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EXHIBIT
3.23
AGREEMENT OF LIMITED
PARTNERSHIP
OF
CHAPARRAL STEEL
MIDLOTHIAN, LP
TABLE OF
CONTENTS
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Page
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| ARTICLE 1 |
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DEFINITIONS;
REFERENCES |
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1 |
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1.1
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Definitions |
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1 |
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1.2
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References |
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7 |
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| ARTICLE
2 |
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FORMATION,
NAME, PURPOSE, REGISTERED OFFICE, REGISTERED AGENT AND
TERM |
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7 |
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2.1
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Formation
of the Limited Partnership |
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7 |
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2.2
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Partnership Name |
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8 |
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2.3
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Purpose |
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8 |
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2.4
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Principal
and Registered Office |
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8 |
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2.5
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Term of
the Partnership |
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8 |
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| ARTICLE
3 |
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CAPITAL
CONTRIBUTIONS; PARTNER LOANS |
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8 |
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3.1
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Initial
Capital Contributions of General Partner |
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8 |
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3.2
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Initial
Capital Contribution of Limited Partner |
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8 |
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3.3
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Authorization of Partner Loans |
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9 |
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3.4
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Additional Capital Contributions |
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9 |
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| ARTICLE
4 |
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DISTRIBUTIONS
AND ALLOCATIONS |
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9 |
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4.1
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Distribution of Net Cash Flow |
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9 |
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4.2
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Distribution of Net Proceeds of a Capital
Transaction |
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9 |
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4.3
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Return of
and Interest on Capital Contributions |
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9 |
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4.4
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Payments |
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9 |
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4.5
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In-Kind
Distributions |
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10 |
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4.6
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Allocations of Net Profit and Net Loss |
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10 |
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4.7
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Partnership Minimum Gain Chargeback |
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11 |
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4.8
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Minimum
Gain Chargeback for Partner Nonrecourse Debt |
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11 |
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4.9
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Qualified
Income Offset |
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12 |
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4.10
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Limit on
Loss Allocations |
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12 |
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4.11
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Net Loss
from Partner Nonrecourse Debt |
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12 |
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4.12
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Nonrecourse Deductions |
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12 |
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4.13
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Code
Section 754 Adjustments |
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12 |
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4.14
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Reversal
of Mandatory Allocations |
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12 |
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TABLE OF
CONTENTS
(continued)
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Page
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4.15
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Compliance with Code |
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12 |
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4.16
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Tax
Allocations — Code Section 704(c) |
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13 |
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4.17
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Allocation on Transfer |
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13 |
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4.18
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Minimum
Interest of General Partner |
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13 |
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ARTICLE 5
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CAPITAL
ACCOUNTS |
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13 |
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5.1
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Capital
Accounts |
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13 |
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5.2
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Adjustment for In-Kind Distributions |
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14 |
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5.3
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Property
Revaluation |
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14 |
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5.4
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Interpretation |
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14 |
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5.5
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Obligation to Repay or Restore |
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15 |
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5.6
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Tax
Elections |
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15 |
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| ARTICLE 6 |
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OPERATING
EXPENSES |
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15 |
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6.1
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Operating
Expenses and Reimbursements |
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15 |
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| ARTICLE 7 |
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ADMISSION OF
PARTNERS; ASSIGNMENT OF INTERESTS |
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16 |
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7.1
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Admission
of Additional Partners |
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16 |
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7.2
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Assignment or Transfer of Partnership Interests |
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16 |
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| ARTICLE 8 |
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MANAGEMENT
DUTIES AND RESTRICTIONS |
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16 |
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8.1
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Powers of
General Partner |
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16 |
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8.2
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Authority
as to Third Persons |
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19 |
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8.3
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Compensation and Expenses of the General Partner |
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19 |
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8.4
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Covenants
of the General Partner |
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20 |
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8.5
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Limitations on Authority |
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20 |
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8.6
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No
Withdrawal From Partnership |
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20 |
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| ARTICLE 9 |
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DISSOLUTION OF
THE PARTNERSHIP |
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20 |
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9.1
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Dissolution |
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20 |
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9.2
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Continuation |
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20 |
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9.3
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Events
Affecting a Limited Partner |
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20 |
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9.4
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Liquidation Procedures |
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21 |
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9.5
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Termination |
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22 |
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9.6
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No
Petition for Dissolution |
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22 |
-ii-
TABLE OF
CONTENTS
(continued)
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Page
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9.7
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Compliance with Timing Requirements of
Treasury Regulations
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22 |
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ARTICLE 10
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FINANCIAL ACCOUNTING AND
REPORTS
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22 |
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10.1
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Financial and Tax Accounting and
Reports
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22 |
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10.2
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Valuation
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23 |
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10.3
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Supervision; Inspection of
Books
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23 |
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10.4
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Quarterly Reports
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23 |
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10.5
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Annual Report; Financial
Statements
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23 |
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10.6
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Consent in Lieu of Meeting
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23 |
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10.7
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Withholding
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23 |
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ARTICLE 11
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OTHER PROVISIONS
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23 |
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11.1
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Execution and Filing of
Documents
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23 |
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11.2
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Other Instruments and Acts
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24 |
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11.3
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Binding Agreement
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24 |
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11.4
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Governing Law
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24 |
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11.5
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Notices
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24 |
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11.6
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Power of Attorney
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24 |
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11.7
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Amendment
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25 |
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11.8
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Entire Agreement
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25 |
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11.9
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Titles; Subtitles
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25 |
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11.10
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Exculpation
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25 |
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11.11
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Indemnification of the General
Partner
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26 |
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11.12
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Limitation of Liability of the Limited
Partners
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26 |
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11.13
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Ambiguities
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26 |
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11.14
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No Right to Partition
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26 |
-iii-
AGREEMENT OF LIMITED
PARTNERSHIP
OF
CHAPARRAL STEEL
MIDLOTHIAN, LP
THIS AGREEMENT OF LIMITED
PARTNERSHIP, made and entered into as of this 29th day of February,
1996, by and between Chaparral Steel Texas, Inc., a Delaware
corporation (the “General Partner”) and Chaparral Steel
Company, a Delaware corporation (the “Limited
Partner”).
NOW, THEREFORE, the General
Partner and the Limited Partner hereby agree to the terms and
conditions of this Agreement of Limited Partnership as
follows:
ARTICLE 1
DEFINITIONS;
REFERENCES
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1.1 |
Definitions. Unless the context requires otherwise, the
following terms shall have the meanings specified in this Section
1.1: |
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1.1.1 |
Act: The Delaware Revised Uniform Limited Partnership
Act. |
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1.1.2 |
Additional Capital Contributions: The additional capital
contributions described in Section 3.4. |
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1.1.3 |
Adjusted Capital Account Deficit: With respect to any Partner,
the deficit balance, if any, in such Partner’s Capital
Account as of the end of the relevant taxable year, after giving
effect to the following adjustments: |
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(a) |
Credit to such Capital Account any amounts which such Partner
(1) is obligated to restore to the Partnership upon liquidation of
its interest in the Partnership (or which is so treated pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c)) pursuant to the terms of
this Agreement or under state law or (2) is deemed to be obligated
to restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (3) the
Partner’s share (as determined under Code Section 752) of any
recourse indebtedness of the Partnership to the extent that such
indebtedness could not be repaid out of the Partnership’s
assets if all of the Partnership’s assets were sold at their
respective Book Values as of the end of the Fiscal Year or other
period and the proceeds from the sales were used to pay the
Partnership’s liabilities; and |
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(b) |
Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)
(ii)(d)(6) of the Regulations. |
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The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith. For purposes of clause (a)(3) above, the
amounts computed pursuant to clause (a)(1) above for each Partner
shall be considered to be proceeds from the sale of the assets of
the Partnership to the extent such amounts would be available to
satisfy (directly or indirectly) the indebtedness specified in
clause (a)(3). |
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1.1.4 |
Affiliate: With respect to any Person, a Person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with the Person in
question. As used herein, the term “control” means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through ownership of voting securities or interests, by contract,
or otherwise. |
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1.1.5 |
Agreement: This Agreement of Limited Partnership of Chaparral
Steel Midlothian, LP and any amendments hereto. |
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1.1.6 |
Bankruptcy: A Person shall be deemed bankrupt if: |
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(a) |
any proceeding is commenced against such Person as
“debtor” for any relief under bankruptcy or insolvency
laws, or laws relating to the relief of debtors, reorganizations,
arrangements, compositions, or extensions and such proceeding is
not dismissed within sixty (60) days after such proceeding has
commenced, or |
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(b) |
such Person commences any proceeding for relief under
bankruptcy or insolvency laws or laws relating to the relief of
debtors, reorganizations, arrangements, compositions, or
extensions. |
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1.1.7 |
Book Value: With respect to any asset, the asset’s
adjusted basis for federal income tax purposes, except as
follows: |
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(a) |
the initial Book Value of any asset contributed (or deemed
contributed under Regulations Section 1.708-1(b)(1)(iv)) by a
Partner to the Partnership shall be the asset’s gross fair
market value at the time of the contribution; |
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(b) |
the Book Value of all Partnership assets shall be adjusted to
equal their respective gross fair market values, as determined by
the General Partner in its reasonable judgment: |
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(i) |
if the General Partner reasonably determines an adjustment is
necessary or appropriate to reflect the relative economic interests
of the Partners in the Partnership as of (1) the |
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acquisition of an additional interest in the Partnership by any
new or existing Partner in exchange for more than a de minimis
capital contribution, or (2) the distribution by the Partnership to
a Partner of more than a de minimis amount of Partnership property
as consideration for an interest in the Partnership;
and |
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(ii) |
as of the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); |
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(c) |
the Book Value of any Partnership asset distributed to any
Partner will be the gross fair market value of the asset on the
date of distribution; and |
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(d) |
the Book Values of Partnership assets will be increased or
decreased to reflect any adjustment to the adjusted basis of the
assets under Code Sections 734(b) or 743(b), but only to the extent
that the adjustment is taken into account in determining Capital
Accounts under Regulations Section 1.704-1(b)(2)(iv)(m), provided
that Book Values will not be adjusted hereunder to the extent that
the General Partner determines that an adjustment under clause (b)
is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment under this clause
(d). |
After the Book Value of any
asset has been adjusted under clause (a), clause (b) or clause (d)
above, Book Value will be adjusted by the Depreciation taken into
account with respect to the asset for purposes of computing Net
Profit and Net Loss.
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1.1.8 |
Capital Account: The capital account of a Partner established
and maintained in accordance with Section 5.1. |
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1.1.9 |
Capital Contributions: With respect to any Partner, the amount
of money actually contributed (or deemed contributed pursuant to
Regulations Section 1.704-1(b)(2)(iv)(c)) to the Partnership and
the initial Book Value of any property (other than money)
contributed to the Partnership with respect to the interest in the
Partnership held by that Partner (net of any liabilities secured by
such property that the Partnership is considered to assume or to
take subject to Code Section 752). Any reference in this Agreement
to the Capital Contribution of a Partner will include a Capital
Contribution made by any prior Partner with respect to the
Partnership interest of the Partner. |
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1.1.10 |
Capital Transaction: The sale, exchange or other disposition of
all or any portion of the property of the Partnership other than in
the ordinary course of business of the Partnership. Capital
Transactions include the financing |
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or refinancing of Partnership property which creates excess
funds not needed for Operations and which funds, in the opinion of
the General Partner, are available for distribution to the
Partners. |
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1.1.11 |
Code: The United States Internal Revenue Code of 1986, as now
existing or hereafter amended. References to sections of the Code
include successor provisions to those sections. |
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1.1.12 |
Depreciation: For each taxable year or other period, an amount
equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for the year or other
period, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of
the year or other period, Depreciation will be an amount which
bears the same ratio to the beginning Book Value as the federal
income tax depreciation, amortization or other cost recovery
deduction for the year or other period bears to the beginning
adjusted tax basis, provided that if the federal income tax
depreciation, amortization, or other cost recovery deduction for
the year or other period is zero, Depreciation will be determined
with reference to the beginning Book Value using any reasonable
method selected by the General Partner. |
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1.1.13 |
Fiscal Year: The period commencing on June 1 of each year and
ending on May 31 of such year. |
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1.1.14 |
General Partner: Chaparral Steel Texas, Inc., a Delaware
corporation. |
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1.1.15 |
Gross Income: For each Fiscal Year or other period, an amount
equal to the Partnership’s gross income as determined for
federal income tax purposes for such Fiscal Year or period but
computed with the adjustments specified in Section 1.1.20(a) and
(c). |
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1.1.16 |
Initial Capital Contributions: The Capital Contributions of the
General Partner made pursuant to Section 3.1 and the Limited
Partners made pursuant to Sections 3.2 and 3.3. |
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1.1.17 |
Limited Partners: Chaparral Steel Company, a Delaware
corporation, the transferees pursuant to the Initial Transfer and
Subsequent Transfer as defined in Section 7.2.2 hereof, and any
other Person who is admitted to the Partnership as a Limited
Partner and shown as a Limited Partner on the books and records of
the Partnership. |
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1.1.18 |
Net Cash Flow: All cash funds from operations of the
Partnership on hand or on deposit from time to time after (i)
payment of all operating expenses payable as of the date in
question, (ii) provision for payment of all outstanding and unpaid
Partnership obligations due and payable as of the date in question
or within sixty (60) days thereafter, and (iii) the establishment
of such reasonable reserves as the General Partner, in its sole
discretion, deems appropriate for the operating needs of the
Partnership. “Net Cash Flow” shall not include or
reflect any proceeds received or expenses incurred in connection
with a Capital Transaction. |
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1.1.19 |
Net Proceeds of a Capital Transaction: The net proceeds
received by the Partnership in connection with a Capital
Transaction after payment of all costs and expenses incurred by the
Partnership in connection with such Capital Transaction, including,
without limitation, brokers’ commissions, loan fees, other
closing costs, the cost of any alteration, improvement, restoration
or repair of Partnership assets necessitated by or incurred in
connection with such Capital Transaction, any reserves that the
General Partner believes in good faith should be established and
the payment of any loans owed by the Partnership to any of the
Partners, plus any other loans that should be appropriately paid,
as determined by the General Partner in its reasonable
discretion. |
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1.1.20 |
Net Profit and Net Loss: For each Fiscal Year or other period,
an amount equal to the Partnership’s taxable income or loss
for such Fiscal Year or period, determined in accordance with Code
Section 703(a) (for this purpose, all items of income, gain, loss
or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss) with
the following adjustments: |
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(a) |
any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net
Profit or Net Loss shall be added to such taxable income or
loss; |
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(b) |
any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
under Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise
taken into account in computing Net Profit or Net Loss shall be
subtracted from such taxable income or loss; |
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(c) |
gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Book Value of such property notwithstanding that the Book Value of
such asset differs from its adjusted tax basis; |
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(d) |
gain or loss resulting from any adjustment pursuant to Section
1.1.7(b) shall be taken into account as gain or loss from
disposition of the asset for purposes of computing Net Profit or
Net Loss hereunder; |
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(e) |
gain or loss resulting from any adjustment attributable to an
in-kind distribution of assets to any Partner pursuant to Sections
5.2 shall be taken into account as gain or loss from disposition of
the asset for purposes of computing Net Profit or Net Loss
hereunder; |
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(f) |
in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing taxable income
or loss, there shall be taken into account Depreciation for such
Fiscal Year or other period as determined under Regulations Section
1.704-1(b)(2)(iv)(g)(3); |
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(g) |
the amount of any Gross Income specially allocated to the
Partners pursuant to Sections 4.7 through 4.9 and 4.14 shall not be
included as income or revenue; and |
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(h) |
any amount allocated pursuant to Sections 4.11 through 4.14
shall not be included as a gain, loss or deduction. |
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1.1.21 |
Net Profit and Net Loss from Capital Transactions: Net Profit
and Net Loss including only those items of income, gain, loss and
deduction relating to Capital Transactions. |
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1.1.22 |
Net Profit and Net Loss from Operations: Net Profit and Net
Loss excluding those items of income, gain, loss and deduction
related solely to Capital Transactions. |
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1.1.23 |
Nonrecourse Deductions: Losses, deductions or Code Section
705(a)(2)(B) expenditures attributable to Nonrecourse Liabilities
of the Partnership. The amount of Nonrecourse Deductions for any
Fiscal Year or other period shall be determined in accordance with
the provisions of Regulations Section 1.704-2(c). |
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1.1.24 |
Nonrecourse Liability: A nonrecourse liability as defined in
Regulations Section 1.752-1(a)(2). |
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1.1.25 |
Operations: All operations and activities of the Partnership
other than those related to or consisting of a Capital
Transaction. |
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1.1.26 |
Partner: A Partner of the Partnership, including the General
Partner and the Limited Partner. |
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1.1.27 |
Partner Nonrecourse Debt: Any Nonrecourse Liability of the
Partnership for which any Partner or related person bears the
economic risk of loss under Regulations Section
1.752-2. |
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1.1.28 |
Partner Nonrecourse Debt Minimum Gain: The minimum gain
attributable to Partner Nonrecourse Debt as determined under
Regulations Section 1.704-2(i)(3). |
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1.1.29 |
Partner Nonrecourse Deductions: Partnership losses, deductions
or Code Section 705(a)(2)(B) expenditures attributable to a
particular Partner Nonrecourse Debt. The amount of Partner
Nonrecourse Deductions for any Fiscal Year or other period shall be
determined in accordance with the provisions of Regulations Section
1.704-2(i)(2). |
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1.1.30 |
Partnership: Chaparral Steel Midlothian, LP, a Delaware limited
partnership. |
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1.1.31 |
Partnership Certificate: The certificate of limited partnership
of the Partnership filed in conformance with the Act. |
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1.1.32 |
Partnership Minimum Gain: The amount computed under Regulations
Section 1.704-2(d)(1) with respect to the Partnership’s
Nonrecourse Liabilities. |
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1.1.33 |
Partnership Percentage or Percentages: The percentages of the
Partners as follows: |
General Partner 1%
Limited Partner
99%
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1.1.34 |
Partnership Term: The period of duration of the Partnership, as
set forth in Section 2.5. |
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1.1.35 |
Person: Any individual, partnership, corporation, trust or
other legal entity. |
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1.1.36 |
Regulations: The Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding
regulations). |
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1.1.37 |
Tax Matters Partner: The General Partner. |
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1.1.38 |
Transfer: Any sale, assignment, transfer, lease or other
disposal of property, including without limitation, an interest in
the Partnership. |
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1.2 |
References. Unless otherwise specified herein, references in
this Agreement to “Section,” “Subsection,”
“Article,” or “Exhibit” refer to the
sections, subsections, articles, or exhibits in this
Agreement. |
ARTICLE 2
FORMATION, NAME, PURPOSE,
REGISTERED OFFICE,
REGISTERED AGENT AND
TERM
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2.1 |
Formation of the Limited Partnership. The General Partner and
the Limited Partner hereby form the Partnership as a limited
partnership pursuant to and in accordance with the provisions of
the Act. |
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2.2 |
Partnership Name. The business of the Partnership will be
conducted under the name Chaparral Steel Midlothian, LP or such
other name or names as the General Partner may
determine. |
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2.3 |
Purpose. The purpose of the Partnership is to (i) manufacture
and market steel products; (ii) own, manage, operate, mortgage,
sell and otherwise deal with the assets of the Partnership; and,
(iii) engage in such other activities as the General Partner shall
deem appropriate, to the extent such activities may be carried on
under applicable law and are not prohibited by the terms and
provisions of this Agreement. |
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2.4 |
Principal and Registered Office. The principal office of the
Partnership is at 300 Ward Road, Midlothian, Texas 76065. The
General Partner has a business office at the Partnership’s
principal office. The registered office of the Partnership is at
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801 and The Corporation Trust Center is the registered agent of
the Partnership. The General Partner may change the principal or
registered office or registered agent of the Partnership from time
to time. The General Partner may establish, maintain and abandon
one or more additional places of business for the
Partnership. |
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2.5 |
Term of the Partnership. The term of the Partnership shall
commence upon the filing and recording of the Partnership
Certificate, and shall continue until December 31, 2046, unless
earlier terminated pursuant to the terms of this
Agreement. |
ARTICLE 3
CAPITAL CONTRIBUTIONS;
PARTNER LOANS
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3.1 |
Initial Capital Contributions of General Partner. Upon the
formation of the Partnership, the General Partner has contributed
$10.00 to the Partnership. Following the formation the General
Partner shall contribute one percent (1%) of the manufacturing and
operating assets previously held by Chaparral Steel Company (to
consist of cash and receivables) to the Partnership. The General
Partner shall not otherwise be required to make additional
contributions to the Partnership except as provided in Sections 3.4
and 5.5. |
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3.2 |
Initial Capital Contribution of Limited Partner. Upon the
formation of the Partnership, the Limited Partner has contributed
$990.00 to the Partnership. Following the formation Chaparral Steel
Company shall convey to the Partnership as a contribution on behalf
of the Limited Partner ninety-nine percent (99%) of the
manufacturing and operating assets of Chaparral Steel Company. Such
conveyance shall be in lieu of a conveyance to Chaparral Steel
Holdings, Inc., a conveyance by Chaparral Steel Holdings, Inc. to
Chaparral Steel Trust, and a conveyance by Chaparral Steel Trust to
the Partnership. The Limited Partner shall not be required to make
additional contributions to the Partnership except as specified in
Sections 3.4 and 5.5. |
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3.3 |
Authorization of Partner Loans. Subject to the limitations
herein and to other agreements of the Partnership, the General
Partner from time to time may cause the Partnership to borrow
required amounts from one or more Partners or their Affiliates.
Loans made by Partners or Affiliates under this Section 3.3 will
not be considered a contribution to the capital of the Partnership,
but will constitute indebtedness of the Partnership to the
advancing Partner or Affiliate, payable from the first available
net cash flow of the Partnership unless otherwise agreed by the
lending Partner or Affiliate and, to the extent still unpaid, upon
the termination and liquidation of the Partnership. Each loan by a
Partner or Affiliate will bear simple interest compounded annually
on the unpaid principal balance at the interest rate approved by
the General Partner. The Partners will not be personally liable for
loans made by Partners or Affiliates under this Section 3.3 or be
obligated to make contributions to the capital of the Partnership
to repay those loans. Loans made by Partners or Affiliates under
this Section 3.3 will be payable only from the assets of the
Partnership. |
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3.4 |
Additional Capital Contributions. The Partners may make
Additional Capital Contributions to the Partnership from time to
time as may be required to meet the demands of the business of the
Partnership. The Partners |
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