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EXHIBIT 2.1
LIMITED PARTNERSHIP AGREEMENT
AMERICAN RETIREMENT COMMUNITIES, L.P.
THIS LIMITED PARTNERSHIP AGREEMENT is made and entered into as of the
7th day of February, 1995, by and among American Retirement Communities, LLC, a
Tennessee limited liability company, as the general partner, and those persons
whose names and addresses are listed on Exhibit A hereto as limited partners and
the other persons who may become limited partners under the terms of this
Agreement, as the limited partners.
W I T N E S S E T H:
WHEREAS, the Partners (as hereinafter defined) desire to enter into
this Agreement for the purpose of establishing a limited partnership (the
"Partnership") to invest in, acquire, own, develop, construct, hold, operate,
manage and dispose of, directly or indirectly, adult living retirement
communities and similar or related facilities or businesses; and
WHEREAS, it is contemplated that the Partnership may acquire the
outstanding shares of stock of American Retirement Corporation, and certain debt
and equity interests in limited partnerships in which American Retirement
Corporation has a direct or indirect interest, in exchange for additional
limited partnership interests in the Partnership;
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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I. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth below (which shall be equally applicable to the singular and plural forms
of the terms so defined).
1.1 The term "Act" shall mean the Tennessee Revised Uniform Limited
Partnership Act, being Sections 61-2-101, et seq of the Tennessee Code
Annotated, as the same may be amended from time to time.
1.2 The term "Affiliate" shall mean (i) any Person directly or indirectly
controlling, controlled by, or under common control with the Person in question,
(ii) any Person owning or controlling 20% or more of the outstanding voting
securities of the Person in question, (iii) any manager, governor, officer or
director of the Person in question and (iv) the spouse or child, or the spouse
of a child, of any Person described in the foregoing clauses of this Section
1.2.
1.3 The term "Affiliated Partnerships" shall mean (a) Fort Austin Limited
Partnership, a Texas limited partnership, (b) Fort Austin Associates Limited
Partnership, a Texas limited partnership, (c) Xxxxxx Court Terrace, L.P., a
Tennessee limited partnership, and (d) Trinity Towers Limited Partnership, a
Tennessee limited partnership.
1.4 The term "Agreement" shall mean this Agreement of Limited Partnership,
as amended from time to time, which Agreement shall also be the agreement of
limited partnership among the Partners.
1.5 The term "Applicable Percent" shall be eight percent (8%) per annum in
calendar year 1995, nine percent (9%) per annum in calendar year 1996 and ten
percent (10%) per annum in calendar year 1997 and each calendar year thereafter.
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1.6 The term "ARC" shall mean American Retirement Corporation, a Tennessee
corporation.
1.7 The term "ARCLLC" shall mean American Retirement Communities, LLC, a
Tennessee limited liability company.
1.8 The term "Bankruptcy" with respect to any Person shall mean the
adjudication of bankruptcy, declaration of insolvency, or the assignment for the
benefit of creditors of or by such person, the subjection of any part or all of
the property of such Person to the control and direction of a receiver, which
receivership is not dismissed within sixty (60) days of such receiver's
appointment, or the filing by such person of a petition for relief under any
federal or other bankruptcy or other insolvency law or for an arrangement with
creditors.
1.9 The term "Budgets" shall have the meaning provided in Section 7.1(a)
hereof.
1.10 The term "Capital Account" shall mean the financial account to be
established and maintained by the Partnership for each Partner as computed from
time to time in accordance with Section 4.3 of this Agreement.
1.11 The term "Capital Transaction" shall mean (a) a sale, condemnation or
other final disposition of any of the properties of the Partnership or any of
its Subsidiaries, (b) an initial financing of any property of the Partnership or
any of its Subsidiaries, or a refinancing of all or a portion of any
indebtedness secured by any of such properties, or (c) the receipt of insurance
proceeds or other damage recoveries by the Partnership in respect of any
property of the Partnership or any of its Subsidiaries (excluding, in any case,
the proceeds of business interruption or similar insurance of the Partnership).
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1.12 The term "Certificate" shall mean the Certificate of Limited
Partnership of American Retirement Communities, L.P. as filed with the Secretary
of State of Tennessee, as amended from time to time.
1.13 The term "Code" shall mean the United States Internal Revenue Code of
1986, as the same may be amended from time to time, and any successor thereto.
1.14 The term "Contribution Account" shall mean a financial account to be
maintained by the Partnership for each Partner, which account shall be credited
(increased) by the amount of cash or property actually contributed by such
Partner to the Partnership from time to time pursuant to Article IV of this
Agreement (excluding the LEAAF Notes). The balance of each Partner's
Contribution Account shall be debited (reduced) by the amounts distributed to
such Partner from time to time pursuant to Section 6.2(d) of this Agreement.
1.15 The term "Effective Date" means February 7, 1995.
1.16 The term "General Partner" shall mean ARCLLC and any successor(s) as
general partner in compliance with Sections 11.2, 11.6 or 11.7 of this
Agreement.
1.17 The term "General Partner's Subordinated Interest" shall mean those
distributions to the General Partner constituting twenty percent (20%), subject
to adjustment as provided in Section 15.4 hereof, of the total distributions
specified in Section 6.1(c), Section 6.2(e) and Section 12.2(d) representing
distributions unrelated to any capital contributions by the General Partner.
1.18 The term "LEAAF Contribution Account" shall mean a financial account
to be maintained by the Partnership for each LEAAF Partner pursuant to Section
4.2 hereof, which account shall initially be in an amount equal to the
outstanding principal amount of the LEAAF
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Notes contributed to the Partnership by such LEAAF Partner, and shall be debited
(reduced) by amounts distributed to such LEAAF Partner pursuant to Sections
6.2(c), 6.3 and 12.2(b) of this Agreement.
1.19 The term "LEAAF Notes" shall mean, collectively, those certain
non-negotiable subordinated promissory notes dated October 31, 1994, due
December 31, 2001, in the aggregate original principal amount of $10,000,000,
issued by Fort Austin Limited Partnership to various investors.
1.20 The term "LEAAF Partners" shall mean those Limited Partners (if any)
that have received LEAAF Partnership Interests in the Partnership pursuant to
Section 4.2 hereof in exchange for capital contributions of the LEAAF Notes, but
only in such capacity.
1.21 The term "LEAAF Partnership Interests" shall mean the special
redeemable preferred limited partnership interests (if any) in the Partnership
received by holders of the LEAAF Notes in exchange for their LEAAF Notes which
are contributed to the Partnership pursuant to Section 4.2 hereof, but shall not
include the Partnership Interest (if any) received by such Partners in exchange
for such LEAAF Notes and all other rights and claims related to the LEAAF Notes,
which rights and claims will be surrendered in connection with the contribution
of their LEAAF Notes pursuant to Section 4.2 hereof.
1.22 The term "LEAAF Return" shall mean a sum equal to fifteen percent
(15%) per annum, simple interest, on the outstanding balance of the LEAAF
Contribution Account of each LEAAF Partner from time to time during the period
to which the LEAAF Return relates, cumulative to the extent not distributed in
any given Year.
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1.23 The term "Limited Partners" shall mean the Persons (including
substituted Limited Partners and LEAAF Partners) who are, from time to time,
admitted to the Partnership as limited partners (pursuant to the provisions of
the Act and of this Agreement) and whose names, business or residence addresses,
the amount of their original capital contributions and capital commitments and
their Percentage Interests appear on Exhibit A to this Agreement, as amended
from time to time.
1.24 The term "Limited Partners Committee" shall mean the committee
referred to in Section 7.2 hereof.
1.25 The term "Minimum Gain" shall mean the amount determined by (a)
computing for each Nonrecourse Liability of the Partnership any gain the
Partnership would realize if it disposed of the property subject to that
liability for no consideration other than full satisfaction of the liability and
(b) aggregating the separately computed gains, increased by any minimum gain
assigned to the Partnership from a Subsidiary pursuant to Regulation section
1.704-2(k). If, pursuant to Regulations sections 1.704-1(b)(2)(iv)(d) or
1.704-1(b)(2) (iv)(f), Partnership property is properly reflected on the books
of the Partnership at a value different from the adjusted tax basis of such
property, the calculation of Minimum Gain pursuant to the preceding sentence
shall be made by reference to such book value.
1.26 The term "Net Capital Gain" shall mean, for each Year, the excess of
the Partnership's gains realized from sales or exchanges of capital assets over
the losses realized during such Year from such sales or exchanges and expenses
incurred in connection with the transactions, excluding all capital gains or
losses which are specially allocated pursuant to Section 5.5 hereof. For a Year
in which "section 1231 gains" exceed "section 1231 losses," as those
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terms are defined in section 1231(a)(3) of the Code, such gains and losses from
sales and exchanges of property used in the trade or business shall be treated
as gains and losses from sales or exchanges of capital assets and shall be
included in the determination of Net Capital Gain. For a Year in which "section
1231 gains" do not exceed "section 1231 losses," such gains and losses from
sales and exchanges of property used in the trade or business shall not be
treated as gains and losses from sales or exchanges of capital assets and shall
not be included in the determination of Net Capital Gain.
1.27 The term "Net Capital Gain Available for General Allocation" shall
mean, for each Year, the amount of Net Capital Gain remaining (if any) after
allocation of Net Capital Gain pursuant to Section 5.2 hereof.
1.28 The term "Net Capital Loss" shall mean, for each Year, the excess of
the Partnership's losses realized from sales or exchanges of capital assets and
expenses incurred in connection with the transactions over gains realized during
such Year from such sales and exchanges, excluding all capital gains or losses
which are specially allocated pursuant to Section 5.5 hereof. For a Year in
which "section 1231 gains" exceed "section 1231 losses," as those terms are
defined in section 1231(a)(3) of the Code, such gains and losses from sales and
exchanges of property used in the trade or business shall be treated as gains
and losses from sales or exchanges of capital assets and shall be included in
the determination of Net Capital Loss. For a Year in which "section 1231 gains"
do not exceed "section 1231 losses," such gains and losses from sales and
exchanges of property used in the trade or business shall not be treated as
gains and losses from sales or exchanges of capital assets and shall not be
included in the determination of Net Capital Loss.
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1.29 The term "Net Cash Flow From Operations" shall mean, with respect to
the Year or period since the last distribution of Net Cash Flow From Operations,
the excess of
(a) the sum of
(i) all cash receipts from operations (excluding capital
contributions, loan proceeds and proceeds from Capital
Transactions), provided that the General Partner, with the
consent of the Limited Partners Committee, may include all
or any portion of the proceeds of a designated Capital
Transaction in the determination of Net Cash Flow From
Operations,
(ii) proceeds of business interruption insurance, and
(iii) reductions in the Partnership's operating reserve, over
(b) the sum of
(i) cash disbursements for operating and non- operating
expenses,
(ii) cash payments of capital expenditures,
(iii) cash payments representing amortization of principal, or
any other payment of principal, on any debt of the
Partnership,
(iv) additions to the Partnership's operating reserve, and
(v) additions to the Partnership's capital reserve (other than
additions from capital contributions, from loan proceeds or
from proceeds of Capital Transactions);
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provided, however, that none of the items in clause (b) above shall be
subtracted to the extent the item in question is paid from capital
contributions, from loan proceeds, from the Partnership's capital reserve or
from proceeds of Capital Transactions.
1.30 The term "Net Income Available for General Allocation" shall mean, for
each Year, the sum of the Net Capital Gain Available for General Allocation (if
any) and the Net Operating Income Available for General Allocation (if any).
1.31 The term "Net Operating Income" or "Net Operating Loss" shall mean,
for each Year, an amount equal to the Partnership's taxable income or loss
(after the adjustments described below) for each Year, determined in accordance
with Code Section 703(a) (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in taxable income or loss), with the following adjustments:
(a) Expenditures described in Section 705(a)(2)(B) of the Code shall
be included as an expense in the determination of Net Operating
Income and Net Operating Loss;
(b) Income exempt from taxation shall be included in the
determination of Net Operating Income and Net Operating Loss;
(c) Items which are specially allocated pursuant to Section 5.5
hereof shall be added or subtracted in the determination of Net
Operating Income and Net Operating Loss; and
(d) Net Capital Gain or Net Capital Loss for the Year shall be
subtracted or added, respectively.
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1.32 The term "Net Operating Income Available for General Allocation" shall
mean, for each Year, the amount of Net Operating Income remaining (if any) after
allocation of Net Operating Income pursuant to Section 5.2 hereof.
1.33 The term "Nonrecourse Deductions" shall mean losses, deductions and
items described in section 705(a)(2)(B) of the Code attributable to Nonrecourse
Liabilities of the Partnership as described in Regulations sections
1.704-2(b)(1) and 1.704- 2(c), including nonrecourse deductions of any
subsidiary allocated to the Partnership and treated as described in Regulation
section 1.704-2(k)(4).
1.34 The term "Nonrecourse Liability" shall mean a debt or liability of the
Partnership or any subsidiary to the extent that no Partner or related person
bears the economic risk of loss for that liability within the meaning of
Regulations sections 1.752-2 and 1.752-4(a).
1.35 The term "Partner Nonrecourse Debt" shall mean a debt or liability of
the Partnership (including a debt or liability of any subsidiary pursuant to
Regulation section 1.704-2(k)(5)) which would be a Nonrecourse Liability except
that a Partner bears the economic risk of loss because, for example, the Partner
is the creditor or guarantor as described in Regulations section 1.704-2(b)(4).
1.36 The term "Partner Nonrecourse Debt Minimum Gain" shall have the
meaning ascribed to such term in Regulations section 1.704-2(i)(2).
1.37 The term "Partner Nonrecourse Deductions" shall mean any item of
partnership loss, deduction, or expenditure under section 705(a)(2)(B) of the
Code that is attributable to a Partner Nonrecourse Debt, as determined pursuant
to Regulations section 1.704-2(i)(2).
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1.38 The term "Partners" shall mean and include the General Partner and all
Limited Partners.
1.39 The term "Partnership" shall mean this limited partnership, American
Retirement Communities, L.P.
1.40 The term "Partnership Capital Loss Account" shall mean the account
maintained by the Partnership pursuant to Section 4.5 hereof.
1.41 The term "Partnership Interest" shall mean the interests of the
Limited Partners in the Partnership, excluding LEAAF Partnership Interests.
1.42 The term "Partnership Operating Loss Account" shall mean the account
maintained by the Partnership pursuant to Section 4.5 hereof.
1.43 The term "Percentage Interest" shall mean (a) for each Partner his
interest in certain allocations and distributions as determined pursuant to
Section 5.4 hereof and (b) with respect to the voting and consent rights of
Limited Partners, the interest of a Limited Partner (other than a LEAAF Partner
in respect of his LEAAF Partnership Interest) in the Partnership, based on such
Limited Partner's interest in certain allocations and distributions as
determined pursuant to Section 5.4 hereof. A Limited Partner's Percentage
Interest for purposes of clause (a) of this Section 1.43 shall be the same as
such Limited Partner's Percentage Interest for purposes of clause (b) of this
Section 1.43.
1.44 The term "Person" shall mean any individual, trust, partnership,
limited partnership, corporation, association, limited liability company or
other entity.
1.45 The term "Policies" shall have the meaning provided in Section 7.1(a)
hereof.
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1.46 The term "Preferred Cash Return" shall mean a sum equal to the
Applicable Percent of simple interest on the daily balance of each Partner's
Contribution Account from time to time during the period to which the "Preferred
Cash Return" relates, cumulative to the extent not distributed in any given
Year.
1.47 The term "Regulations" shall mean Treasury Department regulations,
temporary regulations and proposed regulations promulgated under the Code from
time to time, and any successor provisions thereto.
1.48 The term "Requisite Percentage" shall have the meaning set forth in
Section 7.4(b) hereof.
1.49 The term "Roll-Up" shall mean either (a) a transaction or series of
transactions by which (i) the Partnership achieves ownership, directly or
indirectly, of at least a majority of the partnership interests in the
Affiliated Partnerships, and (ii) the Partnership becomes the owner of all of
the then outstanding shares of stock of ARC or (b) any other transaction or
series of transactions which the Limited Partners Committee deems to be
equivalent to the transaction described in Section 1.49(a).
1.50 The term "Share Exchange" shall mean either (a) a transaction or
series of transactions by which the Partnership becomes the owner of all of the
then outstanding shares of capital stock of ARC or (b) any other transaction or
series of transactions which the Limited Partners Committee deems to be
equivalent to the transaction described in Section 1.50(a).
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1.51 The term "Subsidiary" shall mean a corporation, partnership, limited
partnership or other entity of which the Partnership owns, directly or
indirectly, at least 50% of the outstanding common equity interests and which is
controlled by the Partnership or the General Partner.
1.52 The term "Termination Event" shall have the meaning set forth in
Section 12.1 hereof.
1.53 The term "Year" shall mean the fiscal year of the Partnership, which
shall be the calendar year.
1.54 The term "Year of Liquidation" shall mean the Year during which the
Partnership is liquidated and the final distributions are made to Partners.
II. ORGANIZATION AND RELATED MATTERS
2.1 Formation of Partnership. The parties hereto hereby form a Tennessee
limited partnership under the Act. The General Partner will cause a certificate
of limited partnership to be filed for record in the Office of the Secretary of
State of Tennessee, and in such other places as deemed necessary by the General
Partner to protect the status of the Partnership as a limited partnership and as
otherwise required by law. No copies of this Agreement, the Certificate or any
amendment hereto or thereto need to delivered to the Limited Partners, unless
requested by a Limited Partner pursuant to Section 61-2-304 of the Act.
2.2 Name of Partnership. The name of the Partnership is American Retirement
Communities, L.P.
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2.3 Purpose. The Partnership is hereby formed primarily for the purpose of
establishing a limited partnership that will invest in, acquire, own, develop,
construct, hold, operate, finance, manage and dispose of, directly or
indirectly, adult living retirement communities and similar or related
facilities or businesses. In addition, the Partnership may carry on any business
related thereto or arising therefrom or useful in connection therewith.
2.4 Principal Place of Business; Registered Agent. The principal business
office of the Partnership shall be located at 000 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxxx 00000 or at such other place as the General Partner from
time to time shall designate in writing to the Limited Partners. The Partnership
may maintain such other offices and places of business as the General Partner
may deem beneficial for the Partnership. The initial agent for service of
process for the Partnership at such address shall be W. E. Sheriff.
2.5 Names and Addresses of Partners. The names and addresses of the
Partners are set forth in Exhibit A attached hereto, which Exhibit A is hereby
incorporated herein by reference. Any Partner may change his address by written
notice to the Partnership given as provided herein. The General Partner shall
supplement and amend Exhibit A to reflect the current names and addresses of the
Partners as such names and addresses may change from time to time.
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III. TERM
3.1 Term. The term of the Partnership shall commence on the date of the
filing of the Certificate creating the Partnership with the Secretary of State
of Tennessee and shall continue until December 31, 2015, unless earlier
terminated as provided in Article XIII of this Agreement.
3.2 Termination. Dissolution and termination of the Partnership shall be
governed by the provisions of Article XIII of this Agreement.
IV. CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS
4.1 Capital Contributions of the Partners. The amount of each Limited
Partner's original capital contribution as of the Effective Date is set forth on
Exhibit A hereto. In addition, Exhibit A hereto lists for each Limited Partner
the amount of any additional capital contributions such Limited Partner has
agreed to make and whether such amounts are due as of a specified date or on
call. Each Limited Partner hereby agrees to contribute the amount of any such
additional capital contributions set forth opposite such Limited Partner's name
on Exhibit A hereto on the date specified thereon or on call as specified
thereon. If any Limited Partner fails to make a capital contribution provided
for on Exhibit A hereto with respect to such Limited Partner, the General
Partner may, in its discretion, institute suit against such defaulting Limited
Partner for the amount of such capital contribution, plus interest,
consequential damages and any expenses (including attorney's fees) relating to
such suit, to the extent allowable, and in addition may seek contributions on a
voluntary basis from other Limited Partners or other Persons for the amount of
such capital contribution.
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4.2 Issuance of LEAAF Partnership Interests. The General Partner may, with
the approval of the Limited Partners Committee, cause the Partnership to issue
LEAAF Partnership Interests in exchange for the outstanding principal amount of
the LEAAF Notes, and Partnership Interests in exchange for the surrender of such
LEAAF Notes and all other rights and claims related to the LEAAF Notes. The
LEAAF Partners shall be credited with a LEAAF Contribution Account in a dollar
amount equal to the principal amount of the LEAAF Notes contributed to the
Partnership, in exchange for the contribution of such LEAAF Notes, and a
Contribution Account in a dollar amount to be determined by the General Partner
and the Limited Partners Committee in exchange for the surrender of such LEAAF
Notes and all other rights and claims related to the LEAAF Notes. The LEAAF
Partnership Interests shall be subject to redemption as provided in Section 6.3
hereof. The LEAAF Partnership Interests shall not be deemed to have a Percentage
Interest and shall have no voting or consent rights except as otherwise
specifically provided in Section 7.4 of this Agreement or required by law.
4.3 Capital Account. A Capital Account shall be established on the books of
the Partnership for each Partner. Each such Capital Account shall be credited
with the amount of the respective Partner's contributions to the Partnership as
and when made (including the principal amounts of the LEAAF Notes) and with the
respective Partner's share, determined as provided herein, of Partnership
income, gains, and profits; each Partner's Capital Account shall be debited with
the respective Partner's share, determined as provided herein, of Partnership
losses and with the amount of all distributions made by the Partnership to such
Partner. The Capital Accounts shall be maintained in accordance with the rules
of Section 1.704-1(b)(2)(iv) of the Regulations, and the items of income,
profit, gain, expenditures, deductions and losses which increase or
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decrease such Capital Accounts shall be those items which, pursuant to such
provision, affect the balance of capital accounts.
4.4 Contribution Account. A Contribution Account shall be established on
the books of the Partnership for each Partner, other than LEAAF Partners in
respect of their LEAAF Partnership Interests. Each such Contribution Account
shall be credited (increased) with the amount of the respective Partner's
contributions to the Partnership as and when made, with property contributed in
kind being valued in accordance with Section 4.6(c) hereof. The balance of each
Partner's Contribution Account shall be debited (reduced) by the amounts
distributed to such Partner pursuant to Section 6.2(d) or Section 12.2 of this
Agreement.
4.5 Partnership Loss Accounts.
(a) Partnership Capital Loss Account. The Partnership shall maintain a
single Partnership Capital Loss Account which shall be credited each Year with
the amount of Net Capital Loss allocated pursuant to Section 5.1(b) hereof and
which shall be debited each Year with the amount of Net Capital Gain allocated
pursuant to Section 5.2 hereof.
(b) Partnership Operating Loss Account. The Partnership shall maintain
a single Partnership Operating Loss Account which shall be credited each Year
with the amount of Net Operating Loss allocated pursuant to Section 5.1(b)
hereof and which shall be debited each Year with the amount of Net Operating
Income allocated pursuant to Section 5.2 hereof.
4.6 Additional Contributions and Limited Partnership Interests.
(a) Additional Contributions. In order to raise additional capital
or to acquire assets or to redeem or retire debt or for any other
Partnership purpose, the General Partner, with the approval of the
Limited Partners Committee, is authorized to accept additional
capital
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contributions in cash or in property other than cash from Partners or from
other Persons from time to time and to admit such Persons as additional Limited
Partners. The Partnership may assume related liabilities in connection with any
such issuance. In addition, the General Partner is authorized to cause the
issuance of limited partnership interests having different relative rights,
powers, and privileges, including preferences as to distributions and voting,
and other types of securities, from time to time, to Partners or other Persons,
all on terms and conditions approved by the Limited Partners Committee, with
the consent of the Requisite Percentage of the Limited Partners if required
pursuant to Section 7.4 hereof. In accepting additional capital contributions
or in causing the issuance of limited partnership interests, the General
Partner, with approval of the Limited Partners Committee, is hereby expressly
authorized and empowered to determine a minimum amount for any such investment
by each Partner or other Person, to determine a maximum total for the
additional investments, and to fix the relative rights and preferences of the
limited partnership interests so issued to the full extent allowable by law,
except as such rights and preferences are fixed herein. The General Partner
shall do all things deemed by the General Partner to be necessary or advisable
in connection with any future issuance, including compliance with any statute,
rule, regulation or guideline of any Federal, state or other governmental
agency.
(b) Options and Rights. The General Partner, with the approval of the
Limited Partners Committee, shall have the power and authority to issue on
behalf of the Partnership options, warrants and other instruments, contracts or
securities which are convertible into Partnership Interests or other interests
in the Partnership or which entitle the holder to purchase Partnership Interests
or other interests in the Partnership in the future, and to fix the terms and
conversion or exercise price thereof, and to the fullest extent permitted by
applicable law, to
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finance the purchase of said options, warrants and other instruments, contracts
or securities on such terms as may be deemed appropriate by the General Partner,
with the approval of the Limited Partners Committee.
(c) Valuation of Capital Contributions. The General Partner shall, with the
approval of the Limited Partners Committee, determine the value of any
contributions to the capital of the Partnership that are not made in cash and
the Percentage Interest, if any, to be assigned to the Partner making such
contribution. Any such value and Percentage Interest (if any) shall be set forth
in an agreement between the General Partner and the contributing Partner on or
prior to the date on which the contribution is made. In determining the value of
any such contribution, and in assigning a Percentage Interest (if any) to the
Partner making such contribution, the General Partner and the Limited Partners
Committee shall have the right (but not the obligation) to rely on opinions of
investment banking firms or other professional appraisals, as well as financial
statements and other information that they, in their sole discretion, deem to be
relevant. The value so established shall be credited to the contributing
Partner's Capital Account and Contribution Account.
(d) Admission of Affiliates of the General Partner. The admission of an
additional Limited Partner which is an Affiliate of the General Partner, the
valuation of such Limited Partner's capital contribution and the Percentage
Interest, if any, assigned to the contributing Partner shall require the
approval of the Limited Partners Committee, except for any Limited Partner who
is admitted on terms described in Section 8.2(d) hereof.
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(e) Adjustment of Percentage Interests. If additional Partnership
Interests are issued in accordance with this Section 4.6, the General Partner
and the Limited Partners Committee will adjust the Percentage Interests of the
other Partners as appropriate and make appropriate changes to Exhibit A hereto.
4.7 No Additional Required Contributions or Preemptive Rights. Except as
otherwise specifically required by the terms of this Agreement, no additional
capital contributions shall be required to be made by any of the Partners. No
Partner shall have any preemptive right with respect to (a) additional
contributions to the capital of the Partnership, (b) issuance of additional
Partnership Interests or other interests in the Partnership, (c) issuance of any
obligations, evidences of indebtedness or other securities of the Partnership,
whether or not convertible into or exchangeable for, or carrying or accompanied
by any rights to receive, purchase or subscribe to Partnership Interests or
other interests in the Partnership, (d) issuance of any right of subscription
for or right to receive, or any warrant or option for the purchase of, any of
the foregoing securities or (e) issuance or sale of any other securities that
may be issued or sold by the Partnership.
4.8 No Right to Withdrawal of Capital Contributions.
(a) No Limited Partner shall have the right to with- draw or reduce his
contribution to the capital of the Partnership or to require the Partnership to
make any distribution to the Partners or purchase such Limited Partner's
Partnership Interest or other interest in the Partnership.
(b) No Limited Partner shall have the right to demand, to have
distributed, or to receive any specific class or item of property. Except as
otherwise provided in this Agreement,
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no Limited Partner shall have any priority over any other Limited Partner,
either as to contributions of capital or otherwise.
4.9 Limited Liability. No Limited Partner shall be subject to assessment
nor shall any Limited Partner be personally liable for or upon any of the debts
or obligations of the Partnership or any of the losses of the Partnership beyond
his obligation to contribute to the capital of the Partnership as specified in
Section 4.1 hereof. No Limited Partner shall be required to return to the
Partnership any amount previously distributed to him by the Partnership, except
as and to the extent otherwise required by law.
4.10 Capital Contribution of the General Partner. The General Partner may,
but (except as provided in this Section 4.10) is not required to, make capital
contributions to the Partnership. If the General Partner does not make capital
contributions and fails to maintain a capital account balance equal to the
lesser of (a) 1.01% of the capital contributions and Capital Account balances,
respectively, of the Limited Partners or (b) $500,000, the General Partner shall
be required, upon the occurrence of a Termination Event, to contribute for the
benefit of the Limited Partners (but not for creditors of the Partnership) an
amount equal to the lesser of (i) the deficit capital account balance of the
General Partner after the final distribution pursuant to Section 12.2 hereof
(disregarding the contribution required by this Section 4.10), or (ii) the
excess of 1.01% of total capital contributions of the Limited Partners over the
life of the Partnership over capital contributions by the General Partner.
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V. ALLOCATION OF PROFITS AND LOSSES
FOR FEDERAL INCOME TAX PURPOSES
As of the end of each Year, the Partnership's Net Operating Income or Net
Operating Loss, Net Capital Gain or Net Capital Loss, and each item of income,
gain, loss and deduction related thereto, as well as other items of income,
gain, loss or deduction which are subject to special allocation provisions,
shall be allocated to the Capital Accounts of the Partners and for federal
income tax purposes pursuant to the following Sections of this Article V.
5.1 Allocation of Losses. After giving effect to the special allocations
set forth in Section 5.5 hereof, if the Partnership has a Net Capital Loss or
Net Operating Loss for the Year, or both, any such Net Capital Loss or Net
Operating Loss, or both, shall be allocated as follows:
(a) First, in an amount not exceeding the excess of cumulative
allocations pursuant to Section 5.3(d) hereof (if any) through the current Year
over cumulative allocations in prior Years of Net Capital Loss or Net Operating
Loss, or both, pursuant to this Section 5.1(a), 20% to the General Partner in
respect of the General Partner's Subordinated Interest and 80% to the Partners
in proportion to their Percentage Interests; and
(b) Second, to the Partners in proportion to their Percentage
Interests.
5.2 Allocation of Profits to Extent of Balance of Partnership Loss
Accounts. After giving effect to the special allocations set forth in Section
5.5 hereof, if the Partnership has Net Capital Gain or Net Operating Income, or
both, for the Year, Net Capital Gain shall be allocated to Partners in an amount
not exceeding the balance of the Partnership Capital Loss Account, such amount
to be allocated to each Partner in proportion to his Percentage Interest, and
Net Operating Income shall be allocated to Partners in an amount not exceeding
the balance of the Partnership's Operating Loss Account, such amount to be
allocated to each Partner in proportion to his Percentage Interest. Any Net
Capital Gain and any Net Operating Income remaining after the
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foregoing allocations (defined as "Net Capital Gain Available for General
Allocation" and "Net Operating Income Available for General Allocation,"
respectively) shall be combined as Net Income Available for Allocation and
allocated in accordance with Section 5.3 hereof.
5.3 General Allocation of Profits. After giving effect to the special
allocations described in Section 5.5 hereof and the allocations described in
Sections 5.1 and 5.2 hereof, any Net Income Available for General Allocation
shall be allocated as follows:
(a) First, to the LEAAF Partners, in proportion to and to the extent
of, for each LEAAF Partner, the excess of (i) the cumulative distributions
of the LEAAF Return to such LEAAF Partner, as of the end of the current
Year, over (ii) allocations to such LEAAF Partner pursuant to this Section
5.3(a) for all prior Years;
(b) Second, to the General Partner, to the extent of the distributions
during the current Year of the General Partner's Subordinated Interest
pursuant to Sections 6.1(c) and 6.2(e) hereof;
(c) Third, to the Partners (other than the LEAAF Partners in respect
of their LEAAF Partnership Interests), in proportion to and to the extent
of the distributions during the current Year of their Preferred Cash
Return; and
(d) Fourth, any remaining amount 20% to the General Partner in respect
of the General Partner's Subordinated Interest and 80% to the Partners
(other than the LEAAF Partners in respect of their LEAAF Partnership
Interests) in proportion to their respective Percentage Interests.
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Each allocation of Net Income Available for General Allocation pursuant to this
Section 5.3 shall consist of pro rata portions of Net Capital Gain Available for
General Allocation and Net Operating Income Available for General Allocation.
5.4 Determination of Percentage Interests. The Percentage Interest shall be
determined initially for each Partner as the ratio of the amount of that
Partner's initial contribution to the Partnership (excluding the contribution of
the LEAAF Notes by the LEAAF Partners), including the value of property
contributed in the Roll-Up described in Section 1.49 hereof, to the total of
such initial contributions to the Partnership by all Partners (excluding the
contribution of the LEAAF Notes by the LEAAF Partners), as more particularly set
forth in Exhibit A hereto. Upon the admission of a new Limited Partner or the
making of additional capital contributions by Partners other than in proportion
to their Percentage Interests, the Percentage Interests shall be adjusted as
agreed by the General Partner and the Limited Partners Committee.
5.5 Special Allocations. Prior to the allocations pursuant to Section 5.1
and Section 5.2 of this Agreement, items of income, gain, loss and deduction for
the Year shall be allocated in accordance with the following provisions of this
Section 5.5 to the extent such provisions are applicable, and any items so
allocated shall not be taken into account in determining Net Operating Income,
Net Operating Loss, Net Capital Gain or Net Capital Loss:
(a) Nonrecourse Deductions. Nonrecourse Deductions of the Partnership
for any Year shall be specially allocated to the Partners in accordance with the
Percentage Interests of the respective Partners. Partner Nonrecourse Deductions
of the Partnership for any Year shall be specially allocated to the Partner who
bears the economic risk of loss for the Partner Nonrecourse Debt in question.
The provisions of this Section 5.5(a) are intended to satisfy the
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requirements of Regulations sections 1.704-2(e)(2) and 1.704-2(i)(1) and shall
be interpreted in accordance therewith for all purposes under this Agreement.
(b) Minimum Gain Chargeback. If there is a net decrease in the Minimum
Gain of the Partnership during any Year, each Partner shall be specially
allocated items of Partnership income and gain for such year equal to that
Partner's share of the net decrease in Minimum Gain, within the meaning of
Regulations section 1.704-2(g)(2). The provisions of this Section 5.5(b) are
intended to comply with the minimum gain chargeback requirement of Regulations
section 1.704-2(f) and shall be interpreted in accordance therewith for all
purposes under this Agreement.
(c) Partner Nonrecourse Debt Minimum Gain Chargeback. If there is a net
decrease in Partner Nonrecourse Debt Minimum Gain during any Year, each Partner
that has a share of such Partner Nonrecourse Debt Minimum Gain, determined in
accordance with Regulations section 1.704-2(i)(5), as of the beginning of such
Year shall be specially allocated items of Partnership income and gain for such
Year (and, if necessary, for succeeding Years) equal to such Partner's share of
the net decrease in Partner Nonrecourse Debt Minimum Gain. The provisions of
this Section 5.5(c) are intended to comply with the partner nonrecourse debt
minimum gain chargeback requirement of Regulations section 1.704-2(i)(4) and
shall be interpreted in accordance therewith for all purposes under this
Agreement.
(d) Deficit Capital Account. In the event that any Partner, after all
allocations pursuant to this Article V disregarding this Section 5.5(d), would
have a deficit balance in his Capital Account at the end of any Year which
deficit would be in excess of the sum of (i) the amount that such Partner is
obligated to restore to the Partnership under Regulations section
1.704-1(b)(2)(ii)(c), and (ii) such Partner's share of Minimum Gain (which is
also treated as an
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obligation to restore in accordance with Regulation section
1.704-1(b)(2)(ii)(d)), the Capital Account of such Partner shall be specially
credited with items of Partnership income (including gross income) and gain for
such Year in a manner to eliminate such excess as quickly as possible.
(e) Qualified Income Offset. If any Partner unexpectedly receives any
adjustment, allocation or distribution described in clauses (4), (5) and (6) of
Regulations section 1.704-1(b)(2)(ii)(d), such Partner shall be allocated items
of Partnership income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income, and gain for such Year) in an amount
and manner sufficient to eliminate, as quickly as possible, the deficit balance
of such Partner's Capital Account, if any, to the extent required by the
relevant Regulations. The provisions of this Section 5.5(e) are intended to
comply with the "qualified income offset" requirement of Regulations section
1.704-1(b)(2)(ii)(d)(3) and shall be interpreted in accordance therewith for all
purposes under this Agreement.
(f) Allocations to Reflect Contributed Property. If a Partner
contributes property to the Partnership which has a difference between its tax
basis and its fair market value on the date of its contribution, then all items
of income, gain, loss, and deduction with respect to such contributed property
shall be shared among the Partners, pursuant to Section 704(c)(1)(A) of the
Code, solely for federal income tax purposes, so as to take account of the
variation between the basis of such property and its fair market value at the
time of contribution. Such allocations shall be made in accordance with the
traditional method with reasonable curative allocations described in Regulations
section 1.704-3(c). If two or more Partners contribute in related transactions
depreciable property which has a difference between its tax basis and fair
market value, the curative allocations between those Partners as to the
depreciable property which they
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each contribute shall be limited to depreciation on the property contributed as
described in Regulation section 1.704-3(c)(4) Ex.(2). Any elections or other
decisions relating to such curative allocations shall be made by the General
Partner, after consulting with the accounts for the Partnership, in any manner
that reasonably reflect the purpose and intention of this Agreement. Allocations
pursuant to this Section 5.5(f) are solely for purposes of federal income taxes
and shall not affect, or in any way be taken into account in computing, any
Partner's Capital Account or distributions pursuant to any provision of this
Agreement. A Limited Partner who contributes property to the Partnership
(including the interests in the Affiliated Partnerships) shall provide to the
General Partner such information as may be required to establish such Limited
Partner's tax basis in the contributed property.
5.6 Limitation on Allocations.
(a) General Partner's Minimum Allocation. Notwithstanding any provision
of this Article V to the contrary, in no event shall less than one percent (1%)
of the Partnership's Net Operating Profit or Net Operating Loss for the Year and
Net Capital Gain or Net Capital Loss for the Year be allocated to the General
Partner.
(b) Section 706(d) Restriction. In the case of a Partner who has
contributed capital to the Partnership during the Year or who became (or ceased
to be) a Partner during the Year, the allocation of federal income tax items to
such Partner shall not exceed the maximum allocation permitted under Section
706(d) of the Code to limit retroactive allocations.
5.7 Allocations for Year of Liquidation. After giving effect to the special
allocations set forth in Section 5.5 hereof, the amount of Net Operating Income
or Net Operating Loss and Net Capital Gain or Net Capital Loss for the Year of
Liquidation, and each item of income, gain,
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loss and deduction related thereto, shall be allocated to all Partners in such
manner as to produce, as nearly as possible, a Capital Account balance for each
Partner (including the LEAAF Partners) immediately prior to the final
distribution of assets to such Partner equal to the amount required to be
distributed to that Partner pursuant to Section 12.2 hereof. To the extent that
allocations for the Year of Liquidation cannot be made to satisfy the foregoing
sentence, these allocations shall be made in accordance with the Partners'
respective interests in the Partnership (taking into account all facts and
circumstances) pursuant to Regulation section 1.704(b)-1(b)(1)(i), as determined
by the accountants for the Partnership.
5.8 Adjustment Upon Transfer of Partnership Interest or Change in
Percentage Interest. For any Year during which a Partner (or LEAAF Partner)
transfers all or part of his interest in the Partnership (including a transfer
of all or part of the General Partner's Subordinated Interest) or during which
there is a change in the Percentage Interests, the adjustment for allocation of
(i) Net Operating Income or Net Operating Loss, (ii) Net Capital Gain or Net
Capital Loss, and (iii) other items of income, gain, loss and deduction between
the transferor and transferee Partners (or LEAAF Partners) or regarding a
Partner having different Percentage Interests during portions of the Year shall
be made in the following manner:
(a) Allocations in respect of distributions of the LEAAF Return, the
Preferred Cash Return and the General Partner's Subordinated Interest
pursuant to Sections 5.3(a), 5.3(b) and 5.3(c) hereof shall be adjusted in
proportion to the amount of distributions of such LEAAF Return, Preferred
Cash Return or General Partner's Subordinated Interest received by the
transferor and transferee Partners (or LEAAF Partners) during the Year,
respectively, or to the amount of such distributions received by the same
Partner during
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portions of the Year in which his Percentage Interest is different,
regardless of the number of days that the Partnership Interest (or LEAAF
Partnership Interest) was held, and regardless of the number of days during
each period that the Percentage Interest was different; and
(b) All allocations other than the allocations described in Section
5.8(a) hereof shall be adjusted between the transferor and transferee
Partner or between each Partner having a different Percentage Interest
during different portions of the Year according to the "pro-rata method"
described in Treasury Regulation Section 1.706- 1(c)(2)(ii); that is, all
such items for the entire Year shall be allocated between the disposing and
transferee Partners according to the number of days in the Year that the
Partnership Interest was held by each, or between each Partner having a
different Percentage Interest during different portions of the Year
according to the number of days in the Year that each discrete Percentage
Interest was applicable to that Partner.
VI. DISTRIBUTIONS
6.1 Distribution of Net Cash Flow from Operations. Distributions of all or
any portion of Net Cash Flow from Operations shall be made in amounts and at
times determined by the General Partner, consistent with the Budgets and
Policies. Such distributions of the Partnership's Net Cash Flow from Operations
shall be apportioned among the Partners as follows:
(a) First, to the LEAAF Partners, in proportion to and to the extent of
the excess, if any, of (i) the cumulative LEAAF Return of each LEAAF Partner to
the time of the
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distribution, over (ii) the sum of all prior distributions to such LEAAF Partner
pursuant to this Section 6.1(a) and Section 6.2(a) hereof;
(b) Second, to the Partners (other than the LEAAF Partners in respect
of their LEAAF Partnership Interests), in proportion to and to the extent of the
excess, if any, of (i) the cumulative Preferred Cash Return of each Partner,
over (ii) the sum of all prior distributions to such Partner pursuant to this
Section 6.1(b) and Section 6.2(b) hereof;
(c) Third, any remaining amount 20% to the General Partner in respect
of the General Partner's Subordinated Interest and 80% to the Partners (other
than LEAAF Partners in respect of their LEAAF Partnership Interests),
apportioned among the Partners in accordance with their respective Percentage
Interests at the time of the distribution.
6.2 Distribution of Proceeds of Capital Transactions. Proceeds of
Capital Transactions may, in the discretion of the General Partner and
consistent with any Budgets and Policies, be applied to capital expenditures, to
payment of outstanding debt, to redeem the LEAAF Partnership Interests, to
increase the capital reserve, to increase Net Cash Flow From Operations with the
approval of Limited Partners Committee, or to provide cash for a distribution to
Partners pursuant to this Section 6.2. The General Partner shall identify any
distribution which represents part or all of the proceeds of a Capital
Transaction and shall designate it as such to the Limited Partners Committee.
Any such distribution (except for proceeds of Capital Transactions in the Year
of Liquidation distributed in the winding up of the Partnership pursuant to
Section 12.2 hereof) shall be apportioned among the Partners as follows:
(a) First, to the LEAAF Partners, in proportion to and to the extent of
the excess, if any, of (i) the cumulative LEAAF Return of each LEAAF Partner to
the time of the
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distribution, over (ii) the sum of all prior distributions to such LEAAF Partner
pursuant to Section 6.1(a) hereof and this Section 6.2(a);
(b) Second, to the Partners (other than the LEAAF Partners in respect
of their LEAAF Partnership Interests), in proportion to and to the extent of the
excess, if any, of (i) the cumulative Preferred Cash Return of each Partner,
over (ii) the sum of all prior distributions to such Partner pursuant to Section
6.1(b) hereof and this Section 6.2(b);
(c) Third, in the discretion of the General Partner, to the LEAAF
Partners, in proportion to and to the extent of the outstanding balance of their
LEAAF Contribution Accounts;
(d) Fourth, to the Partners (other than the LEAAF Partners in respect
of their LEAAF Partnership Interests), in proportion to and to the extent of the
outstanding balance of their Contribution Accounts; and
(e) Fifth, any remaining amount 20% to the General Partner in respect
of the General Partner's Subordinated Interest and 80% to the Partners (other
than the LEAAF Partners in respect of their LEAAF Partnership Interests), in
accordance with their respective Partnership Interests immediately prior to the
distribution of proceeds of the Capital Transaction.
6.3 Redemption of LEAAF Partners' Interest. At any time or from time to
time, the General Partner shall have the right, with the approval of the Limited
Partners Committee or in accordance with any Budgets or Policies, to cause the
LEAAF Partnership Interest of each LEAAF Partner to be redeemed, in whole or in
part, by repaying all or a portion of the outstanding amount of such LEAAF
Partner's LEAAF Contribution Account, together with an amount equal to the LEAAF
Return on such LEAAF Contribution Account, less any amounts theretofore paid in
respect of such LEAAF Return pursuant to Section 6.1(a) or 6.2(a) hereof or
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this Section 6.3. Following a redemption of all or part of the LEAAF Partnership
Interest of any LEAAF Partner, such LEAAF Partner shall have no rights as a
Partner with respect to the LEAAF Partnership Interest that has been redeemed
and such LEAAF Partnership Interest shall no longer be deemed to be outstanding.
6.4 Consequences of Distributions. Upon its determination to distribute,
remit or pay funds in any manner expressly provided in this Article VI, made in
good faith, the General Partner and, if applicable, the Limited Partners
Committee shall incur no liability on account of such distribution, even if such
distribution results in the Partnership retaining insufficient funds for the
operation of its business or such insufficiency results in loss to the
Partnership or necessitates the borrowing of funds by the Partnership.
VII. GOVERNANCE OF THE PARTNERSHIP
7.1 Management by General Partner. Except as otherwise provided in this
Agreement, the management of the business and affairs of the Partnership shall
be vested in the General Partner. Without limiting the generality of the
foregoing, the General Partner shall have the power and authority to:
(a) make distributions in accordance with the terms of this Agreement,
or refrain from making any distributions, to the extent that such making or
refraining from making of distributions is not inconsistent with any annual
operating or capital budget approved by the Limited Partners Committee pursuant
to Section 7.3(a) hereof ("Budgets") or any other policies, resolutions or
determinations of the Limited Partners Committee pursuant to Section 7.3 hereof
("Policies");
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(b) establish, maintain or reduce any operating or capital reserves,
to the extent such establishment, maintenance or reduction is not inconsistent
with any Budgets or Policies or any loan agreement to which the Partnership or
any of its Subsidiaries is subject;
(c) subject to Section 7.3(f) hereof, spend the capital and net income
of the Partnership, to the extent not inconsistent with any Budgets or Policies;
(d) subject to Section 7.3(f) hereof, purchase or acquire, hold, lease,
manage and operate the properties and other assets of the Partnership and its
Subsidiaries and enter into agreements containing such terms, provisions and
conditions as the General Partner in its discretion shall approve, to the extent
not inconsistent with any Budget or Policies;
(e) subject to Section 7.3(i) hereof, purchase from or through others
contracts of liability, casualty and other insurance which the General Partner
deems advisable for the protection of the Partnership or for any purpose
convenient or beneficial to the Partnership, to the extent not inconsistent with
any Budget or Policies;
(f) subject to Section 7.3(c) and 7.3(f) hereof, incur indebtedness on
behalf of the Partnership in the ordinary course of business, to the extent not
inconsistent with any Budgets or Policies;
(g) subject to Section 7.3(g) hereof, sell, exchange or otherwise
dispose of properties or assets of the Partnership or any of its Subsidiaries in
the ordinary course of business, upon such terms and conditions as the General
Partner may deem advisable, appropriate or convenient, to the extent not
inconsistent with any Budgets or Policies;
(h) invest in short term debt obligations (including those issued or
guaranteed by federal and state governments and their agencies and certificates
of deposit of commercial
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banks, savings banks or savings and loan association), "money market" accounts
of commercial banks, or "money market" mutual funds, such funds as are
temporarily not required for the purposes of the Partnerships operations to the
extent not inconsistent with any Budgets or Policies;
(i) delegate all or any of its duties hereunder and, in furtherance of
any such delegation, appoint, employ or contract with any Person for the
transaction of the business of the Partnership, which Persons may, under the
supervision of the General Partner, act as consultants, accountants, attorneys,
brokers, escrow agents, leasing agents or in any other capacity deemed by the
General Partner necessary or desirable and pay appropriate fees to any of such
Persons, all to the extent not inconsistent with any Budget or Policies; and
(j) take any and all action necessary or deemed necessary or desirable
by the General Partner to carry out any Budgets or Policies or take any other
action consistent with the actions of the Limited Partners Committee or the
Limited Partners in accordance with the provisions of this Agreement.
7.2 Limited Partners Committee.
(a) Constitution of the Limited Partners Committee; Number and Term of
Office. The Partnership shall have a committee (the "Limited Partners
Committee"), which shall be composed of not less than three (3) nor more than
ten (10) individuals, which Limited Partners Committee shall have the powers and
authority granted to it in this Agreement. The exact number of members of the
Limited Partners Committee, between the minimum of three (3) and the maximum of
ten (10), shall be determined from time to time by the Limited Partners
Committee. The initial members of the Limited Partners Committee shall be
Xxxxxxxx Xxxxxxx, Xxxxxx Xxxxx and Xxxxxx X'Xxxxxxx (the "Initial Members"). As
soon as practicable after the consummation
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of the Roll Up, but in no event later than June 1995, the Limited Partners
Committee shall call a meeting of the Limited Partners of the Partnership
pursuant to Section 7.5 hereof, at which meeting all Limited Partners holding
Partnership Interests as of the date of such meeting shall have the right to
elect new members of the Limited Partners Committee, to serve a term of one year
or until their earlier death, resignation or removal. Thereafter, the members of
the Limited Partners Committee (other than the Chief Manager or other chief
executive officer of the General Partner, who shall be a member ex officio of
the Limited Partners Committee as provided in Section 7.2(b) below) shall be
elected on an annual basis pursuant to Sections 7.4 and 7.5 hereof and shall
serve for a term of one year or until their earlier death, resignation or
removal. Members of the Limited Partners Committee may serve for repeated terms
if re-elected. The Limited Partners Committee shall have the right to appoint
additional members to fill any vacancy on the Limited Partners Committee until
the next annual meeting of Limited Partners.
(b) Qualifications for Membership. The members of the Limited Partners
Committee shall be: (i) Limited Partners or their designated representatives,
(ii) the Chief Manager or other chief executive officer of the General Partner,
who shall serve ex officio as a voting member of the Limited Partners Committee
and (iii) up to two additional members. On or after June 30, 1995, individuals
who (directly or indirectly other than through the Partnership) hold partnership
interests in any of the Affiliated Partnerships (except if, as a result of the
Roll Up, such Affiliated Partnership owns only partnership interests in the
Partnership), or designated or professional representatives of such individuals
or their Affiliates, will not have the right to serve as members of the Limited
Partners Committee. Until the consummation of the Roll Up, if ARCLLC is the
General Partner, no individual who (directly or indirectly) holds an equity
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interest in the General Partner or is employed by ARC may serve as a member of
the Limited Partners Committee, except for the Chief Manager or other chief
executive officer of the General Partner.
(c) Meetings and Notice. The Limited Partners Committee may hold
regular and special meetings either within or without the State of Tennessee.
The Limited Partners Committee may permit any or all of its members to
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all members participating may
simultaneously hear each other during the meeting. A member of the Limited
Partners Committee participating in a meeting by this means is deemed to be
present in person at the meeting. Unless otherwise determined by the Limited
Partners Committee, regular meetings of the Limited Partners may be held without
notice of the date, time, place or purpose of the meeting at such dates, times
and places as may be determined by the Limited Partners from time to time.
Special meetings of the Limited Partners Committee may be called by the General
Partner or any two members of the Limited Partners Committee. Special meetings
must be preceded by at least 24-hours notice of the date, time and place of the
meeting, but need not describe the purpose of such meeting. Notice of an
adjourned meeting need not be given if the time and place to which the meeting
is adjourned are fixed at the meeting at which the adjournment is taken, and if
the period of adjournment does not exceed one month for any one adjournment. A
member of the Limited Partners Committee may waive any required notice before or
after the date and time stated in the notice. Except as provided in the next
sentence, the waiver must be in writing, signed by the member of the Limited
Partners Committee and filed with the minutes or Partnership records. A member's
attendance at or participation in a meeting
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waives any required notice to him or her of such meeting unless the member at
the beginning of the meeting (or promptly upon his or her arrival) objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to any action taken at the meeting.
(d) Quorum. A quorum of the members of the Limited Partners Committee
consists of a majority of the total number of members that has been fixed by the
Limited Partners Committee as the total number of members of the Limited
Partners Committee.
(e) Voting. If a quorum is present when a vote is taken, the
affirmative vote of the majority of the members of the Limited Partners
Committee present is the act of the Limited Partners Committee. A member of the
Limited Partners Committee who is present at a meeting of the Limited Partners
Committee when action is taken is deemed to have voted in favor of such action
unless:
(i) He or she objects at the beginning of the meeting (or promptly
upon his or her arrival) to holding the meeting or transacting business at
the meeting;
(ii) His or her dissent or abstention from the action is entered in
the minutes of the meeting; or
(iii) He or she delivers written notice of such dissent or
abstention to the presiding officer of the meeting before its adjournment
or to the Partnership immediately after adjournment. The right of dissent
or abstention is not available to a member who votes in favor of the action
taken.
(f) Action Without Meeting. Any action required or permitted by this
Agreement to be taken by the Limited Partners Committee may be taken without a
meeting. If
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all members of the Limited Partners Committee consent to taking such action
without a meeting, the affirmative vote of the number of members that would be
necessary to authorize or take such action at a meeting is the act of the
Limited Partners Committee. Such action must be evidenced by one or more written
consents describing the action taken, indicating the member's vote or abstention
on the action, which consents shall be included in the minutes or filed with the
Partnership records reflecting the action taken. Action taken by consent is
effective when the last member signs the consent, unless the consent specifies a
different effective date.
(g) Right to Confer with General Partner and Others. Members of the
Limited Partners Committee shall have the right to confer with representatives
of the General Partner and employees of the Partnership and its Subsidiaries in
connection with any matter regarding the Partnership's business, and may confer
with legal counsel, accountants and other advisers to the Partnership. The
General Partner must consult with (but need not receive the approval of) the
Limited Partners Committee prior to amending its operating agreement, charter or
similar constitutive document.
(h) Additional Rules and Procedures. The members of the Limited
Partners Committee may from time to time establish additional rules and
procedures for the conduct of
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the business of the Limited Partners Committee to the extent that such
additional rules and procedures are not inconsistent with this Agreement or the
Act.
(i) Compensation. Members of the Limited Partners Committee shall be
entitled to reasonable compensation from the Partnership for their services as
members of the Limited Partners Committee, and shall be entitled to
reimbursement from the Partnership for any reasonable expenses incurred in
attending meetings of the Limited Partners Committee.
(j) Resignation. A member of the Limited Partners Committee may resign
at any time by delivering written notice to the Limited Partners Committee or to
the General Partner. A resignation is effective when the notice is delivered
unless the notice specifies a later effective date.
(k) Removal of Members of the Limited Partners Committee. Members of
the Limited Partners Committee may be removed with or without cause upon a vote
of the Limited Partners at a meeting called expressly for such purpose.
7.3 Approval Rights of the Limited Partners Committee. The following
matters shall require the approval of the Limited Partners Committee:
(a) the adoption of annual operating and capital budgets for the
Partnership and its Subsidiaries;
(b) the adoption of policies with respect to distributions, including
policies with respect to the establishment, maintenance or reduction of
operating and capital reserves;
(c) the adoption of policies with respect to the incurrence or
repayment of indebtedness of the Partnership and its Subsidiaries (except as
already approved pursuant to Section 7.3(a) or (h) hereof);
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(d) the adoption of executive and management compensation plans for
employees of the Partnership and its Subsidiaries and the entry into any new
compensation arrangement with senior executives of the Partnership and its
Subsidiaries;
(e) the issuance of additional equity interests in the Partnership as
provided in Section 4.5 hereof;
(f) the acquisition by the Partnership or any of its Subsidiaries of
any assets or properties other than in the ordinary course of business (except
as already approved pursuant to Section 7.3(a) hereof);
(g) the disposition by the Partnership or any of its Subsidiaries of
any assets or properties other than in the ordinary course of business (except
as already approved pursuant to Section 7.3(a) hereof);
(h) the refinancing of any indebtedness of the Partnership or any of
its Subsidiaries other than in the ordinary course of business or as already
approved pursuant to Section 7.3(a) or (c) hereof;
(i) the adoption of policies to be followed by the Partnership with
respect to the acquisition and maintenance of insurance coverage for the assets
and properties of the Partnership and its Subsidiaries;
(j) the adoption of any amendment to this Agreement; provided, however,
that any amendment described in Section 7.4(a)(iv) hereof shall also require the
approval of the Limited Partners to the extent provided in such Section
7.4(a)(iv);
(k) the selection of any independent accounting firm to audit the
financial statements of the Partnership;
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(l) transactions with Affiliates of the General Partner to the extent
provided in Section 8.1(a) hereof;
(m) any other matters requiring the approval of the Limited Partners
Committee pursuant to this Agreement or submitted to the Limited Partners
Committee by the General Partner; and
(n) the approval of any matter (other than the election or removal of
any members of the Limited Partners Committee) for which a vote of the Limited
Partners is required pursuant to this Agreement.
7.4 Approval Rights of the Limited Partners.
(a) Approval Rights. The approval of the Requisite Percentage of the
Limited Partners at a meeting at which a quorum is present in accordance with
Section 7.5 hereof or acting by written consent shall be required for:
(i) the election or removal of members of the Limited Partners
Committee, except as otherwise specifically provided in Section 7.2(a)
hereof;
(ii) the merger of the Partnership with or into another entity, or
the sale of all, or substantially all, of the assets of the Partnership to
another entity (other than a sale of assets to a wholly-owned Subsidiary);
(iii) the dissolution of the Partnership;
(iv) the amendment of this Agreement in any manner that would
materially and adversely alter the rights of the Limited Partners (or the
holders of any particular class of limited partnership interests) with
respect to: (i) the rights of Limited Partners under this Article VII or
(ii) the rights and preferences with respect to allocations
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and distributions (including the Preferred Cash Return) pursuant to
Articles V and VI and Section 12.2 hereof, other than (A) by reason of
adjustment of the Percentage Interests of Partners in accordance with
Section 4.6 hereof upon the admission of a new Limited Partner or the
making of additional capital contributions by Partners other than in
proportion to their Percentage Interests, (B) an adjustment to the method
set forth in Section 5.8 hereof regarding tax allocations for the Year
during which a change in Percentage Interests or a transfer of part or all
of a Partnership Interest occurs or (c) alteration of the tax allocations
set forth in Article V as necessary to conform to the Code or Regulations
(or the interpretation thereof by the Internal Revenue Service) or to
conform to the Partners' interests in the Partnership;
(v) the removal or withdrawal of the General Partner, or election
of a new General Partner, except as provided in Section 11.2 hereof;
(vi) the continuation of the Partnership following the
resignation, removal or withdrawal of the General Partner (except as
provided in Section 11.2 hereof);
(vii) the assignment of the partnership interest of the General
Partner in the Partnership or the transfer of a majority interest in
the equity of the General Partner to Persons other than employees of
the General Partner and its Affiliates;
(viii) any other matter submitted to a vote of Limited Partners
at the discretion of the Limited Partners Committee.
(b) Requisite Percentage. The "Requisite Percentage" for the election
or removal of any member of the Limited Partners Committee shall be a plurality
of the Percentage Interests of Limited Partners present and voting at any
meeting at which a quorum is present. The
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"Requisite Percentage" required for the approval of a merger or sale of assets
shall be a majority of the outstanding Percentage Interests of Limited Partners.
The "Requisite Percentage" for any vote to dissolve the Partnership shall be
three-quarters (75%) of the Percentage Interests of Limited Partners. The
"Requisite Percentage" for the approval of any amendment of this Agreement
requiring a vote of the Limited Partners holding Percentage Interests pursuant
to Section 7.4(a)(iv) shall be a majority of the Percentage Interests of Limited
Partners and the "Requisite Percentage" for any amendment requiring a vote of
the holders of any particular class of limited partnership interest in a
majority of the outstanding balances in the contribution accounts with respect
to such class. The "Requisite Percentage" for the removal or the election of a
General Partner pursuant to Section 7.4(a)(v) shall be two-thirds (66.67%) of
the outstanding Percentage Interests of Limited Partners. The "Requisite
Percentage" for the continuation of the Partnership pursuant to Section
7.4(a)(vi) shall be all of the outstanding Percentage Interests of Limited
Partners and other interests (if any) in the Partnership. The "Requisite
Percentage" for the approval of the assignment of the partnership interest of
the General Partner or the transfer of a majority interest in the equity of the
General Partner pursuant to Section 7.4(a)(vii) is a majority of the outstanding
Percentage Interests of the Limited Partners. The "Requisite Percentage" for the
approval of any other matter submitted to the vote of the Limited Partners shall
be a majority of the Percentage Interests of Limited Partners present and voting
at any meeting at which a quorum is present.
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7.5 Meeting of Limited Partners.
(a) Annual Meeting. An annual meeting of the Limited Partners shall be
held on such date as may be determined by the Limited Partners Committee. The
business to be transacted at such meeting shall be the election of members of
the Limited Partners Committee and such other business as shall be properly
brought before the meeting.
(b) Special Meetings. A special meeting of the Limited Partners shall
be held on call by the General Partner, the Limited Partners Committee or if the
holders of at least ten percent of the Percentage Interests or any other
partnership interest entitled to vote on any issue proposed to be considered at
the proposed special meeting sign, date and deliver to the General Partner and
the members of the Limited Partners Committee one or more written demands for
the meeting describing the purpose or purposes for which such special meeting is
to be held, including all statements necessary to make a statement of such
purpose not incomplete, false or misleading. Only business within the purpose or
purposes described in the meeting notice may be conducted at a special Limited
Partners' meeting.
(c) Place of Meetings. The Limited Partners Committee may designate any
place, either within or without the State of Tennessee, as the place of meeting
for any annual meeting or for any special meeting. If no place is fixed by the
Limited Partners Committee, the meeting shall be held at the principal office of
the Partnership.
(d) Notice of Meetings; Waiver. Notice of the date, time and place of
each annual and special Limited Partners' meeting and, in the case of a special
meeting, a description of the purpose or purposes for which the meeting is
called, shall be given no fewer than ten days nor more than sixty days before
the date of the meeting. A Limited Partner may waive any notice
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required by law or by this Agreement before or after the date and time stated in
such notice. Except as provided in the next sentence, the waiver must be in
writing, be signed by the Limited Partner entitled to notice and delivered to
the Partnership for inclusion in the minutes or filing with Partnership records.
A Limited Partner's attendance at a meeting: (i) waives objection to lack of
notice or defective notice of the meeting, unless the Limited Partner at the
beginning of the meeting (or promptly upon his or her arrival) objects to
holding the meeting or transacting business at the meeting; and (ii) waives
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
Limited Partner objects to considering the matter when it is presented.
(e) List of Limited Partners. Each Limited Partner shall have the right
to receive, for any proper purpose, the name and address of each Limited Partner
and the Percentage Interests or other interests in the Partnership held by each
Limited Partner, and the Partnership shall furnish such information to any
Limited Partner requesting same in writing. Prior to any meeting of the Limited
Partners, the General Partner shall prepare a list of the names of all Limited
Partners who are entitled to notice of a Limited Partners meeting and the
address of such Limited Partners. The list will be available for inspection by
any Limited Partner, beginning two business days after notice of the meeting is
given for which the list was prepared and continuing through the meeting, at the
Partnership's principal office or at a place identified in the meeting notice in
the city where the meeting will be held. A Limited Partner or his or her agent
or attorney is entitled on written demand to inspect and to copy the list,
during regular business hours and at his or her expense during the period in
which it is available for inspection.
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(f) Quorum. A majority of the Percentage Interests or other partnership
interests entitled to vote on any matter constitutes a quorum for action on that
matter, unless the Requisite Percentage is greater than a majority of such
Percentage Interests or other partnership interests. If the Requisite Percentage
is greater than a majority of the Percentage Interests or other partnership
interests entitled to vote on a matter, a quorum shall consist of the Percentage
Interests or the percentage of other partnership interests constituting the
Requisite Percentage.
(g) Adjournment. Once a Limited Partner is represented for any purpose
at a meeting, such Limited Partner is deemed present for quorum purposes for the
remainder of the meeting and for any adjournment of that meeting, unless a new
record date is or must be set for that adjourned meeting. If a quorum shall not
be present or represented at any meeting, the Limited Partners entitled to vote
thereat shall have power to adjourn the meeting to a different date, time or
place without notice other than the announcement at the meeting of the new time,
date or place to which the meeting is adjourned. At any adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally called.
(h) Proxies. A Limited Partner may vote in person or by proxy. A
Limited Partner may appoint a proxy to vote or otherwise act for such Limited
Partner by signing an appointment either personally or by his or her
attorney-in-fact. An appointment of a proxy is effective when received by the
General Partner. An appointment is valid for eleven months unless another period
is expressly provided in the appointment form. An appointment of a proxy is
revocable by the Limited Partner unless the appointment form conspicuously
states that it is irrevocable and that the appointment is coupled with an
interest.
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(i) Acceptance of Limited Partner Documents. If the name on a Limited
Partner document (a vote, consent, waiver or proxy appointment) corresponds to
the name of the Limited Partner, the General Partner, if acting in good faith,
is entitled to accept such Limited Partner document and give it effect as the
act of the Limited Partner. If the name signed on such Limited Partner document
does not correspond to the name of a Limited Partner, the General Partner, if
acting in good faith, is nevertheless entitled to accept such Limited Partner
document and give it effect as the act of the Limited Partner if (i) the Limited
Partner is an entity and the name signed purports to be that of an officer or
agent of the entity; (ii) the name signed purports to be that of the fiduciary
representing the Limited Partner and, if the General Partner requests, evidence
of fiduciary status acceptable to the General Partner has been presented with
respect to such Limited Partner document; (iii) the name signed purports to be
that of a receiver or trustee in bankruptcy or the Limited Partner and, if the
General Partner requests, evidence of this status acceptable to the General
Partner has been presented with respect to the General Partner document; (iv)
the name signed purports to be that of a pledgee, beneficial owner or
attorney-in-fact of the Limited Partner and, if the General Partner requests,
evidence acceptable to the General Partner of the signatory's authority to sign
for the Limited Partner has been presented with respect to such Limited Partner
document; or (v) two or more persons are the Limited Partner as co-owners or
fiduciaries and the name signed purports to be the name of at least one of the
co-owners and the person signing appears to be acting on behalf of all of the
co-owners or at least one of the co-owners or fiduciaries. The General Partner
is entitled to reject a Limited Partner document if the General Partner, acting
in good faith, has a reasonable basis for doubt about the validity of
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the signature on such Limited Partner document or about the signatory's
authority to sign for the Limited Partner.
(j) Ownership of Interests Assigned by a Limited Partner. In the event
a vote of the Limited Partners shall be taken pursuant to this Agreement, a
Limited Partner shall, solely for the purpose of determining the Percentage
Interests held by him in weighing his vote, be deemed the holder of any
Percentage Interests assigned by him, so long as the assignee of such Percentage
Interests has not become a substituted Limited Partner. Whenever the Limited
Partners shall be entitled to vote pursuant to this Agreement, such vote may be
cast in person at a meeting duly called for such purpose or by validly executed
proxy.
(k) Action Without Meeting. Action required or permitted by this
Agreement or the Act to be taken at a meeting of the Limited Partners may be
taken without a meeting. If all Limited Partners entitled to vote on the action
consent to taking such action without a meeting, the affirmative vote of the
number of Limited Partners that would be necessary to authorize or take such
action at the meeting is the act of the Limited Partners. The action must be
evidenced by one or more written consents describing the action taken, at least
one of which is signed by each Limited Partner entitled to vote on the action in
one or more counterparts, indicating such signing Limited Partner's vote or
abstention on the action and deliver to the Partnership for inclusion in the
minutes or for filing with the Partnership records.
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7.6 Tax Matters Partner.
(a) Designation of Tax Matters Partner. The General Partner shall be
the "Tax Matters Partner" (as defined in Section 6231(a)(7) of the Code) for all
administrative and judicial proceedings or the assessment and collection of tax
deficiencies for the refund of tax overpayments arising out of a Partner's
distributive share of Partnership items allocated to the Partners affecting any
of the Partners' tax liability. The General Partner shall have all power and
authority necessary for it to carry out its duties as a Tax Matters Partner
under the Code. Each Partner, by the execution of this Agreement, consents to
the appointment of the General Partner as the Tax Matters Partner and agrees to
execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate to
evidence such consent.
(b) Indemnification and Reimbursement. The Partnership shall indemnify
and reimburse the Tax Matters Partner for all expenses, including legal and
accounting fees, claims, liabilities, losses and damages incurred in connection
with any administrative or judicial proceeding with respect to the tax liability
of the Partners and against any and all loss, liability, cost or expense,
including judgments, fines, amounts paid in settlement and attorneys fees and
expenses, incurred by the Tax Matters Partner in any civil, criminal or
investigative proceeding in which the Tax Matters Partner is involved or
threatened to be involved solely by virtue of being Tax Matters Partner, so long
as the Tax Matters Partner (i) acted in good faith and with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances and (ii) reasonably believed his actions to be in the best
interest of the Partnership (or if such actions were not taken in the Tax
Matters Partner's official capacity with the Partnership, the Tax Matters
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Partner reasonably believed such actions to be not opposed to the best interests
of the Partnership). Neither the General Partner, nor any Affiliate, nor any
other person shall have any obligation to provide funds for such purpose. The
taking of any action and the incurring of any expense by the Tax Matters Partner
and the provisions on limitations of liability of the General Partner and
indemnification set forth in this Agreement shall be fully applicable to the Tax
Matters Partner in its capacity as such.
VIII. TRANSACTIONS WITH AFFILIATES
8.1 In General. The Partnership may acquire property or services from, and
have other transactions with, the General Partner and its Affiliates, subject
only to the following limitations:
(a) Such transaction shall have been approved by a majority of the
members of the Limited Partners Committee or shall be one of the transactions
enumerated in Section 8.2 hereof;
(b) The funds of the Partnership shall be kept separate and will not be
commingled with any other funds; and
(c) All such transactions shall be evidenced in writing and provide for
compensation at a rate commensurate with that which would be obtained in the
case of a similar transaction with independent persons.
8.2 Authorized Transactions. Nothing contained in this Agreement shall
prohibit or limit those transactions with Partners and their Affiliates
contemplated or referred to in this
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Section 8.2, and each of the Limited Partners hereby expressly approves and
consents to the following transactions:
(a) The engagement of the services of such bookkeepers, auditors,
accountants, attorneys, consultants, and other professionals on behalf and at
the reasonable expense of the Partnership, including Affiliates of the General
Partner, whether or not any of the same shall have been or then be otherwise
engaged by the General Partner or any of its Affiliates, all as the General
Partner may deem proper or desirable for the proper operation or protection of
the Partnership;
(b) The reimbursement of the General Partner or any of its Affiliates
by the Partnership for any and all reasonable costs and expenses, including,
without limitation, legal, accounting, auditing, and other fees and expenses of
other agents or advisors, cost of insurance, and the bookkeeping and clerical
work necessary in maintaining the books and records of the Partnership,
including the cost of printing and mailing checks, statements, and reports, and
all other costs and expenses which are, as determined by the General Partner,
properly allocable to the operations of the Partnership incurred by it in
connection with its duties to the Partnership;
(c) The admission of and service by the General Partner as general
partner in partnerships controlled, directly or indirectly, by the Partnership
and the receipt of benefits by the General Partner in connection with its
ownership interest therein;
(d) The acquisition of Partnership Interests or other interests in the
Partnership by persons who are Affiliates of the General Partner and who receive
their Partnership Interests in exchange for shares of ARC or interests in the
Affiliated Partnerships on the same terms as other persons holding like
interests; and
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(e) The payment of fees and expenses with respect to such other matters
and transactions as are contemplated or set forth elsewhere in this Agreement.
IX. INDEMNIFICATION AND EXCULPATION OF GENERAL PARTNER
AND THE LIMITED PARTNERS COMMITTEE
AND OTHER MATTERS
9.1 Indemnification. The General Partner and its Affiliates and the members
of the Limited Partners Committee and their respective members, managers,
governors, officers, directors, partners, agents and employees, shall be
indemnified and held harmless, to the full extent of Partnership assets, by the
Partnership from any loss, liability or damages incurred or suffered by them
(including fees and expenses of attorneys and other experts) as a result of any
and all acts or omissions in connection with the business of the Partnership, if
(i) such actions were in good faith and (except in the case of member of the
Limited Partners Committee) taken with the care an ordinarily prudent person in
a like position would exercise under similar circumstances and (ii) such Person
reasonably believed such actions to be in the best interests of the Partnership
(or if such actions were not taken in such Person's official capacity with the
Partnership, such Person reasonably believed such actions to be not opposed to
the best interests of the Partnership).
9.2 Exculpation. The members of the Limited Partners Committee, the
General Partner and its Affiliates and their respective members, managers,
governors, officers, directors, partners, agents and employees shall not be
liable, in damages or otherwise, to the Partnership or any Limited Partner for
any acts in connection with the business of the Partnership, if (a) such actions
were in good faith and (except in the case of members of the Limited Partners
Committee) taken
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with the care an ordinarily prudent person in a like position would exercise
under similar circumstances and (b) such Person reasonably believed such actions
to be in the best interests of the Partnership (or if such actions were not
taken in such Person's official capacity with the Partnership, such Person
reasonably believed such actions to be not opposed to the best interests of the
Partnership).
9.3 No Personal Liability of Limited Partners. Any amounts payable to the
General Partner or its Affiliates or the members of the Limited Partners
Committee or any other Person pursuant to this Article IX are recoverable only
out of the assets of the Partnership and not from the Limited Partners.
9.4 Periodic Advancement of Expenses. The Partnership shall from time to
time make advances to the General Partner and its Affiliates and the members of
the Limited Partners Committee and their respective members, managers,
governors, officers, directors, partners, agents and employees for expenses in
connection with any claim made against them of the type contemplated in Section
9.1, provided the following conditions are met: (a) the claim relates to the
business of the Partnership; and (b) the Person to whom expenses are advanced
(i) undertakes to repay the advanced funds to the Partnership in cases in which
such Person would not be entitled to indemnification and (ii) furnishes the
Partnership with a written affirmation of such party that such Person has met
the applicable standard of conduct specified in Section 9.1 hereof for
entitlement to indemnification.
9.5 Returns of Capital Contributions. Anything in this Agreement to the
contrary notwithstanding, the General Partner shall not be individually liable
for the return of the capital contributions of the Limited Partners, or any
portion thereof, it being expressly understood that
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any such return shall be made solely from Partnership assets; provided, however,
that the General Partner must comply with Section 4.10 hereof.
X. TRANSFER OF INTERESTS IN THE PARTNERSHIP
10.1 In General. With the General Partner's consent, which consent may be
granted or denied in the sole discretion of the General Partner, a Limited
Partner may sell, transfer, assign or subject to a security interest any or all
of his limited partnership interest; provided, however, that:
(a) Such Limited Partner and his purchaser, transferee or assignee
execute, shall acknowledge and deliver to the General Partner such
instruments of transfer and assignment with respect to such transaction as
are in form and substance satisfactory to the General Partner;
(b) Upon request of the General Partner, such Limited Partner shall
pay the Partnership a transfer fee which is sufficient to pay all
reasonable expenses of the Partnership in connection with such transaction;
and
(c) Upon the request of the General Partner, the Limited Partner or
his purchaser, transferee or assignee shall deliver to the Partnership and
the General Partner an opinion of counsel, in form and substance
satisfactory to the General Partner, to the effect that such sale,
transfer, assignment or subjection to a security interest does not violate
the securities laws of the United States or any applicable state securities
laws.
No such purchaser, transferee, assignee, or holder of such security interest (or
any Person who purchases such limited partnership interest upon foreclosure of
such security interest) shall become
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a Limited Partner within the meaning of Section 61- 2-301 of the Act unless the
General Partner consents in writing to such Person becoming a substituted
Limited Partner. Neither the Partnership nor the General Partner shall recognize
or be bound by any assignment of a limited partnership interest, unless the
General Partner consents to such assignment in writing. Notwithstanding the
foregoing to the contrary, the General Partner's prior consent shall not be
required for the assignment of the right to share in profits by a Limited
Partner to an immediate member of the assignor Limited Partner's immediate
family, but such transferee shall not become a substituted Limited Partner
except with the consent of the General Partner and the fulfillment of the other
conditions set forth in Section 10.2 hereof.
10.2 Substituted Limited Partners. If the General Partner consents to the
admission of a person as a substituted Limited Partner within the meaning of
Sections 61-2-301 and 61-2-704 of the Act, and such person:
(a) Elects to become a substituted Limited Partner by delivering a
written notice of such election to the General Partner;
(b) Executes and acknowledges such other instruments as the General
Partner may deem necessary or advisable to effect the admission of such person
as a substituted Limited Partner, including, without limitation, the written
acceptance and adoption by such person of the provisions of this Agreement; and
(c) Upon request of the General Partner, pays a transfer fee to the
Partnership which is sufficient to cover all reasonable expenses connected with
the admission of such person as a substituted Limited Partner within the meaning
of Section 61-2-301 of the Act, including, without limitation, the cost of
preparing, printing and filing for record an amendment to this
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Agreement and, if required by the Act or deemed appropriate by the General
Partner, the Certificate, and obtaining any opinions of counsel the Partnership
deems necessary or advisable.
Upon the satisfaction of the conditions set forth in clauses (a), (b) and (c)
above, then the General Partner shall amend this Agreement and, if necessary or
desired, the Certificate in accordance with the provisions of the Act and shall
take all other steps which, in the opinion of the General Partner, are
reasonably necessary to admit such person as a substituted Limited Partner under
Section 61-2-301 of the Act. The General Partner shall file an amendment to this
Agreement and the Certificate, if required by the Act or if the General Partner
considers it appropriate to do so. Such person shall become a substituted
Limited Partner on the date of such amendment to this Agreement and his
predecessor will cease to be a Limited Partner on such date.
10.3 Purchase of Limited Partner Interests by the General Partner. The
General Partner may acquire limited partnership interests in the Partnership,
and, if with respect to such interest the General Partner becomes a Limited
Partner within the meaning of the Act, the General Partner shall, with respect
to such interest, enjoy all rights and be subject to all of the obligations and
duties of the Limited Partners.
10.4 Transfer Upon Death of Limited Partner. Upon the death of a Limited
Partner, his executor, administrator, or other personal representative shall
have all of the rights of the deceased Limited Partner for the purpose of
settling his estate; may assign or transfer the limited partnership interest in
the Partnership of the deceased Limited Partner to such persons and in such
manner as the deceased Limited Partner could have during his lifetime; and may
constitute his
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transferee or assignee a substituted Limited Partner to the extent that the
deceased Limited Partner could have done so, but only upon compliance with the
provisions of this Agreement.
XI. TRANSFER OF THE GENERAL PARTNER'S INTEREST
11.1 Resignation and Withdrawal of the General Partner. The General Partner
hereby covenants and agrees not to resign or withdraw as General Partner unless
removed by a vote of the Limited Partners as provided in Section 7.4(a)(v)
hereof or replaced by ARC as provided in Section 11.2 hereof.
11.2 Removal of the General Partner; Substitution of ARC. The General
Partner may be removed at any time upon a vote of Limited Partners holding
two-thirds (66-2/3%) or more of the outstanding Percentage Interests as provided
in Section 7.4(a)(v) hereof. In addition, if ARC is not a Subsidiary of the
Partnership by October 31, 1995, ARC shall have the right, exercisable until
December 31, 1995, to be admitted as a general partner of the Partnership by
executing a copy of this Agreement and agreeing to assume the responsibilities
and obligations of the General Partner under this Agreement. Upon such
admission, ARC will become the General Partner of the Partnership and ARCLLC
will have the right, at its option, to withdraw from the Partnership and have
returned to it the amount of any capital contribution made by it or to continue
its interest in the Partnership as a special limited partner pursuant to Section
11.5 hereof. The admission of ARC as a general partner in the Partnership, the
substitution of ARC for ARCLLC as the General Partner under this Agreement and
the withdrawal of ARCLLC from the Partnership will not require the consent or
approval of the Limited Partners and will not cause the existence of the
Partnership to be terminated.
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11.3 Notice of Transfer. Written notice of the transfer of the General
Partner's interest pursuant to Section 11.7 shall be given by the General
Partner to the Limited Partners. Such notice shall set forth the day upon which
the resignation or transfer is to become effective.
11.4 Liability of the General Partner after Removal. If the General Partner
is removed as general partner in the Partnership in accordance with the
provisions of this Agreement, its liability as a general partner shall cease as
to future obligations of the Partnership, and the Partnership shall promptly
take all steps reasonably necessary under the Act to cause such cessation of
liability.
11.5 Continuing Interest of the General Partner after Removal. Upon
removal, the General Partner that has been removed may transfer its interest to
any substituted General Partner or withdraw with the consent of the Limited
Partners as provided in Section 7.4(a)(v) hereof. If the General Partner does
not withdraw or transfer its interest to a successor General Partner, the
interest of the General Partner that has been removed will be converted into a
special limited partnership interest having no right to participate in
distributions of Net Cash Flow from Operations or proceeds from Capital
Transactions pursuant to Sections 6.1 and 6.2 except as Partner with the
Percentage Interest, if any, held by such General Partner prior to removal, but
having a right to participate in a percentage of the General Partner's
Subordinated Interest on liquidation pursuant to Section 12.2 hereof. The
percentage participation in the General Partner's Subordinated Interest shall be
determined in accordance with a formula to be established by the Limited
Partners Committee at the time of removal in a manner designed to reflect the
length of time that the General Partner that is being removed has served as a
general partner of the
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Partnership and the contribution of such General Partner to the formation of the
Partnership and to the Roll Up.
11.6 Election of Successor General Partner. Except as otherwise provided in
Section 11.2 hereof, if the General Partner withdraws or resigns, or is removed
as general partner of the Partnership, all the Limited Partners may elect a
successor General Partner as provided in Section 7.4 hereof; provided, however,
if after such resignation the Partnership has no remaining General Partner, the
business of the Partnership may be continued, and a dissolution and liquidation
of the Partnership pursuant to Article XII hereof may be avoided, only if,
within 90 days after the withdrawal, resignation or removal of the General
Partner, the Limited Partners elect to continue the business of the Partnership
and elect one or more successor general partners pursuant to Section 7.4 hereof.
The Person so elected as a successor General Partner shall not become the
General Partner until the withdrawal, resignation or removal of the former
general partner is effective and the successor has executed a copy of this
Agreement.
11.7 Transfer to Successor General Partner. The General Partner shall not
have the right to assign the whole or any portion of its partnership interest or
transfer a majority interest in its equity to any person or persons other than
employees of the General Partner or its Affiliates without the written consent
of Limited Partners owning a majority of the Percentage Interests of all Limited
Partners; provided, however, that notwithstanding Section 11.6 hereof, the
General Partner may at any time transfer its interest in the Partnership or its
equity to an entity that is an Affiliate of the General Partner without the
consent of the Limited Partners, and such Affiliate receiving the partnership
interest shall after the effective date set forth in notice thereof to Limited
Partners assume all the rights and duties of the General Partner hereunder.
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XII. DISSOLUTION AND WINDING UP OF THE PARTNERSHIP
12.1 Dissolution of the Partnership. The following events (each, a
"Termination Event") shall cause a dissolution of the Partnership: (a) the
withdrawal, resignation, removal or Bankruptcy of the General Partner unless,
within 90 days after such withdrawal, resignation, removal or Bankruptcy, a
successor General Partner shall be elected pursuant to Sections 7.4 and 11.6 of
this Agreement to continue the business of the Partnership, in a reconstituted
form if necessary, and subject to all the terms of this Agreement; (b) the vote
of Limited Partners owning three-quarters (75%) of the Percentage Interests of
the Limited Partners, (c) the disposition of all or substantially all of the
assets of the Partnership and the receipt of the final cash payment of the sale
price of such assets; or (d) the expiration of the term of the Partnership
pursuant to Article III hereof. In no event shall the Bankruptcy, death,
withdrawal, expulsion, assignment for the benefit of creditors, or legal
incapacity of any Limited Partner result in dissolution of the Partnership. In
the event of the death of any Limited Partner, the personal representative of
the deceased Limited Partner shall succeed to the interest of the deceased
Limited Partner in the Partnership, subject to the rights of any assignees of
the deceased Limited Partner in and to such interest, and subject to the
provisions of this Agreement.
12.2 Winding Up of the Partnership. Upon the dissolution of the Partnership
following the occurrence of a Termination Event, the General Partner shall make
any contribution required pursuant to Section 4.10 hereof (determined after the
final Capital Account balances are determined on a tentative basis following
hypothetical distributions in accordance with this Section 12.2 as if this
contribution by the General Partner were not made), and the General Partner or
other Person or Persons empowered to act on behalf of the Partnership pursuant
to Section 61-2-
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803 of the Act shall take full account of the Partnership's assets and
liabilities and the assets shall be liquidated as promptly as is consistent with
obtaining the fair value thereof. The proceeds from the liquidation of the
Partnership's assets and any contribution by the General Partner pursuant to
Section 4.10 hereof, to the extent sufficient therefor, shall be applied and
distributed as provided in Section 61-2-804 of the Act; provided, however, that
after payment of all Partnership debts, obligations and liabilities there shall
be distributed to each Partner the remaining assets of the Partnership in the
following order of priority:
(a) First, to the LEAAF Partners (if any), to the extent of the difference
between the cumulative LEAAF Return to the time of the final distribution and
the aggregate amounts they have previously received on account thereof, on a
cumulative basis, pursuant to Sections 6.1(a) and 6.2(a) hereof;
(b) Second, to the LEAAF Partners (if any), to the extent of the then
outstanding balance of their LEAAF Contribution Accounts;
(c) Third, to each Partner (other than LEAAF Partners in respect of their
LEAAF Partnership Interests), an amount sufficient to produce an internal rate
of return equal to fourteen percent (14%) per annum, compound interest, computed
as a return on all contributions by such Partner to the Partnership and taking
into account in the calculation all distributions to such Partner (except for
distributions of the General Partner's Subordinated Interest), including the
distribution pursuant to this Section 12.2(c); provided, however, if the amount
to be distributed pursuant to this Section 12.2(c) is not sufficient to produce
an internal rate of return of 14% per annum to all such Partners, the amount
distributed to each such Partner shall be computed to produce an internal rate
of return after all distributions (including the distribution
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pursuant to this Section 12.2(c) but excluding distributions of the General
Partner's Subordinated Interest) that is the same internal rate of return for
each Partner receiving such a distribution; and
(d) Fourth, any remaining amount 20% to the General Partner (and any former
General Partner to the extent provided in Section 11.5 hereof) in respect of the
General Partner's Subordinated Interest and 80% to the Partners (other than
LEAAF Partners in respect of their LEAAF Partnership Interests, which will no
longer be outstanding), in an amount apportioned among the Partners computed to
produce an internal rate of return after all distributions (including all
distributions pursuant to this Section 12.2, but excluding (i) distributions to
LEAAF Partners of their LEAAF Return or amounts credited to their LEAAF
Contribution Accounts and (ii) distributions of the General Partner's
Subordinated Interest) that is the same internal rate of return for each Partner
receiving such a distribution.
XIII. BOOKS OF ACCOUNT, ACCOUNTING, REPORTS,
FISCAL YEAR, BANKING AND TAX ELECTION
13.1 Books of Account. The Partnership's books and records (including a
current list of the names and addresses of and percentage of ownership of all
Limited Partners) and an executed copy of this Agreement, as currently in
effect, shall be maintained at the principal office of the General Partner in
Tennessee, and each Partner shall have access thereto upon notice at a
reasonable time for any proper purpose. The books and records shall be kept by
the General Partner using an appropriate method of accounting consistently
applied and shall reflect all Partnership transactions and be appropriate and
adequate for the Partnership's business. The
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General Partner shall also keep adequate federal income tax records using an
appropriate method of accounting applied on a consistent basis.
13.2 Financial Reports. As soon as reasonably practicable after the end of
each fiscal year, but not later than April 30 of the next succeeding year, each
Partner shall be furnished with a copy of a balance sheet of the Partnership as
of the last day of such fiscal year and statements of income or loss and cash
flow of the Partnership for such year. Such annual financial statements shall be
audited by a reputable independent certified public accounting firm. The
Partnership shall also furnish to each Partner not later than March 31 of each
year an unaudited statement showing the amounts allocated to or allocated
against such Partner pursuant to this Agreement during or in respect of such
year, and any items of income, deduction, credit or loss allocated to such
Partner for purposes of the Code.
13.3 Annual Reports. The annual financial statements provided for in
Section 13.2 of this Agreement shall be accompanied by a report in reasonable
detail, containing a description of the activities of the Partnership during
such year. Such report shall set forth the distributions to the Limited Partners
during such year.
13.4 Fiscal Year. The fiscal year of the Partnership shall be the calendar
year.
13.5 Banking. All funds of the Partnership shall be initially deposited in
one or more separate account or accounts of banks or other insured financial
institutions as shall be determined by the General Partner, but such funds may
be invested as provided in Section 7.1(h) of this Agreement.
13.6 Tax Election to Adjust Basis of Property. Upon the transfer of an
interest in the Partnership or in the event of a distribution of the
Partnership's property, the Partnership may,
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but is not required to, elect pursuant to Section 754 of the Code, to adjust the
basis of the Partnership's property as allowed by Section 734(b) and 743(b)
thereof.
13.7 Other Tax Elections. All elections required or permitted to be made by
the Partnership under any applicable tax laws shall be made by the General
Partner in such manner as the General Partner may determine. In making such
elections, the General Partner may rely upon the advice of the Partnership's
regularly retained accountant.
13.8 Tax Returns. The General Partner shall utilize its best efforts, for
each fiscal year, to file on behalf of the Partnership with the Internal Revenue
Service a Partnership Return within the time prescribed by law (including any
extensions) for such filing. The General Partner shall also utilize reasonable
efforts to file on behalf of the Partnership such state and/or local income tax
returns as may be required by law.
XIV. POWER OF ATTORNEY
14.1 Appointment of Attorney-in-Fact. Each Limited Partner hereby makes,
constitutes and appoints the General Partner with full power of substitution and
resubstitution, his agent and attorney-in-fact (a) to file for record this
Agreement if required by the Act, (b) if the General Partner deems it
appropriate to do so, to sign, execute, certify, acknowledge, and file for
record any other instruments which may be required of the Partnership or of the
Limited Partners by law, including, but not limited to, amendments to or
cancellations of this Agreement and the Certificate, (c) sign, execute, certify,
acknowledge, and file for record any instruments required to effectuate or
evidence the transfer of a partnership interest as permitted by this Agreement,
and (d) upon compliance with the appropriate provisions of this Agreement, to
amend this Agreement
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and the Certificate. Each Limited Partner authorizes each such attorney-in-fact
to take any further action which such attorney-in-fact shall consider necessary
or advisable in connection with the foregoing, hereby giving such
attorney-in-fact full power and authority to act to the same extent as if such
Limited Partner were himself personally present, and hereby ratifying and
confirming all that such attorney-in-fact shall lawfully do or cause to be done
by virtue hereof.
14.2 Effect of Power. The power of attorney granted pursuant to Section
14.1 of this Agreement:
(a) Is a special power of attorney coupled with an interest, is
irrevocable, and shall survive the death, insanity, or incapacity of the
granting Limited Partner; and
(b) May be exercised by any such attorney-in-fact for each Limited
Partner by listing all of the Limited Partners executing any agreement,
certificate, instrument or document with the single signature of such
attorney-in-fact as attorney-in-fact for all of them; and
(c) Shall survive the effectiveness of an assignment by a Limited
Partner of his entire interest in the Partnership, except that where the
purchaser, transferee or assignee thereof is admitted as a substituted Limited
Partner, the power of attorney shall survive such assignment as to the assignor
for the sole purpose of enabling such attorney-in-fact to execute, acknowledge
and file any such agreement, certificate, instrument, or document necessary to
effect such substitution.
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XV. MISCELLANEOUS
15.1 Notices. Except as otherwise provided in this Agreement, any notice,
payment, demand or communication required or permitted to be given by any
provision of this Agreement shall be duly given if delivered in writing
personally to the person to whom it is authorized to be given, or if sent by
mail or overnight delivery service, telecopy, telex or telegraph, as follows: if
to the General Partner, at the address set forth in Section 2.4 of this
Agreement, or to such other addresses as the General Partner may from time to
time specify by written notice to the Limited Partners; and if to a Limited
Partner, at such Limited Partner's address set forth in the first paragraph of
this Agreement or in Exhibit A hereto, or to such other address as such Limited
Partner may from time to time specify, by written notice to the General Partner.
Any such notice shall be deemed to be given as of the date so delivered, if
delivered personally, by telecopy, telex or telegraph, or as of the date on
which the same was deposited in the United States mail or overnight delivery
service, charges prepaid, addressed and sent as aforesaid.
15.2 Section Captions. Section and other captions contained in this
Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
15.3 Severability. Every provision of this Agreement is intended to be
severable. If any term or provision of this Agreement is illegal or invalid for
any reason whatsoever, such illegality or invalidity shall not affect the
validity of the remainder of this Agreement.
15.4 Amendments. This Agreement may be amended from time to time (a) with
the consent of the General Partner and the Limited Partners Committee if the
consent of the Limited Partners is not required pursuant to Section 7.4 hereof,
and (b) with the consent of the General
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Partner, the Limited Partners Committee and the Requisite Percentage of the
Limited Partners is required pursuant to Section 7.4 hereof. In addition, if the
Roll Up is not consummated on or before October 31, 1995, the Limited Partners
Committee shall have the right, exercisable until December 31, 1995, to cause
this Agreement to be amended to reduce the General Partner's Subordinated
Interest below 20% of the total distributions specified in Sections 6.1(c),
6.2(e) and 12.2(d) and to increase amounts distributed to Limited Partners in
respect of their Partnership Interests under Sections 6.1(c), 6.2(e) and 12.2(d)
as a result of such reduction (with a corresponding change in the percentage of
allocations to the General Partner and the Limited Partners under Sections
5.1(a) and 5.3(d)).
15.5 Waiver of Action for Partition. Each Partner irrevocably waives during
the term of the Partnership and during the period of its liquidation following
any dissolution, any right to maintain any action for partition with respect to
any of the assets of the Partnership.
15.6 Counterpart Execution. This Agreement may be executed in one or more
counterparts all of which together shall constitute one and the same Agreement.
15.7 Parties in Interest. Except as provided in Article X of this
Agreement, this Agreement shall be binding upon the parties hereto and their
successors, heirs, devisees, assigns, legal representatives, executors and
administrators.
15.8 Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and there are no agreements, understandings, restrictions,
representations or warranties among the parties other than those set forth
herein or herein provided for.
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15.9 Number and Gender. References herein to the plural shall include the
singular, where applicable, and references to the singular shall include the
plural, where applicable. References herein to any gender shall include any
other gender, where applicable.
15.10 Tennessee Law. Notwithstanding the place where this Agreement or any
counterpart hereof may be executed by any of the parties hereto, the parties
expressly agree that all the terms and provisions hereof shall be construed
under the laws of the State of Tennessee, without regard to the principles of
conflicts of law thereof, and that the Act as now adopted or as may be hereafter
amended shall govern the partnership aspects of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written. GENERAL PARTNER:
AMERICAN RETIREMENT COMMUNITIES, LLC
By: H. Xxxx Xxxxxxxx
------------------------------------
Its:
----------------------------
LIMITED PARTNERS:
[ ]
By: /s/
-----------------------------------
Title:
-------------------------
Each of the other limited partners have executed a separate limited
partner signature page which is attached hereto.
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STATE OF TENNESSEE )
)
COUNTY OF XXXXXXXXXX )
Before me, the undersigned, a Notary Public in and for the State and County
aforesaid, personally appeared __________________ with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath acknowledged that he executed the within instrument for the purposes
therein contained, and who further acknowledged that he is the ______ of
American Retirement Communities, LLC, the within named bargainer, and that he is
authorized by such entity to execute this instrument on behalf of such entity.
WITNESS my hand and seal, this ____ day of _____________, 1993.
-------------------------------------------
Notary Public
My Commission Expires:
----------------------------------
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FIRST AMENDEMENT TO
LIMITED PARTNERSHIP AGREEMENT
AMERICAN RETIREMENT COMMUNITIES, L.P.
This First Amendment, dated as of April 1, 1995, is made by American
Retirement Communities, LLC, a Tennessee limited liability company (the
"General Partner"), as the general partner of American Retirement Communities,
L.P., a Tennessee limited partnership (the "Partnership").
W I T N E S S E T H:
WHEREAS, the Limited Partners Committee of the partnership wishes to
cause the amendment of the Limited Partnership Agreement, dated as of February
7, 1995 (the "Agreement"), by and among the General Partner and the limited
partners of the Partnership (the "Limited Partners") as provided herein and the
General Partner agrees to cause such amendment;
WHEREAS, the consent of the Limited Partners is not required under
Sections 7.4 and 15.4 of the Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. General Partner's Subordinated Interest. Section 1.17 of the
Agreement is hereby amended to read as follows in its entirety:
"1.17 The term "General Partner's Subordinated Interest" shall
mean those distributions to the General Partner constituting
(i) fifteen and eight-tenths percent (15.8%) of the total distributions
specified in Section 6.1(c), and (ii) twenty percent (20%) of the total
distributions specified in Section 6.2(e), and Section 12.2(d), which
represent, in each case, distributions unrelated to any capital
contributions by the General Partner."
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2. Distribution of Net Cash Flow from Operations. Section 6.1(c) of
the Agreement is hereby amended to read as follows in its entirety:
"(c) Third, any remaining amount 15.8% to the General Partner in
respect of the General Partner's Subordinated Interest and 84.2% to the
Partners (other than LEAAF Partners in respect of their LEAAF
Partnership Interests), apportioned among the Partners in
accordance with their respective Percentage Interests at the time of
the distribution."
IN WITNESS WHEREOF, the undersigned General Partner of the Partnership
has caused this First Amendment to be duly executed as of the date first above
written.
AMERICAN RETIREMENT COMMUNITIES, LLC
By: /s/ W. E. Sheriff
--------------------------------
W. E. Sheriff,
Chief Manager
