EXHIBIT 10(O)
AGREEMENT OF LIMITED PARTNERSHIP
OF
IDI SUMMIT, LTD.
Dated as of November 6 , 1997
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THE LIMITED PARTNERSHIP INTEREST REPRESENTED BY THIS AGREEMENT OF LIMITED
PARTNERSHIP HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH ANY AGENCY UNDER THE
SECURITIES ACT OF ANY STATE INCLUDING, WITHOUT LIMITATION, THE TEXAS SECURITIES
ACT IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION PROVIDED IN THOSE STATUTES.
THE SALE OR OTHER DISPOSITION OF SUCH LIMITED PARTNERSHIP INTEREST IS
RESTRICTED, AS SET FORTH IN THIS AGREEMENT OF LIMITED PARTNERSHIP, AND THE
EFFECTIVENESS OF ANY SUCH SALE OR OTHER DISPOSITION MAY BE CONDITIONED UPON
RECEIPT BY THE LIMITED PARTNERSHIP OF AN OPINION OF COUNSEL SATISFACTORY TO THE
LIMITED PARTNERSHIP AND ITS COUNSEL TO THE EFFECT THAT SUCH SALE OR OTHER
DISPOSITION CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS. BY ACQUIRING THE LIMITED
PARTNERSHIP INTEREST REPRESENTED BY THIS AGREEMENT OF LIMITED PARTNERSHIP, EACH
LIMITED PARTNER AGREES THAT HE WILL NOT SELL OR OTHERWISE DISPOSE OF THE LIMITED
PARTNERSHIP INTEREST WITHOUT REGISTRATION OR OTHER COMPLIANCE WITH THE AFORESAID
STATUTES AND THE RULES AND REGULATIONS THEREUNDER. THE SALE OR OTHER
DISPOSITION OF THE LIMITED PARTNERSHIP INTEREST REPRESENTED BY THIS AGREEMENT OF
LIMITED PARTNERSHIP ALSO IS LIMITED BY PROVISIONS HEREOF OTHER THAN THOSE
MENTIONED ABOVE, REFERENCE TO EACH OF WHICH HEREBY IS MADE.
TABLE OF CONTENTS
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AGREEMENT OF LIMITED PARTNERSHIP
OF
IDI SUMMIT, LTD.
Dated as of November ___, 1997
Page
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SECTION I Definitions; General 1
SECTION II Term 2
SECTION III Purpose 2
SECTION IV Principal Place of Business 2
SECTION V Acquisition of the Property 3
SECTION VI Capital Contributions; Capital Accounts 3
SECTION VII Control and Management 5
SECTION VIII Tax Allocations 7
SECTION IX Distributions 10
SECTION X Costs and Obligations 12
SECTION XI Partner Advances 13
SECTION XII Sale of the Project 14
SECTION XIII Transfers of Interests of Partners 15
SECTION XIV Dissolution and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇ Death or Insanity of a Limited Partner 20
SECTION XVI Accounting 20
SECTION XVII Reports and Statements 21
SECTION XVIII Bank Accounts 22
SECTION XIX Power of Attorney 22
SECTION XX Consents 23
SECTION XXI Notices 23
SECTION XXII Certain Defined Terms 24
SECTION XXIII Binding Effect 25
SECTION XXIV Amendments 25
SECTION XXV Applicable Laws 26
SECTION XXVI Counterparts 26
SECTION XXVII No Implied Waiver 26
SECTION XXVIII Legal Construction 26
SECTION XXIX Gender 27
SCHEDULE A List of Class A Limited Partners
EXHIBIT A Property Description
EXHIBIT B Construction management Agreement
EXHIBIT C Management and Leasing Agreement
EXHIBIT D Office Lease
AGREEMENT OF LIMITED PARTNERSHIP
OF
IDI SUMMIT, LTD.
Dated as of November 6 , 1997
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THIS AGREEMENT OF LIMITED PARTNERSHIP (this "Agreement") , is made and
entered into by and among Innovative Developers, Inc., a Texas corporation,
having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ and Summit Community Bank, N.A., a national banking association, having a
mailing address at P. 0. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (collectively,
the "General Partners") , the persons signing this Agreement as Class A Limited
Partners and listed as Class A Limited Partners on Schedule A, which is attached
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hereto and by this reference incorporated herein for all purposes (such persons
being referred to herein individually as a "Class A Limited Partner" and
collectively as the "Class A Limited Partners"). (The Class A Limited Partners
are sometimes also referred to herein individually as a "Limited Partner" and
collectively, as the "Limited Partners"; and the General Partners and the
Limited Partners are sometimes referred to herein individually as a "Partner"
and collectively as the "Partners").
SECTION I
Definitions; General
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1.1. Reference is made to Section XXI of this Agreement for the meaning
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assigned to certain defined terms used throughout this Agreement.
1.2. The parties to this Agreement hereby form a limited partnership
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pursuant to the provisions of the Texas Revised Limited Partnership Act (the
"Act"). The name of the Partnership shall be IDI Summit, Ltd. (the
"Partnership"). The General Partners may change the name of the Partnership
from time to time and from time to time may adopt such trade or fictitious names
as they may determine appropriate.
1.3. The General Partners (and any successors to their interest pursuant to
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the terms of this Agreement) shall be the general partners of the Partnership.
The persons whose names and residence addresses are listed on Schedule A under
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the
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heading "Class A Limited Partners" (and any permitted additional or substitute
Class A Limited Partners) shall be the Class A Limited Partners of the
Partnership.
SECTION II
Term
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2.1. The Partnership shall continue until December 31, 2045 or until
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earlier terminated as provided in Section XIV of this Agreement. The General
Partners shall cause the due filing of any necessary or appropriate Certificate
of Limited Partnership to evidence any matters reflected in this Agreement.
SECTION III
Purpose
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3.1. The sole purpose and business of the Partnership shall be: (i) to
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acquire, own and hold the Property, (ii) to develop and construct upon the
Property an office building and various ancillary facilities (the Property and
such improvements being referred to herein collectively as the "Project"), (iii)
to manage, operate, lease, mortgage, sell and otherwise deal with the Project,
or any part thereof, and (iv) to conduct such other activities (including,
without limitation, the financing of the Project and the Partnership's business)
as the General Partners may deem to be necessary or appropriate to promote the
business of the Partnership, it being agreed that each of the foregoing is an
ordinary part of the Partnership's business.
SECTION IV
Principal Place of Business
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4.1. The principal place of business and registered office of the
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Partnership shall be at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or
at such other location as the General Partners may determine. The registered
agent for the Partnership shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. The General Partners
from time to time may change or establish such additional places of business or
designate other registered agents of the Partnership as they may deem necessary
or appropriate for the operation of the Partnership's business.
4.2. The General Partners shall deliver written notice to each of the
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Limited Partners of any change in the address of the principal place of business
of the Partnership. The General Partners shall make any and all necessary
filings with governmental authorities and agencies in connection with the
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establishment, relocation or discontinuance of any place of business of the
Partnership, including, without limitation, the Partnership's principal place of
business.
SECTION V
Acquisition of the Property
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5.1. The Partnership shall acquire good and indefeasible fee simple title
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to the Property, free and clear of all easements, rights-of-way, liens,
mortgages, adverse claims, restrictions, encroachments, leases, encumbrances,
covenants and other claims and agreements (collectively, "Exceptions") , except
for those Exceptions which the General Partners have determined will not have a
material adverse effect upon the value of the Property and those exceptions
listed in the Special Warranty Deed conveying the Property described in attached
Exhibit A to the Partnership.
5.2. The Partnership shall reimburse the General Partners (or their
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affiliates, as appropriate) for all costs and expenses incurred by them in
connection with the acquisition of the Property by the Partnership and/or the
formation of the Partnership.
SECTION VI
Capital Contributions; Capital Accounts
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6.1. General Partner. Upon the execution and delivery of this
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Agreement, the General Partners shall contribute the aggregate amount of $53,000
(in cash) to the capital of the Partnership, which amount shall be contributed
$26,500 by Summit and $26,500 by IDI. The contribution by IDI under this
Section 6.1 and Section 6.2 below shall be in addition to any fee paid to IDI
under Section 10.3 hereof.
6.2. Class A Limited Partners. Upon the execution and delivery of this
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Agreement, the Limited Partners shall contribute the aggregate amount of
$2,597,000 (in cash) to the capital of the Partnership. Each Class A Limited
Partner and his respective contribution is reflected on Schedule A.
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6.3. Capital Accounts. Each Partner shall have a capital account which
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shall be increased by
(a) the amount of his cash capital contributions to the Partnership
pursuant to Sections 6.1 and 6.2, plus the amount of any Partner Advances
made by such Partner pursuant to Section 11.1;
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(b) the amount of income and gains allocated to him pursuant to
Sections 8.1, 8.2 8.3 and 8.4; and shall be decreased by
(c) the amount of losses allocated to him pursuant to Sections
8.1,, 8.2, 8.3 and 8.4; and
(d) all amounts paid or distributed to him pursuant to Section IX,
including amounts distributed on account of Partner Advances.
6.4. Except as otherwise provided in this Agreement, whenever it is
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necessary to determine the capital account of any Partner for purposes of this
Agreement, the capital account of the Partner shall be determined after giving
effect to all allocations of net income (and gross income) , net gains and net
losses of the Partnership for the current year and all distributions for such
year (including amounts attributable to any Partner Advances) in respect of
transactions effected prior to the date as of which such determination is to be
made. A Partner shall not be entitled to withdraw any part of his capital
account or to receive any distribution from the Partnership, except as
specifically provided in this Agreement, and no Partner shall be entitled to
make any additional capital contribution to the Partnership other than as
provided herein. Any Partner, including any additional or substitute Partner,
who shall receive an interest in the Partnership or whose interest in the
Partnership shall be increased by means of a Transfer to him of all or part of
the interest of another Partner, shall have a capital account which reflects
such Transfer.
6.5. No Limited Partner shall be liable for any of the debts of the
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Partnership and the General Partner shall be liable for the debts of the
Partnership only to the extent otherwise provided at law or by contract. No
Partner shall be required or permitted to contribute any capital in addition to
the contributions required or permitted by the provisions of Sections 6.1, 6.2
and 11.1, and no Partner with a negative balance in his capital account shall
have any obligation to the Partnership or the other Partners to restore said
negative balance. Notwithstanding the foregoing, to the extent required by law,
a Partner receiving a distribution in part or full return of his capital
contribution shall be liable to the Partnership for any sum, not in excess of
such amount returned plus interest, necessary to discharge, to the extent
required by law, the liabilities of the Partnership to creditors who extended
credit or whose claims arose before such distribution.
6.6. Any Partner who shall acquire the interest of any other Partner
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shall, with respect to the interest so acquired, be deemed to be a Partner of
the same class as his transferor.
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6.7. The Partnership shall not pay any interest on any capital
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contributed to the Partnership.
SECTION VII
Control and Management
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7.1. Except as specifically limited herein, the General Partners shall
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have complete discretion in the management, operation and control of the
Partnership for the purposes set forth in Section III. Subject to any
limitations expressly set forth in this Agreement, the General Partners shall
have full authority to perform or cause to be performed, at the Partnership's
expense, the acquisition of the Property, the development and construction of
the Project, the arrangement of interim and/or long-term loans, and the
coordination of all ownership, management and operational functions relating to
the Project. Without limiting the generality of the foregoing, the General
Partners (subject to the provisions of Section 7.2 of this Agreement) are
expressly authorized on behalf of the Partnership to:
(a) perform, any and all acts necessary or appropriate to the
ownership, maintenance and operation of the Project, including, but not
limited to, making applications for rezoning or objections to rezoning of
other property, and commencing, defending and/or settling litigation
regarding the Partnership, the Project or any aspect thereof;
(b) procure and maintain with responsible companies such insurance
as may be available in such amounts and covering such risks as are deemed
appropriate by the General Partners;
(c) take and hold all property of the Partnership, real, personal
and mixed, in the Partnership name;
(d) execute and deliver on behalf of and in the name of the
Partnership, deeds, deeds of trust, notes, leases, subleases, mortgages,
bills of sale, financing statements, security agreements, easements and
any and all other instruments necessary or incidental to the conduct of
the Partnership's business and the financing thereof;
(e) coordinate all accounting and clerical functions of the
Partnership and employ such accountants, lawyers, managers, agents and
other management or service personnel as may from time to
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time be required to carry on the business of the Partnership; and
(f) borrow money, whether on a secured or unsecured basis, or
refinance, recast, modify or extend any loan to the Partnership or any
loan which affects or is secured by the assets of the Partnership or
pledge or encumber the Project or any other Partnership assets as
security for any loan to the Partnership.
7.2. Notwithstanding the generality of the foregoing and Section 7.4, the
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General Partners shall not be empowered, without the mutual agreement of the
General Partners, to:
(a) do any act in contravention of this Agreement;
(b) except as otherwise expressly provided herein, do any act which
would make it impossible to carry on the ordinary business of the
Partnership;
(c) confess of judgment against the Partnership;
(d) possess Partnership property or assign any rights in specific
Partnership property for other than a Partnership purpose;
(e) change or reorganize the Partnership into any other legal form;
(f) require any Partner to make any contribution to the capital of
the Partnership not provided for herein;
(g) admit additional Limited Partners, except as provided herein;
(h) except as otherwise expressly provided herein, admit a person
into the Partnership as a general partner;
(i) except as otherwise expressly provided herein, continue the
business with Partnership property on the insolvency, bankruptcy or
dissolution (without reconstitution) of the last remaining General
Partner; or
(j) modify or amend the office lease with Summit in the form
attached hereto as Exhibit D, or set rates or other terms for renewals
thereunder or expansion by summit.
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7.3. The Limited Partners shall take no active part in the conduct or
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control of Partnership business and shall have no right or authority to act for
or to bind the Partnership. The exercise of any rights and powers of the
Limited Partners pursuant to the terms of this Agreement shall not be deemed
taking part in the management of the Partnership or the exercise of control over
the affairs of the Partnership.
7.4. Whenever any action, approval or decision is required or permitted
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to be made by the General Partners, such action, approval or decision shall be
made only upon mutual agreement of the General Partners. If the General
Partners are unable to reach a mutual agreement the decision of Summit Community
-Bank, N.A. shall be controlling (except in those matters listed in Sections 7.2
and 24.1). Once any such action, decision or approval has been reached, IDI
shall be fully empowered to take or implement such action, decision or approval
on behalf of the Partnership. Further, IDI shall be empowered on behalf of the
Partnership to conduct the day-to-day affairs and business of the Partnership,
including without limitation, overseeing the management and leasing of the
Project.
7.5. Any Partner may engage in or possess an interest in other business
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ventures of any nature or description independently or with others, including,
but not limited to, the real estate business in all its phases, which shall
include, without limitation, the ownership, operation, management, syndication
and development of real property, and neither the Partnership nor any Partner
shall have any rights in or to such independent ventures or the income or
profits derived therefrom.
7.6. Other than as set forth in those Agreements listed in Section 10.3
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hereof, neither the General Partners nor any partners or principals of the
General Partners shall be liable, responsible or accountable in damages or
otherwise to any other Partner for any act performed or failure to act by it or
him in good faith, unless such act or failure to act is attributable to willful
misconduct or fraud. The Partnership (but not any Partner) shall indemnify and
hold harmless each General Partner (and each partner or principal of each
General Partner) for any loss, damage, liability, cost or expense (including
reasonable attorneys' fees) arising out of any act or failure to act by such
General Partner (or any partner or principal of such General Partner), if such
act or failure to act is in good faith and is not attributable to willful
misconduct or fraud.
SECTION VIII
Tax Allocations
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8.1. General. Except as otherwise provided in Section 8.2 below, all
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net income, gains and losses of the Partnership for
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each fiscal year (or part thereof) , as determined for federal income tax
purposes, shall be allocated in the following order of priority:
(a) For each fiscal year of the Partnership, net income and gains in
an amount up to the cash distributable to the Partners for such fiscal
year pursuant to Section 9.1(a) shall first be allocated to the Partners in
the ratio such cash is distributable to the Partners, and any remaining net
income and gains shall be allocated to the Partners in proportion to their
respective Percentage Interests; or
(b) For each fiscal year of the Partnership, net losses in an amount
up to the aggregate positive balances of the Partners' capital accounts
as of the end of such year shall be allocated among the Partners in the
ratio of such positive capital account balances, and any remaining net
losses shall be allocated to the Partners in proportion to their respective
Percentage Interests.
8.2. Dissolution and Termination. All net gains and net losses of the
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Partnership, as determined for federal income tax purposes, in connection with
the dissolution and winding up of the Partnership, shall be allocated in the
following manner and order of priority:
(a) Net gains shall be allocated as follows:
(i) first, an amount of gain up to the negative balances, if any,
in the capital accounts of the Partners shall be allocated to the
Partners having negative capital account balances in proportion to
their respective negative capital account balances, until the balances
of the capital accounts of such Partners equal zero, provided that
such net gains shall first be allocated in such a manner as to cause
the negative capital account balances of the Partners to stand in the
ratio of their respective Percentage Interests;
(ii) then, gain shall be allocated to the General Partners and the
Class A Limited Partners to the extent necessary to make the balance
of their respective capital accounts equal to the amount of the
outstanding Partner Advances respectively made by or on behalf of such
Partners (the "Unreturned Partner Advances,");
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(iii) then, gains shall be allocated to the General Partners and
the Class A Limited Partners to the extent necessary to make the
balances of their respective capital accounts (as reduced in regard to
each General Partner's capital account and each Class A Limited
Partner's capital account by an amount equal to his Unreturned Partner
Advances) to equal their respective Unrecovered Contribution Account;
(iv) then, gains shall be allocated to the Partners in a manner,
as nearly as can be, to cause the capital accounts of the Partners (as
reduced in regard to each General Partner's capital account and each
Class A Limited Partner's capital account by an amount equal to his
Unreturned Partner Advances, and as further reduced in regard to each
General Partner's capital account and each Class A Limited Partner's
capital account by an amount equal to his Unrecovered Contribution
Account) to stand in the ratio of their respective Percentage
Interests; and
(v) all remaining gains shall be allocated to the Partners in
proportion to their respective Percentage Interests; or
(b) Net losses shall be allocated as follows:
(i) first, losses shall be allocated to the Partners having
positive capital account balances in an amount up to and in proportion
to their positive capital account balances; provided that if the
amount of such losses is less than the sum of such positive capital
account balances of all of the Partners having positive capital
accounts, such losses shall be allocated as follows: first such losses
shall be allocated in such a manner as to cause, as nearly as can be,
the capital account balances of the Partners (as reduced in regard to
each General Partner's capital account and each Class A Limited
Partner's capital account by an amount equal to his Unreturned Partner
Advances, and as further reduced in regard to each General Partner's
capital account and each Class A Limited Partner's capital account by
an amount equal to his Unrecovered Contribution Account) to
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stand in the ratio of their respective Percentage Interests and then
in proportion to their Percentage Interests until the capital account
balances (reduced as aforesaid) are equal to zero, and then in such a
manner as to cause, as nearly as can be, the capital account balances
of the Partners (as reduced in regard to each General Partner's
capital account and each Class A Limited Partner's capital account by
an amount equal to his Unreturned Partner Advances) to equal their
respective Unrecovered Contribution Account and then to the Partners
in proportion to their Unrecovered Contribution Account until the
capital account balances (as reduced in regard to each General
Partner's capital account and each Class A Limited Partner's capital
account by an amount equal to his Unreturned Partner Advances) are
equal to zero and then such losses shall be allocated to the General
Partners and the Class A Limited Partners in proportion to their
respective Unreturned Partner Advances;
(ii) then, losses shall be allocated to the Partners in a manner,
as nearly as can be, to cause the negative capital account balances
of the Partners to stand in the ratio of their respective Percentage
Interests; and
(iii) all remaining losses shall be allocated to the Partners in
proportion to their respective Percentage Interests.
8.3. Qualified Income Offset and Minimum Gain Chargeback. This
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Agreement shall be deemed to include provisions effecting a 704(c) allocation, a
"qualified income offset" and a "minimum gain chargeback" as such terms and
concepts are provided for and contained in Treasury Regulation 1.704-1, and the
allocation provisions otherwise herein contained shall be applied in a manner
consistent therewith.
SECTION IX
Distributions
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9.1. (a) General. Except as otherwise provided in Section 9.1(b) below,
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after providing for the satisfaction of the current debts and obligations of the
Partnership and after establishing such reserves as the General Partners deem
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appropriate, the General Partners shall, within thirty (30) days after the end
of each calendar quarter of the Partnership, make distributions to the Partners
of available Partnership cash, if any, in the following manner:
(i) first, available cash shall be distributed to the General
Partners and the Class A Limited Partners in an amount up to and in
proportion to their respective Unreturned Partner Advances;
(ii) second, available cash shall be distributed to the General
Partners and the Class A Limited Partners in an amount up to and in
proportion to their respective Unrecovered Contribution Account; and
(iii) all remaining available cash shall be distributed to the
Partners in proportion to their respective Percentage Interests.
(b) Proceeds Available Upon Dissolution and Winding Up. Upon the
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dissolution and winding up of the Partnership, the proceeds from the sale
of the Property and all other assets of the Partnership, and from any other
transaction undertaken in connection therewith, after making payment of or
provision for payment of all liabilities and obligations of the
Partnership, shall be distributed, to the extent available and as
expeditiously as possible, in the following order of priority:
(i) first, proceeds shall be distributed to the General Partners
and the Class A Limited Partners in an amount up to and in proportion
to their respective Unreturned Partner Advances (provided that no
distribution shall be made to any Partner in an amount in excess of
the positive balance, if any, of his capital account, as such capital
account has been adjusted to reflect the allocation of gains or losses
under Section 8.2);
(ii) second, proceeds shall be distributed to the General Partners
and the Class A Limited Partners in an amount up to and in proportion
to their respective Unrecovered Contribution Account (provided that no
distribution shall be made to any Partner in an amount in excess of
the positive balance, if any, of his capital
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account, as such capital account has been adjusted to reflect the
allocation of gains or losses under Section 8.2 and any distributions
theretofore made pursuant to Section 9. 1 (b) (i) ] ;
(iii) third, proceeds shall be distributed to the Partners in an
amount up to and in proportion to their respective positive capital
account balances (as such capital accounts have been adjusted to
reflect the allocation of gains or losses under Section 8.2 and any
distributions theretofore made pursuant to Sections 9.1(b)(i) and
9.1(b)(ii)); and
(iv) fourth, any remaining balance of proceeds shall be
distributed to the Partners in proportion to their respective
Percentage Interests.
9.2. If any assets of the Partnership shall be distributed in kind, such
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assets shall be distributed to the Partners receiving such assets as tenants-in-
common, with each such Partner receiving a proportionate interest of the
Partners in such asset which bears the same relationship to all interest in such
asset as the amount of cash that would have been distributed to such Partner if
cash had been distributed bears to the aggregate amount of all cash
distributions that would have been made to the Partners receiving such asset.
9.3. No Partner shall be entitled to demand and receive property other
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than cash in return for his capital contributions to the Partnership, and, to
the maximum extent permissible under applicable law, each Partner hereby waives
all right to partition the Property.
9.4. No Limited Partner shall have any priority over any other Limited
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Partner as to the return of his contributions to the capital of the Partnership
or as to compensation by way of income, provided that the foregoing is not
intended to modify the provisions of this Agreement which provide that Partner
Advances, and returns thereon, are intended to be paid to the Partners prior to
any other distributions under Section 9.1.
SECTION X
Costs and Obligations
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10.1. Partnership Management and Expenses. Except as herein otherwise
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provided, the Partnership shall be responsible
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for paying all direct costs and expenses of acquiring, holding, owning,
maintaining and operating the Project, including, without limitation, costs of
maintenance, improvements, advertising expenses, costs for bookkeeping and
accounting directly related to the Project, legal expenses, office supplies, and
all other fees, costs and expenses attributable to the Project, the Partnership
and the organization of the Partnership (including legal and consultant fees).
In the event any such costs and expenses are or have been paid by either of the
General Partners on behalf of the Partnership, then, except as expressly
provided herein to the contrary, such General Partner shall be entitled to be
reimbursed for such payment so long as such payment is reasonably necessary for
Partnership business and is reasonable in amount.
10.2. Reserves. The General Partners may establish a separate working
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capital reserve and may deposit therein from time to time such amounts of
Partnership revenues as they shall determine to be appropriate to meet the
anticipated cash needs of the Partnership.
10.3. Other Agreements. Upon the execution and delivery of this
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Agreement the Partnership shall enter into the following agreements: (i) a
construction management agreement with IDI in the form attached hereto as
Exhibit B; (ii) a management and leasing agreement with IDI in the form attached
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hereto as Exhibit C; and (iii) an office lease agreement with Summit in the form
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attached hereto as Exhibit D.
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SECTION XI
Partner Advances
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11.1. In the event the Partnership shall require any funds to satisfy
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Partnership obligations, the General Partners shall determine the amount of
funds so needed by the Partnership (and in this regard, the General Partners may
anticipate the cash needs of the Partnership for up to six months in advance) .
Upon making their determination of the Partnership's cash needs, the General
Partners shall make a written Cash Call (herein so called) upon the General
Partners and Class A Limited Partners, specifying therein the amount of funds
needed by the Partnership. Within thirty (30) days after receipt of the Cash
Call, each of the General Partners and Class A Limited Partners shall contribute
to the Partnership his pro rata share (based upon his Percentage Interest in
relation to the Percentage Interests of the General Partners and all Class A
Limited Partners) of the amount specified in the Cash Call. Such amounts
required to be funded by the General Partners and Class A Limited Partners are
referred to herein as "Partner Advances". Partner Advances shall be mandatory,
and the failure to make any Partner Advance shall give rise to the remedy
specified below.
11.2. If any General Partner or Class A Limited Partner (a "Non-
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Contributing Partner") fails to fund his Partner Advance within thirty (30) days
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after receipt of a Cash Call, one or more of the other General Partners and
Class A Limited Partners (the "Contributing Partners") shall have the right (but
not the obligation) to advance directly to the Partnership, the Partner Advance
which was to be made by the Non-Contributing Partner. Such amount so advanced
by the Contributing Partners shall be deemed a Default Loan (herein so called)
to the Non-Contributing Partner, and a Partner Advance from the Non-Contributing
Partner to the Partnership. If Contributing Partners tender Default Loans in an
amount in excess of the required Partner Advance, the General Partners shall
accept Default Loans on a pro rata (or other reasonable) basis, and shall return
all excess funds.
11.3. Default Loans (i) shall be an obligation from the Non-Contributing
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Partner to the Contributing Partners, (ii) shall have a term of one (1) year f
rom the date made and (iii) shall bear interest at the annual rate of four
percentage points over the short-term prime lending rate at Summit Community
Bank, N.A., prevailing at the time of the loan, but in no event higher than the
maximum rate permitted by Texas law to be charged at the time such loan is made.
Default Loans shall be automatically secured by the Non-Contributing Partner's
interest in the Partnership, and each General Partner shall be fully authorized
and empowered (pursuant to the power of attorney granted in Section 19.1 hereof)
to execute and deliver in the name of the Non-Contributing Partner, notes,
security agreements
14
and, financing statements and/or other documents as may be necessary or
convenient to evidence or secure any Default Loans. While any Default Loan is
outstanding, all distributions to which the Non-Contributing Partner would have
been entitled shall instead be paid to the Contributing Partner(s) and credited
against accrued interest first and then to the principal balance of the Default
Loan until such Default Loan has been paid in full.
SECTION XII
Sale of the Project
-------------------
12.1. The General Partners may sell the Project at any time, and upon
-----
such terms and conditions as they, in their sole discretion, shall determine.
15
SECTION XIII
Transfers of Interests of Partners
----------------------------------
13.1. No Transfer, mortgage, pledge or hypothecation of all or part of a
-----
Partner's interest in the Partnership may be effected except as expressly
permitted in this Section XIII, and then in the event so permitted, only if (i)
a counterpart of the instrument of Transfer, executed and acknowledged by the
parties thereto, is delivered to the Partnership, (ii) the Transfer would not
result in the "termination" of the Partnership pursuant to Section 708 of the
Code, and (iii) the transferee is not a Tax Exempt Entity.
13.2. The following Transfers by Limited Partners are permitted:
-----
(i) the Transfer by a Limited Partner of all or part of its
Partnership interest in accordance with the right of first refusal
procedures set forth in Section 13.4 below;
(ii) the Transfer by a Limited Partner of all or a part of its
Partnership interest, to IDI or an employee of IDI (or any
immediate member of the family of such employee) or to Summit
Bancshares, Inc. or to any subsidiary or affiliated entity of
either Summit Bancshares, Inc. or Summit Community Bank, N.A.; and
(iii) any Transfer of the Partnership interest of a deceased or
incapacitated Limited Partner to his executors, administrators or
legal representatives or by any of such persons to accomplish any
Transfer described under clause (ii) above (and as used in this
Section XIII, "transferee" shall include such persons).
However, (A) the effectiveness of any of the aforesaid permitted transfers may
be conditioned, in the discretion of the General Partners, upon receipt by the
Partnership of an opinion (the cost of which shall be borne by the transferor),
satisfactory in form and substance to the General Partners, to the effect that
such transaction will not violate the Securities Act of 1933 (the "Securities
Act") or any other applicable securities laws, and (B) no Transfer shall be
permitted if, in the reasonable opinion of counsel to the Partnership (which may
be secured by the General Partners, in their discretion, at the expense of the
Partnership), the Partnership's continued tax status as a
16
partnership for federal income tax purposes would be jeopardized by such
Transfer.
13.3. The following Transfers by General Partners are permitted:
-----
(i) Each General Partner may Transfer all or any part of its
Partnership interest to an affiliate (as defined below) of such
General Partner, and any such transferee of such General Partner's
interest shall have the right to be admitted to the Partnership as
a substituted General Partner; provided, however, that: (a) a
General Partner may not make any such Transfer of its entire
interest in the Partnership, unless the new general partner has at
the time of such assignment or transfer a net worth of at least
Three Hundred Thousand Dollars ($300,000.00), as evidenced by a
financial statement of the kind that would be used by him (it) in
dealing with federally chartered banks and similar financial
institutions and (b) no Transfer of all or any portion of a General
Partner's interest shall be made to any person (or entity), if such
person (or entity) is a Tax Exempt Entity.
(ii) The term "affiliate" used in (i) above means IDI or an
employee of IDI (or such employee's immediate family) or Summit
Bancshares, Inc. or any subsidiary or affiliated entity of either
Summit Bancshares, Inc. or Summit Community Bank, N.A.
(iii) A General Partner may Transfer all or any part of its
interest in accordance with the right of first refusal procedures
set forth in Section 13.4 below.
Notwithstanding the foregoing provisions of this Section 13.3, no General
Partner may Transfer its interest in the Partnership in a manner which would
constitute an event of default under any loan secured by a lien on the Project.
13.4. In the event a Limited Partner desires to make a Transfer in
-----
accordance with Section 13.2(i) or a General Partner desires to make a Transfer
in accordance with Section 13.3(iii), such Partner shall first notify all other
Partners in writing of the terms of the proposed Transfer. The other Partners
shall have a right of first refusal exercisable within sixty (60) days after
such notice to acquire such interest in such proportions
17
as the other Partners shall mutually agree (or if they cannot agree, then in the
ratio that their respective Percentage Interests bear to one another) . In the
event that the other Partners have not exercised the right of first refusal
granted hereunder and tendered payment of the purchase price within the period
such right may be exercised, such interest may be transferred by the Partner in
accordance with the terms presented to the other Partners.
13.5. Notwithstanding anything herein to the contrary, no Partner shall
-----
have the right to Transfer all or part of his or its Partnership interest to any
person if after such Transfer either the Partner (but only if such Partner
continues to hold an interest in the Partnership) or the transferee would hold a
Partnership interest of less than one percent (1%) in the Partnership.
13.6. Notwithstanding anything seemingly to the contrary contained in
-----
Section 13.2, no transferee of all or part of the Partnership interest of any
Limited Partner shall have the right to become a substitute Limited Partner,
unless:
(a) his transferee has stated such intention in the instrument of
assignment;
(b) the transferee has executed an instrument reasonably
satisfactory to the General Partners accepting and adopting the terms and
provisions of this Agreement;
(c) the transferor or transferee has paid any reasonable expenses
in connection with the admission of the transferee as a Limited Partner;
and
(d) in the case of an assignee or transferee who is not otherwise a
Partner, the General Partners consent to such person's becoming a
substitute Limited Partner (in the sole, absolute and unfettered discretion
of the General Partners).
13.7. If a General Partner should acquire an interest as a Limited
-----
Partner, such party shall, with respect to such interest, enjoy all of the
benefits and be subject to all of the obligations and duties of a Limited
Partner to the extent of such interest.
13.8. In the event of a Transfer of all or part of the interest of a
-----
Partner in the Partnership, at the request of the transferee, the General
Partners shall cause the Partnership to elect, pursuant to Section 754 of the
Code, or the corresponding provision of subsequent law, to adjust the basis of
the Partnership property as provided by Sections 734 and 743 of the Code.
18
13.9. Unless otherwise agreed between the transferor and the transferee and
-----
to the extent consistent with the Code and any applicable rules and regulations
thereunder, upon the Transfer of all or any part of the interest of a Partner
as hereinabove provided, the net income, net losses, net gains and credits
attributable to the interest so transferred shall be allocated between the
transferor and the transferee as of the date set forth in the instrument of
Transfer, and such allocation shall be based upon the number of days during the
applicable fiscal year of the Partnership that the interest so transferred was
held by each of them, without regard to the results of the Partnership
activities during the period in which each was the holder; provided, however,
that net gains or net losses on the sale of the Project shall be allocated to
the holder of record of the interest on the date of sale. To the extent the
foregoing allocations are inconsistent with the Code and any applicable rules
and regulations thereunder, the allocations will be modified to the extent
required to insure compliance with such rules and regulations thereunder.
Distributions shall be made to the holder of record of the interest on the date
of distribution.
SECTION XIV
Dissolution and Termination
---------------------------
14.1. Except as provided in Section 14.2, the Partnership shall be
-----
dissolved and its business wound up upon the earliest to occur of:
(a) December 31, 2045;
(b) the General Partners determining that the Partnership should be
dissolved;
(c) the Partnership becoming insolvent or bankrupt;
(d) the insolvency, bankruptcy or dissolution (without
reconstitution) of the last remaining General Partner, and the failure to
replace such General Partner within ninety (90) days; or
(e) the sale or other disposition of all or substantially all of the
Partnership's assets and the failure of the Partnership to continue to own
an indirect interest therein.
For purposes of this Agreement, a bankruptcy of a person means the filing of a
petition for relief as to any person as debtor or bankrupt under the Bankruptcy
Code of 1978 (except if such
19
petition is contested by such person, or the filing by such person or by another
of a petition or application to declare the insolvency of such person or for the
appointment of a receiver or a trustee for such person or a substantial part of
his assets, provided that if such proceeding is commenced by another, such
person indicates his approval of such proceeding, consents thereto or acquiesces
therein, or such proceeding is not contested by such person, and the insolvency
of a person shall be deemed to occur when the assets of such person are
insufficient to pay his or its liabilities and he or it shall so admit in
writing.
14.2. Subject to its right to Transfer its interest in the Partnership,
-----
each General Partner (or any reconstituted successor entity to the General
Partner) agrees to serve as a General Partner of the Partnership until the
Partnership is terminated without reconstitution as provided below. Upon the
occurrence of an event set forth in Section 14.1(d), the business of the
Partnership shall be continued on the terms and conditions of this Agreement if,
within ninety (90) days after such event, a majority in interest of the Class A
Limited Partners shall elect by written consent that the business of the
Partnership should be continued and shall designate in such consent one or more
persons to be substituted as general partner(s) of the Partnership. In the
event that a majority in interest of the Class A Limited Partners elect so to
continue the Partnership with a new general partner (s) , such new general
partner(s) shall succeed to all of the powers, privileges and obligations of the
then existing general partner(s) hereunder, and the interest in the Partnership
of the General Partner shall become a limited partner's interest hereunder.
14.3. The dissolution of the Partnership shall not release or relieve any
-----
of the parties hereto of their contractual obligations under this Agreement.
14.4. Upon any dissolution requiring the winding up of the business of
-----
the Partnership, all or part of the assets, as determined by the General
Partners, or such other person as is winding up the business of the Partnership,
shall be sold and the proceeds thereof distributed and/or the remaining assets
distributed in kind to the Partners in their respective shares as provided
herein.
SECTION XV
Death or Insanity of a Limited Partner
--------------------------------------
15.1. In the event of the death of a Limited Partner, the executor,
-----
administrator or other legal representative of the deceased Limited Partner
shall succeed to the rights of such deceased Limited Partner to receive
allocations and
20
distributions hereunder, and may be admitted into the Partnership as a Limited
Partner in the place and stead of the deceased Limited Partner in accordance
with Section XIII. Any Transfer by such executor, administrator or legal
representative of all or any part of the interest of the deceased Limited
Partner shall be governed by the provisions of Section XIII.
15.2. In the event of the insanity of a Limited Partner, the committee or
-----
other legal representative of the insane Limited Partner shall succeed to the
rights of such Limited Partner to receive allocations and distributions
hereunder, and may be admitted into the Partnership as a Limited Partner in the
place and stead of the insane Limited Partner in accordance with Section XIII.
Any Transfer by such committee or other legal representative of all or any part
of the interest of the insane Limited Partner shall be governed by the
provisions of Section xiii.
SECTION XVI
Accounting
----------
16.1. The fiscal. year of the Partnership shall be the calendar year.
-----
16.2. The General Partners shall keep, or cause to be kept, full and
-----
accurate records of all transactions of the Partnership in accordance with the
principles and practices generally accepted for the cash method of accounting;
provided, however, that the Partnership may change to the accrual method of
accounting upon the written determination to do so executed by the General
Partners.
16.3. All of such books of account shall, at all times, be maintained in
-----
the principal office of the Partnership, and shall be open during reasonable
business hours for the reasonable inspection and examination by the Limited
Partners and their authorized representatives, who shall have the right to make
copies thereof.
16.4. The General Partners shall prepare, or cause to be prepared, a
-----
federal partnership information return in compliance with Section 6031 of the
Code and any required state and local income tax returns for the Partnership for
each tax year of the Partnership, and, in connection therewith, shall make any
available or necessary elections, including elections with respect to the useful
lives of the properties of the Partnership and the rates of cost recovery on
such properties.
16.5. IDI shall be the "Tax Matters Partner" of the Partnership as
-----
defined in Section 6231(a)(7) of the Code, and in connection therewith shall
have full discretion and authority to
21
act as such, subject to any limitations set forth under the Code or any
applicable Treasury Regulations.
SECTION XVII
Reports and Statements
----------------------
17.1. By the first day of April of each fiscal year of the Partnership,
-----
the General Partners, at the expense of the Partnership, shall cause to be
delivered to the Limited Partners the following:
(a) such information as shall be necessary (including a statement
for that year of each Limited Partner's share of net income, net gains, net
losses and other items of the Partnership) for the preparation by the
Limited Partners of their federal, state and local income and other tax
returns; and
(b) a copy of all income tax and information returns to be filed by
the Partnership for the preceding fiscal year of the Partnership.
17.2. Within 180 days after the end of each fiscal year of the
-----
Partnership, the General Partners shall cause to be delivered to each of the
Limited Partners a financial statement of the Partnership for such fiscal year,
prepared at the expense of the Partnership, which financial statement shall set
forth, as of the end of and such fiscal year, the following:
(a) a profit and loss statement and a balance sheet of the
Partnership;
(b) the balances in the capital accounts of each Partner; and
(c) such other information as, in the judgment of the General
Partners, shall be reasonably necessary for the Partners to be advised of
the financial status and results of operations of the Partnership.
SECTION XVIII
Bank Accounts
-------------
18.1. The General Partners shall open and maintain (in the name of the
-----
Partnership) a special bank account or accounts in Summit, in which shall be
deposited all funds of the Partnership. Withdrawals from such account or
accounts shall be made upon the signature or signatures of such person or
persons as the General Partners shall designate. There shall be no
22
commingling of the assets of the Partnership with the assets of any other entity
or person.
SECTION XIX
Power of Attorney
-----------------
19.1. Each Limited Partner hereby irrevocably makes, constitutes and
-----
appoints each General Partner as his true and lawful attorney, to make, sign,
acknowledge, swear to and file with respect to the Partnership:
(a) documents of Transfer of a Limited Partner's interest and all
other documents to effect such Transfer, but only if there has been
compliance with the applicable provisions of this Agreement;
(b) (i) all amendments to this Agreement regarding a change in the
name of the Partnership, its address or that of the General Partners or any
Limited Partner, or the admission or withdrawal of a Limited Partner, and
(ii) amendments adopted in accordance with Section XXIV;
(c) notes, security agreements, financing statements and/or any and
all other documents necessary or convenient to evidence any Default Loan
made or deemed made to a Non-Contributing Partner and/or to pledge the
Partnership interest of a Non-Contributing Partner as security for such
loan.
The foregoing appointment is coupled with an interest.
SECTION XX
Consents
--------
20.1. In each instance in which any consent or approval required by law
-----
or this Agreement is to be obtained from all Limited Partners or a majority in
interest of the Class A Limited Partners, if any General Partner and/or any of
their partners shall have acquired an interest as a Class A Limited Partner,
then the holder of such interest shall have the same right to consent or approve
the matter in issue as the other Class A Limited Partners, as applicable, and
such consent or approval shall be included in the determination of whether the
requisite number of consents or approvals have been received.
23
SECTION XXI
Notices
-------
21.1. Whenever any notice is required or permitted to be given under any
-----
provisions of this Agreement, such notice shall be in writing, signed by or on
behalf of the person giving the notice, and shall be deemed to have been give on
the earlier to occur of (a) actual delivery or (b) when mailed by certified
mail, postage prepaid, return receipt requested, addressed to the person or
persons to whom such notice is to be given as follows (or at such other address
as shall be stated in a notice similarly given):
(i) if to the General Partners, such notice shall be given:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and
Summit Community Bank, N.A.
P. 0. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ 76163-0399
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
(ii) if to the Limited Partners, such notice shall be given to each
of the Limited Partners at their respective addresses indicated on
Schedule A attached hereto.
----------
SECTION XXII
Certain Defined Terms
---------------------
22.1. As used in this Agreement, the following terms have the meanings
-----
assigned to them in this Section 22.1, unless the context clearly requires
otherwise:
"Agreement": This Agreement of Limited Partnership.
---------
"Class A Limited Partners": Those persons whose names and residence
------------------------
addresses are set forth under the heading "Class A Limited Partners" on Schedule
--------
A attached hereto, and any person admitted as a Class A Limited Partner of the
-
Partnership subsequent to the date hereof.
24
"Code" : The Internal Revenue Code of 1986, as amended, or any successor
----
statute thereto.
"Exceptions": Shall have the meaning set forth in Section 5.1 hereof.
----------
"General Partners": Summit and IDI, and their respective successors and/or
----------------
permitted assigns.
"IDI": Shall mean Innovative Developers, Inc., a Texas corporation.
---
"Partner Advances": The advances required to be made pursuant to Section
----------------
11.1.
"Partners": The General Partners and the Limited Partners.
--------
"Percentage Interests": As to the General Partners, two percent (2%) which
--------------------
is allocated between IDI and Summit such that IDI has a 1.0%. Percentage
Interest and Summit has a 1.0%. Percentage Interest; as to the Class A Limited
Partners as a group, ninety-eight percent (98%); as among the Class A Limited
Partners, in proportion to the amount they have respectively contributed to the
capital of the Partnership pursuant to Section 6.2.
"Property": The parcel of land described in Exhibit A attached hereto.
--------
"Summit": Shall mean Summit Community Bank, N.A., a national banking
------
association.
"Tax Exempt Entity": Shall have the meaning set forth in Section 168(h)(2)
-----------------
of the Code.
"Transfer": The transfer, sale, assignment or other disposition of any
--------
part or all of any interest in the Partnership, whether voluntary, by operation
of law or otherwise.
"Unrecovered Contribution Account": As of any given time, an amount
--------------------------------
determined with respect to each General Partner and each Class A Limited Partner
equal to the excess, if any, of (a) the cash capital contributions theretofore
made by such General Partner or Class A Limited Partner to the Partnership
pursuant to Sections 6.1 or 6.2, over (b) all amounts theretofore distributed or
available for distribution to such General Partner or Class A Limited Partner
pursuant to Sections 9.1 (a) (ii) and 9. 1 (b) (ii).
25
SECTION XXIII
Binding Effect
--------------
23.1. Except as herein otherwise provided to the contrary, this Agreement
-----
shall be binding upon and inure to the benefit of the parties hereto, their
personal representatives, successors and permitted assigns.
SECTION XXIV
Amendments
----------
24.1. The General Partners, upon their mutual agreement, shall have full
-----
power and authority to amend, modify or waive all or any portion of this
Agreement. This Agreement may also be amended as provided in Section 19. 1 (b)
(I). No waiver of any breach or condition of this Agreement shall be deemed to
be a waiver of any other condition or subsequent breach, whether of like or
different nature. Notwithstanding the foregoing, so long as any amendment has
been approved by the mutual agreement of the General Partners, each Limited
Partner, either in person or by the power of attorney granted to the General
Partners herein, shall sign such approved amendment.
SECTION XXV
Applicable Laws
---------------
25.1. This Agreement shall be governed by and construed in accordance
-----
with the laws of the State of Texas.
SECTION XXVI
Counterparts
------------
26.1. This Agreement may be executed in counterparts, each of which shall
-----
be deemed an original, and all of which, taken together, shall constitute but
one and the same instrument which may be sufficiently evidenced by one
counterpart.
SECTION XXVII
No Implied Waiver
-----------------
27.1. The failure of the Partners to insist at any time upon the strict
-----
performance of any covenant or agreement or to
26
exercise any option, right, power or remedy contained in this Agreement shall
not be construed as a waiver or a relinquishment thereof for the future.
SECTION XXVIII
Legal Construction
------------------
28.1 In case any one or more of the provisions contained in this Agreement
----
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision hereof and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
Furthermore, in lieu of each such illegal, invalid or unenforceable provision
there shall be substituted a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid and
enforceable. This Agreement constitutes the entire agreement of the parties as
to all matters relating to the Project.
SECTION XXIX
Gender
------
29.1 all pronouns and any variation thereof shall be deemed to refer to the
----
masculine, feminine or neuter, singular or plural, as the identity of the person
or entity may require.
27
IN WITNESS WHEREOF, the parties hereto have subscribed and sworn to this
Agreement as of, but not necessarily on, the day and year first above written.
Business Address: GENERAL PARTNERS:
---------------- ----------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ INNOVATIVE DEVELOPERS, INC.,
Suite G200 A Texas corporation
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and CEO
P. O. Box 330399 SUMMIT COMMUNITY BANK, N.A.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
28
