EXHIBIT 99.4
Amended and Restated Agreement of Limited Partnership of Fastcom, Ltd.
AGREEMENT OF LIMITED PARTNERSHIP
OF
FASTCOM, LTD.
AGREEMENT OF LIMITED PARTNERSHIP made as of the _____ day of
_____________, 1994, by and among FASTCOM MANAGEMENT, INC., a Florida
corporation, having a business address of 0000 Xxxxxxxx Xxxxxx Xxxxx, Xx.
Xxxxxxxxxx, Xxxxxxx 00000, as the general partner (hereinafter referred to as
the "General Partner") and those Persons who have executed this Agreement as
limited partners (hereinafter collectively referred to as the "Limited Partners"
and severally as "Limited Partner;" the said General Partner and Limited
Partners are hereinafter collectively referred to as the "Partners" and
severally as "Partner").
R E C I T A L S
A. A Certificate of Limited Partnership was filed on March 31, 1994, with
the office of the Secretary of State of Florida, by the General Partner.
B. Pursuant to the Certificate of Limited Partnership, the General
Partner and Datalinc as a Limited Partner formed a limited partnership under and
subject to the laws of the State of Florida for the purposes of acquiring,
owning, developing, constructing, managing, leasing, operating, and otherwise
dealing with the Network (as hereinafter defined), and to own or lease such
other realty, personalty and/or fixtures as reasonably may be related to the
ownership or operation of the Network, and to conduct such other business
activities and operations as are consistent with and reasonably related to the
foregoing purposes.
C. Series 200 Limited Partners desire to be admitted as Limited
Partners of the Limited Partnership.
D. The parties desire to enter into this Agreement of Limited
Partnership, to define formally and express the terms and conditions of such
limited partnership and their respective rights and obligations with respect
thereto and to provide for the admission of the Limited Partners as Limited
Partners of the Limited Partnership all as of the date first above written.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions herein contained, and other good and valuable
consideration, the receipt and sufficiency of which hereby is acknowledged by
each party to the others, the parties hereto, for themselves, their respective
successors and assigns, hereby agree as follows:
ARTICLE I
CERTAIN DEFINED TERMS
As used herein, the following terms shall have the following meanings:
"Act" shall mean the Florida Revised Uniform Limited Partnership Act.
"Adjusted Capital Investment" shall mean total cash Contributions of a
Limited Partner to the Partnership less Distributions of any kind from the
Partnership.
"Affiliate" or "Affiliated Person" shall mean, when used with reference
to a specified person, (a) any person that directly or indirectly through one or
more intermediaries controls or is controlled by or is under common control with
the specified person, (b) any person who is an officer, partner or trustee of,
or which serves in a similar capacity with respect to, the specified person or
of which the specified person is an officer, partner or trustee, or with respect
to which the specified person serves in a similar capacity, (c) any person
which, directly or indirectly, is the beneficial owner of 10% or more of any
class of equity securities of, or otherwise has a substantial beneficial
interest in, the specified person or of which the specified person is directly
or indirectly the owner of 10% or more of any class of equity securities or in
which the specified per on has a substantial beneficial interest and (d) a
spouse or child living in the household of the specified person.
"Agreement" shall mean this Agreement of Limited Partnership, as
amended from time to time, as the context requires. Words such as "herein,"
"hereinafter," "hereof," "hereto," "hereby" and "hereunder," when used with
reference to this Agreement, refer to this Agreement as a whole, unless the
context otherwise requires.
"Book Value" means, with respect to any asset, such asset's adjusted
basis for federal income tax purposes, except as follows:
a. The initial Book Value of any asset contributed by a Partner to the
Partnership shall be the fair market value of such asset, as determined by the
contributing Partner and the Partnership;
b. The Book Values of all Partnership assets shall be adjusted to
equal their respective fair market values, as determined by the General Partner,
in its sole and absolute discretion, as of the following times:
(1) The acquisition from the Partnership, in exchange for
more than a de minimus capital contribution, of (i) a Partnership Interest by an
additional Partner, or (ii) an additional Partnership Interest by an existing
Partner;
(2) The distribution by the Partnership to a Partner of more
than a de minimus amount of Partnership property other than money;
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(3) The termination of the Partnership for federal income tax
purposes pursuant to Code Section 708(b)(1)(B) on account of the sale or
exchange of fifty percent (50%) or more of the interests in capital and profits
of the Partnership within a twelve month period; and
(4) The Partnership's ceasing to be a going concern (even though it
may continue in existence for the purposes of winding up its affairs,
paying its debts, and distributing any proceeds of the collection of its
receivables to the Partners).
c. If the Book Value of an asset has been determined or adjusted pursuant
to this section, such Book Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset.
"Capital Account" shall mean the Capital Account that shall be
established, maintained and adjusted for each Partner in accordance with the
rules of Section 1.704-1(b)(2)(iv) of the Regulations. To that end, each
Partner's Capital Account shall be credited with: (a) the amount of cash
contributed to the Partnership by the Partner; (b) additional money contributed
to the Partnership by the Partner; (c) the distributive share of Partnership
Taxable Profit allocated to the Partner pursuant to Article IX; (d) the
distributive share of Partnership Gross Income allocated to him pursuant to
Article IX; and (e) the basis adjustment under Section 48(q)(2) of the Code
allocated to him pursuant to Article IX hereof. Each Capital Account shall be
debited by: (i) Distributions made to the Partner pursuant to Article IX; (ii)
the distributive share of Partnership Tax Loss allocated to the Partner pursuant
to Article IX; (iii) the distributive share of Partnership Non-recourse
Deductions allocated to the Partner pursuant to Article IX; (iv) the
distributive share of any Partnership expenditures described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenses pursuant to
Section 1.704- 1(b)(2)(iv)(i) f the Regulations and not otherwise taken into
account in computing Taxable Profit and Tax Loss, allocated to the Partner
pursuant to Article IX; and (v) the basis adjustment under Section 48(q)(1) and
(3) of the Code allocated to the Partner pursuant to Article IX hereof.
Increases or decreases in the Capital Accounts of the Partners to reflect a
revaluation of Partnership property shall be made at the sole and absolute
discretion of the General Partner and in accordance with Section
1.704-1(b)(2)(iv)(f) of the Regulations. A transferee of Units shall succeed to
the Capital Account relating to the Units transferred except to the extent
provided in applicable Regulations. The foregoing provisions and any other
provisions of this Partnership agreement relating to the maintenance of Capital
Accounts are intended to comply with Section 1.704-1(b)(2)(iv) of the
Regulations, and shall be interpreted and applied in a manner consistent with
such Regulations. To the extent that any provision of this Partnership Agreement
is inconsistent with such Regulation, such Regulation (as the same may be
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amended or revised hereafter) shall control. If the General Partner shall
determine that it is prudent to modify the manner in which Capital Accounts, or
any debits or credits thereto, are computed or maintained in order to comply
with such regulations, the General Partner is authorized to make such
modifications pursuant to Article IX. Any references in this Partnership
Agreement to the Capital Account of a Partner shall be deemed to refer to such
Capital Account as the same may be credited or debited from time to time as set
forth above.
"Capital Contribution" of a Partner shall mean the amount of cash
contributed by such Partner to the Limited Partnership pursuant to Articles III
and XV hereof.
"Cash Flow" in any fiscal year shall mean the net income in such period
from operations of the Limited Partnership determined in accordance with Federal
income tax principles consistently applied (not including Sale Proceeds or
Refinancing Proceeds) plus:
a. depreciation;
b. amortization of capitalized costs;
c. other non-cash charges deducted in determining such net income, and
d. the net reduction in the amount of any reserves or escrows described in
"f" below; minus the following:
e. principal payments on all secured and unsecured borrowings of the
Limited Partnership;
f. the amount of cash set aside for working capital, property replacement
reserves and any other reserves reasonably deemed necessary by the General
Partner; and
g. any other cash expenditures or escrows (except distributions or payments
to Partners) which have not been deducted in determining the net income of the
Limited Partnership and which were not funded by borrowings.
"Closing Date" shall mean such time as the General Partner shall have
accepted subscriptions for 300 Series 200 Units but not later than June 30,
1996, unless the General Partner shall extend the offering period for
subscriptions, but not later than September 30, 1996.
"Code" shall mean the United States Internal, Revenue Code of 1986, the
Regulations promulgated thereunder and any corresponding provisions of
subsequent law.
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"Depreciation" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis.
"Datalinc" means Datalinc, Ltd., a Florida limited partnership.
"Datalinc Units" means the Units owned by Datalinc as described in the
Memorandum. Holders of such Units are referred to herein as "Datalinc Limited
Partners."
"Distribution" shall mean any funds distributed to the Partners pursuant to
this Agreement.
"DOL" shall mean the United States Department of Labor.
"EA Units" means the Early Investor Units as described in the Memorandum.
Holders of such Units are referred to herein as "EA Limited Partners."
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"General Partner" shall mean Fastcom, Inc., a Florida corporation, or any
Person or Persons who or which, at the time of reference thereto, have been
admitted as a successor to the interest of the General Partner or as an
additional General Partner.
"Gross Asset Value" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) 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;
(ii) 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: (a) the acquisition of an
additional interest in the Partnership (other than pursuant to Article IV
hereof) by any new or existing Partner in exchange for more than a de minimus
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Capital Contribution; (b) the distribution by the Partnership to a Partner of
more than a de minimus amount of Partnership Network as consideration for an
interest in the Partnership if the General Partner reasonably determines that
such adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership; and (c) the liquidation of the
Partnership within the meaning of Regulations
(iii) 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
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(iv) The Gross Asset Value of any Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to IRC 734(b) or 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Regulation 1.704-1(b)(2)(iv)(m) and this Section hereof; provided, however,
that Gross Asset Values shall not be adjusted pursuant to this Section to the
extent the General Partner determines that an adjustment pursuant to this
Section 1.20(iv) is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this Section.
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to this Section, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset for
purposes of computing Profits and Losses.
"Gross Income" shall mean items of gross income which are included
within the definition of gross income for the purposes of Section
1.704-1(b)(2)(iv) of the Regulations.
"Limited Partner" shall mean any Person who is a Limited Partner at the
time of reference thereto, including a Substituted Limited Partner. "Limited
Partners" shall refer to all Limited Partners at the time of reference thereto.
"Limited Partnership" shall mean the limited partnership formed
pursuant to the Certificate of Limited Partnership filed on March 31,1994, as
said limited partnership may from time to time be constituted.
"Majority Vote" shall mean the affirmative vote or written consent of
Limited Partners then owning of record outstanding Units of any type within the
aggregate more than a fifty percent (50%) interest in the Distributions of Cash
Flow of the Partnership.
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"Memorandum" shall mean the Confidential Private Placement Memorandum
dated May 1, 1996 for the sale of Series 200 Units of Limited Partnership
interests to Persons who will be admitted as Series 200 Limited Partners,
respectively.
"Minimum Gain" shall mean the aggregate gain (of whatever character),
if any, that would be realized by the Partnership with respect to each
Partnership asset if each Partnership asset was disposed of by the Partnership
in a taxable transaction in full satisfaction of any Non-recourse Debt of the
Partnership secured by such asset, and by then aggregating the amounts so
computed. Such gain shall be determined by reference to the Book Value of each
such property or asset (notwithstanding that the adjusted tax basis of such
property or asset differs from its Book Value) and in accordance with Section
1.704-1(b)(4)(c) of the Treasury Regulations. A Partner's share of Partnership
minimum gain shall equal the excess of (A) the sum of the non-recourse
deductions allocated to such Partner and the aggregate distributions to such
Partner of the proceeds of a non-recourse liability that are allocable to an
increase in partnership minimum gain over (B) the sum of such Partner's
aggregate share of net decreases in partnership minimum gain and such Partner's
aggregate share of decreases in partnership minimum gain resulting from
adjustments to the Book Value of property. A Partner's share of a net decrease
in partnership minimum gain for a fiscal year shall equal an amount that bears
the same relation to the net decrease in partnership minimum gain during such
year as the Partner's share of partnership minimum gain at the end of the
preceding fiscal year bears to the partnership minimum gain at the end of such
preceding year. A Partner's share of any decrease in partnership minimum gain
resulting from any adjustment in the Book Value of property described in
subparagraph (ii) of the definition of "Book Value" shall equal the amount of
the increase in such Partner's Capital Account attributable to such adjustment
to the extent of the reduction in partnership minimum gain caused by such
adjustment as determined under Section 1.704-1T(b)(4)(iv)(f) of the Treasury
Regulations.
"Negative Cash Flow" shall mean the net loss from operations of the
Limited Partnership determined in accordance with Federal income tax principles
consistently applied (not including Sale Proceeds or Refinancing Proceeds),
reduced by
a. depreciation;
b. amortization of capitalized costs;
c. other non-cash charges deducted in determining such net loss; and
d. the net reduction in the amount of any reserves or escrows described in
"f" below; increased by the following:
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e. principal payments on all loans, including but not limited to the
Construction Loan, Permanent Loan and optional Loans and any other indebtedness
of the Limited Partnership;
f. the amount of cash set aside for working capital, property replacement
reserves and any other reserves; and
g. any other cash expenditures or escrows (except distributions or payments
to Partners, and escrows of Limited Partnership funds for property taxes taken
into account in computing net loss), which have not been included in determining
the net loss of the Limited Partnership and which were not funded by borrowings.
"Network" means the THRUCOMM Network as described in the Memorandum,
including all tangible and intangible assets related thereto.
"Network Management Agreement" shall mean the Management Agreement for the
development of the Network Management Agreement shall be entered into between
Fastcom, Inc., and the Limited Partnership, as more fully described in the
Memorandum.
"Network Management Fee" shall mean the fee payable to the General Partner
as managing agent as set forth in Section 5.2 hereof and more fully described in
the Memorandum.
"Non-deductible Expenditures" shall mean all items of Limited Partnership
expenditure described in Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to the Regulations promulgated under Section
704(b) of the Code, including but not limited to any syndication expenses.
"Non-recourse Debt" or "Non-recourse Liability" shall mean indebtedness
secured by Partnership property for which neither the Partnership nor any
Partner has any personal liability and for which no Partner nor any other person
related to a Partner (within the meaning of Section 1.752-1T(h) and
1.704-1T(b)(4)(iv)(h) of the Regulations) has the economic risk of loss.
"Non-recourse Deductions" shall mean the excess, if any, of the net
increase in the amount of Minimum Gain during a partnership's taxable year, over
the aggregate amount of any distributions during such year of proceeds of
non-recourse liability that are allocable to an increase in Minimum Gain.
Section 1.704-1T(b)(4)(iv)(b) of the Regulations. The Non-recourse Deductions of
the Partnership for a taxable year shall consist first of depreciation or cost
recovery deductions with respect to items of Partnership property or other
assets to the extent of the increase in Minimum Gain attributable to any
Non-recourse Debt of the Partnership secured by such Partnership property or
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assets and, to the extent necessary, a pro rata portion of the Partnership's
other items of loss, deduction and non-deductible expenditures under Section
705(a)(2)(B) of the Code (to the extent such non-deductible expenditures reduce
Capital Accounts). Non-recourse Deductions shall be determined in accordance
with the rules in Section 1.704-1T(b)(4)(iv) of the Regulations, and any
subsequent rule or regulation governing the determination of Non-recourse
Deductions.
"Offering" shall mean the offer by the Limited Partnership to sell the
Series 200 Units subject to the terms and conditions set forth herein.
"Optional Loans" shall mean the optional loans referred to in Section 5.10
hereof.
"Partner" shall mean the General Partner or any Limited Partner and
"Partners" collectively refers to the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Non-recourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Non-recourse Debt were treated as Non-recourse Liability,
determined in accordance with Section 1.704-1T(b)(4)(iv)(h) of the Treasury
Regulations.
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"Partner Non-recourse Debt" has the meaning set forth in Section
1.704-1T(b)(4)(17v)(k)(4) of the Treasury Regulations.
"Partner Non-recourse Deductions" has the meaning set forth in Section
1.704-(b)(4)(iv)(h)(3) to the Treasury Regulations. The amount of Partner
Non-recourse Deductions with respect to a Partner Non-recourse 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 Non-Recourse
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 Non-recourse Debt to the extent such distributions are from the
proceeds of such Partner Non-recourse Debt and are allocable to an increase in
Partner Minimum Gain attributable to such Partner Non-recourse Debt, determined
in accordance with Section 1.704-1T(b)(4)(iv)(h)(3) of the Treasury Regulations.
"Person" shall mean any individual, general partnership, limited
partnership, corporation, joint venture, trust, business trust, cooperative or
association and the heirs, executors, administrators, successors and assigns
thereof, where the context so admits.
"Preferred Return" shall mean a 15% per annum cumulative, non-compounded
Preferred Return on their Adjusted Capital Investment, commencing the date of
closing of the Series 100 Unit offering. However, the Preferred Return is only
payable if within three years from the Closing Date of the Series 100 Unit
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offering the Partnership (or a successor entity thereto with essentially the
same business) has not done either of the following (a "Cut-Off Event"): a. Made
aggregate Distributions of any kind to such Partners in an amount equal to their
Adjusted Capital Investment, or b. Has not completed a successful public
offering. If a Cut-Off Event has occurred, the Partnership's obligation to make
a Preferred Return to the Series 100 Limited Partners will terminate. If the
Partnership has made a successful public offering by such date, but the market
value of securities owned by the Series 100 Limited Partners is less than their
Adjusted Capital Investment based upon the public offering price of such
securities (the "Difference"), the Series 100 Limited Partners will be issued
securities with a first priority dividend and other payment right over all other
securities holders equal to the Difference.
"Qualified Income Offset Items" shall mean unexpected adjustments,
allocations, or distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5),
and (6) of the Regulations.
"Refinancing" shall mean the replacement, increase, consolidation,
modification or extension, etc. of any indebtedness on the Network.
"Regulations" shall mean regulations promulgated under the Code, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).
"Refinancing Proceeds" shall mean the proceeds from a Refinancing after
deducting the expenses incurred in connection with the receipt or collection
thereof, the amounts thereof which are applied in reduction of Limited
Partnership liabilities and the amounts thereof which, in the sole discretion of
the General Partner, are set aside for working capital, property replacement
reserves and any other reserves reasonably deemed necessary by the General
Partner.
"Sale" shall mean a sale, condemnation, voluntary or involuntary
conversion, insured casualty or other disposition of the Network or any portion
thereof.
"Sale Proceeds" shall mean the proceeds from any Sale after deducting (a)
expenses incurred in connection with the receipt or collection thereof,
including, but not limited to, any brokerage commissions due to the General
Partner as more fully described in the Memorandum, (b) in the case of a
condemnation, voluntary or involuntary conversion and insured casualty, such
portion thereof as is required to repair, restore or replace the Network or any
portion thereof, (c) all amounts which are applied in reduction of Limited
Partnership liabilities and (d) all amounts which, in the sole discretion of the
General Partner, set aside for working capital, replacement reserves and any
other reserves reasonably deemed necessary by the General Partner. Such reserves
and any other reserves when the Partnership is liquidated shall be deemed Sale
Proceeds.
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"Series 100 Units" means the Series 100 Units as described in the
Memorandum. Holders of such Units are referred to herein as "Series 100 Limited
Partners."
"Series 200 Units" means the Series 200 Units as described in the
Memorandum. Holders of such Units are referred to herein as "Series 200 Limited
Partners."
"Sharing Ratio" of any Limited Partner shall mean such Partner's pro rata
share of the Capital Contributions of all of the same class of Limited Partners.
"Substituted Limited Partner" shall mean any person admitted to the Limited
Partnership as a Limited Partner pursuant to the provisions of Section 8.7
hereof.
"Syndication Expenses" means all expenditures classified as syndication
expenses pursuant to Treasury Regulation Section 1.709-2(b). Syndication
Expenses shall be taken into account under this Agreement at the time they would
be taken into account under the Partnership's method of accounting if they were
deductible expenses.
"Taxable Profits" or "Tax Losses" shall be synonymous with "Net Profit" or
"Net Losses" and shall mean for each fiscal year or other period, an amount
equal to the Partnership's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Taxable Profits or
Tax Losses pursuant to this section shall be added to such taxable income or
loss;
(ii) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulation Section 1.704-1(b) (2)(iv)(i), and not otherwise taken into
account in computing Taxable Profits or Tax Losses pursuant to this section,
shall be subtracted from such taxable income or loss;
(iii) Gain or loss resulting from any disposition of Partnership
Property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis for such property
differs from its Gross Asset Value;
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(iv) In lieu of the depreciation, amortization, and other cost
recovery deduction taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year or other
period, computed in accordance herewith; and
(v) Notwithstanding any other provision of this section, any items
which are specially allocated pursuant to Article IX hereof shall not be taken
into account in computing Taxable Profits or Tax Losses.
"Tax-exempt Investor" shall mean: (a) pension plans (as that term is
defined in Section 3(2)(A) of ERISA), including qualified pension,
profit-sharing and other employer retirement benefits plans (including Xxxxx
[H.R. 10] Plans) and trusts, bank commingled trust funds for such plans and
Individual Retirement Accounts, and (b) permitted transferees and permitted
assigns of Units from a Person described in (a) above.
"Treasury Regulations" means the Income Tax Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Unit" shall mean a limited partnership interest in the Limited
Partnership.
ARTICLE II
CONTINUATION; PURPOSES; AND TERM
2.1 Continuation of Limited Partnership.
The Partners, by execution of this Agreement, agree to continue the limited
partnership previously formed under and subject to the Act and amend and restate
the original Agreement of Limited Partnership in its entirety as set forth
herein.
2.2 Name and Principal Place of Business.
The Limited Partnership shall conduct its business and promote its purposes
under the firm name and style Fastcom, Ltd., or such other name or names as the
General Partner hereinafter from time to time may select. The Limited
Partnership's principal office for the transaction of business shall be
maintained at the address set forth above or such other place or places within
or outside the State of Florida as the General Partner hereinafter may select.
2.3 Purposes.
Except as otherwise expressly provided herein, the purposes of the Limited
Partnership shall be to acquire, own, develop, construct, improve, lease,
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manage, operate, and otherwise deal with the Network, to own or lease such other
realty, personalty, fixtures or other tangible assets and any intangible assets
as reasonably may be related to the ownership or operation of the Network, and
to conduct such other business activities and operations as are consistent with
and reasonably related to the foregoing purposes, and in connection therewith,
to enter into contracts and leases, to borrow money necessary for the Limited
Partnership's business, to pledge, mortgage or otherwise encumber all or any
part of the Limited Partnership's assets.
2.4 Term.
The term of the Limited Partnership shall commence as of the date hereof,
and shall continue and extend to and including December 31, 2039 verify, or
until such earlier date as the Limited Partnership shall be dissolved and
terminated pursuant to the provisions of Article XII hereof.
ARTICLE III
PARTNERS AND CAPITAL
3.1 General Partner's and Datalinc's Capital Contributions.
The General Partner has contributed $100 in cash to the capital of the
Limited Partnership. Datalinc has contributed all rights, title and interest to
all tangible and intangible assets associated with THRUCOMM.
3.2 Limited Partners' Capital Contributions.
The Limited Partnership intends to sell and issue up to 300 Series 200
Units, and to admit as Limited Partners the Persons who pay for such Units in
accordance with the Memorandum. The General Partner is hereby authorized to
raise capital for the Limited Partnership by offering and selling such Units to
qualified offerees. The General Partner, in its sole discretion, may sell
fractional Units.
3.4 Terms of Offering.
Except as otherwise provided in the Agreement, the General Partner shall
determine the terms and conditions of the Offering and is authorized and
directed to do all things which it deems to be necessary, convenient,
appropriate or advisable in connection therewith, including but not limited to,
the execution and performance of agreements with such persons concerning the
marketing of the Units on such basis and upon such terms as the General Partner
shall determine.
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3.5 Interest and Right to Property.
No Partner shall be paid interest on any Capital Contribution, nor shall
any Partner have the right to take and receive property other than cash in
return for his or its Capital Contribution.
3.6 No Withdrawal from Capital Accounts.
Except as otherwise expressly provided herein, no Partner shall be
permitted to make any withdrawals from his or its Capital Account.
3.7 No Interest on Capital Contributions.
No Partner shall receive any interest, salary, or draw with respect to his
Capital Contributions or his Capital Account or for services rendered on behalf
of the Partnership or otherwise in his capacity as a Partner, except as
otherwise provided in this Agreement.
ARTICLE IV
SPECIAL POWER OF ATTORNEY
4.1 Each Limited Partner and any affiliate thereof executing this Agreement
irrevocably constitutes all the General Partner's), present or future, his true
and lawful attorney-in-fact in his name, place and xxxxx to make, execute, swear
to,, acknowledge, deliver and file:
Any Agreement or Amended Certificate of Limited Partnership, as well as
amendments thereto, under the laws of the State of Florida, and under the laws
of any other state in which such Certificate or Agreement is required to be
filed;
Any other instrument which may be required to be filed by the Partnership
under the laws of any state or by any governmental agency, or which the General
Partner deems advisable to file;
Any documents which may be required to effect the continuation of the
Partnership, the admission of a Substitute Limited Partner, the election of a
Substitute General Partner or the dissolution and termination of the
Partnership, provided such continuation, admission, election, or dissolution and
termination are in accordance with the terms of the Partnership Agreement;
All documents, certificates or other instruments, if any, which may be
required for the organization of any new limited partnership occasioned by the
death, dissolution, withdrawal or cessation of existence, removal, adjudication
of incompetency, insanity, bankruptcy, or insolvency of the General Partner; and
All documents, certificates or other instruments which may be required to
reflect amendments authorized or required under the Partnership Agreement.
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4.2 The above power of attorney:
Is a special power of attorney coupled with an interest, is irrevocable,
and shall survive the death of any Limited Partner;
May be exercised by the General Partner for each Limited Partner by an
actual facsimile signature of the General Partner or by listing all of the
Limited Partners and executing any instrument with a single actual or facsimile
signature of the General Partner acting as attorney-in-fact for all of them (the
General Partner may act through any of its corporate officers);
Shall survive the delivery of an assignment by a Limited Partner of the
whole or any portion of his interest; except that where the assignee thereof has
been approved by the General Partner for admission to the Partnership as a
Substitute Limited Partner, the power of attorney shall survive the delivery of
such assignment for the sole purpose of enabling the General Partner to execute,
swear to or acknowledge and file any instrument necessary to effect such
substitution; and
Shall not constitute a waiver of, or be utilized to avoid the rights of the
Limited Partners, or in any manner inconsistent with the status of the
Partnership.
Upon request by the General Partner, the Limited Partners shall from time
to time execute any separate power of attorney that may be necessary or proper
to permit the above-listed powers to be exercised.
4.3 Separate Form.
Each Limited Partner hereby agrees to execute, acknowledge and deliver to
the General Partner, promptly upon request therefor by the General Partner, a
power of attorney in recordable form satisfactory to the General Partner
evidencing the foregoing appointment.
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ARTICLE V
MANAGEMENT; RIGHTS OF GENERAL AND
LIMITED PARTNERS; FEES AND EXPENSES
5.1 Management.
Except as otherwise expressly provided herein and subject to the
restrictions contained in Section 5.4 hereof, the General Partner shall have the
exclusive right and power to manager operate and control the Limited
Partnership, to do all things necessary or appropriate to carry on its business
and purposes,, including, but not limited to,, the right to incur and satisfy
obligations relating to the formation and operation of the Limited Partnership,
and to exercise all rights and powers conferred upon the General Partner by law,
including, but not limited to, the right:
a. To plan, design, finance, lease and cause the Network to be developed
and completed;
b. To develop, construct, hold and dispose of the Network as well as
tangible and intangible property connected therewith in furtherance of the
development of the Network and the business of the Limited Partnership,
including but not limited to defending and/or settling litigation regarding the
Limited Partnership, the Network or any aspect thereof.
c. To adjust, compromise, settle or refer to arbitration any claim in favor
of or against the Limited Partnership and to institute, prosecute and defend any
legal action or proceeding or any arbitration proceeding;
d. To enter into, make and perform any and all contracts and other
agreements in connection with the business and purposes of the limited
Partnership which the General Partner shall deem necessary or desirable and in
the best interests of the Limited Partnership, whether or not such agreements
shall be with persons affiliated with any Partner, including without limitation,
each and every such agreement referred to in or contemplated by the Memorandum;
e. To obtain loans for the Limited Partnership's purposes and to issue,
accept, endorse and execute promissory notes, bonds or other evidences of
indebtedness and, as security therefor, to mortgage, pledge, grant security
interests in, or otherwise encumber its assets, including, but not limited to,
the Network; to obtain replacements of any debts and to prepay, in whole or in
part, refinance, recast, increase, modify, consolidate or extend any obligation
affecting the Limited Partnership;
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f. To acquire and enter into any contract of insurance necessary or proper
for the protection of the Limited Partnership, the conservation of the Network
or any other purpose proper and beneficial to the Limited Partnership;
g. To retain or employ and coordinate the services of all employees,
supervisors, accountants, attorneys, contractors and other persons or entities
necessary or appropriate to carry out the business and purposes of the Limited
Partnership, whether or not affiliated with the General Partner;
h. To perform other obligations provided elsewhere in this Agreement to be
performed by the General Partner;
i. To open accounts and deposit and maintain funds in the name of the
Limited Partnership in banks, savings and loan associations or trust companies;
provided, however, that the Limited Partnership funds shall not be commingled
with the funds of any other person;
j. To exercise all rights and powers conferred upon the General Partner by
law;
k. To amend this Agreement to reflect the addition or substitution of
Limited Partners or the reduction of Capital Accounts upon the return of capital
to the Partners; and
l. To execute, acknowledge and deliver any and all instruments necessary or
desirable in effectuating the foregoing.
5.2 Fees.
The General Partner and its Affiliates shall be entitled to all fees and
compensation for services as described in the Memorandum. The General Partner
and its Affiliates may also enter into other contracts, commitments or
agreements with the Partnership, provided that the fees and prices charged in
such transactions are at least as favorable as the fees and charges being
offered by non-affiliated comparable entities performing similar functions.
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5.3 Reimbursement for Limited Partnership Expenses.
The Partnership shall bear all expenditures incident to its formation. The
Partnership shall reimburse the General Partner and/or Datalinc, except as
otherwise provided in the Memorandum, for (or pay directly) all actual and
direct expenditures incident to its formation, including the fees of the
attorneys and accountants who represent the General Partner in connection with
the review, negotiation and preparation of this Agreement, as well as any costs
incurred by the General Partner in connection with the creation and development
of the Partnership prior to execution hereof, all as further specified herein.
Subject to the restrictions concerning indemnification of the General
Partner as set forth herein, the General Partner shall be entitled to
reimbursement by the Limited Partnership for all out-of-pocket expenses
reasonably paid or incurred by it in connection with the discharge of its
obligations under this Agreement or otherwise reasonably paid or incurred by it
on behalf of the Limited Partnership.
5.4 Restrictions and Rights.
Notwithstanding the grant of authority to the General Partner under Section
5.1 hereof, without the following specified vote of Limited Partners, the
General Partner shall not:
a. Refinance, sell or contract to sell substantially all of the assets of
the Limited Partnership, including, but not limited to, the Network (Vote of
Limited Partners owning at least 2/3 of outstanding Units);
b. Do any act in contravention of this Agreement (unanimous);
c. Employ, or permit the Limited Partnership to employ, the funds or assets
of the Limited Partnership in any manner except for the exclusive benefit of the
Limited Partnership (unanimous); or
d. Receive any rebates or give-ups, directly or indirectly, or participate
in any reciprocal business arrangements which would circumvent such prohibitions
and any other prohibitions or restrictions contained herein with respect to the
Partnership's dealings with the General Partner or its Affiliates (unanimous).
e. Materially alter the use of Proceeds set forth in the Memorandum
(Majority Vote).
5.5 Limitation of Time.
The General Partner shall not be required to devote all of its time or
business efforts to the affairs of the Partnership, but shall devote so much of
its time and attention to the Partnership as is reasonably necessary and
advisable to manage the affairs of the Partnership to the best advantage of the
Partnership.
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5.6 Non-Exclusivity.
Any Partner, whether General or Limited, may engage in or possess an
interest in other business ventures of every nature and description,
independently or with others, including, but not limited to, the ownership,
financing, operation, management, syndication, brokerage and development of
other similar business to that of the Partnership, and neither the Limited
Partnership nor any Partners thereof shall have any right by virtue of this
Agreement in such independent ventures or to the income, profits or losses
derived therefrom. The fact that a Partner, whether General or Limited, or any
member of his family or any Affiliate thereof, as the case may be, is employed
by, or is directly or indirectly interested in or connected with, any Person
with which the Limited Partnership transacts business shall not prohibit the
General Partner from dealing with such Person, and neither the Limited
Partnership nor any Partners thereof, as such, shall have any rights in such
Person, or to any income, profits or losses derived therefrom. The General
Partner shall not be obligated to present any particular investment opportunity
to the Limited Partnership even if such opportunity is of a character which, if
presented to the Limited Partnership could be taken by the Limited Partnership
and the General Partner shall have the right to take for its own account
(individually or as trustee), or to recommend to others any such particular
investment opportunity.
5.7 No Liability and Indemnity.
The General Partner or its Affiliates shall not be liable, responsible or
accountable to the Limited Partnership or any Partner for any act or omission
performed or omitted pursuant to the authority granted to it hereunder or by
law, or for a loss resulting from any mistake or error in judgment on its part
or from the negligence, dishonesty, fraud or bad faith of any employee, broker
or other agent of the Limited Partnership, provided that such act or omission,
such mistake or error in judgment or the selection of such employee, broker or
other agent as the case may be was made in good faith and did not result from
fraud, the misconduct or negligence of the General Partner or its Affiliates.
The General Partner may consult with legal counsel and any action taken or
omitted in good faith in reliance upon and in accordance with the opinion or
advice of such counsel shall be full protection and justification of the General
Partner with respect to the action so taken or omitted. The Limited Partnership
shall indemnify and save harmless the General Partner or its Affiliates from any
loss, damage, liability or expense incurred or sustained by them by reason of
any act performed by any omission by them for or on behalf of the Limited
Partnership and in furtherance of their interest, but this indemnity shall not
be applicable to loss, damage, liability or expense resulting from the fraud,
misconduct or negligence of the General Partner or its Affiliates, nor shall the
Limited Partners be required to make any Capital Contribution therefor to the
Limited Partnership.
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Neither the General Partner or its Affiliates nor the Partnership shall
indemnify any Limited Partner for any reason.
5.8 Reliance by Third Parties.
Third parties dealing with the Limited Partnership may rely conclusively
upon the power and authority of the General Partner to act as set forth herein
and shall not be required to inquire into or ascertain the authority of the
General Partner so to act.
5.9 General Authority.
Except as otherwise provided in this Agreement and by the Act, the General
Partner shall have all the rights and powers and shall be subject to all the
restrictions and liabilities of a partner in a partnership without limited
partners under the laws of the State of Florida.
5.10 Optional Loans.
Any Partner may, but is not obligated to, from time to time, make voluntary
loans to the Limited Partnership. Such loans shall bear interest at the prime
rate in effect from time to time plus 1% per annum and shall be repayable from
Cash Flow or Sale or Refinancing Proceeds when available.
5.11 Removal of General Partner.
a. Limited Partners holding at least 66-2/3% of the Units shall have the
right, exercisable by written notice to all Partners, to remove a General
Partner for good cause stated; provided, however, that the Limited Partners may
not remove a General Partner if such removal would cause or result in a default
by the Partnership under any loan agreement, promissory note, mortgage, security
agreement or other instrument evidencing Partnership indebtedness. For purposes
of this provision, "good cause" shall be limited to any action taken with
respect to the intentional misconduct or gross negligence of the General Partner
and which results in (i) a material violation of this Agreement; or (ii) a
material financial loss to the Partnership, provided any such matter is not
timely remedied by the General Partner.
b. In the event the General Partner shall be compelled to withdraw from the
Partnership pursuant to paragraph (a) of this Section 5.11, the Partnership
shall be dissolved. Notwithstanding the preceding sentence and the provisions of
Section 12.1, the Limited Partners may elect to continue the business of the
Partnership pursuant to the provisions of Article XII and subject to the rights
of the Limited Partners to appoint a successor General Partner under Section
12.2.
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c. The General Partner removed from the Partnership pursuant to paragraph
(a) of this Section 5.11 shall retain its interest, if any, in the Partnership's
Profits and Losses, Cash Flow, Sale Proceeds, Refinancing Proceeds, and any
other allocations, payments or distributions hereunder to which it was entitled
as the General Partner, and from and after the effective date of the removal,
shall be a Limited Partner of the Partnership without voting rights. For all
purposes of this Agreement, the General Partner so removed shall be deemed to
have involuntarily withdrawn from the Partnership as the General Partner
effective as of the date of such removal, shall become a Limited Partner of the
Partnership, and such withdrawal shall not be deemed to have occurred in
violation of this Agreement.
5.12 No Assessment.
No Limited Partner shall be subject to an assessment.
Except as provided in Section 9.6, no Partner with a deficit balance in its
Capital Account shall have any obligation to the Partnership or any other
Partner to restore said deficit balance. In addition, no venturer or partner of
any Partner shall have any liability to the Partnership or to any Partner for
any deficit balance in such venturer's or partner's Capital Account in the
Partner in which it is a partner or venturer. Furthermore, a deficit Capital
Account of a Partner (or of a partner or venturer of a Partner) shall not be
deemed to be a liability of such Partner (or of such venturer or partner) or an
asset or property of the Partnership (or any Partner).
5.13 Limited Liability.
Performance of one or more of the acts described in this Article V hereof
or elsewhere in this Partnership Agreement, including acting on any matter which
this Agreement provides is subject to the approval or disapproval of Limited
Partners, shall not in any way cause any Limited Partner to be deemed a General
Partner or impose any personal liability on any Limited Partner. No Limited
Partner or, in appropriate cases, former Limited Partner shall be liable for any
debts or obligations of the Partnership in excess of his Capital Contribution,
including any portion of such capital plus interest or any other amount which
has been returned to him and with respect to which, by the terms of the Florida
Revised Uniform Limited Partnership Act, he shall remain liable. All
undistributed Cash Flow or Sale Proceeds or Refinancing Proceeds which would
otherwise be distributed to the Limited Partners shall be available to creditors
to satisfy the debts and obligations of the Partnership until the time of actual
distribution.
All repayments of returns of capital made pursuant to this Article by
Limited Partners shall be made within ten (10) days after the General Partner
shall have repaid the share apportioned to the General Partner. Failure of any
Partner or former Partner to make repayment required under this Article shall
subject the defaulting person to payment of interest on the amount due from him
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from the date of the General Partner's notice requiring such payment, at the
highest lawful rate allowed by law plus the costs and expenses,, including
reasonable attorney's fees, of collections.
The Capital Contributions of the Limited Partners shall be available for
the debts, liabilities or other obligations of the Partnership.
5.14 Meetings of, or Actions by, the Limited Partners.
a. Meetings of the Limited Partners to vote upon any matters as to which
the Limited Partners are authorized to take action under this Agreement may be
called at any time by the General Partner or by one or more Limited Partners
holding ten percent (10%) or more of the outstanding Units at a time and place
convenient by delivering written notice, either in person or by registered mail,
to the Limited Partners entitled to vote at such meeting to the effect that a
meeting will be held at a designated time and place, fixed by the General
Partner, convenient to the Limited Partners. However, upon receipt of a written
request either in person or by certified mail stating the purpose(s) of the
meeting the General Partner shall provide all Limited Partners within ten days
after receipt of said request, written notice (either in person or by certified
mail) of a meeting and the purpose of such meeting to be held on a date not less
than fifteen nor more than sixty days after receipt of said request and place
convenient to Limited Partners. All expenses of the meeting and notification
shall be borne by the Partnership. b. Limited Partners shall be entitled to one
(1) vote for each Unit held. Limited Partners present in person or by proxy,
holding in excess of fifty percent (50%) of the Units, shall constitute a quorum
at any meeting. Attendance by a Limited Partner at any meeting and his voting in
person shall revoke any written proxy submitted with respect to any action
proposed to be taken at such meeting. Any matters as to which the Limited
Partners are authorized to take action under this Agreement or under the law may
be acted upon by the Limited Partners without a meeting; and any such action
shall be valid and effective as action taken by the Limited Partners at a
meeting assembled, provided that if written consents to such action by the
Limited Partners are signed by Limited Partners who hold the number of Units
required to authorize such action and that they are delivered to the General
Partner. In the event that there shall be no General Partner, the Limited
Partners may take action without a meeting by the written consent of Limited
Partners having a majority of the voting power of the Limited Partners entitled
to vote. All Partners shall be bound by actions taken in accordance with the
provisions of this Agreement at such meetings.
c. The General Partner shall be responsible for enacting all needed rules
of order for conducting all meetings and shall keep, or cause to be kept, at the
expense of the Partnership, an accurate record of all matters discussed and
22
action taken at all meetings or by written consent. The records of all said
meetings and written consent shall be maintained at the principal place of
business of the Partnership and shall be available for inspection by any Partner
at reasonable times.
5.15 Amendments.
a. This Agreement may be amended by the General Partner without any
additional consent of the Limited Partners whenever:
(i) There is a change in the name of the Partnership or the amount or
character of the contribution of any Partner (including withdrawal or reduction)
pursuant to this Agreement;
(ii) A Person is admitted as a Substitute Limited Partner;
(iii) There is an ambiguous, false, or erroneous statement in the
Agreement, as determined by the General Partner in its sole and absolute
discretion.
(iv) An amendment is required because of a judicial decision;
(v) In the opinion of the Auditor or counsel to the Partnership, it is
necessary or appropriate to add, correct, modify or supplement any provision
hereof to satisfy a requirement of the Code under Section 704 and amendment does
not reduce the obligations of the General Partner;
(vi) An amendment is required to correct obvious errors;
(vii) The amendment adds to the representations, duties or obligations of
the General Partner or surrenders any right or power granted to the General
Partner herein for the benefit of the Limited Partners; or
(viii) The amendment changes any provision required to be changed by the
staff of the Securities and Exchange Commission or other federal agency, or by a
state securities commissioner or similar "Blue Sky" official, which change is
deemed by such commissioner, agency, or official to be for the benefit or
protection of Limited Partners.
The General Partner will be fully authorized to act pursuant to the powers
of attorney in carrying out their rights and duties under this Section 5.15.
b. Except as provided in Section 5.15(a), amendments will only be made with
the approval of the General Partner and Majority Vote of Limited Partners. No
amendment will be made under this Section 5.15 which would adversely affect the
Federal income tax treatment described to the Limited Partners in the Tax
23
opinion to be delivered to the Partnership or in effect convert a Limited
Partner into a General Partner or otherwise increase or extend the financial
obligations or liability of the Limited Partners or change the aggregate
percentage to the General Partner and the Limited Partners as a group of the
allocation of Taxable Income or Tax Loss and Distribution of Cash Flow, Sale
Proceeds or Refinancing Proceedings, from that disclosed to the Limited Partners
in the Memorandum (except to the extent additional Limited Partners are admitted
to the Partnership in accordance with this Agreement) without full disclosure to
the Partners and unless all of the Partners consent thereto.
5.16 No Third Party Rights.
The right of the Partnership to require any additional contributions or
loans under the terms of this Agreement including, but not limited to, the terms
of this Article V, shall not be construed as conferring any rights or benefits
to or upon any party not a party to this Agreement, including, but not limited
to, any holder of any obligations secured by a mortgage, deed of trust, security
interest or other lien or encumbrance upon or affecting the Partnership or any
interest of a Limited Partner therein or the Network or improvements on the
Network, or any part thereof or interest therein; and such provisions may be
amended at any time and from time to time without the approval or consent of
such other person.
ARTICLE VI
DEVELOPMENT, MARKETING AND FINANCING
6.1 Development and Marketing.
The General Partner hereby is specifically authorized to enter into a
Management Agreement which shall incorporate such terms and conditions as are
more fully set forth in the Memorandum.
6.2 Funds for Development.
The funds for the development of the Network shall be provided by the
Limited Partnership from the proceeds of the Offering.
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ARTICLE VII
RIGHTS OF LIMITED PARTNERS
7.1 No Right to Participate in Management.
Limited Partners shall have no right to, nor shall they take any part
in or interfere in any manner with the conduct, control or management of the
Limited Partnership's business and shall have no right or authority to act for
or bind the Limited Partnership, said powers being vested solely and exclusively
in the General Partner. Except as otherwise expressly provided herein, the
Limited Partners shall have only those rights granted to limited partners
pursuant to the Act.
7.2 Restrictions on Limited Partners.
No Limited Partner shall have the right or power to:
a. Withdraw or reduce his or its Capital Contribution to the Limited
Partnership;
b. Cause the termination and dissolution of the Limited Partnership by
court decree or otherwise;
c. Have priority over any other Limited Partner either as to the return of
Capital Contributions or as to distributions. Other than upon the termination
and dissolution of the Limited Partnership as provided by this Agreement, there
has been no time agreed upon when the Capital Contribution of each Limited
Partner may be returned; or
d. Bring an action for partition against the Limited Partnership.
ARTICLE VIII
TRANSFER OF PARTNERSHIP INTERESTS
8.1 Withdrawal of Partners.
Except as otherwise provided herein or by the laws of the State of
Florida, no Partner may resign, withdraw or retire voluntarily from the Limited
Partnership or sell, transfer, assign or otherwise dispose of his or its
interest in the Limited Partnership.
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8.2 Additional Limited Partners.
Except as otherwise provided herein, after the completion of the
Offering and the closing thereunder, the General Partner shall not have the
right to admit additional Limited Partners to the Limited Partnership.
8.3 Transfers, Resignation or Withdrawal by General Partner.
Except as otherwise provided herein, the General Partner shall not have
the right to sell, assign, pledge, transfer, hypothecate or otherwise dispose of
all or any part of its interests in and to the Limited Partnership, its capital,
profits and losses, or to resign or withdraw as General Partner without a
Majority Vote. If during such period the General Partner attempts to make such a
sale, assignment, transfer or other disposition of its interest in the Limited
Partnership or any part thereof in violation of the provisions of this
Agreement, the other Partners, or any one of them, shall, in addition to all
rights and remedies which they may have in law or in equity, be entitled to a
decree or order restraining and enjoining such attempted sale, assignment,
transfer, or other disposition and the General Partner shall not plead in
defense thereto that there would be an adequate remedy at law, it being
recognized and agreed that the injury and damage resulting from such a breach
would be impossible to measure monetarily.
8.4 Transfers by Limited Partners.
Each Limited Partner shall not, sell, assign, transfer, pledge,
hypothecate, grant a security interest in, encumber or in any other manner
dispose of all or any part of his or its interest in and to the Limited
Partnership, its capital, profits and losses, without (a) the prior written
consent of the General Partner which can be withheld in its sole and absolute
discretion; (b) statement from the transferee of such Limited Partner's interest
that the transferee intends to hold such interest for investment purposes, and
(c) an opinion of his or it's counsel, in form and substance reasonably
acceptable to the General Partner, to the effect that such transfer shall not
(1) violate or cause the Limited Partnership or the General Partner to violate
any applicable Federal, state or local securities law, regulation or
interpretive ruling, and (2) shall not cause a termination of the Limited
Partnership for the purposes of any applicable Federal, state or local tax law,
regulation or interpretive ruling. In the event that any Limited Partner at any
time attempts to make a sale, assignment, transfer, pledge, hypothecation,
mortgage, encumbrance or other disposition of his or its interest in and to the
Limited Partnership, its capital, profits and losses, or any part thereof, in
violation of the provisions of this Agreement, the other Partners or any one of
them, shall in addition to all other rights and remedies which they may have in
law, in equity or under the provisions of this Agreement, be entitled to a
decree or order restraining and enjoining such attempted sale, assignment,
transfer, pledge, hypothecation, mortgage, encumbrance or other disposition, and
the offending Partner shall not plead in defense thereto that there would be an
26
adequate remedy at law, it being recognized and agreed that the injury and
damage resulting from such a breach would be impossible to measure monetarily.
Any transfer made in violation of the provisions of this Agreement shall be void
ab initio. Further, no Limited Partner may sell, assign, transfer, pledge,
hypothecate, grant a security interest in, encumber or in any other manner
dispose of all or any part of his or its interest in the Partnership, its
capital, profits or losses except by delivery of the Unit Certificate
representing his interest in the Partnership as specified in Section 14.22.
8.5 Withdrawal, Dissolution or Bankruptcy of the General Partner.
The withdrawal, dissolution or Bankruptcy of the General Partner shall
cause a dissolution of the Limited Partnership unless the remaining Partners
exercise the right set forth in Section 12.2 hereof. Except as provided in
Section 5.11, the entire interest of the withdrawn, dissolved or Bankrupt
General Partner in and to the Limited Partnership, its capital profits and
losses shall be reconstituted into an equivalent Limited Partner interest and
the legal representatives or successors-in-interest, as the case may be, of the
former General Partner shall be admitted to the Limited Partnership as a
Substituted Limited Partner upon compliance with Section 8.7 hereof; provided,
however, that in the event of the Bankruptcy of the General Partner, if such
representative or successor-in-interest shall not comply with Section 8.7
hereof, then the interest of the Bankrupt General Partner shall be dealt with in
accordance with applicable law at the earliest practicable time. Anything herein
contained to the contrary notwithstanding, such reconstituted interest shall not
affect the rights of the Limited Partners as to distributions or return of their
Capital Contributions or otherwise. Further, for a period of six months
following the withdrawal, dissolution or bankruptcy of the General Partner,
assuming the Limited Partners exercise their rights to continue the business of
the Partnership, the Partnership shall have the option to purchase the
reconstituted interest of the General Partner at fair market value based upon a
mutually agreeable M.A.I. appraisal of the Partnership's assets, including the
Network assuming the Network were sold at such price, thereby giving due effect
to the General Partner's residual 1% interest in proceeds of sale or
refinancing. The purchase price must be paid entirely in cash. Except as
otherwise provided in this Agreement, or by the Act, an additional General
Partner shall be admitted to the Limited Partnership by Majority Vote of the
Limited Partners.
8.6 Death, Adjudication of Insanity, Dissolution or Bankruptcy of a Limited
Partner.
The death, adjudication of insanity, dissolution or bankruptcy of a
Limited Partner shall not cause a dissolution of the Limited Partnership.
8.7 Substituted Limited Partners.
Anything herein contained to the contrary notwithstanding,
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a. No successor-in-interest of a Limited Partner and no assignee
or transferee of all or any part of a Limited Partner's interest in and to the
Limited Partnership, its capital, profits and losses, shall be admitted to the
Limited Partnership as a limited partner except upon
(i) submitting to the General Partner a duly executed and acknowledged
counterpart of the instrument or instruments making such transfer, together with
such other instrument or instruments, including, but not limited to, a
counterpart of this Agreement as it then may have been amended, signifying such
transferee's agreement to be bound by all of the provisions of the Limited
Partnership, including, but not limited to Sections 3.9 and 3.10 and, the
restrictions upon transfers of interests therein and thereto, all of the
foregoing in such form and substance as shall be reasonably satisfactory to the
General Partner;
(ii) obtaining the General Partner's consent thereto which may be withheld
in its sole and absolute discretion; and
(iii) agreeing to bear all costs and expenses, including legal fees of the
Limited Partnership, incurred in effecting such substitution.
Upon such transferee's compliance with the foregoing provisions, each of
the Partners shall take all actions reasonably required to effectuate the
recognition of the effectiveness of such transfer and the admission of such
transferee to the Limited Partnership as a Substituted Limited Partner
including, but not limited to, transferring such interest in and to the Limited
Partnership, its capital, profits and losses upon the books thereof and
executing, acknowledging and causing to be filed any necessary or desirable
amendment to this Agreement and the Certificate of Limited Partnership.
b. The General Partner shall not consent to the assignment and transfer of
any Unit or the admission of any such assignee or transferee as a substituted
partner if such assignment, transfer or admission:
(i) would jeopardize the status of the Limited Partnership as a partnership
for Federal income tax purposes;
(ii) would cause a termination of the Limited Partnership within the
meaning of Section 708(b) of the Code;
(iii) would violate, or cause the Limited Partnership to violate, any
applicable law or governmental rule or regulation; or
(iv) in the sole discretion of the General Partner would not be in the best
interest of the Partnership.
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c. No assignment to a non-resident alien, minor or incompetent shall be
effective in any respect.
8.8 Non-Complying Assignments.
Any assignment, sale, exchange or other transfer in contravention of
any of the provisions of this Article VIII shall be void and ineffectual, and
shall not bind or be recognized by the Limited Partnership.
8.9 Consent to Admission.
By executing or adopting this Agreement, each Limited Partner hereby
consents to the admission of Substituted Limited Partners by the General Partner
and to any assignee of his or its Unit becoming a Substituted Limited Partner.
8.10 Obligations of Successors.
Any person who acquires an interest in the Limited Partnership by
assignment or is admitted to the Limited Partnership as a Substituted Limited
Partner shall be subject to and bound by all the provisions of this Agreement as
if originally a party to this Agreement.
8.11 Admission of Successor or Additional General Partners.
With the consent of the Limited Partners holding at least a majority
of the then outstanding Units, the General Partner may withdraw and designate
one or more persons to be its successor General Partner or at any time to be an
additional General Partner, in each case with such participation in such General
Partner's interest as the General Partner and such successor or additional
General Partner may agree upon, provided that the interests of the Limited
Partners in the Limited Partnership shall not be affected thereby. In the event
of the addition or substitution of the General Partner in accordance with the
provisions of this Section 8.11, the General Partner shall execute, file and
record with the appropriate governmental agencies such documents (including
amendments to this Agreement) as are required to reflect the substitution or
admission of such substituted or additional General Partner. Except as
hereinabove expressly provided, no additional General Partners shall be admitted
to the Limited Partnership.
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8.12 No Public Trading of Units.
No Units may be traded on an established securities market or readily
tradable on a secondary market (or the equivalent thereof) as such terms are
utilized in Code 7704(b), or any Regulations promulgated thereto or
legislative history in connection therewith. Any such trade will be deemed void
ab initio and will not be recognized by the General Partner, the Partnership or
the depository or any other agent of the Partnership or the General Partner.
ARTICLE IX
ALLOCATION OF INCOME, LOSS AND DISTRIBUTIONS
9.1 General Apportionment Provisions.
a. Except as provided in Section 9.1e or as may otherwise be
provided in this Article IX, during any month before the Closing Date (including
the month in which the Closing Date occurs), and thereafter, that portion of
Taxable Profits, Tax Loss and Non-recourse Deductions, tax preference items and
tax credits, if any ("other Partnership tax items"), allocable to the Limited
Partners as a group with respect to any month shall be allocated among them as
of the last day of each month of the Partnership's fiscal year in the ratio that
the number of Partnership Units owned by each Limited Partner bears to the total
number of Partnership Units owned by all Limited Partners as of that date.
During any calendar month prior to the Closing Date and including the month in
which the Closing Date occurs, a Limited Partner who is admitted to the
Partnership on any day in such month shall be deemed to have been admitted as of
the last day of such calendar month.
b. Any such allocations made to a particular class of Limited
Partners shall be made on the same basis in accordance with the ratio that the
number of Limited Partnership Units owned by each Limited Partner in such class
bears to the total number of Partnership Units owned by all Limited Partners in
such class.
c. That portion of the Partnership Taxable Profits, Tax Loss and
other Partnership tax items allocated among the Partners during any taxable year
in which there is a change in the percentage of such items allocated among the
Partners or any class of Partners shall be allocated so as to take into account
the varying interests of the Partners in such items during such taxable year;
that is, by taking the amount of such items for the entire taxable year and
prorating such items on a monthly basis among the Partners in accordance with
their varying percentages during such year. No interim closing of the
Partnership's books shall be required.
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d. In the case of a transfer of Partnership Units:
(i) a substitute Limited Partner will be recognized as owning transferred
Partnership Units; and
(ii) an Assignee will be recognized as being entitled to receive
Distributions and allocations of Tax Profits, Tax Loss and other Partnership tax
items attributable to the assigned Partnership Units in the same manner as a
substitute Limited Partner would be so entitled with respect to transferred
Partnership Units, at the time determined in accordance with the following:
Taxable Profits or Tax Losses from current operations for any year will
be allocated between a transferor and a transferee based upon the number of days
during the calendar year that each was recognized as the holder of a Unit,
without regard to whether Partnership operation during particular periods of
such year produced profit or loss. Cash distribution of Sale Proceeds and
Refinancing Proceeds, if any, arising from the sale or refinancing of a Network
will be distributed, and all related Taxable Profits or Tax Losses will be
allocated, to the persons recognized as holder of the Unit on the date on which
the sale or refinancing occurred. For this purpose, transfers will be recognized
as of the date specified by the transferor and the transferee in the instrument
of assignment or, if no date is specified, the date of the last acknowledgment
of such instrument. The date of transfer and related matters shall be as set
forth in the Memorandum.
Neither the Partnership nor any General Partner shall incur any
liability for making allocation and distribution in accordance with the
provisions of this Article V, notwithstanding any General Partner or the
Partnership has knowledge of any transfer of ownership of any Unit.
e. Notwithstanding anything to the contrary herein, the General Partner,
after 60 days prior notice to the Limited Partners, but without the vote or
consent of any of the Limited Partners, may:
(i) adopt a convention other than a "record date" convention for
determining the recognition of the Limited Partners entitled to Distributions
that the General Partner, in its sole discretion, determine is reasonable; and
(ii) allocate Taxable Profits, Tax Loss and other Partnership tax items
among the Limited Partners during the fiscal year of the Partnership in a manner
other than that set forth in this Section 9.1 that the General Partner, in its
sole discretion, determines (a) satisfies the requirements of Section 706 of the
Code and any Regulations promulgated thereunder, and (b) is consistent with the
Units owned by them.
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f. With respect to Taxable Profits which results from discharge,
cancellation or forgiveness of indebtedness owed by the Partnership or secured
by Partnership assets, to the extent such Profits result from deductions taken
by the Partnership for depreciation or amortization it shall be allocated to the
Partners to whom such depreciation or amortization was allocated and among the
Partners in the same proportion in which such depreciation or amortization was
allocated among the Partners.
9.2 Distributions.
a. All Distributions are subject to the payment of the operating
expenses of the Partnership and to the maintenance of the reserves in amounts
determined appropriate by the General Partner in its sole discretion. Such
determinations shall be binding upon the Partnership. Distributions prior to the
Closing Date shall be made 99% to Datalinc and 1% to the General Partner.
Distributions after that date shall be made as provided hereinafter.
b. Distributions from Operations. Distributions of Cash Flow from
operations or from other sources, as, when and to the extent available with
respect to each fiscal year of the Partnership or any portion thereof, shall be
distributed 100% to the Series 100 Limited Partners until such Limited Partners
have received Distributions of any type in an amount equal to their total cash
Capital Contributions plus the aggregate Preferred Return, if and when such
Preferred Return is payable; next, 100% to the Series EA Limited Partners until
such Limited Partners have received Distributions of any type in an amount equal
to 25% of the amount distrubuted pursuant to the preceding clause; next, 100% to
the Series 200 Limited Partners until such Limited Partners have received
Distributions of any type in an amount equal to their total cash Capital
Contributions; next, 100% to the Datalinc Limited Partner until such Limited
Partner has received Distributions of any type in an amount equal to the
following amount: the aggregate total cash Capital Contributions of Series 100
and Series 200 Limited Partners divided by the aggregate percentage interests of
the Series 100, EA and 200 Limited Partners in the Final Clause multiplied by
77.152%, subject to increase with any unpurchased Series 200 Units or Managing
Dealer Units percentage interest reallocated to Datalinc Limited Partner as
specified below; next, 100% to the Managing Dealer Limited Partner until such
Limited Partner has received Distributions of any type in an amount equal to the
following amount: the aggregate total cash Capital Contributions of Series 100
and Series 200 Limited Partners divided by the aggregate percentage interests of
the Series 100, EA and 200 Limited Partners in the Final Clause multiplied by
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2.4%, or such lesser percentage as is actually owned by the Managing Dealer
Limited Partners; next, 100% to the General Partner until such General Partner
has received Distributions of any type in an amount equal to the following
amount: the aggregate total cash Capital Contributions of Series 100 and Series
200 Limited Partners divided by the aggregate percentage interests of the Series
100, EA and 200 Limited Partners in the Final Clause multiplied by 1%; and
thereafter (the following being the "Final Clause"), assuming the sale of all
Series 200 Limited Partnership Units, 2.225% to the Series 100 Limited Partners,
.556% to the EA Limited Partners, 16 2/3% to the Series 200 Limited Partners, a
maximum of 2.4% to the Managing Dealer Limited Partners, 1% to the General
Partner and 77.152% to Datalinc as Limited Partner. If any Series 200 Units have
not been acquired, all Allocations or Distributions otherwise to be made or paid
to such Limited Partners shall be made or paid to Datalinc. If the Managing
Dealer Units have not been acquired, all Allocations or Distributions otherwise
to be made or paid to the Managing Dealer Limited Partner shall be made or paid
to Datalinc.
Series 100 Limited Partners will receive a 15% per annum cumulative,
non-compounded Preferred Return on their Adjusted Capital Investment, commencing
the date of closing of the Series 100 Unit offering. However, the Preferred
Return is only payable if within three years from the Closing Date of the Series
100 Unit offering the Partnership (or a successor entity thereto with
essentially the same business) has not done either of the following (a "Cut-Off
Event"): a. Made aggregate Distributions of any kind to such Partners in an
amount equal to their Adjusted Capital Investment, or b. Has not completed a
successful public offering. If a Cut-Off Event has occurred, the Partnership's
obligation to make a Preferred Return to the Series 100 Limited Partners will
terminate. If the Partnership has made a successful public offering by such
date, but the market value of securities owned by the Series 100 Limited
Partners if less than their Adjusted Capital Investment based upon the public
offering price of such securities (the "Difference"), the Series 100 Limited
Partners will be issued securities with a first priority dividend and other
payment right over all other securities holders equal to the Difference. The
term "Adjusted Capital Investment" means total cash Contributions of a Limited
Partner to the Partnership less Distributions of any kind from the Partnership.
c. Distributions of Sale Proceeds and Refinancing Proceeds.
Subject to 9.2d below, Sale Proceeds and Refinancing Proceeds shall be
distributed on a cumulative basis within 60 days after the Record Date for such
Distributions, shall be distributed 100% to the Series 100 Limited Partners
until such Limited Partners have received Distributions of any type in an amount
equal to their total cash Capital Contributions plus the aggregate Preferred
Return, if and when such Preferred Return is payable; next, 100% to the Series
EA Limited Partners until such Limited Partners have received Distributions of
any type in an amount equal to 25% of the amount distrubuted pursuant to the
preceding clause; next, 100% to the Series 200 Limited Partners until such
Limited Partners have received Distributions of any type in an amount equal to
their total cash Capital Contributions; next, 100% to the Datalinc Limited
Partner until such Limited Partner has received Distributions of any type in an
amount equal to the following amount: the aggregate total cash Capital
Contributions of Series 100 and Series 200 Limited Partners divided by the
aggregate percentage interests of the Series 100, EA and 200 Limited Partners in
the Final Clause multiplied by 77.152%, subject to increase with any unpurchased
33
Series 200 Units or Managing Dealer Units percentage interest reallocated to
Datalinc Limited Partner as specified below; next, 100% to the Managing Dealer
Limited Partner until such Limited Partner has received Distributions of any
type in an amount equal to the following amount: the aggregate total cash
Capital Contributions of Series 100 and Series 200 Limited Partners divided by
the aggregate percentage interests of the Series 100, EA and 200 Limited
Partners in the Final Clause multiplied by 2.4%, or such lesser percentage as is
actually owned by the Managing Dealer Limited Partners; next, 100% to the
General Partner until such General Partner has received Distributions of any
type in an amount equal to the following amount: the aggregate total cash
Capital Contributions of Series 100 and Series 200 Limited Partners divided by
the aggregate percentage interests of the Series 100, EA and 200 Limited
Partners in the Final Clause multiplied by 1%; and thereafter (the following
being the "Final Clause"), assuming the sale of all Series 200 Limited
Partnership Units, 2.225% to the Series 100 Limited Partners, .556% to the EA
Limited Partners, 16 2/3% to the Series 200 Limited Partners, a maximum of 2.4%
to the Managing Dealer Limited Partners, 1% to the General Partner and 77.152%
to Datalinc as Limited Partner. If any Series 200 Units have not been acquired,
all Allocations or Distributions otherwise to be made or paid to such Limited
Partners shall be made or paid to Datalinc. If the Managing Dealer Units have
not been acquired, all Allocations or Distributions otherwise to be made or paid
to the Managing Dealer Limited Partner shall be made or paid to Datalinc.
Series 100 Limited Partners will receive a 15% per annum cumulative,
non-compounded Preferred Return on their Adjusted Capital Investment, commencing
the date of closing of the Series 100 Unit offering. However, the Preferred
Return is only payable if within three years from the Closing Date of the Series
100 Unit offering the Partnership (or a successor entity thereto with
essentially the same business) has not done either of the following (a "Cut-Off
Event"): a. Made aggregate Distributions of any kind to such Partners in an
amount equal to their Adjusted Capital Investment, or b. Has not completed a
successful public offering. If a Cut-Off Event has occurred, the Partnership's
obligation to make a Preferred Return to the Series 100 Limited Partners will
terminate. If the Partnership has made a successful public offering by such
date, but the market value of securities owned by the Series 100 Limited
Partners if less than their Adjusted Capital Investment based upon the public
offering price of such securities (the "Difference"), the Series 100 Limited
Partners will be issued securities with a first priority dividend and other
payment right over all other securities holders equal to the Difference. The
term "Adjusted Capital Investment" means total cash Contributions of a Limited
Partner to the Partnership less Distributions of any kind from the Partnership.
For purposes of determining the Cash Flow and Net Proceeds of Sales and
Refinancings to which the Partners are entitled, all prior Distributions of Cash
Available from operations and other sources and Net Proceeds of Sales and
Refinancings shall be considered as of the date of the proposed Distribution.
34
d. Repurchase of Series 200 Units. Series 200 Limited Partners
have the option to require the Partnership and/or Datalinc to repurchase any or
all of their Series 200 Units on December 31, 2000, if they have not received
Distributions of any type in an amount equal to their total cash Capital
Contributions on or before such date, in an amount equal to their Adjusted
Capital Investment on such date.
e. Zeroing Out the Capital Accounts. Notwithstanding the preceding
provisions of this Section 9.2, when the Partnership is wound up and dissolved
pursuant to Article XII and all of its remaining assets are to be distributed,
all items of income, gain, loss and deduction shall first be allocated to the
Partners' Capital Accounts under Sections 9.3 and 9.4, and other credits and
deductions to the Partners' Capital Accounts shall be taken before the final
Distribution is made. The final Distribution, when made, shall be made to the
Partners in accordance with and in an amount equal to their positive Capital
Account balances pursuant to Sections 9.4 and 12.3, thereby adjusting each
Partner's Capital Account to zero.
f. General and Limited Partner Priorities. Distributions to the General
Partner provided for in this Article IX shall be made at the same time as
Distributions are made to the Limited Partners.
g. Compensation Not to be Deemed Distributions. Any compensation paid to
the General Partner as set forth in the Memorandum shall not be deemed to be
Distributions for purposes of Article IX of this Partnership Agreement,
regardless of how such Distributions are characterized for federal income tax
purposes. As used in this subsection, the term "Compensation" shall mean any
monies paid to the General Partner and its Affiliates which are deductible for
federal income tax purposes.
9.3 Allocation of Net Income, Gross Income, Net Loss, Non-recourse
Deductions, and Other Partnership Tax Items.
a. Taxable Profits, Tax Loss, and other Partnership tax items
shall be determined as of the end of each taxable year of the Partnership and
allocated as set forth in this Section 9.3.
b. Prior to the Closing Date, and except as otherwise specifically
allocated pursuant to Section 9.3f hereof, all Taxable Profits, Tax Loss and
Non-recourse Deductions and other Partnership tax items shall be allocated 1% to
the General Partner and 99% to Datalinc as Limited Partner as required by the
Code. After the Closing Date, Taxable Profits, Tax Loss, Non-recourse Deductions
and other Partnership tax items shall be allocated as set forth below.
c. Taxable Profits of the Partnership not arising from a sale or
refinancing of Partnership Network shall be allocated to the Partners in
proportion to the Distributions of Cash Flow with respect to which such Taxable
Profits relate.
35
d. (i) Taxable Profits arising from a sale or refinancing of Partnership
Network which does not result in a "liquidation" within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(g) shall be allocated to the Partners in
proportion to the distributions of Net Proceeds of Sales and Refinancing to
which such Taxable Profits relate.
(ii) Taxable Profits arising from a sale or refinancing of Partnership
Network which results in a liquidation as set forth in Section 9.3(d)(i) above
shall be allocated as follows:
(a) First, to those Partners who have negative Capital Accounts pro rata to
the extent of such Partners' negative Capital Accounts;
(b) Then, to the Partners in amounts such that the positive balance of each
Partner's Capital Account is equal to the amount of the Distributions of Net
Proceeds of Sales and Refinancings to be made to such Partner pursuant to
Article 9.2(c); and
(c) 100% to the Series 100 Limited Partners until such Limited Partners
have received Distributions of any type in an amount equal to their total cash
Capital Contributions plus the aggregate Preferred Return, if and when such
Preferred Return is payable; next, 100% to the Series EA Limited Partners until
such Limited Partners have received Distributions of any type in an amount equal
to 25% of the amount distrubuted pursuant to the preceding clause; next, 100% to
the Series 200 Limited Partners until such Limited Partners have received
Distributions of any type in an amount equal to their total cash Capital
Contributions; next, 100% to the Datalinc Limited Partner until such Limited
Partner has received Distributions of any type in an amount equal to the
following amount: the aggregate total cash Capital Contributions of Series 100
and Series 200 Limited Partners divided by the aggregate percentage interests of
the Series 100, EA and 200 Limited Partners in the Final Clause multiplied by
77.152%, subject to increase with any unpurchased Series 200 Units or Managing
Dealer Units percentage interest reallocated to Datalinc Limited Partner as
specified below; next, 100% to the Managing Dealer Limited Partner until such
Limited Partner has received Distributions of any type in an amount equal to the
following amount: the aggregate total cash Capital Contributions of Series 100
and Series 200 Limited Partners divided by the aggregate percentage interests of
the Series 100, EA and 200 Limited Partners in the Final Clause multiplied by
2.4%, or such lesser percentage as is actually owned by the Managing Dealer
Limited Partners; next, 100% to the General Partner until such General Partner
has received Distributions of any type in an amount equal to the following
amount: the aggregate total cash Capital Contributions of Series 100 and Series
200 Limited Partners divided by the aggregate percentage interests of the Series
100, EA and 200 Limited Partners in the Final Clause multiplied by 1%; and
thereafter (the following being the "Final Clause"), assuming the sale of all
36
Series 200 Limited Partnership Units, 2.225% to the Series 100 Limited Partners,
.556% to the EA Limited Partners, 16 2/3% to the Series 200 Limited Partners, a
maximum of 2.4% to the Managing Dealer Limited Partners, 1% to the General
Partner and 77.152% to Datalinc as Limited Partner. If any Series 200 Units have
not been acquired, all Allocations or Distributions otherwise to be made or paid
to such Limited Partners shall be made or paid to Datalinc. If the Managing
Dealer Units have not been acquired, all Allocations or Distributions otherwise
to be made or paid to the Managing Dealer Limited Partner shall be made or paid
to Datalinc.
Series 100 Limited Partners will receive a 15% per annum cumulative,
non-compounded Preferred Return on their Adjusted Capital Investment, commencing
the date of closing of the Series 100 Unit offering. However, the Preferred
Return is only payable if within three years from the Closing Date of the Series
100 Unit offering the Partnership (or a successor entity thereto with
essentially the same business) has not done either of the following (a "Cut-Off
Event"): a. Made aggregate Distributions of any kind to such Partners in an
amount equal to their Adjusted Capital Investment, or b. Has not completed a
successful public offering. If a Cut-Off Event has occurred, the Partnership's
obligation to make a Preferred Return to the Series 100 Limited Partners will
terminate. If the Partnership has made a successful public offering by such
date, but the market value of securities owned by the Series 100 Limited
Partners if less than their Adjusted Capital Investment based upon the public
offering price of such securities (the "Difference"), the Series 100 Limited
Partners will be issued securities with a first priority dividend and other
payment right over all other securities holders equal to the Difference. The
term "Adjusted Capital Investment" means total cash Contributions of a Limited
Partner to the Partnership less Distributions of any kind from the Partnership.
If the total gain to be allocated under this Section 9.3(d) includes
any item of ordinary income arising under Code Sections 1245 or 1250, as
amended, or any similar recapture provision, such items shall be allocated among
the Partners in the same amount (or ratable proportion thereof if less) as the
tax benefit which created such recapture. If such total gain includes interest
income on any deferred sales proceeds, such interest income shall be allocated
among the Partners in the same proportion as the total gain is allocated under
this Section 9.3(d).
For purposes of determining Capital Account balances, all Distributions
previously made as well as all other adjustments to Capital Account balances
pursuant to the definition thereof in Article II and the other provisions of
this Section 9.3 shall be taken into account [other than an adjustment for the
allocation of Taxable Profits under this Section 9.3(d)].
If, prior to the allocation in Section 9.3(d)(ii)(b) above, a Partner
has a positive Capital Account balance ("Excess Capital Account Balance")
greater than the amount of Sales Proceeds or Refinancing Proceeds to be
distributed to such Partner resulting from the transaction to which the
37
allocation of such Taxable Profits relates, then there shall be no additional
allocation of Taxable Profits to such Partner and the remaining Taxable Profits
shall be allocated to the other Partners such that their positive Capital
Account balances equals as closely as possible the amount of Sales Proceeds or
Refinancing Proceeds which would have been distributed to such Partners if there
were no Excess Capital Account Balance.
e. (i) Non-recourse Deductions and Tax Loss from a transaction not
constituting a dissolution of the Partnership as defined in Article 9.3(d)(i)
shall be allocated 100% to the Series 100 Limited Partners until such Limited
Partners have received Distributions of any type in an amount equal to their
total cash Capital Contributions plus the aggregate Preferred Return, if and
when such Preferred Return is payable; next, 100% to the Series 100 Limited
Partners until such Limited Partners have received Distributions of any type in
an amount equal to their total cash Capital Contributions plus the aggregate
Preferred Return, if and when such Preferred Return is payable; next, 100% to
the Series EA Limited Partners until such Limited Partners have received
Distributions of any type in an amount equal to 25% of the amount distrubuted
pursuant to the preceding clause; next, 100% to the Series 200 Limited Partners
until such Limited Partners have received Distributions of any type in an amount
equal to their total cash Capital Contributions; next, 100% to the Datalinc
Limited Partner until such Limited Partner has received Distributions of any
type in an amount equal to the following amount: the aggregate total cash
Capital Contributions of Series 100 and Series 200 Limited Partners divided by
the aggregate percentage interests of the Series 100, EA and 200 Limited
Partners in the Final Clause multiplied by 77.152%, subject to increase with any
unpurchased Series 200 Units or Managing Dealer Units percentage interest
reallocated to Datalinc Limited Partner as specified below; next, 100% to the
Managing Dealer Limited Partner until such Limited Partner has received
Distributions of any type in an amount equal to the following amount: the
aggregate total cash Capital Contributions of Series 100 and Series 200 Limited
Partners divided by the aggregate percentage interests of the Series 100, EA and
200 Limited Partners in the Final Clause multiplied by 2.4%, or such lesser
percentage as is actually owned by the Managing Dealer Limited Partners; next,
100% to the General Partner until such General Partner has received
Distributions of any type in an amount equal to the following amount: the
aggregate total cash Capital Contributions of Series 100 and Series 200 Limited
Partners divided by the aggregate percentage interests of the Series 100, EA and
200 Limited Partners in the Final Clause multiplied by 1%; and thereafter (the
following being the "Final Clause"), assuming the sale of all Series 200 Limited
Partnership Units, 2.225% to the Series 100 Limited Partners, .556% to the EA
Limited Partners, 16 2/3% to the Series 200 Limited Partners, a maximum of 2.4%
to the Managing Dealer Limited Partners, 1% to the General Partner and 77.152%
to Datalinc as Limited Partner. If any Series 200 Units have not been acquired,
all Allocations or Distributions otherwise to be made or paid to such Limited
Partners shall be made or paid to Datalinc. If the Managing Dealer Units have
not been acquired, all Allocations or Distributions otherwise to be made or paid
to the Managing Dealer Limited Partner shall be made or paid to Datalinc.
38
(ii) After giving effect to the allocations set forth in Section 9.3(f)
hereof, Tax Loss from the sale or other disposition of all or substantially all
of the Network which results in a liquidation of the Partnership (as such term
is defined in Section 9.3d(i)) shall be allocated as follows:
(a) first, among those Partners having positive Capital Accounts, so as to
bring, as nearly as possible, their Capital Accounts into, and maintain their
Capital Accounts in, the same ratios as the Distributions that they would
receive if an amount equal to the aggregate amount of their Capital Accounts
(determined prior to the allocation of such loss), reduced (but not below zero)
by such loss, were distributed among them in the manner and order of priority
prescribed for a Distribution of Net Proceeds of Sales or Refinancings under
Section 9.2(c) hereof until no Partner has a positive Capital Account; and
(b) 100% to the Series 100 Limited Partners until such Limited Partners
have received Distributions of any type in an amount equal to their total cash
Capital Contributions plus the aggregate Preferred Return, if and when such
Preferred Return is payable; next, 100% to the Series EA Limited Partners until
such Limited Partners have received Distributions of any type in an amount equal
to 25% of the amount distrubuted pursuant to the preceding clause; next, 100% to
the Series 200 Limited Partners until such Limited Partners have received
Distributions of any type in an amount equal to their total cash Capital
Contributions; next, 100% to the Datalinc Limited Partner until such Limited
Partner has received Distributions of any type in an amount equal to the
following amount: the aggregate total cash Capital Contributions of Series 100
and Series 200 Limited Partners divided by the aggregate percentage interests of
the Series 100, EA and 200 Limited Partners in the Final Clause multiplied by
77.152%, subject to increase with any unpurchased Series 200 Units or Managing
Dealer Units percentage interest reallocated to Datalinc Limited Partner as
specified below; next, 100% to the Managing Dealer Limited Partner until such
Limited Partner has received Distributions of any type in an amount equal to the
following amount: the aggregate total cash Capital Contributions of Series 100
and Series 200 Limited Partners divided by the aggregate percentage interests of
the Series 100, EA and 200 Limited Partners in the Final Clause multiplied by
2.4%, or such lesser percentage as is actually owned by the Managing Dealer
Limited Partners; next, 100% to the General Partner until such General Partner
has received Distributions of any type in an amount equal to the following
amount: the aggregate total cash Capital Contributions of Series 100 and Series
200 Limited Partners divided by the aggregate percentage interests of the Series
100, EA and 200 Limited Partners in the Final Clause multiplied by 1%; and
thereafter (the following being the "Final Clause"), assuming the sale of all
Series 200 Limited Partnership Units, 2.225% to the Series 100 Limited Partners,
.556% to the EA Limited Partners, 16 2/3% to the Series 200 Limited Partners, a
maximum of 2.4% to the Managing Dealer Limited Partners, 1% to the General
Partner and 77.152% to Datalinc as Limited Partner. If any Series 200 Units have
39
not been acquired, all Allocations or Distributions otherwise to be made or paid
to such Limited Partners shall be made or paid to Datalinc. If the Managing
Dealer Units have not been acquired, all Allocations or Distributions otherwise
to be made or paid to the Managing Dealer Limited Partner shall be made or paid
to Datalinc.
f. the following special allocation rules shall apply notwithstanding
anything to the contrary in this Section 9.3:
(i) Organization and Offering Expenses. The Capital Account of each Limited
Partner shall be charged with the sales commissions which are part of
Organization and offering Expenses incurred with respect to his Partnership
Units. Syndication Expenses for any Partnership fiscal year or other period
shall be specifically allocated to the Limited Partners in proportion to the
Partnership Units purchased by them in the offering. In the event the General
Partner determine that such result is not likely to be achieved through future
allocations of Syndication Expenses, the General Partner may specially allocate
Taxable Profits or Tax Loss so as to achieve the same effect on the Capital
Accounts of the Limited Partners;
(ii) Non-recourse Deductions Attributable to Partner Loans. The loans, if
any, made by the Partners to the Partnership pursuant to the provisions of this
Partnership Agreement, will be non-recourse loans ("Partner Non-recourse Debt").
Non-recourse Deductions attributable to any such Partner Non-recourse Debt must
be allocated to the Partner who has made the loan because such Partner bears the
economic risk of loss for such loan. The amount of Non-recourse Deductions so
allocated will equal the excess, if any, of the amount of Minimum Gain
attributable to such Partner Non-recourse Debt, over the aggregate amount of any
distributions during such year to the Partner who bears the risk of loss for
such debt of proceeds of such debt that are allocable to an increase in the
Minimum Gain attributable to such debt.
(iii) Excess Loss Reallocation. if any allocation of Tax Loss or
Non-recourse Deductions allocable to a Limited Partner (a) would reduce such
Limited Partner's Capital Account balance then below zero or (b) would increase
the negative balance in such Limited Partner's Capital Account at a time when
another Limited Partner has a positive Capital Account balance, then to the
extent such allocation would cause the negative Capital Account balance of such
Limited Partner (determined after taking into account all prior Distributions
and all prior allocations of Taxable Profits, Tax Loss and Non-recourse
Deductions), to exceed such Limited Partner's share of the Partnership's Minimum
Gain, at the close of the fiscal period in respect of which the Tax Loss or
Non-recourse Deductions, as the case may be, is to be allocated, such excess
shall be reallocated as follows: (x) first, in the case of Tax Loss, pro rata to
all Limited Partners having positive Capital Account balances to the extent of
and in proportion to their respective Capital Account balances until such
Capital Account balances are reduced to zero and (y) second, in the case of
Non-recourse Deductions, pro rata to all Limited Partners having positive
40
Capital Account balances to the extent of and in proportion to their respective
Capital Account balances until such Capital Account balances are reduced to
zero. However, in no event shall there be a reallocation of any item of income,
gain, loss or deduction allocated among the Limited partners pursuant to this
Partnership Agreement for prior years.
In the event that there are no Limited partners with positive balances
in their Capital Accounts, such Tax Loss and/or Non-recourse Deductions shall
instead be allocated to the General Partner, to the extent permitted by the
Regulations under Section 704(b) of the Code, or if not so permitted, then such
Tax Loss and/or Non-recourse Deductions shall be allocated as otherwise required
by such Regulations. In computing a Partner's Capital Account balance for the
purposes of this subsection f(iii), the adjustment set out in subsection f(viii)
shall apply;
(iv) General Partner Gross Income Allocations. To the extent
that Tax Loss or Non-recourse Deductions are allocated to the General Partner
under Section 9.3f(iii), then items of Partnership gross income shall be
specifically allocated to such General Partner in the amount of such Tax Loss or
Non-recourse Deductions as quickly as possible;
(v) Qualified Income Offset. Except as otherwise provided in
(vi) of this Section 9.3f, in the event any Partner receives or is allocated, as
the case may be, any Qualified Income Offset Items which cause or increase a
deficit balance in the Capital Account of such Partner in excess of such
Partner's share of the Partnership's Minimum Gain and following the allocations
in (vi) of this Section 9.3f, then items of Partnership Gross Income shall be
specifically allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the deficit balance in
such Partner's Capital Account created by such Qualified Income Offset Items as
quickly as possible. Gross Income shall be allocated among such partners in the
proportion that the deficit balances attributable to the Qualified Income Offset
Items of each of them bears to the deficit balance so attributable to all of
them. This Section 9.3f(v) is intended to constitute a "qualified income offset"
within the meaning of Section 1.704l(b)(2)(ii)(d) of the Regulations and shall
be interpreted consistently therewith;
(vi) Minimum Gain Chargeback. Notwithstanding any other
provisions of this Section 9.3f, if there is a net decrease in Minimum Gain
during any Partnership fiscal year, each partner must be allocated items of
income and gain for such year in proportion to, and to the extent of, an amount
equal to the greater of (i) the portion of such partner's share of the net
decrease in partnership Minimum Gain during such year that is allocable to the
disposition of the Partnership Property subject to non-recourse liabilities of
the Partnership; or (ii) the deficit balance in such partner's capital account
at the end of such year determined without regard to any allocation of
partnership items that would otherwise be allocated for such year and excluding
the portion of such deficit balances that must be restored to the Partnership
upon liquidation.
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Allocations and the items to be allocated under this Section 9.3f(vi)
shall be made and determined in accordance with Section 1.704-1T(b)(4)(iv) of
the Regulations. This Section 9.3f(vi) is intended to constitute a "minimum gain
chargeback" within the meaning of Section 1.704-1T(b)(4)(iv)(e) of the
Regulations and shall be interpreted consistently therewith;
(vii) Subject only to Section 9.3f (i) through (vi) in no
event shall the General Partner be allocated less than 1% of Taxable Profits and
Tax Loss of the Partnership (and each item of Partnership income, gain, loss and
deduction included therein) under this Section 9.3;
(viii) For purposes of determining the balances in the
Partners' Capital Accounts with respect to items (iii), (v) and (vi) in this
Section 9.3f, such Capital Accounts shall be: (a) reduced by Distributions made
prior to and contemporaneous with any allocation; (b) reduced at the end of each
Partnership fiscal year by such Partner's Qualified Income Offset Items in
accordance with the requirements for the alternate test of economic effect under
Section 1.704-1(b)(2)(ii)(d) of the Regulations (or any corresponding provisions
of succeeding regulations); (c) increased to the extent that such partner is
treated as obligated to restore a deficit balance in his Capital Account upon
liquidation as provided under Section 1.704-1(b)(2)(ii)(c) of the Regulations;
and (d) increased to the extent of his distributive share of the Partnership's
Minimum Gain which such Partner is treated as obligated to restore pursuant to
the penultimate sentence of Section 1.7041T(b)(4)(iv)(f) of the Regulations.
g. If the taxing authorities ignore the characterization of the
amounts paid to the General Partner as compensation pursuant to Article IX
hereof, and refuse to treat such payments as either guaranteed payments within
the meaning of Section 707(c) of the Code, or payments made to the General
Partner other than in its capacity as partner within the meaning of Section
707(a) of the Code, and, as a result such payments are charged to its Capital
Account, then the General Partner shall be allocated the first available Taxable
Profits of the Partnership in an amount equal to the amount so charged, and the
General Partner's Capital Account shall be adjusted to reflect the payment of
such amount.
h. Any allocation of Taxable Profit or Tax Loss which is required
to be allocated among the Partners to take into account the disparity between
the fair market value of a Partnership asset and its adjusted basis (e.g.,
allocations under Section 704(c) of the Code), shall be allocated among the
Partners in accordance with the requirements of the Code and the Regulations
promulgated thereunder.
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i. No Tax Loss shall be allocated to the Limited Partners to the
extent such Tax Loss results from (i) a casualty loss which is uninsured or
which exceeds the amount of applicable insurance, (ii) liability to the
Partnership which results from negligence or intentional action or inaction on
the part of any entity, or (iii) loss which causes the Partnership to become
insolvent or which accrues after the Partnership has become insolvent. All such
Tax Loss shall be allocated to the General Partner.
9.4 Miscellaneous Allocation and Distribution Matters.
It is intended that the allocation rules set forth in Section 9.3,
together with Article XII hereof, shall result in the Capital Accounts of the
Partners equaling zero following the complete winding up of the Partnership and
the Distributions provided for in Section 9.2. The allocation provisions of this
Partnership Agreement in Section 9.3 shall be construed in such a way by the
General Partner in order to validate the Distributions provided for in Section
9.2.(c) upon liquidation of the Partnership.
The percentage interest of the Series 200 Limited Partners set forth in
this Article 9 is subject to adjustment immediately prior to the commencement of
a successful public offering for the Partnership and/or its business as follows:
First, determine the Market Capitalization of the entity offering the securities
post-IPO as follows: If 1/3 of the Issuer is sold to the public for $15,000,000,
then the Market Cap would be $45,000,000. Subtract the amount of money raised in
the IPO from the Market Cap to get the Pre-IPO Valuation. (This example:
$45,000,000 - $15,000,000 = $30,000,000). Then subtract from the Pre-IPO
Valuation the value of any other businesses included in the Issuer, including
but not limited to, the business of Datalinc, Ltd., as determined by the lead
underwriter in the IPO in its sole and absolute discretion (which determination
shall be binding on all parties hereto) to get the Pre-IPO Valuation of the
Business of the Partnership. (This example: assume valuation of other businesses
is $8,000,000). Multiply the Pre-IPO Valuation of the Business of the
Partnership (This example: $30,000,000 - $8,000,000 = $22,000,000) by 70% to get
the Discounted Pre-IPO Valuation of the Business of the Partnership. (This
example: $22,000,000 x 70% = $15,400,000). If less than $18,000,000, multiply 16
2/3% (assuming sale of all Series 200 Units) by [$18,000,000 divided by the
Discounted Pre-IPO Valuation of the Business of the Partnership] to determine
the Adjusted Ownership Percentage of Series 200 Units. (This example:
$18,000,000 divided by $15,400,000 = 1.17 x 16 2/3% = 19.48%). This provision
only applies if the Discounted Pre-IPO Valuation of the Business of the
Partnership is less than $18,000,000. Any increase in the Adjusted Ownership
Percentage of Series 200 Units above 16 2/3% shall result in a corresponding
decrease in the relevant percentage ownership of the Business of the Partnership
of the Datalinc Limited Partner. This adjustment shall only be used to determine
the percentage ownership of the Series 200 Limited Partners in the entity
issuing securities in the IPO.
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9.5 Optional Revaluation of Partnership Property.
Upon the occurrence of (i) a contribution of money or property to the
Partnership (after the initial admittance of the Limited Partner) by a new or
existing partner as consideration for an interest in the Partnership, (ii) a
distribution of money or property by the Partnership to a retiring or continuing
Partner as consideration for an interest in the Partnership, or (iii) in
connection with the liquidation of the Partnership, the General Partner may
elect to increase or decrease the respective Capital Accounts of all Partners to
reflect a revaluation of Partnership property on the books of the Partnership;
provided:
a. Such adjustments must be based on the fair market value of the property
on the date of adjustment;
b. The adjustments reflect the manner in which the unrealized income, gain,
loss or reduction inherent in such property (that has not been reflected in the
Capital Accounts of the Partners previously) would be allocated among the
Partners under this Section 9.4 if there were a taxable disposition of such
property for such fair market value on the adjustment date;
c. Thereafter, the Capital Accounts of the Partners are adjusted in
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for
allocations to them of depreciation, depletion, amortization and gain or loss,
as computed for book purposes, with respect to such property; and
d. Thereafter, the Partners' distributive shares of depreciation,
depletion, amortization and gain or loss, as computed for tax purposes, with
respect to such property shall be determined so as to take account of the
variation between the adjusted tax basis and the book value of such property in
the same manner as under Code Section 704(c) and Treasury Regulations Section
1.704-1(b)(4)(i).
9.6 General Partner's Contribution to Capital.
a. Upon a "liquidation" of the Partnership within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Regulations and after the application of Sections
9.2 and 9.3 for all fiscal years of the Partnership, including the year in which
such "liquidation" occurs, to the extent any General Partner has a negative
Capital Account, such General Partner shall contribute cash to the Partnership
in an amount equal to the lesser of (i) its negative Capital Account or (ii) the
product of (x) a fraction, the numerator of which is that General Partner's
negative Capital Account balance and the denominator of which is the total
negative Capital Account balances of all the General Partners, and (y) 1.01% of
the Original Capital Investment of the Limited Partners, within the time period
prescribed by Section 1.704-1(b)(2)(ii)(b)(3) of the Regulations. The proceeds
of any such contribution shall be distributed to the Limited Partners with
positive Capital Accounts in proportion thereto as specified in Section 9.2(d),
9.4 and 12.3.
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b. In the event a General Partner is required to contribute to the capital
of the Partnership because of a liquidation under the Regulations that does not
result in a dissolution and winding up, the amount of such contribution may be
distributed to that General Partner after such contribution as long as that
General Partner acknowledges its obligation under Section 9.6a to make up
deficits in its Capital Account in the Partnership.
9.7 Limited Partners' Consent to Distributions and Allocation methods.
The methods hereinabove set forth in this Article IX by which Distributions
and allocations of income, gain, loss, deductions, tax credits and other tax
items are made and apportioned are hereby expressly consented to by each Limited
Partner as an express condition to becoming a Limited Partner.
9.8 Liquidation Distribution.
In the event that the Partnership is terminated, Distributions shall be
applied in the manner set forth in Articles 9.2(d), 9.4 and XI hereof.
9.9 General Partner's Opinion Final.
The opinion of the General Partner shall be final and conclusive with
respect to all disputes as to computation and determinations required to be made
under this Article and Articles X and XII.
9.10 Authority to Vary Allocations to Preserve and Protect Partners'
Intent; Other Authority.
a. It is the intent of the Partners that each Partner's distributive share
of income, gain, loss, deduction, or credit (or item thereof) shall be
determined and allocated in accordance with this Article to the fullest extent
permitted by Section 704(b) of the Code. In order to preserve and protect the
determinations and allocations provided for in this Article, the General Partner
is authorized and directed to allocate income, gain, loss, deduction, or credit
(or item thereof) arising in any year differently than otherwise provided for in
this Article to the extent that allocating income, gain, loss, deduction, or
credit (or item thereof) in the manner provided for in this Article would cause
the determinations and allocations of each Partner's distributive share of
income, gain, loss, deduction, or credit (or item thereof) not to be permitted
by Section 704(b) of the Code and Treasury Regulations promulgated thereunder.
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b. In making any allocation (the "new allocation") under the foregoing
paragraph, the General Partner is authorized to act only after having been
advised by counsel specializing in tax matters (the "Special Tax Counsel") that
under Section 704(b) of the Code and the Treasury Regulations thereunder, (i)
the new allocation is necessary, and (ii) the new allocation is an appropriate
modification of the allocations otherwise provided for in this Article in order
to assure that, either in the then current year or in any preceding year, such
Partner's distributive share of income, gain, loss, deduction, or credit (or
item thereof) is determined and allocated in accordance with this Article to the
fullest extent permitted by Section 704(b) of the Code and the Treasury
Regulations thereunder.
c. If the General Partner is required to make any new allocation
in a manner less favorable to any Partner than is otherwise provided for in this
Article, the General Partner is authorized and directed to do so, insofar as it
is advised by Special Tax Counsel that it is permitted by Section 704(b) of the
Code to allocate income, gain, loss, deduction, or credit (or item thereof)
arising in later years in a manner so as to bring the allocations of income,
gain, loss, deduction, or credit (or item thereof) to such Partners on a present
value basis as nearly as possible to the allocations thereof otherwise
contemplated by this Article.
d. New allocations made by the General Partner in reliance upon
the advice of Special Tax Counsel and allocations made by the General Partner
under the previous paragraph in reliance upon the advice of Special Tax Counsel
shall be deemed to be made in good faith pursuant to the fiduciary obligation of
the General Partner to the Partnership and the Partners, and no such allocation
shall give rise to any claim or cause of action by an Partner. Any modification
made pursuant to this Section shall be deemed to be a complete substitute for
any allocation made pursuant to the Partnership Agreement, and approval of any
such change by the Limited Partners is not required.
e. The General Partner may similarly amend this Agreement to
permit the Partnership to comply with any Department of Labor regulations
concerning Plan Assets.
ARTICLE X
AMOUNTS WITHHELD
All amounts which the Partnership is required by law to withhold
pursuant to the Code or any provision of any state or local tax law with respect
to any payment or distribution to the Partnership or the Unit Holders shall be
treated as amounts distributed to the Unit Holders pursuant to Article IX for
all purposes under this Agreement. The General Partner may allocate any such
amounts among the Units Holders in any manner that is in accordance with
applicable law.
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ARTICLE XI
RECORDS AND BOOKS OF ACCOUNT; FISCAL YEAR;
BANKING; REPORTS TO PARTNERS
11.1 Records and Books of Account.
The General Partner shall maintain or cause to be maintained, at the
Limited Partnership's principal office or at such other place or places as the
General Partner from time to time may determine, full and accurate records and
books of account of the Limited Partnership's business. Such records and books
of account shall be maintained on the method of accounting determined by the
General Partner to be most advantageous to the Limited Partnership. Each Partner
shall have the right of inspection and copying of such records and books of
account, at his or its expense.
11.2 Fiscal Year.
The fiscal year of the Limited Partnership shall be the calendar year.
11.3 Banking.
An account or accounts in the name of the Limited Partnership shall be
maintained at such financial institution(s) as the General Partner may select.
All uninvested funds of the Limited Partnership shall be deposited in an account
of the Partnership at such financial institution(s). All funds so credited to
the Limited Partnership in any such account shall be subject to withdrawal by
checks made in the name of the Limited Partnership and signed by the General
Partner or such person or persons as the General Partner may from time to time
designate.
11.4 Reports to Partners
a. As soon as reasonably practical, but in no event later than
ninety (90) days after the close of each fiscal year of the Limited Partnership,
the General Partner shall cause to be prepared and furnished to each Partner:
(i) The information necessary for the preparation by such Partner of his or
its Federal, state and other income tax returns;
(ii) The amount in the Capital Account of such Partner as of the last day
of such fiscal year;
(iii) An income statement and balance sheet of the Limited Partnership as
of the last day of such fiscal year, which shall be prepared by a certified
public accountant and
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(iv) Such other information as the General Partner deems reasonably
necessary for the Partners to be advised of the current status of the Limited
Partnership and its business.
ARTICLE XII
DISSOLUTION; LIQUIDATION; AND TERMINATION
12.1 Dissolution.
The Limited Partnership shall be dissolved upon the first to occur of any
of the following events:
a. The expiration of the term provided for in Section 2.4 hereof;
b. The withdrawal, dissolution or Bankruptcy of a or the last remaining
General Partner unless the Limited Partnership's business is continued as
provided in Section 12.2 hereof;
c. The sale of all or substantially all of its assets, including, but not
limited to, the Network, and the collection and distribution of the proceeds
thereof;
d. The unanimous consent thereto of all Partners.
12.2 Right to Continue the Limited Partnership's Business.
The withdrawal, dissolution or Bankruptcy of the last remaining General
Partner shall cause a dissolution of the Limited Partnership unless the
remaining Limited Partners acting by Majority Vote exercise the right, but not
the obligation exercisable within sixty (60) days from such withdrawal,
dissolution or Bankruptcy to admit a new General Partner to the Limited
Partnership upon such terms and conditions as they shall agree, and to elect to
continue the Limited Partnership's business, in a reconstituted form as herein
provided. If there is an event of withdrawal of a General Partner at a time when
there is at least one other General Partner, the business of the Partnership may
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be carried on by the remaining General Partner. If the remaining General Partner
or General Partners do not so elect, the business of the Partnership may
nonetheless be carried on if, within ninety (90) days after the withdrawal, all
Partners agree in writing to continue the business of the Partnership and to
appoint one or more additional General Partners if necessary or desired. If,
pursuant to the foregoing, the Limited Partnership shall not be dissolved but
shall continue, the interest therein and thereto of the withdrawn, dissolved or
Bankrupt General Partner shall be reconstituted into a Limited Partner's
interest with otherwise equivalent benefits, shall pass to such former General
Partner's successor-in-interest or legal representative, and such reconstituted
limited partnership shall have the exclusive right to use the Limited
Partnership's firm name and style.
12.3 Liquidation.
a. Upon the dissolution of the Limited Partnership, the General Partner
shall take or cause to be taken a full account of the Limited Partnership's
assets and liabilities as of the date of such dissolution and shall proceed with
reasonable promptness to liquidate the Limited Partnership's assets and to
terminate its business. The cash proceeds from the liquidation, as and when
available therefor, shall be applied and distributed in the following order:
(i) to the payment of all taxes, debts and other obligations and
liabilities of the Limited Partnership, including the necessary expenses of
liquidation, but excluding therefrom secured creditors whose obligations
continue in existence after the liquidation of the Limited Partnership assets;
provided however, that all debts and other obligations and liabilities of the
Limited Partnership as to which personal liability exists with respect to any
Partner shall be satisfied or a reserve established therefor, prior to the
satisfaction of any debt or other obligation or liability of the Limited
Partnership as to which no such personal liability exists for either the Limited
Partnership or any Partner; provided however, that where a contingent debt,
obligation or liability exists, a reserve, in such amount as the General Partner
deems reasonable, shall be established to meet such contingent debt, obligation
or liability, which reserve shall be distributed as provided in this paragraph
(a) only upon the termination of such contingency; and
(ii) all remaining proceeds in liquidation of the Limited Partnership shall
be distributable pursuant to the provisions of Section 9.2, 9.3 and 9.4 hereof.
b. The General Partner shall administer the liquidation of the Limited
Partnership and the termination of its business. The General Partner shall be
allowed a reasonable time for the orderly liquidation of the Limited
Partnership's assets and the discharge of liabilities to creditors, so as to
minimize losses resulting from the liquidation of the Limited Partnership's
assets.
c. Anything herein contained to the contrary notwithstanding, the General
Partner shall not be personally or otherwise liable for the return of the
Limited Partners' Capital Contributions, or any part thereof. Any such return
shall be made solely from the Limited Partnership's assets.
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d. Except as otherwise provided herein, no dissolution or termination of
the Limited Partnership shall relieve, release or discharge any Partner, or any
of his or its successors, assigns, heirs or legal representatives, from any
previous breach or default of, or any obligation theretofore incurred or accrued
under any provision of this Agreement, and any and all such liabilities, claims,
demands or causes of action arising from any such breaches, defaults and
obligations shall survive such dissolution and termination.
e. Each Limited Partner shall look solely to the assets of the Limited
Partnership for the return of his Capital Contributions, and if the Limited
Partnership property remaining after the payment or discharge of the debts and
liabilities of the Limited Partnership is insufficient to return the Capital
Contributions of each Limited Partner, such Limited Partner shall have no
recourse against the General Partner or any other Limited Partner. The winding
up of the affairs of the Limited Partnership and the distribution of its funds
shall be conducted exclusively by the General Partner, except as provided
herein, who are hereby authorized to do any and all acts and things authorized
by law for such purposes.
12.4 Limited Partners' Rights.
If necessary, a special liquidator may be appointed by Limited Partners
owning more than fifty percent (50%) of the Limited Partnership Units of the
Partnership. In connection with any such winding up and liquidation, an
independent certified public accountant retained by the Partnership shall, if
requested by Limited Partners owning more than fifty percent (50%) of the Units
of the Partnership, audit the Partnership as of the date of termination, and
such audited statement shall be furnished to all Partners.
12.5 Gains or Losses in Process of Liquidation.
Any gains or losses on disposition of the Network in the process of
liquidation shall be credited or charged to the Partners in the manner specified
in Article IX. No property shall be distributed in kind.
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12.6 Instruments of Termination.
Upon the termination of the Partnership, the General Partner (or special
liquidator, as the case may be) shall make such filings and do such other acts
as shall be required by the Partnership Law, and the Partners hereby agree to
execute and deliver to the General Partner (or special liquidator, as the case
may be) such certificates or documents as shall be. so required.
12.7 Time of Liquidation.
A reasonable time shall be allowed for the orderly liquidation of the
assets of the Partnership and the discharge of liabilities to creditors so as to
enable the General Partner to minimize the losses attendant upon a liquidation.
12.8 No Right of Partition.
The Partners and Assignees and their estates or representative upon
death or the receiver upon bankruptcy or dissolution shall have no rights to
receive Partnership Property in kind, nor shall such Partners or Assignees have
the right to partition, sale, or appraisal of the Partnership's Network, whether
or not upon dissolution and termination of the Partnership, notwithstanding any
provision of law to the contrary.
Notwithstanding the foregoing, if any Partner shall be indebted to the
Partnership, then until payment of such amount by him, the liquidator shall
retain such Partner's distributive share of Partnership Properties or assets and
apply the income therefrom to the liquidation of such indebtedness and the cost
of operation of such Properties or assets during the period of such liquidation;
however, if at the expiration of six (6) months after the statement for which
provision is made herein has been given to such Partner, such amount has not
been paid or otherwise liquidated, the liquidator may sell the interest of such
Partner at public or private sale at the best price immediately obtainable which
shall be determined in the sole judgment of the liquidator. So much of the
proceeds of such sale as shall be necessary shall be applied to the liquidation
of the amount then due under this Article, and the balance of such proceeds, if
any, shall be delivered to such Partner.
12.9 Termination.
Upon compliance with the foregoing plan of liquidation and
distribution, the General Partner shall file or cause to be filed a Certificate
of Cancellation of the Certificate of Limited Partnership as well as any and all
other documents required to effectuate the dissolution and termination of the
Limited Partnership and the Limited Partnership thereupon shall be terminated.
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ARTICLE XIII
PARTNERSHIP STATUS
Anything in this Agreement to the contrary notwithstanding, it is
expressly intended that the entity formed hereby be a partnership as determined
by the applicable provisions of the Code, the rules and regulations promulgated
thereunder, and other laws pertaining thereto, and that in every respect all of
the terms and provisions hereof shall at all times be so construed and
interpreted as to give effect to this intent. In the event that the Internal
Revenue Service of the United States or any governmental authority having
jurisdiction shall in any way or at any time determine that any provision or
provisions of this Agreement affects the status of this entity, the General
Partner shall amend or modify the terms and provisions of this Agreement to the
extent necessary to comply with the rules, regulations and requirements of the
Internal Revenue Service of the United States or any other government authority
having jurisdiction, in order that the entity formed hereby be treated as a
partnership, be taxable as such, and the Partners hereof taxable as partners of
a partnership; which modification or amendment shall be retroactively applied to
the date of this Agreement.
ARTICLE XIV
GENERAL PROVISIONS
14.1 Notices.
Except as otherwise provided herein, any notice, payment, distribution
or other communication which shall be required to be given to any Limited
Partner in connection with the business of the Partnership shall be duly given
if delivered personally in writing, or if sent by mail or telegraph, to the last
address furnished by such Limited Partner. Written notice to the General Partner
or the Partnership shall be given when actually received at the principal office
of the Partnership.
14.2 Survival of Rights.
This Agreement shall be binding upon and inure to the benefit of the
Partners and their respective heirs, legatees, legal representatives, successors
and assigns.
14.3 Headings.
The headings of the Articles and subparagraphs of this Agreement are
for convenience only and shall not be deemed part of the text of this Agreement.
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14.4 Agreement in Counterparts.
This Agreement, or any amendment thereto, may be executed in multiple
counterparts, each of which shall be deemed an original agreement, and all of
which shall constitute one agreement, by each of the parties hereto on the dates
respectively indicated in the acknowledgments of said parties, notwithstanding
that all of the parties are not signatories to the original or the same
counterpart, to be effective as of the day and year first above written. For
purposes of recording a Certificate of Limited Partnership, a second signature
page and acknowledgment page may be attached to each counterpart hereof, and the
second signature page and the acknowledgment page pertaining thereto may be
detached from the counterpart, when executed, and attached to another
counterpart, which other counterpart may thereafter be filed as the Certificate
of Limited Partnership.
14.5 Governing Law.
This Agreement is enforceable in accordance with its terms and shall be
governed, construed and enforced according to the laws of the State of Florida.
All Limited Partners consent to the jurisdiction of state and federal courts in
Florida and appoint the Secretary of State of Florida as agent for service of
process.
14.6 (Reserved)
14.7 Validity.
Should any portion of this Agreement be declared invalid and
unenforceable, then such portion shall be deemed severable from this Agreement
and shall not affect the remainder hereof.
14.8 Amendment.
Except as otherwise provided in this Agreement, this Agreement may be
amended by a vote of the General Partner and a Majority Vote of Limited Partners
at a meeting called pursuant to this Agreement.
14.9 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
or persons may require.
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14.10 Right to Rely Upon the Authority of the General Partner.
The General Partner shall be authorized to bind the Partnership by its
signature alone, which may be a facsimile signature, and persons dealing with
the Partnership may rely upon the representation of the General Partner that
such General Partner has the authority to make any commitment or undertaking on
behalf of the Partnership. No person dealing with the General Partner shall be
required to determine its authority to make such commitment or undertaking, nor
to determine whether the General Partner concurs in the commitment or
undertaking or any other fact or circumstance bearing upon the existence of its
authority. In addition, no purchaser of any property or interest therein owned
by the Partnership shall be required to determine the sole and exclusive
authority of the General Partner to sign and deliver on behalf of the
Partnership any instrument of transfer with respect thereto or to see to the
application or distribution of revenues or proceeds paid or credited in
connection therewith, unless such purchasers shall have received written notice
from the Partnership respecting the same.
14.11 Loan Restrictions.
A creditor who makes a non-recourse loan to the Partnership must not
have, or acquire, at any time as a result of making the loan, any direct or
indirect interest greater than 20% in the profits, capital or property of the
Partnership other than as a secured creditor.
14.12 Merger.
This Agreement contains the entire understanding among the parties and
supersedes any prior understanding and agreements between them respecting the
matters described herein.
14.13 Arbitration.
Any controversy or claim arising out of or relating to this Agreement
or any provision thereof shall be settled by binding arbitration at Tampa,
Florida, in a manner agreed upon by the General Partner and any Limited Partners
directly affected, or if not otherwise agreed upon, then in accordance with the
rules of the American Arbitration Association in effect at that time. Judgment
upon the award so rendered may be entered in any court having competent
jurisdiction thereover. The costs of the arbitration shall be borne by the
non-prevailing party, including the cost of experts, evidence and legal counsel
(and all employees and assistants) of the prevailing party.
14.14 Tax Matters Partner.
a. The General Partner is hereby designated as the Tax Matters
Partner of the Partnership, as provided in regulations pursuant to Section 6231
of the Code (the "Tax Matters Partner"). Each Partner, by the execution of this
Agreement, consents to such designation of the Tax Matters Partner and agrees to
execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate to
evidence such consent.
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b. The duties of the Tax Matters Partner may include the following:
(1) To the extent and in the manner provided by applicable
law and regulations, the Tax Matters Partner shall furnish the name, address,
profits, interest and taxpayer identification number of each Partner to the
Secretary of the Treasury or his delegate (the "Secretary").
(2) To the extent and in the manner provided by applicable
law and regulations, the Tax Matters Partner shall keep each Partner informed of
the administrative and judicial proceedings for the adjustment at the
Partnership level of any item required to be taken into account by a Partner for
income tax purposes (such administrative proceeding being referred to
hereinafter as a "Tax Audit" and such judicial proceeding being referred to
hereinafter as "Judicial Review").
(3) If the Tax Matters Partner, on behalf of the Partnership,
receives a notice with respect to the Partnership tax audit from the Secretary,
the Tax Matters Partner shall, within 30 days of receiving such notice, forward
a copy of such notice to the Partners who hold or held an interest (through
their Interests) in the profits or losses of the Partnership for the Partnership
taxable year to which the notice relates.
c. The Tax Matters Partner is hereby authorized, but not required:
(1) To enter into any settlement agreement with the Internal Revenue
Service or the Secretary with respect to any Tax Audit or Judicial Review, in
which agreement the Tax Matters Partner may expressly state that such agreement
shall bind the other Partners, except that such agreement shall not bind any
Partner who (within the time prescribed pursuant to the Code and Treasury
Regulations thereunder) files a statement with the Secretary providing that the
Tax Matters Partner shall not have the authority to enter into a settlement
agreement on behalf of such Partner;
(2) In the event that a notice of a final administrative adjustment at the
Partnership level of any item required to be taken into account by a Partner for
tax purposes (a "Final Adjustment") is mailed to the Tax Matters Partner, to
seek Judicial Review of such Final Adjustment, including the filing of a
petition for readjustment with the Tax Court, the District Court of the United
States for the district in which the Partnership's principal place of business
is located, or the Court of Claims;
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(3) To intervene in any action brought by any other Partner for Judicial
Review of a Final Adjustment;
(4) To file a request for an administrative adjustment with the Secretary
at any time and, if any part of such request is not allowed by the Secretary, to
file a petition for Judicial Review with respect to such request;
(5) To enter into an agreement with the Service to extend the period for
assessing any tax which is attributable to any item required to be taken into
account by a Partner for tax purposes, or an item affected by such item; and
(6) To take any other action on behalf of the Partners or the Partnership
in connection with any administrative or judicial tax proceeding to the extent
permitted by applicable laws or regulations.
d. The Partnership shall indemnify and reimburse the Tax Matters Partner
for all expenses, including legal and accounting fees, claims, liabilities,
losses and damages incurred in connection with any Tax Audit or Judicial Review
with respect to the tax liability of the Partners. The payment of all such
expenses shall be made before any distributions are made of Cash Available for
Distribution or any discretionary reserves are set aside by the General Partner.
Neither the General Partner, any Affiliate, nor any other person or entity shall
have any obligation to provide funds for such purpose. The taking of any action
and the incurring of any expense by the Tax Matters Partner in connection with
any such proceeding, except to the extent required by law, is a matter in the
sole discretion of the Tax Matters Partner, and the provisions on limitations of
liability of General Partner and indemnification set forth in this Agreement
shall be fully applicable to the Tax Matters Partner in its capacity as such.
14.15 Binding Effect.
Except as otherwise provided in this Agreement, every covenant, term, and
provision of this Agreement shall be binding upon and inure to the benefit of
the Partners and their respective successors and assigns.
14.16 Construction.
Every covenant, term, and provision of this Agreement shall be
construed simply according to its fair meaning and not strictly for or against
any Partner.
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14.17 Severability.
Every provision of this Agreement is intended to be severable. If any
term or provision hereof is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity or legality of the
remainder of this Agreement.
14.18 Incorporation by Reference.
Every exhibit, schedule, and other appendix attached to this Agreement
and referred to herein is hereby incorporated into this Agreement by reference.
14.19 Additional Documents.
Each Partner, upon the request of any General Partner, agrees to
perform all further acts and execute, acknowledge, and deliver any documents
that may be reasonably necessary, appropriate, or desirable to carry out the
provisions of this Agreement.
14.20 Waiver of Action for Partition.
Each of the Partners irrevocably waives any right that he may have to
maintain any action for partition with respect to any of the Partnership
Network.
14.21 Sole and Absolute Discretion.
Except as otherwise provided in this Agreement, all actions which any
General Partner may take and all determinations which any General Partner may
make pursuant to this Agreement may be taken and made at the sole and absolute
discretion of such General Partner.
14.22 Certificates Representing Units.
The Partnership shall issue Certificates representing the Units to all
Limited Partners.
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ARTICLE XV
ADDITIONAL CAPITAL CONTRIBUTIONS,
FINANCING AND ASSESSMENTS
15.1 The General Partner may permit persons (including persons who are
concurrently admitted as Limited Partners, pursuant to the provisions of this
Agreement) to make additional Capital Contributions at such times, through sale
of Units or otherwise, in such amounts and form and for such consideration as
the General Partner and the Majority Vote of the Limited Partners , and to
receive therefor, additional Units. Contributions to the Partnership's capital
may be made in any of the following forms: cash, notes or relinquishment of
legal rights or reduction of Partnership obligations pursuant to notes,
debentures, bonds and other kinds of debt obligations issued by the Partnership.
15.2 All Units offered pursuant to this Article XV shall be initially
offered pro rata to all existing Limited Partners in accordance with their
Sharing Ratio. Any Units not purchased by the existing Limited Partners within
thirty (30) days of notice of the right to purchase the Units may be offered by
the General Partner to any person or entity in its sole discretion.
15.3 The General Partner or its Affiliates, or both, may, in addition
to any of its previous Capital Contributions, make additional Contributions in
cash to the capital of the Partnership in the manner specified in this Article,
provided such additional Contributions shall be regarded as in payment of
Limited Partners' Units and not of General Partner's Units. In addition, the
General Partner may purchase those fractional interests in the Partnership
attributable to the unpaid obligations by Limited Partners by paying such
obligations and assuming said fractional interests.
15.4 Fractional Limited Partnership Units may be issued at the sole
discretion of the General Partner.
15.5 Consistent with the foregoing, after the expenditure or commitment
of the Original Invested Capital, additional Partnership activities may be
financed by any method which the General Partner believes to be appropriate
under the circumstances, by borrowing funds, utilizing Partnership revenues and
other accepted methods of financing.
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IN WITNESS WHEREOF, the Partners have hereunto set their hands and
seals the day and year first above written.
GENERAL PARTNER:
FASTCOM MANAGEMENT, INC.
By:
DATALINC, LTD.
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fastclpa.dr1
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