LIMITED
PARTNERSHIP AGREEMENT
XXXXXXXXX FAMILY PARTNERSHIP, LTD.
A COLORADO LIMITED PARTNERSHIP
EFFECTIVE NOVEMBER 6, 1996
TABLE OF CONTENTS
ARTICLE I - ORGANIZATIONAL MATTERS 1
1.1 Formation 1
1.2 Name 1
1.3 Filings 1
1.4 Registered Office and Agent; Principal Office 2
1.5 Term 2
1.6 Partnership Purposes 2
ARTICLE II - DEFINITIONS 3
2.1 "Act 3
2.2 "Affiliate 3
2.3 "Agreement 3
2.4 "Bankruptcy 3
2.5 "Capital Account 3
2.6 "Capital Contribution 3
2.7 "Certificate 3
2.8 "Code 3
2.9 "Distributable Cash 4
2.10 "Entity 4
2.11 "General Partner 4
2.12 "Interest 4
2.13 "Limited Partner 4
2.14 "Partners 4
2.15 "Partnership 4
2.16 "Partnership Property 4
2.17 "Person 4
2.18 "Pro Rata 4
2.19 "Reserves 4
2.20 "Transfer 5
2.21 "Treasury Regulations 5
ARTICLE III - CAPITAL CONTRIBUTIONS 5
3.1 Initial Capital Contributions 5
3.2 Allocation of Units 5
3.3 Reallocation of Partnership Units 5
3.4 Additional Capital Contributions 5
3.5 Loans to the Partnership 6
3.6 Interest on and Return of Capital 6
ARTICLE IV - COSTS AND EXPENSES 6
4.1 Payments by the Partnership 6
ARTICLE V - ALLOCATIONS 6
5.1 Profits and Losses 6
5.2 Special Allocations 7
5.3 Qualified Income Offset 7
5.4 Income Tax Allocations 8
ARTICLE VI - DISTRIBUTIONS 9
6.1 Annual Distributions of Distributable Cash 9
6.2 Partners' Shares 9
6.3 Distribution in Kind 9
6.4 Liquidating Distributions 9
ARTICLE VII - MANAGEMENT OF PARTNERSHIP 9
7.1 Control Vested in General Partner 9
7.2 Management Authority 9
7.3 Compensation of the General Partner; Reimbursement
of Partnership Expenses 12
7.4 Status and Limited Liability of the Limited Partners 12
7.5 Limitation on Liability of General Partner;
Indemnification 12
7.6 No Recourse Against Others 13
7.7 Right of Third Persons to Rely Upon Authority of
General Partner 13
7.8 Meetings of Partners 14
ARTICLE VIII - DUTIES OF GENERAL PARTNER; OTHER ACTIVITIES;
CONFLICTS OF INTEREST 14
8.1 General Partner's Duty of Care 14
8.2 Other Activities of Partners 15
8.3 Conflicts of Interest 15
ARTICLE IX - FINANCIAL MATTERS 15
9.1 Fiscal Year 15
9.2 Capital Accounts 15
9.3 Books and Records 16
9.4 Reports; Financial Statements 16
9.5 Tax Matters Partner 16
9.6 Tax Returns 17
9.7 Banking 17
9.8 Title to Property 17
ARTICLE X - TRANSFERS OF PARTNERSHIP INTERESTS 17
10.1 Transfers by Limited Partners 17
10.2 Withdrawal, Death, Incapacity, Bankruptcy or
Dissolution of a Limited Partner 18
10.3 Transfers by General Partner 18
10.4 Conditions to Transfer 18
10.5 Right of First Refusal 19
10.6 Effectiveness of Transfer; Indemnification. 20
10.7 Transferability of Limited Partnership Interests
to Partners. 21
ARTICLE XI - WITHDRAWAL, DISSOLUTION AND TERMINATION 21
11.1 Unilateral Acts Prohibited 21
11.2 Events of Dissolution 21
11.3 Winding Up and Liquidation 22
ARTICLE XII - MISCELLANEOUS 23
12.1 Rule Against Perpetuities 23
12.2 Power of Attorney 23
12.3 Notices 24
12.4 Amendments 24
12.5 Partition 24
12.6 Binding and Entire Agreement 25
12.7 No Waiver 25
12.8 Applicable Law 25
12.9 Counterparts 25
12.10 Severability 25
12.11 Ownership of Partnership Property 25
12.12 No Third-Party Beneficiaries 25
EXHIBITS
EXHIBIT 3.1
LIMITED
PARTNERSHIP AGREEMENT
OF XXXXXXXXX FAMILY PARTNERSHIP, LTD.
THIS AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") is made and entered
into as of the 6th day of November, 1996, by and among Xxxxxxxxx Family
Corporation, a Colorado corporation, (the "General Partner"), and Xxxxxx X.
Xxxxxxxxx and Xxxxxx X. Xxxxxxxxx (each a "Limited Partner" and, collectively,
the "Limited Partners"). The General Partner and the Limited Partners, together
with any other persons who become parties to this Agreement in the manner
provided herein, are hereinafter collectively referred to as the "Partners", and
any one of them individually as a "Partner."
RECITALS
Whereas the Partners wish to pool their assets to conduct a business
utilizing those assets, to obtain the advantages of more efficient management
and preservation of those assets, and retain management control over a block of
assets within the partnership, but provide a mechanism for allowing members of
an individual Partner's family to become owners and participate in the business
in the future.
AGREEMENT
Now therefore, in consideration of the mutual covenants herein contained
and for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Partners agree as follows:
ARTICLE I - ORGANIZATIONAL MATTERS
1.1 Formation. The Partners hereby enter into and form a limited
partnership (the "Partnership") pursuant to the Colorado Uniform Limited
Partnership Act of 1981, as amended (the "Act").
1.2 Name. The name of the Partnership shall be Xxxxxxxxx Family
Partnership, Ltd.
1.3 Filings. As soon as practicable, the General Partner shall execute
and file with the Colorado Secretary of State a Certificate of Limited
Partnership (the "Certificate") in accordance with the Act. The General Partner
also shall execute and file on behalf of the Partnership such amendments to the
Certificate, and such trade name affidavits, additional instruments and
amendments thereto, as may from time to time be necessary or appropriate to
carry out this Agreement and enable the Partnership to conduct its business in
compliance with applicable laws. The General Partner shall not be required to
deliver or mail a copy of the Partnership's Certificate to any Limited Partner.
1.4 Registered Office and Agent; Principal Office.
(a) The registered office of the Partnership and the office required
to be maintained by the Partnership in the State of Colorado pursuant to the Act
shall be at 0000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000-0000; the registered
agent for the Partnership at such address shall be Xxxxxx X. Xxxxxxxxx. The
General Partner may, upon giving notice to the Limited Partner(s) in the manner
provided by this Agreement and filing such amendments to the Partnership's
Certificate as may be required under the Act, designate a different registered
office or agent for the Partnership.
(b) The location of the principal place of business of the
Partnership shall be at 0000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000-0000, or such
other location as the General Partner may from time to time select upon written
notice to the Limited Partner(s).
1.5 Term. The Partnership shall commence on the date its Certificate is
filed with the Colorado Secretary of State, and shall continue until 30 years
from such date of formation, unless sooner terminated as provided herein. Each
Partner understands and acknowledges that subject to Article X and prior to the
earlier of 30 years from the date of formation of the Partnership or the
occurrence of one of the events specified in Section 11.2:
(a) such Partner has no unilateral right to dissolve the Partnership
or to withdraw from the Partnership; and
(b) that even if such Partner withdraws from the Partnership, such
Partner has no right pursuant to Section 7-62-604 of the Act to receive the fair
value of such Partner's interest in the Partnership in connection with such
withdrawal, but shall be entitled only to the distributions to which such
Partner would have been entitled had such Partner not withdrawn from the
Partnership.
1.6 Partnership Purposes. The purposes of the Partnership shall be to
acquire, invest in, own, manage, sell, and exchange the Partnership Property and
such other properties as may from time-to-time be acquired by the Partnership;
to reinvest proceeds from the sale or disposition of any assets of the
Partnership; and to conduct such other or further business as the General
Partner may in its discretion determine. The Partnership may sell or otherwise
dispose of all or substantially all of its assets as provided in Section 7.2(b),
and any such sale or disposition shall be considered to be within the scope of
the Partnership's business.
ARTICLE II - DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
set forth in this Article II:
2.1 "Act" means the Colorado Uniform Limited Partnership Act of 1981,
together with any amendments thereto which are applicable to the Partnership
without consent of the Partnership and any amendments thereto which are
applicable to the Partnership only with the consent or election of the
Partnership, but only if the General Partner affirmatively elects or consents to
the application of such amendment to the Partnership.
2.2 "Affiliate" of a specified Person is a Person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the Person specified.
2.3 "Agreement" means this Limited Partnership Agreement of Xxxxxxxxx
Family Partnership, Ltd.
2.4 "Bankruptcy" means the filing by a Partner of any petition in
bankruptcy or for reorganization, liquidation or similar relief under any
statute, law or regulation governing the rights and relief of debtors; or the
entry of an order for relief against a Partner pursuant to an involuntary
bankruptcy petition filed against such Partner; or the adjudication of a Partner
as bankrupt or insolvent; or the application by a Partner for or such Partner's
consent to or acquiescence in the appointment of a trustee, receiver or
liquidator for all or any substantial part of such Partner's assets; or the
making by a Partner of an assignment for the benefit of creditors; or any sub
stantially similar action on the part of a Partner.
2.5 "Capital Account" shall have the meaning set forth in Section 9.2.
2.6 "Capital Contribution" means the cash, cash equivalents or the agreed
fair market value of property which a Partner contributes to the Partnership,
net of any liabilities secured by such contributed property which the
Partnership is considered to have assumed or taken subject to and pursuant to
Section 752 of the Code. Capital Contributions shall not include obligations to
contribute cash at a future date, until such contributions of cash are actually
made.
2.7 "Certificate" means the Certificate of Limited Partnership of the
Partnership required to be filed with the Colorado Secretary of State pursuant
to the Act and any amendment thereof.
2.8 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.9 "Distributable Cash" means all cash, revenues and funds received by
the Partnership, less the sum of the following to the extent paid or set aside
by the Partnership: (i) all principal and interest payments on indebtedness of
the Partnership and all other sums paid to lenders; (ii) all cash expenditures
incurred incident to the normal operation of the Partnership's business; and
(iii) Reserves.
2.10 "Entity" means a Person other than an individual.
2.11 "General Partner" means each Person whose signature appears on the
signature page hereof identified as a general partner together with each other
Person who becomes a general partner in the manner provided in this Agreement.
2.12 "Interest" means the entire ownership interest of a Partner in the
Partnership at any particular time, including the interests of such Partner in
the capital, profits and losses of, and distributions made by, the Partnership,
voting rights and any other rights or benefits to which a Partner may be
entitled hereunder, and the obligations of such Partner to comply with all of
the terms and provisions of this Agreement.
2.13 "Limited Partner" means each Person whose signature appears on the
signature page hereof identified as a limited partner together with each other
Person who becomes a limited partner in the manner provided in this Agreement.
2.14 "Partners" collectively means the General Partners and the Limited
Partners. "Partner" means any one General Partner or Limited Partner.
2.15 "Partnership" means the Xxxxxxxxx Family Partnership, Ltd., the
Colorado limited partnership among the Partners governed by this agreement.
2.16 "Partnership Property" means the Property contributed to the
Partnership described on Exhibit 3.1 and any other property, real or personal,
tangible or intangible as may from time-to-time be acquired by the Partnership
as a result of contribution, purchase, exchange or otherwise.
2.17 "Person" means any individual, corporation, trust, association, joint
stock company, partnership, limited liability company or other entity.
2.18 "Pro Rata" with respect to the Partners, or any of them, shall mean in
proportion to the Partners' respective Capital Account balances as determined
from time to time.
2.19 "Reserves" means, with respect to any fiscal period, funds set aside
or amounts allocated during such period to reserves which shall be maintained in
amounts deemed sufficient by the General Partner for working capital, to pay
taxes, insurance, debt service or other costs or expenses incident to the
ownership or operation of the Partnership's business, and for any expansion or
diversification of the Partnership's business or for additional investments or
repurchases of partnership Interests by the Partnership.
2.20 "Transfer" means any sale, transfer, conveyance, gift, donation,
assignment, exchange, pledge, mortgage, hypothecation, encumbrance or other
disposition of any kind.
2.21 "Treasury Regulations" means the federal income tax regulations (final
or temporary) promulgated under the Code, as amended from time to time.
ARTICLE III - CAPITAL CONTRIBUTIONS
3.1 Initial Capital Contributions. (a) Concurrently with the execution of
this Agreement, the Partners shall contribute to the Partnership the property
described in Exhibit 3.1 which property has the agreed values set forth in
Exhibit 3.1.
3.2 Allocation of Units. Each Partner's Interest shall be evidenced and
represented by such Partner's share of the total Partnership units. Each
Partner shall initially receive one hundred Partnership Units ("Units") for each
1% of the total interests in capital of all Partners (percentage of total
Capital Account balances) held by such Partner. Any amount less than one Unit
shall constitute a fractional Unit. The Units of the Partnership initially
shall be allocated as set forth in Exhibit 3.1. Additional Units shall be
issued to the Partners as necessary to properly reflect any additional Capital
Contributions to the Partnership.
3.3 Reallocation of Partnership Units. The Units of the Partnership have
been allocated initially to the Partners based upon the agreed value of the
Partners' Capital Contributions as set forth in Exhibit 3.1. If for any reason
it is discovered or determined that the initial Capital Contributions of the
Partners have an aggregate value other than as set forth in Exhibit 3.1, or any
additional Capital Contributions have an aggregate value other than as agreed by
the contributing and General Partner as of the date of such contribution, then
the number of Partnership Units allocated to each Partner shall be increased or
decreased, as the case may be, so that the Units allocated to each Partner are
in proportion to the redetermined aggregate value of such Partner's Capital
Contribution to the Partnership.
3.4 Additional Capital Contributions. If the General Partner consents,
any Partner may make voluntary additional Capital Contributions to the
Partnership at such times and in such amounts as such Partner in its discretion
may determine; provided, however, the General Partner shall consent to any
additional Capital Contributions of Xxxxx'x Liquid Gold-Inc. stock by Xxxxxx X.
Xxxxxxxxx, Xxxxxx X. Xxxxxxxxx or their respective personal representatives.
Except as otherwise expressly provided in this Agreement or unanimously agreed,
no Partner shall be required to make additional Capital Contributions to the
Partnership; provided, however, that whenever a Limited Partner makes a Capital
Contribution to the Partnership, the General Partner immediately shall
contribute capital to the Partnership in an amount equal to the amount necessary
to cause the General Partner's capital account balance to be not less than the
lesser of 1.0% of the Partners' total positive capital account balances and
$500,000. The preceding sentence shall not apply at any time the aggregate
balance in the General Partner's Capital Account will not affect the
classification of the Partnership as a partnership for federal tax purposes.
3.5 Loans to the Partnership. The General Partner may cause the
Partnership to borrow funds from one or more third parties (including Affiliates
of any Partner) at such times, interest rates and on such terms and conditions
as the General Partner in its reasonable discretion deems appropriate. The
General Partner may (but shall not be obligated to) loan funds to the
Partnership at such times, interest rates and on such terms and conditions as
the General Partner in its discretion deems appropriate.
3.6 Interest on and Return of Capital. No Limited Partner shall have the
right to withdraw from the Partnership or to demand a return of all or any part
of his Capital Contribution during the term of the Partnership. No interest
shall be paid on Capital Contributions.
ARTICLE IV - COSTS AND EXPENSES
4.1 Payments by the Partnership. All costs and expenses of the
Partnership shall be paid from Partnership funds, including but not limited to
(a) payments on the liabilities and obligations of the Partnership; (b) all
costs of owning, holding, maintaining, improving, repairing, and/or insuring the
Partnership's assets; (c) the expenses of selling or otherwise disposing of the
Partnership's assets; (d) expenses incurred by the General Partner (including
the General Partner's legal fees and expenses) in conducting the business of the
Partnership and in determining and discharging the General Partner's duties to
the Partners; and (e) every other cost and expense incurred in the Partnership's
business whether like or unlike the foregoing.
ARTICLE V - ALLOCATIONS
5.1 Profits and Losses. The profits and losses of the Partnership, and
each item of income, gain, deduction, loss and credit for income tax purposes,
shall be allocated among the Partners Pro Rata; provided, however, that any
items of deduction attributable to expenses of the Partnership which are paid by
means of a corresponding additional capital contribution to the Partnership by
one or more Partners, shall be allocated to the Partners who make such
additional capital contributions to the Partnership.
5.2 Special Allocations. Notwithstanding Section 5.1 hereof:
(a) Notwithstanding any other portion of this Section 5.2, if there
is a net decrease in the Partnership's minimum gain as defined in Treasury
Regulations Section 1.704-2(d) during a taxable year of the Partnership, then
each Partner shall be allocated items of income (including gross income) and
gain for such year (and if necessary for subsequent years) equal to that
Partner's share of the net decrease in Partnership minimum gain. This Section
5.2 (a) is intended to comply with the minimum gain chargeback
requirement of Section 1.704-2 of the Treasury Regulations and shall be
interpreted consistently therewith.
(b) Items of Partnership loss, deduction and Code
Section 705(a)(2)(B) expenditures which are attributable to any nonrecourse debt
of the Partnership and are characterized as partner nonrecourse deductions under
Section 1.704-2(i) of the Treasury Regulations shall be allocated to the
Partners in accordance with said Section 1.704-2(i) of the Treasury Regulations.
(c) Notwithstanding any other portion of this Section 5.2, if during
a taxable year of the Partnership there is a net decrease in partner nonrecourse
debt minimum gain, as defined in Treasury Regulations Section 1.704-2(i)(3),
then each Partner with a share of that partner nonrecourse debt minimum gain
shall be allocated items of income (including gross income) and gain for such
year (and if necessary for subsequent years) equal to that Partner's share of
the net decrease in partner nonrecourse debt minimum gain.
(d) All recapture of income tax deductions resulting from the sale or
disposition of Partnership property shall be allocated to the Partner or
Partners to whom the deduction that gave rise to such recapture was allocated
hereunder to the extent that such Partner is allocated any gain from the sale or
other disposition of such property.
5.3 Qualified Income Offset.
(a) No allocations of loss, deduction and/or Code Section
705(a)(2)(B) expenditures shall be made to any Partner if such allocation would
cause or increase a deficit capital account of such Partner. The amount of the
loss, deduction and/or Code Section 705(a)(2)(B) expenditure which would have
caused or increased a deficit capital account of such Partner instead shall be
allocated to Partners with positive capital accounts.
(b) If any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4),
(5), or (6) of the Treasury Regulations, which cause or increase a deficit
capital account of such Partner, or if any Partner otherwise would have a
deficit capital account at the end of any Partnership taxable year, then items
of Partnership income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income, and gain for such year and, if
necessary, for subsequent years) shall be specially allocated to such Partner in
an amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the deficit capital account so created or increased as
quickly as possible.
(c) It is the intent that Sections 5.3(a) and (b) be interpreted to
comply with the alternate test for economic effect set forth in Section 1.704-
1(b)(2)(ii)(d) of the Treasury Regulations.
(d) Any allocations to the Partners pursuant to Sections 5.2, 5.3(a)
and/or (b) shall be taken into account in computing subsequent allocations of
profits and losses pursuant to Section 5.1, so that the net amount of any items
allocated to the Partners pursuant to Sections 5.1, 5.2, and 5.3 shall, to the
extent possible, be equal to the net amount that would have been allocated to
each Partner pursuant to the provisions of this Article V if the special
allocations required by Sections 5.2 and/or 5.3(a) and (b) had not occurred.
5.4 Income Tax Allocations.
(a) In accordance with Code Section 704(c)(1)(A) and Section
l.704-l(b)(2)(iv) of the Treasury Regulations, if a Partner contributes property
with a fair market value that differs from its adjusted basis at the time of
contribution, then depreciation, depletion, amortization, and gain or loss with
respect to such contributed property shall, solely for federal income tax
purposes, be allocated among the Partners so as to take account of any variation
between the adjusted basis of such contributed property to the Partnership and
its fair market value at the time of contribution.
(b) If, under Section 1.704-1(b)(2)(iv)(f) of the Treasury
Regulations, Partnership property that has been revalued is properly reflected
in the Capital Accounts and on the books of the Partnership at a book value that
differs from the adjusted tax basis of such property, then depreciation,
depletion, amortization, and gain or loss with respect to such property shall,
solely for federal income tax purposes, be allocated among the Partners in a
manner that takes account of the variation between the adjusted tax basis of
such property and its book value, in the same manner as variations between the
adjusted tax basis and fair market value of property contributed to the
Partnership are taken into account in determining the Partners' shares of tax
items under Code Section 704(c).
ARTICLE VI - DISTRIBUTIONS
6.1 Annual Distributions of Distributable Cash. The General Partner
shall, not less than annually, distribute all Distributable Cash unless all of
the Partners agree otherwise.
6.2 Partners' Shares. Except as provided in Section 6.4, all
distributions shall be made among the Partners Pro Rata.
6.3 Distribution in Kind. The General Partner may make all or any portion
of any distribution for which this Agreement provides in cash or in kind. When
any asset of the Partnership is distributed in kind, it may be, but need not be,
distributed in any form of coownership (including tenancy in common, joint
tenancy, tenancy by the entirety, or any other form of coownership) as is
recognized by law with respect to the property distributed.
6.4 Liquidating Distributions. Notwithstanding anything to the contrary
in this Agreement, proceeds resulting from any sale or other taxable disposition
of any property of the Partnership incident to the liquidation and winding up of
the Partnership, as well as any other property distributed in liquidation of the
Partnership, shall be distributed to the Partners in accordance with the
provisions of Sections 6.3 and 11.3.
ARTICLE VII - MANAGEMENT OF PARTNERSHIP
7.1 Control Vested in General Partner. The business and affairs of the
Partnership shall be carried on, controlled and managed by the General Partner,
and no Limited Partner shall have any power or authority to control or manage
the business or affairs of the Partnership.
7.2 Management Authority.
(a) The General Partner shall be responsible for management of the
business of the Partnership. Subject to the limitations expressly imposed by
this Agreement, the General Partner shall have full, exclusive and complete
authority and discretion in the management of the Partnership's business and
shall have full power and authority to take all actions and execute all
instruments or other documents necessary, convenient or appropriate to the
conduct of such business. The General Partner, and its officers, directors or
agents and employees shall devote such time and attention to the business of the
Partnership as the General Partner, in its discretion, deems appropriate.
(b) Without limiting the generality of the foregoing, by execution of
this Agreement the Limited Partners hereby give their consent and authorize the
General Partner, in its discretion, for and on behalf of the Partnership to do
the following without any additional notice to or authorization from any Limited
Partner:
(i) To hold the Partnership Property (including, but not limited
to, shares or equity interests in Xxxxx'x Liquid Gold-Inc. or any successor
entity) without regard to dividends, liquidity, valuation on other economic
benefits, it being the intent of the Partners that such Partnership Property be
held until the General Partner in its sole discretion determines that a
disposition is to be made;
(ii) to purchase, lease or otherwise acquire, improve, develop,
manage, maintain and operate, upon such terms and at such times as the General
Partner in its discretion shall determine, such real or personal property or
other assets as the General Partner deems necessary, incidental or convenient to
the Partnership's business;
(iii) to lease or Transfer, or direct the Transfer of all or any
portion of any Partnership Property (including, but not limited to, shares or
equity interets in Xxxxx'x Liquid Gold-Inc.);
(iv) to borrow money on a secured or unsecured basis to finance the
operations of the Partnership; to encumber all or any portion of the Partnership
Property to secure such borrowing; and to repay, refinance, increase, modify,
consolidate or otherwise deal in such borrowings and encumbrances;
(v) to cause the Partnership to enter into and form corporations,
limited liability companies, partnerships, or joint ventures whether as a
shareholder, manager, member or general or limited partner, or joint ventures
for such purposes as the General Partner may determine;
(vi) to employ such persons, including the General Partner and
Affiliates of any Partner, as the General Partner deems necessary or
appropriate, and to enter into contracts, agreements, undertakings and
transactions with the General Partner, or any Affiliate of any Partner, or with
any other Person having any business, financial or other relationship with any
of the foregoing Persons;
(vii) to pay, extend, renew, modify, adjust, settle, submit to
arbitration, prosecute, defend or compromise, upon such terms as the General
Partner may determine and upon such evidence as they may deem sufficient, any
obligation, suit, liability, cause of action or claim, including taxes, either
in favor of or against the Partnership or its Partners;
(viii) to expend Partnership funds in furtherance of the
Partnership's purposes;
(ix) to invest excess Partnership funds, including without
limitation, the reinvestment of the proceeds from the Transfer of all or any
portion of the Partnership's property or assets;
(x) to do any and all acts on behalf of the Partnership, and
exercise all rights of the Partnership, with respect to its interest in any
Person, including, without limitation, the voting or direction of the vote of
any partnership interests, membership interests, shares or other securities
(including, but not limited to, shares on other equity interests in Xxxxx'x
Liquid Gold-Inc.), participation in arrangements with creditors, the institution
and settlement or compromise of suits and administrative proceedings and other
like or similar matters;
(xi) to open, maintain and close bank accounts and to draw checks
and other orders for the payment of money;
(xii) to purchase and maintain such insurance with respect to
Partnership Property, assets or personnel as the General Partner in his
discretion deems appropriate;
(xiii) to engage consultants, accountants, attorneys and such other
persons as the General Partner may deem necessary or advisable; and to grant to
them powers of attorney if necessary;
(xiv) to enter into, make, perform and terminate such contracts,
agreements, instruments, and other undertakings, and take such other actions,
execute and deliver such other documents, and perform such other acts as the
General Partner deems necessary, convenient or appropriate in order to carry out
the business and affairs of the Partnership;
(xv) to establish such reserves and the amounts thereof as the
General Partner in its discretion deems necessary or appropriate for the
business and operations of the Partnership and for any expansion or
diversification of the Partnership's business;
(xvi) to record with the appropriate authority any trade names,
trademarks, logos, patents, etc. owned by the Partnership;
(xvii) to change the state of organization or registration of the
Partnership, merge or convert the Partnership with or into another Entity
(provided that no such withdrawal of registration, merger or conversion shall
cause any Partner to become individually liable for the debts and obligation of
the Partnership without that Partner's consent; and
(xviii) to elect to or consent to the application of any law or
amendment to any law (including, but not limited to, any change in the Act, the
Code, or either of them) to the Partnership, to the extent the Partnership may
elect or consent to the application of such law or amendment to the law.
7.3 Compensation of the General Partner; Reimbursement of Partnership
Expenses.
(a) The General Partner shall be entitled to compensation from the
Partnership for services rendered to the Partnership. Such compensation shall
be payable in such amounts and at such times as the General Partner reasonably
determines.
(b) The General Partner shall be reimbursed by the Partnership for
the General Partner's reasonable out-of-pocket expenses incurred in connection
with the Partnership's business. The Partnership also may reimburse the General
Partner for the Partnership's proportionate share of the General Partner's
overhead and administrative expenses, if any, including indirect legal and
accounting services, office rent, telephone charges, bookkeeping expenses and
all other items of a general overhead and administrative nature incurred in
managing the Partnership's operations that are not otherwise reimbursed.
7.4 Status and Limited Liability of the Limited Partners.
(a) The Limited Partners, as such, shall have no right to and shall
not participate in any manner in the management and control of the Partnership's
business, and shall have no right or authority to act for or to bind the
Partnership. In accordance with the Act, the votes and actions required to be
taken by the Limited Partners under this Agreement shall not constitute
participation in the control or management of the Partnership.
(b) No Limited Partner shall be liable for any of the debts or
obligations of the Partnership, nor shall any Limited Partner be required or
obligated to make any contribution to the capital of the Partnership other than
its initial Capital Contribution as set forth in Section 3.1.
7.5 Limitation on Liability of General Partner; Indemnification.
(a) Each Partner shall indemnify the Partnership and the other
Partners for, and hold them harmless from, any and all liability, loss, damage
or expense, including reasonable attorneys' fees, incurred as a result of such
Partner's breach of any provision of this Agreement.
(b) Notwithstanding any other provision of this Agreement, neither
the General Partner nor any officer, agent or employee of the General Partner or
the Partnership shall be liable to any Partner or to the Partnership with
respect to any act performed or neglected to be performed in connection with the
Partnership, the conduct of its business or the preservation of its property,
except in the case of actions taken or omissions made in bad faith, involving
gross negligence or willful or wanton misconduct.
(c) The Partnership shall indemnify the General Partner and its
officers and directors, for and hold them harmless from any liability, whether
civil or criminal, and any loss, damage, or expense, including reasonable
attorneys' fees, incurred in connection with the ordinary conduct of the Partner
ship's business and the preservation of its business and property, or by reason
of the fact that such Person is or was a General Partner or an officer, director
or employee thereof; provided the Person to be indemnified acted in good faith
and in a manner believed to be consistent with the provisions of this Agreement
and without gross negligence or willful and wanton misconduct; and further
provided that with respect to any criminal action or proceeding, the Person to
be indemnified had no reasonable cause to believe the conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that indemnification is not available hereunder.
The General Partner may advance actual expenses to itself or to other Persons
threatened by such claims for the actual cost of defending against such claims,
without final determination of the availability of indemnification hereunder.
The obligation of the Partnership to indemnify the General Partner or any other
Person hereunder shall be satisfied out of Partnership assets only, and if the
assets of the Partnership are insufficient to satisfy the Partnership's
obligation to indemnify the General Partner or any other Person, the Person to
be indemnified shall not be entitled to contribution from any other Partner.
7.6 No Recourse Against Others. The Partners acknowledge and agree that
the obligations of the General Partner under this Agreement are solely corporate
obligations, and that nothing in this Agreement shall create or give rise to any
personal liability on the part of the General Partner's incorporators,
stockholders, officers, directors, employees or agents. Any right of recourse
to, or claim of personal liability against, the incorporators, stockholders,
officers, directors, employees or agents of the General Partner by virtue of
this Agreement are hereby expressly waived and released by the Partners in
consideration of the benefits conferred upon them under this Agreement.
7.7 Right of Third Persons to Rely Upon Authority of General Partner.
Notwithstanding anything to the contrary in this Agreement, any Person dealing
with the Partnership shall be entitled to assume that the General Partner has
full power and authority to Transfer or otherwise use in any manner any and all
of the property and assets of the Partnership and to enter into any contracts or
agreements on behalf of the Partnership, and such Person shall be entitled to
deal with the General Partner as if it were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby waives any
and all defenses or other remedies that may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any sale, transfer or conveyance of all or any portion of any other asset
of the Partnership, or any other such dealing. In no event shall any Person
dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any actions or actions of the General
Partner or its representatives. Each and every certificate, document, or other
instrument executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership, and (c) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
7.8 Meetings of Partners. Meetings of the Partners may be called by the
General Partner for any purpose. Notice of any such meeting shall be sent in
accordance with Section 12.3 hereof to all Partners within ten days after
receipt of such a request. Such a meeting shall be held not less than ten nor
more than 50 days after such notice, at such place and time as are designated by
the General Partner in the notice.
ARTICLE VIII - DECISIONS OF GENERAL PARTNER; OTHER ACTIVITIES;
CONFLICTS OF INTEREST
8.1 General Partner's Decisions.
(a) Decisions with respect to the conduct, dissolution, and winding
up of the business of the Partnership shall be made in the sole discretion of
the General Partner based on the best interest of the Partnership, the best
interests of the Partners, the interests of the employees of the Partnership and
others dealing with the Partnership, and such other matters as they consider
relevant.
(b) The General Partner may rely and shall be protected in acting or
refraining from acting upon any certificate, document, or other instrument
believed by it to be genuine and to have been signed or presented by the proper
party or parties.
(c) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, and other consultants
and advisors selected by it and any opinion or advice of any such Person as to
matters that the General Partner believes to be within such Person's
professional or expert competence shall be full and complete authorization and
protection with respect to any action taken or suffered or omitted by the
General Partner hereunder in good faith and in accordance with such opinion or
advice.
8.2 Other Activities of Partners. All Partners, and their shareholders,
officers, directors or partners, if any, shall be free to engage or invest in
other business ventures or properties of any type, whether or not competitive
with the business of the Partnership. Neither the Partnership nor any other
Partner shall by virtue of this Agreement have any right or interest in such
other ventures or investments, or the income or profits therefrom.
8.3 Conflicts of Interest. The General Partner shall not be prohibited
from or otherwise limited in employing, contracting with (including, but not
limited to, contracts for the Transfer, or lease of the Partnership Property),
or otherwise dealing with, any Person, by reason of the fact that such Person is
a Partner or is an Affiliate of a Partner, or is an entity in which any Partner
has an interest, whether such relationship, affiliation, or interest is direct
or indirect.
ARTICLE IX - FINANCIAL MATTERS
9.1 Fiscal Year. The fiscal year of the Partnership shall be the calendar
year, unless such fiscal year is not the required taxable year of the
Partnership pursuant to the Code, in which case the fiscal year of the
Partnership shall be such required taxable year.
9.2 Capital Accounts.
(a) A separate Capital Account shall be established and maintained
for each Partner in accordance with Section 1.704-1(b)(2)(iv) of the Treasury
Regulations. Except as otherwise provided therein:
(i) Such Capital Accounts shall be INCREASED by (1) the amount
of such Partner's Capital Contributions to the Partnership, and
(2) allocations to the Partner of Partnership profit.
(ii) Such Capital Accounts shall be DECREASED by (1) the amount
of money distributed to the Partner by the Partnership, (2) the fair market
value of any property distributed to the Partner by the Partnership, net of
any encumbrances upon such distributed property that such Partner is
considered to assume or take subject to under Section 752 of the Code, and
(3) allocations to the Partner of Partnership loss.
(b) Each item of Partnership income, gain, loss, deduction and credit
attributable to a transferred interest in the Partnership, or other change in a
Partner's interest in the Partnership to which Code Section 706(d) is
applicable, shall, for federal income tax purposes, be determined using any
permissible method under Code Section 706 as determined in the discretion of the
General Partner.
(c) If any of the Capital Accounts of the Partners are computed on
the basis of the book value of an asset and such basis differs from the adjusted
tax basis of such asset, then such Capital Accounts shall be adjusted for
allocations to the Partner of depreciation, depletion, amortization, and gain
and loss, as computed for book purposes (and not for tax purposes) with respect
to such asset, in accordance with Section 1.704-1(b)(2)(iv)(g) of the Treasury
Regulations.
(d) The provisions of this Agreement relating to the maintenance of
Capital Accounts and the allocations of income, gain, loss, deductions and
credits, are intended to comply with Section 1.704 of the Treasury Regulations
and shall be interpreted and applied in a manner consistent with such
regulations. The Partners and the Partnership shall comply with all provisions
of Section 1.704 of the Treasury Regulations, and the General Partner may make
such adjustments to the Capital Accounts, and the computations of debits or
credits thereto, as the General Partner deems necessary in order to comply with
such regulations.
9.3 Books and Records. The General Partner shall cause complete and
correct books of account and records, reflecting all Partnership operations, to
be prepared and maintained. Such books and records shall be kept at the
principal office of the Partnership, or at such other reasonable place as the
General Partner may determine, provided that the Limited Partners shall be given
notice of any change in the location of such books and records. The Limited
Partners shall have the right, at such Partners' own expense, to examine, audit
and make copies of the Partnership's books and records, in person or by duly
authorized agent or attorney, during normal business hours.
9.4 Reports; Financial Statements. The General Partner shall prepare and
send, or cause to be prepared and sent, to the Partners within 75 days after the
last day of each year during the term of the Partnership, financial statements
of the Partnership, consisting of a balance sheet showing the financial position
of the Partnership as at such last day, statements of Partnership profits,
losses, expenses, and cash flow, and showing the results of the operations of
the Partnership for the period then ended.
9.5 Tax Matters Partner. The General Partner is hereby designated the Tax
Matters Partner ("TMP") as defined in Section 6231(a)(7) of the Code. The TMP
and the other Partners shall use their best efforts to comply with the
responsibilities outlined in Sections 6221 through 6233 of the Code (including
any Treasury Regulations promulgated thereunder), and in doing so shall incur no
liability to any other Partner.
9.6 Tax Returns. The General Partner shall cause the preparation and
timely filing of all tax or information returns or reports required to be filed
by the Partnership pursuant to the Code, and of all other tax returns and
reports deemed necessary in the jurisdictions in which the Partnership does
business. Copies of federal and state income tax returns shall be furnished to
each Partner upon request. All elections permitted to be made by the
Partnership under federal or state laws shall be made by the General Partner in
its discretion.
9.7 Banking. The funds of the Partnership shall be deposited in its name
in such checking, savings, certificate of deposit, money market or similar
accounts as may be designated by the General Partner, and all withdrawals
therefrom shall be made only upon the signature of Persons designated in writing
by the General Partner.
9.8 Title to Property. Title to all property and assets of the
Partnership shall be held in the name of the Partnership, or as otherwise agreed
by the General Partner.
ARTICLE X - TRANSFERS OF PARTNERSHIP INTERESTS
10.1 Transfers by Limited Partners.
(a) Except as provided in Section 10.7, no Limited Partner may
Transfer all or any portion of its Interest in the Partnership except with the
prior written consent of Partners holding at least 75% of the total Capital
Account balances of all Partners excluding the Limited Partner that desires to
make the Transfer, which consent may be granted or withheld in the sole
discretion of each such Partner. Any Transfer of an Interest in the Partnership
which does not comply with this Section 10.1 shall be void as against the
Partnership. Each Partner and each owner of an Economic Interest (as defined
below) hereby acknowledges the reasonableness of the restrictions on the
Transfer of an Interest (including, without limitation, an Economic Interest)
imposed by this Article X in view of the Partnership's purposes and the
relationship of the Partners and owners of Economic Interests. Accordingly, the
restrictions on Transfer contained in this Article X shall be specifically
enforceable. Notwithstanding the foregoing, a Limited Partner shall be free to
Transfer such Limited Partner's right to receive distributions and allocations
of Profit and Loss from the Partnership (the "Economic Interest" of a Limited
Partner), provided that the transferee shall have no right to be admitted to the
Partnership as an additional or substitute Limited Partner.
(b) Concurrently with any Transfer of all or a portion of a Limited
Partner's Economic Interest in the Partnership which does not include a Transfer
at the same time of all of such Limited Partner's corresponding Interest in the
Partnership (including, without limitation, the voting rights of such Limited
Partner attributable to the Transferred Economic Interest), the Partnership may
elect to purchase from the transferor Limited Partner, and upon such election
the transferor Limited Partner shall sell to the Partnership, all of such
Limited Partner's remaining interests in the Partnership attributable to the
Transferred Economic Interest (including, without limitation, the voting rights
of such Limited Partner), for a purchase price of $100.
10.2 Withdrawal, Death, Incapacity, Bankruptcy or Dissolution of a Limited
Partner. No Limited Partner shall have the right to withdraw from the
Partnership. In the event of the death, incapacity or Bankruptcy of a Limited
Partner which is a natural person, or the dissolution (without reconstitution
within 30 days) or Bankruptcy of a Limited Partner which is not a natural
person, such Limited Partner shall be deemed not to be a Limited Partner for
purposes of making decisions, exercising powers and giving consents hereunder
(to the extent any such decisions, powers or consents of Limited Partner are
otherwise permitted or required hereunder), and the executor, administrator,
committee or other legal representative of such Limited Partner, or the
successor in interest of such Limited Partner, shall succeed to the Economic
Interest of such Limited Partner in the Partnership, and may be admitted to the
Partnership as a substitute Limited Partner with the prior written consent of
all Partners, which consent may be granted or withheld in the sole discretion of
each Partner, but shall not be admitted as a substitute Limited Partner in the
absence of such consent. The withdrawal, death, incapacity, dissolution or
Bankruptcy of a Limited Partner shall not dissolve the Partnership.
10.3 Transfers by General Partner.
(a) The General Partner may not Transfer all or any part of its
Interest in the Partnership without the prior written consent of Partners
holding at least 75% of the total Capital Account balances of all Partners
excluding the General Partner.
(b) The General Partner shall not admit any Person as a substitute or
additional General Partner of the Partnership without the prior written consent
of Partners holding at least 75% of the total Capital Account balances of all
Partners excluding the General Partner.
10.4 Conditions to Transfer. No Transfer of an Interest in the Partnership
shall be effective as against the Partnership, and no transferee who intends to
be admitted as a Partner shall become an additional or substitute Partner,
unless and until such assignee executes and delivers to the Partnership a
written consent to be bound by all of the provisions of this Agreement and, in
the case of admission to the Partnership, to become a Partner with respect to
the Partnership interest acquired, together with such other documents or instru
ments as the General Partner shall consider necessary or appropriate in
connection with such transferee's admission to the Partnership.
10.5 Right of First Refusal.
(a) Except with respect to Interests transferred pursuant to
Section 10.7, a selling Partner desiring to sell (for consideration) all or any
portion of such Partner's Interest in the Partnership, including an Economic
Interest, to a purchaser shall obtain from such purchaser a bona fide written
offer to purchase such Interest, stating the terms and conditions upon which the
purchase is to be made and the consideration offered therefor. The selling
Partner shall give written notification to the Partnership and the remaining
Partners of its intention to so transfer such Interest, furnishing to the
Partnership and the remaining Partners a copy of the aforesaid written offer to
purchase such Interest.
(b) The Partnership, or its assignee, shall have the right to
exercise a right of first refusal to purchase all (but not less than all) of the
Interest proposed to be sold by the selling Partner upon the same terms and
conditions as stated in the aforesaid written offer to purchase by giving
written notice to the selling Partner within twenty (20) days after receiving
written notice from the selling Partner. If the Partnership does not elect to
exercise such right, then, within five (5) days after the expiration of the
twenty (20) days, the Partnership shall give notice thereof to each of the
remaining Partners. The remaining Partners shall have the right to exercise a
right of first refusal to purchase all (but not less than all) of the Interest
proposed to be sold by the selling Partner upon the same terms and conditions as
stated in the aforesaid written offer to purchase by giving written notification
to the selling Partner within ten (10) days after receiving written notice from
the Partnership. Each remaining Partner electing to acquire the Interest shall
do so on a Pro Rata basis taking into account only Capital Accounts owned by the
remaining Partners electing to exercise such right. The failure of all the
remaining Partners (or any one or more of them) to so notify the selling Partner
of their desire to so exercise this right of first refusal within said ten (10)
day period shall result in the termination of the right of first refusal and,
subject to Section 10.5(e) below, the selling Partner shall be entitled to
consummate the sale of its Interest to such purchaser.
(c) In the event the Partnership or the remaining Partners (or any
one or more of the remaining Partners) give written notice to the selling
Partner of their desire to exercise this right of first refusal and to purchase
all of the selling Partner's Interest which the selling Partner desires to sell
upon the same terms and conditions as are stated in the aforesaid written offer
to purchase, the Partnership or remaining Partners so exercising the right (as
the case may be) shall have the right to designate the time, date and place of
closing, provided that the date of closing shall be within sixty (60) days after
the Partnership's receipt of written notification from the selling Partner of
the offer to purchase.
(d) In the event of either the purchase of the selling Partner's
Interest in the Partnership by a purchaser (other than an existing Partner), and
as a condition to recognizing one or more of the effectiveness and binding
nature of any such sale and substitution of a new Partner as against the
Partnership or otherwise, the General Partner may require the selling Partner or
the proposed purchaser to execute, acknowledge and deliver to the remaining
Partners such instruments of transfer, assignment and assumption and such other
certificates, representations and documents, and to perform all such other acts
which such General Partner deems necessary or desirable to:
(i) constitute such purchaser as a Partner;
(ii) confirm that the person desiring to acquire an Interest or
to be admitted as a Partner, has accepted, assumed and agreed to be subject and
bound by all of the terms, obligations and conditions of the Partnership
Agreement, as the same may have been further amended;
(iii) preserve the Partnership after the completion of such sale,
under the laws of each jurisdiction in which the Partnership is qualified,
organized or does business;
(iv) maintain the status of the Partnership as a partnership for
federal income tax purposes;
(v) assure compliance with any applicable state and federal laws
including securities laws and regulations.
(e) Notwithstanding anything contained in this Section 10.5 to the
contrary, if nontransferring Partners holding at least 75% of the total Capital
Account balances of all Partners excluding the Partner that desires to transfer
its Interest do not approve by written consent (which consent may be granted or
withheld in their sole discretion) of the proposed sale (or other Transfer) of
an Interest by a selling Partner to a Person who is not a Partner prior to such
sale, then the proposed transferee shall not be admitted as a Partner.
(f) Notwithstanding any provision of this Section 10.5 to the
contrary, (i) if a notice of a proposed transfer of an Interest specifies a
consideration in other than United States money, the Partnership and the
remaining Partners shall have the right to acquire the Interest proposed to be
transferred for the United States money equivalent of the specified
consideration, or (ii) if such a notice specifies a manner, time, terms or
conditions that cannot be complied with without unreasonable effort, the
Partnership and the remaining Partners shall have the right to acquire the
Interest proposed to be transferred by complying with the reasonable equivalent
of the specified manner, time, terms or conditions.
10.6 Effectiveness of Transfer; Indemnification. Any Transfer of an
Interest (including without limitation an Economic Interest) in accordance with
this Article X shall be deemed effective as of the last day of the calendar
month in which the consent of all nontransferring Partners thereto was given or,
if no such consent was required pursuant to this Article X, then as of the last
day of the calendar month in which the transferee complies with Section 10.4.
The transferring or selling Partner hereby indemnifies the Partnership and the
remaining Partners against any and all loss, damage, or expense (including,
without limitation, tax liabilities or loss of tax benefits) arising directly or
indirectly as a result of any Transfer or purported Transfer in violation of
this Article X.
10.7 Transferability of Limited Partnership Interests to Partners.
Notwithstanding any provision hereof to the contrary, any Partner may freely
transfer by sale, gift or otherwise, all or any portion of such Partner's
interest as a Limited Partner to any Person who is immediately prior to such
transfer a Limited Partner. Such transfer shall be complete without further
action on the General Partners' receipt of notice of such transfer. A transfer
described in this Section 10.7 shall not be subject to Sections 10.4 or 10.5 and
the transferee Limited Partner hereby agrees that all of the provisions of this
Partnership Agreement shall apply to any interest as a Limited Partner received
pursuant to this Section 10.7.
ARTICLE XI - WITHDRAWAL, DISSOLUTION AND TERMINATION
11.1 Unilateral Acts Prohibited. No Partner shall have the right to, and
each Partner agrees not to, take or omit to take, any action the direct or
indirect result of which is to dissolve, withdraw from, terminate or liquidate
the Partnership, except as expressly permitted by this Agreement.
11.2 Events of Dissolution. The Partnership shall dissolve upon the
occurrence of the earliest of the following events:
(a) the written agreement of Partners holding at least 75% of the
total Capital Account balances of all Partners to dissolve the Partnership;
(b) the resignation, Bankruptcy, dissolution, liquidation or
insolvency (an "event of withdrawal") of the General Partner, unless there is at
least one other general partner of the Partnership that agrees to continue the
Partnership's business or, if within 90 days after the event of withdrawal,
Partners holding at least 75% of the total Capital Account balances of all
Partners agree in writing to continue the business of the limited partnership
and to admit one or more additional general partners, if necessary;
(c) at such time that more than 79 percent of the interests in
capital or profits of the Partnership are owned by Economic Interest owners;
(d) the occurrence of any event which under Colorado law causes the
dissolution of a limited partnership; or
(e) the expiration of the term provided for in Section 1.5, unless
such term is extended by amendment of this Agreement.
11.3 Winding Up and Liquidation.
(a) Upon dissolution of the Partnership, an accounting shall be made
of the accounts of the Partnership and of the Partnership's assets, liabilities
and operations, from the date of the last previous accounting through the date
of dissolution. The General Partner or, in the event of dissolution by reason
of the dissolution or Bankruptcy of the sole General Partner, such Person as
shall be designated by Limited Partners having Capital Accounts that constitute
not less than sixty-seven percent of all of the Capital Accounts of all Limited
Partners, shall immediately proceed to wind up the affairs of the Partnership.
The Person responsible for administering the winding up and liquidation of the
Partnership shall be known as the "Liquidating Partner".
(b) Except as otherwise provided herein, if the Partnership is
dissolved and its affairs are to be wound-up, the Liquidating Partner shall
(1) sell or otherwise liquidate all of the Partnership assets as promptly as
practicable (except to the extent that the Liquidating Partner may determine to
distribute any assets to the Partners in kind), (2) allocate any profit or loss
resulting from such sales to the Partners in accordance with Article V hereof,
(3) discharge liabilities of the Partnership in the order of priority provided
by law (including all costs relating to the dissolution, winding up, liquidation
and distribution of assets), (4) establish, in accordance with Section 1.704-
1(b)(2)(ii)(b) of the Treasury Regulations, such reserves as may be reasonably
necessary to provide for contingent liabilities or other remaining liabilities
of the Partnership, and (5) distribute the remaining assets, subject to the
provisions of Section 11.3(c) below, to the Partners in accordance with and to
the extent of the positive balance of each Partner's Capital Account as
determined after the adjustments provided for in Section 6.3 of this Agreement.
Any such distributions to the Partners in respect of their Capital Accounts
shall be made in accordance with the time requirements set forth in
Section 1.704-1(b)(2)(ii)(b)(2) of the Treasury Regulations.
(c) Notwithstanding anything to the contrary in this Agreement, upon
a liquidation within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury
Regulations, if any Partner has a deficit Capital Account (after giving effect
to all contributions, distributions, allocations and other Capital Account
adjustments for all taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership, and the negative balance of such
Partner's Capital Account shall not be considered a debt owed by such Partner to
the Partnership or to any other person for any purpose whatsoever.
(d) The distribution of cash and/or property to the Partners in
accordance with the provisions of this Section 11.3 shall constitute a complete
return to the Partners of their Capital Contributions and a complete
distribution to the Partners of their respective Partnership Interests.
(e) The Liquidating Partner, in its sole discretion, may withhold the
distribution of installment obligations owed to the Partnership in accordance
with Section 1.704-1(b)(2)(ii)(b) of the Treasury Regulations.
(f) Upon completion of the winding up, liquidation and distribution
of the assets, the Liquidating Partner shall file or cause to be filed a
Certificate of Cancellation of the Partnership's Certificate of Limited
Partnership, and the Partnership shall be deemed terminated.
ARTICLE XII - MISCELLANEOUS
12.1 Rule Against Perpetuities. Unless sooner terminated by the express
provisions of this Partnership Agreement, the Partnership shall terminate
twenty-one years after the death of the survivor of the Partners, or any of
their issue who are living on the date of execution of this Partnership
Agreement.
12.2 Power of Attorney. Each Limited Partner hereby irrevocably makes,
constitutes and appoints the General Partner and each officer and director
thereof, with full power of substitution, so long as such officer or director is
acting in such a capacity (and any successor general partner and each officer
and director thereof so long as such officer or director is acting in such
capacity), its true and lawful attorney, in such Limited Partner's name, place
and stead (it is expressly understood and intended that the grant of such power
of attorney is coupled with an interest) to make, execute, sign, acknowledge,
swear and file with respect to the Partnership:
(a) a Certificate of Limited Partnership and such amendments thereto
as may be required by law or pursuant to the provisions of this Agreement, and
such Certificates of Limited Partnership as may be required by law to
reconstitute and continue the business of the Partnership in accordance with the
provisions of this Agreement;
(b) all papers which may be deemed necessary or desirable to effect
the dissolution and termination of the Partnership; and
(c) all such other instruments, documents and certificates which may
from time to time be required by the laws of the State of Colorado, the United
States of America, or any other jurisdiction in which the Partnership shall
determine to do business, or any political subdivision or agency thereof, to
effectuate, implement, continue and defend the valid existence of the
Partnership.
This power of attorney shall not be affected by and shall survive the
bankruptcy, insolvency, death, incompetency, or dissolution of a Limited Partner
and shall survive the delivery of any assignment by the Limited Partner of the
whole or any portion of its Interest in the Partnership, except that where the
assignee thereof has been admitted to the Partnership as a substitute Limited
Partner, this power of attorney shall survive the delivery of such assignment
for the sole purpose of enabling the General Partner or any officer or director
of the General Partner to execute, acknowledge and file any instrument necessary
to effectuate such substitution.
12.3 Notices. All notices, elections or other communications required or
permitted to be made or given pursuant to this Agreement shall be in writing and
shall be deemed given or made if mailed by first class registered or certified
(return receipt requested) United States mail, postage prepaid, by overnight
courier, or if transmitted (and actually received) by any telecommunication
device (e.g., telex or telecopy), and addressed or sent to:
the General Partner at: 0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
the Limited Partners:
Xxxxxx X. Xxxxxxxxx at: 0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Xxxxxx X. Xxxxxxxxx at: 0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Any Partner may change its address by giving notice in writing to the General
Partner of its new address. Notice to the Partnership shall be given to the
General Partner; notice by the Partnership shall be given by the General
Partner.
12.4 Amendments. This Agreement may be amended only by the written
agreement of Partners holding at least 75% of the total Capital Account balances
of all Partners.
12.5 Partition. Each of the Partners hereby irrevocably waives for the
term of the Partnership any right that such Partner may have to maintain any
action for partition with respect to the Partnership property.
12.6 Binding and Entire Agreement. Subject to the restrictions on
Transfers set forth herein, this Agreement shall inure to the benefit of, and be
binding upon, the Partners and their respective legal representatives, and
permitted successors and assigns. This Agreement and the documents contemplated
hereunder constitute the entire agreement of the Partners with respect to the
subject matter hereof, and supersede all prior agreements or negotiations,
whether written or oral.
12.7 No Waiver. The failure of any Partner to insist upon strict
performance of a covenant hereunder or of any obligation hereunder, irrespective
of the length of time for which such failure continues, shall not be a waiver of
such Partner's right to demand strict compliance in the future. No consent or
waiver, express or implied, to or of any breach or default in the performance of
any obligation hereunder shall constitute a consent or waiver to or of any other
breach or default in the performance of the same or any other obligation
hereunder.
12.8 Applicable Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and interpreted, construed and enforced
in accordance with the laws of the State of Colorado, without regard to the
principles of conflicts of laws.
12.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
12.10 Severability. If any provision of this Agreement, or the
application thereof to any Person, shall be determined to be invalid or
unenforceable to any extent, the remainder of this Agreement, and the
application thereof to other Persons or circumstances, shall not be impaired,
and shall be enforced to the fullest extent permitted by law.
12.11 Ownership of Partnership Property. 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.
12.12 No Third-Party Beneficiaries. The Partners intend and agree that
no Person shall be a third party beneficiary of this Agreement. Any agreement
to make any contribution or to otherwise pay any amount and any assumption of
liability, express or implied, contained in this Agreement, shall be only for
the benefit of the Partners and their respective permitted successors and
assigns, and such agreements and assumptions shall not inure to the benefit of
the obligees under any indebtedness or to any other Person.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of November 6, 1996.
GENERAL PARTNER:
XXXXXXXXX FAMILY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx,
President
LIMITED PARTNERS:
/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
EXHIBIT 3.1
to
Limited Partnership Agreement
of
Xxxxxxxxx Family Partnership, Ltd.
General Partner Contribution Percentage Unit
of Total Allocation
Capital
Accounts
Xxxxxxxxx Family 25,000 shares of common
Corporation stock in Xxxxx'x Liquid
Gold-Inc. which have a
value of $1.375 per share
for a total value of 1.03% 103
$34,375.
Limited Partner Contribution Percentage Unit
of Total Allocation
Capital
Accounts
Xxxxxx X. Xxxxxxxxx 1,458,895 shares of common
stock in Xxxxx'x Liquid
Gold-Inc. which have a
value of $1.375 per share
for a total value of 59.99% 5,999
$2,005,980.63.
Xxxxxx X. Xxxxxxxxx 947,884 shares of common
stock in Xxxxx'x Liquid
Gold-Inc. which have a
value of $1.375 per share
for a total value of 38.98% 3,898
$1,303,340.50.
$3,343,696.13 100.00% 10,000
