PARTNERSHIP AGREEMENT
STARWOOD AMPHITHEATER OPERATING COMPANY
THIS AGREEMENT made and entered into this 23 day of February, 1986, by and
between XXXX INVESTMENT COMPANY, INC., a Tennessee corporation organized under
the laws of the State of Tennessee, and XXXXXX X. XXXX, both of the preceeding
hereinafter referred to as "Xxxx", and XXXX PRODUCTIONS, INC., a corporation
organized under the laws of the State of Texas, hereinafter referred to as
"Pace", as the Original Partners, each hereinafter referred to individually as
"Partner" or collectively as "Partners".
WITNESSETH:
WHEREAS, Xxxx and Xxxx desire to form a partnership for the specific
purposes and upon the specific terms hereinafter set out;
NOW, THEREFORE, for and in consideration of the premises and their mutual
covenants and agreements contained herein the parties do agree as follows:
Article I
Formation of Partnership
Section 1.01 - Formation of Partnership
(a) Xxxx and Pace hereby enter into and form a partnership (the
"Partnership") for the limited purpose and scope set forth herein, which shall
be known as STARWOOD AMPHITHEATER OPERATING COMPANY.
(b) Except as expressly provided for herein to the contrary, the rights
and obligations of the Partners and the administration of the Partnership shall
be governed by the Tennessee Uniform Partnership Act.
(c) A Partner's interest in the Partnership shall be personal property for
all purposes. All real and other property owned by the Partnership shall be
deemed owned by the Partnership as an entity, and no Partner, individually,
shall have any ownership of such property.
(d) No Partner shall be liable for any obligations incurred by the other
Partners whether incurred before or after the execution of this Agreement,
except obligations incurred by the Partnership pursuant to the terms of this
Agreement. Each Partner hereby indemnifies the other and agrees to hold the
others harmless from all such excluded obligations.
Section 1.02 - Purposes and Scope of the Partnership
The business of the Partnership shall be limited strictly to the
development and management of an outdoor Amphitheater and entertainment facility
to be constructed in Davidson County, Tennessee (hereinafter the "Project") and
in connection therewith the Partnership may purchase, lease, or otherwise
acquire, hold, own, manage, operate, mortgage, sell, convey, exchange, develop,
improve, option, lease, sublease, subdivide, or otherwise dispose of real estate
and related personal property, of every class and description (including without
limitation interests in other corporations, partnerships, joint ventures,
associations and syndicates involved in said activities), and any said estate or
interest therein, including leaseholds, for any term, in any of the states,
districts, territories, or colonies of the United States, and in any and all
foreign countries, subject to the laws of such state, district, territory,
colony, or country and the operation and management thereof for the production
of income and profit, including the payment of all ad valorem taxes,
assessments, and other impositions thereon, preparing detailed plans for the
development thereof, the construction of buildings and other improvements, and
such other activities ordinarily included in the operation and management of
outdoor Amphitheaters and entertainment facilities for the production of income
and profit, and shall not be extended by implication or otherwise except by the
written agreement of the Partners. Except as otherwise expressly and
specifically provided in this Agreement, no Partner shall have any authority to
act for or to assume any obligation or responsibility on behalf of any other
Partner or the Partnership.
Section 1.03 - Name of Partnership
The sole business and affairs of the Partnership shall be conducted solely
under the name of Starwood Amphitheater Operating Company and such name shall be
used at all times in connection with the Partnership business and affairs.
Section 1.04 - Scope of Partner's Authority
Except as otherwise expressly and specifically provided in this Agreement,
no Partner shall have any authority to act for, or to assume any obligation or
responsibility on behalf of, any other Partner or the Partnership.
Section 1.05 - Principal Place of Business
The principal place of business of the Partnership shall be:
0000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Article II
Management of Partnership
Section 2.01 - Managing General Partner
Pace Productions, Inc. (the Managing General Partner) shall act as the
Managing General Partner of the Partnership subject to and in accordance with
the terms of this Agreement.
Section 2.02 - Duties of Managing General Partner
(a) The Managing General Partner at the expense of, and on behalf of, the
Partnership, shall in good faith use its best efforts to (i) implement or cause
to be implemented all Major Decisions approved by the Executive Committee and
(ii) to conduct or cause to be conducted the day-to-day business and affairs of
the Partnership in accordance with, and as limited by, this Agreement, including
the following:
1. Protect and preserve the assets owned by the Partnership;
2. Render for taxation and pay all ad valorem taxes, assessments, and
other impositions applicable to the property owned by the
Partnership;
3. Negotiate and when approved by the Executive Committee, enter into
and supervise the performance of contracts covering the construction
of improvements;
4. Determine the type and limits of fidelity bonds obtained on various
employees of the Partnership;
5. Keep all books of account and other records of the Partnership;
6. Retain or employ and coordinate the services of all employees and
other persons necessary or appropriate to carry out the business of
the Partnership;
7. To the extent that funds from the Partnership are available
therefor, pay all debts and other obligations of the Partnership,
including all amounts due under financing of improvements, if
applicable, or other loans to the Partnership and costs of operation
and maintenance of the improvements therefore;
8. Maintain all funds of the Partnership held by Executive Committee in
a Partnership account in a bank or banks approved by the Partners;
9. The Managing General Partner shall cause to be prepared and
furnished to each Partner promptly after the close of each calendar
month, and unaudited statement, certified by the Managing General
Partner to be true and correct to the best of its knowledge and
belief, showing the operation of the Partnership for such month, the
unpaid balance due of all obligations of the Partnership, and all
other information reasonably requested by the Partners. The Managing
General Partner shall cause to be prepared and furnished to the
Partners, promptly after the close of each calendar year, all
information necessary for which a balance sheet of the Partnership
dated as of the end of the calendar year, and a related statement of
income or loss for such calendar year may be prepared. The Managing
General Partner shall also cause to be prepared and filed all
applicable partnership tax returns.
10. Make distributions periodically to the Partners, in accordance with
the provisions of this Agreement;
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11. Perform other normal business functions and otherwise operate and
manage the day to day business and affairs of the Partnership in
accordance with, and as limited by, this Agreement;
12. Purchase contracts of liability, casualty or other insurance for the
protection of the Partnership the limits of which shall be approved
by the Executive Committee; and
13. Perform other obligations as directed by the Partners and as
provided elsewhere in this Agreement to be performed by the Managing
General Partner.
(b) The Managing General Partner shall be obligated to perform its
responsibilities and obligations hereunder only to the extent that funds of the
Partnership are available therefore.
Section 2.03 - Executive Committee
(a) Disposition of all Major Decisions of the Partnership shall be vested
in an Executive Committee comprised of two (2) groups with Xxxx as one group and
Pace as a group, each respective group being entitled to one (1) vote upon any
matter required to be approved by the Executive Committee. All Major Decisions
with respect to the overall management and control of the Executive Committee
shall be made and agreed to by the Partners and shall be binding on the
Partnership and all Partners. The Executive Committee shall at all times consist
of 2 members, one to be appointed by each Group. Any member of the Executive
Committee may be removed and replaced at any time by the respective Group that
appointed such member upon written notice of such removal and replacement to the
other Managers. Initially, and until replaced as above, the members for the
Executive Committee shall be:
For Pace: Xxxxx X. Xxxxxx
0000 Xxxx Xxx Xxxxx Xx.
Xxxxx 000
Xxxxxxx, XX 00000
For Xxxx: Xxxx X. Xxxx
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
In the event of the death, resignation, or removal of any member of the
Executive Committee, the Partner who appointed such member shall have ten (10)
days within which to appoint a successor member. The Executive Committee, at its
first meeting, shall establish a regular meeting time and place and may also
meet upon ten days' (10) written notice from one Partner to the other Partners.
The Executive Committee shall designate one of its members to serve as Secretary
and it shall be the responsibility of the Secretary to keep the minutes of
meetings and of decisions made pursuant to written approvals and shall timely
furnish copies to all Partners. Except as may otherwise be permitted under this
Agreement or other Agreements approved by the Executive Committee, no action of
the Partnership shall be effective or binding upon the Partnership or any of its
Partners without the vote of both members of the Executive Committee. The
Executive Committee may act without a meeting if action taken is approved in
writing prior to the taking of such action by the members necessary to take such
action at a meeting.
(b) No act shall be taken or sum expended or obligation incurred by the
Partnership, Executive Committee, or any Partner with respect to a matter within
the scope of any of the major decisions ("Major Decisions") affecting the
Partnership, as defined below, unless the Major Decisions have been approved
unanimously by the members of the Executive Committee. The Major Decisions shall
be the following:
1. Purchase of real property;
2. General architectural considerations with respect to the improvement
of the real property owned, leased or acquired by the Partnership;
3. Determining whether or not distribution should be made to the
Partners, as provided by Section 5.03 herein;
4. Financing obtained by the Partnership;
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5. Sale, leasing, mortgaging or the placing of any other encumbrance
upon any real property owned or leased by the Partnership;
6. All decisions relative to the use and development of the real
property owned or acquired by the Partnership;
7. Applications for zoning or other arrangements involving the use or
development of the property owned or acquired by the Partnership;
8. The contracting for the construction of any improvements on
Partnership property involving an expenditure of more than
$10,000.00;
9. Terminating or modifying (i) any lease or (ii) any other contract
excluding contracts between the Partnership and entertainers or
performing artists for personal services at the Project which shall
be performed in eight days or less;
10. Approving each Budget pursuant to Section 2.04 herein;
11. Making any expenditure or incurring a sum in excess of $10,000.00
for the transaction or group of similar transactions, provided,
however that this provision shall not apply to contracts with
entertainers or performing artists which are included in the Budget
and shall be performed in eight days or less;
12. Determination of the maximum and minimum working capital
requirements of the Partnership;
13. The adjustment, compromise or settlement of any claim, objection,
debt, demand, suit or judgment against the Partnership in excess of
$10,000.00;
14. Any Agreement, Contract, Lease or other arrangement whether written
or oral with any Partner or any affiliate of a Partner. For the
purpose of this paragraph, Affiliate shall include relatives or
family members of a Partner as well as any entity controlled by a
Partner, or in which a Partner has an equity involvement and shall
include entities related to a Partner;
It is agreed that the exceptions to 2.03 (b) 9 and 11 are for the purpose
of enabling the Managing Partner to implement the day to day operation of the
Project by contracting with performing artists and entertainers. It is the
intention of the Partners, however, to consult on a regular, periodic basis
relative to the type of entertainment to be presented at the Project and general
financial parameters relative thereto. The Managing Partner shall submit for the
approval of the Executive Committee annually, with the Budget provided for in
Section 2.04 hereinbelow, a proposed list of artists and entertainers with whom
it intends to contract during the following year. This listing shall be updated
quarterly and the Managing Partner shall use best efforts not contract with or
employ any artists or entertainers which are objectionable to a member of the
Executive Committee.
Section 2.04 - Budgets
Not less often than once each fiscal year, the Managing General Partner
shall prepare and submit to the Executive Committee for its consideration a
budget ("Budget") setting forth the estimated receipts and expenditures
(capital, operating and other) of the Partnership for the period covered by the
Budget. When approved by the Executive Committee, the Managing General Partner
shall use its best efforts to implement the Budget and shall be authorized
without the need for further approval by the Executive Committee to make the
expenditures and incur the obligations only to the extent as is provided for in
the Budget.
Section 2.05 - Compensation of the Partners
Except as may be expressly provided for herein or hereafter approved by
the Partners, no payment will be made by the Partnership to any Partner for the
services of such Partner or any representative or employee of any Partner nor
shall any Partner receive or retain directly or indirectly any fees for their
services in development, planning, marketing, promotion and operation of the
Project. The Partners agree to devote an appropriate portion of their time and
efforts toward the planning, development, marketing and operation of the
Project. Partners may be reimbursed for their verified out of pocket expenses
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incurred in furtherance of the Project provided such expenses are set forth in
the Annual Budget.
Section 2.06 - Contracts with Related Parties
The Partnership shall not enter into any contract, agreement, lease, or
other arrangement for the furnishing to or by the Partnership of goods, services
or space or payment of commission to any party or entity related to or
affiliated with any Partner, or with respect to which any Partner or party or
entity related to or affiliated with any Partner has a direct or indirect
ownership or control unless such contract, agreement, lease or other arrangement
has been approved unanimously by the Executive Committee. There shall be no
disproportionate charges to the Project for any joint services or similar
contracts involving other sites managed or owned by a Partner.
Section 2.07 - Consents and Approval
In any instance under this Agreement in which the consent or approval of a
Partner to any proposed action is required, such consent or approval shall be
deemed to have been given unless written objection to such proposed action,
stating the grounds therefor with particularity, is sent by such objecting
Partner to the other Partner within seven days after receipt of a written
request for such consent or approval.
Article III
Transfer Of Property Or Partner Interests
Section 3.01 - Sale, Assignment, Transfer of Other Disposition
(a) Except as provided in this Article III hereof, no Partner may sell,
transfer, assign or otherwise dispose of, or mortgage, hypothecate, or otherwise
encumber or permit or suffer any encumbrance of all or any part of its interest
in the Partnership unless approved by the Partners and any attempt to so
transfer or encumber any such interest shall be void.
(b) The interest of any Partner in the Partnership may be sold,
transferred, assigned, pledged, encumbered, hypothecated or conveyed upon the
following conditions:
(1) A Partner may sell, transfer or encumber any part of his/its interest
in the Partnership to one or more Partners; provided, however, each other
Partner shall have the primary right to purchase that portion of the
transferred Partnership interest, computed by the proportion which such
Partner's percentage interest bears to the percentage interest of all the
other Partners (excluding the percentage interest of the Partner desiring
to transfer part of his/its interest) and also a secondary right to
purchase any remaining percentage not purchased by the other Partners.
(2) A Partner may transfer all or any portion of his/its interest in the
Partnership by will, or intestacy, to the decedent's heirs, devisees,
administrators or executors, provided that any such devisees, heirs,
administrators or executors shall hold such interest subject to all the
terms and provisions of this Agreement.
(3) Xxxx shall be permitted to transfer all or a part of its interest to
other members of the Xxxx family, or entities of which controlling
interest are owned by such member, i.e., from descendants of Xxxxxx Xxxx
or their spouses, without the consent of the other Partner(s) provided the
other Partner(s) are notified at least ten (10) days prior to such
transfer.
(4) Pace shall be permitted to transfer all or a part of its interest to
entities of which a controlling interest is owned by Xxxxx X. Xxxxxx or
Xxxxxx Xxxxxxxx (or to members of their immediate families or their
spouses, provided that either Xxxxx Xxxxxx or Xxxxxx Xxxxxxxx continues to
be the managing partner or chief executive officer of the assignee)
without the consent of the other Partner(s) provided the other partner(s)
are notified at least ten (10) days prior to such transfer.
(5) A Partner may sell, transfer, assign, pledge, encumber, hypothe-
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cate or convey all or any part of his interest in the Partnership upon the
written approval of the Partners.
Notwithstanding the foregoing, none of the Partners may, without the consent of
all the Partners, assign its interest in the Partnership if such proposed
assignment, when considered with any other assignment of Partnership interest
during the twelve (12) month period ending on the date of such proposed
assignment, would cause the termination of the Partnership for federal tax
purposes.
Section 3.02 - Right of Sale and First Refusal
(a) If any Partner (hereinafter called the "Selling Party") shall desire
to sell (any type of disposition including any transfer or encumbrance is
hereinafter included in the term "sell" or "sale") all or any portion of its
interest in the Partnership to a person or party in a transaction other than as
may be provided for herein, the Selling Party may consummate such sale only if
it has complied with the following provisions and conditions:
(1) The Selling Party shall deliver to the other Partners, within seven
(7) days of the execution thereof, an executed copy of a bona-fide
written contract with an individual, partnership, firm or corporation.
Such contract shall be unassignable; provide for a closing not less than
thirty (30) or more than one hundred twenty (120) days from the date of
the contract; be accompanied by a good certified or bank cashier's check
for not less than five percent (5%) of the purchase price (which check
shall on request of any Partner be placed in escrow until the closing);
provide for a consideration of the balance of the purchase price to be
paid in cash (all or a portion of which may be represented by a purchase
money mortgage) only, and also be accompanied by a statement, in
reasonable detail, or the personal and financial information relating to
the prospective purchaser. The executed copy of the contract, a copy of
the check, and the statement, shall be accompanied by a request by the
Selling Party to approve such sale or to purchase the Selling Party's
interest in the Partnership as provided in the Contract;
(2) The other Partners shall have the right either (1) to allow the
Selling Party to sell its interest in the Partnership as called for in the
contract, or (ii) to purchase the interest of the Selling Party in the
Partnership as specified in the contract equal to the proportionate
interest of each Partner in the Partnership at the price contained in the
contract and on the other terms and conditions of such contract (except
that the other Partners may pay the entire purchase price in cash at the
closing). Should any of the other Partners elect not to purchase its pro
rata portion of such interest, the remaining Partners may purchase any
such portion, provided however, unless all of the interest of the Selling
Party is purchased by the other Partners, the other Partners shall be
deemed to have allowed the proposed sale; and
(3) The other Partners shall have a period of fifteen (15) days after the
service of the Selling Party's notice specified in subparagraph (1) above
to serve upon the Selling Party a notice which shall specify whether such
Partners shall approve the sale to the prospective purchaser, or whether
such Partners shall purchase the interest of the Selling Party specified
in the contract as provided above. If the other Partners fail to respond
within such time or fail to agree within such time to purchase the
interest of the Selling Party specified in the contract, they shall, if
necessary, execute, acknowledge and deliver such documents, or cause the
same to be done, as shall be required to effectuate the sale of such
interest in accordance with such contract.
Any closing in respect to the sale of the Selling Party's interest in the
Partnership shall be held at the time and place specified in the
bona-fide contract, or as specified by the purchasing Partners, as the
case may be, but in any event within ninety (90) days after the notice
sent to the Partners by the Selling Party. If said sale to a third party
is not completed within said ninety (90) day period, the Selling Party
must again submit the contract (or any new contract) to
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the other Partners, and the other Partners shall have all of the right
provided in this Article 3.02.
(b) If the Selling Party has agreed to pay any commission or fee to any
agent or broker by reason of the sale or proposed sale under this Section, the
Selling Party shall cause said agent or broker to deliver to Selling Party a
certification by the agent or broker as to the identity of all parties who will
share such commission and the respective amounts to be shared. A true and
correct copy of the certification shall also accompany the copy of the bona fide
contract. To the extent that the certification discloses that the broker or
agent will share any part of the commission or fee with the proposed purchaser,
then to the extent permitted by law, the broker shall be required to share the
commission to the same extent with the other Partners. However, in no event
shall the Partnership or the other Partners be required to pay any commission or
fees to any broker or agent.
(c) In the event that the proposed sale is completed pursuant to such
contract, the new Partner shall be a Partner under the terms and provisions of
this Agreement together with all of the rights, duties and obligations
pertaining thereto including the right and restrictions contained in this
Section with respect to further sale, however, no such new Partner shall possess
any rights of management and, in addition, no party shall become such a new
Partner if there has been any change in the identity of the proposed new
Partner, or any substantial change in the terms and conditions of the bona fide
contract or sale unless approved by the Partners.
Section 3.03 - No Right to Partition
No partner shall have the right to partition any property of the
partnership during the term of this Agreement nor shall any partner make
application to any court or authority having jurisdiction in the matter or
commence or prosecute any action or proceeding for partition or the sale
thereof, and upon any breach of the provisions of this paragraph by any partner,
the others, in addition to all rights and remedies in law and in equity they may
have, shall be entitled to a decree or order restraining and enjoining such
application, action or proceeding.
Article IV
Finance
Section 4.01 - Initial Contributions
The initial contributions and interests of the Partners are as follows:
Cash
Contribution
As to Xxxx Investment Company, Inc. $ 9,400.00
As to Xxxxxx X. Xxxx 600.00
As to Pace: $10,000.00
Xxxx and Xxxx shall contribute to the Partnership good, marketable and
insurable fee simple title to acres of real property more particularly
described on Exhibit "A" hereto at a stated and agreed net value to be
reflected in its capital account which is based on a value of $15,000 per
acre.
Section 4.02 - Additional Contributions
(a) If, from time to time, the aggregate of the Partnership net income and
the sums contributed to the Partnership, pursuant to Section 4.01 hereof, are
not adequate to finance the (i) cost of any property acquisition, development or
any improvements, (ii) operating deficits, and (iii) other sums of money
required to be expended in connection with the business and affairs of the
Partnership, then from time to time, as required by the vote of the Executive
Committee, the Partners, in their respective Ownership Percentage, shall
contribute to the Partnership such additional capital as may be required to
finance the expenditures referred to in subsections (i) through (iii) of Section
4.02. The amounts so contributed shall be credited to the Partners' respective
capital accounts. The need for additional capital, the amount of
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additional capital required and the time for contribution of such additional
capital shall be determined from time to time by the Executive Committee and
written notice thereof shall be given to all Partners at least thirty (30) days
prior to the time payments are required. Each Partner shall, within the time
prescribed by the Executive Committee, contribute such amount of additional
capital as his then current Ownership Percentage bears to the total additional
capital then being contributed by all Partners.
(b) In the absence of Executive Committee requirement, as aforesaid, the
Partners shall make additional capital contributions (the "Additional
Contributions") to the Partnership in proportion to their Percentage Interests
after written notice from any Partner to the other Partners of the total amount
of capital contribution which is required in order for the Partnership to have
at least Ten Thousand Dollars ($10,000.00) in cash on hand for general working
capital or for the Partnership to make any payment required to cure or prevent
default under any obligation of the Partnership (provided said obligation was
incurred with approval of the Executive Committee) or any payment to prevent
execution on any judgment obtained against the Partnership or any property of
the Partnership provided the property was acquired with approval of the
Executive Committee. Within ten (10) days after receipt of notice from any
Partner pursuant to Section 8.01 for a call for Additional Contributions or a
decision is reached pursuant to this Article for Additional Contributions, each
Partner agrees to contribute to the Partnership an amount equal to the product
of his Percentage Interest (in effect at the time of such notice) multiplied by
the aggregate amount of such Additional Contribution required by the
Partnership. Each Partner shall be personally liable to the Partnership for his
share of the Additional Contribution. The amounts so contributed shall be
credited to the Partners' respective capital accounts.
(c) No interest shall accrue to be paid on any capital contributions to
capital made by any Partner.
(d) In the event a Partner ("Non-Contributing Partner") does not
contribute his entire pro-rata share of additional capital as is required by
this Section, such of the other Partners as shall have contributed their
pro-rata share of such additional capital, may, on a pro rata basis, contribute
such Non-Contributing Partners uncontributed amount of additional capital. In
such an event, the contributing Partner or Partners may by reason of their extra
contribution, acquire a portion of the Non-Contributing Partner's interest in
the Partnership which portion shall be that portion required to cause each
Partner's interest in the Partnership to be in precise proportion to each
Partner's total contribution to the Capital of the Partnership (including the
initial contribution to the capital of the Partnership). The failure of a
Partner to contribute such additional sums of money shall be considered a
default only in event the other Partners shall fail or refuse to contribute such
Non-Contributing Partner's share of additional capital as hereinabove set forth.
(e) Any advances of money to the Partnership by any Partner in excess of
its agreed capital contribution may at the option of the Partner so advancing
the funds be deemed a loan to the Partnership by said Partner, to be repaid by
the Partnership on a bear interest, at the same rate as the prime rate as set by
First Tennessee Bank, for 12 months. If said loan is not repaid to the Partner
by the Partnership within a period of 12 months then such sum shall cease to be
a loan and shall immediately become a capital contribution by said Partner to
the said Partner's capital account and the provision of Article Four (b) shall
be applicable.
(f) The Partnership shall endeavor to obtain the most favorable financing
arrangements for improvements to be constructed by the Partnership, including
non-recourse financing when available. To the extent that guarantees of
indebtedness may be required in connection with financing of improvements, such
guarantees shall be in proportion to the Partnership interests of the individual
Partners and not joint and several guarantees unless otherwise agreed by the
Executive Committee.
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Article V
Accounting and Distributions
Section 5.01 - Ownership of Partnership
The Partnership shall be owned initially by the Partners in the percentage
interest (hereinafter referred to as "Ownership Percentage") set forth opposite
each of their names below, to wit:
Ownership
Percentage
----------
PACE PRODUCTIONS, INC. 50
XXXXXX X. XXXX 3
XXXX INVESTMENT COMPANY, INC. 47
Section 5.02 - Tax Status, Allocations, and Reports
(a) Any provision hereof to the contrary notwithstanding, solely for the
United States federal income taxes purposes, each of the Partners hereby
recognizes that the Partnership will be subject to all provisions of subchapter
K of chapter 1 of subtitle A of the United States Internal Revenue Code of 1954;
provided, however, the filing of a U. S. Partnership Return of Income shall not
be construed to extend the purposes of the Partnership or expand the obligations
of the Partners. At the request of any Partner, the Partnership shall file an
election under Section 754 of the United States Internal Revenue Code of 1954.
All of the partners shall share in the property and capital of the Partnership
in the proportions set forth in Section 5.01, opposite their respective names,
and subject to the terms and conditions hereinafter provided, each class or item
of income, gain, loss, deduction, or credit of the Partnership shall be
allocated in the proportions set forth in Section 5.01 and all available cash,
irrespective of how realized, shall be distributed as provided in Section 5.03.
(b) The Managing General Partner shall prepare or cause to be prepared all
tax returns and statements, if any, which must be filed on behalf of the
Partnership with any taxing authority, and shall submit such returns and
statements to all of the Partners for their approval prior to filing, and upon
approval thereof by all the Partners, make timely filing thereof.
(c) For accounting and federal and state income tax purposes, except as
herein and otherwise specifically provided, all income, deductions, credits,
gains and losses of the Partnership shall be allocated to the Partners in the
Ownership Percentage, provided, however, if the computation of the amount of any
such item uses a basis of property transferred to the Partnership by a Partner
different from the tax basis of such property the difference between such amount
and the amount of such item computed by using the tax basis of such property
shall be allocated for tax purposes to the Partner transferring such property to
the Partnership. Any item which is stipulated to be an expense of the
Partnership under the terms of this Agreement or which would be so treated in
accordance with generally accepted accounting principles shall be treated as an
expense of the Partnership for all purposes hereunder, whether or not such item
is deductible for purposes of computing net income for federal income tax
purposes.
Section 5.03 - Distribution to the Partners
(a) At the end of each calendar quarter, the Executive Committee shall
determine reasonable working capital requirements of the Partnership to service
the debt and other obligations of the partnership. The terms "Distributable
Funds" shall mean the amount by which the total of the cash owned by the
Partnership from time to time is in excess of the sum of the reasonable working
capital requirements of the Partnership, and the outstanding loans by the
Partners to the Partnership.
(b) Within 90 days after the end of each twelve month period for which it
has been determined pursuant to Section 5.03 (a) hereof that Distributable Funds
exist, such Distributable Funds shall be distributed to the Partners in their
respective Ownership Percentage, without regard to the Partner's capital
account, except as provided in 5.03(c) hereinbelow.
9
(c) In the event that the Partners agree to sell, finance or refinance all
or any portion or any interest in the property of the Partnership, then in such
event, the net proceeds of such sale or excess proceeds of financing or
refinancing (except for the part thereof required to be paid to any mortgagees
or third party creditors) shall be distributed first to reduce the outstanding
loans (principal and interest) made by the Partners to the Partnership pursuant
to Section 4.02 and only thereafter to reduce the capital accounts to levels
proportionate to the Partners respective percentage interests in the Partnership
and, if funds are available, to the Partners in accordance with their percentage
interests.
Section 5.04 - Accounting
(a) The fiscal year of the Partnership shall end on the last day of
December.
(b) The books of the Partnership shall be kept and maintained by the
Managing Partner at all times at the place or places approved by the Partners.
The books of account shall be maintained on an accrual basis in accordance with
generally accepted accounting principles, consistently applied and shall show
all items of income and expense, with tax matters to be determined by the
Managing Partner.
(c) The Managing General Partner, at the expense of the Partnership, shall
prepare or cause to be prepared and furnish to each of the Partners promptly
after the close of each calendar with an unaudited statement, certified by the
Managing Partner to be true and correct to the best of its knowledge and belief,
showing the operation of the Partnership for such month, the balance in each
Partner's capital account, the unpaid balance due under all obligations of the
Partnership, and all other information reasonably requested by any Partner. The
Managing General Partner shall cause to be prepared and furnished, at the
expense of the Partnership, to the Partners promptly after the close of each
fiscal year, a balance sheet of the Partnership dated as of the end of the
fiscal year, a related statement of income or loss for the Partnership for such
fiscal year; and the same information for the fiscal year as is required to be
included in the aforesaid monthly reports, all of which shall be prepared in the
customary manner by an independent public accountant appointed by the Executive
Committee.
(d) Each Partner shall have the right at all reasonable times during usual
business hours to audit, examine and make copies of, or extracts from, the books
of account and other corporate records of the Partnership. Such right may be
exercised through any agent or employee of such Partner designated, in writing,
by it or by an independent public accountant, designated, in writing, by such
Partner. Each Partner shall bear all expenses incurred in any examination made
by such Partner.
Section 5.05 - Gain or Loss or Disposition of Property Contributed by Partner.
If property which was contributed by an partner is sold and a taxable gain
or loss is realized thereon, such taxable gain or loss shall be allocated solely
to that partner to the extent of the difference between the agreed value of such
property at the time that it was contributed to the partnership and the tax
basis of such property at said time. Any additional gain or any loss realized
upon sale or other disposition of the property shall be allocated to all
partners in accordance with their ownership percentage.
Article VI
Term and Termination
Section 6.01 - Term
The Partnership shall be in effect for a term beginning on the date hereof
and shall continue until the earlier of September 1, 2064 or such time as it is
terminated and liquidated in accordance with the provisions hereof. All
provisions of this agreement relative to termination and liquidation shall be
cumulative; that is, the exercise or use of one of the provisions hereof shall
not preclude the exercise or use of any other provisions hereof.
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Section 6.02 - Automatic Termination
(a) If any of the following events shall occur, namely:
(1) If any Partner shall file a voluntary petition in bankruptcy or shall
be adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under the present or
any future United States Bankruptcy Code or any other present or future
applicable federal, state or other statute or law relative to bankruptcy,
insolvency, or other relief for debtors or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver, conservator, or
liquidator of said Partner or of all or any substantial part of its
properties or its interest in the Partnership (the term "acquiesce"
includes, but is not limited to, failure to file a petition or motion to
vacate or discharge any order, judgement, or decree providing for such
appointment within ten days after the appointment); or
(2) If a court of competent jurisdiction shall enter an order, judgement,
or decree approving a petition filed against any Partner seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under the present or any future Federal
Bankruptcy Act, or any other present or future applicable federal, state
or other statute, or law relating to bankruptcy, insolvency, or other
relief for debtors, and said Partner shall acquiesce in the entry for such
order, judgement, or decree (the term "acquiesce" includes, but is not
limited to, the failure to file a petition or motion to vacate or
discharge such order, judgement or decree within ten days after the entry
of the order, judgement or decree), or such order, judgement, or decree
shall remain unvacated and unstayed for an aggregate of 90 days (whether
or not consecutive) from the date of entry thereof or any trustee,
receiver, conservator, or liquidator of said Partner or of all or any
substantial part of its property or its interest in the Partnership shall
be appointed without the consent or acquiescence of said Partner and such
appointments shall remain unvacated and unstayed for an aggregate of 60
days (whether or not consecutive); or
(3) Any Partner shall admit in writing its inability to pay its debts as
they mature; or
(4) Any Partner shall give notice to any governmental body of insolvency
or pending insolvency, or suspension or pending suspension of its
operation; or
(5) Any Partner shall make an assignment for the benefit of creditors or
take any similar action for the protection or benefit of creditors; or
(6) Any Partner shall cause the partnership to be dissolved by reason of
any "cause of dissolution" as defined in the Tennessee Uniform Partnership
Act;
(7) Any Partner shall cease to be a Partner immediately upon adjudication
of incompetency or insanity and the Partnership shall terminate.
(8) Upon dissolution or liquidation of a Corporate Partner, the
Partnership shall terminate.
Then and in any such event but except as provided in Section 6.02(b)
hereof, the Partnership shall terminate automatically, and any Partner causing
such termination shall be deemed to be the "Withdrawing Party", as of the date
of occurrence of the respective event of termination.
(b) Notwithstanding the preceding, the Partner(s) whose actions did not
trigger any event of termination set forth in (1) through (6) hereinabove, may
elect to continue the Partnership by providing written notice of its intention
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within thirty (30) days of the act which would otherwise have occasioned the
automatic termination.
(c) Death. In the event a Partner is an individual, upon the death of a
Partner, his legal representative, or his heir of his Partnership interest if
that interest shall be bequeathed to a specific heir, shall continue as a
Partner in the Partnership or may sell the interest therein for the heir's
benefit or the benefit of the deceased Partner's estate pursuant to Article III.
The election to exercise the option to continue as a Partner shall be made
within three (3) months of the death of a Partner by providing the
surviving Partners with written notice of that intention. The election to
continue shall substitute the heir or legal representative as a full
Partner, with all rights, powers, and duties of a Partner, and the heir or
legal representative shall acknowledge compliance in writing with the
Partnership Agreement.
An election not to continue as a Partner shall result in the sale of the
deceased Partner's interest to the Partnership, and the purchase price
shall be paid by the surviving Partners within forty-five (45) days after
notice of that election.
6.03 - Liability of Partner on Withdrawal or Termination
Subject to the provisions of Article 6.04 and the following paragraph,
upon the termination of a Partner due to any of the events referred to in
Article 6.02 of this Agreement, its liability as a Partner shall cease as to any
obligation not then accrued and the Partnership shall promptly take all steps
reasonably necessary under the Act to cause such cessation of liability.
Notwithstanding the provisions of the preceding paragraph, if the
Partnership does not continue pursuant to the provisions of Article 6.02 (b) or
6.04(c), the liability of the terminated Partner shall continue for purposes of
the winding up of the Partnership pursuant to Article 6.04(b) of this Agreement.
The Partner as to whom the Event of Dissolution has occurred (such Partner
being referred to as the "Withdrawing Partner") shall immediately cease to be a
Partner and shall have no right to participate in the management and control of
the Partnership, and the remaining Partner or Partners, as the case may be, may
send such notices of the dissolution to such persons and entities as the
remaining Partner or Partners, as the case may be.
The remaining Partner or Partners, as the case may be, shall settle the
business of the Partner as expeditiously as its nature will permit and account
for the interests of the Partners. Such settlement procedure may include, but
shall not be limited to, a purchase by the remaining Partner of the Distribution
Percentage Interest of the Withdrawing Partner at a price determinated in
accordance with an appraisal or appraisals of the interest of the Withdrawing
Partner made by three generally recognized competent real estate appraisers in
the area, one selected by each Partner and the third selected by the appraisers
selected by the Partners, a public sale of all or any part of the assets of the
Partnership, a winding up the Partnership, or, after causing the Partnership to
convey the Property and improvements to the Partners (including the Withdrawing
Partner) as tenants-in-common in accordance with the respective Distribution
Percentage Interests, a petition to a court of appropriate jurisdiction
requesting that such court supervise and approve a partitioning of the Property
and Improvements.
The prior written consent of the remaining Partner or Partners, as the
case may be, shall be required prior to any consent to any administration of the
Property and Improvements by any referee, trustee or court of bankruptcy.
The remaining Partners shall have the right at all times to continue the
business and affairs of the Partnership.
6.04 - Dissolution and Winding Up of the Partnership
a. Dissolution of the Partnership.
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1. Except as otherwise provided in Article 6.02 and 6.03 of this
Agreement, the termination of a Partner due to any of the events referred
to in Article 6.02(a) of this Agreement shall cause a dissolution of the
Partnership.
2. The Partnership shall also be dissolved upon (i) the unanimous vote to
do so of the Partners (ii) the expiration of the term of the Partnership,
or (iii) the sale of the Property in its entirety.
b. Winding up of the Partnership. Upon the dissolution of the Partnership,
the Partners 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, and the proceeds therefrom, to the extent sufficient
therefor, shall be applied and distributed in the following order, unless
otherwise required by the Act;
1. To the payment and discharge of all of the Partnership's debts and
liabilities to creditors and persons other than Partners;
2. To the payment and discharge of all of the Partnership's debts and
liabilities to the Partners other than on account of their Capital
Contributions and share of the profits of the Partnership;
3. To the Partners in liquidation of their capital accounts, all such
distributions to be proportionate of their capital accounts immediately
prior to such distributions;
4. The balance, if any, to the Partners in proportion to their Partnership
Percentage;
Nothing contained in the Agreement shall prohibit the Partners from
purchasing any assets of the Partnership upon dissolution.
c. Continuation of Partnership upon Dissolution. Notwithstanding the
withdrawal or termination of a Partner pursuant to Article XII or the
dissolution of the Partnership due to the provisions of Article XIII(1a) or
Article XIII(1b) of this Agreement, the Partners may, within a period of three
(3) months after any of the listed events, by an affirmative vote of Partners,
elect to continue the Partnership. Thereupon, the Partnership shall continue
until the end of the term for which it is formed or until the occurrence of one
of the listed events, in which event the Partners shall again elect whether to
continue the Partnership. This Agreement shall be amended to reflect such
continuation.
ARTICLE VII
Arbitration
7.01 In the event the members of the Executive Committee are unable to
agree upon a matter requiring the Executive Committee approval, any member of
the Executive Committee may submit such matter for arbitration in accordance
with terms of this Article. The initiating member shall notify the other members
of the Executive Committee and in such notice shall designate the first
arbitrator. Within five (5) days after the giving of such notice, the other
member shall designate, in a written notice, the second arbitrator. If the party
entitled to do so fails to timely designate the second arbitrator, the first
arbitrator shall proceed to determine the matter of valuation at issue. If a
second arbitrator is designated, the arbitrators shall meet within five (5) days
after the designation of the second arbitrator and select a third arbitrator
within five (5) days. A decision of the arbitrators so chosen shall be given
within a period of fifteen (15) days after the appointment of the third
arbitrator. A decision in which any two arbitrators shall have concurred shall
be binding and conclusive on the parties hereto or if no two arbitrators concur,
then the average of the two closest mathematical determinations shall constitute
the decision of all three arbitrators and shall be similarly binding and
conclusive as to the matters which are subject to mathematical resolution. If
any arbitrator shall fail, refuse or become unable to act, a new arbitrator
shall be appointed in his place following the same method as was originally
followed with respect to the arbitrator to be replaced. The Partnership shall
pay the fees and expenses of arbitration. All hearing and proceedings held and
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all investigations and actions taken by the arbitrators shall take place in
Nashville, Tennessee. Any arbitrator designated to serve in accordance with the
provisions of this Section 7.01 shall be qualified to appraise commercial real
estate in the county and state where the property subject to the disagreement is
located (or if the disagreement does not involve a particular jurisdiction in
Tennessee) of the type described in this Partnership Agreement, shall be a
member of the American Institute of Real Estate Appraisers or any successor
association or body of comparable standing if such institute is not then in
existence and shall have been actively engaged in the appraisal of similar real
estate in Tennessee for a period of not less than five (5) years immediately
preceding such arbitrator's appointment. Except as expressly provided for
herein, no dispute or controversy shall be settled or determined by arbitration.
Article VIII
General
Section 8.01 - Notices
All notices, demands, or requests provided for or permitted to be given
pursuant to this Agreement must be in writing. All notices, demands and requests
to be sent pursuant hereto shall be deemed to have been properly given or served
by depositing the same in the United States mail, post paid and registered or
certified with return receipt requested at the following addresses:
Xx. Xxxxx X. Xxxxxx
Pace Productions, Inc.
0000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Xx. Xxxxxx X. Xxxx
P.O. Box 171199
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Xx. Xxxx X. Xxxx
Xxxx Investment Company, Inc.
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
(b) All notices, demands, or requests shall be effective upon being
deposited in the United States mail; however, the time period in which a
response to any such notice, demands, or request must be given shall commence to
run from the date of receipt on the return receipt of the notice, demand, or
request by the addressee thereof.
(c) By giving to the other party at least seven days' written notice
thereof, the parties hereto and the respective successors and assigns shall have
the right from time to time at any time during the time of this Agreement to
change their respective addresses and each shall have the right to specify at
its address any other address within the United States of America.
(d) No assignee of any interest by an Partner shall be entitled to receive
a notice independent of the notice sent to the Partner making such transfer. A
notice sent or made to a Partner shall be deemed to have been sent and made to
all assignees, if any, to such Partner.
(e) All payments to be made pursuant hereto to any Partner shall be made
at the address as provided herein for such Partner. All such payments shall be
effective upon receipt.
Section 8.02 - Insurance
(a) The Partnership shall carry and maintain in force such insurance as
may be required, including, but not limited to, the following insurance, the
premiums of which shall be a cost and expense to be borne by the Partnership;
(i) Workmen's Compensation
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(ii) Comprehensive general liability insurance on an "occurrence" basis
for the benefit of the Partners as named insureds against claims for
"personal injury", including without limitation, bodily injury,
death, or property damage.
(iii) Hazard insurance on physical improvements situated upon the
Property.
The limits of liability and insurance coverages shall be approved by the
Executive Committee.
Section 8.03 - Entire Agreement
This Agreement contains the entire agreement between the parties hereto
relative to its formation of this Partnership. No variation, modifications, or
changes herein or hereof shall be binding upon any party hereto unless set forth
in a document duly executed by, and on behalf of, such parties.
Section 8.04 - Waiver
No consent or waiver, expressed or implied, by and Partner to or of any
breach or default by the other in the performance by the other of its
obligations hereunder shall be deemed or construed to be a consent or waiver to
or of any other breach or default in the performance by such other party of the
same or any other obligations of such Partner hereunder. Failure on the part of
any Partner to complain of the act or failure to act of any other Partner or to
declare any other Partner in default, irrespective of how long such failure
continues, shall not constitute a waiver by such Partner of its rights
hereunder.
Section 8.05 - Severability
If any provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provisions to other
persons or circumstances shall not be effected thereby and shall be enforced to
the greatest extent permitted by law.
Section 8.06 - Binding Agreement
Subject to the restrictions on transfers and encumbrances set forth
herein, this Agreement shall inure to the benefit of and be binding upon the
undersigned Partners and their respective legal representatives, successors and
assign. Whenever, in this Agreement a reference is made to any party or Partner
is made, such reference shall be deemed to include a reference to the legal
representatives, successors and assigns of such party or Partner.
Section 8.07 - Miscellaneous
a. Financial Assets. As soon as reasonably practicable after the end of
each fiscal year, but not later than 45 days following the close of such fiscal
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, source and application of funds, and cash flow of the Partnership for such
year, and a statement showing the amounts allocated to or allocated against such
Partner pursuant to the 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 Internal Revenue Code of 1954, as amended, and any applicable
state or local income tax laws.
b. Annual Reports. The financial statements provided for in this Agreement
shall be accompanied by a report in reasonable detail, containing a description
of activities of the Partnership during such year. Such report shall set forth
the distributions to the Partners during such year and shall separately identify
distributions from (i) cash flow from operations during the year, (ii) cash flow
from prior periods and (iii) proceeds from any financing or disposition of
Partnership assets.
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c. Fiscal Year. The fiscal year of the Partnership shall be the calendar
year.
d. Banking. All funds of the Partnership shall be initially deposited in a
separate bank account or accounts or in an account or accounts of a savings and
loan association as shall be determined by the General Partners, but such funds
may be invested in any manner as determined by the General Partners, consistent
with their obligations under this Agreement.
e. Tax Election. Upon the transfer of an interest in the Partnership or in
the event of a distribution of the Partnership's property, the Partnership shall
elect pursuant to Section 754 of the Internal Revenue Code of 1954, as amended,
to adjust the basis of the Partnership's property as allowed by Sections 734(b)
and 743(b) thereof.
f. Tax Returns. The General Partners shall, for each fiscal year, file on
behalf of the Partnership a Partnership return within the time prescribed by law
(including any extensions) for such filing. The General Partners shall also file
on behalf of the Partnership such state and/or city income tax returns as may be
required by law. The Schedule K-1, Form 1065 for each taxable year shall be
supplied to each Partner by March 1st of the following year.
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
set forth herein above.
XXXX INVESTMENT COMPANY, INC. PACE PRODUCTIONS, INC.
BY: /s/ Xxxx X. Xxxx BY: /s/ Xxxxx X. Xxxxxx
-------------------------- --------------------------
Xxxx X. Xxxx, President Xxxxx X. Xxxxxx, President
/s/ Xxxxxx X. Xxxx
--------------------------
Xxxxxx X. Xxxx
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