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Exhibit No 10.21
THE OFFER AND SALE OF LIMITED PARTNERSHIP
INTERESTS IN WEST FORK PIPELINE
COMPANY LP HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE OR FOREIGN SECURITIES
LAWS, OR APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR
BY ANY FEDERAL, STATE OR FOREIGN
AUTHORITY. SUCH INTERESTS MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF UNLESS SUCH INTERESTS
ARE FIRST REGISTERED PURSUANT TO ALL
SUCH APPLICABLE LAWS OR UNLESS COUNSEL
SATISFACTORY TO THE GENERAL PARTNER SHALL
HAVE RENDERED AN OPINION SATISFACTORY TO
THE GENERAL PARTNER THAT SUCH
REGISTRATION IS NOT REQUIRED. THE SALE,
ASSIGNMENT OR OTHER TRANSFER OF SUCH
INTERESTS IS ALSO RESTRICTED BY ARTICLE IX
OF THE AGREEMENT OF LIMITED
PARTNERSHIP OF WEST FORK PIPELINE COMPANY
LP.
AGREEMENT OF LIMITED PARTNERSHIP
WEST FORK PIPELINE COMPANY LP
Dated as of May 9, 2003
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TABLE OF CONTENTS
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Page
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ARTICLE I Formation of
Partnership..................................................
1
Section 1.1. Formation
........................................................
1
Section 1.2. Name
.............................................................
1
Section 1.3.
Business..........................................................
2
Section 1.4. Place of
Business and Registered Agent............................
2
Section 1.5. Names and Addresses of
Partners................................... 2
Section 1.6. Additional
Partners...............................................
3
Section 1.7.
Term..............................................................
3
Section 1.8.
Filings...........................................................
3
Section 1.9. Title to
Partnership Property.....................................
3
ARTICLE II Definitions and
References...............................................
3
Section 2.1. Defined
Terms.....................................................
3
Section 2.2. References
and Titles.............................................
7
ARTICLE III Capitalization and Partnership
Expenses................................. 7
Section 3.1. Capital
Contributions of Partners.................................
7
Section 3.2. No Other
Required Capital Contributions...........................
8
Section 3.3. Additional
Capital Contributions..................................
8
Section 3.4.
Non-payment of Capital Contributions..............................
9
Section 3.5. Return of
Capital Contributions...................................
9
Section 3.6. Payments
and Advances by General Partner..........................
10
ARTICLE IV
Allocations and Distributions.....................................
10
Section 4.1.
Allocations.......................................................
10
Section 4.2. Section
704(c) Allocations........................................
12
Section 4.3.
Distributions.....................................................
12
ARTICLE V
Management................................................................
12
Section 5.1. Power and
Authority of General Partner............................
12
Section 5.2. Contracts
With Affiliates.........................................
13
Section 5.3. Tax
Elections.....................................................
14
Section 5.4. Tax
Returns; Tax Matters Partner..................................
14
Section 5.5.
Reimbursement of Expenses.........................................
14
Section 5.6. Other
Operations..................................................
14
Section 5.7. Liability
of Partners and Indemnification.........................
14
Section 5.8. Certain
Decisions.................................................
15
ARTICLE VI Rights of Limited
Partner................................................
16
Section 6.1. Rights of
Limited Partner.........................................
16
Section 6.2.
Limitations on Limited Partner....................................
16
Section 6.3. Liability
of Limited Partner......................................
17
Section 6.4. Withdrawal
and Return of Capital Contributions....................
17
Section 6.5
Outside Activities................................................
17
ARTICLE VII Books, Records and Bank
Accounts........................................ 17
Section 7.1. Capital
Accounts, Books and Records...............................
17
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Section 7.2.
Reports...........................................................
18
Section 7.3. Bank
Accounts.....................................................
18
Section 7.4.
Information Relating to the Partnership...........................
18
ARTICLE VIII Dissolution, Liquidation and
Termination............................... 18
Section 8.1.
Dissolution.......................................................
18
Section 8.2.
Liquidation and Termination.......................................
19
Section 8.3.
Reconstitution....................................................
20
ARTICLE IX
Assignments of Interests..........................................
20
Section 9.1. Assignment
by Partners............................................
20
Section 9.2
Right of First Refusal on Sale....................................
21
ARTICLE X Representations and
Warranties............................................ 22
Section 10.1. Representations,
Acknowledgements and Warranties of the Partners.. 22
ARTICLE XI
Miscellaneous............................................................
23
Section 11.1. Notices
..........................................................
23
Section 11.2.
Amendment.........................................................
24
Section 11.3.
Partition.........................................................
24
Section 11.4. Entire
Agreement..................................................
24
Section 11.5.
Severability......................................................
24
Section 11.6. No
Waiver.........................................................
24
Section 11.7. Applicable
Law....................................................
24
Section 11.8. Meetings of the
Partners.......................................... 24
Section 11.9. Successors and
Assigns............................................ 25
Section 11.10. Sole
Discretion...................................................
25
Section 11.11.
Counterparts......................................................
25
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AGREEMENT OF LIMITED PARTNERSHIP
WEST FORK PIPELINE COMPANY LP
THIS
AGREEMENT OF LIMITED PARTNERSHIP (this "Agreement") dated as of
May
9, 2003, is made by and among WEST FORK
PIPELINE COMPANY GP LLC, a Texas limited
liability corporation, as the general
partner (the "General Partner"), and each
of the persons listed on Exhibit A, each as
a limited partner (individually, a
"Limited Partner" and collectively, the
"Limited Partners").
RECITALS:
WHEREAS,
the General Partner and the Limited Partners desire to form the
Partnership for the purpose of developing a
pipeline in the State of Texas from
a Tufco/TXU connection near Interstate 30
and Oakland Avenue in Tarrant County
to certain wells to be drilled in that area
(the "Pipeline");
WHEREAS,
it is the intention of the parties that the Partnership shall
use
the Pipeline for the transport of gas from
wells in which the parties own
Working Interests and not for use by the
public, third parties or other people
who are not affiliated with any Partner;
and
WHEREAS,
it is the intention of the parties that any interest in the
Partnership among the Limited Partners be
substantially the same as their
respective proportionate Working Interest
ownership in the wells that are to be
connected to the Partnership's
pipeline;
AGREEMENT:
NOW,
THEREFORE, based on the mutual agreements contained herein, and
other
good and valuable consideration, the
receipt and sufficiency is hereby
acknowledged, the General Partner and the
Limited Partners agree as follows:
ARTICLE I
Formation of Partnership
Section 1.1.
Formation. Subject to the provisions of this Agreement, the
parties do hereby form a limited
partnership (the "Partnership") pursuant to the
provisions of the Texas Revised Limited
Partnership Act (such Act, as amended
from time to time, or any successor statute
or statutes thereto, being called
the "Act").
Section
1.2. Name. The name of the Partnership shall be "West Fork
Pipeline Company LP." Subject to all
applicable laws, the business of the
Partnership shall be conducted in the name
of the Partnership unless under the
law of some jurisdiction in which the
Partnership does business such business
must be conducted under another name. In
such a case, the business of the
Partnership in such jurisdiction may be
conducted under such other name or names
(except the name of the General Partner,
any Affiliate of the General Partner or
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the name of any of the Limited Partners) as
the General Partner shall determine
to be necessary so long as it does not
affect adversely the limited liability of
the Limited Partners hereunder or
jeopardize in any manner the title to or
ownership of any Partnership assets. The
General Partner shall cause to be filed
on behalf of the Partnership such
partnership or assumed or fictitious name
certificate or certificates or similar
instruments as may from time to time be
required by law.
Section
1.3. Business. The business of the Partnership shall be (a) to
acquire, develop, own and operate the
Pipeline solely for the use of the
Partners and Affiliates of the Partners;
(b) to engage in or perform any and all
acts or actions as the General Partner may
from time to time determine to be
advantageous or desirable to the
Partnership including but not limited to,
gathering services compression, and
treating services, and field services for
gas and all business activities related
thereto; and (c) to take all such other
actions incidental to any of the foregoing
as the General Partner may determine
to be necessary or desirable (such
permitted activities described in (a), (b)
and (c) are collectively hereinafter
referred to as the "Business"); provided,
however, all Business shall be conducted or
undertaken in accordance with all
the terms and conditions of, and subject to
the limitations set forth in this
Agreement. Notwithstanding the foregoing,
the Partnership shall not (i) engage
in the exploration or production of oil,
conventional gas or other minerals or
the marketing of oil, conventional gas or
other minerals, or (ii) own or operate
any properties or assets outside the AMI.
The AMI shall not be amended, expanded
or contracted without the express written
consent of all the Partners.
Section
1.4. Place of Business and Registered Agent.
(a) The
principal United States office and place of business of the
Partnership and its street address shall be
as set forth in the Certificate of
Limited Partnership of the Partnership. The
General Partner, at any time and
from time to time, may change the location
of the Partnership's principal United
States office and place of business and may
establish such additional place or
places of business of the Partnership as
the General Partner shall determine to
be necessary or desirable, provided notice
thereof is concurrently given to the
Limited Partners.
(b) The
registered office of the Partnership in the State of Texas and
the
registered agent for service of process on
the Partnership shall be as set forth
in the Certificate of Limited Partnership
of the Partnership. The General
Partner, at any time and from time to time,
may change the Partnership's
registered office or registered agent or
both by complying with the applicable
provisions of the Act and giving concurrent
notice thereof to the Limited
Partners and may establish, appoint and
change additional registered offices and
registered agents of the Partnership in
such other states as the General Partner
shall determine to be necessary or
advisable.
Section
1.5. Names and Addresses of Partners. The General Partner is
the
sole general partner of the Partnership,
and the mailing and street address of
its business shall be as set forth in the
records of the Partnership. The
Limited Partners are the only limited
partners of the
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Partnership, and the mailing and street
address of each of the Limited Partners
shall be as set forth in the records of the
Partnership.
Section
1.6. Additional Partners. The General Partner shall continue to
approve the admission of additional
Partners to the Partnership until total cash
and the fair market value of any property
made as initial Capital contributions
to the Partnership equals $400,000 (such
amount being the "Admission
Threshold"). The General Partner may
exercise its sole discretion in approving
or denying the admission of any potential
Partner but shall exercise its best
efforts to admit additional Partners until
the Admission Threshold has been
contributed. The General Partner may in its
sole discretion approve the
admission of additional Partners after the
Admission Threshold has been
contributed. In any case, any additional
Partner shall provide its mailing and
street address to the Partnership.
Section
1.7. Term. The Partnership shall be formed and commence upon
the
completion of filing for record an initial
Certificate of Limited Partnership of
the Partnership with the Secretary of State
of the State of Texas and shall
continue until terminated in accordance
with Article VIII. The General Partner
shall not be required to deliver or mail a
copy of the certificate of limited
partnership to the Limited Partners.
Section
1.8. Filings. Upon the request of the General Partner, the
Limited
Partners shall promptly execute and deliver
all such certificates and other
instruments conforming hereto as shall be
necessary for the General Partner to
accomplish all filing, recording,
publishing and other acts appropriate to
comply with all requirements for the
formation and operation of the Partnership
as a limited partnership under the laws of
the State of Texas. The General
Partner shall cause the Partnership to
continue to comply with all requirements
necessary to maintain the limited liability
of the Limited Partners in the State
of Texas.
Section
1.9. Title to Partnership Property. All property owned by the
Partnership, whether real or personal,
tangible or intangible, shall be deemed
to be owned by the Partnership as an
entity, and no Partner, individually, shall
have any ownership of such property. The
Partnership shall hold its property in
its own name. The Partnership shall hold
all of its assets in the name of the
Partnership unless under the law of some
jurisdiction in which the Partnership
owns assets such assets must be held in
another name. In such a case, such
assets in such jurisdiction shall be held
under such other name or names (except
the name of the General Partner, any
Affiliate of the General Partner or the
name of any Limited Partner) as the General
Partner shall determine to be
necessary so long as it does not affect
adversely the limited liability of the
Limited Partners hereunder or jeopardize in
any manner the title to or ownership
of any Partnership assets.
ARTICLE II
Definitions and References
Section
2.1. Defined Terms. When used in this Agreement, the following
terms shall have the respective meanings
set forth below:
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"Act"
shall have the meaning assigned to such term in Section 1.1
hereof.
"Adjusted
Capital Account" shall mean the Capital Account maintained for
each Partner as provided in Section 7.1(b),
(a) increased by (i) the amount of
any unpaid Capital Contributions agreed to
be contributed by such Partner under
Article III, if any, (ii) an amount equal
to such Partner's allocable share of
Minimum Gain as computed on the last day of
such fiscal year in accordance with
the applicable Treasury Regulations, and
(iii) the amount of Partnership
liabilities allocable to such Partner under
Section 752 of the Internal Revenue
Code with respect to which such Partner
bears the economic risk of loss to the
extent such liabilities do not constitute
Partner Nonrecourse Debt, and (b)
reduced by (i) the amount of all losses and
deductions reasonably expected to be
allocated to such Partner in subsequent
years under Sections 704(e) (2) and
706(d) of the Internal Revenue Code and
Treasury Regulation Section
1.751-1(b)(2)(ii), and (ii) the amount of
all distributions reasonably expected
to be made to such Partner to the extent
they exceed offsetting increases to
such Partner's Capital Account that are
reasonably expected to occur during (or
prior to) the year in which such
distributions are reasonably expected to be
made.
"Admission
Threshold" shall have the meaning assigned to such term in
Section 1.6 hereof.
"Affiliate" shall mean (a) any person directly or indirectly
owning,
controlling or holding with power to vote
10% or more of the outstanding voting
securities of the person in question, (b)
any person 10% or more of whose
outstanding voting securities are directly
or indirectly owned, controlled or
held with power to vote by the person in
question, (c) any person directly or
indirectly controlling, controlled by or
under common control with the person in
question, and (d) any officer, director or
partner of the person in question or
any person described in subsection (a), (b)
or (c) of this paragraph.
"Agreed
Rate" shall mean a rate per annum which is equal to the lesser
of
(a) the rate of interest as published from
time to time in The Wall Street
Journal as the "prime rate" (defined. as
the base rate on corporate loans posted
by at least 75% of the nation=s 30 largest
banks), adjusted from time to time to
reflect any changes in such rate determined
hereunder, or (b) the maximum rate
from time to time permitted by applicable
law.
"AMI"
shall mean the geographic area depicted on the plat attached
hereto
as Exhibit C.
"Buyout"
shall have the meaning set forth in Section 3.3 (a) hereof.
"Capital
Account" shall have the meaning set forth in Section 7.1 (b)
hereof.
"Capital
Call" shall have the meaning set forth in Section 3.3 hereof.
"Capital
Contributions" shall mean for any Partner at the particular
time
in question the aggregate of the dollar
amounts of any cash and the fair market
value of any property
4
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contributed to the capital of the
Partnership, or, if the context in which such
term is used so indicates, the dollar
amounts of cash and the fair market value
of any property agreed to be contributed,
or requested to be contributed, by
such Partner to the capital of the
Partnership.
"Dale Gas"
shall mean Dale Gas Partners, LP, a Texas limited partnership
and a Limited Partner of the
Partnership.
"Dilution"
shall have the meaning set forth in Section 3.3 (b) hereof.
"Extraordinary Gain" shall have the meaning assigned to such term
in
Section 4.1(b) hereof.
"Fulcrum
LP" shall mean Fulcrum, LP, a Texas limited partnership and a
Limited Partner of the Partnership.
"General
Partner" shall mean West Fork Pipeline Company GP LLC, a Texas
limited liability company, and any person
that becomes a substituted General
Partner of the Partnership pursuant to the
terms hereof.
"Internal
Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any
successor statute or statutes.
"Limited
Partner" shall mean each of the persons listed on Exhibit A and
any person that becomes a substituted
Limited Partner or an additional Limited
Partner of the Partnership pursuant to the
terms hereof.
"Minimum
Gain" shall mean (i) with respect to Partnership Nonrecourse
Liabilities, the amount of gain that would
be realized by the Partnership if it
disposed of (in a. taxable transaction) all
Partnership properties that are
subject to Partnership Nonrecourse
Liabilities in full satisfaction of
Partnership Nonrecourse Liabilities,
computed in accordance with applicable
Treasury Regulations, or (ii) with respect
to each Partner Nonrecourse Debt, the
amount of gain that would be realized by
the Partnership if it disposed of (in a
taxable transaction) the Partnership
property that is subject to such Partner
Nonrecourse Debt in full satisfaction of
such Partner Nonrecourse Debt, computed
in accordance with applicable Treasury
Regulations.
"Non-Contributing Partner" shall have the meaning assigned to such
term in
Section 3.3 hereof.
"Non-Participating Working Interest Owner" shall mean a Partner
that owns
a Working Interest and that elects under
the applicable operating agreement or
other agreement among the Working Interest
owners not to contribute capital to
pay for the costs to explore or develop or
produce oil and gas on property
subject to such Working Interest.
"Notice"
shall have the same meaning assigned to such term in Section
9.2(a) hereof.
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"Offered
Partnership Interest" shall have the same meaning assigned to
such term in Section 9.2(a) hereof.
"Offering
Partner" shall have the same meaning assigned to such term in
Section 9.2(a) hereof.
"Organizational Services" shall mean the services provided by Dale
Gas and
Fulcrum LP as founders in connection with
the development and organization of
Partnership and related relationships and
transactions associated with the
business of the Partnership.
"Participating Pro-Rata Basis" shall mean the allotment of a
Non-Contributing Partner's Partnership
Interest, either for the calculation of a
Buyout or a Dilution by each respective
Partner electing to participate in a
Buyout or a Dilution. Each respective
Partner electing to participate in a
Buyout or a Dilution shall be entitled to
an amount of Partnership Interest
equal to the product of (X)(A/B). For the
purposes of calculating each
respective allotment: "X" shall be the
amount of Partnership Interest that (1)
in the case of a Dilution, a
Non-Contributing Partner would have received in
exchange for its Capital Contribution due
to be made under a Capital Call or (2)
in the case of a Buyout, the total amount
of Partnership Interest owned by a
Non-Contributing Partner; "A" shall be the
total amount of Partnership Interest
owned by the respective Partner
participating in the Buyout or Dilution; "B"
shall be the total number of shares owned
by all Partners participating in the
Buyout or Dilution.
"Partners"
shall mean the General Partner and the Limited Partners.
"Partnership" shall mean West Fork Pipeline Company LP, a Texas
limited
partnership.
"Partner
Nonrecourse Debt" shall mean any nonrecourse debt of the
Partnership for which any Partner bears the
economic risk of loss.
"Partner
Nonrecourse Deductions" shall mean the amount of deductions,
losses and expenses equal to the net
increase during the year in Minimum Gain
attributable to a Partner Nonrecourse Debt,
reduced (but not below zero) by
proceeds of such Partner Nonrecourse Debt
distributed during the year to the
Partners who bear the economic risk of loss
for such debt, as determined in
accordance with applicable Treasury
Regulations.
"Partnership Interest" shall mean a Partner's interest in the
Partnership,
including the right to receive
distributions of the Partnership's assets and the
right to receive allocations of income,
gain, loss, deduction, or credit of the
Partnership.
"Partnership Nonrecourse Liabilities" shall mean nonrecourse
liabilities
(or portions thereof) of the Partnership
for which no Partner bears the economic
risk of loss.
"person"
shall include an individual, an estate, a limited liability
company, a corporation, a partnership, an
association, a joint stock company and
a trust.
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"Pipeline"
shall have the meaning assigned to such term in the recitals to
this Agreement.
hereof.
"Regulatory Allocations" shall have the meaning assigned to such
term in
Section 4.1(f) hereof.
"Securities Act" shall be the Securities Act of 1933, as amended,
and the
rules and regulations promulgated
thereunder.
"Sharing
Ratio" shall mean for each Partner the percentage set forth by
the name of such Partner on Exhibit A
hereof.
"Working
Interest" shall mean a real property interest in the AMI
entitling the owner to receive a specified
percentage of proceeds from the sale
of oil and gas production or a percentage
of such production, but requiring such
owner to bear the costs to explore for,
develop and produce such oil and gas.
Section
2.2. References and Titles. All references in this Agreement to
articles, sections, subsections and other
subdivisions refer to corresponding
articles, sections, subsections and other
subdivisions of this Agreement unless
expressly provided otherwise.
Titles
appearing at the beginning of any of such subdivisions are for
convenience only and shall not constitute
part of such subdivisions and shall be
disregarded in construing the language
contained in such subdivisions. The words
"this Agreement," "herein," "hereof,"
"hereby," "hereunder" and words of similar
import refer to this Agreement as a whole
and not to any particular subdivision
unless expressly so limited. Pronouns in
masculine, feminine and neuter genders
shall be construed to include any other
gender, and words in the singular form
shall be construed to include the plural
and vice versa, unless the context
otherwise requires.
ARTICLE III
Capitalization and Partnership Expenses
Section
3.1. Capital Contributions of Partners.
(a)
Concurrently with its execution of this Agreement, the General
Partner
has made a Capital Contribution of
$5,263.16 to the capital of the Partnership.
(b)
Concurrently with their respective execution of this Agreement,
each
Limited Partner other than Dale Gas shall
contribute cash to the capital of the
Partnership as such Limited Partner's
respective Capital Contribution to the
Partnership in the respective amounts set
forth opposite their respective
signatures to this Agreement.
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(c) In
consideration for their provision of the Organizational
Services
and other valuable contributions to the
Partnership, Dale Gas and Fulcrum LP
shall collectively receive credit for
having made Capital Contributions to the
Partnership in an aggregate amount equal to
one third (1/3) of every dollar of
cash and the fair market value of any
property with respect to the first
$1,000,000 of Capital Contributions made to
the Partnership by the Limited
Partners. These Capital Contributions shall
be divided between Dale Gas and
Fulcrum LP with 89.5% of such contributions
deemed to be made by Dale Gas and
10.5% of such contributions deemed to be
made by Fulcrum LP. All such Capital
Contributions deemed to be made by Dale Gas
and Fulcrum LP to the Partnership
pursuant to the immediately preceding
sentence shall be credited to the Capital
Accounts of Dale Gas and Fulcrum LP, and
the amounts so credited shall be deemed
to have been transferred to Dale Gas and
Fulcrum LP as consideration for their
provision of the Organizational Services
and such amounts (together with any tax
deductions relating thereto) shall be
charged against the Capital Accounts of
the Limited Partners who initially made
such Capital Contributions. To
illustrate, if the Limited Partners
contribute $1,000 to the Partnership in cash
or property, Dale Gas shall receive a
credit of $298.33 (89.5% of 1/3 of the
Limited Partners' Capital Contributions) to
its Capital Account and Fulcrum LP
shall receive a credit $35 (10.5% of 1/3 of
the Limited Partners' Capital
Contributions) to its Capital Account. At
the request of the General Partner,
Dale Gas and Fulcrum LP may mutually elect
to consent in writing to the
terminate their collective right to receive
credit to their Capital Accounts
pursuant to this Section 3.1(c) with
respect to any additional Capital
Contributions made to the Partnership if
total Capital Contributions do not
exceed $1,000,000.
Section
3.2. No Other Required Capital Contributions. Notwithstanding
anything to the contrary contained herein,
the Capital Contributions contributed
by the Partners pursuant to Section 3.1
shall be the maximum contribution to the
Partnership that the Partners shall be
required to make (unless otherwise
provided in Section 3.3).
Section
3.3. Additional Capital Contributions. At any time after the
making of the Capital Contributions
referred to in Section 3.1, the General
Partner may request that each Partner make
additional Capital Contributions to
the Partnership in accordance with each
Partner's Sharing Ratio for uses as are
consistent with the purposes of the
Partnership (such a request being a
("Capital Call").
Any
Partner who is a Non-Participating Working Interest Owner in any
well
to which the Partnership has extended the
Pipeline or for which a Capital Call
has been made by the General Partner to
construct an extension to the Pipeline
is not eligible to make any Capital
Contributions in any response to any Capital
Call.
In the
event that a Partner shall decline or is not eligible to make
all
or any portion of the additional Capital
Contributions in response to a Capital
Call at any time (such a Partner being a
"Non-Contributing Partner"), the
General Partner may elect to take any of
the following actions at any time:
(a) The
General Partner may allow Partners electing to make additional
Capital Contributions to purchase such
Non-Contributing Partner's Partnership
Interest on a Participating
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Pro-Rata Basis for 110% of the total of all
Capital Contributions made by such
Non-Contributing Partner (a "Buy Out");
(b) The
General Partner may allow the Partners electing to make
additional
Capital Contributions to pay all of the
additional Capital Contributions which a
Non-contributing Partner declines to make
on a Participating Pro-Rata Basis, and
the General Partner shall adjust the
Sharing Ratios accordingly (a "Dilution");
or
(c) The
General Partner may cause the Partnership and/or the Partners
to
take such other actions upon which the
Partners shall agree.
In any
case, a Non-Contributing Partner may not make any future
Capital
Contributions in response to any future
Capital Calls.
Section
3.4. Non-payment of Capital Contributions.
(a) The
Partnership shall have the right to pursue any remedy existing
at
law or in equity for the collection of the
unpaid amount of the Capital
Contributions agreed to be made in Section
3.1 or hereafter agreed to be made in
accordance with Section 3.3, including
without limitation the prosecution of a
suit against a defaulting Partner. If the
unpaid amount is given to an attorney
for collection, or suit is filed thereon,
and as often as any such event occurs,
the Partnership shall be entitled to
recover all costs of collection, including
without limitation reasonable attorneys'
fees and costs. All delinquent amounts,
and all costs of collection, shall be
payable to the Partnership together with
interest at 18% per annum from the due date
until paid. No right, power, or
remedy conferred upon the Partnership and
the General Partner in this Section
3.4 shall be exclusive, and each such
right, power or remedy shall be cumulative
and in addition to all other rights, powers
or remedies available at law, in
equity, by statute or otherwise.
(b) The
Partnership may retain any revenues otherwise distributable to
a
defaulting Partner pursuant to this
Agreement in an amount equal to the amount
such Partner failed or refused to
contribute as required pursuant to the terms
of this Agreement, together with interest
on such past-due amounts at a rate
equal to the Agreed Rate. Any amount so
withheld shall be deemed, for all
purposes of this Agreement, to have been
distributed to the defaulting Partner
and, other than that portion of such
amounts representing interest, be deemed to
have been recontributed by the defaulting
Partner to the capital of the
Partnership for the purposes for which
contributions were initially requested.
To the extent that a. Partner has advanced
funds to the Partnership as a result
of the default of a Partner, such Partner
shall be entitled to be reimbursed
from the amounts so withheld from the
defaulting Partner.
Section
3.5. Return of Capital Contributions. Except as provided in
Section 3.6, no interest shall accrue on
any contributions to the capital of the
Partnership; and no Partner shall have the
right to withdraw or be repaid any
capital contributed by such Partner except
as provided in Section 8.2 of this
Agreement. All interest that accrues on
Partnership funds shall be allocated and
credited to the Partners in accordance with
Section 4.1.
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Section
3.6. Payments and Advances by General Partner. The General
Partner
shall have the right to pay any
indebtedness or obligation of the Partnership
out of funds of the General Partner, and
may bill the Partnership in the same
manner that the Partnership may bill the
Limited Partners. Further, if at any
time the General Partner advances funds to
or on behalf of the Partnership or
the General Partner is required to pay any
indebtedness or obligation of the
Partnership in excess of the Capital
Contributions of the General Partner agreed
to be made in this Article III, such
advance or payment shall constitute a loan
by the General Partner to the Partnership.
If any such advance or payment is
outstanding for more than sixty (60) days
and except as provided in Section 3.5,
such advance or payment shall bear interest
from the date first made at a rate
equal to the Agreed Rate. No such advance
or payment by the General Partner
shall be deemed to be a contribution by the
General Partner to the capital of
the Partnership. Any loan made by the
General Partner hereunder to pay any costs
or expenses allocated and charged to any
Partner shall be repaid (with payments
to be applied first to the payment of
interest and then to the repayment of
principal) from the revenues that would
otherwise be next distributed to such
Partner hereunder.
ARTICLE IV
Allocations and Distributions
Section 4.1. Allocations.
(a) Except
as otherwise provided in Section 3.2 or in this Article IV, all
Partnership profits and losses, and the
related items of income, gain, loss,
deduction and credit for federal income tax
purposes, shall be allocated or
credited to the Partners in accordance with
each Partner's respective Sharing
Ratio.
(b)
Extraordinary Gain shall be allocated in such manner as shall
cause
the Capital Accounts of the Partners to
equal, as nearly as possible, the
amounts such Partners would receive if all
assets on hand were sold for cash at
their respective fair market values and
such cash were distributed to the
Partners in accordance with their Sharing
Ratios. The term "Extraordinary Gain@
shall mean gain from the sale, deemed sale
or other disposition of all or
substantially all of the assets of the
Partnership. A deemed sale of all or
substantially all of the assets of the
Partnership shall occur upon a
dissolution of the Partnership, admission
of a new Partner, or any other event
that would require a revaluation of the
Partners' Capital Accounts under
Treasury Regulation Section
1.704-1(b)(2)(iv).
(c)
Notwithstanding any of the foregoing provisions of this Section 4.1
to
the contrary:
(i) If during any fiscal year of the Partnership there is a net
increase
in Minimum Gain attributable to a Partner Nonrecourse Debt that
gives rise
to Partner Nonrecourse Deductions, each Partner bearing the
economic
risk of loss for such Partner Nonrecourse Debt shall be
allocated
items of
Partnership deductions and losses for such year (consisting
first
of cost
recovery or depreciation deductions with respect
10
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to
property that is subject to such Partner Nonrecourse Debt and then,
if
necessary,
a pro rata portion of the Partnership's other items of
deductions
and losses, with any remainder being treated as an increase in
Minimum
Gain attributable to Partner Nonrecourse Debt in the subsequent
year)
equal to such Partner's share of Partner Nonrecourse Deductions,
as
determined
in accordance with applicable Treasury Regulations.
(ii) If for any fiscal year of the Partnership there is a net
decrease
in Minimum Gain attributable to Partnership Nonrecourse
Liabilities, each Partner shall be allocated items of Partnership
income
and gain
for such year (consisting first of gain recognized from the
disposition of Partnership property subject to one or more
Partnership
Nonrecourse Liabilities and then, if necessary, for subsequent
years)
equal to
such Partner's share of such net decrease (except to the extent
such
Partner's share of such net decrease is caused by a change in
debt
structure with such
Partner commencing to bear the economic risk of loss
as to all
or part of any Partnership Nonrecourse Liability or by such
Partner
contributing capital to the Partnership that the Partnership
uses
to repay a
Partnership Nonrecourse Liability), as determined in accordance
with
applicable Treasury Regulations.
(iii) If for any fiscal year of the Partnership there is a net
decrease
in Minimum Gain attributable to a Partner Nonrecourse Debt,
each
Partner
shall be allocated items of Partnership income and gain for
such
year
(consisting first of gain recognized from the disposition of
Partnership property subject to Partner Nonrecourse Debt, and then
if
necessary,
a pro rata portion of the Partnership's other items of income
and gain,
and if necessary, for subsequent years) equal to such Partner's
share of
such net decrease (except to the extent such Partner's share of
such net
decrease is caused by a change in debt structure or by the
Partnership's use of capital contributed by such Partner to repay
the
Partner's
Nonrecourse Debt) as determined in accordance with applicable
Treasury
Regulations.
(d) The
losses and deductions allocated pursuant to this Section 4.1
for
any fiscal year shall not exceed the
maximum amount that can be allocated to a
Partner without causing or increasing a
deficit balance in the Partner's
Adjusted Capital Account. All losses or
deductions in excess of the limitations
set forth in this Section 4.1 (d) shall be
allocated to Partners with positive
Adjusted Capital Account balances remaining
at such time in proportion to such
positive balances.
(e) In the
event that a Partner unexpectedly receives any adjustment,
allocation or distribution described in
Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) that
causes or increases a deficit balance
in such Partner's Adjusted Capital Account
balance, items of Partnership income
and gain shall be allocated to that Partner
in an amount and manner sufficient
to eliminate the deficit balance as quickly
as possible.
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<PAGE>
(f) The
allocations set forth in subsections (c), (d) (last sentence)
and
(e) (collectively, the "Regulatory
Allocations") are intended to comply with
certain requirements of the Treasury
Regulations.
It is the
intent of the Partners that, to the extent possible, all
Regulatory Allocations that are made be
offset either with other Regulatory
Allocations or with special allocations
pursuant to this Section 4.1(f).
Therefore, notwithstanding any other
provisions of this Article IV (other than
the Regulatory Allocations), the General
Partner shall make such offsetting
special allocations in whatever manner it
determines appropriate so that, after
such offsetting allocations are made, each
Partner's Adjusted Capital Account
balance is, to the extent possible, equal
to the Adjusted Capital Account
balance such Partner would have had if the
Regulatory Allocations were not part
of the Agreement and all Partnership items
were allocated pursuant to the
remaining sections of this Article IV.
Section
4.2. Section 704(c) Allocations. In accordance with Section
704(c)
of the Internal Revenue Code and the
Treasury Regulations thereunder, income and
deductions with respect to any property
contributed to the Partnership shall,
solely for federal income tax purposes, be
allocated among the Partners in a
manner to take into account any variation
between the adjusted tax basis of such
property to the Partnership and its fair
market value at the time of
contribution. In making such allocations,
the General Partner shall use such
method or methods of allocation as it shall
determine, in good faith, to be
reasonable and in accord with applicable
Treasury Regulations.
Section
4.3. Distributions. The General Partner may distribute funds of
the Partnership at such times and in such
amounts as the General Partner
determines in its absolute discretion to be
appropriate. Any such distributions
shall be made to the Partners in accordance
with the Partners' Sharing Ratios.
All
distributions in liquidation of a Partner's interest in the
Partnership shall be made in accordance
with Section 8.2.
ARTICLE V
Management
Section
5.1. Power and Authority of General Partner. The General
Partner
shall have full and exclusive power and
authority on behalf of the Partnership
to manage, control, administer and operate
the assets, business and affairs of
the Partnership and to do or cause to be
done any and all acts deemed by the
General Partner to be necessary or
appropriate thereto, and the Limited Partners
shall have no right of control over the
business and affairs of the Partnership.
In addition to the powers now or hereafter
granted a general partner of a
limited partnership under the Act or which
are granted to the General Partner
under any other provision of this
Agreement, the General Partner shall have full
power and authority to do all things deemed
necessary or desirable by it to
conduct the business of the Partnership in
the name of the Partnership,
including, without limitation, the right
and power to:
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<PAGE>
(a) To
purchase or otherwise acquire ownership interests in any real
or
personal property of every nature
considered necessary or appropriate to carry
on and conduct the business of the
Partnership;
(b) To
borrow monies for the use in the Partnership's business and
from
time to time to draw, make, execute and
issue promissory notes and other
negotiable or non-negotiable instruments
and evidences of indebtedness; to
secure the payment of the sums so borrowed
and to mortgage, pledge or assign in
trust all or any part of the property of
the Partner
