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EXHIBIT 3.1
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SOUTHERN FOODS GROUP, L.P.
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THIRD AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
SOUTHERN FOODS GROUP, L.P.
TABLE OF CONTENTS
Page
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ARTICLE I GENERAL
1.1 Continuation............................................................................ 1
1.2 Purpose................................................................................. 1
1.3 Commencement and Term................................................................... 1
1.4 Offices and Addresses................................................................... 1
1.5 State Law Partnership................................................................... 2
ARTICLE II DEFINITIONS......................................................................... 2
ARTICLE III CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
3.1 Capital Contributions................................................................... 4
3.2 Capital Accounts........................................................................ 4
ARTICLE IV ALLOCATIONS
4.1 Allocation of Profits and Losses........................................................ 7
4.2 Special Allocations..................................................................... 8
4.3 Curative Allocations.................................................................... 9
4.4 Tax Allocations: Code Section 704(c).................................................... 10
4.5 Other Allocation Rules.................................................................. 10
ARTICLE V DISTRIBUTIONS
5.1 Distributions of Distributable Cash..................................................... 11
ARTICLE VI RIGHTS AND OBLIGATIONS OF PARTNERS
6.1 General Partner......................................................................... 11
6.2 Authority of Limited Partner............................................................ 12
6.3 Reimbursement of Expenses............................................................... 12
6.4 Outside Activities...................................................................... 12
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ARTICLE VII TAX MATTERS; BOOKS AND RECORDS
7.1 Tax Matters Partner..................................................................... 12
7.2 Annual Tax Return....................................................................... 12
7.3 Tax Elections........................................................................... 13
7.4 Taxation as a Partnership............................................................... 13
7.5 Books, Records and Accounting........................................................... 13
ARTICLE VIII RESTRICTIONS ON TRANSFER
8.1 Consent of Partners Required for All Transfers.......................................... 13
8.2 Substitute Partners..................................................................... 13
8.3 No Additional Partnership Interests..................................................... 13
ARTICLE IX DISSOLUTION AND WINDING UP
9.1 Dissolution............................................................................. 14
9.2 Reconstitution.......................................................................... 14
9.3 Liquidation............................................................................. 14
9.4 Distribution in Kind.................................................................... 14
9.5 Termination of Partnership.............................................................. 15
ARTICLE X GENERAL PROVISIONS
10.1 Addresses and Notices................................................................... 15
10.2 Titles and Captions..................................................................... 15
10.3 Pronouns and Plurals.................................................................... 15
10.4 Further Action.......................................................................... 15
10.5 Binding Effect.......................................................................... 15
10.6 Integration............................................................................. 15
10.7 Third Party Beneficiaries............................................................... 15
10.8 Amendment and Waiver.................................................................... 16
10.9 Counterparts............................................................................ 16
10.10 Applicable Law.......................................................................... 16
10.11 Invalidity of Provisions................................................................ 16
EXHIBIT
Exhibit A - Partners and Percentage Interests
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THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SOUTHERN FOODS GROUP, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the
"Agreement") is entered into by and between SFG Management, LLC, a Delaware
limited liability company (the "General Partner"), and Suiza Fluid Dairy Group,
L.P., a Delaware limited partnership (the "Limited Partner" and, together with
the General Partner, the "Partners").
ARTICLE I
GENERAL
1.1 Continuation. The Partnership was formed as a limited partnership
in accordance with the Delaware Act on December 20, 1994, and the Partners, who
are the transferees of all of the partnership interests in the Partnership,
hereby agree to continue the Partnership as a limited partnership pursuant to
the provisions of the Delaware Act. The Partners hereby enter into this
Agreement in order to set forth the rights and obligations of the Partners and
certain matters related thereto. Except as expressly provided and permitted
herein to the contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the
Delaware Act.
1.2 Purpose. The purpose and business of the Partnership is to engage
in any lawful business activities permitted by the Act and all other actions
reasonably necessary or advisable in connection therewith or incident thereto.
1.3 Commencement and Term. The Partnership commenced on December 20,
1994, and will continue in existence until the termination of the Partnership
in accordance with the provisions of Section 9.1.
1.4 Offices and Addresses. The principal office of the Partnership and
the registered office of the Partnership shall be 0000 Xxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, and the registered agent for service of process on the
Partnership shall be Corporation Service Partnership, or such other registered
office or registered agent as the General Partner may from time to time
designate. The principal office of the Partnership shall be at 0000 XxXxxxxx
Xxx., LB 30, Suite 1200, Xxxxxx, Xxxxx 00000, or such other place as the
General Partner may from time to time designate. The Partnership may maintain
offices at such other place or places as the General Partner deems advisable.
The address of each Partner is the address of such Partner appearing on the
books of the Partnership from time to time.
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1.5 State Law Partnership. The Partners intend that the Partnership be
treated as a limited partnership in accordance with the Delaware Act for all
purposes under state law. The Partnership is not a sole proprietorship, and
this Agreement shall not be construed to provide otherwise.
ARTICLE II
DEFINITIONS
In addition to the other terms defined elsewhere in this Agreement,
the following terms have the meanings indicated:
"Agreement" means this Third Amended and Restated Limited Partnership
Agreement of Southern Foods Group, L.P., as it may be amended, supplemented, or
restated from time to time.
"Book Value" has the meaning set forth in Section 3.2(c).
"Capital Account" means the capital account maintained for each Partner
pursuant to Section 3.2.
"Capital Contribution" means any cash or other property contributed by
either Partner to the Partnership pursuant to the provisions of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time.
"Delaware Act" means the Delaware Revised Limited Partnership Act, 6
Del. C. Section 17-101, et seq., as it may be amended from time to time, and any
successor to such Delaware Act.
"Distributable Cash" means the amount by which the aggregate amount of
all cash and cash equivalents from time to time held by the Partnership on hand
or in bank accounts or other temporary investments pending distribution,
exceeds the aggregate of all amounts to be paid or set aside by the Partnership
for: (i) when due, all principal and interest payments on indebtedness of the
Partnership and all other sums payable to lenders; (ii) all cash expenditures
to be incurred in the normal operations of the business of the Partnership; and
(iii) such cash reserves as the General Partner may mutually deem reasonably
necessary for the proper operation of the business of the Partnership.
"Effective Date" means January 1, 2000.
"Fair Market Value" means the price in cash, or its equivalent, that
an asset would bring considering its highest and most profitable use, it then
offered for sale in the open market, in competition with other similar assets
at or near the same location, with a reasonable time allowed to find a
purchaser.
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"General Partner" means SFG Management, and any other Person who is
admitted as a General Partner in the Partnership on and after the Closing Date
and whose admission has been reflected on the books and records of the
Partnership.
"Independent Accountants" means any of the five largest nationally
recognized accounting firms in the Unites States, as selected by the General
Partner. Deloitte & Touche LLP shall be the initial Independent Accountant.
"Limited Partner" means Suiza Fluid Dairy Group, L.P. and any other
Person who is admitted as a Limited Partner in the Partnership on and after the
Closing Date and whose admission has been reflected on the books and records of
the Partnership.
"Liquidator" has the meaning set forth in Section 9.3.
"Losses" has the meaning set forth in Section 3.2(b).
"Partner" means SFG Management, Suiza Fluid Dairy Group, L.P., and any
other Person who is admitted as a Partner in the Partnership on and after the
Closing Date and whose admission has been reflected on the books and records of
the Partnership.
"Partnership" means the limited partnership continued pursuant to this
Agreement.
"Partnership Interest" means the interest of a Partner in the
Partnership hereunder, including without limitation such Partner's right (a) to
an allocable share of the profits, losses, deductions and credits of the
Partnership, (b) to a distributive share of the assets of the Partnership and
(c) to participate in the management of the Partnership, or to vote with
respect to certain matters, on the terms set forth in this Agreement.
"Percentage Interest" means, for each Partner, the percentage set
forth opposite such Partner's name on Exhibit A hereto as the Percentage
Interest of such Partner.
"Person" means any individual, corporation, partnership, trust or
other entity.
"Profits" has the meaning set forth in Section 3.2(b).
"Regulations" means the Department of Treasury Regulations promulgated
under the Code, as amended and in effect (including corresponding provisions of
succeeding regulations).
"SFG Management" means SFG Management, LLC, a Delaware limited
liability company.
"Tax Matters Partner" has the meaning set forth in Section 7.1.
"Transfer" has the meaning set forth in Section 8.1.
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ARTICLE III
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
3.1 Capital Contributions. The transferors to the current Partners
have previously made Capital Contributions to the Partnership. No Partner will
be required or allowed to make any additional Capital Contribution unless such
additional Capital Contribution has been approved by all Partners. If the
Partners approve any additional Capital Contribution, such contribution will be
made by all of the Partners in the same proportion as their Percentage
Interests.
3.2 Capital Accounts.
(a) Maintenance Rules. The Partnership shall maintain for
each Partner a separate Capital Account in accordance with this
Section 3.2, which shall control the division of assets upon
liquidation of the Partnership as provided in Section 9.3. The Capital
Account shall be maintained in accordance with the following
provisions:
(i) Such Capital Account shall be increased by the
cash amount or Book Value of any property contributed by such
Partner to the Partnership pursuant to this Agreement, such
Partner's allocable share of Profits and any items in the
nature of income or gain which are specially allocated to
such Partner pursuant to Section 4.2 and Section 4.3 hereof,
and the amount of any Partnership liabilities assumed by such
Partner or which are secured by any property distributed to
such Partner.
(ii) Such Capital Account shall be decreased by the
cash amount or Book Value of any property distributed to such
Partner pursuant to this Agreement, such Partner's allocable
share of Losses and any items in the nature of deductions or
losses which are specially allocated to such Partner pursuant
to Section 4.2 and Section 4.3 hereof, and the amount of any
liabilities of the Partner assumed by the Partnership or
which are secured by any property contributed by such Partner
to the Partnership.
(iii) In the event all or a portion of an interest
in the Partnership is transferred in accordance with the
terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to
the transferred interest; provided, however, that if the
transfer causes a termination of the Partnership under
Section 708(b)(1)(B) of the Code, then the Partnership shall
be deemed to have contributed its assets to a new limited
partnership in exchange for interests in the new limited
partnership, followed by a distribution of the interests in
the new limited partnership to the Partnership and
liquidation of the Partnership. Such deemed liquidation and
reconstitution shall not cause the Partnership to be
dissolved or reconstituted for purposes other than
maintenance of the Capital Accounts and federal income tax,
unless otherwise provided in Article IX.
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The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts generally are intended
to comply with Section 1.704-1(b) of the Regulations and shall be
interpreted and applied in a manner consistent with such Regulations.
If the General Partner reasonably determines that it is prudent to
modify the manner in which the Capital Accounts, or any increases or
decreases to the Capital Accounts, are computed in order to comply
with such Regulations, the General Partner may authorize such
modifications.
(b) Definition of Profits and Losses. "Profits" and "Losses"
mean, for each Fiscal Year or other period, an amount equal to the
Partnership's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(i) Income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Profits and Losses pursuant to this Section 3.2(b)
shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described
in Code Section 705(a)(2)(B), or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits and Losses pursuant to this Section 3.2(b)
shall be subtracted from such taxable income or loss;
(iii) In the event the Book Value of any Partnership
asset is adjusted pursuant to Section 3.2(c)(ii) or Section
3.2(c)(iii), the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such
asset for purposes of computing Profits and Losses;
(iv) Gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to
the Book Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its
Book Value;
(v) In lieu of the deduction for depreciation, cost
recovery or amortization taken into account in computing such
taxable income or loss, there shall be taken into account
"Book Depreciation" as defined in this Section 3.2(b)(v).
"Book Depreciation" for any asset means for any Fiscal Year
or other period an amount that bears the same ratio to the
Book Value of that asset at
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the beginning of such Fiscal Year or other period as the
federal income tax depreciation, amortization or other cost
recovery deduction allowable for that asset for such year or
other period bears to the adjusted tax basis of that asset at
the beginning of such year or other period. If the federal
income tax depreciation, amortization, or other cost recovery
deduction allowable for any asset for such year or other
period is zero, then Book Depreciation for that asset shall be
determined with reference to such beginning Book Value using
any reasonable method selected by the General Partner; and
(vi) Notwithstanding any other provision of this
Section 3.2(b), any items that are specially allocated
pursuant to Section 4.2 or Section 4.3 shall not be taken
into account in computing Profits and Losses.
(c) Definition of Book Value. "Book Value" means for any asset
the asset's adjusted basis for federal income tax purposes, except as
follows:
(i) The initial Book Value of any asset contributed
by a Partner to the Partnership shall be the gross fair
market value of such asset, as determined by the General
Partner.
(ii) The Book Values of all Partnership assets shall
be adjusted to equal their respective gross fair market
values, as determined by the General Partner, as of the
following times: (A) the acquisition of an additional
interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis capital contribution if
the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership; (B) the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership
property as consideration for an interest in the Partnership
if the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership; and (C) the liquidation of the Partnership
within the meaning of Regulation Section
1.704-1(b)(2)(ii)(g);
(iii) The Book Value of any Partnership asset
distributed to any Partner shall be the gross fair market
value of such asset on the date of distribution, as
determined by the General Partner.
(iv) The Book Values of Partnership assets shall be
increased (or decreased) to reflect any adjustment to the
adjusted basis of such assets pursuant to Code Section 734(b)
or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)
and Section 4.2(d) hereof; provided, however, that Book
Values shall not be adjusted pursuant to this Section
3.2(c)(iv) to the extent the General Partner determines that
an adjustment pursuant to Section 3.2(c)(ii) is necessary or
appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Section
3.2(c)(iv).
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(v) If the Book Value of an asset has been
determined or adjusted pursuant to Section 3.2(c)(i), Section
3.2(c)(ii), or Section 3.2(c)(iv) hereof, such Book Value
shall thereafter be adjusted by the Book Depreciation taken
into account with respect to such asset for purposes of
computing Profits and Losses.
(d) Interest; Loans. No interest will be paid by the
Partnership on capital contributions or on balances in Capital
Accounts. Loans by a Partner to the Partnership will not be considered
capital contributions.
(e) No Withdrawal. No Partner will be entitled to withdraw
any part of his capital contributions or Capital Account or to receive
any distribution of Partnership assets from the Partnership, except as
provided in Article V and Article IX of this Agreement.
ARTICLE IV
ALLOCATIONS
4.1 Allocation of Profits and Losses.
(a) Allocation of Profit Generally. After giving effect to
the allocations set forth in Section 4.2 and Section 4.3, and after
giving effect to all distributions of cash or property (other than
cash or property to be distributed pursuant to Article IX), Profits
for any Fiscal Year shall be allocated to the Partners in the
following manner:
(i) First, to each Partner with a negative balance
in its Adjusted Capital Account, pro rata in accordance with
such negative Adjusted Capital Account balances, until such
negative Adjusted Capital Account balances have been
eliminated;
(ii) Next, to the Partners in proportion to their
Percentage Interests.
(b) Allocation of Losses.
(i) After giving effect to the provisions of Section
4.2 and Section 4.3, and subject to the limitation set forth
in Section 4.1(b)(ii), Losses for any Fiscal Year shall be
allocated to the Partners in the following manner:
(A) First, to the Partners until each of
their Adjusted Capital Account balances is reduced
to zero dollars ($0), in proportion to their
Adjusted Capital Account balances;
(B) Next, to the Partners in proportion to
their Percentage Interests.
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(ii) Notwithstanding anything to the contrary in
Section 4.1(b)(i):
(A) The Losses allocated pursuant to
Section 4.1(b)(i) hereof to any Partner for any
Fiscal Year shall not exceed the maximum amount of
Losses that may be allocated to such Partner without
causing such Partner to have an Adjusted Capital
Account Deficit at the end of such Fiscal Year.
(B) If some but not all of the Partners
would have an Adjusted Capital Account Deficit as a
consequence of an allocation of Losses pursuant to
Section 4.1(b)(i) hereof, the limitations set forth
in this Section 4.1(b)(ii) shall be applied by
allocating Losses pursuant to this Section
4.1(b)(ii) only to those Partners who would not have
an Adjusted Capital Account Deficit as a consequence
of receiving such an allocation of Losses (with the
allocation of such Losses among such Partners to be
determined by the General Partner, based on the
allocation that is most likely to effectuate the
distribution priorities set forth in Section 5.1
hereof).
(C) If no Partner may receive an additional
allocation of Losses pursuant to Section
4.1(b)(ii)(B) above, such additional Losses not
allocated pursuant to Section 4.1(b)(ii)(B) shall be
allocated solely to the Partners in proportion to
their Percentage Interests.
4.2 Special Allocations.
(a) Minimum Gain Chargeback--Partnership Nonrecourse
Liabilities. If there is a net decrease in Partnership Minimum Gain
during any Partnership Fiscal Year, certain items of income and gain
shall be allocated (on a gross basis) to the Partners in the amounts
and manner described in Regulations Section 1.704-2(f) and (j)(2)(i)
and (ii), subject to the exemptions set forth in Regulations Section
1.704-2(f)(2), (3), (4), and (5). This Section 4.2(a) is intended to
comply with the minimum gain chargeback requirement (set forth in
Regulations Section 1.704-2(f)) relating to Partnership nonrecourse
liabilities (as defined in Regulations Section 1.704-2(b)(3)) and
shall be so interpreted.
(b) Minimum Gain Chargeback--Partner Nonrecourse Debt. If
there is a net decrease in Partner Minimum Gain during any Partnership
Fiscal Year, certain items of income and gain shall be allocated (on a
gross basis) as quickly as possible to those Partners who had a share
of the Partner Minimum Gain (determined pursuant to Regulations
Section 1.704-2(i)(5)) in the amounts and manner described in
Regulations Section 1.704-2(i)(4), (j)(2)(ii), and (j)(2)(iii). This
Section 4.2(b) is intended to comply with the minimum gain chargeback
requirement (set forth in Regulations Section 1.704-2(i)(4)) relating
to partner nonrecourse debt (as defined in Regulations Section
1.704-2(b)(4)) and shall be so interpreted.
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(c) Qualified Income Offset. If, after applying Section
4.2(a) and Section 4.2(b), any Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain shall be specially
allocated (on a gross basis) to each such Partner in an amount and
manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of such Partner as
quickly as possible.
(d) Optional Basis Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Code
Sections 734(b) or 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall
be treated as an item of gain (if the adjustment increases the basis
of the asset) or loss (if the adjustment decreases such basis) and
such gain or loss shall be specially allocated to the Partners in a
manner consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such Section of the Regulations.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
Fiscal Year shall be specially allocated among the Partners in
proportion to their Percentage Interests.
(f) Partner Nonrecourse Deductions. Partner nonrecourse
deductions shall be allocated pursuant to Regulations Section
1.704-2(b)(4) and (i)(1) to the Partner who bears the economic risk of
loss with respect to the deductions.
(g) Special Allocation: Economic Sharing Arrangement.
Notwithstanding anything to the contrary in this Article IV, the
Partners acknowledge and agree that the manner in which distributions
are to be made pursuant to Section 5.1 correctly reflects the
Partners' economic sharing arrangement in the Partnership. To the
extent that allocations of Profits, Losses, and other items of income,
gain, loss, and deduction set forth in this Article V (other than this
Section 4.2(g)) could produce an economic sharing arrangement among
the Partners different than that described in Section 5.1, then the
Partnership shall specially allocate items of gross income, gain,
loss, and deduction among the Partners in any manner that may be
required to cause the allocations of Profits, Losses, and other items
of income, gain, loss, and deduction described in Article V to be
consistent with the economic sharing arrangement described in Section
5.1.
4.3 Curative Allocations. The allocations set forth in Section
4.1(b)(ii) and Section 4.2(a) through Section 4.2(f) hereof (the "Regulatory
Allocations") are intended to comply with certain requirements of the
Regulations. It is the intent of the Partners that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Partnership income, gain, loss,
or deduction pursuant to this Section 4.3. Therefore, notwithstanding any other
provisions of this Article IV (other than the Regulatory Allocations), the
General Partner shall make such offsetting special allocations of Partnership
income, gain, loss, or deduction in whatever manner it determines appropriate
so that, after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account
balance such Partner would have had if the Regulatory Allocations were not part
of the Agreement and all Partnership
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items were allocated pursuant to Section 4.1(a), Section 4.1(b)(i), and Section
4.2(g) hereof. In exercising its discretion under this Section 4.3, the General
Partner shall take into account future Regulatory Allocations under Sections
4.2(a) and 4.2(b) that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Sections 4.2(e) and 4.2(f).
4.4 Tax Allocations: Code Section 704(c).
(a) In accordance with Code Section 704(c) and the
Regulations thereunder, income, gain, loss and deduction with respect
to any property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the Partners so as to take
account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its initial
Book Value (computed in accordance with Section 3.2(c)(i) hereof).
(b) If the Book Value of any Partnership asset is adjusted
pursuant to Section 3.2(c)(ii) hereof, subsequent allocations of
income, gain, loss, and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset
for federal income tax purposes and its Book Value in the same manner
as under Code Section 704(c) and the Regulations thereunder.
(c) Any elections or other decisions relating to such
allocation shall be made by the General Partner.
(d) Allocations pursuant to this Section 4.4 are solely for
purposes of federal, state, and local taxes and shall not affect or in
any way be taken into account in computing any Person's Capital
Account, Adjusted Capital Account, or share of Profits, Losses, and
other items or distributions pursuant to any provision of this
Agreement.
4.5 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or any
other item allocable to any period, Profits, Losses, and any such
other item shall be determined on a daily, monthly, or other basis, as
determined by the General Partner using any permissible method under
Code Section 706 and the Regulations thereunder.
(b) For federal income tax purposes, every item of income,
gain, loss and deduction shall be allocated among the Partners in
accordance with the allocations under Sections 4.1, 4.2, 4.3, and 4.4.
(c) The Partners are aware of the income tax consequences of
the allocations made by this Article IV and hereby agree to be bound
by the provisions of this Article IV in reporting their shares of
Partnership income and loss for income tax purposes.
(d) The Partners agree that the Partners' Percentage
Interests represent the Partners' respective interests in Partnership
profits for purposes of allocating excess
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nonrecourse liabilities (as defined in Regulations Section
1.752-3(a)(3)) pursuant to Regulations Section 1.752-3(a)(3).
ARTICLE V
DISTRIBUTIONS
5.1 Distributions of Distributable Cash. The General Partner shall
review the Partnership's accounts at the end of each calendar quarter to
determine whether distributions are appropriate. Subject to Section 17-607 of
the Delaware Act, the General Partner shall authorize such distributions of
Distributable Cash as it may determine in its sole discretion; provided,
however, to the extent there is sufficient Distributable Cash to make
distributions under Section 5.1(a) hereof, such distributions shall be made. All
such distributions of cash shall be made pro rata in accordance with the
Partners' Percentage Interests.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF PARTNERS
6.1 General Partner.
(a) Authority. The business and affairs of the Partnership
will be managed by the General Partner, subject to the limitations and
restrictions contained in applicable law. All determinations relating
to the business and affairs of the Partnership will be made by the
General Partner in its sole discretion. The General Partner will at
all times act and exercise its discretion hereunder in a reasonable
manner consistent with its fiduciary duty to the Limited Partner. The
General Partner will have complete authority to take, in the name of
the Partnership, any action that the General Partner determines to be
appropriate under this Agreement or for the conduct of the business of
the Partnership. All decisions and actions taken by the General
Partner under the authority of this Section 6.1 will be binding upon
all of the Partners and the Partnership. Each Partner will promptly
execute instruments determined by the General Partner to be
appropriate to evidence the authority of the General Partner to
consummate any transaction permitted by this Agreement.
(b) Reliance by Third Parties. Notwithstanding any other
provision of this Agreement to the contrary, no purchaser of property
from the Partnership or other person dealing with the Partnership will
be required to verify any representation by the General Partner as to
its authority to encumber, sell or otherwise use any assets or
properties of the Partnership, and any such purchaser or other person
will be entitled to rely exclusively on such representation and to
deal with the General Partner as if it were the sole party in interest
therein, both legally and beneficially.
(c) Indemnification. The Partnership will indemnify and hold
harmless the General Partner and any partner, member, employee, agent
or representative of the General Partner against all liabilities,
losses and damages incurred by any of them by reason of any act
performed or omitted to be performed in the name of or on behalf of
the Partnership, or in connection with the Partnership's business,
including attorneys' fees
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and any amounts expended in the settlement of any claims or
liabilities, losses or damages, to the fullest extent permitted by the
Delaware Act; provided that no Partner will be subject to personal
liability by reason of the indemnification provisions of this Section
6.1(c).
(d) Liability of General Partner. The General Partner will
not be liable to the Partnership or any Limited Partner for errors in
judgment or for any acts or omissions that do not constitute gross
negligence or willful or wanton misconduct, including without
limitation those acts or omissions that may constitute simple
negligence.
(e) Reliance by General Partner. The General Partner may rely
on and will be protected in acting or refraining from acting in
reliance on any resolution, certificate, statement, instrument,
opinion, report or other document believed by it to be genuine and to
have been signed or presented by the proper party or parties. The
General Partner may consult with legal counsel, accountants and other
consultants and advisers selected by him, and any opinion of any such
consultant or adviser as to matters which the General Partner believes
to be within such person's professional or expert competence will be
full and complete authorization and protection in respect of any
action taken or suffered or omitted by the General Partner hereunder
in good faith and in accordance therewith.
6.2 Authority of Limited Partner. The Limited Partner may not take
part in the control (as defined in the Act) of the Partnership, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership or any of the Partners, except as expressly set
forth in this Agreement.
6.3 Reimbursement of Expenses. The Partnership will reimburse the
Partners for any expenses reasonably incurred by them on the Partnership's
behalf.
6.4 Outside Activities. Each Partner and any affiliate thereof may
have business interests and engage in business activities in addition to those
relating to the Partnership, and neither the Partnership nor any of the
Partners will have any rights by virtue of this Agreement or the partnership
relationship created hereby in any business ventures of any other Partner or
any affiliate thereof.
ARTICLE VII
TAX MATTERS; BOOKS AND RECORDS
7.1 Tax Matters Partner. SFG Management shall be the "Tax Matters
Partner" for Federal income tax purposes pursuant to Section 6231 of the Code
with respect to each applicable taxable year of the Partnership. SFG Management
is authorized to do whatever is necessary to qualify as such.
7.2 Annual Tax Returns. SFG Management shall prepare or cause the
Independent Accountants to prepare, at the Partnership's expense, and shall
timely file, or cause the timely filing of, all tax returns and shall, on
behalf of the Partnership, timely file, or cause the timely
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filing of, all other writings required by any governmental authority having
jurisdiction to require such filing.
7.3 Tax Elections. SFG Management shall do all acts, make all
elections and take whatever reasonable steps are required to maximize, in the
aggregate, the federal, state, and local income tax advantages available to the
Partnership and shall defend all tax audits and litigation with respect thereto
at the expense of the Partnership. SFG Management shall maintain the books,
records, and tax returns of the Partnership in a manner consistent with the
acts, elections and steps taken by the Partnership.
7.4 Taxation as a Partnership. No election shall be made by the
Partnership or any Partner for the Partnership to be excluded from the
application of any of the provisions of Subchapter K, Chapter 1 of Subtitle A
of the Code or from any similar provisions of any state tax laws.
7.5 Books, Records and Accounting. The General Partner will keep or
cause to be kept appropriate books and records with respect to the
Partnership's business. The funds of the Partnership will be deposited in
separate accounts in the name of the Partnership. The fiscal year of the
Partnership will be the calendar year.
ARTICLE VIII
RESTRICTIONS ON TRANSFER
8.1 Consent of Partners Required for All Transfers. Neither Partner
may sell, assign, convey, transfer, pledge or hypothecate in any manner
(together, "Transfer") all or any portion of its Partnership Interest without
the prior written consent of the other Partner, and any attempted Transfer in
contravention of this requirement shall be void and of no effect.
8.2 Substitute Partners. Notwithstanding the other provisions of this
Article VIII, no third party that acquires a Partnership Interest will have the
right to participate in the management or control of the Partnership or to vote
with respect to such Partnership Interest unless such transferee is admitted as
a Partner with the written consent of each Partner. No transfer of a
Partnership Interest (whether voluntary or involuntary) will be effective
unless and until the transferee executes all documents and agreements deemed
reasonably necessary or advisable by the General Partner to evidence such
transfer and to insure that such transferee has assumed the duties and
obligations of a Partner under this Agreement.
8.3 No Additional Partnership Interests. Except for transfers of
Partnership Interests in accordance with this Article VIII, the Partnership
will not issue additional Partnership Interests without the written consent of
each Partner.
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ARTICLE IX
DISSOLUTION AND WINDING UP
9.1 Dissolution. The Partnership will be dissolved upon:
(a) an election to dissolve the Partnership that is approved
in writing by both Partners;
(b) any other event that, under the Delaware Act, would cause
the dissolution of the Partnership.
9.2 Reconstitution. Upon the occurrence of any event that would cause
the dissolution of the Partnership pursuant to clause (b) of Section 9.1, the
Partnership may be reconstituted and its business continued upon unanimous
approval by the remaining Partners obtained within 60 days after the date of
dissolution.
9.3 Liquidation. If the Partnership is dissolved and not
reconstituted, the General Partner, or, if the General Partner is unable or
unwilling to act in such capacity, a liquidator or liquidating committee
selected by Partners holding a majority of the outstanding Partnership
Percentages (the "Liquidator"), will proceed to wind up the affairs of the
Partnership in an orderly manner. Except as expressly provided in this Article
IX, the Liquidator will have and may exercise, without further authorization or
consent of any of the parties hereto, all of the powers conferred upon the
General Partner under the terms of this Agreement (but subject to all of the
applicable limitations, contractual and otherwise, upon the exercise of such
powers) to the extent necessary or desirable in the good faith judgment of the
Liquidator to carry out the duties and functions of the Liquidator hereunder
for such period of time as is reasonably required in the good faith judgment of
the Liquidator to complete the winding up and liquidation of the Partnership as
provided for herein. The Liquidator will apply and distribute the assets of the
Partnership (and any proceeds from the liquidation thereof) in the following
order of priority, unless otherwise required by mandatory provisions of
applicable law:
(a) to the payment of the expenses of the terminating
transactions, including without limitation brokerage commissions, legal
fees, accounting fees and closing costs;
(b) to the creditors of the Partnership, including Partners,
in the order of priority provided by law; and
(c) to the Partners in accordance with the positive balances
in their respective Capital Accounts; provided however, that the
Liquidator may place in escrow a reserve of cash or other assets of the
Partnership for contingent liabilities in an amount reasonably
determined by the Liquidator to be appropriate for such purposes.
9.4 Distribution in Kind. If the Partnership is dissolved and it is
not necessary to liquidate all the assets of the Partnership to make the
payments required by Section 9.3(a) or 9.3(b), then the Liquidator may make an
in-kind distribution of any remaining Partnership
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property to the Partners in lieu of all or a portion of the cash distribution
required by Section 9.3(c).
9.5 Termination of Partnership. Upon completion of the distribution of
Partnership property as provided in Sections 9.3 and 9.4 of this Agreement, the
Partnership will be terminated, and the Liquidator shall file any appropriate
instruments in accordance with the Delaware Act to terminate the Partnership.
ARTICLE X
GENERAL PROVISIONS
10.1 Addresses and Notices. Any notice, demand, request or report
required or permitted to be given or made to a Partner under this Agreement
must be in writing and will be deemed given or made (a) when delivered in
person or sent by telecopy, (b) one day after being sent by overnight delivery
service, or (c) three days after being sent by United States registered or
certified mail, in each case to the Partner at its address as shown on the
records of the Partnership, notwithstanding any claim of any person who may
have an interest in any Partnership Interest by reason of an assignment or
otherwise.
10.2 Titles and Captions. All article and section titles and captions
in this Agreement are for convenience only and are not intended to be part of
this Agreement or to define, limit, extend or describe the scope or intent of
any provisions hereof. Except as specifically provided otherwise, references to
"Articles" and "Sections" are to Articles and Sections of this Agreement.
10.3 Pronouns and Plurals. Wherever the context may require, any
pronoun used in this Agreement includes the corresponding masculine, feminine
or neuter forms, and the singular form of nouns, pronouns and verbs includes
the plural and vice versa.
10.4 Further Action. The parties agree to execute all documents,
provide all information and take or refrain from taking all actions as may be
reasonably necessary or appropriate to achieve the purposes of this Agreement.
10.5 Binding Effect. This Agreement will be binding on and inure to the
benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
10.6 Integration. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
10.7 Third Party Beneficiaries. None of the provisions of this
Agreement are intended to confer any benefit on any creditor of the Partnership
or any other third party.
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10.8 Amendment and Waiver. This Agreement may be amended only in a
writing executed and delivered by all of the Partners. No failure by any party
to insist upon the strict performance of any covenant, duty, agreement or
condition of this Agreement or to exercise any right or remedy consequent upon
a breach thereof will constitute waiver of any such breach or any other
covenant, duty, agreement or condition.
10.9 Counterparts. This Agreement may be executed in counterparts, all
of which together will constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.
10.10 Applicable Law. This Agreement will be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
10.11 Invalidity of Provisions. If any provision of this Agreement is
declared or found to be illegal, unenforceable or void, in whole or in part,
then the parties will be relieved of all obligations arising under such
provision, but only to the extent that it is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement be deemed
amended by modifying such provision to the extent necessary to make it legal
and enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
[THE REMAINING PORTION OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement is executed effective as of 12:01
a.m., January 1, 2000.
GENERAL PARTNER:
SFG MANAGEMENT, LLC
By: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
Address:
0000 XxXxxxxx Xxx.
LB 30, Suite 1200
Xxxxxx, Xxxxx 00000
LIMITED PARTNER:
SUIZA FLUID DAIRY GROUP, L.P.
By: Suiza Fluid Dairy Group GP, LLC,
Its General Partner
By: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Title: Vice President
Address:
0000 XxXxxxxx Xxx.
LB 30, Suite 1200
Xxxxxx, Xxxxx 00000
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EXHIBIT A
PARTNERS AND PERCENTAGE INTERESTS
Partner Percentage
----------------------------------------------- Interest
-----------
SFG Management, LLC (General Partner) 1.00%
Suiza Fluid Dairy Group, L.P. (Limited Partner) 99.00%
Total 100.00%
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