EXHIBIT 10.3
LIMITED PARTNERSHIP AGREEMENT
OF
OCWEN PARTNERSHIP, L.P.
THIS LIMITED PARTNERSHIP AGREEMENT (this "Agreement") OF OCWEN PARTNERSHIP,
L.P. (the "Partnership"), is made and entered into as of the 3rd day of
March, 1997, by and between OCWEN GENERAL, INC., a Virginia corporation (the
"General Partner"), and OCWEN LIMITED, INC., a Virginia corporation (the
"Limited Partner") (collectively, the "Partners" and individually, a "Partner").
NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements between the parties hereto, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
FORMATION OF PARTNERSHIP
1.1 Name. The name of the Partnership shall be Ocwen Partnership,
L.P.
1.2 Term. The Partnership shall continue until December 31, 2050,
unless sooner terminated as hereinafter provided or by operation of law.
1.3 Purpose. The purposes of the Partnership are to (a) own, hold,
sell, lease, transfer, exchange, and operate real estate-related assets and
(b) transact any and all other lawful business for which the Partnership may be
organized under Virginia law that is incident, necessary, and appropriate to
accomplish the foregoing.
1.4 Specified Office. The specified office and place of business of
the Partnership, and where the records of the Partnership shall be kept, shall
be 0000 Xxxx Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxx Xxxxx, Xxxxxxx 00000.
1.5 Registered Agent. The initial registered agent shall be Xxxxxx
X. Xxxxxx, III, who is a resident of Virginia and a member of the Virginia State
Bar, and whose business address is the Riverfront Plaza, East Tower, 000 Xxxx
Xxxx Xxxxxx in the City of Richmond.
ARTICLE II
PERCENTAGE INTERESTS AND CAPITAL CONTRIBUTIONS
2.1 Percentage Interests and Initial Capital Contributions. Each
Partner's address and percentage interest in the Partnership ("Percentage
Interest") are as follows:
Percentage
Partner Interest
------- ----------
General Partner: 1%
Ocwen General, Inc.
0000 Xxxx Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Limited Partner: 99%
Ocwen Limited, Inc.
0000 Xxxx Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
The General Partner's initial contribution to the capital of the
Partnership shall be $1. The Limited Partner's initial contribution to the
capital of the Partnership shall be $99.
2.2 Additional Contributions. As and when the Partnership shall
require funds to meet the costs and expenses of all business activities with
respect to the Partnership, the General Partner shall contribute to the
Partnership such required funds as may be determined by the General Partner.
The Limited Partner shall have no obligation to contribute any funds pursuant to
this Section 2.2.
ARTICLE III
MANAGEMENT
3.1 Authority of the General Partner; Indemnification. The overall
management and control of the business and affairs of the Partnership shall be
vested in the General Partner. Except as otherwise provided in this Agreement,
all decisions concerning the management of the business and affairs of the
Partnership and its assets shall be made exclusively by the General Partner, all
in accordance with the objects and purposes of the Partnership set forth in
Section 1.3. The General Partner shall be authorized to execute documents and
take actions on behalf of the Partnership, which shall be binding on the
Partnership and on which third parties shall be entitled to rely. The
Partnership shall indemnify each Partner for any costs and/or expenses incurred
in connection with actions taken in good faith on behalf of the Partnership.
2
ARTICLE IV
DISTRIBUTIONS; REDEMPTIONS
4.1 Definition of Net Cash Flow. As used herein, the term "Net Cash
Flow" for any period shall mean the excess, if any, of (i) the cash receipts of
the Partnership (other than from the sale of the Partnership's assets upon
liquidation) and amounts withdrawn from reserves, over (ii) disbursements of
cash by the Partnership (other than distributions to Partners and amounts paid
pursuant to Section 4.3 hereof), including the payment of operating expenses,
debt-service on any mortgage or deed of trust encumbering the Partnership's
property, capital expenditures, and such amounts as may be required by the
Partnership (as reasonably determined by the General Partner) to pay Partnership
expenses and to maintain reserves and working capital.
4.2 Distribution of Net Cash Flow. Net Cash Flow shall be
distributed on a quarterly basis (or, at the election of the General Partner, on
a more frequent basis) among the Partners at such time or times as shall be
determined by the General Partner in accordance with their respective Percentage
Interests.
4.3 Distributions upon Liquidation. (a) Upon liquidation of the
Partnership, after payment of, or adequate provision for, debts and obligations
of the Partnership, including any Partner loans, any remaining assets of the
Partnership shall be distributed to all Partners with positive Capital Accounts
(as defined in Section 5.1 hereof) in accordance with their respective positive
Capital Account balances. For purposes of this Section 4.3(a), the Capital
Account of each Partner shall be determined (i) after all adjustments made in
accordance with Article V and Section 4.2 hereof resulting from Partnership
operations and from all sales and dispositions of all or any part of the
Partnership's assets. Any distributions pursuant to this Section 4.3 shall be
made by the end of the Partnership's taxable year in which the liquidation
occurs (or, if later, within 90 days after the date of the liquidation). To the
extent deemed advisable by the General Partner, appropriate arrangements
(including the use of a liquidating trust) may be made to assure that adequate
funds are available to pay any contingent debts or obligations of the
Partnership.
(b) If the General Partner has a negative balance in its Capital
Account following a liquidation of the Partnership, as determined after taking
into account all Capital Account adjustments in accordance with Article V and
Section 4.2 hereof resulting from Partnership operations and from all sales and
dispositions of all or any part of the Partnership's assets, the General Partner
shall contribute to the Partnership an amount of cash equal to the negative
balance in its Capital Account and such cash shall be distributed by the
Partnership to creditors, if any, and then to the Limited Partner in accordance
with Section 4.3(a). Such contribution by the General Partner shall be made by
the end of the Partnership's taxable year in which the liquidation occurs (or,
if later, within 90 days after the date of the liquidation).
4.4 Redemption of Portion of Partnership Interests. If Ocwen Asset
Investment Corp., the parent corporation of the General Partner and the
Limited Partner (the "Company"), decides to securitize mortgage loans and/or
leases of real estate through the issuance of collateralized mortgage
obligations, each of the General Partner and the Limited Partner has the
right to redeem a portion of its interest in the Partnership (each, a
"Partnership Interest") in exchange for the mortgage loans and/or leases to
be securitized. The portion of a Partnership Interest redeemed pursuant to
this Section will be determined based on the fair market value of the
mortgage loans and/or leases distributed to the General Partner or Limited
Partner. Such fair market value will be determined by the General Partner,
but will be subject to the review of the "Independent Directors" of the
Company.
For Purposes of the Section, the term "Independent Directors" means
members of the Company's Board of Directors who, within the two years prior
to the date of this Agreement, have not owned an interest in, been employed
by, been an officer or director of, performed services for, or had any
material business or professional relationship with Ocwen Capital Corporation
or its affiliate.
3
ARTICLE V
CAPITAL ACCOUNTS; PROFITS AND LOSSES
5.1 Capital Accounts. The General Partner, on behalf of the
Partnership, shall establish and maintain, or cause to be established and
maintained, a capital account ("Capital Account") for each Partner in accordance
with the rules described in section 1.704-1(b)(2)(iv) of the Treasury
regulations (the "Regulations") promulgated under the Internal Revenue Code of
1986, as amended (the "Code").
5.2 Definition of Profit and Loss. "Profit" and "Loss" and any items
of income, gain, expense, or loss referred to in this Agreement shall be
determined in accordance with federal income tax accounting principles, as
modified by Regulations section 1.704-1(b)(2)(iv), except that Profit and Loss
shall not include items allocable pursuant to Section 5.4, 5.5, or 5.6 hereof.
All allocations of income, Profit, gain, Loss, and expense (and all items
contained therein) for federal income tax purposes shall be identical to all
allocations of such items set forth in this Article V, except as otherwise
required by section 704(c) of the Code and Regulations section 1.704-1(b)(4).
5.3 Allocation of Profit and Loss. Except as otherwise provided in
this Article V, Profit and Loss of the Partnership shall be allocated among the
Partners in accordance with their respective Percentage Interests.
5.4 Minimum Gain Chargeback. Notwithstanding any provision to the
contrary, (i) any expense of the Partnership that is a "nonrecourse deduction"
within the meaning of Regulations section 1.704-2(b)(1) shall be allocated in
accordance with the Partners' respective Percentage Interests, (ii) any expense
of the Partnership that is a "partner nonrecourse deduction" within the meaning
of Regulations section 1.704-2(i)(2) shall be allocated in accordance with
Regulations section 1.704-2(i)(1), (iii) if there is a net decrease in
Partnership Minimum Gain (as hereinafter defined) within the meaning of
Regulations section 1.704-2(f)(1) for any Partnership taxable year, items of
gain and income shall be allocated among the Partners in accordance with
Regulations section 1.704-2(f) and the ordering rules contained in Regulations
section 1.704-2(j), and (iv) if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain (as hereinafter defined) within the meaning of Regulations
section 1.704-2(i)(4) for any Partnership taxable year, items of gain and income
shall be allocated among the Partners in accordance with Regulations section
1.704-2(i)(4) and the ordering rules contained in Regulations section
1.704-2(j). A Partner's "interest in partnership profits" for purposes of
determining its share of the nonrecourse liabilities of the Partnership within
the meaning of Regulations section 1.752-3(a)(3) shall be such Partner's
Percentage Interest. "Partnership Minimum Gain" shall have the meaning set
forth in Regulations section 1.704-2(d). A Partner's share of Partnership
Minimum Gain shall be determined in accordance with Regulations section
1.704-2(g)(1). "Partner Nonrecourse Debt Minimum Gain" shall have the meaning
set forth in Regulations section 1.704-2(i). A Partner's share of Partner
Nonrecourse Debt Minimum Gain shall be determined in accordance with Regulations
section 1.704-2(i)(5).
4
5.5 Qualified Income Offset. If the Limited Partner receives in any
taxable year an adjustment, allocation, or distribution described in
subparagraph (4), (5), or (6) of Regulations section 1.704-1(b)(2)(ii)(d) that
causes or increases a negative balance in such Partner's Capital Account that
exceeds the sum of such Partner's shares of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as determined in accordance with Regulations
sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income
and gain in an amount and manner sufficient to eliminate such negative Capital
Account balance as quickly as possible as provided in Regulations section
1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of income or gain
to the Limited Partner in accordance with this Section 5.5, to the extent
permitted by Regulations section 1.704-1(b) and Section 5.6 hereof, items of
expense or loss shall be allocated to such Partner in an amount necessary to
offset the income or gain previously allocated to such Partner under this
Section 5.5.
5.6 Capital Account Deficits. Loss shall not be allocated to the
Limited Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect items described in
Regulations sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.6, to the extent permitted by
Regulations section 1.704-1(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to such Partner under
this Section 5.6.
ARTICLE VI
TRANSFERS; TERMINATION
6.1 Transfers. Partnership Interests may not be assigned in
whole or in part.
5
Any transfer of a Partnership Interest shall be void AB INITIO.
6.2 Termination. (a) The Partnership shall terminate upon the
first to occur of any of the following events or dates:
(i) in accordance with Section 1.2 above;
(ii) by written agreement of the Partners;
(iii) by the sale or other disposition of all or
substantially all of the assets of the
Partnership;
(iv) the withdrawal, removal, bankruptcy, or termination
of the General Partner unless, within 90 days
after such event, the Partners agree in writing to
continue the business of the Partnership and to
appoint another general partner;
(v) the entry of a decree of judicial dissolution; or
(vi) the automatic cancellation of the Partnership's
certificate of limited partnership due to
nonpayment of the annual registration fee.
6
(b) Upon termination of the Partnership under Section 6.2(a),
the Partnership shall discharge the obligations and pay the indebtedness of the
Partnership, or provide therefor, and distribute the balance, if any, of the
assets of the Partnership to the Partners as set forth in Section 4.3. After
the foregoing has been accomplished, it shall be deemed that the Partnership has
been liquidated and this Agreement shall terminate and no Partner shall have any
further rights or obligations hereunder. The liquidation of the Partnership and
the termination of the business and affairs of the Partnership shall be
conducted by the General Partner. During such period, the business and affairs
of the Partnership shall be conducted so as to maintain and preserve the assets
of the Partnership in a manner consistent with the liquidation of the
Partnership.
ARTICLE VII
BOOKS, RECORDS, AND ACCOUNTING
7.1 Fiscal and Taxable Year. The fiscal and taxable year of the
Partnership shall be the calendar year.
7.2 Method of Accounting. The General Partner shall keep, or cause
to be kept, full and accurate records of all transactions of the Partnership in
accordance with a method of accounting that is (i) permissible under the Code
and (ii) agreed to by the Partners.
7.3 Books and Records. All books and records of the Partnership
shall, at all times be maintained at the principal office of the Partnership or
at such other place as shall be determined by the General Partner.
7.4 Federal Tax Returns. The General Partner shall prepare, or cause
to be prepared, at the expense of the Partnership, a federal information tax
return in compliance with the provisions of the Code, and any required state and
local tax returns for the Partnership for each taxable year of the Partnership.
7.5 Tax Return Information. The General Partner shall cause to be
delivered to the Limited Partner such information as shall be necessary for the
preparation by the Limited Partner of its federal, state and local income and
other tax returns.
7.6 Tax Matters Partner. The General Partner shall be the Tax
Matters Partner of the Partnership within the meaning of section 6231 of the
Code. All elections required or permitted to be made by the Partnership under
the Code shall be made by the General Partner in its sole discretion.
7
ARTICLE VIII
GENERAL
8.1 Notice. All notices, instructions, requests, demands or other
communications that are required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when delivered by hand or
when deposited in the United States Mail, by registered or certified mail,
return receipt requested, postage prepaid to the addresses set forth in Article
II or at such different address as shall be specified by notice given in the
manner described herein.
8.2 Applicable Law. This Agreement and the obligations of the
parties hereunder shall be interpreted, construed, and enforced in accordance
with the laws of the Commonwealth of Virginia.
8.3 Entire Agreement; Amendments. This Agreement contains the
entire agreement among the parties hereto relative to the operation of the
Partnership. No variations, modifications, or changes to or of this Agreement
shall be binding upon a party unless set forth in a document duly executed by
or on behalf of such party. Section 6.1 hereof shall not be amended unless
and until persons other than the General Partner and the Limited Partner are
admitted as partners of the Partnership.
8.4 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
8.5 Counterparts. This Agreement may be executed in counterparts and
as so executed shall constitute one Agreement.
8.6 Captions. Captions and headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provisions hereof.
8.7 Attorney's Fees. In the event of any litigation between the
Partners arising out of this Agreement or relating to the Partnership, the
prevailing party shall be entitled to recover from the nonprevailing party its
reasonable attorney's fees and costs at the trial and all appellate levels.
8.8 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 heirs, legatees, legal
representatives, and permitted successors, transferees, and assigns.
8
IN WITNESS WHEREOF, each of Ocwen General, Inc. and Ocwen Limited,
Inc. has caused this Agreement to be executed by its duly authorized officer or
representative as of the date first above written.
GENERAL PARTNER:
OCWEN GENERAL, INC.,
a Virginia corporation
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
LIMITED PARTNER:
OCWEN LIMITED, INC.,
a Virginia corporation
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
9
