COMPREHENSIVE SOFTWARE SYSTEMS LTD.
AGREEMENT
OF LIMITED PARTNERSHIP
TABLE OF CONTENTS
ARTICLE I
FORMATION
1.1 Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Registered Agent . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Address of General and Limited Partners . . . . . . . . . . . . . . 1
1.6 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
DEFINITIONS
2.1 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Capital Contribution . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Distributable Cash . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Event of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 Minimum Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Net Profit or Net Loss . . . . . . . . . . . . . . . . . . . . . . 5
2.14 Nonrecourse Liabilities . . . . . . . . . . . . . . . . . . . . . . 5
2.15 Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.18 Project Completion . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 Shareholder Agreement . . . . . . . . . . . . . . . . . . . . . . . 6
2.20 Sharing Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.21 Special Limited Partner . . . . . . . . . . . . . . . . . . . . . . 6
2.22 Treasury Regulations . . . . . . . . . . . . . . . . . . . . . . . 6
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ARTICLE III
CAPITAL
3.1 Contributions of Partners . . . . . . . . . . . . . . . . . . . . . 6
3.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Failure to Contribute . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
ALLOCATION OF PROFIT AND LOSS: DISTRIBUTIONS
4.1 Sharing Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Allocation of Net Profit and Net Loss . . . . . . . . . . . . . . . 8
4.3 Allocation of Minimum Gain . . . . . . . . . . . . . . . . . . . . . 8
4.4 Qualified Income Offset . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Allocations for Contributed Property . . . . . . . . . . . . . . . . 8
4.6 Distributions of Distributable Cash . . . . . . . . . . . . . . . . 9
4.7 Curative Allocations . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V
RIGHTS, POWERS, AND DUTIES OF GENERAL PARTNER
5.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.3 Restrictions on Authority of General Partner . . . . . . . . . . . . 12
5.4 Other Activities . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Limitation on Liability of General Partners; Indemnification . . . . 14
5.7 Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . 16
5.8 Tax Status of Partnership . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
6.1 No Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 No Right to Manage . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Death or Disability of Limited Partners . . . . . . . . . . . . . . 17
6.4 Consent of Limited Partner . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
TRANSFERS BY LIMITED PARTNERS AND ADDITIONAL LIMITED PARTNERS
7.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.2 Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Effect of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.4 Substitution of Limited Partners . . . . . . . . . . . . . . . . . . 22
7.5 Acquit Partnership . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 Additional Limited Partners . . . . . . . . . . . . . . . . . . . . 23
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ARTICLE VIII
ASSIGNMENT, WITHDRAWAL AND SUBSTITUTION OF GENERAL PARTNER
8.1 Assignment of General Partner's Interest . . . . . . . . . . . . . . 23
8.2 Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.3 Special Limited Partners . . . . . . . . . . . . . . . . . . . . . . 24
8.4 Admission of Additional or Successor General Partner . . . . . . . . 24
8.5 Failure to Admit Substitute General Partner. . . . . . . . . . . . . 25
ARTICLE IX
ACCOUNTING
9.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.2 Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.4 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.5 Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.6 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE X
TERMINATION AND DISSOLUTION
10.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.3 Distribution of Assets . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Deficit Capital Accounts . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XI
MISCELLANEOUS
11.1 Signatures; Amendments . . . . . . . . . . . . . . . . . . . . . . . 28
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.3 Waiver of Partition . . . . . . . . . . . . . . . . . . . . . . . . 29
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.6 Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.7 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.8 Pronouns and Plurals . . . . . . . . . . . . . . . . . . . . . . . . 30
11.9 Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.12 No Benefit to Third Parties . . . . . . . . . . . . . . . . . . . . 31
11.13 Compliance with Securities Laws . . . . . . . . . . . . . . . . . . 31
11.14 Limitation on Use in Case of Distribution of Software . . . . . . . 31
11.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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COMPREHENSIVE SOFTWARE SYSTEMS LTD.
AGREEMENT
OF LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP, made and entered into as of the
4th day of February, 1993, by and among CSS Management, Inc., a Colorado
corporation as General Partner; and BHC Securities, Inc., Comprehensive
Securities Systems, Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Inc., ▇▇▇▇ ▇▇▇▇▇, Inc., ▇▇▇▇▇▇▇▇ &
Company Securities, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc., Southwest
Securities, Inc., ▇▇▇▇▇▇▇▇ Inc. and TransTerra Co. as Limited Partners.
ARTICLE I
FORMATION
1.1 PARTNERSHIP. The parties hereby agree to the formation of this
limited partnership pursuant to the Colorado Uniform Limited Partnership Act
of 1981 (the "Act"), upon the terms and conditions set forth in this
Agreement.
1.2 NAME. The name of the Partnership is Comprehensive Software Systems
Ltd.
1.3 OFFICE. The office of the Partnership is at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place in the State of Colorado
as the General Partner may hereafter designate upon notice to the Partners.
1.4 REGISTERED AGENT. The name and address of the registered agent of
the Partnership for service of process in the State of Colorado is ▇▇▇▇ ▇.
▇▇▇▇▇, Popham, Haik, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Ltd., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
2400 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.5 ADDRESS OF GENERAL AND LIMITED PARTNERS.
(a) The name and business address of the General Partner is as follows:
CSS Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
1
(b) The names, business addresses and telefacsimile numbers of the
Limited Partners are as follows:
BHC Securities, Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Comprehensive Securities ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
Systems, Inc. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, Inc. ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
McDonald & Company ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Securities, Inc. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Associates, Inc. ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Southwest Securities, Inc. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ Inc. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
TransTerra Co. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
1.6 PURPOSE. The purpose of the Partnership is to provide consulting
services and to develop software for securities broker-dealers, banks and other
financial institutions utilizing state of the art hardware and software
techniques. The Partnership will market such systems and do any and all other
things necessarily incident to such activities.
1.7 TERM. The term of the Partnership shall commence on the filing
of the Certificate and shall continue until December 31,
2
2042 unless the Partnership is earlier dissolved and terminated in accordance
with the provisions of this Agreement or the Act.
ARTICLE II
DEFINITIONS
2.1 AGREEMENT shall mean this agreement of limited partnership, as it
may be amended from time to time.
2.2 AFFILIATE of a Person shall mean any other Person that, directly
or indirectly, controls or is controlled by or is under common control with such
Person.
2.3 CAPITAL ACCOUNT shall mean the Capital Account of each Partner
determined and maintained from the inception of the Partnership strictly in
accordance with the rules set forth in Section 1.704-1(b)(2)(iv) of the Treasury
Regulations. The Regulations shall control in case of any conflict between
those Regulations and this definition. By way of illustration and not
limitation, each Partner's Capital Account shall initially equal the cash and
the fair market value of property (net of liabilities secured by such
contributed property assumed or to which the property is subject) contributed by
a Partner to the Partnership, and during the term of the Partnership shall be
(A) increased by the amount of (1) Net Profit or items thereof as allocated to
the Partner, other than Net Profit or items thereof attributable to the
difference between the fair market value and adjusted basis of the property at
contribution, and (2) any money and the fair market value of property (net of
any liabilities secured by such contributed property assumed or to which the
property is subject) subsequently contributed to the Partnership and, (B)
decreased by the amount of (1) Net Loss or items thereof allocated to the
Partner, except (a) Net Loss or items thereof attributable to depreciation of
contributed property, which shall decrease Capital Accounts to the extent of
depreciation computed as if the property were purchased by the Partnership at
its fair market value, and (b) Net Loss attributable to the difference between
the fair market value and adjusted basis of property at contribution (which
shall not decrease the contributing Partner's Capital Account), and (2) all cash
and the fair market value of property (net of liabilities secured by such
distributed property assumed or to which the property is subject) distributed to
such Partner.
2.4 CAPITAL CONTRIBUTION shall mean the amount of money or value of
property contributed to the capital of the Partnership by a Partner pursuant to
Article III.
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2.5 CERTIFICATE shall mean the certificate of limited partnership of
the Partnership as filed with the office of the Secretary of State of the
State of Colorado, as it may be amended from time to time.
2.6 CODE shall mean the Internal Revenue Code of 1986, as amended
from time to time.
2.7 DISTRIBUTABLE CASH for any period means such portion of the cash
on hand or in bank accounts of the Partnership as, in the reasonable discretion
of the Board of Directors of the General Partner, is available for distribution
to the Partners after a reasonable provision has been made for the current
liabilities of the Partnership and a reasonable reserve has been allowed for
Partnership operating expenses.
2.8 DISTRIBUTIONS shall mean any money or other property distributed
to Partners with respect to their interests in the Partnership.
2.9 EVENT OF WITHDRAWAL shall mean the events provided for in
Section 7-62-402 of the Act or any successor provision.
2.10 GENERAL PARTNER shall mean CSS Management, Inc. and any other
Person or Persons who succeeds it in that capacity in accordance and with the
terms of this Agreement.
2.11 LIMITED PARTNERS shall mean BHC Securities, Inc., Comprehensive
Securities Systems, Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Inc., ▇▇▇▇ ▇▇▇▇▇, Inc., ▇▇▇▇▇▇▇▇ &
Company Securities, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc., Southwest
Securities, Inc., ▇▇▇▇▇▇▇▇ Inc. and TransTerra Co. and any Person who succeeds
them as Limited Partners, but shall not include a Special Limited Partner.
2.12 MINIMUM GAIN with respect to any taxable year of the Partnership
shall mean the minimum gain of the Partnership computed strictly in accordance
with the principles of Section 1.704-2(b)(2) of the Treasury Regulations issued
under the Code.
Subject to the previous sentence, "Minimum Gain" means an amount of
gain that would be realized by the Partnership on the disposition of Partnership
property subject to non-recourse indebtedness equal to the amount by which such
non-recourse indebtedness exceeds the adjusted tax basis of such property. For
this purpose, where the asset is subject to multiple secured liabilities, the
allocation rules of Treasury Regulations Section 1.704-2(d)(2) shall apply. If
Partnership property subject to one or more Nonrecourse Liabilities of the
Partnership is, under Treasury Regulations Section 1.704-1(b)(2)(iv)(d) or
(b)(2)(iv)(f), properly reflected on the books of the Partnership at a book
value
4
that differs from the adjusted tax basis of such property, the determination of
Minimum Gain shall be made with reference to book value.
2.13 NET PROFIT or NET LOSS shall mean the net profit or net loss of
the Partnership, as the case may be, as determined for federal income tax
purposes and all items required to be separately stated by Section 702 of the
Code and Treasury Regulations thereunder.
2.14 NONRECOURSE LIABILITIES means liabilities of the Partnership (or
a portion thereof) with respect to which none of the Partners has any risk of
loss (other than through the Partner's indirect interest as a Partner in the
Partnership assets subject to the liability) as defined in Section 1.752-1(a)(2)
of the Treasury Regulations.
2.15 PARTNER shall mean any General Partner and any Limited Partner.
2.16 PARTNERSHIP shall mean the limited partnership formed under this
Agreement.
2.17 PERSON shall mean and include an individual, proprietorship,
trust, estate, partnership, joint venture, association, company, corporation or
other entity of whatever nature.
2.18 PROJECT COMPLETION shall mean the later of February 1, 1996, or
that point in time when the back office and order management modules of the
software being developed by the Partnership are deliverable and usable (as
determined in the reasonable judgment of the Board of Directors of the General
Partner ("Software Completion")) and have been installed, as evidenced by the
commencement and clearing of live trades using such software, by 50% of the
Brokers who elect to install such software within sixty (60) days after such
determination by the Board of Directors, and a definitive schedule for
installation of the software with the remaining Brokers (each such Broker shall
have up to six (6) months after such determination by the Board of Directors to
elect to install such software) has been adopted by the Board of Directors of
the General Partner (no later than 30 days from the end of six months after such
determination), provided however, if such schedule is not adhered to by the
Partnership (other than for reasons within the control of one or more Brokers or
by reason of governmental restrictions, strikes or scarcity of labor or
material, or for other reasons beyond the control of the Partnership),
immediately upon the failure to adhere to the schedule, Project Completion shall
be deemed not to have occurred and all of the provisions hereof applicable to
the period prior to Project Completion shall again be effective.
5
2.19 SHAREHOLDER AGREEMENT shall mean the Participation and
Shareholder Agreement dated February 4, 1993, among the original Limited
Partners, the General Partner and this Partnership.
2.20 SHARING RATIOS shall mean the percentages set forth in
Section 4.1.
2.21 SPECIAL LIMITED PARTNER shall mean, as further described in
Section 8.2, a former General Partner in the case of the retirement, withdrawal,
removal or the adjudication of bankruptcy of such General Partner.
2.22 TREASURY REGULATIONS mean the regulations of the United States
Treasury Department pertaining to the income tax, as amended in any successor
provision.
ARTICLE III
CAPITAL
3.1 CONTRIBUTIONS OF PARTNERS. The Initial and Subsequent Monthly
Capital Contributions of the Partners are as set forth below:
SUBSEQUENT MONTHLY SUBSEQUENT MONTHLY
INITIAL CAPITAL CAPITAL CONTRIBUTION CAPITAL CONTRIBUTION
GENERAL PARTNER CONTRIBUTION FEBRUARY 1993 - JULY 1993 AUGUST 1993 - JANUARY 1996
--------------- --------------- ------------------------- --------------------------
CSS Management, Inc. $1,333.33 $--0-- $--0--
LIMITED PARTNERS
----------------
BBC Securities, Inc. $8,333.33 $45,527.78 $25,000
Comprehensive Securities
Systems, Inc. 65,333.31 --0-- --0--
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Inc. 8,333.33 45,527.78 25,000
▇▇▇▇ ▇▇▇▇▇, Inc. 8,333.33 45,527.78 25,000
▇▇▇▇▇▇▇▇ & Company
Securities, Inc. 8,333.33 45,527.78 25,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc. 8,333.33 45,527.78 25,000
Southwest Securities, Inc. 8,333.33 45,527.78 25,000
▇▇▇▇▇▇▇▇ Inc. 8,333.33 45,527.78 25,000
TransTerra Co. 8,333.33 45,527.78 25,000
The Initial Capital Contribution and the first Subsequent Monthly Capital
Contribution shall be payable upon execution of this Agreement. Thereafter,
Subsequent Monthly Capital Contributions shall be payable the first business day
of each month commencing March 1993 and continuing through January 1996.
6
3.2 INTEREST. No Partner shall be entitled to interest on his Capital
Contributions or on any Net Profits or Distributable Cash retained by the
Partnership.
3.3 FAILURE TO CONTRIBUTE. If a Partner does not contribute by the
time required all or any portion of a Capital Contribution that Partner is
required to make as provided in Section 3.1, the Partnership may take such
action at law or in equity (including, without limitation, court proceedings)
as the General Partner may, in its sole discretion, deem appropriate to
obtain payment by that Partner of the portion of that Partner's Capital
Contribution that is in default together with interest on that amount at the
highest rate permitted by law from the date that the Capital Contribution was
due until the date that it is made, all at the cost and expense of the
Partner failing to make its Capital Contribution, or, at the General
Partner's option, the Partnership may exercise its rights under Section 13(a)
of the Shareholder Agreement.
ARTICLE IV
ALLOCATION OF PROFIT AND LOSS: DISTRIBUTIONS
4.1 SHARING RATIOS. The Initial and Subsequent Sharing Ratios of the
Partners shall be as follows:
Initial Subsequent
Sharing Ratios Sharing Ratios
-------------- --------------
BBC Securities, Inc. 12.25% 6.25%
Comprehensive Securities
Systems, Inc. 1.00% 49.00%
CSS Management, Inc. 1.00% 1.00%
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Inc. 12.25% 6.25%
▇▇▇▇ ▇▇▇▇▇, Inc. 12.25% 6.25%
▇▇▇▇▇▇▇▇ & Company
Securities, Inc. 12.25% 6.25%
▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc. 12.25% 6.25%
Southwest Securities, Inc. 12.25% 6.25%
▇▇▇▇▇▇▇▇ Inc. 12.25% 6.25%
TransTerra Co. 12.25% 6.25%
The Initial Sharing Ratios shall apply to all Distributions and to the
allocation of Net Profit or Net Loss before Project Completion; and the
Subsequent Sharing Ratios shall apply for all periods
7
thereafter during which Project Completion remains attained in accordance with
the definition thereof contained in Section 2.18 hereof.
4.2 ALLOCATION OF NET PROFIT AND NET LOSS. Subject to Sections 4.3,
4.4 and 4.5 hereof, Net Profit and Net Loss shall be allocated among the
Partners in accordance with the Sharing Ratios set forth in Section 4.1.
4.3 ALLOCATION OF MINIMUM GAIN. In the event that there is a net
decrease in the Minimum Gain of the Partnership during a Partnership taxable
year, each Partner shall be allocated items of Partnership income and gain in
accordance with Treasury Regulation Section 1.704-2(f)(1) for such year (and, if
necessary, for subsequent years) in an amount equal to such Partner's share of
such net decrease of Partnership Minimum Gain. For this purpose, a Partner's
share of the net decrease in Partnership Minimum Gain shall be determined under
Treasury Regulation Section 1.704-2(g)(2). This Section 4.3 is intended to
comply with Treasury Regulation Section 1.704-2(f)(1) and shall be interpreted
consistently therewith.
4.4 QUALIFIED INCOME OFFSET. In the event any Partners unexpectedly
receive any adjustments, allocations, or distributions described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership
income and gain shall be specially allocated to such Partners in an amount and
manner sufficient to eliminate the deficit balances in their Capital Accounts
created by such adjustments, allocations, or distributions as quickly as
possible. Any special allocations of items of income or gain pursuant to this
Section shall be taken into account in computing subsequent allocations of
profits pursuant to this Section, so that the net amount of any items so
allocated to each Partner pursuant to this Section shall, to the extent
possible, be equal to the net amount that would have been allocated to each such
Person pursuant to the provisions of this Section if such unexpected
adjustments, allocations or distributions had not occurred.
The Partners intend that the provision set forth in this Section will
constitute a "Qualified Income Offset" as described in Section 1.704-
1(b)(2)(ii)(d) of the Treasury Regulations. The regulations shall control in the
case of any conflict between those regulations and this section.
4.5 ALLOCATIONS FOR CONTRIBUTED PROPERTY. In accordance with Code
Section 704(c) and the Treasury 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 in a
manner consistent with Code Section 704(c) and the Treasury Regulations
thereunder.
8
In the event the fair market value of any Partnership property is
adjusted due to a distribution of property, admission of a new Partner,
termination of the Partnership or otherwise, subsequent allocations of income,
gain, loss, and deduction with respect to such asset shall be allocated among
the Partners in the same manner consistent with Code Section 704(c) and the
Treasury Regulations thereunder.
4.6 DISTRIBUTIONS OF DISTRIBUTABLE CASH. Any Distributable Cash shall
be distributed to the Partners in accordance with the Sharing Ratios set forth
in Section 4.1 at such times and in amounts as determined by the Board of
Directors of the General Partner, in its discretion; provided that all
Distributable Cash on hand shall be distributed at least annually within one
hundred twenty (120) days after the expiration of each fiscal year of the
Partnership. Notwithstanding any other provision hereof, if the Partnership
reports any taxable income for any fiscal year, the Partnership shall distribute
sufficient cash distributions to its Limited Partners so that they would be able
to pay federal, state and local income taxes with such distributions on such
income at the highest effective rate that any Limited Partner is subject to for
such fiscal year. The Board of Directors of the General Partner may from time to
time also allow a Partner to withdraw Distributable Cash from the Partnership,
without concurrent distributions to other Partners in accordance with the
Sharing Ratios, if agreed to in writing by all Partners. Such draws shall be
repaid to the Partnership from future distributions of Distributable Cash to the
Partner.
4.7. CURATIVE ALLOCATIONS. If the General Partner determines, after
consultation with counsel, that the allocation of any item of Partnership
income, gain, loss, deduction or credit is not specified in this Article IV (an
"unallocated item"), or that the allocation of any item of Partnership income,
gain, loss, deduction or credit hereunder is clearly inconsistent with the
Partners' economic interests in the Partnership (determined by reference to the
general principles of Temp. Reg. Section 1.704-1T(b)(4)(iv), Treas. Reg.
Section 1.704-1(b) and the factors set forth in Treas. Reg. Section 1.704-
1(b)(3)(ii)) (a "misallocated item"), then the General Partner may allocate such
unallocated items, or reallocate such misallocated items, to reflect such
economic interests.
9
ARTICLE V
RIGHTS, POWERS, AND DUTIES OF GENERAL PARTNER
5.1 MANAGEMENT.
(a) The General Partner, within the authority granted under this
Agreement, shall have full, complete and exclusive right, power, authority
and discretion to manage and control the business of the Partnership. In so
doing, the General Partner shall take all actions and do all things necessary
or appropriate to effectuate the purposes of the Partnership and to protect
the interests of the Limited Partners. The General Partner shall devote all
of its time to the affairs of the Partnership and shall receive no
compensation from the Partnership, other than as expressly provided in this
Agreement. The General Partner shall, except as otherwise provided in this
Agreement, have all the rights and powers and shall be subject to all the
restrictions and liabilities of a partner in a partnership without limited
partners.
(b) All decisions made, and actions taken, for and on behalf of the
Partnership, pursuant to the authority granted in this Agreement and in the
Act, by the General Partner shall be the decisions and actions, respectively,
of the Partnership.
5.2 POWERS. Subject to Section 5.3, the General Partner, shall
have all authority, rights, and powers generally conferred by law, including
the authority, rights and powers of general partners in a partnership without
limited partners, and shall have all the authority, rights and powers which
they deem necessary or appropriate to effect the purposes of the Partnership,
including, by way of illustration but not by way of limitation, the following:
(a) To acquire, hold, sell, transfer, assign, lease or otherwise
deal with any real, personal or mixed property, interest therein or
appurtenance thereto;
(b) To borrow money and, if security is required therefor, to
mortgage or subject to any other security device any portion of the assets of
the Partnership, to obtain replacements of any mortgage or other security
device, and to prepay, in whole or in part, refinance, increase, modify,
consolidate or extend any mortgage or other security device;
(c) To maintain or cause to be maintained, to the extent deemed
necessary by the General Partner, adequate insurance with respect to general
liability of the Partnership and with respect to any insurable assets of the
Partnership pursuant to policies of
10
insurance in form and coverage customary to property similar to the
Partnership's insurable assets and the Partnership's business;
(d) To employ, contract and deal with, from time to time,
persons, firms or corporations, including any Partners, in connection with the
management and operation of the Partnership business, including without
limitation, contractors, agents, brokers, accountants and attorneys, on such
terms as the General Partner shall determine;
(e) To place record title to, or the right to use, Partnership
assets in the name or names of a nominee or nominees, trustee or trustees, or
other agents of or for the Partnership for any purpose convenient or
beneficial to the Partnership;
(f) To ensure the proper application of revenues of the
Partnership, including the establishment of reserve funds to provide for
future requirements of the Partnership or any other purpose deemed necessary
or appropriate by the General Partner;
(g) To bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against
the Partnership;
(h) To pay as a Partnership expense any and all costs or expenses
associated with the formation, development, organization and operation of the
Partnership;
(i) To deposit, withdraw, invest, pay, retain, and distribute the
Partnership's funds in a manner consistent with the provisions of this
Agreement;
(j) To make such elections under the Code and other relevant tax
laws as to the treatment of items of Partnership income, gain, loss,
deduction and credit, and as to all other relevant matters, as the General
Partner deems necessary or appropriate, including without limitation
elections referred to in Section 754 of the Code, selection of the manner and
method of determining depreciation of the capital assets of the Partnership,
determination of which items of cash outlay are to be capitalized or treated
as current expenses, and selection of the method of accounting and
bookkeeping procedures to be used by the Partnership;
(k) To discount, sell, exchange, hypothecate, grant a security
interest in or pledge for such consideration as the Executive Committee of
the Board of Directors of the General Partner shall determine in its absolute
discretion, any assets of the Partnership;
11
(l) To require in any or all Partnership contracts that the
General Partner shall not have any liability thereon but that the Person
contracting with the Partnership shall look solely to the Partnership and its
assets for satisfaction;
(m) To maintain proper books of account for the Partnership and
to prepare all reports of operations and tax returns which are to be
furnished to the Partners pursuant to this Agreement or which are required by
taxing bodies or other governmental agencies;
(n) to designate depositories of the Partnership's funds, and the
terms and conditions of such deposits and drawings thereon;
(o) To execute and file with any state tax authority, if
necessary or appropriate to comply with or minimize withholding obligations
under the law of any state, a statement on behalf of the Partners
acknowledging and confirming their obligations to file tax returns with such
state;
(p) To determine the time and amount of Distributions to the
Partners consistent with this Agreement;
(q) To engage in any kind of activity and to perform and carry
out contracts of any kind necessary to carry out the activities authorized in
the preceding clauses of this subsection;
(r) To delegate all or any of its duties under this Agreement to
any of its officers, agents and employees, and in furtherance of such
delegation elect, employ, contract or deal with any person, except as
provided under this Agreement or by law; and
(s) To execute, acknowledge and deliver any and all instruments
to effectuate the foregoing.
5.3 RESTRICTIONS ON AUTHORITY OF GENERAL PARTNER.
Notwithstanding the provisions of Section 5.2, the General Partner
shall be subject to all the restrictions and limitations of a partner in a
partnership without limited partners, and in addition, without the consent of
all the Limited Partners, shall not have the authority to:
(a) do any act in contravention of this Agreement or the Act;
(b) confess a judgment against the Partnership;
12
(c) admit an additional General Partner except as provided in
this Agreement;
(d) admit an additional Limited Partner, except as provided in
this Agreement;
(e) knowingly perform any act that would subject any Limited
Partner to liability as a General Partner;
(f) alter the primary purpose of the Partnership as set forth in
Section 1.6 hereof;
(g) file on behalf of the Partnership a voluntary petition in
bankruptcy or a petition or answer of any nature seeking for the Partnership
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law, or regulation;
(h) employ, or permit to employ, the funds or assets of the
Partners in any manner except for the exclusive benefit of the Partnership;
(i) commingle the Partnership funds with those of any other
person or entity;
(j) perform any act required to be authorized by all of the
Limited Partners under the Act or by all Partners under Section 7-60-109(3)
of the Colorado Uniform Partnership Act unless the right to do so is
expressly granted by this Agreement;
(k) borrow from the Partnership;
(l) perform any act which would make it impossible to carry on
the ordinary business of the Partnership;
(m) possess Partnership property, or assign the Partnership's
right in specific Partnership property, for other than a Partnership purpose;
or
(n) cause the Partnership to distribute any Partnership assets in
kind.
5.4 OTHER ACTIVITIES. The General Partner shall be required to
devote full time to the management of the Partnership business. The General
Partner shall not engage or possess an interest, independently or with
others, in other businesses or ventures of any nature and description. The
Limited Partners, however, may engage or possess an interest, independently
or with others, in other businesses or ventures of every nature and
description in competition with the Partnership or otherwise
13
subject to use and confidentiality restrictions in this Agreement or other
agreements with the Partnership.
5.5 DISTRIBUTIONS. Each Partner shall look solely to the assets of the
Partnership for all Distributions and share of Net Profit or Net Loss, and
shall have no recourse therefor (upon dissolution or otherwise) against any
General Partner or Limited Partner, except, however, that this limitation
shall not impair the right of the Partnership to enforce its rights against a
Partner under Sections 5.6, 6.1 or 10.4 hereof. No Partner shall have any
right to demand or receive property other than money upon dissolution and
termination of the Partnership.
5.6 LIMITATION ON LIABILITY OF GENERAL PARTNERS; INDEMNIFICATION.
(a) The General Partner and its directors, officers, employees and
agents who are entitled to indemnification from the General Partner in
connection with performing services on behalf of the Partnership
("Indemnitee"), shall not have any liability, responsibility, or
accountability in damages or otherwise to any Partner or the Partnership for
any loss suffered by the Partnership which arises out of any act or omission
performed or omitted by such Indemnitee in good faith and within the scope of
the authority granted to it by this Agreement and in the best interest of the
Partnership; PROVIDED that such act or omission did not constitute gross
negligence, misconduct or any knowing violation of any statute, law or
regulation by such Indemnitee. Such Indemnitee shall be indemnified by the
Partnership and the Partnership hereby agrees to indemnify, pay, protect, and
hold harmless such Indemnitee (on the demand of and to the satisfaction of
such Indemnitee) from and against any and all liabilities, obligations,
losses, damages, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or nature (provided that the same were not the
result of gross negligence, misconduct or any knowing violation of any
statute, law or regulation on the part of the Indemnitee) including, without
limitation, all reasonable legal fees, costs and expenses of defense, appeal
and settlement of any and all suits, actions or proceedings instituted
against such Indemnitee and all costs of investigation in connection
therewith (collectively referred to as "Liabilities" for the remainder of
this Section 5.6) that may be imposed on, incurred by, or asserted against an
Indemnitee in any way relating to or arising out of, any action or inaction
on the part of such Indemnitee. Notwithstanding the foregoing, an Indemnitee
shall be liable, responsible and accountable, and the Partnership shall not
be liable to any such Indemnitee for any portion of such Liabilities, that
resulted from such Indemnitee's own gross negligence, misconduct or any
knowing violation of any statute, law or regulation. Subject to Section
5.6(c) hereof, if any action, suit or proceeding shall be pending
14
or threatened against the General Partner relating to or arising, or alleged
to relate or arise out of any such action or nonaction, such General Partner
shall have the right to employ separate counsel of its choice in such action,
suit or proceeding and the reasonable fees and expenses of such counsel shall
constitute costs, expenses, and disbursements for the purposes of the
indemnification provided by this Section 5.6.
The satisfaction of the obligations of the Partnership under this
Section 5.6(a) shall be from and limited to the assets of the Partnership and
no Partner shall have any personal liability on account thereof.
(b) The Partnership shall not incur the cost of that portion of any
insurance which insures any Indemnitee for any liability as to which such
Indemnitee is prohibited from being indemnified under this Section 5.6.
(c) Advances from Partnership funds to an Indemnitee for legal expenses
and other costs incurred as a result of any legal action initiated against an
Indemnitee by a Limited Partner of the Partnership in his capacity as such is
prohibited. Except as provided in the foregoing sentence, advances from
Partnership funds to an Indemnitee for legal expenditures and other costs
incurred as a result of any initiated suit, action or proceeding is
permissible if (i) such suit, action or proceeding relates to or arises out
of, or is alleged to relate to or arise out of, any action or inaction on the
part of the Indemnitee in the performance of its duties or provision of its
services on behalf of the Partnership; (ii) such suit, action or
proceeding is initiated by a third party who is not a Limited Partner, and
(iii) the Indemnitee undertakes to repay any funds advanced pursuant to this
Section 5.6(c) in cases in which such Indemnitee would not be entitled to
indemnification under Section 5.6(a). If advances are permissible under this
Section 5.6(c), the Indemnitee shall furnish the Partnership with an
undertaking as set forth in the foregoing sentence and shall thereafter have
the right to ▇▇▇▇ the Partnership for, or otherwise request that the
Partnership pay, at any time and from time to time after such Indemnitee has
become obligated to make payment therefor, any and all amounts for which such
Indemnitee has determined in good faith that such Indemnitee is entitled to
indemnification under this Section 5.6. The Partnership shall pay any and all
such bills and honor any and all such requests for payment for which the
Partnership is liable as determined above. In the event that a final
determination is made by the Board of Directors of the General Partner that
the Partnership is not so obligated in respect to any amount paid by it, such
Indemnitee will refund such amount, plus interest thereon at the then
prevailing market rate of interest, within 60 days of such final
determination, and in the event that a final determination is made
15
by the Board of Directors of the General Partner that the Partnership is so
obligated in respect to any amount not paid by the Partnership to such
Indemnitee, the Partnership will pay such amount to such Indemnitee.
5.7 REIMBURSEMENT OF EXPENSES.
(a) Except as otherwise set forth herein, all of the Partnership's
expenses shall be billed directly to and paid by the Partnership. The General
Partner shall be reimbursed for the actual cost to the General Partner of
goods, materials and services used for and by the Partnership. The General
Partner shall be reimbursed for the administrative services necessary to the
prudent operation of the Partnership at the General Partner's actual cost.
The General Partner shall not be reimbursed by the Partnership for the
following expenses:
(i) Services for which the General Partner is entitled to
compensation in the form of a separate fee; and
(ii) Any expenses that are unrelated to the business of the
Partnership.
(b) Subject to Section 5.7(a), the Partnership shall pay all expenses of
the Partnership and all reasonable expenses of the General Partner relating
to the Partnership which may include, but are not limited to: (i) all costs
of borrowed money, taxes, and assessments on Partnership property and other
taxes applicable to the Partnership; (ii) legal, audit, accounting, and
other fees; (iii) printing and other expenses and taxes incurred in
connection with the issuance, distribution, transfer and recording of
documents evidencing ownership of an interest in the Partnership or in
connection with the business of the Partnership; (iv) fees and expenses paid
to independent contractors, bankers, brokers, servicers, leasing agents and
consultants; (v) the cost of insurance as required in connection with the
business of the Partnership; (vi) expenses of revising or amending the
Partnership Agreement, converting, modifying or terminating the Partnership;
(vii) the costs and expenses incurred in qualifying the Partnership to do
business in any jurisdiction, including fees and expenses of any resident
agent appointed by the Partnership; (viii) the costs incurred in connection
with any litigation or regulatory proceedings in which the Partnership is
included and (ix) the costs, salaries, benefits, bonuses, employment taxes,
and expenses incurred, paid borne or reimbursed by the General Partner to all
employees and officers of the General Partner.
5.8 TAX STATUS OF PARTNERSHIP. The General Partner shall use its best
efforts to meet such requirements of the Code,
16
as interpreted from time to time by the Internal Revenue Service, necessary
to assure that the Partnership will be classified as a partnership for
federal income tax purposes.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
6.1 NO ASSESSMENTS. Except as specifically provided herein, or as
otherwise provided by law, no Limited Partner shall be personally liable for,
or bound by, any expenses, liabilities or obligations of the Partnership.
6.2 NO RIGHT TO MANAGE. No Limited Partner shall take part in, or
interfere in any manner with, the management, control, conduct or operation
of the Partnership, or have any right, power or authority to act for or bind
the Partnership.
6.3 DEATH OR DISABILITY OF LIMITED PARTNERS. The Partnership shall not
be dissolved by the death, insanity, adjudication of incompetency,
bankruptcy, insolvency or withdrawal of any Limited Partner; by the
assignment by any Limited Partner of its interest; or by the admission of a
substitute Limited Partner.
6.4 CONSENT OF LIMITED PARTNERS. The General Partner may from time to
time seek the consent of the Limited Partners on any matters not inconsistent
with the provisions of the Act. Such consent may be obtained by a written
consent or by the vote of the Limited Partners at a meeting where a majority
of the Sharing Ratios of Limited Partners are represented in person or by
proxy after at least 30-days written notice to all Limited Partners. Any
consent or vote shall be subject to the provisions of Section 5 of the
Shareholder Agreement. A majority of Sharing Ratios voted for or consenting
to a proposal of the General Partner will, unless otherwise provided herein
or in another agreement among all the Limited Partners, evidence the consent
of the Limited Partners, provided however that the General Partner shall not
take any of the following actions without the consent of two-thirds of the
Sharing Ratios of the Limited Partners:
(a) The sale of all or substantially all of the assets of the
Partnership pursuant to a single transaction or series of related
transactions, except for sales in connection with the liquidation and winding
up of the Partnership business upon its dissolution,
(b) The dissolution of the Partnership, and
17
(c) the merger or consolidation of the Partnership.
ARTICLE VII
TRANSFERS BY LIMITED PARTNERS AND ADDITIONAL LIMITED PARTNERS
7.1 TRANSFER. A Limited Partner may not transfer (a transfer, for
purposes of this Agreement, shall be deemed to include, but not be limited
to, any sale, assignment, pledge, creation of a security interest or other
disposition, whether voluntary or involuntary), in whole or in part, any of
its interest in the Partnership pursuant to this Agreement, unless, in
addition to the conditions in Section 11.13 and this Article VII, such
transfer complies with the applicable provisions of the Shareholder Agreement
(so long as such provisions have not been terminated) and the following terms
and conditions have been satisfied:
(a) The transferee shall have: (i) assumed all costs incurred by the
Partnership in connection with the transfer; (ii) at the request of the
General Partner, furnished the Partnership with an opinion of counsel,
satisfactory in form and substance to counsel for the Partnership, that such
transfer complies with applicable federal and state securities laws and this
Agreement and that such transfer, for federal income tax purposes, will not
cause the termination of the Partnership, cause the Partnership to be treated
as an association taxable as a corporation or otherwise adversely affect the
Partnership or the Partners; and (iii) complied with such other conditions as
the General Partner may require from time to time;
(b) The transferee shall have at the request of the General Partner,
acknowledged in writing that the transferee's interest in the Partnership
interest to be transferred is and shall continue to be subject and
subordinate to any security interest then existing of the Partnership in such
Partnership interest;
(c) The General Partner shall have consented in writing to the
transfer, which consent may be withheld or given in the sole discretion of
the General Partner.
Transfers will be effective and recognized by the Partnership only as of
the close of business on the last day of the calendar month following
satisfaction of the above conditions, and the transferor shall cease to be a
Partner as of that day. Any transfer in contravention of this Article VII and
any transfer which if made would cause a termination of the Partnership for
federal income tax purposes (even if the General Partner has
18
consented to such transfer) shall be void and ineffectual and shall not bind
the Partnership.
7.2 RIGHT OF FIRST REFUSAL.
(a) As long as Section 12 of the Shareholder Agreement or any
successor provision has not been terminated, such Section 12 shall govern
transfers of the interests of Limited Partners and shall supersede this
Section 7.2. Any Limited Partner other than Comprehensive Securities Systems,
Inc. ("a Broker") may transfer any portion of its Partnership interest to any
Affiliate of it without compliance with this Section 7.2. Comprehensive
Securities Systems, Inc. ("Employee Co.") shall not transfer any portion of
its Partnership interest to Affiliates except in accordance with the terms of
this Section 7.2.
(b) If a Limited Partner shall receive a bona fide offer in writing
(a "Bona Fide Offer") from a party which, in the case of Brokers only, is not
an Affiliate of such Limited Partner and which is financially responsible (a
"Prospective Purchaser") to purchase all and not less than all of the
Partnership interest of that Limited Partner for cash (or cash equivalents)
payable in full at closing, which Bona Fide Offer is subject to no
contingencies (other than those imposed by this Section 7.2) and such Limited
Partner is not in default under the Shareholder Agreement, this Agreement or
its License Agreement and desires to accept such Bona Fide Offer, then the
Limited Partner that received the Bona Fide Offer (the "Selling Limited
Partner"), in the manner set forth in this Section 7.2, shall first offer to
sell its Partnership interest to the other Limited Partners (the "Offerees")
for a consideration and on terms equivalent to those to which the Selling
Limited Partner would be entitled if it accepted the Bona Fide Offer. For the
purposes of this Agreement, the term Bona Fide Offer shall mean a written
offer which is honest in fact, not collusive and, to the best knowledge of a
Limited Partner receiving such offer, not a sham.
(c) The Selling Limited Partner shall give written notice (an "Offer
Notice") to each of the Offerees of its receipt of the Bona Fide Offer and
its offer to sell its Partnership interest at the price and on the material
terms set forth therein, enclosing with such Offer Notice a complete and
correct copy of the Bona Fide Offer setting forth all of the terms thereof.
(d) If an Offeree or any Affiliate of the Offeree that the Offeree
may designate shall desire to exercise the right to purchase pursuant to
subsection (b) of this Section 7.2 (an "Accepting Offeree"), then it shall do
so in accordance with the following provisions:
19
(i) such Accepting Offeree shall give written notice thereof
to the Selling Limited Partner and the other Offerees within 30 days
after the Offer Notice was given and, if an Affiliate of such Offeree
is to effect the purchase, the Offeree shall guarantee the
performance of such Affiliate;
(ii) each Accepting Offeree, except for Employee Co., that
gives notice of the exercise of the right to purchase shall be
obligated to purchase that portion of the Partnership interest being
offered by the Selling Limited Partner which is in the proportion
that its Sharing Ratio immediately prior to such purchase bears to
the aggregate Sharing Ratios of all Brokers who are then Limited
Partners, and if Employee Co. is an Accepting Offeree, it shall be
obligated to purchase, if at all, all of the Partnership interest of
the Selling Limited Partner, however, if Employee Co. is not the only
Accepting Offeree, it shall have no rights to purchase any portion of
the Project Interest of the Selling Limited Partner, except as
provided in clause (iv) below;
(iii) if not all of the Selling Limited Partner's Partnership
interest is committed for by Accepting Offerees pursuant to clause
(ii) above, the Selling Limited Partner shall give another written
notice (the "Second Offer Notice") only to the Accepting Offerees,
within 45 days after the Offer Notice was given, stating the amount
of its Partnership interest that remains uncommitted (the "Excess
Amount");
(iv) if any Accepting Offeree (including Employee Co.) is
willing to commit to purchase any of the Excess Amount (an "Excess
Accepting Offeree"), it shall give written notice to the Selling
Limited Partner within 60 days after the Offer Notice was given,
stating the additional Partnership interest it is willing to commit
to purchase, and if such commitments total more than the Excess
Amount, the Excess Amount shall be allocated for purchase among the
Excess Accepting Offerees in proportion to the respective Excess
Amounts they were willing to purchase, provided, however, that if all
the Excess Amount can be purchased by Brokers who are Excess
Accepting Offerees, then Employee Co., if it is an Excess Accepting
Offeree, shall not purchase any of the Excess Amount; and
(v) the closing of a purchase of a Selling Limited Partner's
interest pursuant to this Section 7.2(d) shall be held at a mutually
acceptable place on a mutually acceptable date not more than the
later of 60 days after the date the Offer Notice was given or 45 days
after the date the Second Offer Notice was given, if it was in fact
given; PROVIDED, HOWEVER, that if one or more Accepting Offerees fail
to tender its share of the purchase price therefor at the closing,
then
20
each of the nontendering Accepting Offerees shall lose its rights
under this Section 7.2(d) and the tendering Accepting Offerees shall
be provided an additional 30 days in which to tender payment for the
Selling Limited Partner's interest. At any such closing, the
Accepting Offerees shall tender payment to the Selling Limited
Partner, and the Selling Limited Partner shall assign to the
Accepting Offerees, the Partnership interest to be sold, free and
clear of all liens, claims and encumbrances (other than those
necessary to finance such sale), and shall execute such documents as
may be necessary to effectuate the sale.
(e) In the event that (i) no offer to sell made pursuant to Section
7.2(b) has been accepted on or prior to the 31st day after the Offer Notice
was given in accordance with Section 7(d)(i) above, (ii) if no Second Offer
Notice is given, the 60-day period referred to in Section 7.2(d)(v) (subject
to extension in accordance with Section 7.2(d)(v)) shall lapse without the
Accepting Offerees having tendered payment in accordance with Section 7(d)(i)
and (v) above, or (iii) the 45-day period referred to in Section 7.2(d)(v)
(subject to extension in accordance with Section 7.2 (d)(v)) shall lapse
without the Accepting Offerees having tendered payment (the first to occur of
the events referred to in clauses (i), (ii) and (iii) being herein referred
to as the "Free to Sell Date"), then the Selling Limited Partner shall have
the right to sell all but not less than all of its Partnership's interest to
the Prospective Purchaser at the price (or a greater price) and upon the terms
specified in the Bona Fide Offer, subject to the terms of the other
subsections of this Section 7.2. The Selling Limited Partner's right to sell
its Limited Partner's interest to the Prospective Purchaser pursuant to this
Section 7.2 shall expire and the full restrictions of this Section 7.2 shall
be reinstated in the event that the Prospective Purchaser has not purchased
such Partnership interest within 90 days after the Free to Sell Date.
(f) A Selling Limited Partner does not waive whatever claims or
remedies it may have in law or equity against an Accepting Offeree that
elects to purchase and wrongfully fails to so purchase the Selling Limited
Partner's interests. The Accepting Offerees that tender payment under the
circumstances described in Section 7.2(d)(v) do not waive whatever claims or
remedies they may have in law or equity against any nontendering Accepting
Offeree.
7.3 EFFECT OF TRANSFER. If a transfer of a Limited Partner's interest
has become effective pursuant to Sections 7.1 or 7.2, but the transferee is
not substituted as a Limited Partner pursuant to Section 7.4 hereof, the
transferee shall be entitled, as though a Limited Partner, to receive
Distributions in the manner provided in Article IV, but shall have no other
rights by virtue of
21
such transfer, and the transferor shall remain primarily liable for
Subsequent Capital Contributions hereunder. Unless otherwise agreed by such
transferee who does not become a substituted Limited Partner, such transferee
shall not be liable for the obligations of such Limited Partner but the right
of any such transferee to receive distributions or other payments shall be
subject to set-off to the same extent that such Limited Partner would have
been subject to set-off. Notwithstanding any other provisions of this
Agreement, the Partnership shall be entitled to treat the transferor of a
Limited Partner's interest as the absolute owner thereof, and shall incur no
liability by reason of distributions of cash or other property made in good
faith to such transferor, until such time as the transfer has been accepted
by the General Partner and registered on the books of the Partnership.
7.4 SUBSTITUTION OF LIMITED PARTNERS. A transferee of a Limited
Partner's interest shall have the right to be substituted as a Limited
Partner if and only if:
(a) The transferee delivers to the General Partner a written notice,
executed and acknowledged by the transferee and by the transferor, requesting
that the transferee be substituted as a Limited Partner;
(b) All Partners consent in writing to such substitution;
(c) The transferee executes, acknowledges and delivers to the General
Partner instruments in form and substance satisfactory to the General Partner
accepting and adopting the terms, provisions, appointments and agreements set
forth in this Agreement and assuming the obligations, if any, of the
transferor to the Partnership;
(d) The opinions, acknowledgements and assumptions referred to in
Section 7.1 are furnished to the General Partner; and
(e) The transferor and/or transferee agree to pay the out-of-pocket
costs incurred by the Partnership, including legal fees, in connection with
such substitution.
7.5 ACQUIT PARTNERSHIP. In the absence of compliance with the terms of
this Article and written notice to the Partnership of any transfer of a
Partnership interest, any payment to the assigning Partner shall acquit the
Partnership of liability to the extent of such payment to any other Person
who may have an interest in such payment by reason of a transfer by the
Partner.
22
7.6 ADDITIONAL LIMITED PARTNERS. Subject to Section 10 of the
Shareholder Agreement, additional Persons may be admitted to the Partnership
as Limited Partners and Partnership interests may be created and issued to
those Persons and to existing Partners if approved by the General Partner and
all of the Limited Partners on such terms and conditions as the General
Partner and the Limited Partners may determine at the time of admission. The
terms of admission or issuance must specify the Sharing Ratios applicable to
the new Partnership interests and to the existing Partners; the effect, if
any, on Capital Contributions of the Partners; and may provide for the
creation of different classes or groups of Limited Partners having different
rights, powers, and duties. The General Partner shall reflect the creation of
any new class or group in an amendment to this Agreement indicating the
different rights, powers, and duties, and such an amendment need be executed
only by the General Partner.
ARTICLE VIII
ASSIGNMENT, WITHDRAWAL AND SUBSTITUTION OF GENERAL PARTNER
8.1 ASSIGNMENT OF GENERAL PARTNER'S INTEREST.
(a) The General Partner may without any consent or approval, assign,
mortgage, pledge, encumber or otherwise dispose of any of such General
Partner's right to receive distributions or other payments with respect to
its Partnership interests from the Partnership, but such action shall not
cause the withdrawal of the General Partner nor cause the transferee to
become substituted as a General Partner, unless such withdrawal and
substitution is approved as required by this Article. The General Partner
shall remain liable for its obligations hereunder and, unless otherwise
agreed by such transferee who does not become a substituted General Partner,
such transferee shall not be liable for the obligations of such General
Partner or of the Partnership, but the right of any such transferee to
receive distributions or other payments shall be subject to set-off to the
same extent that such General Partner would have been subject to set-off.
(b) Any Person receiving all or part of the Partnership interest of a
General Partner as a result of transfer by operation of law, whether by
death, bankruptcy or otherwise, shall, subject to the terms of this
Agreement, receive only such General Partner's rights to receive
distributions or other payments from the Partnership, and shall not become a
substituted General Partner (unless substituted as a General Partner pursuant
to this Article). The Person receiving such Partnership interest shall have
the same status as a transferee under subsection (a).
23
8.2 WITHDRAWAL. A General Partner may not withdraw or retire from the
Partnership without the consent of all of the Limited Partners. Any General
Partner who with the consent of all of the Limited Partners withdraws or
retires shall cease to be a Partner as of the close of business on the last
day of the calendar month in which such consent is obtained.
8.3 SPECIAL LIMITED PARTNERS. Upon the occurrence of an Event of
Withdrawal, a General Partner with respect to which such event has occurred,
or his legal representative as the case may be, shall become a Special
Limited Partner. A Special Limited Partner shall have no responsibility for,
and no right to participate in, the management of the Partnership business,
but shall retain his rights with respect to his Capital Contributions, Net
Profits and Net Losses, and Distributions as if he had remained a General
Partner, subject to any set-off or other claim which the Partnership may have.
8.4 ADMISSION OF ADDITIONAL OR SUCCESSOR GENERAL PARTNER. A Person
shall be admitted or substituted as an additional or successor General
Partner of the Partnership only if each of the following conditions is
satisfied:
(a) the admission or substitution of such Person shall have been
consented to or ratified by all of the Partners excluding Special Limited
Partners under Section 8.3 hereof;
(b) such Person shall have accepted and agreed to be bound by the terms
and provisions of this Agreement, by executing a counterpart hereof, and such
other documents or instruments as may be required or appropriate in order to
effect the admission of such Person as a General Partner shall have been
filed for recording, and all other actions required by law in connection with
such admission shall have been performed;
(c) if such Person is a corporation, it shall have provided the
Partnership with evidence satisfactory to counsel for the Partnership of its
authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
(d) counsel for the Partnership shall have rendered an opinion to the
Partnership that the admission of such Person as a General Partner is in
conformity with the Act and that none of the actions taken in connection with
the admission of such Person is in violation of the Act, shall impair the
limited liability of the Limited Partners, shall cause the termination or
dissolution of the Partnership for tax purposes or otherwise, shall cause the
Partnership to be classified other than as a partnership, (including as a
publicly-traded partnership) for federal income tax purposes or shall violate
federal or state securities laws.
24
8.5 FAILURE TO ADMIT SUBSTITUTE GENERAL PARTNER. In the event a
substitute General Partner has not been admitted within a reasonable time
after the occurrence of an Event of Withdrawal with respect to the General
Partner (which "reasonable time" shall in no event be more than 90 days), and
as a result there is no General Partner then acting, the Partnership shall be
dissolved, terminated and liquidated as of such date, as provided in Article
X.
ARTICLE IX
ACCOUNTING
9.1 BOOKS AND RECORDS. The Partnership's books and records, a list of
the full name and last known business address of each Partner, copies of the
Partnership's federal, state and local tax returns and reports, if any, and
financial statements, for the three (3) most recent years, this Agreement and
all amendments thereto, and all Certificates, together with executed copies
of any power of attorney pursuant to which any Certificate has been executed,
shall be maintained at the office of the Partnership and shall be open to
inspection and, upon payment of costs, to copying by the Partners or their
duly authorized representatives at all reasonable times.
9.2 BOOKS OF ACCOUNT. The General Partner shall, for income tax
purposes, keep and maintain, or cause to be kept and maintained, adequate
books of account of the Partnership.
9.3 FISCAL YEAR. The fiscal year of the Partnership shall be the
calendar year.
9.4 TAX RETURNS. The Tax Matters Partner, at Partnership expense,
shall cause income tax returns for the Partnership to be prepared and timely
filed with the appropriate authorities.
9.5 TAX MATTERS PARTNER. The General Partner shall be the "tax matters
partner" of the Partnership pursuant to Section 6231(a) (7) of the Code. The
General Partner shall take such action as may be necessary to cause each
other Partner to become a "notice partner" within the meaning of section 6223
of the Code. The General Partner shall inform each other Partner of all
significant matters that may come to its attention in its capacity as tax
matters partner by giving notice thereof within seven days after becoming
aware thereof, and, within that time, shall forward to each other Partner
copies of all significant written communications it may receive in that
capacity. The General Partner may take an action contemplated by sections
6222 through 6232 of the Code only with the consent of the Limited Partner,
but
25
this sentence does not authorize the General Partner to take any action left
to the determination of an individual Partner under sections 6222 through 6232
of the Code.
9.6 REPORTS. The General Partner shall cause to be prepared and
delivered to each Partner, within forty-five (45) days after the expiration
of each fiscal quarter of the Partnership, at Partnership expense, unaudited
financial statements (balance sheet, statement of income or loss and
statement of cash flows) prepared in accordance with generally accepted
accounting principles, except as noted therein, and within ninety (90) days
after the expiration of each fiscal year of the Partnership, at Partnership
expense, (a) Partnership information necessary for the preparation of the
Partners' income tax returns (including a copy of the Partnership's federal,
state and local income tax returns, if any) and (b) annual audited financial
statements (balance sheet, statement of income or loss and statement of cash
flows) prepared in accordance with generally accepted accounting principles
consistently applied, accompanied by a report of a nationally recognized firm
of independent public accountants engaged at the direction of the Executive
Committee of the Board of Directors of the General Partner containing the
favorable opinion of such accountants to that effect. The officers of the
Partnership shall also cause to be prepared annual summaries of Partnership
operations, and such other information on the Partnership's operations and
conditions as the Executive Committee of the Board of Directors of the
General Partner deems appropriate. Upon reasonable request, such information
shall be available for review by any Partner.
ARTICLE X
TERMINATION AND DISSOLUTION
10.1 DISSOLUTION. The Partnership shall be dissolved upon the
earliest to occur of the following:
(a) The occurrence of an Event of Withdrawal unless at the time
there is at least one other General Partner and all other General Partners
determine to carry on the business of the Partnership.
(b) The expiration of the term of the Partnership.
(c) A dissolution of the Partnership at the direction of the
General Partner, subject to Section 6.4 hereof.
(d) Written consent of all Partners.
26
(e) Entry of a decree of judicial dissolution under Colorado
Statutes, Section 7-62-802.
10.2 TERMINATION. Upon dissolution, the Partnership shall be wound
up and terminated unless, and in the event the dissolution is caused by the
occurrence of an Event of Withdrawal with respect to the General Partner,
within 90 days after the occurrence of such Event of Withdrawal, all Partners
agree in writing to continue the business of the Partnership and to the
admission of one or more additional General Partners if necessary or desired
to continue the business of the Partnership. Expenses incurred in the
reformation or attempted reformation of the Partnership shall be deemed
expenses of the Partnership.
10.3 DISTRIBUTION OF ASSETS. Upon a dissolution of the Partnership,
unless it is continued pursuant to Section 10.2, the General Partner (or, if
there is no General Partner then remaining such other Person(s) designated by
the Limited Partners) shall take full account of the Partnership assets and
liabilities, shall liquidate the assets as promptly as is consistent with
obtaining the fair value thereof, and shall apply and distribute the proceeds
therefrom in the following order:
(a) To the payment of the expenses of liquidation and the debts and
liabilities of the Partnership (other than any loans or advances that may
have been made by the Partners to the Partnership);
(b) To the setting up of any reserves which the General Partner may
deem necessary or appropriate for any anticipated obligations or
contingencies of the Partnership or of the General Partner arising out of or
in connection with the operation or business of the Partnership. Such
reserves may be paid over by the General Partner to an escrow agent or
trustee selected by the General Partner to be disbursed by such escrow agent
or trustee in payment of any of the aforementioned obligations or
contingencies and, if any balance remains at the expiration of such period
as the General Partner shall deem advisable, to be distributed by such escrow
agent or trustee in the manner hereinafter provided;
(c) To the repayment of any loans or advances which may have been
made by any of the Partners to the Partnership, but if the amount available
for such repayment shall be insufficient, then pro rata on account thereof;
and
(d) To the Partners in accordance with their positive capital
accounts and in accordance with Section 1.704-1(b)(2)(ii)(b)(2) of the
Treasury Regulations.
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Upon liquidation of any Partner's interest in the Partnership, liquidating
distributions shall be made to such Partner in accordance with positive
capital accounts and in accordance with Section 1.704-1(b)(2)(ii)(b)(2) of
the Treasury Regulations. If at the time of liquidation the General Partner
shall determine that an immediate sale of part or all of the Partnership
assets would cause undue loss to the Partners, the General Partner may, in
order to avoid loss, either defer liquidation and retain the assets or
distribute the assets to the Partners in kind. In the event that the General
Partner elects to distribute such assets in kind, the assets shall first be
assigned a value and the unrealized appreciation or depreciation in value of
the assets shall be allocated to the Partner's capital accounts, as if such
assets had been sold and the gain or loss allocated in the manner described
in Article IV, and such assets shall then be distributed to the Partners in
accordance with their positive capital accounts.
10.4 DEFICIT CAPITAL ACCOUNTS. The Limited Partners have no
liability to the Partnership, to the other Partners, or to the creditors of
the Partnership on account of any deficit balance in the Limited Partners'
capital account.
If a General Partner has a deficit balance in his capital account at
the time of liquidation of the Partnership or the liquidation of his interest
to the Partnership (after crediting allocations of income and debiting
allocations of loss to its capital account), the General Partner must pay to
the Partnership the amount of the deficit balance. This amount, upon
liquidation of the Partnership, shall be paid to the creditors of the
Partnership due such amounts or distributed to the other Partners in
accordance with his positive capital account balance and in accordance with
Section 1.704-1(b)(2)(ii)(b)(3) of the Treasury Regulations.
This payment must be made in immediately available funds. This
payment must be made no later than the end of the taxable year of the
liquidation of its interest in the Partnership (or, if later, within ninety
(90) days after the date of the liquidation).
ARTICLE XI
MISCELLANEOUS
11.1 SIGNATURES; AMENDMENTS.
(a) Each Limited Partner and General Partner shall become a
signatory hereto by signing, directly or by an attorney-in-fact, this
Agreement and such other instrument or instruments, and in such manner and at
such time, as the General Partner shall
28
determine. By so signing, each Limited Partner and General Partner, as the
case may be, shall be deemed to have adopted, and to have agreed to be bound
by, all the provisions of this Agreement, as amended from time to time;
provided, however, that no such counterpart shall be binding until it shall
have been accepted by the General Partner.
(b) Except as provided in subsection (c) below, any amendment
hereto shall be authorized and adopted upon the execution by all the Partners
hereto.
(c) In making any amendments, there shall be prepared and filed by
the General Partner for recording such documents and certificates as shall be
required to be prepared and filed under the Act and under the laws of any
other jurisdictions under which the Partnership is then formed or qualified.
(d) Any provision to the contrary herein notwithstanding, the
General Partner may, without the consent of the Limited Partners, make any
technical changes to the provisions of this Agreement to conform the
allocations set forth in Article Four hereof to the requirements of
regulations under Code Sections 704(b) and 704(c). Any amendment made by the
General Partner in accordance with this Section 11.1(d), (i) shall be made
pursuant to appropriate advice of counsel, and (ii) shall be deemed to have
been made pursuant to the fiduciary obligations of the General Partner to the
Partnership and the Limited Partners.
11.2 NOTICES. Notices to the Partners shall be sent to the addresses
set forth in Section 1.5. Any Partner may require notices to be sent to a
different address by giving notice to the other Partners in accordance with
this Section 11.2. All notices, requests, demands, consents and other
communications required or permitted hereunder shall be by telecopy or in
writing and shall be deemed to have been duly given and received when
personally delivered to an officer of each party hereto, or transmitted by
telecopier, confirmation received, to the telephone number specified below,
or five business days after such notice is mailed, certified mail return
receipt requested, first-class postage prepaid, or the next day after such
notice is sent by commercial courier.
11.3 WAIVER OF PARTITION. No Partner or successor in interest to any
Partner may have any property of the Partnership partitioned, or, except as
provided by applicable law, file a complaint or institute any proceeding at
law or in equity to have the property partitioned, and each Partner for itself,
its successors, representatives, and assigns, hereby waives any right to proceed
under any applicable law or otherwise to partition any Partnership property. Any
creditor of a Partner shall have
29
recourse only against such Partner's interest in the Partnership, but such
creditor shall not have any recourse against the property of the Partnership.
11.4 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties and supersedes any prior agreement or
understanding among them representing the subject matter of this Agreement.
11.5 HEADINGS. All article and section headings in this Agreement
are for convenience of reference only and shall not control or alter the
meaning of this Agreement as set forth in this text.
11.6 CERTAIN PROVISIONS. If the operation of any provision of this
Agreement would contravene the provisions of the Revised Uniform Limited
Partnership Act as in effect in the State of Colorado, or would result in the
imposition of general liability on any Limited Partner, such provision shall
be void and ineffectual.
11.7 SEPARABILITY. Each provision of this Agreement shall be
considered separable and if, for any reason, any provision or provisions
hereof are determined to be invalid and contrary to existing or future law,
such invalidity shall not impair the operation of or affect those portions of
this Agreement that are valid.
11.8 PRONOUNS AND PLURALS. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular, or
plural as the identity of the person or persons may require.
11.9 BINDING AGREEMENT. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto, their successors, heirs,
legatees, devisees, assigns, legal representatives, executors and
administrators, except as otherwise provided herein.
11.10 COUNTERPARTS. This Agreement may be executed in sereval
counterparts, and all so executed shall constitute one agreement, binding on
all the parties hereto, even though all parties are not signatory to the
original or the same counterpart. Any counterpart of either this Agreement or
the Certificate, which has attached to it separate signature pages, which
altogether contain the signatures of all Partners, shall for all purposes be
deemed a full executed instrument. Each party to the Agreement agrees that it
will be bound by its own telecopied signature and that it accepts the
telecopied signatures of the other parties to this Agreement.
30
11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF COLORADO
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO
AGREE TO SUBMIT TO THE JURISDICTION OF ANY FEDERAL COURT IN THE STATE OF
COLORADO, AND TO VENUE IN THE CITY AND COUNTY OF DENVER FOR ALL MATTERS
CONCERNING THE INTERPRETATION, CONSTRUCTION OR ENFORCEMENT OF THIS AGREEMENT
OR FOR ANY OTHER MATTERS CONCERNING OR ARISING OUT OF THIS AGREEMENT.
11.12 NO BENEFIT TO THIRD PARTIES. The provisions of this Agreement
shall not be construed for the benefit of or enforceable by a person not a
party hereto, including but not limited to any creditor of any Partner or any
of their affiliates.
11.13 COMPLIANCE WITH SECURITIES LAWS. No Partnership interest has
been or may be registered under the Securities Act of 1933, as amended, or any
state securities law, without the consent of the General Partner. A Partner
may not transfer all or any part of his interest, except upon compliance with
the applicable federal and state securities laws. The General Partner shall
have no obligation to register any Partner's interest under the Securities
Act of 1933, as amended, or any state securities law, or to make any
exemption therefrom available to any Partner.
11.14 LIMITATION ON USE IN CASE OF DISTRIBUTION OF SOFTWARE. To the
extent that any of the Partners receive rights to any of the assets of the
Partnership by distribution in liquidation or otherwise, such Partners agree
that they will be subject to and shall comply with the limitations on the use
of Partnership software and the confidentiality provisions contained herein,
subject however to the terms of any other agreement the Partners may enter
into with the Partnership or among themselves which shall govern. The terms of
this Section 11.14 shall survive any termination of this Agreement. Each
Partner or Affiliate of the Partner shall have a worldwide, personal,
nontransferable, and nonexclusive right to reproduce, modify, translate and
use the software. The software shall be used only for the processing of the
brokerage business of the Partner or an Affiliate of the Partner, including,
but not limited to, correspondent business on either a fully disclosed or
omnibus basis, and shall not be used in the operation of a service bureau or
sold or otherwise made available for use by a non-Affiliated entity. The
software and any modifications, changes, enhancements, conversions, upgrades
or additions made to the software, made by the Partnership or a third party
on the Partnership's behalf, shall be the sole and exclusive property of the
Partnership, including all applicable rights to patents, copyrights,
trademarks and trade secrets inherent therein and appurtenant thereto. Any
modifications, changes, enhancements, conversions, upgrades or additions
made to the software by a Partner or an Affiliate of the Partner or a third
party on the
31
Partner's or an Affiliate's behalf ("Permitted Modifications") shall be the
sole and exclusive property of such Partner or Affiliate, including all
applicable rights to patents, copyrights, trademarks and trade secrets
inherent therein and appurtenant thereto and the Partner or its Affiliate
shall have the right to use the Permitted Modifications without charge
pursuant to the terms of the License Agreement. Notwithstanding the above,
nothing herein shall prevent the making of modifications, changes,
enhancements, upgrades or additions or developing any new software products
by a Partner which produce the same or similar results, data, reports or
information produced by the Permitted Modifications. Each Partner shall not
sell, transfer, publish, disclose, display or otherwise make available to
others (except for Affiliates) any source code, object code, documentation or
other material relating to the software. Each Partner shall obtain agreements
from its employees and the Affiliates' employees maintaining confidentiality
of, and prohibiting unauthorized use of disclosure of, the source code or
object code of the software or of any portion of the software, or any of the
algorithms or logic contained therein. Without limitation of the foregoing, a
Partner shall advise the other Partners immediately in the event that the
Partner learns or has reason to believe that any person who has had access to
the software, or any portion thereof, has violated or intends to violate the
terms of this Section; and the Partner will (at such Partner's own expense),
cooperate with the other Partners in seeking injunctive or other equitable
relief against such Person.
11.15 CONFIDENTIALITY. Each Partner acknowledges that the software
contains proprietary trade secrets and hereby agrees to maintain the
confidentiality of the software in a manner using at least as great a degree
of care as the manner used to maintain the confidentiality of the Partner's
own most confidential information. Each Partner acknowledges that the
disclosure of any aspect of the software, of any of the confidential
information referred to herein or any information which, at law or equity,
ought to remain confidential within the Partner and any of its Affiliates,
will give rise to irreparable injury to the Partnership or the Partners as a
group inadequately compensable in damages. Accordingly, the Partnership or
any Partner may seek or obtain injunctive relief against the breach or
threatened breach of any of the foregoing undertakings, in addition to any
other legal remedies which may be available, and each Partner hereby consents
to the obtaining of such injunctive relief. The terms of this Section 11.15
shall survive any termination of this Agreement.
32
IN WITNESS WHEREOF, each of the parties hereto has executed and sworn to
this Agreement as of the date first above written.
GENERAL PARTNER:
CSS MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: President
--------------------
LIMITED PARTNERS:
BHC SECURITIES, INC.
By:/s/
-----------------------
Title:
--------------------
COMPREHENSIVE SECURITIES
SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Title: President
--------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Title:
----------------------
▇▇▇▇ ▇▇▇▇▇, INC.
By: ▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Title:
----------------------
33
▇▇▇▇▇▇▇▇ & COMPANY SECURITIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: C.F.O.
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
By:/s/ ▇▇▇▇ Preppensen
---------------------------
Title: Sr V.P. Sec/Treas
------------------------
SOUTHWEST SECURITIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Title: CEO
-----------------------
▇▇▇▇▇▇▇▇ INC.
By: /s/ Zoe ▇▇▇ ▇▇▇▇▇
---------------------------
Title: Sr VP
------------------------
TRANSTERRA CO.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: Vice President
------------------------
34
