this
Agreement or by law.
12.3 TAX DESIGNATION. The General Partner is designated
the Partnership's Tax Matters Partner pursuant to Internal Revenue Code Section
6231(7) for purposes of filing federal partnership tax returns, partnership
audits, and administrative and judicial proceedings involving tax matters of the
Partnership.
12.4 ACTIVITIES OF ANY GENERAL PARTNER AND AFFILIATE OF
ANY GENERAL PARTNER IN CONNECTION WITH THE PARTNERSHIP.
(a) The Limited Partners understand that the
General Partner and any affiliate of the General Partner, are and in the future
may be, interested directly or indirectly in various other businesses and
undertakings not included in the
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Partnership. The Limited Partners understand that the conduct of the business
of the Partnership may involve business dealings with such other businesses or
undertakings. The Limited Partners hereby agree that the creation of the
Partnership and the assumption by the General Partner of its duties hereunder
shall be without prejudice to the rights of the General Partner (or the rights
of any affiliates of the General Partner) to engage in such other interests
and activities and to receive and enjoy profits or compensation from them;
provided that any involvement in such other businesses or undertakings may
involve any activity which would in any way be deemed an activity in the same
line of business or trade as any and all business activities to be undertaken
by the Partnership. The Limited Partners waive any rights they might
otherwise have to share or participate in such other interests or activities
of the General Partner or any affiliates of the General Partner. The General
Partner does and will in the future engage in other business ventures,
including, but not limited to, the operation and management of Partnership
assets and neither the Partnership nor the Limited Partners will be entitled
to the income or profits derived from it. In this connection, it is
understood and agreed by the Limited Partners that the General Partner is and
may continue to be engaged in businesses other than the Partnership, and that
the General Partner must necessarily divide the time thereof between the
Partnership and other businesses, both prior and future, and that the General
Partner may, during the life of the Partnership, acquire additional assets and
not offer the same to the Partnership.
(b) The Limited Partners hereby acknowledge and
consent to the entering into of any agreement or other arrangement for the
furnishing to or by the Partnership of goods or services with any individual,
corporation, partnership, joint venture, association, firm, or other entity that
is an affiliate of the General Partner, and any such arrangements shall not in
itself constitute a breach by the General Partner of a fiduciary duty to the
Partnership, as long as any such arrangements are beneficial and prudent and
enhance the Limited Partners' interest.
(c) The Limited Partners also recognize that all
Limited Partners may be interested directly or indirectly in various other
businesses and undertakings not included in the Partnership which are deemed to
be activities in the same line of business or trade as any and all business
activities to be undertaken by the Partnership.
12.5 AUTHORITY. No person, firm, or corporation dealing
with the Partnership shall be required to inquire into the authority of the
General Partner to take any action or make any decision.
12.6 GENERAL PARTNER COMPENSATION. The General Partner
agrees that it shall not receive any compensation from the Partnership for its
services.
12.7 LIABILITY. Neither the General Partner nor any of
its affiliates, shareholders, employees and agents shall have any liability to
any Limited Partner or the Partnership for any loss or damage, mistake or error
in judgment,
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incurred by reason of any act or omission performed or omitted in good faith
either on behalf of the Partnership or in furtherance of the interests of the
Partnership in a manner reasonably believed to be within the scope of authority
conferred by this Agreement, provided such acts or omissions do not constitute
fraud, gross negligence or gross misconduct or the breach of a fiduciary duty
with respect to such acts or omissions.
12.8 INDEMNIFICATION. The General Partner, its
affiliates, shareholders, employees and agents shall be indemnified and held
harmless by the Partnership from and against any and all losses, liabilities,
costs, expenses or damages arising from any and all claims, demands, actions,
suits or proceedings, civil, administrative or investigative, in which the
General Partner, or its affiliates, shareholders, employees and agents may be
involved, as a party or otherwise, by reason of the management of the affairs of
the Partnership, whether or not the General Partner continues to be such at the
time any such liability or expense is paid or incurred. Neither the General
Partner nor any of its affiliates, shareholders, employees and agents shall be
entitled to indemnification hereunder for any conduct arising from (i) fraud,
gross negligence, gross misconduct or criminal acts; (ii) the breach of this
Agreement by the General Partner; or (iii) a matter unrelated to such General
Partner's management of the Partnership's affairs. The rights of
indemnification provided in this Section will be in addition to any rights to
which the General Partner, or such other persons, may otherwise be entitled by
contract or as a matter of law, and shall extend to each of its successors and
assigns. In particular, and without limitation of the foregoing, the General
Partner, and its affiliates, shareholders, employees and agents, shall be
entitled to indemnification by the Partnership against reasonable expenses,
including attorney's fees, actually and necessarily incurred by any of them in
connection with the defense of any action, to which it or any of them may be
made a party, or the right of the Partnership to procure a judgment in favor of
the Partnership, to the fullest extent permitted under the provisions of the
Florida Act or any other applicable statute. Such indemnification shall be
limited to the assets of the Partnership.
13. INCOME TAX ELECTIONS.
13.1 INCOME TAX ELECTION. The General Partner shall make
such federal income tax elections as it deems in the interest of the
Partnership.
13.2 ELECTION UPON TRANSFER, DEATH OR DISTRIBUTION. In
the event of the transfer of an Interest, or upon the death of an individual
Limited Partner, or in the event of the distribution of Partnership properties
to any party, the Partnership may, upon the request of any Partner and in the
complete discretion of the General Partner, file an election in accordance with
applicable United States Treasury Regulations to cause the basis of the
Partnership properties to be adjusted for federal income tax purposes as
provided in Sections 734 and 743 of the Internal Revenue Code.
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14. AMENDMENT OF PARTNERSHIP AGREEMENT.
14.1 AMENDMENTS REQUIRING CONSENT. Except as otherwise
provided in this Section 14, this Agreement may be amended by the General
Partner and a majority of the Limited Partners as determined in accordance
with the allocation of distributive shares as set forth in Section 5. This
Agreement, shall not be amended without the Requisite Vote (as defined in
Section 14.4), if the effect of such amendment would be to (i) change or amend
Section 4; (ii) increase the liability of the Partners; (iii) change the
contributions required of Partners; (iv) change the rights and interests in
profits and losses of the Partnership; (v) change the rights of Partners upon
liquidation; (vi) amend allocations under Sections 8 or 9; or (vii) amend this
Section 14.
14.2 AMENDMENTS NOT REQUIRING CONSENT. The General
Partner may, without prior consent from any Limited Partner, amend any provision
of this Agreement from time to time to (i) add to the Agreement any further
covenants, restrictions, deletions, or provisions for the protection of the
Partners; (ii) to cure an ambiguity or to correct or supplement any provisions
contained herein; or (iii) to make such other provision in regard to matters or
questions arising under this Agreement, which will not adversely affect the
interests of the Partners.
14.3 PROHIBITED AMENDMENTS. No amendment to this
Agreement shall be effective if, in the opinion of counsel to the Partnership,
such amendment could result in the Partnership's not being taxed as a
partnership, or the Partnership's being terminated for tax purposes.
14.4 DEFINITION OF REQUISITE VOTE. For purposes of this
Agreement, the term "Requisite Vote" shall mean two-thirds of the Limited
Partners as determined in accordance with the allocation of their distributive
shares as set forth in Section 5.1.
15. DURATION, TERMINATION AND WINDING UP
15.1 GENERAL. The Partnership shall terminate upon the
occurrence of any of the following events:
(a) The withdrawal of the General Partner, unless
there exists another General Partner and such General Partner wishes to carry on
the business of the Partnership; however, such dissolution may be avoided if,
within 90 days after such General Partner's withdrawal, all remaining Partners
agree in writing to continue the business of the Limited Partnership and appoint
one or more additional General Partners;
(b) The dissolution of the General Partner,
(except a technical dissolution as a consequence of the transfer of all of the
assets and liabilities
13
of the General Partner to a successor entity in which the General Partner or its
principals retain an interest, or a merger, consolidation, or other
reorganization of the General Partner, all of which events expressly will not
cause dissolution of the Partnership); provided, however, such dissolution of
the Partnership may be avoided if steps are taken by the remaining Partners as
described in the above subparagraph (a);
(c) The filing of a petition in bankruptcy
against the General Partner if such petition is not dismissed within 60 days of
the date of filing;
(d) The expiration of the fixed term of the
Partnership at 11:59 p.m. on December 31, 2014 unless otherwise extended;
(e) The disposition of all Partnership property;
or
(f) The written consent of all Partners,
delivered to the General Partner.
15.2 EFFECTIVENESS OF TERMINATION. Termination shall be
effective on the date on which the event occurs giving rise to the termination,
but the Partnership shall not wind up until the assets have been distributed
pursuant to this Agreement.
15.3 ALLOCATIONS UPON TERMINATION. Upon the termination
of the Partnership:
(a) Partnership properties, or any portion of
them, may be sold at the election of the General Partner if a price deemed
reasonable by the General Partner may be obtained.
(b) The fair market value of any Partnership
properties that are not sold shall be determined, and the gain or loss that
would have resulted had each such Partnership property been sold for its fair
market value shall be computed.
(c) Gain or loss realized on actual sales of
Partnership property and the gain or loss that would have been realized on sales
of unsold Partnership property computed as provided in (b) above, shall be
allocated for federal income tax purposes among the Partners as provided in
Section 9.1 hereof and reflected in the Capital Accounts as provided in Section
7.1 hereof.
(d) The Partnership properties, or the proceeds
therefrom in the event of a sale of all or a portion of them, shall be
distributed as provided below in Section 15.4.
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Partnership properties distributed upon termination
of the Partnership shall remain subject to such agreements, if any, then in
effect with respect to such partnership properties.
15.4 DISTRIBUTIONS UPON TERMINATION. The proceeds of
such sales, as well as other cash and any unsold Partnership properties, upon
termination of the Partnership shall be used as follows:
(a) First, to pay or provide for all amounts
owing by the Partnership to creditors, including any Partner, but not any amount
owed to a Partner solely in the capacity of a Partner, to the extent permitted
by law in satisfaction of the liabilities of the Partnership whether by payment
or by establishment of reserves for such payment.
(b) Second, to the setting up of any reserves
that the General Partner may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership or of any General
Partner arising out of or in connection with the Partnership. Such reserves
shall be paid over to any attorney of the State of Florida, or trust company,
selected by the General Partner, as escrowee, to be held for a period of not
longer than three years, for the purpose of disbursing such reserves in payment
of any of the aforementioned contingencies, and at the expiration of such
period, to distribute the balance remaining, as provided in this provision.
(c) Third, upon liquidation of the Partnership
(or any Partner's Interest) liquidating distributions shall, in all cases, be
made in accordance with the positive Capital Account balances of the Partners,
as determined after taking into account all Capital Account adjustments for the
taxable year during which such liquidation occurs (other than those made
pursuant to this sentence), by the end of such taxable year (or, if later,
within 90 days after the date of such liquidation), and in the same manner as
provided in Section 9.2.
(d) Fourth, if the General Partner has a deficit
balance in his Capital Account after allocation of gain or loss among the
Partners as specified in Section 15.4 and after the payments and liquidating
distributions specified above in this section have been made, the General
Partner shall pay to the Partnership an amount equal to the amount of the
deficit balance in his or her Capital Account by the end of the taxable year in
which the liquidation occurs, and the Partnership shall use that deficit Capital
Account balance payment first to pay amounts, if any, still owed to the
Partnership's creditors and then to distribute the balance, if any, of the
deficit Capital Account balance payment in repayment of any remaining positive
balances in other Partners' Capital Accounts.
(e) Fifth, any net remaining profits shall be
distributed to the Limited Partners and the General Partner in accordance with
their distributive shares as set forth in Sections 5.1 and 5.2.
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15.5 WINDING UP. The winding up of Partnership affairs
and liquidation and distribution of its assets shall be conducted exclusively by
the General Partner or, if the General Partner is unable or unwilling to act, by
a trustee named by the Requisite Vote of the Partners (the "Trustee"). The
General Partner or the Trustee is hereby authorized to do any and all acts and
things authorized by law to effect such dissolution, liquidation, and
distribution of the assets of the Partnership.
16. REPRESENTATIONS WARRANTIES AND COVENANTS OF THE PARTNERS.
Each Limited Partner, if an individual, represents upon
becoming a Limited Partner that he or she (a) is 21 years of age or over and a
United States citizen; (b) is either (i) an accredited investor (as defined in
Rule 501 of Regulation D of the federal Securities and Exchange Commission under
the Securities Act of 1933, as amended) or (ii) alone or with purchaser
Representative(s) (as defined in Rule 501 of Regulation D of the federal
Securities and Exchange Commission under the Securities Act of 1933, as amended)
has such knowledge and experience in financial and business matters that he or
she is capable of evaluating the merits and risks of investing in the
Partnership; (c) is the sole party in interest in his or her Interest under this
Agreement and as such is vested with all legal and equitable rights in such
Interest; (d) is making this purchase solely for his or her own account without
any present intention or agreement of assigning, selling, or transferring any
portion to any other person; and (e) can bear the economic risk of investment in
the Partnership (including the possible loss of the entire amount) without
impairing the ability to provide for himself or herself and his or her family
and that he or she understands that he or she must continue to bear the economic
risk of the investment for an indefinite period of time. Each Limited Partner,
if a partnership, trust, or corporation, represents upon becoming a Limited
Partner that it or its controlling persons are authorized and duly qualified to
invest in Interests in the Partnership and makes the same representations set
forth in (a), (b), (c), and (d) above and that its becoming a Limited Partner
would not result in the transactions contemplated hereunder being prohibited
transactions under the Internal Revenue Code.
17. FURTHER ASSURANCES AND POWER OF ATTORNEY.
17.1 GENERAL. Each Limited Partner, upon executing and
delivering to the General Partner a counterpart of this Agreement, irrevocably
constitutes and appoints the General Partner, with full power of substitution,
as his or her true and lawful attorney in name, place, and stead for the
following purposes:
(a) To sign, swear to, and acknowledge
(i) Certificates and Agreements of Limited Partnership and all amendments to
them required by law with respect to the formation of the Partnership; (ii) all
instruments that effect a change or modification of the Partnership in
accordance with the provisions of this Agreement; (iii) all conveyances or other
instruments and documents necessary to effect the dissolution and liquidation of
the Partnership and the distribution of Partnership
16
properties upon dissolution; (iv) all instruments required in order to comply
with applicable tax laws; and (v) all instruments required in order to implement
the authority of the General Partner under this Agreement; and
(b) To execute, acknowledge, swear to, and file
any and all notices, reports, returns, or other documents permitted or required
by the United States Treasury Department or any rule or regulation issued
thereby in connection with the admission of any additional or substitute
Partner.
17.2 FURTHER ASSURANCES. Each Limited Partner hereby
agrees to execute and deliver to the General Partner within ten days after
receipt of the General Partner's written request such other and further
statements of interest and holdings, designations, powers of attorney, and other
instruments as the General Partner deems necessary or desirable to comply with
the requirements of law or administrative rule for the formation and operation
of this Partnership.
17.3 IRREVOCABILITY OF POWER. The foregoing grants of
authority are hereby declared to be irrevocable, and a power coupled with an
interest, and shall survive the death of the Partner.
17.4 CONFLICTS BETWEEN EXERCISE OF POWER AND THIS
AGREEMENT. In the event of any conflict between the provisions of this
Agreement and any document executed or filed by the General Partner pursuant to
exercise of the Power of Attorney granted herein, this Agreement shall govern.
18. MISCELLANEOUS.
18.1 COUNTERPARTS. This Agreement may be executed in as
many counterparts as shall be deemed necessary by the General Partner, and when
so executed, each such counterpart shall be as fully valid and binding on all
parties as every other such counterpart.
18.2 HEADINGS. The headings in this Agreement are
inserted for convenience and identification only and are in no way intended to
limit the scope, extent, or intent of this Agreement or any provision of it.
18.3 SEVERABILITY. If any provision of this Agreement or
the application of such provision to any person or circumstance is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity of the remaining terms and provisions of it.
18.4 GOVERNING LAW AND VENUE. This Agreement and the
application or interpretation of it shall be governed exclusively by its terms
and by the laws of Florida without regard to its conflicts of laws provisions.
Each of the parties agrees to submit to the jurisdiction of the state and
federal courts in Palm Beach
17
County, Florida, in any action, claim, or other proceeding arising out of any
dispute in connection with this Agreement.
18.5 CUMULATIVE REMEDIES. The rights and remedies
provided by this Agreement are cumulative, and the exercise of one right or
remedy by any party shall not preclude or waive its right to use any or all
other remedies.
Such rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance, or otherwise.
18.6 SUCCESSOR AS GENERAL PARTNER. In the event of a
merger, consolidation, or reorganization of a General Partner that is not a
natural person, any successor shall be deemed to be the General Partner for all
purposes and effects and shall succeed to and enjoy all rights and benefits
conferred and bear all obligations and burdens imposed upon the predecessor
General Partner.
18.7 BOOKS AND RECORDS. The Partnership's books and
records shall be maintained by the General Partner at the General Partner's
office, or such other place as the General Partner may designate by written
notice to the partners and by complying with the requirements of law at the time
of such change. Each Limited Partner shall have access to the Partnership's
books and records during regular business hours and may copy such records at his
or her own expense. The books and records shall be kept in accordance with
generally accepted accounting practices for federal income tax purposes applied
on a consistent basis by the Partnership and shall reflect all Partnership
transactions. The Partnership shall maintain its accounts on an accrual basis
and shall adopt such Partnership tax year as the General Partner may determine.
18.8 FINANCIAL REPORTS. Financial statements shall be
prepared by the Partnership on an accrual basis in accordance with generally
accepted accounting principles and shall be transmitted to each of the Partners
within 30 days after the close of each month. Each Partner has the right to
have the books of the Partnership audited at his or her own expense.
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18.9 PRONOUNS. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the person, persons, entity or entities may require.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of this _____ day of ________________, 1997.
GENERAL PARTNER:
SENTINEL ACCEPTANCE CORPORATION
By:
-------------------------------------
Title:
----------------------------------
LIMITED PARTNER:
SENTINEL ACCEPTANCE LTD., L.P.
By: Sentinel Acceptance Corporation
General Partner
By:
-------------------------------------
Title:
----------------------------------
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