PARTNERSHIP AGREEMENT
OF
QUALITY FEEDERS
This Partnership Agreement is made and entered into as of
, 1997, by and between Xxxxxxx'x Quality Feeders,
LLC, an Illinois limited liability company ("Xxxxxxx") and Red Oak
Feeders, L.C., an Iowa limited liability company ("Red Oak")
(Xxxxxxx and Red Oak, collectively, the "Partners").
WITNESSETH:
WHEREAS, Xxxxxxx and Red Oak desire to organize and operate a
business for the purposes of purchasing, buying, feeding, raising
and selling cattle; and
WHEREAS, in order to organize and operate such business
Xxxxxxx and Red Oak have agreed to form a general partnership which
shall be conducted upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements hereinafter set forth, the Members hereby
agree as follows:
Section 1. The Partnership
1.01 Organization. The Partners agree to form and constitute
a partnership as a general partnership (the "Partnership")
pursuant to and in accordance with the Act.
1.02 Name. The name of the Partnership is Quality Feeders.
1.03 Principal Office. The address of the principal business
office of the Partnership within the State of Illinois shall be
0000 Xxxxx 00xx Xxxxxx, Xxxxxx, Xxxxxxxx or such other address as
may be designated from time to time by the Management Committee.
1.04 Duration. The duration of the Partnership shall be
perpetual, unless the Partnership is earlier dissolved (i) in
accordance with either the provisions of this Agreement or the Act
or (ii) by either Partner, at any time, by written notice of such
dissolution given by the dissolving Partner to the other Partner(s)
not less than sixty (60) days prior to the dissolution date.
1.05 Purposes. The purposes of the Partnership is to engage
in the business of purchasing, buying, feeding, raising and selling
cattle, including acquiring option contracts and/or futures
contracts thereon; and to engage in such other activities and
businesses as may be necessary or desirable in furtherance of the
foregoing purposes or as may be incidental or related thereto.
1.06 Purposes Limited. The Partnership is to be engaged in
business only for the purposes specified in Section 1.05 hereof.
Except as otherwise provided in this Partnership Agreement, the
Partnership shall not engage in any other activity or business and
no Partner shall have any authority to hold itself out as a general
agent of another Partner in any business or activity. The Partners
shall use the Partnership's credit and assets only for the benefit
of the Partnership and none of the Partnership's Assets shall be
transferred or encumbered for or in payment of any individual
obligation of a Partner.
1.07 Title To Property. All real and personal property owned
by the Partnership shall be owned by the Partnership as an entity
and, insofar as permitted by applicable law, no Partner shall ahve
any ownership interest in such property in its individual name or
right, and each Partner's interest in the Partnership shall be
personal property for all purposes
1.08 Definitions. The following capitalized terms used in
this Agreement shall have the following meanings:
(a) "Accountants" shall mean an independent firm of certified
public accountants to be agreed upon by Xxxxxxx and Red Oak.
(b) "Act" shall mean the Illinois Uniform Partnership Act, as
set forth in 805 ILCS 205/1 et. seq., as amended from time to time
(or any corresponding provision of succeeding law.)
(c) "Adverse Act" means, with respect to any Partner, any of
the following:
(i) A failure of such Partner to make any Capital
Contribution required pursuant to Sections 5.01 and 5.02 of
this Agreement and the election by the Nondefaulting Partner
under Section 5.03(a) or (b) to treat such failure as an
Adverse Act (to the extent that the provisions thereof are not
complied with by the Defaulting Partner);
(ii) A transfer of all or any portion of a Partner's
Interest in the Partnership except as permitted by this
Agreement;
(iii) An Event of Bankruptcy with respect to such
Partner;
(iv) Any termination (including a merger in which such
Entity is not the survivor) or dissolution of a Entity which
is a Partner unless substantially all assets of the terminated
or dissolved Person are transferred to a Person who is a
permitted transferee under Section 13.02;
(v) Any attempt by a Partner to (x) cause a partition in
breach of Section 13.06 hereafter, or (y) withdraw from the
Partnership, except as otherwise permitted herein or dissolve
the Partnership in breach of Section 13.07;
(vi) The failure of either party to furnish the
Certification provided for in Section 12.03 hereof, or the
submission of a false, inaccurate or fraudulent Certification;
(vii) Default by a Partner or an Affiliate of a
Partner under an Interested Party Contract as defined in
Section 10 (after giving effect to any applicable period of
grace); or
(viii) Default by a Partner in the performance of any
of its other obligations or duties hereunder, but only if such
default has a material adverse effect on the condition
(financial or other), business properties, net worth or
results of operations of the Partnership, taken as a whole.
(d) "Agreement" means this Agreement of Partnership, as
amended from time to time.
(e) "Affiliate" shall mean, with respect to any Person, (i)
any Person directly or indirectly controlling, controlled by or
under a common control with such Person, (ii) any Person owning or
controlling 10% or more of the outstanding voting securities of
such Person, (iii) any officer, director or general partner of such
Person, or (iv) any Person who is an officer, director, general
partner, trustee or holder of 10% or more of the voting securities
of any Person described in clauses (i) through (iii) of this
sentence.
(f) "Anniversary Date" shall mean the same day and month as
the date of this Agreement occurring in any subsequent year.
(g) "Capital Account" shall mean, with respect to any
Partner, the Capital Account maintained for such Person in
accordance with the provisions set forth in Section 7 hereof.
(h) "Capital Contribution" shall mean, with respect to any
Partner any contribution to the capital of the Partnership in cash
or property by a Partner whenever made. "Initial Capital
Contribution" shall mean the initial contribution, by a Partner to
the capital of the Partnership pursuant to this Agreement.
(i) "Code" shall mean the Internal Revenue Code of 1986, as
amended, or corresponding provisions of any subsequent superseding
federal revenue laws.
(j) "Distributable Cash" shall mean all cash, revenues and
funds received by the Partnership from Partnership operations, less
the sum of the following to the extent paid or set aside by the
Partnership: (i) all principal and interest payments on
indebtedness of the Partnership and all other sums paid to lenders;
(ii) all cash expenditures incurred in the normal operation of the
Partnership's business; (iii) such Reserves as the Management
Committee deem reasonably necessary for the proper operation of the
Partnership's business. "Distributable Cash" shall not be reduced
by depreciation or other similar non-cash allowances, but shall be
increased by any reduction of Reserves previously established.
(k) "Entity" shall mean any general partnership, limited
partnership, limited liability company, corporation, joint venture,
trust, business trust, cooperative, association, foreign trust or
foreign business organization.
(l) "Event of Bankruptcy" shall mean, with respect to any
Person, any of the following:
(i) Filing a voluntary petition in bankruptcy or for
reorganization or for the adoption of an arrangement under the
Bankruptcy Code (as now or in the future amended) or an
admission seeking the relief therein provided;
(ii) Making a general assignment for the benefit of
creditors;
(iii) Consenting to the appointment of a receiver for
all or a substantial part of such Person's property;
(iv) In the case of the filing of an involuntary petition
in bankruptcy, an entry of an order for relief;
(v) The entry of a court order appointing a receiver or
trustee for all or a substantial part of such Person's
property without its consent; or
(vi) The assumption of custody or sequestration by a
court of competent jurisdiction of all or substantially all of
such Person's property.
(m) "Fundamental Issue" shall mean decisions and actions
which would have a material impact on the Partnership including,
specifically, the following matters:
(i) Incurring, or becoming liable in respect of,
increasing, modifying, or extending any loan or other
indebtedness of the Partnership, whether secured or unsecured,
including borrowings for working capital purposes;
(ii) Acquiring, whether by purchase or otherwise, or
leasing, whether as lessor or lessee, any real property;
(iii) Acquiring or leasing any personal property
other than in the ordinary course of business;
(iv) Selling, leasing or otherwise conveying or
transferring any material Partnership Assets, other than in
the ordinary course of business, or granting any options,
rights of first refusal, mortgages, pledges, security
interests or other encumbrances with respect to such
Partnership Assets;
(v) Making any loans, extending any credit or becoming
a guarantor, surety or endorser, to or for any Person
(including any Partner) except for normal trade credit
extended, and customary endorsements for deposit of
instruments received, in the ordinary course of business;
(vi) Confessing any judgment against the Partnership,
releasing, compromising, assigning or transferring any claims,
rights or benefits of the Partnership, submitting a
Partnership claim to arbitration (other than pursuant to
customary trade association rules to which the Partnership
becomes subject in the ordinary course of business), or
submitting a Partnership claim to litigation;
(vii) Entering into, terminating or materially
amending any contract, commitment or obligation (other than
those contracts made in the ordinary course of business);
(viii) Entering into or engaging in any business other
than that described in Section 1.05 hereof;
(ix) Entering into or amending any Interested Party
Contracts as described in Section 10 hereof;
(x) Making any elections for tax purposes, including any
elections pursuant to Section 754 of the Code;
(xi) Distributing any cash or Partnership Assets, other
than as provided in this Agreement, or establishing any
Reserves;
(xii) Admitting a new Partner to the Partnership;
(xiii) Making additional Capital Contributions to the
Partnership, either proportionately or disproportionately;
(xiv) Doing any act in contravention of this
Agreement or which would make it impossible or unreasonably
burdensome to carry on the business of the Partnership; or
(xv) Entering into any amendment, modification, revision,
supplement, rescission or termination with respect to any of
the foregoing.
(n) "GAAP" shall mean United States generally accepted
accounting principles as in effect from time to time.
(o) "Impasse" shall mean the failure of the Partners or the
Management Committee to consent or agree upon a Fundamental Issue
which has been placed before the Partners or the Management
Committee for approval, provided that such failure to consent or
agree on such Fundamental Issue makes it impossible or unreasonably
burdensome to continue to carry on the business of the Partnership
as contemplated by this Agreement. An Impasse shall occur on the
day after the Management Committee or Partners, as the case may be,
fail to approve or act upon the Fundamental Issue being considered.
(p) "Management Committee" means the Management Committee of
the Partnership established pursuant to Section 2.01 of the Act.
(q) "Partners" shall mean those Persons who executes a
counterpart of this Agreement as a Partner and each of the parties
who may hereafter become Partners "Partner" means any one of the
Partners.
(r) "Partnership" means the general partnership formed by
this Agreement and the partnership continuing the business of this
Partnership in the event of dissolution as herein provided. Words
such as "herein", "hereafter", "hereto", "hereof" and
"hereunder" refer to this Agreement as a whole, unless the context
otherwise requires.
(s) "Partner's Interest" shall mean a Partner's entire
interest in the Partnership including, without limitation, the
right to participate in the management of the business and affairs
of the Partnership, including the right to vote on, consent to, or
otherwise participate in any decision or action of or by the
Partners granted pursuant to this Agreement and the Act.
(t) "Partnership Assets" shall mean all real and personal
property acquired by the Partnership and any improvements thereto,
and shall include both tangible and intangible property.
(u) "Percentage Interest" shall mean, for any Partner, its
percentage interest in the Partnership based upon its Capital
Contributions thereto as set forth in Section 5 and as the same may
be changed, from time to time, based upon additional Capital
Contributions made by one or more Partners as unanimously agreed to
by the Partners.
(v) "Person" shall mean any individual or Entity, and the
heirs, executors administrators, legal representatives, successors
and assigns of such "Person" where the context so permits.
(w) "Prime Interest Rate" shall mean the highest domestic
prime rate of interest per annum as reported or published from time
to time in the money rates section of the Midwest Edition of The
Wall Street Journal, or its successor.
(x) "Profits" and "Losses" 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 (i) Code 703(a) (for this purpose, all items of income, gain,
loss or deduction required to be stated separate pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss); and
(ii) GAAP employed under the accrual method of accounting.
(y) "Regulations" shall mean proposed, temporary and final
income tax regulations promulgated under the Code, as such
Regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
(z) "Reserves" shall mean funds set aside or amounts
allocated to reserves which shall be maintained in amounts deemed
sufficient by the Managers for working capital and to pay taxes,
insurance, debt service or other costs or expenses incident to the
ownership or operation of the Company's business.
Section 2 Management and Operations
2.01 Management Committee. The business and affairs of the
Partnership shall be managed by a Management Committee. Except as
may otherwise be provided herein, the Management Committee shall
(a) direct, manage and control the business, affairs and properties
of the Partnership; (b) have full and complete authority, power and
discretion with respect thereto; (c) make all decisions regarding
those matters; and (d) perform any and all other acts or activities
customary or incidental to the management of the Partnership's
business.
2.02 Number, Tenure and Qualifications. The Management
Committee shall consist of four (4) members, with each Partner
appointing two (2) such members. All appointments by a Partner of
its members to serve on the Management Committee shall be made by
written notice delivered to the other Partner. Each Partner may
remove and/or replace any or all of its members on the Management
Committee at any time by written notice to the other Partner. The
number of members of the Management Committee shall be fixed from
time to time by the unanimous vote of the Partners, but in no
instance shall there be less than two (2) members (i.e. one being
appointed by each Partner); and provided, further, that any
increase in the number of members of the Management Committee shall
be in multiples equal to the number of Partners which are then
parties to this Agreement.
2.03 Meetings. The Management Committee shall meet not less
frequently than quarterly at such time and place as they may
determine. Meetings of the Management Committee shall be called
by any two (2) members of the Management Committee upon written
notice to the other members at any time. Notice of such meetings
of the Management Committee shall be delivered to each member not
less than ten (10) business days before the date on which the
meeting is to be held, which notice shall specify the time,
location and, if a special meeting, the purpose thereof. Notice of
any meeting may be waived in writing by any member of the
Management Committee entitled thereto.
2.04 Quorum. The attendance of all members of the
Management Committee appointed by the Partners shall constitute a
quorum for the transaction of business.
2.05 Telephonic Meetings. A member of the Management
Committee may participate in any meetings thereof by means of
conference telephone or similar communications equipment enabling
all members of the Management Committee participating in the
meeting to hear one another. Participation in a meeting pursuant
to this section shall constitute presence in person at such
meeting.
2.06 Manner of Acting. All matters requiring an affirmative
vote or the approval of the Management Committee shall be deemed
approved only upon a majority vote of all members of the Management
Committee present at a meeting at which a quorum is present. Any
decision of the Management Committee may be made without a meeting
in person if all members of the Management Committee are notified
of the issue(s) to be decided and if such decision(s) are first
approved by the Management Committee, either in writing or during
a telephone conference call or similar means of communications
allowing the members of the Management Committee participating in
the meeting to hear each other at the same time. Any decisions or
actions so approved by the Management Committee, other than at a
meeting in which a quorum is present in person, shall be documented
by a consent in writing setting forth the actions or decisions
taken and signed by all of the Management Committee.
2.07 Certain Powers of Management Committee. Without limiting
the generality of Section 2.01, the Management Committee shall have
power and authority, on behalf of the Partnership, to decide all
Fundamental Issues to the extent allowed by the Act and otherwise:
(a) To purchase liability and other insurance to protect the
Partnership's Assets and business;
(b) To hold and own Partnership Assets in the name of the
Partnership;
(c) To invest Partnership funds in time deposits, short-term
governmental obligations, commercial paper or other
prudent, low risk money market investments;
(d) To execute on behalf of the Partnership all instruments
and documents, including, without limitation, checks;
drafts; notes and other negotiable instruments; mortgages
or deeds of trust; security agreements; financing
statements; documents providing for the acquisition,
mortgage or disposition of the Partnership's Assets; ass-
ignments, bills of sale; leases; and any other
instruments or documents necessary to the business of the
Partnership;
(e) To employ accountants, legal counsel, managing agents or
other experts to perform services for the Partnership;
and
(f) To do and perform all other acts as may be necessary or
appropriate to the conduct of the Partnership's business
consistent with its purposes.
Unless authorized to do so by this Agreement or by the
Management Committee, no attorney-in-fact, employee or other agent
of the Partnership shall have any power or authority to bind the
Partnership in any way, to pledge its credit or to render it liable
for any purpose. No Partner shall have any power or authority to
bind the Partnership unless the Partner has been authorized by the
Management Committee to act as an agent of the Partnership in
accordance with the previous sentence.
2.08. Liability for Certain Acts Indemnity. Each member
of the Management Committee shall perform his duties on behalf of
the Partnership in good faith, in a manner he reasonably believes
to be in the best interest of the Partnership, and with such care
as an ordinary prudent person in a like position would use under
similar circumstances. No member of the Management Committee or
other Person acting for the Partnership at the Management
Committee's request or direction shall be liable to the Partnership
or to the Partners for any actions taken or omitted to be taken by
such member or Person in exercising his duties or responsibilities
in that capacity, except to the extent any such act or omission was
attributable to such member's or Person's willful misconduct,
fraud, gross negligence or bad faith. The Partnership shall
indemnify the Management Committee and any other Person acting on
behalf of the Partnership at the Management Committee's request or
direction, their successors and assigns, from and against any
claims asserted and any losses, damages, costs or expenses,
including reasonable attorneys' fees and costs of suit incurred by
any member of the Management Committee and/or any such Person as a
result of actions taken or omitted to be taken by any such member
or Person in exercising his duties or responsibilities on behalf of
the Partnership with the exception that the Partnership shall not
indemnify any such member and/or Person to the extent any such
member's and/or Person's acts and/or omissions are the result of
any such Person's and/or member's wilful misconduct, fraud, gross
negligence or bad faith.
2.09 No Exclusive Duty to Partnership. A member of the
Management Committee shall not be required to manage the
Partnership have other business interests and engage in activities
in addition to those relating to the Partnership. Neither the
Partnership nor any Partner shall have any right, by virtue of this
Agreement, to share or participate in such other investments or
activities of any Partner or to the income or proceeds derived
therefrom.
2.10 Reimbursement for Expenses of Management Committee
Members, Employees and Other Agents. The Partnership shall, to the
maximum extent permitted by law, reimburse and make advances for
reasonable expenses to members of the Management Committee, its
employees and other agents.
2.11 Resignations, Removal and Vacancies. Any members of the
Management Committee may resign at any time by giving written
notice to the other Management Committee members and the Partners.
The resignation of any member of the Management Committee shall
take effect upon receipt of notice thereof or at such later date
specified in such notice; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make
it effective. A member of the Management Committee may not be
removed by the other Partner but may, as stated in Section 2.02, be
substituted, removed or replaced by the Partner (and only the
Partner) which originally appointed such member, at the sole and
absolute discretion of such Partner. Any vacancy occurring for any
reason in the number of members of the Management Committee as a
result of the resignation, removal or death of a member thereof
shall be filled by the Partner (and only the Partner) which
initially appointed such Person. Any positions to be filled by
reason of an increase in the number of Management Committee members
shall be filled by each Partner appointing an additional member or
members thereof, as necessary to fill, on an equal basis, the
number of additional members provided for by the unanimous action
of the Partners.
2.12 Salaries. The salaries and other compensation of the
members of the Management Committee, if any, shall be fixed from
time to time by a unanimous vote of the Partners. No member of the
Management Committee shall be prevented from receiving such salary
because he is either a Partner, or an officer, director or
employee, of a Partner or an Affiliate of a Partner.
Section 3. Rights and Obligations of Partners
3.01 Limitation of Liability. Each Partner's liability shall
be as set forth in this Agreement, the Act and other applicable
law.
3.02 List of Partners. Upon the written request of any
Partner, the Management Committee shall provide a list showing the
names, addresses and Partnership Interests of all Partners.
3.03. Approval of Sale of All Assets. The Partners shall
have the right, by unanimous agreement, to approve the sale,
exchange or other disposition of all, or substantially all, of the
Partnership's Assets which is to occur as part of a single
transaction or plan.
3.04 Partnership Company Books. The Management Committee shall
maintain and preserve, or cause to be maintained and preserved,
during the term of the Partnership, the accounts, books and other
relevant Partnership documents described in Section 12. Upon
reasonable written request, each Partner shall have the right, at
a time during ordinary business hours to inspect and copy, at the
requesting Partner's expense, the Partnership's books and records,
including but not limited to, tax returns and reports.
3.05 Priority and Return of Capital. Except as otherwise may
be expressly provided in this Agreement, no Partner shall have
priority over any other Partner, either as to the return of Capital
Contributions or as to Profits, Losses or distributions; provided
that this Section shall not apply to loans which a Partner has made
to the Partnership.
Section 4. Meetings of Partners
4.01 Meetings. Meetings of the Partners, for any purpose or
purposes, may be called by any two (2) members of the Management
Committee or by any one (1) Partner.
4.02 Place of Meetings. The Partners may designate any place,
either within or outside the State of Illinois, as the place of
meeting for any meeting of the Partners. If no designation is
made, or if a special meeting is otherwise called, the place of
meeting shall be the principal place of business of the Partnership
in the State of Illinois.
4.03 Annual Meetings. An annual meeting of the Partners shall
be held on the first Monday in April of each year or at such time
as the Partners may designate for the transaction of any business
which may come before the meeting. Special meetings of the
Partners may be called, from time to time, in the manner provided
in Section 4.01, for such purpose or purposes as stated in the call
of the meeting.
4.04 Notice of Meetings. Except as provided 4.05, written
notice stating the place, day and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor
more than thirty (30) days before the date of the meeting, either
personally or by mail, by or at the direction of the Partner or
Persons calling the meeting, to each Partner entitled to vote at
such meeting.
4.05 Meeting of All Partners. If all of the Partners shall
meet at any time or place, either within or outside the State of
Illinois, and consent to the holding of a meeting at such time and
place, such meeting shall be valid without call or notice, and at
such meeting any lawful action may be taken.
4.06 Record Date. For the purpose of determining Partners
entitled to notice of or to vote at any meeting of Partners or any
adjournment thereof, or Partners entitled to receive payment of any
distribution, or in order to make a determination of Partners for
any other purpose, the date on which notice of the meeting is
mailed or the date on which the resolution or written consent
declaring such distribution is adopted, as the case may be, shall
be the record date for such determination of Partners. When a
determination of Partners entitled to vote at any meeting of
Partners has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
4.07 Quorum. Any meeting of Partners shall require that all
one hundred percent (100%) of the Percentage Interests be
represented at such meeting in person or proxy in order to
constitute a quorum for purposes of conducting business at such
meeting. A duly authorized officer, manager or representative of
any Partner which is an Entity may attend any meeting or act for
the Partner pursuant hereto. In the absence of a quorum at any
such meeting, the Partner or Partners present may adjourn the
meeting from time to time provided that a notice of the adjourned
meeting, including the date, time and place of the rescheduled
meeting, shall be given to each Partner which a quorum shall be
present or represented, any business may be transacted which might
have been transacted at the meeting as originally noticed. The
Partners present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal
during such meeting of any Percentage Interests whose absence would
cause less than a quorum.
4.08 Manner of Acting. If a quorum is present, the
affirmative vote of Partners holding one hundred percent (100%) of
the Percentage Interests shall be the act of the Partners.
4.09 Proxies. At all meetings of Partners, a Partner may vote
in person or by proxy executed in writing by the Partner or by a
duly authorized attorney-in-fact. Such proxy shall be filed with
the Management Committee before or at the time of the meeting. No
proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
4.10 Action by Partners Taken Without a Meeting. Any action
required or permitted to be taken at a meeting of Partners may be
taken without a meeting if the action is evidenced by one or more
written consents describing the action taken, signed by each
Partner entitled to vote and delivered to the Management Committee
for inclusion in the minutes or for filing with the Partnership
records. Any action taken under this Section is effective when all
Partners entitled to vote have signed the consent, unless the
consent specifies a different effective date.
4.11 Waiver of Notice. When any notice is required to be
given to any Partner, a waiver thereof in writing signed by the
Person entitled to such notice, whether before, at or after the
time stated therein, shall be equivalent to the giving of such
notice.
Section 5. Capital Contributions to the Company
5.01 Partners' Capital Contributions. Each Partner shall
contribute the following as its Capital Contribution to the
Partnership:
Form of
Capital Capital
Partner Contribution Contribution
Xxxxxxx Cash $1,500,000.00
Red Oak Cash $1,500,000.00
Such contributions shall be made at such time as determined by the
Management Committee upon not less than three (3) business days
advance written notice from the Management Committee to each
Partner. All such contributions shall be made on an equal basis by
the Partners in proportion to each Partner's Percentage Interest in
the Partnership. The Accountants for the Partnership shall
determine the fair market value of all property, other than cash,
contributed by the Partners.
5.02 Additional Capital Contributions. No Partner shall make
any additional Capital Contributions to the Partnership unless the
Management Committee agrees upon such additional Capital
Contributions. Such additional Capital Contributions shall be made
either proportionately or disproportionately as the Management
Committee determines. If disproportionately, then the Partners'
Percentage Interest in the Partnership shall be adjusted to take
into account such disproportionate additional Capital
Contributions. After the making of any such determination, each
Partner shall deliver to the Partnership on the date agreed to by
the Management Committee, its share thereof, if any. All
additional Capital Contributions shall be made in cash unless
otherwise agreed to by the Management Committee.
5.03 Actions Upon Default in Making a Capital Contribution.
In the event that any Partner fails to make a Capital Contribution
pursuant to the provisions of Sections 5.01 or 5.02 hereof on or
before the date on which it is due (hereinafter a "Defaulting
Partner"), then, in the event that the other Partner is obligated
to and has made its Capital Contribution as provided for under such
Section (hereinafter a "Nondefaulting Partner"), the Nondefaulting
Partner may, in its sole discretion, elect to take any one of the
following actions:
(a) The Nondefaulting Partner may give written notice
delivered to the Partnership and the other Partners demanding an
immediate return to it by the Partnership of an amount equal to the
defaulted Capital Contribution which was not made by the Defaulting
Partner, in which case the Partnership shall return such amount,
together with interest thereon at the Prime Interest Rate
calculated on a per diem basis (on a 360 day year) for the number
of days which lapsed between the date the Nondefaulting Partner
made its Capital Contribution and the date on which such sum is
returned. If a Nondefaulting Partner elects this option, then it
shall, for all purposes, be considered that the principal sum
returned to the Nondefaulting Partner was a loan to the Partnership
and not a Capital Contribution. In addition to receiving a return
of the above-described sum, the Nondefaulting Partner may in the
notice delivered pursuant to this Section 5.03(a), also give notice
that in the event the Defaulting Partner does not make the agreed
upon Capital Contribution, in full, within thirty (30) days
following the date of such notice (in which case the Nondefaulting
Partner shall also properly recontribute the principal sum returned
to it), the Nondefaulting Partner may deem such failure an Adverse
Act by the Defaulting Partner by giving such Defaulting Partner
notice to that effect.
(b) The Nondefaulting Partner may elect to advance directly
to the Partnership, as a loan to the Defaulting Partner, the amount
of Capital Contribution not made by the Defaulting Partner and the
loan shall bear interest at the per annum rate which is the lesser
of (i) the Prime Interest Rate plus two (2) percentage points, such
rate to be changed as often as the Prime Interest Rate changes, or
(ii) the maximum rate of interest permitted by Illinois law. As
long as any amount remains due with respect to any such loan, any
subsequent distributions made pursuant to this Agreement to which
the Defaulting Partner would otherwise be entitled shall be paid
directly to the Nondefaulting Partner, which distribution shall be
applied first to interest then due and then to principal until such
loan is paid in full. The payment of such a loan shall be secured
by the Defaulting Partner's Percentage Interest in the Partnership
and the Defaulting Partner hereby grants a security interest in
such Percentage Interest to the Nondefaulting Partner and hereby
appoints the Nondefaulting Partner as its attorney-in-fact with
full power and authority to prepare and execute any documents,
instruments and agreements including, but not limited to, any
financing statements, that may be necessary or appropriate to
perfect and continue such security interest in favor of the
Nondefaulting Partner. This power of attorney is coupled with an
interest and cannot be revoked. In the event such loan is not
repaid in full within one hundred twenty (120) days after it is
made, such nonpayment shall be deemed an Adverse Act by the
Defaulting Partner and the Nondefaulting Partner may exercise any
rights or remedies available hereunder or at law as in equity,
including the right to dissolve the Partnership pursuant to Section
15.
5.04. General.
(a) Except as otherwise provided in this Agreement, no
Partner shall demand or receive a return of its Capital Contribu-
tion unless agreed to by the Partners. Any and all Capital
Contributions returned to Partners shall be on an equal basis in
proportion to each Partner's Percentage Interest in the
Partnership. Under circumstances requiring a return of any Capital
Contributions, no Partner shall have the right to receive property
other than cash except as may be specifically provided herein.
(b) No Partner shall receive any interest, salary or draw
with respect to its Capital Contributions or its Capital Account or
for services rendered on behalf of the Partnership or otherwise in
its capacity as a Partner, except as otherwise provided in this
Agreement.
Section 6. Partnership Financing
6.01 Partnership Borrowings. The working capital and other
requirements of the Partnership which are not funded through the
earnings of the Partnership or through Capital Contributions made
pursuant to Sections 5.01 and 5.02 may be met by borrowings from
financial institutions or other Persons, in such amounts and upon
such terms and conditions as the Management Committee shall, from
time to time, deem appropriate.
6.02 Loans by Partners and Affiliates. No loans shall be made
to the Partnership by any Partner or an Affiliate of any Partner
other than pursuant to Section 5.03(b), without the prior consent
of all Partners, after full disclosure of the amount to be loaned,
the purpose of such financing, the interest rate and payment terms
offered, and the identification of any collateral to be pledged to
secure such loan. All Partners shall be given the opportunity to
participate in any such financing by loaning to the Partnership a
pro rata share of the amount to be financed in proportion to such
Partner's respective Percentage Interest in the Partnership at the
time of such financing; provided, however, that no Partner shall be
obligated to make any loan to the Partnership.
Section 7. Capital Accounts
7.01 Individual Capital Accounts. An individual Capital
Account shall be maintained for each Partner. The Capital Account
of each Partner shall consist of (a) the sum of: (i) cash
contributed by the Partner to the Partnership; (ii) the fair market
value of any property other than cash contributed by the Partner to
the Partnership; (iii) any Profits and any items in the nature of
income or gain allocated to the Partner pursuant to this Agreement;
and (iv) any other items required to be added thereto pursuant to
Regulation Section 1.704-1(b)(2)(iv), less (b) the sum of (i) the
amount of all cash distributions by the Partnership to the Partner;
(ii) the fair market value of any property other than cash
distributed by the Partnership to the Partner; (iii) any Losses and
any items in the nature of expenses, losses or deductions allocated
to the Partner pursuant to this Agreement, and (iv) any other items
required to be subtracted therefrom under Regulation Section 1.704-
1(b)(2)(iv).
7.02 Transfer of Capital Account. In the event of a permitted
sale or exchange of a Partnership Interest in the Partnership, the
Capital Account of the transferor shall become the Capital Account
of the transferee to the extent it relates to the transferred
Partnership Interest in accordance with Section 1.704-1(b)(2)(iv)
of the Regulations.
7.03 Manner of Maintaining Capital Accounts. The foregoing
provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b) and shall be interpreted and applied
in a manner consistent with such Regulations. If the Partnership
determines that the manner in which Capital Accounts are to be
maintained pursuant to the preceding provisions of his Section
should be modified in order to comply with Regulations Section
1.704-1(b), then notwithstanding anything to the contrary contained
in the preceding provisions of this Section 7, the method in which
Capital Accounts are maintained shall be so modified; provided,
however, that any change in the manner of maintaining Capital
Accounts shall not materially alter the economic agreement between
or among the Partners as set forth in this Agreement.
Section 8. Allocations
8.01 Profits. Profits for any fiscal year shall be allocated
fifty percent (50%) to Moorman and fifty percent (50%) to Red Oak.
8.02 Losses. Losses for any fiscal year shall be allocated
fifty percent (50%) to Moorman and fifty percent (50%) to Red Oak.
8.03 General.
(a) Except as otherwise provided in this Agreement, all items
of Partnership income, gain, loss, deduction, or any other
allocation not otherwise provided for shall be divided among the
Partners in the same proportion as they share Profits or Losses, as
the case may be, for the fiscal year.
(b) The Partners are aware of the income tax consequences of
the allocations made by this Section 8 and hereby agree to be bound
by the provisions of this Section 8 in reporting their shares of
Profits and Losses for income tax purposes.
(c) For purposes of determining the Profits, Losses, or any
other items allocable to any period, Profits, Losses and any such
other items as may determined on a daily, monthly or other basis,
shall be determined by the Management Committee using any
permissible method under Code Section 706 or any Regulations
thereof.
Section 9. Distributions
9.01 Distributable Cash. Except as provided in Section 15
hereof, relating to the liquidation and winding up of the
Partnership, and subject to the limitations of Sections 9.04 and
9.05, all distributions of cash, including Distributable Cash or
other property, shall be made, at such time or times as may be
determined by the Management Committee, fifty percent (50%) to
Moorman and fifty percent (50%) to Red Oak. Notwithstanding the
foregoing provision, the Partners agree that non-discretionary,
i.e., mandatory, distributions shall be made, from time to time, as
necessary to cover the Partners' income tax liabilities arising
from their proportionate share of the Partnership's gains and
Profits.
9.02 Distributions in Event of a Transfer. In the event a
Partnership Interest is transferred in accordance with the relevant
provisions of this Agreement relating to transfers, distributions
which are made on or before the date of a permitted transfer shall
be made to the transferor and all distributions thereafter shall be
made to the transferee, provided that proper notice of such
transfer has been delivered to the Partnership. Any attempt to
make a transfer which is not permitted under this Agreement shall
not give rise in any transferee to a right to receive any
distributions hereunder.
9.03 Amounts Withheld. All amounts withheld pursuant to the
Code or any provision of any state or local tax law with respect to
any payment or distribution by the Partnership to any Partners
shall be treated as amounts distributed to the Partners for
purposes of this Agreement.
9.04 Limitations Upon Distributions.
(a) No distributions or return of contributions shall be made
and paid if, after the distribution or return of contribution is
made either:
(i) the Partnership would be insolvent; or
(ii) the net assets of the Partnership would be less than
zero.
(b) The Management Committee may base a determination that a
distribution or return of contribution may be made under Section
9.04 in good faith reliance upon a balance sheet and profit and
loss statement of the Partnership represented to be correct by the
Person having charge of its books of account or certified by the
Accountants to fairly reflect the financial condition of the
Partnership.
Section 10. Related Party Transactions. The Partnership
may contract to purchase goods or services from any Partner or an
Affiliate of a Partner ("Interested Party Contracts"). All
Interested Party Contracts shall be negotiated, conducted and
handled in all respects on an arm's length basis and in good faith.
As of the date hereof the only Interested Party Contract is the
Management Agreement referred to in Section 11.
Section 11. Management Agreement. Simultaneously with the
execution of this Agreement, Xxxxxxx'x, Inc., which is an Illinois
corporation and a member of Xxxxxxx, and the Partnership shall
enter into a Management Agreement with respect to the day to day
operations of the Partnership which Management Agreement shall be
in the form of Exhibit A attached hereto.
Section 12. Accounting and Records
12.01 Accounting Method. The Partnership shall use a
method of accounting, as approved by the Partnership, in the
preparation of its financial records and for tax purposes and shall
keep its books and records accordingly.
12.02 Accounting Records. Complete and accurate business
and accounting records shall be maintained reflecting all costs and
expenses incurred, all charges made, all credits made and received,
and all income derived in connection with the operation of the
Partnership's business in accordance with GAAP consistently
applied. The Partnership's books and records shall be maintained
at the principal place of business of the Partnership and each
Partner shall have the right, at its sole expense, to inspect,
examine, copy and/or audit the Partnership's Company's books and
records during normal business hours.
12.03 Financial Statements; Audit. As soon as
practicable, but not later than thirty (30) days after the end of
each month, the Management Committee shall furnish each Partner
with an unaudited balance sheet and an unaudited statement of
income or loss for the month and year to date, all in reasonable
detail, setting forth in each case in comparative form the figures
for the corresponding period (or periods) of the previous fiscal
year.
The Management Committee shall annually and upon dissolution
under Section 15, appoint Accountants to examine the Partnership's
financial statements as of the end of such fiscal year or upon
dissolution and to render its opinion as to whether those financial
statements present fairly the financial position and results of
operations and statement of cash flow of the Partnership. Each
Partner shall be furnished with a copy of such audited financial
statements and the Accountants' opinion within ninety (90) days
after the end of each fiscal year of the Partnership or after
dissolution.
Each Partner shall have the right, at its sole expense, to
review and verify all charges made for services rendered or goods
sold to the Partnership by any Partner or any Affiliate of a
Partner. Upon the request of either Partner, the other shall
prepare and submit to the requesting Partner (but not more often
than semi-annually) a certification detailing and itemizing such
charges during such period of time as specified in the request and
verifying the truth, completeness and accuracy thereof
("Certification"). The review and verification may include audits
by such independent certified public accountants as the Partner
conducting the review deems advisable. Upon request, each Partner
or such Partner's Affiliate shall make all records relating to the
charges in question available to the Partner doing the review, or
its representatives, during normal business hours at such Partner's
or such Partner's Affiliate's principal place of business.
12.04 Fiscal Year. The fiscal year of the Partnership
shall end on December 31 each calendar year during the term of the
Partnership, unless otherwise unanimously agreed to by the Partners
or required by the Internal Revenue Service.
12.05 Tax Matters Partner and Tax Returns.
(a) Tax Matters Partner. Xxxxxxx is hereby designated "Tax
Matters Partner" for the Partnership and shall be so designated in
each Federal information return filed on behalf of the Partnership.
The Tax Matters Partner shall not be liable to the Partnership or
any other Partner for any act or omission on behalf of the
Partnership, which act or omission was within the scope of
authority conferred on the Tax Matters Partner by this Agreement,
unless such act or omission constituted fraudulent or willful
misconduct, was performed or omitted in bad faith or constituted
gross negligence or a violation of law. Within five (5) business
days of receipt, each Partner shall give to each other Partner
written notice of the first Partner's receipt from any taxing
authority of any notification of an audit or investigation of or
involving the Partnership or the reporting of Profits or Losses
thereof. The Tax Matters Partner shall keep the other Partners
fully advised of the progress of any audit and shall promptly
supply the other Partners with copies of any written communication
received from the Internal Revenue Service or any other taxing
authority relating to any audit within ten (10) days of receipt
thereof, and shall at least ten (10) days prior to submitting any
materials to the Internal Revenue Service or other taxing authority
provide such materials to the other Partners. Each Partner shall
have the right to participate in (i) any audit or other administra-
tive proceeding relating to the determination of income, gains,
Profits, Losses, deductions or credits at the Partnership level and
(ii) any material discussions with the Internal Revenue Service or
other taxing authority relating to Partnership tax issues. No
position will be taken with respect to material tax issues, no
statute of limitations will be extended, no protest or petition
related to any tax issue will be filed and no settlement or
compromise of any tax issue related to the Partnership will be made
without the consent of all affected Partners, which consent shall
not be unreasonably withheld.
(b) Tax Returns. Acting pursuant to instructions of the
Management Committee, the Tax Matters Partner shall cause income
and other required federal, state and local tax returns for the
Partnership to be prepared in a manner consistent with the
provisions of this Agreement and sent to each Partner for review at
least ten (10) business days prior to filing, and to be timely
filed with the appropriate authorities. The Tax Matters Partner
and all affected Partners shall consult and cooperate in good faith
to resolve any objections to the manner in which any such return
has been prepared and to make appropriate changes before the
deadline for timely filing (taking into account any available
extensions). Unless each affected Partner agrees otherwise, the
Tax Matters Partner shall also prepare, submit for review and file
any amendment to or request for administrative adjustment to such
tax returns that may be necessary to reflect material adjustments
by federal, state or local tax authorities to the valuation or tax
basis of any of the Assets or of any Partner's Interest in the
Partnership. Acting pursuant to instructions of the Management
Committee, the Tax Matters Partner shall make such elections as it
shall deem to be in the best interests of the Partnership and the
Partners. The cost of preparation of such returns shall be borne
by the Partnership.
(c) Projections and Reports. The Tax Matters Partner shall
cause to be provided to each Partner not later than April 15 of
each year information concerning the Partnership's projected
taxable Profits or Losses and each class of income, gain, loss,
deduction or credit (and the allocation thereof under the
provisions of this Agreement) which is relevant to reporting a
Partner's share of Partnership Profits, gain, Losses, deduction or
credit for purposes of Federal or state income tax. If any Partner
questions the method or amount of any tax allocation made pursuant
to Section 8 hereof, the Partners shall consult in good faith and
agree on the proper allocation. Information required for the
preparation of a Partner's income tax returns, i.e. a Form K-1,
shall be furnished to the Partners as soon as possible after the
close of the Partnership's fiscal year.
(d) Cooperation. The Tax Matters Partner shall, from time to
time, upon request of any Partner, reasonably cooperate with such
Partner on any tax matters relating to the Partnership.
12.06 Bank Accounts. All funds contributed or advanced by
the Partners or borrowed for the account of the Partnership and all
other revenues received as a result of the conduct of the
Partnership's business shall be deposited in the name of the
Partnership in an account (or accounts) to be established at such
bank or banks as the Management Committee shall approve from time
to time. The funds of the Partnership shall not be commingled with
the funds of any other Person. Checks, drafts and other types of
transfers may be drawn on such accounts by signature or signatures
of and authorized by those Persons designated, from time to time,
by the Management Committee.
Section 13. Transfers of Interest
13.01 Restrictions on Transfers. Except as expressly
permitted or required by this Agreement, no Partner shall, directly
or indirectly, in any manner, sell, assign, pledge, transfer,
encumber, hypothecate, exchange or otherwise dispose of, either for
value or otherwise, all or any part of its Partnership Interest or
cause, permit or recognize any sale, transfer, assignment,
encumbrance or other disposition, directly or indirectly, of any of
its interest in the Partnership, nor shall any such interest be
subject, directly or indirectly, to sale, transfer, assignment,
encumbrance, hypothecation, exchange or other disposition by
operation of law or agreement, without the prior written consent of
all Partners. Any such transfer or attempted transfer in violation
of the preceding sentence shall be null and void and shall not be
recognized by the Partnership for any purpose whatsoever.
13.02 Permitted Transfers.
(a) Notwithstanding the foregoing limitations, each Partner
shall have the right to transfer all (but not less than all) of its
Partnership Interest in the Partnership as described in this
Section 13.02 (a Partner so transferring such interest, a
"Transferring Partner").
(b) A Partner may transfer its Partnership Interest (i) to
any Affiliate of such Partner; (ii) to any other Person approved by
all of the Partners; or (iii) to any other Person in compliance
with the procedure outlined in Section 13.03.
(c) It shall be a condition precedent to any transfer
described in this Section 13 that: (i) the transferee shall, by an
instrument or document in form satisfactory to the Partnership and
its counsel, become a party to and assume and agree to be bound by
all provisions of this Agreement, including the provisions of this
Section 13, and to assume all obligations of the transferor Partner
with respect to this Agreement and the Partnership Interest being
transferred; (ii) unless otherwise unanimously agreed to by the
Partners, the Partnership shall have received, prior to the
transfer, an opinion of counsel acceptable to the Management
Committee that such transfer will not terminate the Partnership for
federal income tax purposes; (iii) such transferee shall pay or
make satisfactory arrangements to pay, in the opinion of the
Management Committee, all reasonable costs and expenses incurred by
the Partnership in connection with such transfer and (iv) in the
case of a transfer to a Partner's Affiliate, that the Transferring
Partner advises the other Partner(s) in writing of such transfer
within seven (7) days following such transfer.
(d) Upon the transfer of its Partnership Interest in
accordance with this Section, a Transferring Partner shall
thereupon cease to be a Partner and shall be relieved of liability
hereunder; its transferee shall thereupon be substituted in its
place hereunder, and all references herein to Partners shall
include such transferee, but no such transfer shall otherwise
affect the rights or obligations of any of the parties hereto.
(e) The Partners intend that any transfer permitted hereby
shall not result in a termination of the Partnership and,
notwithstanding, any "dissolution" of the Partnership under the
Act, the Partnership shall continue to hold the Partnership Assets
in accordance with the terms of this Agreement and there shall be
no liquidation or winding up of the Partnership hereunder.
13.03 Right of First Refusal.
(a) If a Partner desires to sell all or any portion of its
Partnership Interest in the Partnership (the "Selling Partner") to
a third party purchaser (which must be other than an Affiliate of
the Selling Partner), the Selling Partner shall obtain from a third
party purchaser a bona fide written offer to purchase such
interest, stating the terms and conditions upon which the purchase
is to be made and the consideration offered (the "Written Offer").
The Selling Partner shall give written notification to the other
Partner(s) ("Remaining Partner(s)") by certified mail or personal
delivery, of its intention to so transfer such interest by
furnishing to the Remaining Partners a copy of the Written Offer to
purchase such interest.
(b) The Remaining Partners and each of them shall, on a basis
pro rata to their Percentage Interest in the Partnership or on a
basis pro rata to the Percentage Interests of those Remaining
Partners exercising their right of first refusal, have the right to
exercise a right of first refusal to purchase all (but not less
than all) of the interest proposed to be sold by the Selling
Partner upon the same terms and conditions as stated in the Written
Offer by giving written notification to the Selling Partner, by
certified mail or personal delivery, of their intention to do so
within forty-five (45) days after receiving the Written Offer from
the Selling Partner. Failure of the Remaining Partners to so
notify the Selling Partner of their desire to exercise this right
of first refusal within said forty-five (45) day period shall
result in the termination of the right of the first refusal and the
Selling Partner shall be entitled to consummate the sale of its
interest in the Partnership, to such third party purchaser,
provided that the sale shall be consummated in accordance with the
Written Offer and within sixty (60) days following the expiration
of the aforesaid forty-five (45) day period.
In the event the Remaining Partners (or any one or more of the
Remaining Partners) give written notice to the Selling Partner of
their desire to exercise this right of first refusal to purchase
all of the Selling Partner's interest in the Partnership which the
Selling Partner desires to sell upon the same terms and conditions
as are stated in the aforesaid Written Offer, the Remaining
Partners shall have the right to designate the time, date and place
of closing, provided that the date of closing shall be within sixty
(60) days after written notification to the Selling Partner of the
Remaining Partner or Partner's election to exercise their right of
first refusal.
13.04 Effective Date of Sale. Any sale or transfer of
Partnership Interest in compliance with this Section 13 shall
become effective as of the date which is the later of (i) the last
day of the calendar month in which the Remaining Partners' consent
is given or (ii) the date on which the transferee complies with the
conditions set forth in Section 13.02(c).
13.05 Reasonableness of Restrictions. Each Partner
acknowledges and agrees that the restrictions on the transfer of
Partnership Interest set forth in this Section 13 are reasonable in
view of the Partnership's purpose and the relationship of the
Partners. Accordingly, such restrictions shall be specifically
enforceable.
13.06 Waiver of Partition. No Partner shall, either
directly or indirectly, take any action to require partition or
appraisement of the Partnership or of any of its assets or
properties or cause the sale of any Partnership Assets, and
notwithstanding any provisions of applicable law to the contrary,
each Partner (and his legal representatives, successors or assigns)
hereby irrevocably waives any and all rights to maintain any action
for partition or to compel any sale with respect to its Partnership
Interest, or with respect to any assets or properties of the
Partnership, except as expressly provided in this Agreement.
13.07 Covenant Not to Withdraw or Dissolve.
Notwithstanding any provision of the Act, each member hereby
covenants and agrees that the Partners have entered into this
Agreement based on their mutual expectation that all Partners will
continue as Partners and carry out the duties and obligations
undertaken by them hereunder and that, except as otherwise
expressly provided in Sections 1.04 and 15.01, no Partner shall
withdraw or retire from the Partnership, be entitled to demand or
receive a return of such Partner's Profits (or a bond or other
security for the return of such Profits), or exercise any power
under the Act to dissolve the Partnership without the unanimous
consent of the Partners.
Section 14. Additional Partners
From and after the date of the formation of the Partnership,
any Person acceptable to the Partners by their unanimous vote
thereof, shall become a Partner of the Partnership, either through
the issuance by the Partnership of a Partnership Interest to such
Person for such consideration as the Partners by their unanimous
vote shall determine, or as a transferee of a Partner's Partnership
Interest, or any portion thereof, subject to the terms and
conditions of this Agreement. No new Partners shall be entitled to
any retroactive allocation of Profits, Losses, income or expense
deductions incurred by the Partnership. The Management Committee
may, at their option, at the time a Partner is admitted, close the
Partnership books (as though the Partnership's tax year had ended)
or make pro rata allocations of Profits, Losses, income and expense
deductions for the Partners for that portion of the Partnership's
tax year in which a Partner was admitted in accordance with the
provisions of Code Section 706(d) and the Regulations promulgated
thereunder. In the event another Partner is added, a supplemental
agreement, in terms satisfactory to all Partners, shall be executed
by all Partners setting forth: (a) the amount of capital and the
allocation thereof among the Partners; (b) the percentages in which
the Partnership's Profits and Losses shall be thereafter shared or
borne; and (c) a statement that all Partners shall be bound by this
Agreement as amended by the supplemental agreement. Every new
Partner shall contribute to the Partnership in cash or property at
the time of its admission, its portion of the capital account, as
set forth in the supplemental agreement.
Section 15. Dissolution and Termination
15.01 Dissolution Events. The Partnership shall dissolve
and commence winding up and liquidation upon the first to occur of
any of the following ("Liquidating Events"):
(a) The occurrence of an Impasse, which persists for a period
of forty-five (45) days;
(b) A Partner electing to dissolve the Partnership by written
notice to the other Partners after a Partner so notified committed
or sustained an Adverse Act which Adverse Act is not remedied by
the Partner committing or sustaining the same within sixty (60)
days of such Partner receiving notice thereof from the other
Partner.
(c) The Partnership is dissolved by either Partner pursuant
to Section 1.04 hereof;
(d) The sale of all or substantially all of the Partnership
Assets;
(e) The unanimous written agreement of all Partners;
(f) The happening of any other event that makes it unlawful
or impossible to carry on the business of the Partnership;
(g) The death, retirement, resignation, expulsion, Event of
Bankruptcy or dissolution of a Partner or occurrence of any other
event which terminates the continued membership of a Partner in the
Partnership (a "Withdrawal Event"), unless the business of the
Partnership is continued by the written consent of all remaining
Partners within ninety (90) days after the Withdrawal Event and
there are at least two (2) remaining Partners.
(h) Any event that causes there to be only one Partner,
unless within ninety (90) days of such event there is admitted to
the Partnership one or more new Partners who, under the Act, have
the authority to and do consent to the continuation of the business
of the Partnership.
The Partners agree that, notwithstanding any provisions of the
Act, the Partnership shall not dissolve prior to the occurrence of
a Liquidating Event. If it is determined, by a court of competent
jurisdiction, that the Partnership has dissolved prior to the
occurrence of a Liquidating Event, the Partners agree to continue
the business of the Partnership without a winding up or liquidation
and to take any steps necessary to continue the Partnership
pursuant to the terms of this Agreement.
15.02 Winding Up and Distribution of Assets. Upon the
occurrence of a Liquidating Event, the Partnership shall continue
solely for the purposes of winding up its affairs in an orderly
manner, liquidation its assets, and satisfying the claims of its
creditors and Partners. Thereupon, no Partner shall take any
action which is inconsistent with, or not necessary to, or
appropriate for, winding up the Partnership's business and affairs.
The Management Committee shall be responsible for overseeing the
winding up and liquidation of the Partnership and shall take full
account of the Partnership's liabilities and Partnership Assets,
and the Partnership Assets shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds
therefrom, to the extent sufficient therefor, shall be applied and
distributed in the following order:
(a) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than
Partners or their Affiliates, including expenses of liquidation and
winding up;
(b) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to Partners and their
Affiliates; and
(c) The balance, if any, to the Partners in accordance with
their Capital Accounts, after giving effect to all contributions,
distributions and allocations for all periods.
Upon completion of the winding up, liquidation and
distribution of the Partnership Assets, the Partnership shall be
deemed terminated. The Management Committee shall comply with all
requirements of applicable law pertaining to the winding up of the
affairs of the Partnership and the final distribution of its
Partnership Assets.
15.03 Return of Contribution Non-Recourse to Other
Partners. Except as provided by law or as expressly provided in
this Agreement, upon dissolution, each Partner shall look solely to
the Partnership's Assets for the return of its Capital
Contribution. If the Partnership's Assets remaining after the
payment or discharge of the debts and liabilities is insufficient
to return the Capital Contribution of one or more Partners, such
Partner or Partners shall have no recourse against any other
Partner, except as otherwise provided by law.
15.04 Reserves. In the discretion of the Management
Committee, a prorata portion of the distributions that would
otherwise be made to the Partners pursuant to Section 15.02(c) may
be withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership,
provided that such withheld amounts shall be distributed to the
Partners as soon as practicable.
15.05 Deficit Restoration Provisions and Compliance with
Timing Requirements of Regulations. In the event the Partnership
or a Partner's interest in the Partnership is "liquidated" within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), then (a)
distributions shall be made pursuant to Section 15.02 to the
Partners who have positive Capital Accounts in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(2), and (b) if any
Partner's Capital Account has a deficit balance (after giving
effect to all contributions, distributions and allocations for all
taxable years, including the year during which such liquidation
occurs), such Partners shall contribute to the capital of the
Partnership the amount necessary to restore such deficit balance to
zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3)
for the last day of the taxable year of the Partnership in which
the liquidation occurs or, if later, the date which is ninety (90)
days after the date of such liquidation. The proceeds of such
restoration payments shall be distributed as provided in Section
15.02.
Section 16. Representations and Warranties
Xxxxxxx, with respect to itself, represents and warrants to
Red Oak, and Red Oak, with respect to itself, represents and
warrants to Xxxxxxx:
(a) Xxxxxxx and Red Oak are each limited liability companies,
each of which is validly existing and in good standing under the
laws of its jurisdiction of organization, and each has the power to
own its assets and properties, carry on its business as now
conducted, and execute, deliver and perform this Agreement.
(b) Its execution, delivery and performance of this Agreement
has been duly authorized by all necessary company action, and is
valid and binding upon and enforceable against it in accordance
with the respective terms hereof. Neither the execution and
delivery of this Agreement nor the performance of this Agreement
will conflict with, result in a breach of, accelerate any
obligations under or give rise to a right of termination under the
terms of any agreement or instrument to which it is a party or by
which any of its assets or properties are bound or affected, or
will conflict with or violate any judgment, decree, order, statute
or other provision of law, or result in any charge, claim,
encumbrance or restriction on any of its assets or properties, or
conflict with any terms or provisions of its Articles of
Organization or Agreement.
(c) Without limiting the generality of the foregoing, any
required governmental approval of and permissions for its
execution, delivery and performance of this Agreement have been
duly obtained.
Section 17. General Provisions
17.01 Inconsistent Actions. Neither Partner shall take
any action, as Partners of the Partnership, whether permitted by
the laws of the State of Illinois or otherwise, inconsistent with
the terms of this Agreement.
17.02 Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the Partners with respect to
the transactions contemplated by this Agreement and supersedes all
prior agreements and understandings between the Partners relating
to the subject matter of this Agreement.
17.03 Applicable Law. This Agreement and its
interpretation shall be governed exclusively by its terms and by
the laws of the State of Illinois, and specifically the Act.
17.04 Severability. The unenforceability, invalidity, or
illegality of any provision above shall not affect or impair any
other provision or render it unenforceable, invalid or illegal.
17.05 Interpretation. Whenever used in this Agreement,
unless the context clearly indicates otherwise, the use of the
singular includes the plural and vice versa; and the use of the
neuter or any gender is applicable to any other gender or the
neuter. The captions and the table of contents, if any, are for
convenience only and shall not affect the interpretation or
construction of this Agreement.
17.06 Incorporation by Reference. Every exhibit, schedule
and other appendix attached to this Agreement and referred to
herein is hereby incorporated in this Agreement by reference.
17.07 Waiver. A Partner's failure to enforce at any time
or for any period of time any provision of this Agreement or to
exercise any right or remedy does not constitute a waiver of such
provision, right or remedy, or prevent such party thereafter from
enforcing any or all provisions and exercising any and all rights
and remedies. The exercise of any right or remedy does not
constitute an election or prevent the exercise of any or all rights
or remedies otherwise available.
17.08 Expenses and Costs. Each Partner shall pay its own
expenses, incurred by or on behalf of it and in connection with the
authorization, preparation and signing of this Agreement,
including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants.
17.09 Notice. Unless otherwise expressly provided, any
notice, demand, request, consent, approval or communication that a
Partner desires or is required to give to the other Partner (or any
other Person) hereunder must be in writing and shall be deemed
properly delivered and received: (i) on the date delivered if
delivered in person; (ii) three (3) business days after being
deposited in the U.S. mail, if sent by certified mail, return
receipt requested, postage prepaid; (iii) on the day received if
sent by facsimile or telefax transmission; and (iv) one (1)
business day after being properly delivered to a recognized
guaranteed overnight courier (e.g. Federal Express), with all
charges prepaid or billing thereof properly arranged to sender.
All such notices shall be addressed to the Partner at the address
set forth below or such other address as such Partner may designate
by written notice in accordance with this provision:
If to Xxxxxxx:
Xxxxxxx'x Quality Feeders, LLC
0000 Xxxxx 00xx Xxxxxx
X.X. Xxx X0
Xxxxxx, Xxxxxxxx 00000-0000
ATTENTION: Xxxxxxx X. Xxxxxx, Manager
If to Red Oak:
Red Oak Feeders, L.C.
0000 Xxxxxxxx Xxxxx
XX Xxx 000
Xxx Xxx, Xxxx 00000
ATTENTION: Xxxxxx Xxxxxxxxx, President
If to the Partnership:
To all current members of the Management Committee.
17.10 Amendment. No amendment, modification, termination
or waiver of this Agreement or any provision thereof shall be
effective unless made in writing and signed by each Partner.
17.11 Indemnification. The Partnership shall indemnify,
and hold each Partner and each of its Affiliates harmless against,
to the full extent permitted by law, any loss, damage, cost or
expense (including court costs and reasonable attorney fees) which
such Partner or such Affiliates may sustain or incur by reason of
any claim, demand, suit or recovery by any Person or Entity (other
than such Partner or an Affiliate of such Partner) arising or
allegedly arising out of the Partnership's business, including the
Partner's management of the Partnership or the Partners' acts or
omissions in connection with the management of the Partnership.
17.12 Binding Effect. Unless otherwise expressly 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 legal representatives, successors,
transferee and assigns.
17.13 Counterparts. This Agreement may be signed in
several counterparts, including a photocopy or facsimile thereof,
each of which, including the signature thereon, shall be an
original and all of which together shall constitute one and the
same agreement.
17.14 Further Action. Each Partner agrees to perform all
further acts and execute, acknowledge and deliver any documents
which may be reasonably necessary, appropriate or desirable to
carry out the provisions of this Agreement.
IN WITNESS WHEREOF, the Partners hereto have caused their
signatures or the signatures of their duly authorized
representatives, to be set forth below as of the day and year first
above written.
PARTNERS:
Xxxxxxx'x Quality Feeders, LLC Red Oak Feeders, L.C.
By: _________________________ By:___________________________
Its Manager Its President
