LIMITED PARTNERSHIP AGREEMENT OF KANDU PARTNERS, L.P. (A GEORGIA LIMITED PARTNERSHIP)
EXHIBIT 1
KANDU PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
ARTICLE 1 |
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DEFINED TERMS |
1 | |||
ARTICLE 2 |
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THE PARTNERSHIP |
6 | |||
Section 2.1 Effect of Agreement and the Act |
6 | |||
Section 2.2 Name |
6 | |||
Section 2.3 Place of Business; Registered Agent |
6 | |||
Section 2.4 Purposes and Scope |
6 | |||
Section 2.5 Assumed Name Certificate |
7 | |||
Section 2.6 Certificate of Limited Partnership |
7 | |||
Section 2.7 Ownership; Waiver of Right of Partition |
7 | |||
Section 2.8 Limits of Partnership |
7 | |||
Section 2.9 No Individual Authority |
7 | |||
Section 2.10 No Partner Responsible for Other Partner’s Commitments
|
7 | |||
Section 2.11 Other Activities of Partners |
7 | |||
Section 2.12 Records |
8 | |||
Section 2.13 Term |
8 | |||
Section 2.14 Representations and Warranties of the Partners |
8 | |||
Section 2.15 Confidentiality of Information |
9 | |||
Section 2.16 Power of Attorney |
10 | |||
ARTICLE 3 |
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FINANCIAL STRUCTURE |
11 | |||
Section 3.1 Initial Capital Contributions |
11 | |||
Section 3.2 Third Party Loans |
11 | |||
Section 3.3 Partner Loans |
11 | |||
Section 3.4 Additional Capital Contributions |
11 | |||
Section 3.5 Withdrawal of Capital |
12 | |||
Section 3.6 Distributions and Payments of Net Cash Flow Prior to Dissolution and Liquidation |
12 | |||
Section 3.7 Distributions Upon Dissolution, Liquidation and Winding
Up |
13 | |||
Section 3.8 Allocation of Profit, Loss and other Tax Items
|
13 | |||
Section 3.9 Matters Concerning Accounting and Income Taxes
|
15 | |||
Section 3.10 Matters Concerning Banking |
16 | |||
ARTICLE 4 |
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MANAGEMENT |
17 | |||
Section 4.1 Rights and Powers of the General Partners |
17 | |||
Section 4.2 Limitation on Power and Authority of the General
Partners |
18 |
-i-
Section 4.3 Liability of Partners |
19 | |
Section 4.4 Annual Reports and Tax Returns |
20 | |
Section 4.5 Participation in Management |
20 | |
ARTICLE 5 |
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LIMITED LIABILITY |
21 | |
ARTICLE 6 |
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TRANSFERS AND OTHER DISPOSITIONS |
21 | |
Section 6.1 Transfer Limitations |
21 | |
Section 6.2 Withdrawal |
24 | |
Section 6.3 Overriding Restrictions on Transfer |
26 | |
Section 6.4 Pledge or Encumbrance of Interest in Partnership |
27 | |
Section 6.5 Dissolution or Bankruptcy of a Partner |
27 | |
Section 6.6 Successor General Partner |
27 | |
Section 6.7 Affected Interest Option |
28 | |
Section 6.8 Acquisition of Affected Interest |
28 | |
ARTICLE 7 |
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TERMINATION |
29 | |
Section 7.1 Waiver of Rights |
29 | |
Section 7.2 Voluntary Termination |
29 | |
Section 7.3 Involuntary Termination |
30 | |
Section 7.4 Liquidation Procedures |
30 | |
ARTICLE 8 |
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MISCELLANEOUS PROVISIONS |
32 | |
Section 8.1 Notices |
32 | |
Section 8.2 Governing Law |
32 | |
Section 8.3 Waiver |
32 | |
Section 8.4 Severability |
32 | |
Section 8.5 Entire Agreement; Amendment |
33 | |
Section 8.6 Successors and Assigns |
33 | |
Section 8.7 Third Parties |
33 | |
Section 8.8 Survival |
33 | |
Section 8.9 Interpretation |
33 | |
Section 8.10 Exhibits |
33 | |
Section 8.11 Construction |
33 | |
Section 8.12 Headings |
33 | |
Section 8.13 Further Action |
33 | |
Section 8.14 Offset |
33 | |
Section 8.15 Counterparts |
34 | |
Section 8.16 Tax Audit |
34 | |
Section 8.17 Foreign Qualification |
34 | |
Section 8.18 Dispute Procedure |
34 | |
Section 8.19 Force Majeure |
34 |
-ii-
Section 8.20 Tax Status |
34 | |
EXHIBIT “A” |
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CAPITAL CONTRIBUTIONS OF PARTNERS |
36 |
-iii-
of
KANDU PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
THIS LIMITED PARTNERSHIP AGREEMENT, made and entered into as of the 10th day of May, 1999, by and among KANDU MANAGEMENT CORP., a Georgia corporation, as general partner, and XXXXXXX X. XXXXXX, as
limited partner,
THAT WHEREAS, the parties hereto desire to form a limited partnership under the provisions of the Revised Uniform Limited Partnership Act as enacted in the State of Georgia
for the purposes hereinafter described;
ARTICLE 1
DEFINED TERMS
For the purposes of this Agreement, the following defined terms shall have the meanings ascribed thereto:
“Act” shall mean the Georgia Revised Uniform Limited Partnership Act, Official Code of Georgia Annotated (S)(S) 14-9-100, et seq., as amended.
“Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit balance, if any, in
such Partner’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such Partner is obligated to restore pursuant to any provision of this Agreement or pursuant to Regulations §
1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations §§ 1.704-2(g)(1) or 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Regulations §§
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704- 1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of Regulations § 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Affected Interest” means a Partnership Interest (or portion thereof) (i) that a Partner Transfers or attempts to Transfer in violation of this Agreement, whether or not the Partnership is
required by law (and/or by order of a court) to recognize such Transfer, (ii) that is subjected (except as permitted by this Agreement) to a lien or security interest, (iii) that is subjected to attachment, “charging order,” foreclosure
(even if such Partnership Interest was subjected to a lien or security interest as permitted in this Agreement), garnishment, or levy, or (iv) that is held by a Partner who dies (unless the persons or Entities to whom the deceased Partner's estate
will distribute such Partnership Interest are Permitted Transferees, or such persons or Entities obtain the consent of all the other Partners), dissolves, becomes Bankrupt, becomes insolvent, or is adjudicated incompetent.
“Affected Interest Holder” means, with respect to an Affected Interest, the person or Entity who holds such Affected Interest.
“Affected Interest Option” means, with respect to an Affected Interest, (i) as to the Partnership, the
option granted to the Partnership pursuant to Section 6.8(a) to acquire all or any portion of an Affected Interest from an Affected Holder, and (ii) as to the Unaffected Partners, the option granted to the Unaffected Partners pursuant to Section
6.8(b) to acquire all or any portion of an Affected Interest from an Affected Holder.
“Affected Interest
Option Notice” means a written notice given by the Partnership or an Unaffected Partner, as the case may be, to the Affected Interest Holder that states that the Partnership or such Unaffected Partner, as the case may be, intends to purchase
all or any portion of an Affected Interest pursuant to an Affected Interest Option. Such notice shall state the portion of the Affected Interest the Partnership or such Unaffected Partner, as the case may be, desires to acquire (determined, in the
case of notice from an Unaffected Partner, in accordance with Section 6.8(b)).
“Agreement” or
“Partnership Agreement” means this Limited Partnership Agreement.
“Appraisal” means, unless
the context indicates otherwise, a written valuation report by an Appraiser that describes and values the fair market value of a Partnership Interest.
“Appraiser” means a person or Entity qualified to perform business Appraisals of partnerships and ownership interests in partnerships.
“Approve,” “Approved” or “Approval” refers to, as to the subject matter thereof, an express approval contained in a written statement
signed by the General Partners and/or the Limited Partners, as the case may be.
“Bankruptcy” means any
of (i) the initiation by a referenced person or Entity of a proceeding under a federal, state or local bankruptcy or insolvency law, (ii) the initiation against any
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referenced person or Entity of a proceeding under a federal, state, or local bankruptcy or insolvency law, which proceeding has not been
vacated, discharged, or bonded within 90 days of initiation, (iii) a general assignment by a referenced person or Entity for the benefit of creditors, (iv) the admission by a referenced person or Entity in writing of its inability to pay its debts
as they become due, or (v) the acquiescence of a referenced person or Entity to appointment of a receiver or trustee for all or a substantial part of its property or court appointment of such receiver or trustee which is not suspended or terminated
within ninety (90) days after appointment.
“Capital Account” means, with respect to any Partner, the
Capital Account maintained for such person or Entity in accordance with the following provisions:
(a) To each Partner’s Capital Account there shall be credited such Partner's Capital Contributions, such Partner’s distributive share of Profit as determined under Section 3.8.1 and any items in the
nature of income or gain that are specially allocated pursuant to Section 3.8.3 and Section 3.8.4 hereof, and the amount of any Partnership liabilities assumed by such Partner or which are secured by any Partnership property distributed to such
Partner and;
(b) To each Partner’s Capital Account there shall be
debited the amount of cash and the Gross Asset Value of any Partnership property distributed to such Partner pursuant to any provisions of this Agreement, such Partner's distributive share of Loss as determined under Section 3.8.2 and any items in
the nature of expenses or losses that are specially allocated pursuant to Section 3.8.3 and Section 3.8.4 hereof, and the amount of any liabilities of such Partner assumed by the Partnership or which are secured by any property contributed by such
Partner to the Partnership.
(c) In determining the amount of any liability
for purposes of subparagraphs (a) and (b) hereof, there shall be taken into account I.R.C. § 752(c) and any other applicable provisions of the I.R.C. and the Regulations.
(d) To the extent that Regulations § 1.704-1(b)(2)(iv) specifies adjustments to Capital Accounts that are not otherwise provided
for in this Agreement, in order that the allocations of Profit, Loss and items of income, gain, loss and deduction will have substantial economic effect under Regulations § 1.704-1(b)(2)(ii) or be deemed to be in accordance with the
partners’ interests in the partnership under Regulations § 1.704-2(e), then Capital Accounts shall be adjusted as so required by the Regulations.
The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations § 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations.
“Capital Contributions” means the aggregate and additional
contributions to the capital of the Partnership made by each Partner.
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“Default Interest Rate” means the rate per annum equal to the “prime rate” of NationsBank, N.A.,
Atlanta, Georgia (or its successors), as such rate may be adjusted from time to time, plus two percent (2%) per annum, non-compounded.
“Effective Date” means May 10, 1999.
“Entity” means any corporation,
venture (general or limited), limited partnership, association, joint stock company, trust or other business entity or organization.
“Federal Act” means the federal Securities Act of 1933, as amended, and the federal Securities Exchange Act of 1934, as amended, and all regulations promulgated under either of them.
“Fiscal Year” means the fiscal year of the Partnership, which shall be the calendar year.
“General Partner” means any of and “General Partners” means all of (i) Kandu Management Corp., (ii) its permitted
successors and assigns, and (iii) any successor General Partner pursuant to the terms of this Agreement, other than a person or Entity that has ceased to be a General Partner in the Partnership.
“General Partnership Interest” means the Partnership Interest owned by a General Partner.
“I.R.C.” means the Internal Revenue Code of 0000, Xxxxx 00, Xxxxxx Xxxxxx Code, as the same may now or hereafter be amended.
“Limited Partner” means any of and “Limited Partners” means all of Xxxxxxx X. Xxxxxx and his permitted successors and
assigns.
“Limited Partnership Interest” means the Partnership Interest owned by a Limited Partner.
“Liquidating Trustee” means the Partner or other person designated to wind up the Partnership as
specified in Section 7.4.
“Majority in Interest of Limited Partners” means the greater of (i) those
Limited Partners whose Percentage Interests are, in the aggregate, more than fifty percent (50%) of the Percentage Interests of all Partners, and (ii) those Limited Partners whose interests in profits and capital of the Partnership are, in the
aggregate, more than fifty percent (50%) of the profits and capital interests in the Partnership, as determined in accordance with Rev. Proc. 94-46, 1994-2 C.B. 688.
“Net Cash Flow” means the Partnership’s funds available for distribution in accordance with the provisions of Section 3.6 hereof, determined as
follows: (a) Operating Cash Flow: with respect to any period of operation, all cash receipts received during such period and derived from the ownership and operation of the Partnership assets received during such
period, minus (i) all costs and expenses of the Partnership paid during such period (other than depreciation or other similar noncash expenses), including, without limitation, debt service on any loan or debt obligation, and minus (ii) any other
cash expenditures made by the Partnership as permitted or required under the terms of this Agreement during such period, and minus (iii) funds paid into any Reserve Account
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as required during such period for the establishment of or addition to such reserves as the General Partners shall reasonably deem necessary or
appropriate for the proper operation of the business of the Partnership; and plus (iv) the amount by which any such reserves shall be reduced by the General Partners; (b) Cash Flow from Disposition of the Partnership’s Assets: all
cash proceeds from such sale or disposition, minus (i) all costs and expenses of the Partnership in connection with such sale or disposition, and minus (ii) all then due liabilities of the Partnership relating to the Partnership assets being sold or
disposed of, and those liabilities of the Partnership the terms of which require partial or complete satisfaction of the debt upon such a sale or disposition, and in the event of the sale of all of the assets of the Partnership, all liabilities of
the Partnership; and (c) Cash Flow from Refinancing: with respect to any refinancing of any indebtedness of the Partnership which is secured by a Mortgage, the entire amount disbursed under any such new loan to the Partnership minus
(i) all costs and expenses of the Partnership in connection with the obtaining of such loan, and minus (ii) all indebtedness of the Partnership satisfied with the proceeds of such new loan contemporaneously with such disbursement, and minus (iii)
funds paid into Reserve Accounts as required for the establishment of or addition to such reserves as the General Partners shall reasonably deem necessary or appropriate for the proper operation of the business of the Partnership.
“Notice” means a written advice or notification required or permitted by this Agreement, given in the manner provided
in Section 8.1.
“Partner” means any of and “Partners” means all of the General Partners and
the Limited Partners and such other Partners as may be admitted to the Partnership from time to time pursuant to the terms hereof.
“Partner Loan” means a loan to the Partnership by one or more Partners pursuant to Section 3.3.
“Partnership” means Kandu Partners, L.P., a Georgia limited partnership, formed under the Act pursuant to the terms hereof for the limited purposes and scope set forth herein.
“Partnership Interest” means the ownership interest and rights of a Partner in the Partnership, including, without limitation,
his right to a distributive share of the Profits and Losses, distributions, and the right to Approve matters as set forth herein.
“Percentage Interest” means the profits interest of a Partner in the Partnership. Initially, the Percentage Interest of each of the Partners is:
General Partners: |
Kandu Management Corp. |
1.00% | ||
Limited Partners: |
Xxxxxxx X. Xxxxxx |
99.00% |
Upon the admission of any additional persons as Partners or upon a change in the
respective Percentage Interests among existing Partners, this provision shall be amended to reflect the names and revised Percentage Interests of the existing and of any newly admitted Partners; provided, however, notwithstanding any provision of
this Agreement to the contrary, the aggregate Percentage Interest of the General Partners shall at all times equal or exceed one percent (1.00%).
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“Permitted Transferee” means any of (i) Xxxxxxx X. Xxxxxx, (ii) a descendant of Xxxxxxx X. Xxxxxx, including
descendants by adoption if the adoption was a court adoption of a minor under eleven (11) years of age, or (iii) a trust created for the benefit of anyone referenced in clauses (i) or (ii) above.
“Profit” or “Loss” means the income or loss of the Partnership as defined in Section 3.8.
“Regulations” means the Regulations promulgated under the I.R.C. as such regulations may be amended from time to time. All references herein to a specific
section of the Regulations shall be deemed also to refer to any corresponding provision of succeeding Regulations.
“Regulatory Allocations” shall have the meaning set forth in Section 3.8.3.
“Tax
Matters Partner” shall mean Kandu Management Corp., in its capacity as General Partner.
“Transfer”
shall mean any sale, transfer, gift, bequest, assignment, conveyance, or other disposition of a Partnership Interest, whether voluntary, involuntary, by operation of law or otherwise.
“Unaffected Partners” means, with respect to the acquisition of an Affected Interest, those Partners other than the Affected Holder.
ARTICLE 2
Section 2.3 Place of Business;
Registered Agent. The mailing address and principal place of business of the Partnership shall be Xxxx Xxxxxx Xxx 00000, Xxxxxxx, Xxxxxxx 00000-0000. The General Partners may change the place of business of the Partnership at
any time and from time to time by providing written notice to the Limited Partners. The Partnership also may have such other places of business as the General Partners determine to be appropriate. The Partnership’s agent for service of process
shall be Xxxxx X. Xxxxxxx and the address of its registered office in the State of Georgia shall be 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000-0000.
6
partnership organized under the Act, as such business activities may be determined by the General Partners from time to time.
Section 2.10 No Partner Responsible for Other
Partner’s Commitments. No Partner nor the Partnership shall be responsible or liable for any indebtedness or obligation of any other Partner incurred either before or after the execution of this Agreement, except those
responsibilities, liabilities, debts and obligations heretofore undertaken or incurred in good faith in carrying out the purposes of the Partnership, or hereafter undertaken or incurred on behalf of the Partnership under or pursuant to the terms of
this Agreement, or assumed in writing by the Partnership, and each Partner hereby indemnifies and agrees to hold the other Partners harmless from all such obligations and indebtedness except as aforesaid.
7
management, leasing or sale of real property) or require, or be deemed to require, accountability to the Partnership or to any other Partner
with respect thereto or with respect to any opportunity therefor, even if such business or activity may compete with the business of the Partnership.
(a) December 31, 2049; or
(b) The dissolution of the Partnership pursuant to the express provisions of Article 7 hereof.
(a) It is
acquiring its Partnership Interest for its own account for investment, and not with a view to distribution or resale, has not subdivided its Partnership Interest with, nor is it holding all or any portion of the Partnership Interest for, any other
person, and agrees not to sell, hypothecate or otherwise dispose of its Partnership Interest unless it has been registered under the Federal Act and applicable state securities laws or an exemption from the registration requirements of the Federal
Act and such state laws is available;
8
(b) All information which it has provided
to the Partnership concerning itself is correct and complete, and if there should be any material change in such information it will immediately provide such information to the Partnership;
(c) It is acquiring its Partnership Interest without being furnished any offering literature or prospectus;
(d) It recognizes that no federal or state agency has made any finding or determination as to the
fairness of an investment in the Partnership nor any recommendation or endorsement of an investment in the Partnership;
(e) If this Agreement is executed on behalf of a partnership, corporation, trust or other entity, the undersigned has been duly authorized to execute and deliver this Agreement and all other
instruments executed and delivered on behalf of such partnership, corporation, trust or other entity in connection with the purchase of the Partnership Interest, the signature of the undersigned is binding upon such partnership, corporation, trust
or other entity and the undersigned has delivered herewith the underlying partnership agreement, corporate charter documents or trust agreement of such entity as currently in effect;
(f) It acknowledges that it has been informed that (i) the Partnership Interests have not been registered under the Federal Act or
under any state securities laws, (ii) the Partnership Interests may not be sold unless they are subsequently registered or an exemption from such registration is available, (iii) such registration will not be made at any time in the future and (iv)
the Partnership is not obligated to take any action necessary to make any exemption for sale without registration available; and
(g) It agrees that it will not sell or offer to sell any portion of its Partnership Interest or solicit offers to buy the same from or otherwise approach or negotiate in respect
thereof with any person or Entity, so as thereby to bring this transaction and the offering of Partnership Interests within the provisions of Section 5 of the Federal Act, or the registration requirements of any state laws or regulations applicable
to him or the Partnership.
Partnership or persons or Entities with which it does business. Each Partner shall hold in strict confidence any information it receives regarding the
Partnership that is identified as being confidential
9
(and if that information is provided in writing, that is so marked) and may not disclose it to any
person or Entity other than another Partner, except for disclosures (1) compelled by law (but the Partner must notify the General Partners promptly of any request for that information, before disclosing it, if practicable), (2) to advisers or
representatives of the Partner, but only if they have agreed in writing to be bound by the provisions of this Section, or (3) of information that Partner also has received from a source independent of
the Partnership that the Partner reasonably believes obtained that information without breach of any obligation of confidentiality. The Partners acknowledge that breach of the provisions of this Section may cause irreparable
injury to the Partnership for which monetary damages are inadequate, difficult to compute, or both. Accordingly, the Partners agree that the provisions of this Section may be enforced by specific performance.
(a) Any and all amendments to the Certificate which are adopted pursuant to this Agreement;
(b) Any and all instruments which the General Partners deem appropriate to effect, evidence and reflect any sales or transfers by, or the dissolution, termination and liquidation
of, the Partnership;
(c) Any and all such other instruments, documents and
certificates which may from time to time be required by the Internal Revenue Service, the State of Georgia, the United States of America, or any political subdivision within which the Partnership conducts its business, to comply with applicable
securities laws or otherwise carry out the business of the Partnership; and
(d) Any and all other instruments that may be required or permitted by law to be filed on behalf of the Partnership and that are not inconsistent with this Agreement.
The foregoing power of attorney is hereby declared to be irrevocable and coupled with an interest, and it shall survive the death, dissolution, incompetency or
legal disability of any Partner and shall extend to the Partners’ heirs, executors, successors and assigns; and may be exercised by said agent and attorney in fact for all (or any one) of them or in other manner, including by facsimile
signature, as the agent and attorney in fact may deem appropriate. Notwithstanding the foregoing, nothing in this article shall enlarge the powers granted to the General Partners pursuant to the other terms of this Agreement. The agent and attorney
in fact shall not have the right, power or authority to amend, extend the term, or modify this Agreement when acting in his capacity.
10
ARTICLE 3
11
if the making of Additional Capital Contributions is Approved by all of the Partners, then the Partners shall make such Additional Capital
Contributions as were specified in the Notice from the General Partners. Alternatively, to the extent that additional funds are required by the Partnership to satisfy its expenses, the General Partners shall be authorized to contribute their own
funds to the Partnership with which to pay those expenses and any such contributions shall be made pro rata, in accordance with their Percentage Interests, unless otherwise agreed to by the General Partners, and such contributions shall be treated
as Additional Capital Contributions by the General Partners.
(a) First, to the repayment of accrued and unpaid interest on any Partner Loans made pursuant to
the provisions of Section 3.3 (if more than one such loan exists, interest shall be paid on said loans in the priority specified in said Section 3.3);
(b) Second, to the repayment of the unpaid principal of any Partner Loans made pursuant to the provisions of Section 3.3 (if more
than one such loan exists, such loans shall be paid in the priority specified in said Section 3.3); and
(c) Then, to the Partners pro rata in accordance with their respective Percentage Interests. If a Partnership Interest is held by a minor, distributions under this Agreement to such minor shall be paid to his
or her natural parents, legal guardian or custodian, or a trust for the benefit of such minor.
(a) With regard to Net Cash Flow and Partnership property, the General Partners shall make a determination, in accordance with their duty of care and loyalty to the Partnership,
as to the need for the property in the operation of the Partnership business, considering both current needs for operating capital, prudent reserves for future operating capital, current investment opportunities, and prudent reserves for future
investment opportunities, and all in keeping with the Partnership purposes.
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(b) It is the duty of the General Partners, in determining the amount of Net Cash
Flow available for the payment of distributions, to take into account the needs of the Partnership in its business and sums necessary in the operation of its business until the income from further operations is available, the amounts of its debts,
the necessity or advisability of paying its debts, or at least reducing them within the limits of the Partnership's credit, the preservation of its capital as represented in the property of the Partnership as a fund for the protection of its
creditors, and the character of its surplus property.
(c) Any contributed
property or borrowed funds by the Partnership shall be considered as needed for Partnership investment purposes, and any cash produced from the sale of property contributed to the Partnership or from the sale of any property purchased with borrowed
funds, or any reinvestment of any of the property, including the portion of the sale proceeds representing capital appreciation, shall be considered as needed reserves for Partnership investment purposes. Any Net Cash Flow derived from income shall,
to the extent deemed unnecessary for Partnership purposes by the General Partners under the foregoing standard, be distributed in accordance with this Agreement.
(a) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Profit or Loss shall be added to such taxable income or loss;
(b) Any expenditures of the Partnership described in I.R.C. (§) 705(a)(2)(B) or treated as
I.R.C. (§) 705(a)(2)(B) expenditures pursuant to Regulations (§) 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profit or Loss, shall be subtracted from such taxable income or loss;
(c) In the event the value of any Partnership asset is adjusted pursuant to the Regulations under
I.R.C. (§) 704(b), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits and Losses;
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(d) If the value of Partnership assets has
been adjusted as described in paragraph (c) above, in lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, amounts representing depreciation, cost recovery or
amortization deductions shall be computed using the adjusted value of the Partnership's assets; and
(e) Notwithstanding any other provisions of this definition, any items which are specifically allocated pursuant to Section 3.8.4 shall not be taken into account in computing Profit or Loss.
If the Partnership's taxable income or loss for tax purposes for such Fiscal Year, as adjusted in the manner provided herein, is a positive amount,
such amount will be the Partnership's Profit for such Fiscal Year; and if negative, such amount shall be the Partnership's Loss for the Fiscal Year.
3.8.1 Profits. After the application of the provisions of Section 3.8.3, Profits for any Fiscal Year shall be
allocated among the Partners in proportion to their respective Percentage Interests.
3.8.2 Losses. After the application of the provisions of Section 3.8.3, Losses for any Fiscal Year shall be allocated among the Partners as follows:
(a) First, to the Partners in proportion to, and to the extent of, the positive balances in the
Partners’ Capital Accounts; and
(b) Then to the Partners in
proportion to their Percentage Interests.
(c) Notwithstanding the
provisions of paragraphs (a) and (b) of this Section 3.8.2, Losses allocated pursuant to this Section 3.8.2 shall not exceed the maximum amount of Losses that can be so allocated without causing a Limited Partner to have an Adjusted Capital Account
Deficit at the end of any Fiscal Year. All losses in excess of this limitation shall be allocated to the General Partners.
3.8.3 Special Allocations. To the extent that the General Partners contribute additional capital to the Partnership to provide funds to pay the Partnership's expenses, as
contemplated in Section 3.4, and the payment of such expenses gives rise to a deduction for federal or state income tax purposes, such deduction shall be specially allocated to the General Partners.
3.8.4 Other Allocation Rules.
3.8.4.1 Code and Regulatory Compliance. The provisions of Section 3.8 are intended to comply with I.R.C.
(§) 704(b) and the regulations promulgated thereunder, and shall be interpreted and applied in a manner consistent therewith. The General Partners shall have reasonable discretion to apply the provisions of this Agreement and take such other
reasonable action as may be necessary to comply with I.R.C. (§) 704 and the Regulations thereunder.
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3.8.4.2 Binding
Effect. The Partners are aware of the income tax consequences of the allocations made pursuant to Section 3.8 and hereby agree to be bound by the provisions of this Section 3.8 in reporting their shares of Partnership income
and loss and items thereof for income tax purposes.
3.8.4.3 Tax
Allocations. Except as provided in Section 3.8.4.4, all items of income, gain, loss and deduction shall be allocated, for federal income tax purposes, in the same manner as the corresponding items of income, gain, loss and
deduction are allocated for purposes of maintaining the Capital Accounts of each of the Partners.
3.8.4.4 Code Section 704(c). In accordance with I.R.C. § 704(c) and the Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the
capital of the Partnership, or after the assets of the Partnership have been revalued under Regulations § 1.704-1(b)(2)(iv)(g), shall, solely for tax purposes, be allocated among the Partners so as to take into account any variation between the
adjusted basis of such property to the Partnership for federal income tax purposes and its initial value as so determined pursuant to the contribution or revaluation of Partnership assets including, but not limited to, special allocations to a
contributing Partner that are required under I.R.C. § 704(c) to be made upon distribution of such property to any of the non- contributing Partners. Any elections or other decisions relating to such allocations shall be made by the General
Partners. Allocations pursuant to this Section 3.8.4.4 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Partner’s Capital Account or share of Profit, Loss,
other items, or distributions pursuant to any provision of this Agreement.
3.8.4.5 Excess Nonrecourse Liabilities. For purposes of Regulations § 1.752-3(a)(3), the Partners agree that excess nonrecourse liabilities of the Partnership shall be allocated
among the Partners in accordance with their respective Percentage Interests.
15
the Partnership by reason of each such election, as reasonably determined by the General Partners, shall be reimbursed,
upon demand, by the Partner (or its Transferee) that requested the Partnership to make such election and, if more than one Transfer has occurred, the additional costs incurred as a result of the I.R.C. § 754 election shall be prorated among the
Transferring Partners (or their Transferees) in accordance with the determination of the accountants regularly engaged by the Partnership.
(a) The Tax Matters Partner shall keep the Partners informed of all administrative and judicial proceedings, as required by I.R.C.
(S) 6223(g), and shall furnish to the Partners a copy of each notice or other communication received by the Tax Matters Partner from the Internal Revenue Service (except such notices or communications as are sent directly to the Partners by the
Internal Revenue Service). The expenses so incurred by the Tax Matters Partner shall be Partnership expenses and shall be paid by the Partnership.
(b) The Tax Matters Partner shall have the authority, on behalf of the Partnership, to do all or any of the following:
(i) Enter into a settlement agreement or make any election with the Internal Revenue
Service that purports to bind any other Partner,
(ii) File a petition as
contemplated in I.R.C. § 6626(a) or 6228,
(iii) Intervene in any
action as contemplated in I.R.C. § 6226(b),
(iv) File any request
contemplated in I.R.C. § 6227(b),
(v) Enter into an agreement
extending the period of limitations as contemplated in I.R.C. § 6229(b)(1)(B), and
(vi) Take any other action on behalf of the Partners or the Partnership in connection with any administrative or judicial tax proceeding to the extent permitted by applicable law or regulations.
16
may, from time to time, determine. The General Partners are hereby authorized to exercise their best judgment to determine from time to time the
cash requirements of the Partnership and to invest all surplus funds of the Partnership in such short-term interest-bearing deposits or income-producing investments or both as the General Partners shall determine to be appropriate. In addition, the
General Partners shall be authorized to establish and maintain reserves for Partnership purposes pursuant to this Agreement to the extent deemed reasonably necessary by the General Partners.
ARTICLE 4
(a) Enter into, make and perform such contracts,
undertakings, leases and agreements, and do such other acts as it may deem necessary or advisable, or as may be incidental to, or necessary for, the conduct of the business of the Partnership and the ownership, management, development and sale of
the Partnership assets;
(b) Open, maintain and close bank accounts and
draw checks and other orders for the payment of money;
(c) Employ from
whatever source it deems reasonable such employees, accountants, property managers, attorneys and other persons in the administration, supervision, management, improvement and disposition of the assets and business of the Partnership as, in the
judgment of the General Partners, are necessary or desirable, with the expenses of the same to be paid by the Partnership;
(d) Purchase, at the expense of the Partnership, liability and other insurance to protect the Partnership’s properties and business and to protect the General Partners;
(e) Perform any and all other acts or activities customary or incident to the acquisition,
ownership, management, improvement, leasing and disposition of real estate;
(f) Enter into agreements and contracts with parties and give receipts, releases and discharges with respect to all of the foregoing and any matters incident thereto;
17
(g) Be reimbursed for all reasonable and
customary out-of-pocket expenses incurred in conducting the Partnership business, including but not limited to reasonable travel expenses, and costs related to Partnership accounting and bookkeeping services;
(h) Pay itself reasonable annual compensation for services rendered to the Partnership, reasonable
compensation to be measured by the time and complexity required in the administration of the Partnership, the value of property under the General Partners’ administration, and the responsibilities assumed in the discharge of the duties of
office, including the power, in its reasonable discretion, to adjust prospectively the General Partners’ compensation based upon its performance and dedication of time to the business of the Partnership; provided, however, all payments to the
General Partners for services rendered to the Partnership will not be a return on invested capital, but will be paid as compensation for services rendered; and
(i) Appoint in writing an attorney-in-fact to represent it in exercising any or all of the powers stated in this Section 4.1.
In dealing with the General Partners acting on behalf of the Partnership, no person or Entity shall be required to inquire into the
authority of the General Partners to bind the Partnership. Persons and entities dealing with the Partnership shall be entitled to rely conclusively on the power and authority of the General Partners as set forth in this Agreement. Any document or
instrument, including, without limitation, any deed, mortgage, deed of trust, deed to secure debt, promissory note, xxxx of sale, lease, contract of sale, option or management agreement required to be executed on behalf of the Partnership shall be
executed by the General Partners, and no other signature or consent shall be required.
(a) The General Partners shall be prohibited from taking the following actions:
(1) Changing the Partnership to a general partnership;
(2) Taking any action that would cause the Partnership to be treated as an association
taxable as a corporation for federal income tax purposes;
(3) Taking any
action which would make it impossible to carry on the ordinary business of the Partnership;
(4) Possessing or transferring Partnership property or assigning rights in Partnership property for other than a Partnership purpose;
(5) Performing any act on behalf of the Partnership in contravention of this Agreement; or
(6) Causing the Partnership to commingle its funds with the funds of others.
18
(b) The General Partners shall be permitted to take the following actions only
with the prior Approval of a Majority in Interest of Limited Partners:
(1) Incur Partnership indebtedness in excess of the greater of (a) $1,000,000, or (b) a loan to value ratio of fifty percent (50%) (in either case, cumulative of all Partnership liabilities and the cumulative
value of the Partnership assets measured at book value);
(2) Prior to the
actual termination of the Partnership, sell or otherwise transfer all or substantially all of the Partnership’s assets;
(3) Compromise any claim or dispute having an amount or value in issue in excess of fifty percent (50%) of the total value of the Partnership’s assets;
(4) Confess a judgment against the Partnership; or
(5) Make, execute, or deliver on behalf of the Partnership any assignments for the benefit of
creditors.
(c) The General Partners shall be permitted to take the
following actions only with the prior Approval of all Partners:
(1) Admit
any individual or Entity as an additional or substitute Partner, except as may otherwise be provided for in Article 6 of this Agreement;
(2) Amend this Agreement, except as may be provided for elsewhere in this Agreement; and
(3) Terminate, liquidate and wind up the Partnership, except as may otherwise be provided for in this Agreement.
19
independent certified public accountant selected by the General Partners, and in such event, the cost of any such audit shall be borne by the Partnership. The General Partners also shall cause to be
prepared and filed on a timely basis all income tax returns which must be filed on behalf of the Partnership with any taxing authority.
Section 4.5 Participation in Management.
4.5.1 Restrictions on Limited Partner Participation. Except as may be otherwise expressly provided herein to the contrary, no Limited Partner shall participate in the management or
control of the Partnership’s business or transact any business for the Partnership, and no Limited Partner shall have the power to act for or bind the Partnership, said powers being vested solely and exclusively in the General Partners in
accordance with the provisions of this Agreement. No Limited Partner in his capacity as such shall have any power or authority with respect to the Partnership except as expressly provided by this Agreement.
4.5.2 Exceptions to Restrictions on Limited Partner
Participation. Notwithstanding the provisions of Section 4.5.1, the Limited Partners shall have the right to vote upon the matters listed below:
(a) Election of a Successor General Partner;
(b) Any matter requiring the vote of the Limited Partners as set out in paragraphs (b) and (c) of Section 4.2 of this Agreement;
(c) The extension of the term of the Partnership; and
(d) Any matter requiring the vote of the Limited Partners as set out elsewhere in this
Agreement or in the Act.
20
ARTICLE 5
No Limited Partner shall be bound by, or personally liable for, the
expenses, liabilities, or obligations of the Partnership, except as provided under the Act. Except as required under the Act, no Limited Partner shall be required or obligated to make further contributions of any sort whatsoever to the capital of
the Partnership, unless and until such contributions have been Approved by all of the Partners, nor shall any Limited Partner be personally liable for any debts, obligations, or other liabilities of the Partnership,
whether arising in contract, tort, or otherwise, except as expressly provided otherwise in this Agreement or the Act. No Limited Partner shall be obligated to make loans to the Partnership.
ARTICLE 6
business and investment objectives of the Partnership and its federal tax
status. An unauthorized Transfer of a Partner’s Partnership Interest could create a substantial hardship to the Partnership, jeopardize its capital base, and adversely affect its tax structure. Therefore, the ownership and transferability of
interests in the Partnership are substantially restricted. Neither record title nor beneficial ownership of a Partnership Interest of any Partner may be Transferred or encumbered, pledged, or hypothecated except as
otherwise set forth in this Agreement. These restrictions upon ownership and Transfer are not intended as a penalty, but as a method to protect and preserve existing relationships based upon trust and
the Partnership’s capital and its financial ability to continue. If there is a doubt as to ownership of a Partnership Interest or who is entitled to Net Cash Flow or liquidating proceeds, the General Partners may accumulate Net Cash Flow or
liquidation proceeds until the issue is resolved to the satisfaction of the General Partners.
(a) A Limited Partner may Transfer all or part of its Limited Partnership Interest to any person or Entity if such Limited Partner first offers in writing to sell such Limited Partnership Interest to the
Partnership, and, to the extent the Partnership does not accept such offer, to the other Partners. The Partnership, in the discretion of the General Partners, shall have the right to accept the offer at any time during the thirty (30) days following
the date on which the written offer is delivered to the General Partners, and, within such time period, the Partnership shall notify the Partners of its decision to exercise or decline to exercise such offer. To the extent the Partnership does not
accept such offer, the Partners (other than the Transferring Limited Partner) shall have the right (but not the obligation) to accept such offer within 20 days after the date on which they received notice from the Partnership under the preceding
sentence, and the Partners desiring to accept such offer shall exercise that option pro rata in accordance with their respective Percentage Interests,
21
or in such other proportion as the General Partners shall determine. To the extent the Partnership and the Partners do
not accept the offer within the time periods specified herein, such Limited Partnership Interest may during the following sixty (60) days be disposed of free of the restrictions imposed by this Agreement; provided, however, that the purchase price
for such Limited Partnership Interest, if the proposed Transfer is a sale or exchange, shall not be more favorable than the purchase price (or the fair market value of the property proposed to be received by the Transferring Limited Partner, if an
exchange) and the terms of purchase (or exchange) that would have been applicable to the Partnership and Partners had the Partnership or Partners purchased the Limited Partnership Interest. If the proposed Transfer is a gift or bequest, then the
purchase price and terms applicable to the Partnership and Partners shall be those that would apply under paragraphs (c) through (f) of Section 6.8, if such Partnership Interest had been an Affected Interest that the Partnership had elected to
acquire under Section 6.7 of this Agreement. Any Limited Partnership Interest not so disposed of within the sixty (60) day period shall thereafter remain subject to the terms of this Agreement.
(b) A Limited Partner may Transfer all or a portion of its Limited Partnership Interest to a Permitted Transferee without
complying with the provisions of Section 6.1.1(a).
(c) Upon receiving a
Transfer of a Limited Partnership Interest, a Permitted Transferee (or a Transferee of a Transfer for which Section 6.1.1(a) has been met) shall be a Transferee. Such a Transferee shall become a substitute Limited Partner only in accordance with
Section 6.1.2.
(d) Any Transfer of a Limited Partnership Interest other
than to a Permitted Transferee and not in compliance with Section 6.1.1(a) shall be null and void ab initio and shall not be recognized by the Partnership, and such Limited Partnership Interest shall be an Affected Interest subject to the
terms and provisions of Sections 6.7 and 6.8 of this Agreement. In any such event, the person or Entity to whom such attempted Transfer is made shall become neither a Partner nor a Transferee or assignee hereunder, and shall not be entitled to
participate in any decision or to receive any share of Profits or cash in respect of the Partnership's business or to share in distributions, if any, in which its Transferor would otherwise have been entitled to share, and shall have no right to
require any information or accounting of any transactions of the Partnership, and shall not be entitled to vote with respect to any Partnership matter.
(a) A Transferee of the whole or any portion of a Limited Partnership Interest shall have the right to become a substitute Limited
Partner in place of his Transferor if and only if (i) each Partner shall have consented in writing to such Transferee becoming a substituted Limited Partner, (ii) the Transferee expressly assumes and agrees to be bound by this Agreement in the place
and stead of such Transferor, (iii) the appropriate instruments, documents, or statements, if any, are
22
prepared, executed, acknowledged, filed, recorded, published and delivered, (iv) the Transferee pays or obligates itself
to pay any and all reasonable expenses of the Partnership connected with such substitution, and (v) the Transferee causes to be delivered to the Partnership, if the other Partners so request, at the Transferee's sole cost and expense, a favorable
opinion of legal counsel reasonably acceptable to the other Partners, as to such matters as such Partners shall reasonably request. The consent to substitution of a Transferee that is described above shall be in the sole discretion of any Partner.
Upon compliance with all provisions hereof applicable to such Transferee becoming a substitute Limited Partner, all other Partners agree to execute and deliver such amendments hereto as are necessary to constitute such Transferee a substitute
Limited Partner of the Partnership.
(b) The General Partners may elect to
treat a Transferee who has not become a substitute limited partner as a substitute Limited Partner in the place of its Transferor with respect to the Partnership Interest Transferred should they deem, in their sole discretion, that such treatment is
in the best interest of the Partnership.
(c) The Transferee to whom a
Transfer of a Limited Partnership Interest is made in accordance with Section 6.1.1 and who is not admitted as a Partner pursuant to this Section 6.1.2 shall not become a Limited Partner hereunder and shall be considered only an assignee of the
Limited Partnership Interest. Such Transferee shall only be entitled to share in those allocations and distributions, if any, in which its Transferor would otherwise have been entitled to share, diminished by the share of the losses and obligations,
if any, for which such Transferor would be liable. Such a Transferee shall have no right to require any information or accounting of any transactions of the Partnership or inspect the Partnership’s books and records and shall not be deemed a
Partner of the Partnership, and the Partnership Interest held by such Transferee shall not be permitted to vote with respect to any Partnership matter. Such a Transferee who does not become a substitute Limited Partner as provided for in this
Section 6.1.2, remains subject to all the provisions of this Article 6 to the same extent and in the same manner as any Limited Partner desiring to Transfer all or any part of its Limited Partnership Interest.
(a) Subject to the other provisions of this Agreement, a General Partner may Transfer all or part of its General Partnership Interest
to any person or Entity other than a Permitted Transferee only after having obtained the prior written consent of each other Partner, which consent shall be given in each Partner's sole discretion.
(b) Subject to the other provisions of this Agreement, a General Partner may Transfer all or a
portion of its General Partnership Interest to a Permitted Transferee.
(c) Subject to the provisions of Section 6.6, any General Partnership Interest Transferred by a General Partner shall be converted to that of a Limited Partner immediately before the Transfer. Upon receiving a
Transfer of such Limited Partnership Interest, a Permitted Transferee (or a Transferee of a Transfer as to which
23
consent has been obtained pursuant to paragraph (a) of this Section 6.1.3) shall be a Transferee. Such a Transferee of a
General Partner shall become a substitute Limited Partner only in accordance with Section 6.1.2.
(d) Any Transfer of a General Partnership Interest other than to a Permitted Transferee and not in compliance with Section 6.1.3(a) shall be null and void ab initio and shall not be recognized by the
Partnership. In any such event, such General Partnership Interest shall be converted to that of a Limited Partner immediately before the Transfer and shall constitute an Affected Interest subject to the terms and provisions of Sections 6.8 and 6.9
of this Agreement. In any such event, the person or Entity to whom such attempted Transfer is made shall become neither a Partner nor a Transferee or assignee hereunder, and shall not be entitled to participate in any decision or to receive any
share of Profits or cash in respect of the Partnership's business or to share in distributions, if any, in which its Transferor would otherwise have been entitled to share, and shall have no right to require any information or accounting of any
transactions of the Partnership, and shall not be entitled to vote with respect to any Partnership matter.
(a) Upon a Transfer by a Partner of all of its Interest in the Partnership and substitution of a substituted Partner with respect to the Transferring Partner's Partnership Interest, the Transferring Partner
shall cease to be a Partner.
(b) Upon a Transfer by a Partner of less than
all of its Partnership Interest and substitution of a substituted Partner with respect to the portion of the Partnership Interest Transferred, all in accordance with this Agreement, the Transferring Partner shall cease to be a Partner with respect
to such portion of the Partnership Interest Transferred.
(c) If a Partner Transfers
all or any part of its Partnership Interest, and the Transferee is not admitted as a substitute Limited Partner, no person or Entity shall be entitled to vote with respect to such Transferred Partnership Interest.
6.2.1 Withdrawal of a Limited Partner. Until the Partnership is terminated and its affairs wound up in
accordance with the Act and this Agreement, no Limited Partner shall have the right to withdraw from the Partnership or to receive a return of any of its contributions to the Partnership, except with the consent of each other Partner, and in each
case upon such terms and conditions as may be specifically agreed upon between the remaining Partners and the withdrawing Partner. A Limited Partner will breach this Agreement if it (1) attempts to withdraw from the Partnership, (2) interferes in
the management of the Partnership affairs, (3) engages in conduct which could result in the Part nership losing its tax status as a partnership, (4) engages in conduct that tends to bring the Partnership into disrepute, (5) owns an interest in the
Partnership that becomes subject to a charging order, attachment, garnishment, or similar legal proceedings (including without
24
limitation, pursuant to a divorce decree or settlement agreement), (6) breaches any confidentiality provisions of this
Agreement, or (7) fails to meet any commitment to the Partnership. A Limited Partner who is in breach of this Agreement shall be liable to the Partnership for damages caused by the breach. The Partnership may offset for the damages against any
distributions or return of capital to the Limited Partner who has breached this Agreement. The provisions of this Agreement with respect to distributions upon withdrawal are exclusive and no Limited Partner shall be entitled to claim any further or
different distribution upon withdrawal under the Act or otherwise. No Limited Partner shall have the right or power to cause the dissolution and winding up of the Partnership by court decree or otherwise.
6.2.2 Voluntary Withdrawal of a General Partner. Prior to the expiration of
the term, no General Partner may voluntarily withdraw from the Partnership except with the consent of each other Partner, and in each case upon such terms and conditions as may be specifically agreed upon between the remaining Partners and the
withdrawing Partner. Any General Partner who withdraws or ceases to be a General Partner pursuant to the Act in violation of this Section 6.2.2 violates this Agreement, and the Partnership may recover damages from the withdrawing General Partner,
including the reasonable cost of obtaining replacement of the services the withdrawn General Partner was obligated to perform, for breach of this Agreement. The Partnership may, in addition to pursuing any remedies otherwise available under
applicable law, effect that recovery by offsetting those damages against the amount otherwise distributable to the withdrawing General Partner, and reducing the Limited Partner’s Partnership Interest into which the withdrawing General
Partner’s Partnership Interest may be converted under the Act and this Agreement. Upon the voluntary withdrawal of a General Partner pursuant to this Section 6.2.2, the Partnership Interest of the withdrawing General Partner shall automatically
be converted to that of a Limited Partner without voting rights, without further act or deed. The provisions of this Agreement with respect to distributions upon withdrawal are exclusive and no General Partner shall be entitled to claim any further
or different distribution upon withdrawal under the Act or otherwise.
6.2.4 Withdrawal of a General Partner—Remaining General Partners. Upon the withdrawal, Bankruptcy, insolvency, dissolution, death or adjudication of
incompetence of a General Partner that is not the sole General Partner, the remaining General Partner(s) shall immediately (i) give notice to the Limited Partners of such event, (ii) make such amendments to this Agreement and execute and file for
recordation such amendments or documents or other instruments as are necessary to reflect the termination of such General
25
Partner and (iii) continue the business of the Partnership (and the General Partner(s) hereby expressly agrees to so
continue the business of the Partnership).
26
Agreement.
appropriate instruments, documents, or statements, if any, are prepared, executed, acknowledged, filed, recorded, published and delivered, (iv) with respect to a substitution, such person or Entity pays or obligates itself to pay any
and all reasonable expenses of the Partnership connected with such substitution, and (v) with respect to a substitution, such person or Entity causes to be delivered to the Partnership, if the other Partners so request, at its sole cost and expense,
a favorable opinion of legal counsel reasonably
acceptable to the other Partners, as to such matters as such Partners shall reasonably request. The consent to substitution or
addition of a General Partner that is described above shall be in the sole discretion of any Partner. Upon compliance with all provisions hereof
27
applicable to such person or Entity becoming a General Partner, all other Partners agree to execute and deliver such amendments hereto as are
necessary to constitute such person or Entity a General Partner of the Partnership. A successor General Partner shall be liable for all obligations and liabilities incurred by it as General Partner after the effective date of its admission. However,
unless such successor General Partner agrees to the contrary, it shall be free of, and held harmless by the Partnership against, any obligation or
liability incurred by or on
behalf of the activities of the Partnership before the effective date of its admission.
(a) The Partnership
shall have the right (but not the obligation) to acquire all or any portion of any Affected Interest from the Affected Interest Holder upon the terms and conditions set forth in Section 6.8. Within 20 days after the Partnership actually becomes
aware of the facts giving rise to the creation of the Affected Interest Option, the Partnership shall notify all Partners of the existence of the Affected Interest Option and the identity of the Affected Interest Holder.
(b) The Unaffected Partners shall have the right (but not the obligation) to acquire from the
Affected Interest Holder, upon the terms and conditions set forth in Section 6.8, all or any portion of the Affected Interest to the extent that the Partnership does not exercise its Affected Interest Option with respect thereto. The Unaffected
Partners who desire to exercise the Affected Interest Option shall exercise such option pro rata in accordance with their respective Percentage Interests, or in such other proportion as the General Partners shall determine.
(c) To the extent that neither the Partnership nor the Unaffected Partners exercise
their right to acquire the Affected Interest pursuant to paragraphs (a) or (b) of this Section 6.7, the Affected Interest Holder shall, notwithstanding any provision of this Agreement to the contrary, be treated as the Transferee of such Affected
Interest.
(a) The Partnership may exercise its Affected Interest Option by sending an Affected Interest Option Notice to the Affected Interest
Holder within 60 days after the Partnership actually becomes aware of the facts giving rise to the creation of the Affected Interest Option, and, within such time period, the Partnership shall notify the Unaffected Partners of its decision to
exercise or decline to exercise such Affected Interest Option.
(b) To the
extent the Partnership does exercise its Affected Interest Option, the Unaffected Partners may exercise their Affected Interest Option by sending an Affected Interest Option Notice to the Affected Interest Holder within 20 days after the date on
which the Unaffected Partners received notice from the Partnership pursuant to paragraph (a) of Section 6.8.
28
(c) The valuation date for the
determination of the purchase price of the Affected Interest that the Partnership and/or the Unaffected Partners desire to purchase shall be the first day of the month following the month in which the facts giving rise to the creation of the
Affected Interest Option occurred.
(d) Unless the Partnership and/or the
Unaffected Partners seeking to exercise the Affected Interest Option and the Affected Interest Holder agree otherwise, the price of such Affected Interest shall be its fair market value as determined by an Appraisal.
(e) Closing of the sale will occur at the principal office of the Partnership at 10 o’clock
a.m. Atlanta, Georgia time on the first Tuesday of the month following the month in which the Appraisal is rendered or price agreed.
(f) In order to reduce the burden upon the resources of the Partnership, the Partnership and/or the Unaffected Partners who are exercising the Affected Interest Option,
respectively, shall each have the option, to be exercised in writing delivered at closing, to pay the purchase price in 15 equal annual installments (or equal annual installments for such shorter period as shall be coextensive with the remaining
term of the Partnership if such remaining term is less than fifteen 15 years) with interest at the Default Interest Rate. The first installment of principal, with interest, shall be due and payable on the first business day of the calendar year
following closing, and subsequent annual installments, with accrued interest, shall be due and payable on the first business day of each succeeding calendar year until the entire amount of the obligation with interest is paid in full. The
Partnership and/or the Unaffected Partners who are exercising the Affected Interest Option, respectively, shall each have the right to prepay all or any part of the purchase money obligation at any time without penalty, together with accrued but
unpaid interest on the amount prepaid.
(g) Neither the Affected Interest
Holder nor, if a different person or Entity, the Partner with respect to whom the event giving rise to the creation of the Affected Interest Option occurred shall have the right to vote on Partnership matters during the period beginning on the date
that the Affected Interest became an Affected Interest and ending on the later of (i) the date on which the sale of the Affected Interest (or any portion thereof) is closed pursuant to paragraph (e) of this Section 6.8, if the Affected Interest
Option is timely exercised, or (ii) 61 days after the date on which the Unaffected Partners received notice of the existence of such option pursuant to paragraph (a) of this Section 6.8, if the Affected Interest Option is not timely exercised.
ARTICLE 7
29
interests in the Partnership; or (iii) the sale of all or substantially all of the assets of the Partnership and the distribution to the
Partners of all proceeds from such sale.
(a) The death, adjudication of incompetence or dissolution of the sole remaining General Partner;
(b) The filing of an involuntary petition in Bankruptcy against the sole remaining General Partner which is not dismissed within one
hundred twenty (120) days of such filing;
(c) The filing by the sole
remaining General Partner of any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future federal Bankruptcy Code or any present or future
federal, state or other statute or law relating to Bankruptcy, insolvency or other relief for debtors;
(d) The sole remaining General Partner’s seeking, or consenting to, or acquiescing in the appointment of any trustee, receiver, conservator or liquidator of it or of all or any substantial portion of its
property or interest in the Partnership; or
(e) The resignation and
withdrawal of the sole remaining General Partner from the Partnership.
30
(a) First, the Partnership shall pay creditors of the Partnership (other
than the Partners) in accordance with their respective priorities, including expenses of liquidation;
(b) Second, the Partnership shall set up any reserves which the Liquidating Trustee deems to be reasonably necessary for any contingent or unforeseen liabilities or obligations of the Partnership arising out of
or in connection with the Partnership. Said reserve may be paid over by the Liquidating Trustee to a bank or trust company, as escrow agent, to be held for the purpose of disbursing such reserves in payment
31
of the aforementioned contingencies, and at the expiration of such period as the Liquidating Trustee shall deem advisable
distribute the balance thereof in the manner provided in this Section 7.4.3;
(c) Third, the Partnership shall pay and discharge any liabilities of the Partnership to any of the Partners; and
(d) Fourth, all remaining assets or proceeds shall be distributed to the Partners in accordance with Section 3.7.
ARTICLE 8
32
33
34
Address: Xxxx Xxxxxx Xxx 00000 Xxxxxxx, Xxxxxxx 00000-0000 |
General Partners: KANDU MANAGEMENT CORP. /s/ Xxxxxxx X.
Xxxxxx Xxxxxxx X.
Xxxxxx, President |
Attest: /s/ Xxxxx X. Xxxxxx Xxxxx X. Xxxxxx, Secretary [CORPORATE SEAL] |
Address: 000 Xxxx Xxx, Xxx. 000 Xxxxxxx, Xxxxxxx 00000-0000 |
Limited Partners: KANDU MANAGEMENT CORP. /s/ Xxxxxxx X. Xxxxxx (SEAL) XXXXXXX X. XXXXXX |
35
KANDU PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
EXHIBIT “A”
CAPITAL CONTRIBUTIONS OF PARTNERS
General Partners: |
||||
Kandu Management Corp. |
1.00% |
6,122 shares of common stock of Xxxxxx Industries, Inc. | ||
Limited Partners: |
||||
Xxxxxxx X. Xxxxxx |
99.00% |
606,086 shares of common stock of Xxxxxx Industries, Inc. |
KANDU PARTNERS, L.P.
(A GEORGIA LIMITED PARTNERSHIP)
TRANSFER RESTRICTIONS
THE LIMITED PARTNERSHIP INTERESTS IN KANDU PARTNERS, L.P. (THE “INTERESTS”), ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT. THE INTERESTS HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER (i) THE SECURITIES LAWS OF THE STATE OF GEORGIA (THE “GEORGIA ACT”), (ii) ANY OTHER STATE SECURITIES LAWS, OR (iii) THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “FEDERAL
ACT”). NEITHER THE INTERESTS NOR ANY PART THEREOF MAY BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED, OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT AND (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE GEORGIA ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE GEORGIA ACT OR WHICH IS OTHERWISE IN COMPLIANCE WITH THE GEORGIA ACT, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER ANY OTHER
APPLICABLE STATE SECURITIES LAWS OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER ANY SUCH SECURITIES LAWS OR WHICH IS OTHERWISE IN COMPLIANCE WITH SUCH SECURITIES LAWS, AND (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE FEDERAL ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE FEDERAL ACT OR WHICH IS OTHERWISE IN COMPLIANCE WITH THE FEDERAL ACT.