Exhibit 3.34
AGREEMENT OF LIMITED
PARTNERSHIP
OF
EYEMASTERS OF TEXAS,
LTD.
This Agreement of Limited
Partnership (this “Agreement”) is entered into by and
between EyeMasters of Texas Management, Inc., a Delaware
corporation, as General Partner, and EyeMasters of Texas
Investments, Inc., a Delaware corporation, as Limited Partner, to
be effective as of February 26, 2003 (the “Effective
Date”).
RECITATIONS
The parties hereto desire to form a
limited partnership for the purposes and on the terms hereinafter
set forth and to avail themselves of such liability protection as
is provided under the Limited Partnership Act.
In consideration for the mutual
covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties desire to enter into this
Agreement to embody the terms of their agreement with respect to
their partnership.
The Partnership will be formed with
EyeMasters of Texas Management, Inc., a Delaware corporation
(“EyeMasters Management”), owning a .5% partnership
interest and serving as the General Partner and EyeMasters of Texas
Investments, Inc., a Delaware corporation (“EyeMasters
Investments”), owning a 99.5% partnership interest and being
a Limited Partner.
EyeMasters Management, the General
Partner, and EyeMasters Investments, the Limited Partner, desire to
adopt this Partnership Agreement to read as follows as hereinafter
set forth.
NOW, THEREFORE, to reflect the
foregoing, the parties hereto agree as follows:
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1.
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EyeMasters
Investments is hereby admitted to the Partnership as a limited
partner.
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2.
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The General
Partner and the Limited Partners agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Definitions . As used in
this Agreement, the following terms shall have the respective
meanings indicated:
“Adjusted Capital Account
Deficit” shall mean, with respect to any Partner, the deficit
balance, if any, in such Partner’s Capital Account as of the
end of the relevant year, after giving effect to the following
adjustments: (i) credit to such Capital Account any amounts which
the
Partner is obligated to contribute to the
Partnership, (ii) credit to such Capital Account the
Partner’s share of Partner Minimum Gain and the
Partner’s share of Minimum Gain; and (iii) debit to such
Capital Account the items described in Treasury Regulations §
1.704-l(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of
Adjusted Capital Account Deficit is intended to comply with the
provisions of Treasury Regulations § 1.704-l(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
“Affiliate” shall mean,
when used with reference to a specific Person, (a) any Person that
directly or indirectly controls, is controlled by, or is under
common control with the specified Person, (b) any Person that is an
officer, director, partner, trustee, or serves in a similar
capacity with respect to the specified Person, or for which the
specified Person is an officer, partner, trustee, or serves in a
similar capacity, and (c) any Person that, directly or indirectly,
is the beneficial owner of ten percent (10%) or more of any class
of equity securities of the specified Person, or of which the
specified Person, directly or indirectly, is the owner of ten
percent (10%) or more of any class of equity securities.
“Agreement” or
“Partnership Agreement” shall mean this Agreement of
Limited Partnership of EyeMasters of Texas, Ltd., as amended or
restated from time to time.
“Bankrupt” or
“Bankruptcy” shall mean, in respect of a Partner, the
occurrence of any of the following with respect to such
Partner:
(a) such Partner shall (i)
voluntarily consent to an order for relief by filing a petition for
relief under the laws of the United States codified as Title 11 of
the United States Code, (ii) seek, consent to, or not contest the
appointment of a receiver, custodian, or trustee for itself or for
all or any part of its property, (iii) file a petition seeking
relief under the bankruptcy, arrangement, reorganization, or other
debtor relief laws of any state or other competent jurisdiction,
(iv) make a general assignment for the benefit of creditors, or (v)
admit in writing that it is generally not paying its debts as such
debts become due;
(b) (i) a petition is filed against
such Partner seeking an order for relief under the laws of the
United States codified as Title 11 of the United States Code, or
seeking relief under the bankruptcy, arrangement, reorganization,
or other debtor relief laws of the United States or any state or
other competent jurisdiction, or (ii) a court of competent
jurisdiction enters an order, judgment, or decree appointing,
without the consent of such Partner, a receiver, custodian, or
trustee for it, or for all or any part of its property, and such
petition, order, judgment, or decree shall not be and remain
discharged or stayed within sixty (60) days after its entry;
or
(c) the interest in the Partnership
or any Partner is seized or subjected to a charging order by a
creditor of such Partner and the same is not released from seizure
or charging order or bonded out within thirty (30) days from the
date of notice of such seizure or charging order.
“Capital Account” shall
have the meaning assigned to it in Section 7.2 .
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“Capital Contributions”
of a Partner shall mean the amount of cash and the net fair market
value (as set forth in Exhibit A ) of property contributed
by that Partner to the Partnership pursuant to Article
6.
“Capital Percentage”
shall mean, as to any Partner as of the date of determination, a
fraction (expressed as a percentage), the numerator of which is the
Capital Account balance of such Partner as of such date, and the
denominator of which is the total Capital Account balances of all
Partners as of such date.
“Certificate of Limited
Partnership” shall mean a certificate in the form acceptable
for filing with the Secretary of State of the State of Texas under
the Limited Partnership Act.
“Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time, and
the corresponding provisions of any successor statute.
“Dispose,”
“Disposing,” and “Disposition” shall mean a
sale, assignment, transfer, gift, exchange, mortgage, pledge, grant
of a security interest, or other disposition or encumbrance or the
acts thereof.
“Effective Date” shall
have the meaning set forth in the recitals.
“General Partner” shall
mean EyeMasters of Texas Management, Inc., a Delaware corporation,
together with each other Person (if any) that subsequently becomes
a General Partner in the Partnership pursuant to the provisions of
this Agreement, but excludes any such Person that subsequently
ceases to be a General Partner pursuant to the provisions of this
Agreement.
“Independent
Accountants” shall mean the independent accountants selected
by the General Partner.
“Limited Partners” shall
mean each Person set forth on Exhibit A hereto and that is
designated on the signature pages hereof as, and that has executed
this Agreement as a Limited Partner, but excludes any such Person
that subsequently ceases to be a Limited Partner pursuant to the
provisions of this Agreement, all as shown on the books and records
of the Partnership.
“Limited Partnership
Act” shall mean the Texas Revised Limited Partnership Act,
Texas Civil Statutes, Article 6132a-1, adopted 1987, as amended
from time to time, and any successor to said Act.
“Liquidator” shall have
the meaning set forth in Section 13.2 hereof.
“Minimum Gain” shall
mean the aggregate gain, if any, that would be realized by the
Partnership for purposes of computing income or loss with respect
to each Partnership asset if each Partnership asset was disposed of
by the Partnership in a taxable transaction in full satisfaction of
all nonrecourse liabilities of the Partnership secured by such
asset. Minimum Gain with respect to each Partnership asset shall be
further determined in accordance with the
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rules of Treasury Regulations § 1.704-2(d)
and any subsequent rule or regulation governing the determination
of minimum gain. A Partner’s share of Minimum Gain at the end
of any Partnership year shall equal the aggregate Nonrecourse
Deductions allocated to such Partner (or his predecessors in
interest) up to that time, less such Partner’s (and
predecessors’) aggregate share of decreases in Minimum Gain
determined in accordance with Treasury Regulations §
1.704-2(g).
“Net Cash Flow” shall
mean, with respect to any period, (i) all cash revenues and
receipts received by the Partnership (excluding Capital
Contributions); less cash expended (other than to the extent
expended from reserves established in accordance with clause (ii)
of this definition) for debts and expenses and interest and
principal payments on any indebtedness of the Partnership and (ii)
reserves that the General Partner reasonably determines to be
necessary for future capital expenditures, expenses and
contingencies. For purposes of determining Net Cash Flow,
depreciation and amortization shall not be considered an expense of
the Partnership. Net Cash Flow shall be determined consistent with
the financial statements of the Partnership.
“Net Income” shall mean,
for a taxable year of the Partnership, the excess of (i) the income
and gain of the Partnership for such year determined in accordance
with the accounting principles described in Article 7.1(a) ,
over (ii) the deductions and losses of the Partnership for such
year determined in accordance with the accounting principles
described in Article 7.1(a) .
“Net Loss” shall mean,
for a taxable year of the Partnership, the excess of (i) the
deductions and losses of the Partnership for such year determined
in accordance with the accounting principles described in
Article 7.1(a) , over (ii) the income and gain of the
Partnership for such year determined in accordance with the
accounting principles described in Section 7.1(a)
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“Nonrecourse Deductions”
shall mean the excess, if any, of the net increase in the amount of
Minimum Gain during a Partnership year over the aggregate amount of
any distributions during such year of proceeds of a nonrecourse
liability that are allocable to an increase in Minimum Gain. The
Nonrecourse Deductions of a year shall consist first of
depreciation with respect to each item of Partnership property to
the extent of the increase in Minimum Gain attributable to
nonrecourse liabilities of the Partnership secured by such
Partnership property, with the remainder of any Nonrecourse
Deductions made up of a pro rata portion of the Partnership’s
other items of loss. Nonrecourse Deductions shall be further
determined in accordance with the rules of Treasury Regulations
§§ 1.704-2(b)(1) and 1.704-2(c) and any subsequent rule
or regulation governing the determination of nonrecourse
deductions.
“Partners” or
“Partner” shall mean the General Partner and the
Limited Partners, or any one of them.
“Partner Minimum Gain”
shall mean the aggregate of the partner nonrecourse debt minimum
gain amounts of the Partnership computed in accordance with
Treasury Regulations § 1.704-2(i)(3).
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“Partner Nonrecourse
Deductions” shall be determined in accordance with the
principles of Treasury Regulations § 1.704-2(i)(1). The amount
of Partner Nonrecourse Deductions for a year is determined in
accordance with Treasury Regulations § 1.704-2(i)(2) and
generally equals the net increase, if any, in the amount of Partner
Minimum Gain during that year, determined pursuant to Treasury
Regulations § 1.704-2(i)(3).
“Partnership” shall have
the meaning attributed to it in Section 3.1 .
“Partnership Interest”
shall mean the interest of each Partner in the Partnership (which
shall include, without limitation, its rights as General Partner or
Limited Partners, as the case may be, and its interest in revenues,
income, gains, losses, deductions, Net Cash Flow, and
distributions.
“Partnership Year” shall
mean the calendar year.
“Person” shall mean an
individual, partnership, corporation, trust, unincorporated
association, or other entity or association.
“Regulations” shall mean
the Income Tax Regulations promulgated under the Code, as such
regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
“Regulatory Allocations”
shall have the meaning assigned to it in Section
7.1(d).
“Securities Act” shall
mean the Securities Act of 1933, as amended.
“Section 754 Election”
shall have the meaning set forth in Section 8.5(a)
hereof.
“Voting Interest” shall
mean the interest of each Partner as set forth on Exhibit A
, as said interests may be adjusted, from time to time, pursuant to
this Agreement.
“Winding Up” shall mean
the period following a dissolution of the Partnership.
ARTICLE II
FORMATION OF LIMITED
PARTNERSHIP:
INITIAL CLOSING AND
ORGANIZATIONAL CERTIFICATES
2.1 Formation and Continuation of
Limited Partnership . The parties hereby form the Partnership
under and pursuant to the Limited Partnership Act. Except as
provided to the contrary in this Agreement, the rights, duties,
status, and liabilities of the Partners, and the formation,
administration, dissolution, and continuation or termination of the
Partnership, shall be as provided in the Limited Partnership
Act.
2.2 Organizational
Certificates . Upon the request of the General Partner, each
Limited Partner shall promptly execute, acknowledge, swear to, and
deliver all certificates and other instruments and perform such
additional acts consistent with the terms of this Agreement as may
be necessary to enable the General Partner to form, qualify and
continue the Partnership as a limited partnership under the laws of
the State of Texas.
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ARTICLE III
PARTNERSHIP NAME, OFFICES, AND
TERM
3.1 Limited Partnership Name
. The name of the Partnership shall be “EyeMasters of Texas,
Ltd.” and the business of the Partnership shall be conducted
under such name or under such assumed name as may be selected from
time to time by the General Partner.
3.2 Principal Place of
Business .
(a) The address of the registered
office of the Partnership in the State of Texas shall be 800
Brazos, Suite 1100, Austin Texas 78701 and the name of the
registered agent at such address is Capital Corporate Services,
Inc.
(b) The principal place of business
of the Partnership shall be 11103 West Avenue, San Antonio, Texas
78701, or such other place as may be designated by the General
Partner. The books and records of the Partnership shall be
maintained at the Partnership’s principal place of business.
The Partnership shall have such other places of business as the
General Partner deems necessary or desirable. The General Partner
shall notify the Limited Partners of any change in the principal
place of business of the Partnership.
(c) The General Partner’s
principal place of business is 11103 West Avenue, San Antonio,
Texas 78213.
3.3 Term . The Partnership
shall continue, unless sooner terminated in accordance with any
provision of this Agreement, until the close of Partnership
business on December 31, 2050.
ARTICLE IV
PURPOSES
The purpose and intent of this
Partnership will be as follows:
(a) To hold the various assets and
liabilities of Eye Care Centers of America, Inc., a Texas
corporation (“Parent”), related to associated with or
used in connection with the operation of the optical retail stores
located within the State of Texas and thereafter operating;
and
(b) For any other lawful business
which may be carried on by a limited partnership under the laws of
the State of Texas.
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ARTICLE V
DISPOSITION OF PARTNERSHIP
INTERESTS
5.1 Dispositions . No Limited
Partner shall Dispose of any Partnership Interests it owns or may
acquire except with the written consent of all of the
Partners.
5.2 Status After Disposition
. No Limited Partner shall have the right, without the consent of
the General Partner, to constitute its assignee as a Limited
Partner (whether or not such transfer is permitted under Article
V ). In addition, no Disposition by a Limited Partner shall
release such Limited Partner from any of its obligations under this
Agreement without the written consent of the General Partner (which
consent may be granted or withheld in the sole discretion of the
General Partner). A Person that receives an interest or right in or
in respect of the Partnership but that is not admitted to the
Partnership as a substituted or additional Partner shall not be
entitled to vote, and the interest of such Person shall not be
counted in determining, for voting or quorum purposes, the Voting
Interests. Any Person receiving an interest or right in or in
respect of the Partnership (whether or not such Person becomes a
Limited Partner) shall not be entitled to Dispose of its interest
or right or any part thereof without fulfilling the conditions of
Section 5.1 to the same extent and in the same manner as any
Limited Partner that desires to effect a Disposition of an interest
in the Partnership.
5.3 Disposition Documents .
Notwithstanding Section 5.1, the Partnership shall not
recognize, for any purpose, any purported Disposition of all or any
portion of or interest in a Limited Partner’s Partnership
Interests unless and until the provisions of this Article V
have been satisfied and there shall have been delivered to the
General Partner a dated notification of such Disposition (i)
executed, acknowledged, and sworn to by both the Limited Partner
effecting such Disposition and the Person to whom such interest is
Disposed, (ii) if the assignee wishes to become a substituted
Limited Partner, the acceptance by such assignee of all of the
terms and provisions of this Agreement (including, without
limitation, a grant by such assignee to the General Partner and any
successors thereto and each of its officers of the power of
attorney set forth in Article XIV ), and (iii) containing a
representation that such Disposition was made in accordance with
all applicable laws and regulations. Each Disposition shall be
effective as of the first day of the calendar month immediately
following the month in which the Partnership actually receives the
aforesaid notification of Disposition.
5.4 Disposition Costs . All
costs incurred by the Partnership in connection with the
Disposition of an interest in the Partnership (including, without
limitation, the fees incurred in connection with the obtaining of
the legal opinions referred to in Section 11.1(e)) shall be
borne and paid by the Partner effecting the Disposition within ten
(10) days after the receipt by such Partner (or such
Partner’s estate or legal representative, as applicable) of
the Partnership’s invoice for the amount due.
5.5 Admission of a Substituted
Limited Partner . The General Partner may, in its absolute
discretion, and without the consent or agreement of any other
Partner, admit an assignee of a Partnership Interest as a
substituted Limited Partner. Upon admission, a substituted Limited
Partner shall be subject to all provisions of this Agreement as if
originally a party hereto.
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5.6 Disposition of General
Partner’s Interests . The General Partner shall have the
right, from time to time, to effect a Disposition of all or any
portion of its interests in the Partnership to one or more Persons
and to admit the Person or Persons to whom such interest or portion
thereof is Disposed as an additional or substituted General
Partner; provided, however such disposition must be approved by the
shareholders and the board of directors of the General Partner. In
the event any Person is admitted as a substituted General Partner,
such admission shall occur contemporaneously with the withdrawal of
the General Partner that disposes of its interest. Any additional
or substituted General Partner shall continue the business of the
Partnership. Notwithstanding anything in this Agreement to the
contrary, any General Partner who voluntarily or involuntarily for
any reason withdraws from the Partnership (including, without
limitation, a withdrawal by a General Partner pursuant to
Section 13.1(b)) , or sells, transfers, or assigns his
interest in the Partnership, shall be and remain liable for all
obligations and liabilities incurred by him as a General Partner
prior to the time of such withdrawal, sale, transfer, or
assignment, but he shall be free of any obligation or liability as
a General Partner incurred as a result of the activities of the
Partnership from and after the time of such withdrawal, sale,
transfer, or assignment.
5.7 Pledge of Partnership
Interest . Nothing in this Agreement including, without
limitation, Section 5.1, shall prevent any Partner from
pledging its Partnership Interest to any financial institution,
whether acting on its own behalf or as a collateral trustee or an
agent, to which such Partner or the Partnership has incurred or
guaranteed any obligation, and neither any such financial
institution which exercises its rights and remedies under any such
pledge agreement nor any person who becomes a holder of Partnership
Interests as the result thereof or its successors or assigns shall
be bound by the restrictions set forth in Section
5.1.
ARTICLE VI
CAPITAL OF THE
PARTNERSHIP
6.1 Initial Capital Contributions
of the Partners . The initial Capital Contributions to the
Partnership by the Partners are as set forth in Exhibit
A.
6.2 Return of Capital;
Partner’s Loans . No Partner is entitled to the return of
his or her contribution or any subsequent contributions to the
Partnership or to be paid interest in respect of either of his or
her Capital Account or any contribution made by him or her to the
Partnership. No unrepaid capital contribution shall be deemed or
considered to be a liability of the Partnership or of any Partner.
No Partner shall be required to contribute or loan any cash or
property to the Partnership to enable the Partnership to return any
Partner’s contribution to the Partnership. Notwithstanding
the prior sentence, nothing herein shall prevent a Partner from
loaning money to the Partnership under terms and conditions
determined by the General Partner.
6.3 Schedule of Partners;
Contributions; Capital Percentages . The name, address, and
initial Capital Percentages of each Partner are set forth in
Exhibit A attached hereto. Exhibit A hereto shall be
amended by the General Partner from time to time to reflect (i) any
additional Capital Contributions made by the Partners, and (ii) the
admission of additional or substituted Partners. The Partnership
Interests owned by Partners hereunder shall not be represented by
certificates.
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6.4 No Further Obligation .
Except as expressly provided for in or contemplated by this
Article 6 , neither the General Partner nor the Limited
Partners shall have any obligation to provide funds to the
Partnership under this Agreement, whether by contributions to
capital, loans, return of monies received or otherwise.
ARTICLE VII
ALLOCATIONS, NET CASH FLOW AND
DISTRIBUTIONS
7.1 Allocations .
(a) In General . The
recognition and classification of the items of income, gain, loss
and deduction of the Partnership (whether recognized prior to or
during Winding Up) shall be the same for purposes of this
Section 7.1 as their recognition and classification for
federal income tax purposes determined (i) without regard to any
Section 754 Election which may have been made, (ii) without regard
to any provision of the Code which provides that an item of income
or gain is not includable in gross income or that an expenditure is
not deductible or chargeable to a capital account, and (iii)
without regard to any items allocated pursuant to Section
7.1(e) .
(b) Net Income . Net Income
shall be allocated in the following priority:
(i) First, to each Partner in
proportion to, and to the extent of, the amount by which (A) the
amount of the cumulative Net Loss allocated to each Partner
pursuant to Section 7.1(d)(i) , if applicable, and next
pursuant to Section 7.1(c) , exceeds (B) the cumulative Net
Income theretofore allocated to each Partner pursuant to this
Section 7.1(b)(i) ; and
(ii) Second, to the Partners in
accordance with their respective Capital Percentages.
(c) Net Loss . Net Loss shall
be allocated to the Partners in accordance with their respective
positive Capital Account balances.
(d) Restrictions on
Allocations . Notwithstanding anything in this Section
7.1 to the contrary:
(i) The Net Loss allocated to a
Partner pursuant to Section 7.1(c) shall not exceed the
maximum amount of Net Loss that can be so allocated without causing
such Partner to have an Adjusted Capital Account Deficit at the end
of the year. All Net Loss in excess of the limitation set forth in
this Section 7.1(d)(i) shall be allocated to the General
Partner.
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(ii) In the event a Partner receives
any adjustments, allocations or distributions described in Treasury
Regulations § 1.704-1 (b) (2) (ii) (d) (4), (5) or (6), items
of Net Income shall be specially allocated to such Partner in an
amount and manner sufficient to eliminate, to the extent required
by the Treasury Regulations, the Adjusted Capital Account Deficit
of such Partner as quickly as possible.
(iii) In the event a Partner has an
Adjusted Capital Account Deficit at the end of any Partnership
Year, such Partner shall be specially allocated items of Net Income
in the amount and manner sufficient to eliminate, to the extent
required by Treasury Regulations, the Adjusted Capital Account
Deficit of such Partner as quickly as possible.
(iv) Notwithstanding any other
provision of this Agreement, but subject to the exceptions set
forth in Treasury Regulations § 1.704-2(f)(2), (3), (4) or
(5), if there is a net decrease in Minimum Gain during a
Partnership Year, the Partners must be allocated items of Net
Income for such year (and, if necessary, subsequent years) in the
proportion to, and to the extent of, an amount equal to such
Partner’s share of the net decrease in Minimum Gain (as such
share is determined in accordance with Treasury Regulations §
1.704-2(g)(2)). The Minimum Gain charge back shall consist first of
Net Income from the disposition of Partnership assets subject to
nonrecourse liabilities of the Partnership with the remainder of
the Minimum Gain charge back, if any, made up of a pro rata portion
of the Partnership’s other items of income or gain for such
year and shall be determined in accordance with Treasury
Regulations §§ 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provisions. If such Net Income
from the disposition of Partnership assets exceeds the amount of
Minimum Gain charge back, a proportionate share of each item of
such Net Income shall constitute a part of the Minimum Gain charge
back.
(v) Notwithstanding any other
provision of this Agreement, but subject to the exceptions
referenced in Treasury Regulations § 1.704-2(i)(4), if there
is a net decrease in Partner Minimum Gain during any year, items of
income and gain for such year (and, if necessary subsequent years)
shall first be allocated to each Partner with a share of that
Partner Minimum Gain in proportion to, and to the extent of, an
amount equal to such Partner’s share of the net decrease in
Partner Minimum Gain (as such share is determined in accordance
with Treasury Regulations § 1.704-2(i)(4)). The items to be so
allocated shall be determined in accordance with Treasury
Regulations § 1.704-2(i)(4), or any successor
provision.
(vi) Nonrecourse Deductions for any
taxable year shall be allocated among the Partners in the same
manner as are the other Net Income and Net Loss of the Partnership
for such year. Partner Nonrecourse Deductions for any taxable year
should be allocated among the Partners in accordance with Treasury
Regulations § 1.704-2(i)(1).
(vii) The allocations set forth in
this Section 7.1(d) (“Regulatory Allocations”)
are intended to comply with certain requirements of Treasury
Regulations §§ 1.704-1 and 1.704-2. Notwithstanding any
other provision of this Section 7.1 (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken
into account in allocating other Net Income and Net Loss among the
Partners so that, to the extent possible, the net amount
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of such allocations of other Net Income and Net
Loss and the Regulatory Allocations to the Partners shall be equal
to the net amount that would have been allocated among the Partners
if the Regulatory Allocations had not occurred.
(e) Section 704(c) . Items of
income, gain, loss, and deduction with respect to an asset
contributed to the Partnership by a Partner that has a fair market
value (as set forth in this Agreement, or if not set forth in this
Agreement, as determined by the General Partner) at the time of
such contribution which is different from its adjusted tax basis
shall, for tax purposes only, be allocated among the Partners in
the manner provided under Section 704(c) of the Code and Treasury
Regulations thereunder so as to take into account any variation
between the basis of the property to the Partnership and its fair
market value at the time of contribution. Such allocations shall be
made in accordance with the traditional method set forth in
Treasury Regulations § 1.704-3(b).
7.2 Computation of Capital
Account . The balance of the “Capital Account” of a
Partner is initially zero and a
