AGREEMENT OF LIMITED PARTNERSHIP OF HUGHES BUILDING MATERIALS, LTD.

 

 

“Capital Contribution” or “Capital Contributions” means the Initial Capital Contribution and any Additional Capital Contributions made by a Partner pursuant to Section 3.01 hereof.

 

“Capital Proceeds” means the amount of net proceeds received by the Partnership upon the sale or other disposition of all or a substantial portion of the Partnership’s business or assets other than in the ordinary course of the Partnership’s business that the General Partner determines to be available for distribution to the Partners after the payment or provision for payment (including the creation of reserves) of any Partnership indebtedness and other expenses and liabilities that the General Partner determines should be paid out of such proceeds, and the amount of any such reserves that the General Partner determines are available for distribution to the Partners.

 

“Certificate of Limited Partnership” means the Certificate of Limited Partnership, and any and all amendments thereto, filed on behalf of the Partnership with the Secretary of State of the State of Delaware as required under the Act.

 

“Code” means the Internal Revenue Code of 1986, as amended (or any corresponding provision or provisions of succeeding law).

 

“Fiscal Year” means the fiscal year of the Partnership, which shall end on December 31 of each year.

 

“General Partner” means American Enterprises MPT Corp., a Delaware corporation, and its successors or assigns or any other Person admitted as a substitute general partner pursuant to this Agreement.

 

“Initial Capital Contribution” means the amount of the capital contribution made by a Partner in accordance with Section 3.01(a).

 

“Limited Partner” means American Enterprises MPT Holdings, L.P., a Delaware limited partnership, and its successors or assigns.

 

“Minimum Return” means an annual rate of return of twelve percent (12.0%) on the amount of the Limited Partner’s Net Invested Capital outstanding from time to time, compounded annually.

 

“Net Invested Capital” means the sum of the Limited Partner’s Initial Capital Contributions and Additional Capital Contributions (if any) reduced, as and when made, by the amount of distributions to the Limited Partner pursuant to Sections 3.03(a) and 3.03(b)(i) which, pursuant to Section 3.03(c), are treated as a return of the Limited Partner’s Net Invested Capital.

 

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“Net Capital Profits” means the amount of net income and gain realized by the Partnership for Federal income tax purposes with respect to a transaction giving rise to Capital Proceeds, as determined by the General Partner.

 

“Net Operating Profits” means, with respect to a fiscal period, the net income of the Partnership for Federal income tax purposes during such period excluding any Net Capital Profits, as determined by the General Partner.

 

“Net Losses” means, with respect to a fiscal period, the net loss of the Partnership (whether or not as a result of a transaction giving rise to Capital Proceeds) for Federal income tax purposes during such period, as determined by the General Partner.

 

“Operating Cash Flow” means, with respect to any fiscal period, an amount, determined by the General Partner in its sole and absolute discretion, equal to the cash revenues of the Partnership from all sources during such fiscal period, other than Capital Proceeds, plus such reserves that the General Partner determines are no longer necessary to provide for the foreseeable needs of the Partnership (other than any reserves created from Capital Proceeds), less (i) all cash expenditures of the Partnership during such fiscal period, including, without limitation, operating expenses, debt service, repayment of Partner Advances and interest thereon (which shall be repaid in full prior to any distribution of Operating Cash Flow), administrative expenses, and expenditures incurred by the Partnership in connection with capital transactions, and (ii) such reserves that the General Partner determines to be necessary or appropriate to provide for the foreseeable needs of the Partnership.

 

“Partners” means the General Partner and the Limited Partner. Reference to a “Partner” means either of the Partners.

 

“Partner Advances” means loans or advances, if any, made by a Partner to the Partnership from time to time pursuant to Section 3.01(b) hereof.

 

“Partnership” means the limited partnership formed under the Act by this Agreement by the parties hereto, as said Partnership may from time to time be constituted.

 

“Partnership Interest” means the entire interest of a Partner in the Partnership at any particular time, including the right of such Partner to any and all rights and benefits to which a Partner may be entitled as provided in this Agreement, together with the obligations of such Partner to comply with all the terms and provisions of this Agreement.

 

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“Person” means any individual, partnership, corporation, trust, or other legal entity.

 

“Prime Rate” means for any period the daily average of the “base rate” for corporate loans at NationsBank, N.A. or such other large U.S. money center banks as shall be designated from time to time by the General Partner.

 

“Tax Allocations Addendum” means Exhibit B to this Agreement as it may be amended from time to time in accordance with Section 3.07 hereof.

 

“Tax Matters Partner” means the General Partner.

 

1.02.                         Continuation of Partnership: Certificate of Limited Partnership . The General Partner formed the Partnership on October 15, 1996, pursuant to the provisions of the Act. The Partners hereby execute this Agreement for the purpose of continuing the existence of the Partnership and setting forth the rights, duties and relationship of the Partners. If the laws of any jurisdiction in which the Partnership transacts business so require, the General Partner also shall file, with the appropriate office in that jurisdiction, a copy of the Certificate of Limited Partnership as filed with the office of the Secretary of State of the State of Delaware or any other documents necessary for the Partnership to qualify to transact business and to establish and maintain the Limited Partner’s limited liability under the Act.

 

1.03.                         Name . The name of the Partnership is American Enterprises MPT, L.P.

 

1.04.                         Names and Addresses of Partners . The names and addresses of the Partners as of the date of this Agreement are set forth in Exhibit A hereto.

 

1.05.                         Principal Place of Business . The principal place of business and the principal office of the Partnership shall be located at 1802 Pittsburgh Avenue, Erie, Pennsylvania. The Partnership may have such other or additional offices, either within or without the State of Delaware, as the General Partner shall deem advisable.

 

1.06.                         Registered Agent The name and address of the initial registered agent of the Partnership shall be Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805. The General Partner may change the registered agent from time to time, in its sole and absolute discretion.

 

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1.07.                         Term . The term of the Partnership commenced on October 15, 1996, and shall continue until the Partnership is dissolved in accordance with the provisions of this Agreement.

 

1.08.                         Title to Partnership Property . Legal title to the property of the Partnership shall be in the name of the Partnership.

 

ARTICLE II
BUSINESS OF THE PARTNERSHIP

 

2.01.                         Purposes . The purposes for which the Partnership is formed and the businesses to be carried on and promoted by it are:

 

(a)                to acquire the business and assets of the Mechanical Power Transmission Group of Zurn Industries, Inc. pursuant to a certain Agreement for the Purchase and Sale of Assets dated October 15, 1996; and

 

(b)               to engage in any one or more businesses or transactions, or to acquire all or any portion of any entity engaged in any one or more businesses or transactions which the General Partner, in its sole and absolute discretion, from time to time may authorize or approve, whether or not related to the business described in Section 2.01(a) or to any other business then engaged in by the Partnership.

 

2.02.                         Authority . In order to carry out its purposes, the Partnership is empowered and authorized to do any and all acts and things necessary, appropriate, proper, advisable, desirable, incidental to or convenient for the furtherance and accomplishment of its purpose and for the protection and benefit of the Partnership, including but not limited to the following:

 

(a)                buy, own, operate, assign, mortgage, or lease any property;

 

(b)               enter into any kind of activity, and perform and carry out contracts of any kind necessary to, in connection with, incidental to, or desirable to, the accomplishment of the purposes of the Partnership;

 

(c)                borrow money and issue evidences of indebtedness in furtherance of the Partnership business and secure any such indebtedness by mortgage, pledge, or other lien; and

 

(d)               do any and all other acts and things necessary or desirable in furtherance of the Partnership’s business.

 

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ARTICLE III
CAPITAL CONTRIBUTIONS,
DISTRIBUTIONS, AND ALLOCATIONS

 

3.01.                         Capital Contributions; Advances .

 

(a)                         The General Partner and the Limited Partner each shall make an Initial Capital Contribution to the Partnership in the amount set forth opposite such Partner’s name on Exhibit A .

 

(b)                        Partners shall be permitted (but shall not be required) to make Additional Capital Contributions to the Partnership from time to time as the General Partner, in its sole and absolute discretion, may request them to make. In addition, the Partners may (but shall be under no obligation to) loan or advance to the Partnership such funds as the General Partner, in its sole and absolute discretion, may request, with interest on such loans or advances to be at the Prime Rate plus one-quarter of one percentage point (“Partner Advances”).

 

(c)                         Except as provided in Section 3.03(b), no Partner shall have the right to demand the return of its Capital Contributions or Net Invested Capital prior to the dissolution and liquidation of the Partnership.

 

3.02.               Capital Accounts . The Partnership shall keep a separate Capital Account for each Partner which shall be determined and maintained in the manner provided for in the Tax Allocations Addendum attached hereto as Exhibit B .

 

3.03.               Distributions.

 

(a)                         The Partnership shall make distributions to the Partners of Operating Cash Flow, if any, from time to time as determined by the General Partner (subject to any applicable covenants or other restrictions contained in the Partnership’s loan agreements). All distributions of Operating Cash Flow shall be made in the ratio of 1% to the General Partner and 99% to the Limited Partner.

 

(b)                        The Partnership shall distribute to the Partners any Capital Proceeds realized by the Partnership within a reasonable period of time following the event giving rise to such Capital Proceeds, as determined by the General Partner (subject to any applicable covenants or other restrictions contained in the Partnership’s loan agreements). All distributions of Capital Proceeds and any distributions to be made to the Partners in connection with the liquidation of the Partnership, shall be made in accordance with the following priorities:

 

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(i)  first, in the ratio of 1% to the General Partner and 99% to the Limited Partner, to the extent necessary to provide the Limited Partner with an amount which, together with the amounts previously distributed to it pursuant to this Section 3.03, are sufficient to provide it with the Minimum Return and a return of its Capital Contributions;

 

(ii)  second, to the Partners, to the extent of and in proportion to the remaining positive balances in their Capital Accounts (after taking into account, in the case of a distribution of Capital Proceeds, the allocation of the Net Capital Gain (if any) or Net Loss realized with respect to the transaction giving rise to such Capital Proceeds or, in the case of a distribution in connection with the liquidation of the Partnership, the allocation of all Net Operating Income, Net Capital Gain, and Net Loss made or to be made to the Partners); and

 

(iii)  thereafter, to the Partners, in the ratio of 99% to the General Partner and 1% to the Limited Partner.

 

(c)                         For purposes of computing the amount of the Minimum Return and the Limited Partner’s Net Invested Capital, any distribution to the Limited Partner pursuant to Section 3.03(a) and 3.03(b)(i) shall be considered to be made first as payment of the Minimum Return as of the date such distribution is made and second as repayment of the Limited Partner’s Net Invested Capital.

 

3.04.                         Allocation of Profits and Losses .

 

(a)                         Subject to Section 4 of the Tax Allocations Addendum, Net Operating Profits with respect to each Fiscal Year (or portion thereof) shall be allocated in the ratio of 1% to the General Partner and 99% to the Limited Partner.

 

(b)                        Subject to Section 4 of the Tax Allocations Addendum, Net Capital Profits realized with respect to any Fiscal Year shall be allocated to the Partners (prior to giving effect to any distributions made or to be made to the Partners with respect to the Fiscal Year) in the following order of priority:

 

(i)  first, to all Partners whose Capital Accounts have negative balances, in the ratio of such negative balances until such negative balances are brought to zero;

 

(ii)  second, in the event the Capital Account balance of the Limited Partner is less than the amount to be distributed to it pursuant to

 

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Section 3.03(b)(i), in the ratio of 1% to the General Partner and 99% to the Limited Partner, to the extent necessary to increase the Capital Account balance of the Limited Partner to equal the amount to be distributed to it pursuant to Section 3.03(b)(i); and

 

(iii)  thereafter, any remaining Net Capital Profits shall be allocated to the Partners in the ratio of 99% to the General Partner and 99% to the Limited Partner.

 

(c)                         Subject to Section 4 of the Tax Allocations Addendum, any Net Losses shall be allocated to the Partners in the ratio of 1% to the General Partner and 99% to the Limited Partner.

 

3.05.                         Partnership Funds . All funds of the Partnership shall be deposited in such bank accounts as shall be designated by the General Partner and all withdrawals from such bank accounts shall be made by checks or other instruments signed by the designated representatives of the General Partner or such other Person or Persons as the General Partner may designate.

 

3.06.                         Tax Matters .

 

(a)                         The General Partner shall be the “Tax Matters Partner” for purposes of Code Sections 6221 through 6232, inclusive. As the Tax Matters Partner, the General Partner shall prepare and file all required income tax returns and shall manage administrative tax proceedings conducted at the Partnership level by the Internal Revenue Service with respect to Partnership matters.

 

(b)                        The Tax Allocations Addendum shall set forth in detail the policies and procedures which shall guide the tax accounting of the Partnership. Such policies and procedures shall be in accordance with all then-applicable provisions of the Code and regulations, including without limitation the provisions thereof governing allocation of gains and losses; provided, however, that such allocations (the “Regulatory Allocations”) shall be taken into account in allocating other profits, losses, and items of income, gain, loss and deduction among the Partners so that, to the extent possible, the net amount of such allocations of other profits, losses and other items and the Regulatory Allocations to each Partner shall be equal to the net amount that would have been allocated to each such Partner if the Regulatory Allocations had not occurred. The General Partner shall have the authority to amend the Tax Allocations Addendum from time to time as it deems necessary, in its sole and absolute discretion.

 

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ARTICLE IV
RIGHTS, OBLIGATIONS, AND POWERS OF
THE PARTNERS

 

4.01.                         Authority of the General Partner.

 

(a)                         The General Partner, in its capacity as general partner, shall have the right, power and authority, acting for and on behalf of the Partnership, inter alia , to take all actions and execute and deliver all agreements on behalf of the Partnership in connection with the business of the Partnership, including, without limitation, the authority to cause the Partnership to sell, exchange, lease, pledge, mortgage, or otherwise deal with all or any of its assets or to merge with or into any other entity (regardless of whether the Partnership is the surviving entity), as determined by the General Partner in its sole and absolute discretion. The General Partner also shall have the right, power and authority to execute and deliver on behalf of the Partnership any contract, agreement or other instrument or document required or otherwise appropriate to acquire, sell, operate or encumber the Partnership’s properties.

 

(b)                        All decisions made for and on behalf of the Partnership by the General Partner shall be binding upon the Partnership. Except as otherwise expressly set forth in this Agreement, the General Partner (acting for and on behalf of and in the name of the Partnership), in extension and not in limitation of the rights and powers given it by law or by the other provisions of this Agreement, shall, in its sole discretion, have the full and entire right, power and authority, in the management of the Partnership’s business, to do any and all acts and things necessary, proper, convenient or desirable to effectuate the purposes of the Partnership.

 

4.02.                         Restrictions on General Partner’s Authority . Notwithstanding any other provision of this Agreement, including Section 4.01 and except as provided herein, the General Partner shall have no authority to do any of the following acts without obtaining the consent of the Limited Partner:

 

(i)  to file a bankruptcy petition on behalf of the Partnership; or

 

(ii)  to admit any general partner to the Partnership.

 

4.03.                         Management of Business .  Except to the extent the consent of the Limited Partner may be required under Section 4.02, management of the Partnership’s business shall in every respect be the full and exclusive responsibility of the General Partner, which shall have all rights, powers and authorities permitted by the Act and the laws of the State of Delaware. The General Partner shall have the right, power and authority to delegate any or all

 

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of its management duties to any other Person (including an affiliate of the General Partner) and to cause the Partnership to reasonably compensate any such Person for services rendered to or for the benefit of the Partnership, including a reasonable allowance for overhead expenses. The Limited Partner shall take no part in the management or control of the business of the Partnership or transact any business in the name of the Partnership. The Limited Partner shall have no power or authority to bind the Partnership or to sign any agreement or document in the name of the Partnership.

 

4.04.                         Outside Activities . Except as may be otherwise limited or provided for in any other agreement between the Partnership and a Partner, the Partners may engage in and possess interests in other business ventures (including limited partnerships) of every kind and description whatsoever, including, without limitation, interests in other entities that may compete with the Partnership’s business. Neither the Partnership nor any of the Partners shall have any rights by virtue of this Agreement in or to such other business ventures or to the income or profits derived therefrom.

 

4.05.                         Action Prior to Agreement . Each and every act and action taken by the General Partner on behalf of the Partnership prior to the date hereof is hereby ratified and confirmed for all purposes and in all respects.

 

4.06.                         Partners or Affiliates Dealing with Partnership . Each of the Partners and any of their affiliates shall have the right to contract or otherwise deal with the Partnership.

 

4.07.                         Liability to Partnership and the Limited Partner . Except as provided in Section 5.01, the General Partner shall not be liable, responsible or accountable in damages, for the return of Capital Contributions or otherwise to the Limited Partner or to the Partnership for any acts performed in good faith and within the scope of this Agreement except to the extent that a court of competent jurisdiction finds, upon entry of a final judgment, that its actions and/or omissions are attributable to gross negligence, willful misconduct, recklessness, malfeasance or fraud.

 

4.08.                         Indemnification .

 

(a)                         The Partnership shall indemnify, defend and hold harmless the Partners, their stockholders, owners, partners, directors, officers, employees and agents from and against any loss, liability, damage, cost or expense (including reasonable attorneys fees) arising out of or alleged to arise out of any demands, claims, suits, actions or proceedings against any of them in or as a result of or relating to their respective capacities, actions or omissions with respect to the Partnership, or otherwise concerning the business or affairs of the Partnership

 

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including, without limitation, any demands, claims, suits, actions or proceedings, initiated by any of the Partners; provided, however, that the acts or omissions of the General Partner shall not be indemnified thereunder to the extent a court of competent jurisdiction finds, upon entry of a final judgment, that the same resulted from gross negligence, willful misconduct, recklessness, malfeasance or fraud. Any indemnification under this Section 4.08 shall be made from the assets of the Partnership, and no Partner shall be personally liable therefor.

 

(b)               The rights of indemnification contained in this Section 4.08 shall be cumulative of, and in addition to, any and all rights, remedies and recourse to which any indemnified party shall be entitled, whether pursuant to the provisions of this Agreement, at law or in equity. Indemnification shall be made solely and entirely from assets of the Partnership (excluding, for these purposes, all assets of the Partners other than those of and attributable to such Partner’s interest in the Partnership), and the Limited Partner shall not be personally liable to any indemnified party under this Section 4.08.

 

(c)                Any Person, when entitled to indemnification pursuant to this Section 4.08, shall be entitled to receive, upon application therefor, advances to cover the costs of defending any proceeding. All rights to indemnification hereunder shall survive the dissolution of the Partnership and the death, retirement, incompetency, insolvency or bankruptcy of any Partner.

 

4.09.                         Transfers of Partnership Interests . No Partner shall at any time transfer all or any part of its P