Agreement of Limited Partnership Of Merry Maids Limited Partnership

 

 

Provisions

 

NOW THEREFORE, in consideration of the commitments contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

 

1.       Assignment of Partnership Interest . Consumer Services LP assigns its 1% general partnership interest to MM Maids.

 

2.       Partners after Assignment . As a result of the transaction contemplated by this Amendment, MM Maids is the sole general partner of Merry Maids LP and Consumer Services LP is the sole limited partner of Merry Maids LP.

 

3.       No Other Changes . The parties make no changes to the LP Agreement other than the changes described in this Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Amendment on the date first mentioned above.

 

	ServiceMaster Consumer Services
	Limited Partnership
	By: ServiceMaster Consumer Services, Inc.
	By:	/s/ Lawrence L. Mariano
		Lawrence L. Mariano, III
		Senior Vice President
	MM Maids L.L.C.
	By:	/s/ Amelia N. Blanton
		Amelia N. Blanton
		Vice President & Secretary

 

 

Amendment No. 4

 

Agreement of Limited Partnership
Of
Merry Maids Limited Partnership
Dated June l7, 1988,
As amended August 5, 1998

 

THIS AMENDMENT is made on December 31, 2002, by and between ServiceMaster Consumer Services Limited Partnership, a Delaware limited partnership (“Consumer Services LP”) and ServiceMaster Consumer Services, Inc., a Delaware corporation (“Consumer Services”).

 

Recitals

 

A.      The current partners of Merry Maids Limited Partnership (“Merry Maids LP”) are as follows:

 

 

B.      Pursuant to that certain Agreement of Limited Partnership of Merry Maids Limited Partnership, dated June 17, 1988, as amended August 5, 1998 (“LP Agreement”), Consumer Services has exercised its right to assign its 1% general partnership interest to Consumer Services LP.

 

C.      As a result of the transaction contemplated by this Amendment, the partners of Merry Maids LP will be as follows:

 

 

 

Provisions

 

NOW THEREFORE, in consideration of the commitments contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

 

1.      Assignment of Partnership Interest . Consumer Services assigns its 1% general partnership interest to Consumer Services LP.

 

2.      Partners after Assignment . As a result of the transaction contemplated by this Amendment, Consumer Services LP is the sole general partner of Merry Maids LP and Consumer Services LP is the sole limited partner of Merry Maids LP.

 

3.      No Other Changes . The parties make no changes to the LP Agreement other than the changes described in this Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Amendment on the date first mentioned above.

 

	ServiceMaster Consumer Services
	Limited Partnership
	By: ServiceMaster Consumer Services, Inc.
	By:	/s/ Lawrence L. Mariano
		Lawrence L. Mariano, III
		Senior Vice President
`	ServiceMaster Consumer Services, Inc.
	By:	/s/ Ernest J. Mrozek
		Ernest J. Mrozek
		President

 

 

Amendment No. 3

 

Agreement of Limited Partnership

Of

Merry Maids Limited Partnership

Dated June 17, 1988,
As amended August 5, 1998

 

THIS AMENDMENT is made on December 31, 2002, by and between ServiceMaster Consumer Services Limited Partnership, a Delaware limited partnership (“Consumer Services LP”) and Merry Maids, Inc., a Delaware corporation (“MM Inc.”).

 

Recitals

 

A.      The current partners of Merry Maids Limited Partnership (“Merry Maids LP”) are as follows:

 

 

B.      Pursuant to that certain Agreement of Limited Partnership of Merry Maids Limited Partnership, dated June 17, 1988, as amended August 5, 1998 (“LP Agreement”), MM Inc. has exercised its right to assign its 1% general partnership interest to ServiceMaster Consumer Services, Inc. (“Consumer Services”).

 

C.      As a result of the transaction contemplated by this Amendment, the partners of Merry Maids LP will be as follows:

 

 

 

Provisions

 

NOW THEREFORE, in consideration of the commitments contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

 

1.      Assignment of Partnership Interest . MM Inc. assigns its 1% general partnership interest to Consumer Services.

 

2.      Partners after Assignment . As a result of the transaction contemplated by this Amendment, Consumer Services is the sole general partner of Merry Maids LP and Consumer Services LP is the sole limited partner of Merry Maids LP.

 

3.      No Other Changes . The parties make no changes to the LP Agreement other than the changes described in this Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Amendment on the date first mentioned above.

 

	ServiceMaster Consumer Services
	Limited Partnership
	By: ServiceMaster Consumer Services, Inc.
	By:	/s/ Lawrence L. Mariano
		Lawrence L. Mariano, III
		Senior Vice President
`	Merry Maids, Inc.
	By:	/s/ Amelia N. Blanton
		Amelia N. Blanton
		Vice President

 

 

Amendment No. 2

 

Agreement of Limited Partnership
of
Merry Maids Limited Partnership
dated June 17, 1988

 

THIS AMENDMENT is made on August 5, 1998 by and among ServiceMaster Consumer Services Limited Partnership, a Delaware limited partnership (“ServiceMaster Consumer Services L.P.”), and Merry Maids Limited Partnership, a Delaware limited partnership (“Merry Maids L.P.”)

 

Recitals

 

A.      The current partners of Merry Maids L.P. are as follows:

 

 

B.      Pursuant to that certain Agreement of Limited Partnership of Merry Maids L.P., dated June 17, 1988 (“LP Agreement”), ServiceMaster Consumer Services L.P. has exercised its right to assign its .09% partner interest to Merry Maids, Inc.

 

C.      As a result of the transaction contemplated by this Amendment, the partners of Merry Maids L.P. will be as follows:

 

 

Provisions

 

NOW THEREFORE, in consideration of the commitments contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

 

1.      Assignment of Partner Interest . ServiceMaster Consumer Services L.P. assigns its .09% partner interest to Merry Maids, Inc.

 

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2.      Partners after Assignment . As a result of the transaction contemplated by this Amendment, Merry Maids, Inc. is the sole general partner of Merry Maids L.P., and ServiceMaster Consumer Services L.P. is the sole limited partner of Merry Maids L.P.

 

3.      No Other Changes . The Parties make no changes to the LP Agreement other than the changes described in this Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Amendment on the date first mentioned above.

 

Merry Maids, Inc.			ServiceMaster Consumer Services Limited
			Partnership
			By:	ServiceMaster Consumer Services, Inc.,
				general partner
By:	/s/ Michael M. Isakson		By:	/s/ Ernest J. Mrozek
	Michael M. Isakson			Ernest J. Mrozek
	President			President

 

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Amendment No. 1

 

Agreement of Limited Partnership
of
Merry Maids Limited Partnership
dated June 17, 1988

 

THIS AMENDMENT is made on August 5, 1998 by and among TSSGP Limited Partnership, a Delaware limited partnership (“TSSGP”), and Merry Maids Limited Partnership, a Delaware limited partnership (“Merry Maids L.P.”).

 

Recitals

 

A.      The current partners of Merry Maids L.P. are as follows:

 

 

B.      TSSGP desires to withdraw as the Special General Partner of Merry Maids L.P.

 

C.      ServiceMaster Consumer Services L.P. and Merry Maids, Inc. desire to approve the withdrawal of TSSGP as the Special General Partner under the Agreement of Limited Partnership of Merry Maids L.P., dated June 17, 1988 (“LP Agreement”).

 

D.      As a result of the transaction contemplated by this Amendment, the partners of Merry Maids L.P. will be as follows:

 

 

Provisions

 

NOW THEREFORE, in consideration of the commitments contained in this Amendment and for other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

 

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1.      Withdrawal of TSSGP . TSSGP withdraws as the Special General Partner from Merry Maids L.P.

 

2.      Approval of Withdrawal . ServiceMaster Consumer Services L.P. and Merry Maids, Inc. approve of the withdrawal by TSSGP as the Special General Partner under the LP Agreement.

 

3.      Partners after Withdrawal . As a result of the withdrawal of TSSGP, Merry Maids, Inc. is the sole general partner of Merry Maids L.P., and ServiceMaster Consumer Services L.P. is the sole limited partner of Merry Maids L.P.

 

4.      No Other Changes . The Parties make no changes to the LP Agreement other than the changes described in this Amendment.

 

IN WITNESS WHEREOF, the parties have executed this Amendment on the date first mentioned above.

 

Merry Maids, Inc.			TSSGP Limited Partnership
			(withdrawing limited partner)
			By:	TSSGP Management Corporation, general
				partner
By:	/s/ Michael M. Isakson		By:	/s/ Robert F. Keith
	Michael M. Isakson			Robert F. Keith
	President			Vice President
ServiceMaster Consumer Services Limited Partnership
By:	ServiceMaster Consumer Services,
	Inc., general partner
By:	/s/ Ernest J. Mrozek
	Ernest J. Mrozek
	President

 

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1.2                     Name . The name of the Partnership shall be, end the business of the Partnership shall be conducted under the name of, “Merry Maids Company Limited Partnership.” The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate. The words “Limited Partnership” shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole discretion may change the name of the Partnership at any time and from time to time.

 

1.3                     Registered Office: Principal Office . (a) The address of the registered office of the Partnership in the State of Delaware shall be Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and the registered agent for service of process on the Partnership in the State of Delaware at such registered office shall be The Corporation Trust Company.

 

(b)                     The principal office of the Partnership shall be 2300 Warrenville Road, Downers Grove, Illinois 60515, or such other place as the General Partner may from time to time designate to the Partners. The Partnership may maintain offices at such other place or places as the General Partner deems advisable.

 

1.4                     Power of Attorney . (a) Each Partner hereby constitutes and appoints the General Partner and the Liquidator (and any successor to either thereof by merger, assignment, election or otherwise) with full power of substitution as his true and lawful agent and attorney-in-fact, with full power and authority in his name, place and stead, to:

 

(i)                         execute, swear to, acknowledge, deliver, file and record in the appropriate public office:

 

(A)                   this Agreement, all certificates and other instruments and all amendments thereof which the General Partner or the Liquidator deems reasonable and appropriate or necessary to form, qualify or

 

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continue the qualification of, the Partnership as a limited partnership (or a partnership in which limited partners have limited liability) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property; (B) all instruments which the General Partner or the Liquidator deems appropriates or necessary to reflect any amendment, change, modification or restatement of this Agreement made in accordance with its terms; (C) all conveyances and other instruments or documents which the General Partner or the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including a certificate of cancellation; and (D) all instruments relating to the admission, withdrawal or substitution of a partner pursuant to Article XI;

 

(ii)                      execute, swear to and acknowledge all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole discretion of the General Partner or the Liquidator, to make, evidence, give, confirm, or ratify any vote, consent, approval, agreement or other action which is made or given by the Partners hereunder or is consistent with the terms of this Agreement and/or appropriate or necessary, in the sole discretion of the General Partner or the Liquidator, to effectuate the terms or intent of this Agreement.

 

Nothing herein contained shall be construed as authorizing the General Partner to amend this Agreement except in accordance with Article XIV or as otherwise expressly provided for in this Agreement.

 

(b)                     The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and not be affected by the subsequent dissolution, bankruptcy or termination of any Partner or the transfer of all

 

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or any portion of its Partnership Interest and shall extend to such Partner’s successors, assigns and representatives. Each such Partner, in its capacity as such, hereby agrees to be bound by any representations made by the General Partner or the Liquidator, acting in good faith pursuant to such power of attorney; and each such Partner hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the General Partner or the Liquidator, taken in good faith under such power of attorney. Each Partner shall execute and deliver to the General Partner or the Liquidator, within 15 days after receipt of the General Partner’s or the Liquidator’s request therefor, such further designations, powers of attorney and other instruments as the General Partner or the Liquidator deem necessary to effectuate this Agreement and the purposes of the Partnership.

 

1.5                     Term . The Partnership commenced upon the filing of the Certificate of Limited Partnership in accordance with the Delaware Act and the Partnership shall continue in existence until the close of the Partnership business on December 31, 2038 or until the earlier termination of the Partnership in accordance with the provisions of Article XIV.

 

ARTICLE II

 

Definitions

 

2.1                     Defined Terms . Unless clearly indicated to the contrary, the following definitions shall, for all purposes, be applied to the terms used in this Agreement:

 

“Adjusted Capital Account Deficit” means, with respect to the Special General Partner or the Limited Partner, the deficit balance, if any, in such Partner’s Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments:

 

(1)                      Credit to such Capital Account any amounts which such Partner is obligated to restore pursuant to any provision of this Agreement or is deemed to be

 

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obligated to restore pursuant to the penultimate sentence of Treasury Regulation §l.704-1(b)(4)(iv)(f);

 

(ii)                      Debit to such Capital Account the items described in Treasury Regulation §1.704-1(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 Regulation §1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

“Affiliate” means any Person that directly or indirectly controls, is controlled by, or is under common control with, the Person in question. As used in the definition of “Affiliate”, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Business Day” means Monday through Friday of each week, except that a holiday recognized as such by the Government of the United States or the states of Illinois or Nebraska shall not be regarded as a Business Day.

 

“Capital Account” means the capital account maintained for a Partner pursuant to Section 4.4.

 

“Capital Contribution” means any cash and cash equivalent which a Partner contributes to the Partnership pursuant to Article V.

 

“Certificate of Limited Partnership” means the Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware pursuant to Section 1.4, as it may be amended and/or restated from time to time.

 

“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time, and applicable regulations thereunder. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.

 

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“Commencement Date” means the Closing Date as defined in the Merry Maids Acquisition Agreement.

 

“Corporate Capital Contribution” means any cash and cash equivalent which a stockholder of the Special General Partner contributes to the Special General Partner pursuant to the stockholders agreement which is referred to in the Merry Maids Acquisition Agreement.

 

“Delaware Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del Code, Sections 17-101, et seq, as it may be amended from time to time, and any successor to such Act.

 

“Designated Amount” means, with respect to the Special General Partner: (i) the amount equal to the total of all payments which would be due on the Equity Loan for each Fiscal Year under the assumption that all of the stockholders of the Special General Partner borrowed the entire amount of their Corporate Capital Contributions from the same lender under the same terms and conditions as established for the Equity Loan, plus (ii) the annual federal and state tax obligations imposed on the stockholders of the Special General Partner because of Partnership earnings allocated to such stockholders minus the value of any tax benefit attributable to interest payments made on the Equity Loan.

 

“Equity Loan” means the loan arranged by the Buyer under the Merry Maids Acquisition Agreement in order to fund the Corporate Capital Contribution of the Special General Partner hereunder.

 

“Fiscal Year” means the calendar year.

 

“General Partner” means Merry Maids MGP, Inc., a Delaware corporation.

 

“General Partners” means the General Partner and the Special General Partner collectively.

 

“Limited Partner ^” means The ServiceMaster Company.

 

“Liquidator” has the meaning specified in Section 14.3.

 

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“Merry Maids Acquisition Agreement” means the Agreement for the Purchase and Sale of Assets by and between Merry Maids, Inc., and the Partnership dated July  5, 1988.

 

“Opinion of Counsel” means a written opinion of counsel acceptable to the General Partner. Such counsel may be the regular counsel to the Partnership or the General Partner.

 

“Net Cash Flow” means the total cash receipts generated from the operations of the Partnership, the sale or other disposition of any Partnership property or otherwise (but specifically excluding (i) receipts from Capital Contributions and (ii) proceeds from loans to the Partnership), reduced by: (a) all expense incident to the operation and management of the Partnership (but excluding any expense not involving a cash outlay, such as amounts charged for depreciation); (b) all current payments on account of any loans to the Partnership, including without limitation debt service to third party lenders; (c) expenditures for capital assets not financed through reserves previously set aside by the Partnership for such purposes; and (d) reasonable reserves for working capital and future obligations.

 

“Partners” means the General Partner, the Special General Partner and the Limited Partner.

 

“Partnership” means the limited partnership organized pursuant to this Agreement.

 

“Partnership Interest” means the ownership interest of a Partner in the Partnership.

 

“Percentage Interest” means the ratio of the number of Units held by a person to the total number of Units, expressed as a percentage. At the Commencement Date, the Percentage Interests of the Partners are: the General Partner: 1%; the Special General Partner: 10%; the Limited Partner: 89%.

 

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“Person” means an individual or a corporation, partnership, trust, unincorporated organization, association or other entity.

 

“Special General Partner” means MMSGP, Inc., a Delaware corporation.

 

“Unit” means a one-tenth of one percent (0.1%) Partnership Interest.

 

ARTICLE III

 

Purpose

 

3.1                     Purpose . The purpose and business of the Partnership shall be the providing of maid service to the home and the granting of franchises for the conduct of such business. Such business shall include, without limitation, the acquisition, management, operation and disposition of the properties acquired by the Partnership under the Merry Maids Acquisition Agreement, the carrying on of any business relating thereto or arising therefrom, the entering into any partnership, joint venture or other similar arrangement, to engage in any of the foregoing or the ownership of interests in any entity engaged in any of the foregoing, and anything incidental or necessary to the foregoing, all for the production of income and profit.

 

ARTICLE IV

 

Capital Contributions

 

4.1                     General Partner . (a) The General Partner shall not be required to contribute to the capital of the Partnership except (i) as may be necessary to pay liabilities of the Partnership for which provision cannot otherwise be made through cash flow generated from operations of the Partnership or debt incurred in accordance with this Agreement or (ii) as otherwise expressly required pursuant to the provisions of this Agreement.

 

(b)                     The General Partner will at all times while serving in such capacity retain its Percentage Interest entitling it to a 1% participation in the Partnership’s income, gains, losses, deductions and credits, but only for so long as it continues to serve in such capacity.

 

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4.2                     Special General Partner . On the Commencement Date, the Special General Partner shall contribute to the Partnership cash in the amount of $2,500,000. Such amount shall be paid by cash, certified or cashier’s check or by wire transfer. The Special General Partner shall not be required to contribute any additional amounts to the Partnership.

 

4.3                     Limited Partner . On the Commencement Date, the Limited Partner shall contribute to the Partnership cash in the amount of $2,500,000.00.

 

4.4                     Capital Accounts . A separate Capital Account shall be maintained for each Partner in accordance with federal income tax accounting principles, maintained in accordance with Treasury Regulation Section 1.704-1 (b). The Capital Account of each Partner shall be increased by: (i) the amount of any cash and the fair market value of any property contributed to the Partnership by such Partner (net of liabilities secured by such contributed property that the Partnership is considered to assume or take subject to); (ii) the amount of Partnership income and gain or items thereof allocated to such Partner; (iii) such Partner’s prorata share (determined in the same manner as such Partner’s share of income, gains, losses, deductions and credits) of any other amount received by the Partnership during such year which is exempt from federal income tax; and (iv) other items to the extent mandated by Treasury Regulation Section 1.704-1 (b). The Capital Account of each Partner shall be reduced by: (i) the amount of money distributed to the Partner by the Partnership; (ii) the fair market value of property distributed by the Partnership to the Partner (net of liabilities secured by such distributed property that the Partner is considered to assume or take subject to); (iii) the amount of Partnership losses and deductions or items thereof allocated to the Partner; (iv) such Partner’s prorata share (determined in the same manner as such Partner’s prorata share of income, gains, losses, deductions or credits) of any other expenditures of the Partnership which are not deductible in computing the Partnership’s taxable income and which are not properly capitalized; and (v) other items to the extent mandated by Treasury Regulation Section 1.704 (b).

 

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4.5                     Interest . No interest shall be paid by the Partnership on Capital Contributions or on balances in Partners’ Capital Accounts.

 

4.6                     No Withdrawal . A Partner shall not be entitled to withdraw any part of its Capital Contribution or its Capital Account or to receive any distribution from the Partnership, except as provided in Article VI, Article XIII and Article XIV.

 

4.7                     Loans from Partners . Loans by a Partner to the Partnership shall not be considered Capital Contributions. If any Partner shall advance funds to the Partnership in excess the amounts required hereunder to be contributed by it to the capital of the Partnership the making of such advance shall not result in any increase in the amount of the Capital Account of such Partner. The amounts of any such advances shall be a debt of the Partnership to such Partner and shall be payable or collectible only out of the Partnership assets in accordance with the terms and conditions upon which such advances be made. All such advances shall be made on terms at least as favorable as the Partnership could bargain for at arms length with unrelated third party lenders.

 

4.9                     Units . There shall be no prohibition on the division of Units as to fractional Units by any Partner or the Partnership issuing or transferring such Units or parts thereof under this Agreement.

 

ARTICLE V

 

Allocations

 

5.1                     Determination of Profits and Losses . The profits and losses of the Partnership shall be determined for each Fiscal Year in accordance with the accrual method of accounting within ninety days after the end of such Fiscal Year. The terms “Profits” and “Losses” as used herein include each item of Partnership income, gain, loss, deduction and credit, as the case may be.

 

5.2                     Allocation of Profits and Losses. Except as otherwise provided herein, the Profits and Losses of the Partnership (including profit or loss on the sale of all or substantially all of the Partnership’s assets) shall be allocated with respect to each

 

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Fiscal Year to the Partners in accordance with their Percentage Interests.

 

5.3                     Allocation in the Event of Transfer . Each item of income, gain, loss, deduction or credit allocable to a Partner’s Percentage Interest that is transferred in whole or in part during any year shall, if permitted by law, be allocated according to the varying Percentage Interests of the Partners during the year. In applying this rule, the Partners shall prorate such Partnership items over the Partnership year by assigning the appropriate portion of each such item to each day in the period to which it is attributable.

 

5.4                     Allocation of Profits and Losses on Distribution of Assets in Kind . In the event that all or a portion of the assets of the Partnership are to be distributed to the Partners in kind, the Capital Accounts of the Partners shall be:

 

(a)                       increased by the gain which would have been recognized by the Partnership if the assets to be distributed in kind were sold by the Partnership at a price equal to the fair market value of such assets and any such Profits were allocated between the Partners in accordance with the provisions of this Article V; or

 

(b)                      decreased by the loss which would have been recognized by the Partnership if the assets to be distributed in kind were sold by the Partnership at a price equal to the fair market value of such assets and any such Losses were allocated between the Partners in accordance with the provisions of this Article V.

 

For purposes hereof the term “fair market value” shall be an amount agreed upon unanimously by the Partners within thirty days of a determination to distribute assets in kind pursuant hereto and, if not so agreed, by appraisal performed by an appraiser selected in the reasonable good faith discretion of the General Partner, provided such appraiser shall be an M.A.I. appraiser with at least five years prior experience in valuing similar assets.

 

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5.8                     Imputation of Profit or Loss . Notwithstanding anything to the contrary in this Agreement, and to the extent that, as a result of the Partnership engaging in any transaction with any Partner, any Partner is deemed to recognize income as a result of any transaction between such Partner and the Partnership pursuant to Sections 1272-1274, Section 7372, Section 483 or Section 482 of the Code, or any similar provision now or hereafter in effect, or the Partnership is deemed to receive income under any of these provisions, any corresponding resulting loss, deduction or income of the Partnership shall be allocated to the partner who engaged in such transaction with the Partnership.

 

5.9                     Minimum Gain . Notwithstanding any other provision of this Agreement, if the Limited Partner’s or the Special General Partner’s Capital Account has a deficit balance resulting in whole or in part from allocations of loss or deduction attributable to nonrecourse debt which is secured by Partnership property, which deficit balance exceeds such Partner’s share of minimum gain (as defined below), then gross income and gain shall first be allocated to such Partner in an amount equal to such excess. For purposes of this Section 5.9, “minimum gain” means the excess of the outstanding principal balance of nonrecourse debt which is secured by Partnership property over the Partnership’s adjusted tax basis of such property. The Partners hereby acknowledge that this Section 5.9 is intended to comply with the requirements of Treasury Regulation Section 1.704-l(b)(4)(iv) and is to be interpreted, if possible, to comply with the requirements of such regulation. The General Partner shall have complete discretion to amend this provision if such an amendment would not have a material adverse effect on the Special General Partner, or the Limited Partner, and if, in the opinion of counsel, such amendment is advisable to comply with Treasury Regulation Section 1.704-l(b)(4)(iv).

 

5.10               Qualified Income Offset. (a) Except as provided in Section 5.9, in the event that the Special General Partner or the Limited Partner unexpectedly receives an

 

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adjustment, allocation or distribution due to items set forth in Regulation Section l.704-l(b)(2)(ii)(d)(4), (5) or (6) that results in such Partner having an Adjusted Capital Account Deficit, such Partner shall, as quickly as possible and to the extent required by Treasury Regulation §1.704-l(b)(2)(ii)(d), be allocated items of gross income in an amount sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible.

 

(b)                     The Partners hereby acknowledge that this Section 5.10 is intended to comply with the requirements of Treasury Regulation §1.704-1(b)(2)(ii)(d), relating to a “qualified income offset”, and is to be interpreted, if possible, to comply with the requirements of such regulation. The General Partner shall have complete discretion to amend this provision if such an amendment would not have a material adverse effect on the Special General Partner or the Limited Partner and if in the opinion of counsel such amendment is advisable to comply with Treasury Regulation §1.704-1(b)(2)(ii)(d).

 

5.11               Limitation on Allocation of Losses . Notwithstanding the provisions of Section 5.2, Losses allocated pursuant to Section 5.2 shall not exceed the maximum amount of Losses that can be so allocated without causing the Limited Partner or Special General Partner to have an Adjusted Capital Account Deficit at the end of any Fiscal Year. All Losses in excess of the limitation set forth in this Section 5.11 shall be allocated to the General Partner.

 

5.12               Curative Allocations . Notwithstanding the provisions of Section 5.2, allocations pursuant to Sections 5.9, 5.10 and 5.11 shall be taken into account in allocating other Profits or Losses among the Partners so that to the extent possible the net amount of such allocations of other Profits or Losses and the allocations pursuant to Section 5.9, 5.10 and 5.11 to each Partner shall be equal to the net amount that would have been allocated to each such Partner if the allocations pursuant to Sections 5.9, 5.10 and 5.11 had not occurred.

 

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ARTICLE VI

 

Distributions of Net Cash Flow

 

6.1                     Distributions of Net Cash Flow; No Dissolution and Termination . (a) Net Cash Flow not distributed in connection with a dissolution and termination of the Partnership shall be distributed as provided in this Section 6.1.

 

(b)                     For the first five Fiscal Years of the Partnership, distributions of available Net Cash Flow shall be made at such times as the General Partner shall determine, but not-less often than quarterly, in the following manner: to the Special General Partner in an amount equal to the Designated Amount and the balance, to the General Partner and the Limited Partner, in proportion to their respective Percentage Interests.

 

(c)                      After the expiration of the fifth Fiscal Year of the Partnership, distributions of Net Cash Flow shall be distributed at such times as the General Partner shall determine in accordance with the Partners’ respective Percentage Interests.

 

6.2                     Distribution of Net Cash Flow Upon Dissolution and Termination . Distributions of Net Cash Flow upon dissolution and termination of the Partnership shall be made in accordance with the provisions of Section 14.3.

 

ARTICLE VII

 

Management and Operation of the Business

 

71.                     Management . (a) The General Partner shall conduct, direct and exercise full control over all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner and no other Partner shall have any right of control or management over the business and affairs of the Partnership; provided however, that the shareholders of the Special General Partner shall, at least initially, be employees of the Partnership, subject to the full authority of the General Partner as provided herein.

 

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(b)                     In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provisions 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, subject to the terms of this Agreement, including, without limitation —

 

(i)                         the making of any expenditures, the borrowing of money, the guaranteeing of indebtedness and other liabilities, the issuance of evidence of indebtedness, and the incurring of any obligations it deems necessary for the conduct of the activities of the Partnership in the ordinary course of business;

 

(ii)                      the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership and the merger of the Partnership with or into another entity;

 

(iii)                   the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose and on any terms it sees fit, including, without limitation, the financing of the conduct of the operations of the Partnership, the lending of funds to other Persons and the repayment of obligations of the Partnership;

 

(iv)                  the negotiation and execution on any terms deemed desirable in its sole discretion and the performance of any contracts, conveyances or other instruments that it considers useful or necessary to the conduct of the Partnership operations or the implementation of its powers under this Agreement;

 

(v)                     the distribution of Partnership cash as provided for herein;

 

(vi)                  the selection and dismissal of employees and outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring;

 

(vii)               the maintenance of such insurance for the benefit of the Partnership and the Partners as it deems necessary;

 

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(viii)            the formation of any further limited or general partnerships, joint ventures or other relationships that it deems desirable in the ordinary course of business;

 

(ix)                    the control of any matters affecting the rights and obligations of the Partnership, including, without limitation, the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation; and

 

(x)                       the purchase, sale or other acquisition or disposition of Units, at such times and on such terms as permitted pursuant to Article XIII hereof.

 

(b)                     The Special General Partner shall carry out such management responsibilities in respect of the business of the Partnership as the General Partner may delegate to the Special General Partner. Through the knowledge and activities of its shareholders, the Special General Partner shall be fully conversant, with the business and affairs of the Partnership and shall continually be prepared to make reports and recommendations to the General Partner regarding the management of and planning for the Partnership upon request therefor by the General Partner.

 

(c)                      The participation by the General Partner in any agreement authorized or permitted under this Agreement shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partner under this Agreement or under applicable law.

 

7.2                     Certificate of Limited Par