EXHIBIT 5
LIMITED PARTNERSHIP AGREEMENT
OF
XXXXXX X. XXXXXXX FAMILY LIMITED PARTNERSHIP, L.P.
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THIS AGREEMENT ("Agreement") is made this 19th day of December, 2001, by
and among XXXXXX X. XXXXXXX, as general partner (the "General Partner"), XXXX X.
XXXXXXX and XXXXXX X. XXXXXXX, as limited partners (along with such other
Persons who may hereafter be admitted to the Partnership as limited partners,
the "Limited Partners"). The General Partner and the Limited Partners are
sometimes collectively referred to herein as the "Partners" or, in the case of a
single partner, the "Partner."
The Partners desire to form a limited partnership for the purposes and
under the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1
DEFINITIONS
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"CAPITAL ACCOUNT" means, with respect to any Partner, the Capital Account
maintained for such Partner 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 Profits
and any items in the nature of income or gain which are specially allocated
pursuant to Section 15.4 or Section 15.5 of the Appendix to this Agreement, and
the amount of any Partnership liabilities assumed by such Partner or which are
secured by any property distributed to such Partner.
(b) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Property distributed to such
Partner pursuant to any provision of this Agreement, such Partner's distributive
share of Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 15.4 or Section 15.5 of the Appendix to
this Agreement, 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 the event all or a portion of an interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred interest.
(d) In determining the amount of any liability for purposes of
subparagraphs (i) and (ii) there shall be taken into account Code Section 752(c)
and any other applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the General Partner shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto (including, without limitation, debits or
credits relating to liabilities which are secured by contributions or
distributed property or which are assumed by the Partnership or the Partners),
are computed in order to comply with such Regulations, the General Partner may
make such modification, provided that it is not likely to have a material
adverse effect on the amounts distributed to any Partner upon the dissolution of
the Partnership. The General Partner also shall (i) make any adjustments that
are necessary or appropriate to maintain equality between the Capital Accounts
of the General Partner and Limited Partners and the amount of Partnership
capital reflected on the Partnership's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii)
make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b).
"CAPITAL CONTRIBUTION" means, with respect to any Partner, the amount of
money and the initial Gross Asset Value of any property (other than money)
contributed to the Partnership by such Partner with respect to the interest in
the Partnership held by such Person. The principal amount of a promissory note
which is not readily traded on an established securities market and which is
contributed to the Partnership by the maker of the note (or a Person related to
the maker of the note within the meaning of Regulations Section
1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of any
Partner until the Partnership makes a taxable disposition of the note or until
(and to the extent) principal payments are made on the note, all in accordance
with Regulations Section 1.704-1(b)(2)(iv)(d)(2).
"CASH FLOW" is the amount for any Fiscal Year by which the sum of (i) the
Partnership's receipts from all sources (including net cash from operations,
proceeds of borrowings, insurance and condemnation proceeds, and Capital
Contributions) and (ii) the amounts released from reserves by the General
Partner, exceeds the sum of (iii) the Partnership's cash expenditures (including
debt service on Partnership borrowings) and (iv) any reserve that the General
Partner, in her sole discretion, determines to be necessary or appropriate for
accrued or anticipated Partnership liabilities or expenditures.
"CLASS A PARTNERSHIP UNITS" means those Partnership Units that are
designated as Class A shares and which, as a result of such designation,
represent the General Partner interests only.
"CLASS B PARTNERSHIP UNITS" means those Partnership Units other than Class
A Partnership Units and which represent the Partnership interest of the Limited
Partners.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding provisions of succeeding law, and "REGULATIONS"
refers to the relevant Treasury regulations adopted thereunder.
"PARTICIPATION PERCENTAGE" means, with respect to any Partner, such
Partner's interest in the Partnership as evidenced by the Partnership Units held
by such Partner, including such Partner's interest in Profits and Losses and
income, gains, losses, deductions and credits.
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"PARTNERSHIP" means the limited partnership formed by this Agreement.
"PARTNERSHIP UNITS" means such Partnership Units as may be issued from time
to time by the Partnership evidencing the ownership interest of a Partner in the
Partnership at any particular time, including the Partner's share of the Profits
and Losses of the Partnership, the right to receive distributions from the
Partnership and the right to any and all other benefits to which such Partner
may be entitled as provided in this Agreement and in the Act, together with the
obligations of such Partner to comply with all the terms and provisions of this
Agreement and of the Act. "Partnership Units" shall include both Class A
Partnership Units and Class B Partnership Units.
"PERSON" (whether or not capitalized) means any natural person or any
partnership (whether general or limited), corporation, limited partnership,
joint venture, estate, trust, business trust, governmental agency, cooperative,
association or other entity, and the Successors of such Person, as the context
may require.
"PROFITS AND LOSSES" shall have the meaning set forth in Section 15 of the
Appendix to this Agreement.
Additional definitions are contained in the Appendix to this Agreement,
which definitions are incorporated herein as if fully set forth in this Section.
SECTION 2
FORMATION AND NAME
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2.1 Formation. The Partners hereby form a limited partnership (the
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"Partnership") pursuant to the provisions of the Delaware Revised Uniform
Limited Partnership Act, as amended. The Act shall govern the rights and
liabilities of the Partners except to the extent otherwise provided in this
Agreement. The Partners have authorized Xxxxxx X. Xxxxxx of the firm Stradley,
Ronon, Xxxxxxx & Young, LLP to sign and file the Certificate of Limited
Partnership on their behalf, and hereby confirm and ratify such authorization.
2.2 Name. The name of the Partnership shall be "XXXXXX X. XXXXXXX FAMILY
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LIMITED PARTNERSHIP, L.P." and all business of the Partnership shall be
conducted in such name. The Partnership shall hold its property in the name of
the Partnership and not in the name of any individual Partner.
2.3 Advice of Counsel. This document was prepared by counsel for the
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Limited Partnership and such counsel does not represent the interests of the
Partners or any other Person that may become a party to this Agreement, whose
interests may in certain instances conflict with those of the Partnership and
the General Partner. Each Person signing this Agreement (i) understands and
agrees that this Agreement contains legally binding provisions and has certain
financial and tax consequences for Partners, (ii) has had the opportunity to
consult with an independent lawyer regarding such provisions and consequences,
and (iii) has either consulted such a lawyer or consciously decided not to
consult such a lawyer.
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SECTION 3
LOCATION
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The office and principal place of business of the Partnership shall be as
follows: c/o Central Bancorp, Inc., 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000.
The General Partner may from time to time change such office and principal place
of business, and in such event the General Partner shall notify the Limited
Partners prior to the effective date of such change. The General Partner may
establish additional offices or places of business of the Partnership when and
as required by the Partnership's business.
SECTION 4
PURPOSE
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The purpose of the Partnership is to acquire, hold and manage investment
property, consisting of corporate stocks, bonds, notes and other obligations,
interests in partnerships, real estate, or other assets, and to engage in any
and all activities related or incident thereto, including without limitation,
collecting the income, adding to or improving the property, leasing real estate,
and selling or otherwise disposing of the property or any portion thereof and
reinvesting the proceeds.
SECTION 5
TERM
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The Partnership shall continue until terminated in accordance with this
Agreement.
SECTION 6
PARTNERS; CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
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6.1 Partnership Units. Rights in the Partnership are reflected in
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Partnership Units. All voting and management rights shall be vested in the Class
A Partnership Units held by the General Partner. Class B Partnership Units shall
not possess any voting rights or privileges as to any matters concerning the
Partnership or its Partners. A Partner may hold both Class A Partnership Units
(which represent such Partner's interest in the Partnership as a General
Partner) and Class B Partnership Units (which represent such Partner's interest
in the Partnership as a Limited Partner).
6.2 Partnership Unit Certificates. The Partnership may issue certificates
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of Partnership Units and will, at the written request of a Partner, provide a
certified statement of Partnership interest, stating the number and class of
Partnership Units owned and the total number of Partnership Units outstanding,
as well as any effective assignments of rights under those Partnership Units, as
of the date the statement is provided.
6.3 Schedule of Partners. The names, Partnership Units (and classes
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thereof), initial Participation Percentages and initial Capital Accounts of the
Partners are set forth on
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Schedule A attached hereto. Schedule A shall be amended from time to time to
reflect any changes of address, adjustments with respect to the admission of any
additional Partners or any other changes to the information set forth thereon.
6.4 Costs. All costs and fees in connection with the formation of the
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Partnership and the transactions incident thereto or contemplated thereby or
otherwise incurred by the Partners in connection therewith (including, without
limitation, professional fees, filing and organizational fees and expenses,
deposits, equipment purchases, lease payments and other contractual
undertakings) shall be borne entirely by the Partnership irrespective of whether
any such amounts were expended prior to the formation of the Partnership.
6.5 Issuance of Partnership Units.
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(a) The General Partner will determine when and for what consideration
the Partnership will issue Partnership Units. For each Partner, the records of
the Partnership shall state the value and nature of the contribution received by
the Partnership and the number and class of Partnership Units received in return
by the Partner.
(b) All certificates of Partnership Units shall be endorsed as
follows:
THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, HYPOTHECATED, PLEDGED, OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH A LIMITED PARTNERSHIP AGREEMENT DATED AS OF DECEMBER
19, 2001, COPIES OF WHICH ARE ON FILE IN THE OFFICE OF THE PARTNERSHIP
AND MAY BE INSPECTED BY ANY PROPER PERSON ON REQUEST. THESE SECURITIES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR STATE
SECURITIES LAWS, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR
IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
(c) No Preemptive Rights. No Partner has the right to make additional
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contributions or obtain additional Partnership Units, and no Partner shall be
entitled to any preemptive rights, except as otherwise provided by the General
Partner.
(d) No Rights of Redemption or Return of Contribution. Except as
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otherwise provided herein, no Partner has a right to have his Partnership Units
redeemed or his contribution returned prior to the termination of the
Partnership.
6.4 Interest on Capital. No interest shall be payable on any Capital
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Contributions to the Partnership.
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SECTION 7
LIMITED PARTNERS
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7.1 Liability of Limited Partners. No Limited Partner shall be liable for
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the debts, liabilities, contracts or any other obligations of the Partnership.
Except as expressly provided in Section 6.1, no Limited Partner shall be
obligated to make contributions to the capital of the Partnership.
SECTION 8
CAPITAL ACCOUNTS; ALLOCATION OF PROFIT AND LOSS
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8.1 Maintenance of Capital Accounts. A Capital Account shall be maintained
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for each Partner in accordance with Section 1.1. The provisions of this
Agreement that relate to the maintenance of Capital Accounts, the allocation of
Partnership Profits and Losses and tax items, and the distribution of
Partnership property upon the liquidation of the Partnership or a Partner's
interest in the Partnership are intended to comply with Section 704 of the Code
and the Regulations, and shall be interpreted and applied in a consistent manner
thereunder.
8.2 Allocations of Profits and Losses. After giving effect to the special
---------------------------------
allocations, if any, referred to in Section 8.3, Profits and Losses for any
Fiscal Year of the Partnership shall be allocated among the Partners in
accordance with their Participation Percentages.
8.3 Other Allocations. The Appendix to this Agreement includes certain
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provisions relating to special allocations that are incorporated in this
Agreement and made a part hereof. The allocations of Profits and Losses pursuant
to Section 8.2 shall be subject to the allocation rules set forth in the
Appendix.
SECTION 9
DISTRIBUTIONS TO PARTNERS
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9.1 Distributions of Cash Flow. Cash Flow shall be distributed at such
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times as the General Partner shall determine, and all such distributions shall
be made pro rata in accordance with each Partner's Participation Percentage at
the time.
9.2 Distribution on Dissolution of the Partnership. In the event of a
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dissolution of the Partnership (or of any Partner's interest in the
Partnership), liquidating distributions shall, in all cases, be made in
accordance with the positive Capital Account balances of the Partners, as
determined after taking into account all Capital Account adjustments for the
Partnership Fiscal Year during which such dissolution occurs, and shall be made
by the end of such Fiscal Year (or, if later, within ninety (90) days after the
date of such dissolution or liquidation). Distributions to the Partners of
proceeds upon the dissolution of the Partnership shall be made at such time or
times and in such manner as to conform with Section 704(b) of the Code.
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SECTION 10
MANAGEMENT OF THE PARTNERSHIP
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10.1 Powers of the General Partner. Exclusive management and conduct of the
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Partnership's business and day-to-day affairs shall be vested in the General
Partner. The General Partner may sell, exchange or lease any real or personal
property or other assets of the Partnership, or contract to do so, for such
price and upon such terms and conditions as it shall determine; cause the
Partnership to borrow money on such terms and conditions as it deems
appropriate; employ and discharge employees; and carry on and transact or
supervise and control all of the other business of the Partnership.
10.2 Duties and Activities of the General Partner. The General Partner
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shall devote to the Partnership such time as may be necessary for the proper
performance of her duties hereunder, but the General Partner shall not be
expected to devote her full time to the performance of such duties. Nothing
herein shall limit the General Partner from engaging in any other business
activities, including activities which may be competitive with the Partnership,
or participation in management of any corporation or other entity which is
affiliated with the Partnership or with any of its Partners.
10.3 Role and Voting of Limited Partners. No Limited Partner shall have any
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right to take part in the management of the business or affairs of the
Partnership, nor shall he have authority to act for or bind the Partnership. The
Limited Partners shall not have the right to receive notice of, or to vote upon
or consent to, any action or decision, other than as expressly provided in this
Agreement or required by law.
10.4 Payment of Expenses. All expenses of the Partnership shall be billed
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directly to and paid by the Partnership. The General Partner may charge to the
Partnership and/or pay out of Partnership funds, as and when available, all
reasonable expenses incurred by the General Partner in the operation of the
Partnership.
10.5 Partnership Funds. All deposits in and withdrawals from Partnership
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bank accounts shall be made by the General Partner or such other persons as the
General Partner may designate in writing. Pending utilization of funds in the
operations of the Partnership, such funds may be held by the General Partner in
cash or equivalents, or in such investments as the General Partner deems
appropriate.
10.6 Payments for Professional Services. The General Partner may, in her
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sole discretion, engage on behalf of the Partnership such accountants,
attorneys, investment advisors, appraisers and other consultants as it deems
appropriate, and may pay such persons reasonable fees for such services.
10.7 Loans to Limited Partners. The General Partner may, in her sole
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discretion, loan money to one or more Limited Partners, provided the loan bears
a reasonable rate of interest, is repayable in installments over a specified
period of time, and is reflected by a written promissory note.
10.8 Indemnification of General Partner. The Partnership shall indemnify
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and hold harmless the General Partner, from any loss, expense or liability
(including but not limited to reasonable attorneys fees) incurred by such
General Partner in connection with, or by reason of, its activities as General
Partner of the Partnership. Such duty to indemnify shall be limited to
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assets of the Partnership, and shall not extend to acts of gross negligence or
willful misconduct of any General Partner.
SECTION 11
WITHDRAWAL OR REMOVAL OF GENERAL PARTNER;
TRANSFERABILITY OF PARTNERSHIP INTERESTS
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11.1 Withdrawal of General Partner. The General Partner may withdraw from
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the Partnership at any time, and if there is no other General Partner then
acting, a successor General Partner shall be appointed in accordance with
Section 11.3.
11.2 Removal of General Partner. A General Partner may be removed only by
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the unanimous vote of the Partners, and only if a successor General Partner is
forthwith appointed by the other Partners in accordance with Section 11.3
(unless following such removal there exists at least one other General Partner).
11.3 Admission of New or Additional Partners. Any person (including an
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existing Partner) may become a new General or Limited Partner, but only with the
consent of the General Partner. Nothing in this Agreement shall prohibit two or
more persons from serving as General Partner, provided that any additional
General Partner is duly admitted in accordance with this Section 11.3. Upon a
person becoming a General Partner, he may thereafter be removed only in
accordance with Section 11.2. If a General Partner withdraws or is removed under
the foregoing Sections, the remaining General Partner (if any), shall appoint a
successor, and if the remaining General Partner fails to do so or there is no
other General Partner then acting, then such appointment shall be made by the
affirmative action of Limited Partners owning, in the aggregate, more than fifty
percent (50%) of the Class B Partnership Units. Upon the withdrawal or removal
of a General Partner, those Class A Partnership Units held by such Partner shall
automatically be converted to Class B Partnership Units. Upon appointment or
admission of a new or successor General Partner, the remaining General Partner
or the Limited Partners, as the case may be, that appoints or admits such Person
as a General Partner, shall designate the portion of such Person's Partnership
Units that shall be classified as Class A Partnership Units, and such portion
shall be converted in accordance with such designation.
11.4 Transfer or Assignment by a Partner
-----------------------------------
(a) A Partner may not transfer his Partnership Units, or any portion
thereof, except as expressly provided herein.
(b) Notwithstanding the foregoing, a Partner may transfer his
Partnership Units, or any portion thereof, to the Partnership, to another
Partner, to any one or more of his parent's lineal descendants, to an entity
wholly owned by his parent's lineal descendants, or to a trust for his parent's
lineal descendants, provided that the Partnership Units in the hands of such
transferee shall continue to be subject to all the provisions of this Agreement,
and the transferee shall have indicated his acceptance of all of the terms and
conditions of this Agreement by executing a copy of this Agreement.
(c) No transfer or assignment of Partnership Units may be made which
could result in termination of the Partnership for federal income tax purposes
or prevent it from being taxed as a partnership.
8
11.5 Option to Purchase Partner's Interest
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(a) If a Partner makes any transfer of his Partnership Units,
voluntary or involuntary, during lifetime or at death, which is not permitted by
Section 11.4(b) of this Agreement, the Partnership (and thereafter the other
Partners) shall have an immediate option to purchase the Partnership Units from
such Partner (or his estate or other transferee), at the price and terms
provided herein. For purposes of this subsection, a Partner shall be deemed to
have made a transfer of his Partnership Units if he suffers any lien or
encumbrance to be placed thereon, or if his Partnership Units become subject to
the claims of any other person by reason of commencement of proceedings in
bankruptcy or divorce, whether or not such proceedings are instituted by the
transferring Partner.
(b) The foregoing option of the Partnership shall be exercisable for a
period of sixty (60) days after the non-permitted transfer, provided that such
period shall not expire sooner than sixty (60) days after the General Partner's
actual knowledge of such transfer, or after any final judicial or administrative
order directing that the Partnership Units be transferred or sold in
satisfaction of another person's claim against the Partner. If such option is
not exercised by the Partnership, the individual remaining Partners shall have
an option to purchase the Partnership Units for an additional thirty (30) days,
in proportion to their relative Participation Percentages at the time.
(c) The purchase price for the Partner's Partnership Units shall be
the appraised value of his Partnership Units, as determined hereafter (or the
actual consideration for the transfer, if less) payable in equal quarterly
installments over a period of five (5) years, plus interest with each
installment at the minimum rate required for such obligations by the Code as of
the date of purchase. For this purpose appraised value means the market value of
the Partnership's assets, as determined by an independent appraiser selected by
the General Partner, reduced by Partnership liabilities and multiplied by the
Partner's Participation Percentage. The installment obligation shall not be
assignable by the selling Partner, but may be prepaid by the Partnership or the
purchasing Partners, as the case may be, at any time without premium or penalty.
Notwithstanding the foregoing, the purchase price for the Partnership Units of a
General Partner, including a General Partner who withdraws or is removed under
Section 11.1 or 11.2, shall not exceed the amount of its Capital Account, as
adjusted, under Section 1.1 of this Agreement.
(d) Any Partnership Units of a Partner which are not purchased by the
Partnership or other Partners pursuant to the provisions of this subsection 11.5
shall, in the hands of the Partner or his transferee, as the case may be,
continue to be subject to all the provisions of this Agreement, and the
transferee shall, as a condition of receiving the interest, execute a copy of
this Agreement agreeing to be bound by its terms. Such transferee shall have the
status of a mere assignee of the Partnership Units, and shall not be a Partner,
or have any of the rights thereof, unless and until admitted as a Partner
pursuant to Section 11.3.
9
SECTION 12
TERMINATION OF THE PARTNERSHIP
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12.1 Dissolution
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(a) The Partnership shall be dissolved on the earlier of:
(i) The unanimous written consent of all of the Partners;
(ii) The death of XXXXXX X. XXXXXXX; or
(iii) Upon entry of a decree of judicial dissolution.
(b) Dissolution of the Partnership shall be effective on the day on
which the event occurs giving rise to the dissolution, but the Partnership shall
not terminate until the Partnership's Certificate of Limited Partnership shall
have been canceled and the assets of the Partnership have been distributed as
provided in Section 12.2 below.
12.2 Liquidation
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(a) Upon dissolution of the Partnership, the General Partner shall
apply and distribute the assets of the Partnership, or the sale proceeds
attributable thereto, in accordance with the priority below. The General Partner
shall have sole discretion to decide whether to sell a particular asset or
distribute the asset in kind. A statement shall be prepared by the General
Partner setting forth the assets and liabilities of the Partnership, and a copy
of such statement shall be furnished to each of the Limited Partners.
Thereafter, the assets or the proceeds thereof shall be applied in the following
order:
(i) The expenses of liquidation and the debts of the Partnership
(other than debts owing to a Partner), together with such reserves as the
General Partner deems reasonably necessary for any contingent liabilities of the
Partnership;
(ii) Such debts as are owing to the Partners, including unpaid
expense accounts or advances made to or for the benefit of the Partnership by
the General Partner;
(iii) The balance, if any, shall be paid or distributed to the
Partners in accordance with Section 9.2 hereof.
(b) Except as otherwise provided in subsection (c), upon dissolution
of the Partnership the Limited Partners shall look solely to the assets of the
Partnership for the return of their investment, and they shall have no recourse
or further right or claim against the General Partner.
(c) In the event any of the assets of the Partnership are to be
distributed in kind, the amount of any cash and/or the assets and the nature
thereof to be distributed to each Partner shall be determined in the sole
discretion of the General Partner. Assets shall be distributed on the basis of
their fair market values and any Partner entitled to any interest in such assets
shall receive such interest as a tenant-in-common with the other Partners so
entitled.
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SECTION 13
BOOKS AND RECORDS; REPORTS
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13.1 Books and Records. The Partnership shall keep proper books and records
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at the principal place of business of the Partnership or at such other place as
the General Partner may determine. Such books and records shall be open to
inspection and examination by all Partners or their duly authorized
representatives at any reasonable time.
13.2 Accounting Method; Fiscal Year. The books of the Partnership shall be
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kept on a cash basis for both accounting and income tax purposes. The Fiscal
Year of the Partnership shall end on December 31.
13.3 Reports. The General Partner shall cause the Partnership's annual
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income tax return to be prepared within a reasonable time following the end of
each Fiscal Year, and the General Partner shall thereupon provide to the Limited
Partners a report indicating the Limited Partners' respective shares of the
income, gain, loss, deduction and credits for such Fiscal Year for federal
income tax purposes.
SECTION 14
GENERAL PROVISIONS
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14.1 Amendments. This Agreement may be amended only by unanimous written
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consent of all Partners.
14.2 Governing Law. This Agreement shall be governed by, and construed in
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accordance with, the laws of the State of Delaware, notwithstanding any
conflict-of-law doctrines of such state or other jurisdiction to the contrary.
14.3 Binding Nature of Agreement. Except as otherwise provided, this
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Agreement shall be binding upon and inure to the benefit of the Partners and
their heirs, personal representatives, successors and permitted assigns.
14.4 Severability. In the event that any provision of this Agreement shall
------------
be held to be invalid, the same shall not affect the validity of the other
provisions of the Agreement.
14.5 Multiple General Partners At any time when the Partnership has
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multiple General Partners, action may be taken by the vote of those General
Partners holding, in the aggregate, more than fifty percent (50%) of the Class A
Partnership Units. The General Partners may designate one of their number to
execute documents and otherwise act on behalf of the General Partners.
14.6 Entire Agreement. This Agreement constitutes the entire understanding
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and agreement among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements and
understandings, oral or written.
14.7 Paragraph Headings. The paragraph headings in this Agreement are for
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convenience only; they form no part of this Agreement and shall not affect its
interpretation.
14.8 Gender. The feminine shall include the masculine, and the singular the
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plural, as the context may require.
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14.9 Notice. Any notice required or appropriate hereunder is deemed to be
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duly given to such Person on the date of delivery if delivered in person to such
Person or sent to such Person by facsimile transmission or reputable overnight
courier, or on the earlier of actual receipt or three (3) business days after
the date of mailing if mailed to such Person by registered or certified mail
(first class postage prepaid, return receipt requested). Any notice required or
permitted to be given to the Partnership shall be sent to the principal office
of the Partnership, or to such other address or facsimile number as the
Partnership may specify in a notice given to all of the Limited Partners. Any
notice required or permitted to be given to a Limited Partner shall be sent to
such Limited Partner at such address or to such facsimile number as such Limited
Partner may hereafter notify the Partnership.
14.10 Tax Matters Partner and Tax Elections. The General Partner is
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specifically authorized to act as the "Tax Matters Partner" under the Code and
in any similar capacity under state or local law. The General Partner shall have
the power to make, to not make or to revoke any elections now or hereafter
required or permitted to be made by the Code (including, without limitation, an
election under Section 754 of the Code) or any state or local law.
IN WITNESS WHEREOF, the General Partner and the Limited Partners have
executed this Limited Partnership Agreement as of the day and year first above
written.
GENERAL PARTNER:
/s/ Xxxxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX
LIMITED PARTNERS:
/s/ Xxxxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxxx
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XXXX X. XXXXXXX
12
APPENDIX
TO
LIMITED PARTNERSHIP AGREEMENT OF
XXXXXX X. XXXXXXX FAMILY LIMITED PARTNERSHIP, L.P.
Provisions Relating to Profit and Loss and Federal Income Tax Allocations
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15.1 Definitions. Unless the context clearly indicates otherwise, the
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following terms shall have the meaning set forth below:
"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:
(i) Credit to such Capital Account of any amounts which such
Partner is obligated to restore pursuant to any provision of this Agreement or
is deemed to be obligated to restore pursuant to the penultimate sentences of
Regulation Section 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account of the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"DEPRECIATION" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such Fiscal Year,
except that if the Gross Asset Value of an asset differs from its adjusted basis
for federal income tax purposes at the beginning of such Fiscal Year,
Depreciation shall be an amount which bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization, or other
cost recovery deduction for such Fiscal Year bears to such beginning adjusted
tax basis; provided, however, that if the adjusted basis for federal income tax
purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation
shall be determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner.
"FISCAL YEAR" means (i) the period commencing on the effective date of
this Agreement and ending on December 31, 2001, (ii) any subsequent twelve (12)
month period commencing on January 1 and ending on December 31, or (iii) any
portion of the foregoing periods for which the Partnership is required to
allocate Profits, Losses and other items of Partnership income, gain, loss, or
deduction pursuant to Section 8 of this Agreement.
"GROSS ASSET VALUE" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset,
as determined by the contributing Partner and the General Partner;
13
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined by
the General Partner, as of the following times: (a) the acquisition of an
additional interest in the Partnership by any new or existing Partner in
exchange for more than a de minimis capital contribution; (b) the distribution
----------
by the Partnership to a Partner of more than a de minimis amount of property as
----------
consideration for an interest in the Partnership; and (c) the liquidation of the
Partnership within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g);
provided, however, that adjustments pursuant to clauses (a) and (b) above shall
be made only if the General Partner reasonably determines that such adjustments
are necessary or appropriate to reflect the relative economic interests of the
Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership asset distributed
to any Partner shall be adjusted to equal the gross fair market value of such
asset on the date of distribution as determined by the General Partner; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulation 1.704-1(b)(2)(iv)(m) and in subsection (vi) of
the definition of Profit and Loss and 15.4(g) hereof; provided, however, that
Gross Asset Values shall not be adjusted pursuant to this subsection (iv) to the
extent the General Partner determines that an adjustment pursuant to subsection
(ii) hereof is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this subsection (iv). If the
Gross Asset Value of an asset has been adjusted pursuant to subsections (i),
(ii) or (iv) hereof, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"NONRECOURSE LIABILITY" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"PARTNER NONRECOURSE DEBT" has the meaning set forth in Section
1.704-2(b)(4) of the Regulations.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect
to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that
would result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
"PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in Sections
1.704-2(i)(1) and (2) of the Regulations.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Sections
1.704-2(b)(2) and 1.704-2(d) of the Regulations.
"PROFITS" AND "LOSSES" means, for each Fiscal Year, an amount equal to
the Partnership's taxable income or loss for such Fiscal Year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be
14
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Profits or Losses
shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulation 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits or Losses pursuant to this subsection, shall be
subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership asset
is adjusted pursuant to subsections (ii) and (iii) of the definition of Gross
Asset Value, 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 or
Losses;
(iv) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(v) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year, computed in
accordance with the definition of "Depreciation.";
(vi) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulation 1.704-1(b)(2)(iv)(m)(4) to be taken into account
in determining Capital Accounts as a result of a distribution other than in
complete liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Profits or Losses; and
(vii) Notwithstanding any other provision of this subsection, any
items which are specially allocated pursuant to Section 15.4 or Section 15.5
hereof shall not be taken into account in computing Profits or Losses. The
amounts of the items of Partnership income, gain, loss or deduction available to
be specially allocated pursuant to Sections 15.4 and 15.5 hereof shall be
determined by applying rules analogous to those set forth in subsections (i) to
(vi) hereof.
"REGULATORY ALLOCATIONS" has the meaning set forth in Section 15.5
hereof.
15.2 Allocations Generally. Notwithstanding the provisions of Section 8.2
----------------------
(but subject to the provisions of this Appendix), allocations of Profit and Loss
shall, to the extent possible, be made in such a manner as to result in the
Partners receiving total distributions (including, for these purposes,
liquidating distributions pursuant to Section 12.2 of the
15
Agreement) from the commencement of the Partnership through the date of
liquidation, in the order and amounts contemplated by Section 9.1.
15.3 Limitation on Losses. The Losses allocated pursuant to Section 8.2
--------------------
shall not exceed the maximum amount of Losses that can be so allocated without
causing any Partner to have an Adjusted Capital Account Deficit at the end of
any Fiscal Year. In the event some but not all of the Partners would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 8.2 hereof, the limitation set forth in this Section 15.3
shall be applied on a Partner by Partner basis so as to allocate the maximum
permissible Losses to each Partner under Section 1.704-1(b)(2)(ii)(d) of the
Regulations. All Losses in excess of the limitations set forth in this Section
15.3 shall be allocated to the General Partner.
15.4 Special Allocations. The following special allocations shall be made
--------------------
in the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in Section
-----------------------
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Agreement, if there is a net decrease in Partnership Minimum Gain during any
Fiscal Year, each Partner shall be specially allocated items of Partnership
income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal
Years) in an amount equal to such Partner's share of the net decrease in
Partnership Minimum Gain, determined in accordance with Regulation 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Sections
1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 15.4(a) is
intended to comply with the minimum gain chargeback requirement in Section
1.704-2(f) of the Regulations and shall be interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided in
-------------------------------
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of
this Agreement, if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain attributable to a Partner Nonrecourse Debt during any Partnership Fiscal
Year, each Partner who has a share of the Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Regulations, shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to such Partner's share of the net decrease in
Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulation 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Sections 1.704-2(i)(4)
and 1.704-2(j)(2) of the Regulations. This Section 15.4(b) is intended to comply
with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of the
Regulations and shall be interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Partner unexpectedly
-------------------------
receives any adjustments, allocations, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Partnership
income and gain shall be specially allocated to each such Partner in an amount
and manner sufficient to eliminate, to the
16
extent required by the Regulations, the Adjusted Capital Account Deficit of such
Partner as quickly as possible, provided that an allocation pursuant to this
Section 15.4(c) shall be made only if and to the extent that such Partner would
have an Adjusted Capital Account Deficit after all other allocations provided
for in this Section 15 have been tentatively made as if this Section 15.4(c)
were not in the Agreement.
(d) Gross Income Allocation. In the event any Partner has a deficit
-------------------------
Capital Account at the end of any Partnership Fiscal Year which is in excess of
the sum of (i) the amount such Partner is obligated to restore pursuant to this
Agreement, and (ii) the amount such Partner is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulation 1.704-2(g)(1) and
1.704-2(i)(5), each such Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as quickly as possible,
provided that an allocation pursuant to this Section 15.4(d) shall be made only
if and to the extent that such Partner would have a deficit Capital Account in
excess of such sum after all other allocations provided for in this Agreement
have been made as if Section 15.4(c) hereof and this Section 15.4(d) were not in
the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year
----------------------
shall be allocated in accordance with each Partner's Participation Percentage.
(f) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
------------------------------
for any Fiscal Year shall be specially allocated to the Partner who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable in accordance with Regulation
1.704-2(i)(1).
(g) Section 754 Adjustments. To the extent an adjustment to the
-------------------------
adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to Regulations 1.704-1(b)(2)(iv)(m)(2)
or (4), to be taken into account in determining Capital Accounts as the result
of a distribution to a Partner in complete liquidation of his interest in the
Partnership, the amount of such adjustment to Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Partners in accordance with their interests in the
Partnership in the event that Regulation 1.704-1(b)(2)(iv)(m)(2) applies, or to
the Partner to whom such distribution was made in the event that Regulation
1.704-1(b)(2)(iv)(m)(4) applies.
15.5 Curative Allocations. The allocations set forth in Sections 15.3 and
---------------------
15.4 (the "Regulatory Allocations") are intended to comply with certain
requirements of the Regulations. It is the intent of the Partners that, to the
extent possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Partnership
income, gain, loss or deduction pursuant to this Section 15.5. Therefore,
notwithstanding any other provision of this Agreement (other than the Regulatory
Allocations), the General Partner shall make such offsetting special allocations
of Partnership income, gain, loss or deduction in whatever manner such General
Partner determines to be appropriate so that, after such offsetting allocations
are made, each Partner's Capital Account balance is, to the extent possible,
equal to the Capital Account balance such Partner would have had if the
Regulatory Allocations were not part of the Agreement and all Partnership items
were allocated pursuant to Section 8.2. In exercising their discretion under
this Section 15.5, the General
17
Partner shall take into account future Regulatory Allocations under Sections
15.4(a) and 15.4(b) that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Sections 15.4(e) and 15.4(f).
15.6 Other Allocation Rules.
----------------------
(a) For purposes of determining the Profits, Losses, or any other
items allocable to any period, Profits, Losses, and any such other items shall
be determined on a daily, monthly, or other basis, as determined by the General
Partner using any permissible method under Code Section 706 and the Regulations.
(b) Except as otherwise provided herein, all items of taxable income,
gain, loss, deduction, and any other allocations not otherwise provided for
shall be allocated among the Partners in the same proportion as such Partner's
share of Profits or Losses, as the case may be, for the Fiscal Year or other
allocation period
(c) The Partners are aware of the income tax consequences of the
allocations made by this Agreement and hereby agree to be bound by the
provisions of this Agreement in reporting their shares of Partnership income and
loss for income tax purposes.
15.7 Effect of Code Section 704(c). In accordance with Code Section 704(c)
----------------------------
and the Regulations thereunder, income, gain, loss, and deduction with respect
to any property contributed to the capital of the Partnership shall, solely for
tax purposes, be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial Gross Asset Value (computed in
accordance with the definition of "Gross Asset Value"). In the event the Gross
Asset Value of any Partnership asset is adjusted pursuant to subsection (ii) of
the definition of Gross Asset Value, subsequent allocations of income, gain,
loss, and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Regulations thereunder.
18
As of December 19, 2001
SCHEDULE A
XXXXXX X. XXXXXXX FAMILY LIMITED PARTNERSHIP, L.P.
Class of Number of
Partnership Partnership Capital * Participation
Name of Partner Shares Shares Account Percentage
--------------- ------------ -------- ------- -----------
XXXXXX X. XXXXXXX A 1 1.00 1.0000%
XXXX X. XXXXXXX B 49 49.00 49%
XXXXXX X. XXXXXXX B 50 50.00 50%
--- ------- ---------
Totals 100 $100.00 100.0000%
=== ======= =========
*These figures are based on the fair market value of the underlying assets of
the partnership as of their date of contribution to the partnership on December
19, 2001, and do not reflect the value of each partner's "capital account" that
will be determined in accordance with partnership tax accounting provisions.
Such provisions generally require the use of cost basis in the underlying assets
instead of fair market value, and such information is not currently available.
19
