<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
EXCEL Communications, Inc.
--------------------------
(Name of Issuer)
Common Stock $.001 par value per share
--------------------------------------
(Title of Class of Securities)
300903101
---------
(CUSIP Number)
J. Christopher Dance
8750 North Central Expressway, Suite 2000, Dallas, Texas 75231, (214) 863-8000
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 28, 1996
---------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [ X ]. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 300903101
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1. NAME OF REPORTING PERSON - Kenny Allan Troutt Children's Trust II
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON - The Trust does not have
an I.R.S. identification number (since it is not required for
federal income tax purposes).
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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7. SOLE VOTING POWER
0
NUMBER OF
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 20,000,000
OWNED BY
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON WITH 0
10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
20,000,000
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.4%
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14. TYPE OF REPORTING PERSON
OO
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SCHEDULE 13D
CUSIP No. 300903101
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1. NAME OF REPORTING PERSON - Steven J. Troutt
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON - ###-##-####
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7. SOLE VOTING POWER
0
NUMBER OF
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 20,170,642
OWNED BY
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON WITH 0
10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
20,170,642
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.5%
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14. TYPE OF REPORTING PERSON
IN
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<PAGE>
Item 1. Security and Issuer.
-------------------
The name of the issuer is EXCEL Communications, Inc. (the
"Issuer"). The Issuer is organized under the laws of the State of
Delaware and its principal executive offices are located at 8750 North
Central Expressway, Suite 2000, Dallas, Texas 75231. The class of equity
securities to which this statement relates are shares of common stock,
par value $.001 per share, of the Issuer (the "Common Stock").
Item 2. Identity and Background.
-----------------------
(a) The persons filing this schedule are the Kenny Allan Troutt
Children's Trust II (the "KAT Children's Trust II") and Steven J.
Troutt. Steven J. Troutt is the trustee of the Kenny Allan Troutt
Children's Trust (the "KAT Children's Trust"), the Lisa Elaine Troutt
Children's Trust (the "LET Children's Trust"), and the KAT Children's
Trust II (the KAT Children's Trust II, the KAT Children's Trust and the
LET Children's Trust are collectively referred to herein as the
"Trusts").
(b) The business address of Steven J. Troutt, the KAT Children's
Trust, the LET Children's Trust and the KAT Children's Trust II is 8750
North Central Expressway, Suite 2000, Dallas, Texas 75231.
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(c) The principal business of each of the KAT Children's Trust
and the LET Children's Trust is to hold trust property, including shares
of Common Stock, to invest trust property, and to make distributions of
trust property in accordance with the terms of the Agreement and
Declaration of Trust of the KAT Children's Trust and of the LET
Children's Trust, respectively. The principal business of the KAT
Children's Trust II is to hold, administer and distribute the trust
property and all proceeds and accumulations with respect to the trust
assets held by the trust, according to the terms of the Trust Agreement
for the KAT Children's Trust II. The present principal occupation of
Steven J. Troutt is Director of Commissions of the Issuer (this is a
management position only, and Steven J. Troutt is not an officer or on
the Board of Directors of the Issuer).
(d) In the past five years, none of the KAT Children's Trust,
the LET Children's Trust, the KAT Children's Trust II or Steven J.
Troutt has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) In the past five years, none of the KAT Children's Trust,
the LET Children's Trust, the KAT Children's Trust II or Steven J.
Troutt has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation
with respect to such laws.
<PAGE>
(f) The place of organization for the KAT Children's Trust, the
LET Children's Trust and the KAT Children's Trust II is Texas. The place
of citizenship of Steven J. Troutt is the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Steven J. Troutt beneficially owns (i) 6,968 shares of Common
Stock in his individual capacity, which shares have been allocated to
him under the Issuer's employee stock ownership plan (the "ESOP"), and
(ii) an aggregate of 20,163,674 shares of Common Stock in his capacity
as trustee of the KAT Children's Trust, the LET Children's Trust and the
KAT Children's Trust II, which shares are held of record by Troutt
Partners, Ltd., a Texas limited partnership (the "Partnership"), and are
represented by limited partnership interests in the Partnership held by
the Trusts. The KAT Children's Trust II beneficially owns 20,000,000
shares held of record by the Partnership, which are represented by a
limited partnership interest in the Partnership held by the KAT
Children's Trust II.
The acquisition by Steven J. Troutt and the KAT Children's Trust
II of beneficial ownership of shares of Common Stock held of record by
the Partnership occurred as a result of the contribution by Kenny A.
Troutt of shares of Common Stock to the KAT Children's Trust and the LET
Children's Trust as a gift (and the subsequent contribution by those
Trusts of the shares to the Partnership in exchange for a partnership
interest) and the contribution by Kenny A. Troutt of shares of Common
Stock directly to the Partnership in exchange for a partnership interest
(and the subsequent contribution by Kenny A. Troutt of that partnership
interest to the KAT Children's Trust II as a gift).
No part of the acquisition price was represented by funds or
other consideration borrowed or otherwise obtained for the purpose of
acquiring, holding, trading or voting the securities.
Item 4. Purpose of Transaction.
----------------------
The purpose of the transaction was to establish, for estate
planning and tax purposes, a trust and a limited partnership (i.e., the
Partnership) to hold of record the shares of Common Stock previously
held by Kenny A. Troutt and his spouse (both as his separate property
and their community property) and by the KAT Children's Trust and the
LET Children's Trust. As part of such estate planning, a limited
partnership interest in the Partnership held by Kenny A. Troutt directly
was contributed to the KAT Children's Trust II. The Partnership
currently holds the shares of Common Stock held by it for investment
purposes only with the ultimate objective of realizing a capital gain
upon disposition. The Trusts hold the limited partnership interests in
the Partnership held by them for investment purposes only. None
<PAGE>
of the Trusts or Steven J. Troutt currently has any plans or proposals
that relate or would result in any of the actions set forth in parts (a)
through (j) of Item 4.
Item 5. Interest in Securities of the Issuer.
------------------------------------
Prior to August 15, 1996, Kenny A. Troutt, by gift, transferred an
aggregate of 81,837 shares of Common Stock held as his separate property
to the KAT Children's Trust. Also prior to August 15, 1996, Lisa Elaine
Troutt, the spouse of Kenny A. Troutt, transferred, by gift, an
aggregate of 81,837 shares of Common Stock held as her separate property
to the LET Children's Trust. On August 15, 1996, Kenny A. Troutt
transferred 20,000,000 shares held as his separate property to the
Partnership in exchange for a limited partnership interest.
Additionally, on August 15, 1996, the KAT Children's Trust transferred
81,837 shares to the Partnership for a general partnership interest and
the LET Children's Trust transferred 81,837 shares to the Partnership in
exchange for a limited partnership interest. As a result of these and
other estate planning transfers that also were effected on August 15,
1996, Kenny A. Troutt, the Partnership and the Troutt Family Trust filed
a Schedule 13D under the Securities Exchange Act of 1934, as amended, on
or about August 23, 1996.
<PAGE>
Thereafter, on August 28, 1996, Kenny A. Troutt transferred to
the KAT Children's Trust II, by gift, the limited partnership in the
Partnership representing the 20,000,000 shares he had previously
contributed to the Partnership.
The Agreement of Limited Partnership (the "Partnership
Agreement") of the Partnership provides that each partner (which
includes limited partners) has the right to vote the number of shares of
Common Stock held by the Partnership that equals the total number of
shares of such stock owned by the Partnership multiplied by the
Partnership interest for such partner. In addition, the Issuer's ESOP
provides that participants are entitled to direct the ESOP trustee as to
the manner in which the shares of Common Stock allocated to their
accounts will be voted.
As a result of these provisions, Steven J. Troutt beneficially
and indirectly owns, in his individual capacity (with respect to his
ESOP shares) and in his capacity as trustee of the Trusts, 20,170,642
shares of Common Stock because he has shared power to vote (i) the 6,968
shares of Common Stock allocated to his ESOP account (which voting power
is shared with the ESOP), (ii) the 81,837 shares of Common Stock held of
record by the Partnership and represented by the KAT Children's Trust's
general partnership interest in the Partnership (which voting power is
shared with the KAT Children's Trust) (iii) the 81,837 shares of Common
Stock held of record by the Partnership and represented by the LET
Children's Trust's limited partnership interest in the Partnership
(which voting power is shared with the LET Children's Trust), and (iv)
the 20,000,000 shares of Common Stock held of record by the Partnership
and represented by the KAT Children's Trust II's limited partnership
interest in the Partnership (which voting power is shared with the KAT
Children's Trust II). Steven J. Troutt does not hold any shares of
Common Stock of record. In addition, the KAT Children's Trust II
beneficially and indirectly owns, in its capacity as a limited partner
of the Partnership, the 20,000,000 shares of Common Stock held of record
by the Partnership and represented by the KAT Children's Trust II's
limited partnership interest in the Partnership (which voting power is
shared with Steven J. Troutt).
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
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The Partnership Agreement provides that each of the partners has
the right to vote the number of shares of Common Stock held by the
Partnership that equals the total number of shares of such stock owned
by the Partnership multiplied by the Partnership interest for such
partner. The Partnership Agreement also provides that a unanimous vote
of the partners may be required for certain dispositions of the
Partnership's assets.
<PAGE>
Item 7. Material to be Filed as Exhibits.
--------------------------------
Exhibit 1 Agreement of Limited Partnership of Troutt Partners, Ltd.
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Exhibit 2 Joint Filing Statement
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<PAGE>
SIGNATURES
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
THE KENNY ALLAN TRUST CHILDREN'S TRUST II
By: /s/ STEVEN J. TROUTT
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Steven J. Troutt, trustee Date: September 9, 1996
/s/ STEVEN J. TROUTT
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Steven J. Troutt, as trustee Date: September 9, 1996
of the Kenny Allan Troutt
Children's Trust II
<PAGE>
Exhibit
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Exhibit 1 Agreement of Limited Partnership
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of Troutt Partners, Ltd.
Exhibit 2 Joint Filing Statement
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<PAGE>
EXHIBIT 1
AGREEMENT OF LIMITED PARTNERSHIP
OF
TROUTT PARTNERS, LTD.
I. FORMATION AS A TEXAS LIMITED PARTNERSHIP
This limited partnership is created under the Texas Revised Limited
Partnership Act, Article 6132a-1, Vernon's Texas Revised Civil Statutes, this
15/th/ day of August 1996, among the undersigned General and Limited Partners.
This Partnership will become effective upon the execution of this Agreement and
the filing of the Certificate of Limited Partnership with the Texas Secretary of
State ("Effective Date"). The Partnership will not conduct any business until
the Effective Date.
II. PARTNERSHIP NAME
The name of the Partnership is Troutt Partners, Ltd.
III. REGISTERED AGENT, REGISTERED ADDRESS, AND PRINCIPAL OFFICE
The registered agent and street address for the Partnership in the State of
Texas is: Kenny Allan Troutt, at 10595 Strait Lane, Dallas, Texas 75229. The
street address of the Partnership's principal office in the United States is:
10595 Strait Lane, Dallas, Texas 75229. All records of the Partnership
required by the Act will be maintained at the principal office.
IV. DEFINITIONS
The use of any of the following defined terms in their uncapitalized form
shall indicate that the words have their normal meaning.
A. "Act" means the Texas Revised Limited Partnership Act, as amended and
any successor statute.
B. "Additional Proceedings" is defined in Article XVIII, Section K., of
this Agreement.
C. "Agreed Value" means the fair market value of any contributed or
distributed property net any liability assumed or taken subject to, as fair
market value is determined by the General Partner using any reasonable method of
valuation.
D. "Agreement" means this Agreement of Limited Partnership as amended.
E. "Allocation Regulations" means Treasury Regulations promulgated under
Sections 704(b) and 704(e) of the Code.
F. "Assignee" means a person who has acquired all or a portion of a
beneficial interest in a Partnership Interest. An Assignee has only the rights
granted under Section 7.02 of the Act. An Assignee does not have the right to
become a Partner except as provided in this Agreement or in Section 7.04 of the
Act.
G. "Appraisal" means, unless the context indicates otherwise, a written
valuation report by an Appraiser that describes and values the fair market value
of an ownership interest in the Partnership.
H. "Appraiser" means a person or firm qualified to perform business
Appraisals of partnerships and ownership interests in partnerships.
I. "Built-In Gain" with respect to any Partnership property means (1) as of
the time of contribution, the excess of the Agreed Value of any Contributed
Property over its adjusted basis for federal income tax purposes and (2) in the
case of any adjustment to the Carrying Value of any Partnership property
pursuant to Article IX, Section B., of this Agreement, the Unrealized Gain.
J. "Built-In Loss" with respect to any Partnership property means (1) as of
the time of contribution, the excess of the adjusted basis for federal income
tax purposes of any Contributed Property over its Agreed Value and (2) in the
case of any adjustment to the Carrying Value of any Partnership property
pursuant to Article IX, Section B, of this Agreement, the Unrealized Loss.
K. "Capital Account" shall have the meaning ascribed to it in Article IX of
this Agreement.
L. "Capital Contribution" means the Agreed Value of any property and the
amount of cash contributed to the Partnership.
M. "Carrying Value" with respect to any Contributed Property, means the
Agreed Value of the property reduced as of the time of determination by all book
depreciation, cost recovery and amortization deductions charged to the Capital
Accounts and an appropriate amount to reflect any sales, retirements or
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP OF TROUTT PARTNERS, LTD.
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other dispositions of assets included in such property and, with regard to other
Property, the adjusted basis of such property for federal income tax purposes as
of the time of determination. The Carrying Values shall be further adjusted as
provided in Article IX of this Agreement and, at the time the Carrying Value of
a Property is so adjusted, such property shall thereafter be deemed to be a
Contributed Property contributed as of the date of adjustment.
N. "Code" means the Internal Revenue Code of 1986, as amended.
O. "Contributed Property" means any property other than cash contributed to
the Partnership.
P. "Default Interest Rate" means the rate per annum equal to the lesser of
(1) the Wall Street Journal prime rate as quoted in the money rates section of
-------------------
the Wall Street Journal which is also the base rate on corporate loans at large
-------------------
United States money center commercial banks as its prime commercial or similar
reference interest rate, with adjustments to be made on the same date as any
change in the rate, and (2) the maximum rate permitted by applicable law.
Q. "Distributable Cash" means, at the time of determination, all
Partnership cash derived from the conduct of the Partnership's business, other
than (1) Capital Contributions with interest earned pending its utilization, (2)
financing proceeds, (3) reserves for working capital, and (4) other amounts that
the General Partner reasonably determines to be necessary for the proper
operation of the Partnership's business and its winding up and liquidation.
R. "Effective Date" means the date when this Partnership becomes effective
as defined in Article I of this Agreement.
S. "Family" means Kenny Allan Troutt and Lisa Elaine Troutt and their
descendants.
T. "Family Assets" means all Property owned by the Family, individually or
in combination with others, which has been contributed to or acquired by the
Partnership.
U. "General Partner" or "General Partners" means the Person(s) designated
as General Partner(s) on Schedule A and any successor General Partner(s)
admitted pursuant to the terms of this Agreement.
V. "General Partnership Interest" means the Partnership Interest owned by a
General Partner.
W. "Limited Partner" or "Limited Partners" means the Person(s) admitted to
the Partnership as original, additional or substituted Limited Partners as
reflected on Schedule A as amended.
X. "Limited Partnership Interest" means the Partnership Interest owned by a
Limited Partner.
Y. "Liquidator" means the General Partner or, if there are no remaining
General Partners, a person or committee selected by a Majority in Interest of
Limited Partners who will commence to wind up the affairs of the Partnership and
to liquidate and sell its properties when there has been a dissolution or
termination without reconstitution of the Partnership. "Liquidator" shall also
refer to any successor or substitute Liquidator.
Z. "Majority in Interest" means those Partners whose Sharing Ratios
aggregate more than fifty percent (50%) of the Sharing Ratios of all Partners.
AA. "Majority in Interest of Limited Partners" means those Limited
Partners whose Sharing Ratios aggregate more than fifty percent (50%) of the
Sharing Ratios of all Limited Partners.
AB. "Partner" shall mean a partner (whether limited or general) of the
Partnership and "Partners" shall mean all the General and Limited Partners of
the Partnership.
AC. "Partnership" shall mean the limited partnership formed under this
Agreement, as constituted or amended.
AD. "Partnership Interest" means the ownership interest and rights of a
Partner in the Partnership, including, without limitation, his right to a
distributive share of the Profits and Losses and the Property of the
Partnership. Partnership Interest shall initially be the percentage set forth
opposite the Partner's name on Schedule A and shall be determined by the ratio
of his Capital Accounts to the Capital Accounts of all Partners. The
Partnership Interest of each Partner will be synonymous with that Partner's
Sharing Ratio.
AE. "Partnership Purposes" shall be those purposes set out in Article V of
this Agreement.
AF. "Permitted Transferee" means (1) a spouse of a Partner other than a
spouse who is legally separated under a decree of separate maintenance or a
Page 2
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP OF TROUTT PARTNERS, LTD.
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spouse who is a party to a pending divorce proceeding; (2) a descendant of a
Partner, including descendants by adoption if the adoption was a court adoption
of a minor under five (5) years of age; (3) any parent or sibling of a Partner;
(4) a descendant of a sibling of a Partner including those by adoption as
defined in (2) above; (5) a trust created for the benefit of anyone in (1)
through (4) above; (6) any organization described in each of the following
sections of the Code: Section 170(b)(1)(A), Section 170(c), Section 2055(a) and
Section 2522(a); (7) a charitable remainder trust created under Section 664 of
the Code; and, (8) a charitable lead trust.
AG. "Person" means any individual, estate, partnership, corporation,
trust, unincorporated association, limited liability company, joint venture or
any other entity.
AH. "Profits" and "Losses" means for each fiscal year or other period, an
amount equal to the Partnership's taxable income or loss for such year or
period, determined in accordance with Code Section 703(a) (for this purpose all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
1. any income of the Partnership that is exempt from federal income tax and
not otherwise taken into account in computing Profits or Losses pursuant to this
definition shall be added to such taxable income or loss;
2. any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Allocation Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account in computing Profits or Losses pursuant to this definition shall be
subtracted from such taxable income or loss;
3. gain or loss resulting from any disposition of Property with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Carrying Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs from its
Carrying Value;
4. depreciation and amortization on Property shall be computed by reference
to the Carrying Value of the such Property.
5. notwithstanding any other provision of this definition, any items which
are specially allocated pursuant to Article X, Section B.3. of this Agreement
shall not be taken into account in computing Profits or Losses.
AI. "Property" means all real and personal property which has been
contributed to or acquired by the Partnership and all increases and decreases
applicable to the Property.
AJ. "Required Consent" means the consent of all General Partners and of a
Majority in Interest of Limited Partners.
AK. "Regulations" means Treasury Regulations promulgated under the Code as
amended.
AL. "70 Percent in Interest" means those Partners whose aggregate Sharing
Ratios equal seventy percent (70%) or more of the Sharing Ratios of all
Partners.
AM. "70 Percent in Interest of Limited Partners" means those Limited
Partners whose aggregate Sharing Ratios equal seventy percent (70%) or more of
the Sharing Ratios of all Limited Partners.
AN. "Section 704(e) Capital Account" shall have the meaning ascribed to it
in Article IX of this Agreement.
AO. "Section 704(e) Carrying Value" shall have the meaning ascribed to it
in Article IX of this Agreement.
AP. "Sharing Ratio" means the ratio of a Partner's Capital Account to the
Capital Accounts of all Partners, or, if applicable, the ratio of a Partner's
Section 704(e) Capital Account to the Section 704(e) Capital Accounts of all
Partners. The Sharing Ratio of each Partner will be synonymous with his
Partnership Interest. Each Partner's Sharing Ratio is subject to change over
time as provided in this Agreement. Section 704(e) Capital Accounts and Section
704(e) Carrying Values are maintained in order to insure that allocations under
Article X are made in accordance with Section 704(e) of the Code. Section
704(e) Capital Accounts and Section 704(e) Carrying Values are applicable for
determining Sharing Ratios for any period beginning immediately after an
adjustment has been made under Article IX, Section C. and ending immediately
before any next succeeding adjustment under Article IX, Section B.
Page 3
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP OF TROUTT PARTNERS, LTD.
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AQ. "Unanimous Consent" means the consent of all Partners.
AR. "Unrealized Gain" attributable to a Partnership property means the
excess of the fair market value of the property over the Carrying Value or the
Section 704(e) Carrying Value, as the case may be, of the property as of the
date of determination.
AS. "Unrealized Loss" attributable to a Partnership property means the
excess of the Carrying Value or the Section 704(e) Carrying Value, as the case
may be, of the property over the fair market value of the property as of the
date of determination.
V. PURPOSES
A. Purposes. The purpose of the Partnership is to make a Profit, increase
wealth, and provide a means for the Family to become knowledgeable of, manage,
and preserve Family Assets. The Partnership will accomplish the following:
1. provide resolution of any disputes which may arise among the Family in
order to preserve family harmony and avoid the expense and problems of
litigation;
2. maintain control of Family Assets;
3. consolidate fractional interests in Family Assets;
4. increase Family wealth;
5. establish a method by which annual gifts can be made without
fractionalizing Family Assets;
6. continue the ownership of Family Assets and restrict the right of non-
Family to acquire interests in Family Assets;
7. provide protection to Family Assets from claims of future creditors
against Family members;
8. prevent the transfer of a Family member's interest in the Partnership
as a result of a failed marriage;
9. provide flexibility in business planning not available through trusts,
corporations, or other business entities;
10. facilitate the administration and reduce the cost associated with the
disability or probate of the estate of Family members; and
11. promote knowledge of and communication about Family Assets.
B. Foreign Jurisdictions. The Partnership is authorized to engage in all
business permitted by the Act. If the Partnership qualifies to do business in a
foreign jurisdiction, then it may transact all business permitted in that
jurisdiction. There is no jurisdictional restriction upon Property or activity
of the Partnership.
C. Specific Authority. To accomplish the Partnership Purposes, the
Partnership has, but is not limited to, the following authority:
1. to purchase, sell, invest and deal in the following: stocks, bonds,
notes, evidences of indebtedness of any Person, domestic or foreign, bonds and
any other obligations of any governmental entity, domestic or foreign, bills of
exchange and commercial paper, and any other securities; and gold, silver,
grain, cotton, and other commodities and provisions usually dealt on exchanges
or over-the-counter markets;
2. to engage in the real estate business; acquire, own, hold, develop,
and operate real estate properties, either as operator, managing agent,
principal, agent, partner, stockholder, syndicate member, associate, joint
venturer, participant, or otherwise; invest in and raise funds for real estate
development and operation; purchase, construct, acquire, own, develop, operate,
lease, mortgage, pledge, sell or otherwise dispose of buildings, fixtures, and
improvements; and do anything necessary or incident to the real estate business;
3. to engage in farming and ranching business; acquire, own, hold,
develop, and operate farm and ranching properties, either as operator, managing
agent, principal, agent, partner, stockholder, syndicate member, associate,
joint venturer, participant, or otherwise; invest in and raise funds for farming
and ranching; purchase, construct, acquire, own, develop, operate, lease,
mortgage, pledge, sell or otherwise dispose of crops, livestock, and facilities;
and do anything necessary or incident to farming and ranching;
4. to invest Partnership Property or carry on a trade or business, form
all types of business entities
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or trusts; or acquire general or limited partnership interests in a partnership,
membership interests in a limited liability company or a joint venture, shares
in a corporation, or interests in any syndication;
5. to buy, sell, lease, and deal in services, personal property, and real
property; and engage in any other trade, business, or investment activity;
6. to buy, sell, trade, exchange, acquire, transfer, assign, lease,
develop, manage, and operate oil, gas and other mineral interests, either alone
or together with others;
7. to operate any lawful business enterprise which accomplishes other
Partnership Purposes;
8. to guarantee the financial transactions of others, with or without
charging a fee;
9. to borrow and lend money; and, unless prohibited, allow a Partner to
lend money to and transact other business with the Partnership or Partners;
10. to invest and reinvest any of the Property or income of the
Partnership, whether or not the original purpose for the investment has been
accomplished, and it being the understood that, until the end of the term of the
Partnership, the investment objectives of this Partnership are to continue until
the Partnership is dissolved and its affairs wound up;
11. to purchase, lease, acquire, sell or dispose of machinery, equipment,
buildings and other depreciable property;
12. to purchase, lease, acquire, hold, operate, sell, lease or dispose of
full or fractional interests in improved or unimproved real and personal
property;
13. to borrow or raise money by the issuance, acceptance, endorsement or
execution of notes, drafts, bills of exchange, warrants, bonds, debentures,
instruments or evidences of indebtedness, securing the indebtedness by mortgage,
pledge, transfer or assignment in trust of all or any part of the Property; and
by selling, pledging or disposing of obligations of the Partnership;
14. to operate one or more offices, lease or acquire office space, engage
personnel and do all things necessary to operate the office;
15. to carry insurance as the General Partner may deem necessary and
appropriate;
16. to make, enter into, deliver and perform all contracts, agreements or
undertakings, pay all costs and expenses and perform all acts deemed appropriate
by the General Partner to carry out the Partnership Purposes.
D. Customary Activities. The General Partner may take any action permitted
by this Agreement and the Act to accomplish the Partnership Purposes. This
shall include any act customary or reasonably related to the acquisition,
ownership, management, sale, investment, reinvestment, or financing of the
Partnership Property. These customary activities shall include, but not be
limited to, buying and selling options, short sales, hedging, and purchases on
margin.
VI. TERM OF THE LIMITED PARTNERSHIP
The Partnership shall be a term-of-years partnership pursuant to the Act.
The Partnership will begin upon the Effective Date and may not continue beyond
December 31, 2045. The Partnership may be terminated and wound up at any time
by Unanimous Consent unless sooner terminated and wound up in accordance with
the Act or this Agreement.
VII. PARTNERS
A. Admission of New Partners. The initial Partners are those Partners who
executed this Agreement as General and Limited Partners as of the Effective
Date. After the Effective Date, no Person shall be admitted as a Partner except
as provided in this Agreement and the Act. Once the Person has been admitted as
a Partner, he shall have the rights and obligations of a Limited Partner or
General Partner, as applicable. Any new Partner will be required to accept and
assume the terms and conditions of this Agreement in writing.
B. Management by General Partners.
1. The General Partner shall be responsible for the exclusive management,
operation and control of the business and affairs of the Partnership. The
General Partner shall act as a "manager" of the Partnership. If there is more
than one General Partner, all obligations of the General Partners under this
Agreement shall be joint and several. Any actions taken by the General Partners
shall be valid if approved by a majority of the General Partners.
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2. The General Partners by unanimous consent of the General Partners may
designate a managing Partner ("Manager"). The Troutt Family Trust is hereby
designated as the initial Manager of this Partnership. A designated Manager
shall serve until the designation is revoked by unanimous consent of the Limited
Partners (including any Limited Partnership interest held by the Manager as a
Limited Partner) and all of the other General Partner(s), if any, or the Manager
ceases to serve for any other reason. If a Manager is designated, the Manager
is authorized and directed to manage and control the assets and the business of
the Partnership. The Manager may exercise all of the powers which could be
exercised by majority consent of the General Partners. If a Manager is
designated, any reference to "General Partner" in this Agreement shall also
include "Manager" if applicable.
3. The General Partner may hire employees of the Partnership, appoint any
individual as an officer of the Partnership, and delegate to the officer or
employee any power or duty a General Partner may have. The fact that a Partner
is directly or indirectly affiliated with any person shall not prohibit that
person from being employed or dealing with the Partnership. Any employment or
dealing shall be done at reasonable rates for similar services, supplies, or
materials.
4. A General Partner will have the authority to employ, select, remove,
and change the authority and responsibility of any consultants or professionals
as the General Partner considers necessary to assist in the prudent management
of the Partnership and its Property.
5. The General Partner shall remain responsible to the Partnership for
the acts or omissions of the Manager, agent, or employee and for performance of
their General Partner duties provided for in this Agreement or the Act.
C. Admission of Additional General Partner. Additional General Partners
may be admitted as provided in Article XVI, Section C.4.
D. Removal of a General Partner. Notwithstanding anything herein to the
contrary, a General Partner may not be removed unless there is at least one
remaining General Partner. Except as otherwise provided in this Agreement, if a
General Partner is in material breach of his obligations and does not cure, or
commence and diligently prosecute the curing of, such breach within 90 days
after notice thereof by any of the Limited Partners, or if he has committed any
act or omission of fraud or malfeasance to the injury of the Partnership, then
said General Partner may be removed upon vote of 70 Percent in Interest of
Limited Partners.
E. Authority of a General Partner. The General Partner shall have full
power to do all things appropriate in carrying out the Partnership Purposes,
including authority to:
1. sell, exchange, assign, convey, lease and/or transfer legal and
equitable title to the Partnership Property on terms and conditions deemed
reasonable by the General Partner;
2. acquire, utilize for Partnership Purposes, and operate, improve, and
develop any Partnership Property;
3. retain, without liability, any property in the form in which it is
received without regard to its productivity or the proportion that any one asset
or class of assets may bear to the whole;
4. register or take title to Partnership assets in the name of the
Partnership or as Trustee, with or without disclosing the identity of his
principal, or to permit the registration of securities in "street name" under a
custodial arrangement with an established securities brokerage firm, trust
department, or other custodian;
5. borrow money, finance, refinance or otherwise incur obligations for
the account of the Partnership and pledge, mortgage, and grant a security
interest in the Property;
6. carry out the Partnership Purposes through other partnerships,
corporations, limited liability companies, or other entities;
7. compromise claims against the Partnership;
8. make any election under any tax law in the manner the General Partner
deems advisable, the election or failure to elect of which shall not result in
any cause of action against the General Partner;
9. execute and/or accept any instrument, conveyance, or agreement
incident to the Partnership's business or property without the joinder,
ratification, or consent of the Partners;
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10. pay all Partnership debts, obligations, and expenses;
11. perform the Partnership's obligations, and exercise all of the
Partnership's rights, under any agreement to which the Partnership or any
nominee of the Partnership is a party;
12. loan funds to any Partner on terms and conditions deemed reasonable
by the General Partner;
13. advance any monies to the Partnership required for the business of
the Partnership, but with no obligation to do so;
14. acquire and determine the amounts of insurance coverages required by
the Partnership Purposes, Property, and/or business;
15. enter into contracts and business undertakings to further the
Partnership Purposes;
16. open and maintain bank and investment accounts and arrangements,
drawing checks and other orders for the payment of money, and designating
individuals with authority to sign or give instructions with respect to those
accounts and arrangements;
17. maintain the Partnership Property in good order;
18. collect sums due the Partnership;
19. invest and reinvest Property to accomplish Partnership Purposes,
including but not limited to investing the Property in accordance with the
Modern Portfolio Theory;
20. make distributions of Distributable Cash subject to other provisions
of this Agreement;
21. execute and file certificates or instruments as required or permitted
by the Act and any other laws of the State of Texas or any other jurisdiction
where the Partnership does business;
F. Restrictions on General Partner. The General Partner will not have the
---
authority to enter into any of the following transactions without Unanimous
Consent:
1. prior to the actual termination of the Partnership, sell substantially
all of the Property in liquidation or cessation of business;
2. confess a judgment against the Partnership;
3. do any act in violation of this Agreement;
4. possess Property or assign the right of the Partnership or its
Partners in specific Property for other than a Partnership Purpose;
5. make, execute, or deliver any assignments for the benefit of
creditors, or on the assignee's promise to pay the debts of the Partnership;
6. do any act for which the consent of the Limited Partners is required
by the Act;
G. Requirement of Unanimous Consent. The General Partner will not have the
---
authority to enter into any of the following transactions without Unanimous
Consent:
1. terminate, liquidate and wind up the Partnership, except as otherwise
provided in Article XVI, Section A.2. of this Agreement;
2. admit additional or substitute partners except as otherwise provided
in Article XIII, Section B., of this Agreement;
3. do any act that would make it impossible to carry on the Partnership
Purposes and business of the Partnership;
4. engage in any business activity other than that which is consistent
with the Partnership Purposes;
5. amend this Agreement except as provided for elsewhere in this
Agreement.
H. Compensation and Reimbursement of General Partner. The General Partner
shall diligently and faithfully devote the time to the management of the
Partnership necessary to serve the Partnership Purposes and shall perform all of
the duties of a General Partner which are provided for in this Agreement and the
Act. A General Partner will be entitled to a reasonable annual compensation for
services rendered to the Partnership, reasonable compensation to be measured by
the time required in the administration of the Partnership, the value of
property under the General Partner's administration, and the responsibilities
assumed in the discharge of the duties of office and shall comply with Section
704(e) of the Code, if applicable. This compensation shall be a guaranteed
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payment. The General Partner will be entitled to reimbursement of all
reasonable and necessary business expenses incurred in the administration of the
Partnership. If the cash flow of the Partnership is insufficient to pay the
compensation, the unpaid portion of the compensation may be deferred and bear
interest at the Default Interest Rate. Payments to the General Partner for
services rendered to the Partnership will not be a return on invested capital,
but will be paid as compensation for services rendered.
I. Liability and Indemnification of General Partner.
1. A General Partner will owe a fiduciary obligation to the Partnership
and to each of the Partners, such obligation to include the duty of loyalty and
the duty of care.
2. To the extent Texas law will permit, a General Partner who succeeds
another will be responsible only for the property and records delivered by or
otherwise acquired from the preceding General Partner, and may accept as correct
the records of the preceding General Partner without duty to audit the records
or to inquire further into the administration of the predecessor and without
liability for a predecessor's errors and omissions.
3. A General Partner will not have liability for loss of income from or
depreciation in the value of the property which was retained in the form which
the General Partner received it.
4. The General Partner shall be entitled to all indemnification
authorized in the Act.
5. Each General Partner shall indemnify, save and hold harmless the
Partnership and each of the Limited Partners from any loss, damage, claim or
liability incurred by them, including but not limited to reasonable attorneys'
fees and expenses.
6. Pursuant to the Act, the Partnership shall indemnify, save and hold
harmless the General Partner, its beneficiaries, trustees, affiliates, officers,
directors, partners, employees, and agents from any loss, damage, claim or
liability, including but not limited to direct and indirect costs and reasonable
attorneys' fees and expenses, incurred by them by reason of any act performed by
the General Partner on behalf of the Partnership or in furtherance of the
Partnership Purposes; provided, however, that this indemnity from the
Partnership shall be satisfied out of Partnership assets only.
7. The Partnership may purchase insurance to minimize all or part of any
indemnification risk.
8. For purposes of this section the term "General Partner" shall also
refer to the General Partners' heirs, administrators, executors, successors and
assigns.
J. Waiver of Self-Dealing.
1. The General Partner shall have the authority to enter into any
transaction on behalf of the Partnership despite the fact that another party to
the transaction may be (1) a trust of which a Partner is a trustee or
beneficiary; (2) an estate of which a Partner is a personal representative or
beneficiary; (3) a business controlled by one or more Partners or a business of
which any Partner is also a director, officer or employee; (4) any affiliate,
employee, stockholder, associate, manager, partner, or business associate; (5)
any Partner, acting individually; or (6) any relative of a Partner; provided the
terms of the transaction are no less favorable than those the Partnership could
obtain from unrelated third parties.
2. It is expressly understood that each Partner is entitled to invest his
personal assets for his own account and is entitled to conduct his personal
affairs and investments without regard to whether they constitute a Partnership
"opportunity."
3. A Partner may engage in or possess an interest in any other business
or venture of any nature and description, independently or with others,
including ones in competition with the Partnership, with no obligation to offer
to the Partnership or any other Partner the right to participate. Neither the
Partnership nor its Partners shall have by virtue of this Agreement any right in
any independent venture or its income or Profits.
K. Amendment to Certificate of Limited Partnership. If a General Partner
is unwilling or unable to sign a required amendment to the Certificate of
Limited Partnership, the amended certificate may be signed by any remaining or
successor General Partner(s). Each General Partner appoints his successor and
any remaining General Partner(s), if any, as his attorney in fact to sign the
amended certificate.
L. Reliance by Third Parties.
1. Any Person dealing with the Partnership, other than a Partner, may
rely on the authority of the General Partner in taking any action in the name of
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the Partnership without inquiry into the provisions of this Agreement. Any
document executed by the General Partner shall be deemed to be the action of the
Partnership as to any third parties. No purchaser, tenant, transferee or
obligor will have any obligation to see to the application of payments made to
the General Partner.
2. Any Person dealing with the Partnership or the General Partner may
rely upon a certificate signed by the General Partner as to:
a. the identity of the Partners;
b. any conditions precedent to acts by the Partnership;
c. the Persons who are authorized to execute any documents and bind the
Partnership; and
d. any other matter involving the Partnership or any Partner.
M. Limited Partners' Liability and Authority to Act. No Limited Partner
shall be personally liable for all or any part of the debts or other obligations
of the Partnership. The Limited Partners shall not take part in the management
or control of the business, or transact any business of the Partnership or have
power to sign for or to bind the Partnership. However, this provision shall not
prevent a Limited Partner from acting in a capacity or exercising a power
enumerated in Section 3.03(b) of the Act.
N. Voting of Limited Partners.
1. Limited Partners shall have the right to vote upon the matters listed
below:
a. removal of the General Partner;
b. election of a successor General Partner;
c. termination and dissolution of the Partnership;
d. amendment of this Agreement;
e. the extension of the term of the Partnership; and
f. any matter requiring the vote of the Limited Partners as set out
elsewhere in this Agreement or in the Act.
2. Those matters to be voted on by the Limited Partners can be done by
written consent. Such a written consent may be utilized at any meeting of the
Partners, or it may be utilized in obtaining approval by the Partners without a
meeting.
O. Restrictions of Limited Partners.
1. No Limited Partner shall have the right to withdraw from the
Partnership or to receive a return of any of its contributions to the
Partnership until the Partnership is terminated and its affairs wound up in
accordance Section 8.04 of the Act and this Agreement. A Limited Partner will
breach this Agreement if he (1) attempts to withdraw from the Partnership, (2)
interferes in the management of the Partnership affairs, (3) engages in conduct
which could result in the Partnership losing its tax status as a partnership,
(4) engages in conduct that tends to bring the Partnership into disrepute, (5)
owns a Partnership Interest that becomes subject to a charging order,
attachment, garnishment, or similar legal proceedings, (6) breaches any
confidentiality provisions of this Agreement, or (7) fails to meet any
commitment to the Partnership. A Limited Partner who is in breach of this
Agreement shall be liable to the Partnership for damages caused by the breach.
The Partnership may offset for the damages against any distributions or return
of capital to the Limited Partner who has breached this Agreement.
2. No Limited Partner shall have the right or power to cause the
dissolution and winding up of the Partnership by court decree or otherwise.
P. Partnership Communication.
1. At least once a year, and as soon as possible after the financial
statements are completed, a meeting shall be held for all Partners. The General
Partner shall review and discuss the financial statements at the meeting and
report to the Limited Partners the financial condition of the Partnership. The
annual meeting shall be held at a place designated by the General Partner on or
before the third Tuesday in April of each year. All Partners shall receive
prior notice of dates, time, and place of the meeting.
2. The General Partner or 70 Percent in Interest of Limited Partners may
establish an Advisory Committee of the Partnership consisting of three or more
Limited Partners (the "Advisory Committee"). If the Advisory Committee is
established, at least once each calendar year, the General Partner, on notice
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to each member on or before the tenth day prior to the meeting, shall call a
meeting of the Advisory Committee, at which the General Partner apprises it
generally of the business and affairs of the Partnership since the latest
meeting of the Advisory Committee. The Advisory Committee may make
recommendations to or otherwise advise and consult with the General Partner
regarding the business and affairs of the Partnership; however, the Advisory
Committee is not authorized to take any action on behalf of the Partnership or
to compel any Partner to take any action. The Advisory Committee may make a
report of the meeting to the remaining Limited Partners.
Q. Ownership of Partnership Property. All Property shall be owned by and
in the name of the Partnership. Each Partner expressly waives the right to
require partition of any Property. The Partners shall execute any documents
that may be necessary to reflect the Partnership's ownership of its Property and
shall record the documents in the public offices that may be necessary or
desirable in the discretion of the Partners. No Partner shall have the right or
power to demand or receive Property other than cash in return for his
contribution.
R. Confidentiality of Information.
1. Each Partner is entitled to all information under the circumstances
and subject to the conditions stated in this Agreement and the Act. The
Partners agree, however, that the General Partner or 70 Percent in Interest of
Limited Partners may determine, due to contractual obligations, business
concerns, or other considerations, that certain information regarding the
business, affairs, Property, and financial condition of the Partnership shall be
kept confidential and not provided to some or all other Limited Partners, and
that it is not just or reasonable for those Partners or Assignees or
representatives to examine or copy that information.
2. The Partners acknowledge that they may receive information regarding
the Partnership in the nature of trade secrets or that otherwise is
confidential, the release of which may be damaging to the Partnership or Persons
with which it does business. Each Partner shall hold in strict confidence any
information it receives regarding the Partnership that is identified as being
confidential (and if that information is provided in writing, that is so marked)
and may not disclose it to any Person other than another Partner, except for
disclosures (1) compelled by law (but the Partner must notify the General
Partner or 70 Percent in Interest of Limited Partners, as appropriate, promptly
of any request for that information, before disclosing it, if practicable), (2)
to advisers or representatives of the Partner or Assignees of the Partner, but
only if they have agreed to be bound by the provisions of this section, or (3)
of information that Partner also has received from a source independent of the
Partnership that the Partner reasonably believes obtained that information
without breach of any obligation of confidentiality. The Partners acknowledge
that breach of the provisions of this section may cause irreparable injury to
the Partnership for which monetary damages are inadequate, difficult to compute,
or both. Accordingly, the Partners agree that the provisions of this section
may be enforced by specific performance.
S. Classes. This Partnership shall have only one class of Partnership
Interest.
T. Voting of Stock of Controlled Corporations. Any other provision of this
Partnership Agreement to the contrary notwithstanding, any time that the
Partnership holds stock of a controlled corporation, as defined in Section
2036(b) of the Code and the regulations thereunder, with respect to any Partner,
each Partner will have the right to vote a number of such shares of stock equal
to the total number of shares of such stock owned by the Partnership times the
Partnership Interest for such Partner.
VIII. CAPITAL CONTRIBUTIONS
A. Initial Contributions. Each Partner shall contribute to the
Partnership, as his initial Capital Contribution, the property described in
Schedule A attached as part of this Agreement.
B. Optional Contributions. The Partners shall be permitted to make
additional Capital Contributions to the Partnership on a pro rata or non-pro
rata basis. Optional Capital Contributions by a Limited Partner will be subject
to the consent of the General Partner. Optional Capital Contributions by a
General Partner will be subject to the consent of 70 Percent in Interest of
Limited Partners. The required consent need not be in writing, and any optional
Capital Contributions will be presumed to have been made with the required
consent unless there is clear and convincing evidence to the contrary. The
General Partners are required to maintain an aggregate General Partnership
Interest of at least 1% at all times.
C. Required Contributions. If required in the discretion of the General
Partner, the Partners will be required to make additional Capital Contributions
to
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the Partnership to meet operating expenses of the Partnership within thirty
(30) days from date of written notice by the General Partner. Any required
Capital Contributions shall be made pro rata, in accordance with the Partners'
Sharing Ratios unless otherwise agreed to by all Partners in writing.
D. All or any part of one or more of the Capital Contributions of the
Limited Partners may be made by one or more of the other Partners on behalf of
such Limited Partner as a gift.
E. To simplify Partnership accounting, any adjustment to the Sharing Ratios
of the Partners caused by required or optional Capital Contributions shall be
made as of the end of the calendar quarter in which the contributions were made.
F. Failure to Contribute.
1. If a Partner fails to make a required Capital Contribution, the
Partnership may exercise, on notice to that Partner (the "Delinquent Partner"),
one or more of the following remedies:
a. taking such action, at the cost and expense of the Delinquent
Partner, to obtain payment by the Delinquent Partner of the portion of the
Delinquent Partner's Capital Contribution that is in default, together with
interest on that amount at the Default Interest Rate from the date that the
Capital Contribution was due until the date that it is made;
b. permitting the Partners, in proportion to their Sharing Ratios or in
such other percentages as they may agree (the "Lending Partner", whether one or
more), to advance the portion of the Delinquent Partner's Capital Contribution
that is in default, with the following results:
(1) the sum advanced constitutes a loan from the Lending Partner to
the Delinquent Partner and a Capital Contribution of that sum to the Partnership
by the Delinquent Partner,
(2) the principal balance of the loan and all accrued unpaid interest
is due and payable on the tenth day after written demand by the Lending Partner
to the Delinquent Partner,
(3) the amount lent bears interest at the Default Interest Rate from
the day that the advance is deemed made until the date that the loan, together
with all interest accrued, is repaid to the Lending Partner,
(4) all distributions from the Partnership that would be made to the
Delinquent Partner shall be paid to the Lending Partner until the loan and all
interest accrued have been paid in full,
(5) the payment of the loan and interest accrued is secured by a
security interest in the Delinquent Partner's Partnership Interest,
(6) the Lending Partner has the right, in addition to the other
rights and remedies granted to it under this Agreement or at law or in equity,
to take any action, at the cost and expense of the Delinquent Partner, that the
Lending Partner may deem appropriate to obtain payment by the Delinquent Partner
of the loan and all accrued and unpaid interest;
c. exercising the rights of a secured party under the Uniform
Commercial Code of the State of Texas; or
d. exercising any other rights and remedies available at law or in
equity.
2. Each Partner grants to the Partnership, and to the Lending Partner
with respect to any loans made to that Partner, as security, equally and ratably
for the payment of all Capital Contributions that Partner has agreed to make and
the payment of all loans and interest accrued made by Lending Partners to that
Partner, a security interest in its Partnership Interest under the Uniform
Commercial Code of the State of Texas. On any default in the payment of a
required Capital Contribution or in the payment of a loan or interest accrued,
the Partnership or the Lending Partner, as applicable, is entitled to all the
rights and remedies of a secured party under the Uniform Commercial Code of the
State of Texas with respect to the security interest granted. Each Partner
shall execute and deliver to the Partnership and the other Partners all
financing statements and other instruments that the General Partner or the
Lending Partner, as applicable, may request to effectuate and carry out the
preceding provisions of this section. At the option of the General Partner or a
Lending Partner, this Agreement or a carbon, photographic, or other copy of this
Agreement may serve as a financing statement.
G. Right to Demand Return of Capital Contribution. No Partner shall have
the right to demand the return of all or any part of his Capital Contributions.
IX. CAPITAL ACCOUNTS
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A. General. A "Capital Account" shall be established for each Partner and
shall be maintained at all times throughout the existence of the Partnership in
a manner so as to correspond with the rules set forth in the Allocation
Regulations. A Partner's Capital Account shall be increased by (1) the amount
of his Capital Contribution to the Partnership, and (2) allocations of income or
gain to the Partner for partnership book purposes pursuant to Article X, and
shall be reduced by (1) the amount of money distributed to the Partner by the
Partnership, (2) the Agreed Value of any property distributed to the Partner by
the Partnership, and (3) allocations of deduction or loss to the Partner for
Partnership book purposes by the Partnership pursuant to Article X. The Capital
Accounts of the Partners shall not bear interest.
B. Additional Interests. If any additional Partnership Interests are to be
issued in consideration for a contribution of Property or cash (other than a de
minimis amount) or if any Property or cash (other than a de minimis amount) is
to be distributed in liquidation of the Partnership or a Partnership Interest,
the Capital Accounts of the Partners and the Carrying Value of all Property
shall, immediately prior to such issuance or distribution, be adjusted
(consistent with the provisions of Section 704(b) of the Code and the Allocation
Regulations) upward or downward to reflect any Unrealized Gain or Unrealized
Loss attributable to all Property (as if the Unrealized Gain or Unrealized Loss
had been recognized upon actual sale of the Property upon a liquidation of the
Partnership immediately prior to issuance).
C. Transfers. If all or any portion of a Partnership Interest is
transferred to a Permitted Transferee as a gift or deemed gift, the Capital
Accounts of the Partners and the Carrying Value of all Property shall,
immediately prior to such transfer, be adjusted upward or downward to reflect
any Unrealized Gain or Unrealized Loss attributable to such Property in a manner
similar to that set forth in Section B. of this Article. The Capital Accounts
and Carrying Values so determined under this Section C. shall be referred to as
the "Section 704(e) Capital Accounts" and "Section 704(e) Carrying Values,"
respectively. The Section 704(e) Capital Accounts and Section 704(e) Carrying
Values shall thereafter be adjusted in the same manner as Capital Accounts and
Carrying Values.
D. Account Succession. Except as otherwise required by the Allocation
Regulations, in the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account and the Section 704(e) Capital Account of the transferor to the
extent it relates to the transferred interest.
E. Deficit Restoration. No Partner will be required to restore a deficit in
his Capital Account upon liquidation of the Partnership or the Partner's
Partnership Interest.
F. General Partner's Interest. The General Partner's General Partner
Interest will be maintained separately from any Limited Partnership Interest
which he may have.
X. ALLOCATIONS
A. General. Except as otherwise provided in this Article X, for federal
income tax purposes, each item of income, gain, loss and deduction will be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to this Article X.
B. Profits and Losses. Except as provided in this Article X., Profits and
Losses shall be allocated as follows:
1. Losses shall be allocated:
a. First, to the Partners in accordance with such Partners' Sharing
Ratios but only to the extent of such Partners' Capital Accounts.
b. Second, any remaining Losses shall be allocated to the General
Partner.
2. Profits shall be allocated:
a. First, to the General Partner to the extent of any Losses previously
allocated to the General Partner under Section X.B.1.b. above.
b. Second, to the Partners in accordance with such Partners' Sharing
Ratios.
3. Notwithstanding the preceding allocations, and to the extent the
General Partner deems it necessary to insure that the Agreement and the
allocations thereunder meet the requirements of Section 704 of the Code and the
Allocation Regulations, allocations of the following type and in the following
priority will be made to the appropriate Partners in the necessary and required
amounts as set forth in the Regulations before any other allocations under this
subsection 3:
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a. Partner nonrecourse debt minimum gain chargeback under Regulations
Section 1.704-2(i);
b. Partnership minimum gain chargeback under Regulations Section 1.704-
2(f) (provided that the General Partner may seek a waiver of such chargeback in
appropriate circumstances under Regulations Section 1.704-2(f)(4) in its sole
discretion);
c. in the event any Partners unexpectedly receive any adjustments,
allocations, or distributions described in Regulations Section 1.704-1(b)(2)
(ii)(d)(4), (5), or (6), items of Partnership income and gain to such Partners
in an amount and manner sufficient to eliminate the deficit balances in their
Capital Accounts (excluding from such deficit balance amounts Partners are
obligated to restore under this Agreement or are treated as obligated to restore
pursuant to Regulations Sections 1.704-1(b)(2)(ii)(c), 1.704-1(b)(2)(ii)(h),
1.704-2(g), or 1.704-2(i)(5)) created by such adjustments, allocations, or
distributions as quickly as possible and in a manner which complies with
Regulations Section 1.704-1(b)(2)(ii)(d);
d. Partner nonrecourse deductions under Regulations Section 1.704-2(i)
which will in all cases be allocated to the Partner which bears economic risk of
loss for the indebtedness to which such deductions are attributable; and
all of the allocations made pursuant to the preceding portions of this
Section B.3. will be taken into account in computing subsequent allocations of
Profits and Losses pursuant to this Section B. so that the net amount of any
items so allocated and the Profits, Losses and all other items allocated to each
Partner pursuant to this Section B. will, to the extent possible, be equal to
the net amount that would have been allocated to each such Partner pursuant to
this Section B. if this Section B.3. had not applied. Pursuant to Regulations
Section 1.752-3(a)(3), solely for purposes of determining each Partner's
proportionate share of the "excess nonrecourse liabilities" of the Partnership
(as defined in Regulations Section 1.752-3(a)(3)), the Partners' respective
interests in Profits will be equal to their Sharing Ratio.
C. Transferor - Transferee Allocations; Section 754 Election. Income,
gain, loss, deduction or credit attributable to any interest in the Partnership
which has been transferred shall be allocated between the transferor and the
transferee under any method allowed under Section 706 of the Code as agreed by
the transferor and the transferee. The General Partner, at his discretion, may
make the election provided under Section 754 of the Code and any corresponding
provision of applicable state law.
D. Reliance on Advice of Accountants and Attorneys. The General Partner
shall have no liability to the Limited Partners or the Partnership if he relies
upon the written opinion of tax counsel or accountants retained by the
Partnership with respect to all matters (including disputes) relating to
computations and determinations required to be made under this Article or other
provisions of this Agreement. After all allocations under this Article have
been made, the General Partner, in its discretion, shall reallocate income among
the Partners to the least extent necessary to insure that the provisions of
Section 704(e) and the Regulations have been fulfilled, especially Regulations
Section 1.704-1(e)(3). To the extent that any Partner was allocated income
which the Internal Revenue Service finally determines should have allocated to
any other Partner under the principles of Section 704(e), the first Partner
intends and does designate the income as a gift to the second Partner.
E. Tax Allocations; Code Section 704(c). With regard to income, gain,
loss, depreciation, depletion and cost recovery deductions for federal income
tax purposes: In the case of a Contributed Property, such items will be
allocated among the Partners in the manner provided in Section 704(c) of the
Code to take account of the Built-in Gain and Built-in Loss at the time of
contribution and, in the case of any Property the Carrying Value of which has
been adjusted pursuant to Article IX, such items will be allocated among the
Partners in a manner consistent with the principles of Section 704(c) of the
Code to take into account Unrealized Gain or Unrealized Loss resulting from
differences between the Carrying Value and the adjusted tax basis of such
property.
XI. DISTRIBUTIONS
A. General. Subject to Article XII and other provisions of this Agreement,
Distributable Cash may be distributed at the sole discretion of the General
Partner among the Partners pro rata in accordance with their Sharing Ratios.
B. No Interest. If any Partner does not withdraw the whole or part of his
share of any cash distribution made pursuant to Article XI, Section A., the
Partner shall not be entitled to receive any interest without Unanimous Consent.
Further, such non-withdrawn amount shall become an Optional Capital Contribution
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under Article VIII, Section B., if otherwise permitted at that time.
C. Transferor - Transferee Shares. Unless agreed in writing by a
transferor and transferee, Distributable Cash allocable to the transferred
Partnership Interest which may have been transferred during any year shall be
distributed to the holder of such Partnership Interest who was recognized as the
owner on the date of such distribution, without regard to the results of
Partnership operations during the year.
D. Partner Loans. Notwithstanding the foregoing, if any Partner advances
any funds or makes any other payment to or on behalf of the Partnership, not
required in this Agreement, to cover operating or capital expenses of the
Partnership which cannot be paid out of the Partnership's operating revenues,
any advance or payment shall be deemed a loan to the Partnership by the Partner,
bearing interest from the date the advance or payment was made until the loan is
repaid at the Default Interest Rate. Notwithstanding Article XI, Sections A.
and B., all distributions of Distributable Cash shall first be distributed to
the Partners making the loans until the loans have been repaid, together with
interest. Thereafter, the balance of the distributions, if any, shall be made
in accordance with the terms of Article XI, Sections A. and B. If distributions
are insufficient to repay all loans as provided above, the funds available shall
first be applied to repay the oldest loan and, if any funds remain available,
the funds shall be applied in a similar manner to remaining loans in accordance
with the order of the dates on which they were made; however, as to loans made
on the same date, each loan shall be repaid pro rata in the proportion that the
loan bears to the total loans made on that date.
XII. LIMITATION ON GENERAL PARTNER'S DISCRETION TO MAKE DISTRIBUTIONS.
With regard to Distributable Cash and Property, the General Partner shall
make a determination, in accordance with his duty of care and loyalty to the
Partnership, as to the need for the Property in the operation of the Partnership
business, considering both current needs for operating capital, prudent reserves
for future operating capital, current investment opportunities, and prudent
reserves for future investment opportunities, all in keeping with the
Partnership Purposes. It is the duty of the General Partner, in determining the
amount of Distributable Cash available for the payment of distributions, to take
into account the needs of the Partnership in its business and sums necessary in
the operation of its business until the income from further operations is
available, the amounts of its debts, the necessity or advisability of paying its
debts, or at least reducing them within the limits of the Partnership's credit,
the preservation of its capital as represented in the Property of the
Partnership as a fund for the protection of its creditors, and the character of
its surplus Property. Any contributed Property or borrowed funds by the
Partnership shall be considered as needed for Partnership investment purposes,
and any cash produced from the sale of Property contributed to the Partnership
or from the sale of any Property purchased with borrowed funds, or any
reinvestment of any of the Property, including the portion of the sale proceeds
representing capital appreciation, shall be considered as needed reserves for
Partnership investment purposes. Any Distributable Cash derived from income
shall, to the extent deemed unnecessary for Partnership Purposes by the General
Partner under the foregoing standard, be distributed in accordance with this
Agreement.
XIII. RESTRICTIONS UPON PARTNERSHIP INTERESTS
The ownership and transferability of interests in the Partnership are
substantially restricted. Neither record title nor beneficial ownership of a
Partnership Interest of any Partner may be transferred or encumbered except as
otherwise set forth in this Agreement.
A. Generally. This Partnership is formed by those who know and trust one
another, who will have surrendered certain management rights (in exchange for
limited liability in the case of a Limited Partner), or who will have assumed
management responsibility and risk (in the case of a General Partner) based upon
their relationship and trust. Capital is material to the business and
investment objectives of the Partnership and its federal tax status. An
unauthorized transfer of a Partner's interest could create a substantial
hardship to the Partnership, jeopardize its capital base, and adversely affect
its tax structure. These restrictions upon ownership and transfer are not
intended as a penalty, but as a method to protect and preserve existing
relationships based upon trust and the Partnership's capital and its financial
ability to continue. Except as provided in Article XIII, Section B., neither
record title nor beneficial ownership of a Partnership Interest may be
transferred without the Required Consent.
B. Disclosures, Limitations, and Exceptions. The ownership and transfer or
assignment of a Partnership
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Interest is further subject to the following disclosures, limitations and
exceptions:
1. The Partnership Interests have not, nor will be, registered under
federal or state securities laws. Partnership Interests may not be offered for
sale, sold, pledged, or otherwise transferred unless so registered, or unless an
exemption from registration exists. The availability of any exemption from
registration must be established by an opinion of counsel, whose opinion must be
satisfactory to the General Partner.
2. The death of an individual General Partner will automatically convert
his General Partnership Interest to a Limited Partnership Interest. A Limited
Partner who is (1) an individual, (2) a trust with an individual beneficiary who
has a limited or unlimited power of appointment at his death, or (3) a General
Partner whose death converted his General Partnership Interest to a Limited
Partnership Interest may transfer his Limited Partnership Interest to a
Permitted Transferee as an Assignee without Required Consent.
The transfer may be accomplished (1) pursuant to the properly probated
last will of a Partner; (2) pursuant to the terms for a Permitted Transferee;
(3) pursuant to the exercise of a limited or unlimited power of appointment or
beneficiary designation of any trust; or (4) pursuant to a written and
acknowledged assignment and designation of beneficiary delivered by the Partner
to a General Partner prior to the death of the Partner, effective as of his
death or the death of the beneficiary.
If there has been no pre-arranged transfer as provided above, the
executor, administrator, guardian, conservator, or legal representative of a
deceased or incompetent Limited Partner shall have the status of an Assignee
and, in accordance with Section 7.05 of the Act, may exercise all the deceased
or incompetent Limited Partner's rights and powers to settle the Limited
Partner's estate or administer the Limited Partner's property, including the
right of an Assignee to become a Limited Partner by obtaining Required Consent.
However, the estate of a deceased or incompetent Limited Partner shall not have
the right to become a substitute Limited Partner except as may be provided in
this Article.
3. A Limited Partner who is an individual or a trust with an individual
beneficiary with a limited or unlimited right to make a disposition of all or
any part of his interest in the trust during his lifetime, will have the right
to make transfers of his Limited Partnership Interest with or without
consideration to a Permitted Transferee as an Assignee without Required Consent.
4. The Partnership will not be required to recognize the interest of any
Assignee or transferee who has obtained a purported Partnership Interest as the
result of a transfer or assignment which is not authorized by this Agreement.
If there is a doubt as to ownership of a Partnership Interest or who is entitled
to Distributable Cash or liquidating proceeds, the General Partner may
accumulate Distributable Cash or liquidation proceeds until the issue is
resolved.
5. If any Person acquires the Partnership Interest, or becomes an
Assignee, as the result of an order of a court which the Partnership is required
by law to recognize, or if a Partner's interest in the Partnership is subjected
to a lawful "charging order," or if a Partner makes an unauthorized transfer or
assignment of a Partnership Interest, which the Partnership is required by law
(and by order of a court) to recognize, the Partnership will have the unilateral
option to acquire the interest of the transferee or Assignee, or any fraction or
part thereof, upon the following terms and conditions:
a. The Partnership will have the option to acquire the interest by
giving written notice to the transferee or Assignee of its intent to purchase
within ninety (90) days from the date it is finally determined that the
Partnership is required to recognize the transfer or assignment, or the date
upon which the Partnership concedes that it is required to recognize the
transfer or assignment, whichever should first occur.
b. The valuation date for the determination of the purchase price of
the interest will be the first day of the month following the month in which
notice is delivered.
c. Unless the Partnership and the transferee or Assignee agree
otherwise, the purchase price for the interest, or any fraction to be acquired
by the Partnership, shall be its fair market value as determined by an
Appraisal.
d. Closing of the sale will occur at the principal office of the
Partnership at 10 o'clock a.m. on the first Tuesday of the month following the
month in which the Appraisal is rendered.
e. In order to reduce the burden upon the resources of the Partnership,
the Partnership will have the option, to be exercised in writing delivered at
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closing, to pay its purchase money obligation in fifteen (15) equal annual
installments [or the remaining term of the Partnership if less than fifteen (15)
years] with interest at the Default Interest Rate. The first installment of
principal, with interest, will be due and payable on the first day of the
calendar year following closing, and subsequent annual installments, with
accrued interest, will be due and payable on the first day of each succeeding
calendar year until the entire amount of the obligation is paid. The
Partnership will have the right to prepay all or any part of the purchase money
obligation at any time without penalty.
f. By Required Consent, other than the Partner whose interest is to be
acquired, the General Partner may assign the Partnership's option to purchase to
one or more of the remaining Partners and when done, any rights or obligations
imposed upon the Partnership will instead become, by substitution, the rights
and obligations of the Partners who are assignees.
g. Neither the transferee nor Assignee of an unauthorized transfer or
assignment or the Partner causing the transfer or assignment will have the right
to vote on Partnership matters during the prescribed option period or, if the
option to purchase is timely exercised, until the sale is closed.
6. Notwithstanding anything in this Article to the contrary, any
successor to the Partnership Interest of a Limited Partner shall be admitted to
the Partnership as a substitute Limited Partner only upon the (a) furnishing to
the General Partners of a written acceptance in a form satisfactory to the
General Partners of all of the terms and conditions of this Agreement and such
other documents and instruments as may be required to effect the admission of
the successor as a Limited Partner; and (b) obtaining the Required Consent. The
consent may be withheld or granted in the sole discretion of those constituting
the Required Consent. The transferee shall be admitted to the Partnership as a
substitute Limited Partner as of the effective date of the transfer.
C. Partnership Interest Pledge or Encumbrance. No Partner may grant a
security interest in or otherwise pledge, hypothecate or encumber his interest
in this Partnership or such Partner's distributions without Required Consent.
It is understood that the Partners are under no obligation to give consent nor
are they subject to liability for withholding consent.
XIV. TAXES, ACCOUNTING, BOOKS, AND RECORDS
A. Fiscal Year; Accounting Records. The fiscal period of the Partnership
shall be the calendar year and the accounting records of the Partnership shall
be kept on the cash receipts and disbursements method of accounting or in
accordance with generally accepted accounting principles, at the discretion of
the General Partner. All books, records, accounts, papers, and memoranda in any
manner relating to the Partnership (including those records required by the Act)
shall be kept at the principal office of the Partnership. Subject to the
provisions of Article VII, Section R., of this Agreement, each Partner at all
reasonable times during regular office hours shall have access to the records
for purposes of inspecting and copying, at the Partner's expense (unless
otherwise required by the Act).
B. Financial Statements and Reports. The General Partner shall cause to be
delivered to each Partner the following:
1. within ninety (90) days after the end of each fiscal year, an
unaudited balance sheet and statement of operations, Partners' equity and
changes in financial position, which shall be prepared on the cash receipts and
disbursements method of accounting or in accordance with generally accepted
accounting principles; and
2. within ninety (90) days after the end of each fiscal year:
a. U.S. federal income tax Form K-1 and any similar forms required by
any state or local taxing authority; and
b. any other information concerning the Partnership reasonably
necessary for the preparation of the Partners' federal and state income tax
returns.
The General Partner, upon showing good cause, shall be entitled to a reasonable
extension of the ninety (90) day period applicable to the items described in
subsection (b). "Good cause" shall be determined without regard to the
foreseeability of such cause. All financial statements and reports shall be
prepared at the expense of the Partnership.
C. Tax Matters Partner; Tax Elections. The General Partner, and if there
are multiple General Partners, then the General Partner designated as "manager"
and if none, then a General Partner appointed by majority vote of the General
Partners, and if there is no General Partner appointed then the General
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Partner with the largest combined General and Limited Partnership Interest,
shall be the initial "Tax Matters Partner" for federal income tax purposes. Any
successor Tax Matters Partner shall be a General Partner. Unless otherwise
agreed to by a Majority in Interest, the Partnership shall make such elections
and adopt such accounting methods and procedures for federal and state income
tax purposes as the Tax Matters Partner deems to be in the best interest of the
Partnership.
XV. POWER OF ATTORNEY
Each Limited Partner, and any Assignee or transferee of his interest in the
Partnership, does irrevocably constitute and appoint the General Partner as his
true and lawful attorney in fact and agent, to execute, acknowledge, swear to,
deliver, record and file, in the Partner's or assignee's name, place and stead,
all instruments, documents and certificates which may from time to time be
required by the laws of the United States of America, the State of Texas, or any
other jurisdictions the laws of which are applicable to the Partnership (1) to
effectuate, implement and continue the valid existence of the Partnership as
organized and operated in accordance with the terms of this Agreement,
including, without limitation, all certificates and other instruments (including
counterparts of this Agreement and amendments) which the General Partner deems
appropriate to reflect any amendment, change or modification of the Partnership
in accordance with the terms of this Agreement; (2) to reflect the dissolution
and termination of the Partnership pursuant to the terms of this Agreement,
including the writing required by the Act to cancel the Partnership's
certificate filed with the Secretary of State of Texas; (3) to comply with the
fictitious or assumed name statutes in effect in the State of Texas and all
other jurisdictions in which the Partnership conducts or plans to conduct
business. The agent and attorney in fact shall not, however, have the right,
power or authority to amend, extend the term, or modify this Agreement when
acting in his capacity. The power of attorney granted herein shall be deemed to
be coupled with an interest, shall be irrevocable, shall survive the death,
dissolution, incompetency or legal disability of any Partner and shall extend to
the Partners' heirs, executors, successors and assigns; and may be exercised by
said agent and attorney in fact for all (or any one) of them or in other manner,
including by facsimile signature, as the agent and attorney in fact may deem
appropriate. Notwithstanding the foregoing, nothing in this Article shall
enlarge the powers granted to the General Partner pursuant to the other terms of
this Agreement.
XVI. DISSOLUTION
A. Events of Dissolution. The happening of any one of the following events
shall work an immediate dissolution of the Partnership:
1. an event of withdrawal of a General Partner described in Section
4.02(a) of the Act, except that any event described in Subsection (4), (5), (7),
(8) and (9) of Section 4.02(a) of the Act shall not be an event of withdrawal.
2. by Unanimous Consent;
3. the entry of a decree of judicial dissolution under Section 8.02 of
the Act;
4. the expiration of the term of the Partnership as stated in Article VI;
or
5. any other event causing dissolution under the Act.
B. Dissolution or Bankruptcy of a Partner. On the dissolution or
bankruptcy of a Partner, such Partner and his successors shall thereafter have
the status of an Assignee and shall receive distributions to which he is
entitled. For purposes of this Agreement, the "bankruptcy" of a Partner shall
be deemed to have occurred upon the happening of any event described in
Subsections (4) and (5) of Section 4.02(a) of the Act.
C. Withdrawals; Reconstitution. Technical dissolutions may occur pursuant
to Article XVI, Sections A.1. and A.5., of this Agreement, but if there is a
remaining General Partner, the Partnership will be reconstituted and continued.
1. A General Partner may have the power but not the right to withdraw at
any time from the Partnership and cease to be a General Partner under the
provisions of Section 6.02(a) of the Act by giving written notice to the other
Partners. Any General Partner who withdraws or ceases to be a General Partner
pursuant to Section 4.02(a), Subsections (1), (2), (3), (6), and (10) of the
Act, before the expiration of the stated term of this Partnership violates this
Agreement, and the Partnership may recover damages from the withdrawing General
Partner, including the reasonable cost of obtaining replacement of the services
the withdrawn Partner was obligated to perform, for breach of this Agreement.
The Partnership may, in addition to pursuing any remedies otherwise available
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under applicable law, effect that recovery by offsetting those damages against
the amount otherwise distributable to the withdrawing General Partner, reducing
the Limited Partner's interest into which the withdrawing General Partner's
interest may be converted under Section 6.02(b)(1) of the Act.
2. Subject to the liability created under Section 6.02(a) of the Act, a
General Partner who ceases to be a General Partner under Section 4.02(a),
Subsections (1), (2), (3), (6), and (10) of the Act shall, at the option of the
remaining General Partners or, if there are no remaining General Partners, at
the option of a Majority in Interest of Limited Partners in a vote that excludes
any Limited Partnership Interest held by the withdrawing General Partner:
a. convert the interest in that General Partner's Capital Account,
Profits, Losses, and distributions to that of a Limited Partner; or
b. pay to the withdrawn General Partner in cash, other property of the
Partnership of equivalent value, or secure by bond approved by a court of
competent jurisdiction, the fair market value of that Partner's Partnership
Interest less the damages caused by the withdrawn General Partner's breach of
this Agreement.
3. The Partnership shall have the unilateral option to acquire the entire
interest of the withdrawn General Partner under the same terms and conditions
specified in Article XIII, Section B.5., as if the withdrawn General Partner was
a transferee of an interest conveyed without authority.
4. Successor General Partner. If there are multiple General Partners and
one or more General Partners withdraws or ceases to serve for any reason and
there is at least one remaining General Partner, the business of the Partnership
is permitted to continue by the remaining General Partners without amendment to
this Agreement. If a General Partner, serving alone, withdraws or ceases to
serve for any reason, then, without any amendment to this Agreement, in the
priority and in succession, the following persons will serve as successor
General Partners: Steven James Troutt, Lisa Elaine Troutt, Preston Allen Troutt
(if he is at least age 30), and Grant Michael Troutt (if he is at least age 30)
("Designated Successor General Partners"), and the business of the Partnership
is permitted to continue. Prior to the withdrawal of all multiple General
Partners or the withdrawal of a sole General Partner serving without a
Designated Successor General Partner, additional General Partners or Designated
Successor General Partners may be appointed by Majority In Interest. If a
General Partner, serving alone, withdraws or ceases to serve for any reason and
there are no Designated Successor General Partners remaining, then without
amendment to this Agreement, all the remaining Partners may continue the
business of the Partnership and appoint one or more new General Partners
effective as of the date of withdrawal of the withdrawing General Partner. Any
Designated Successor General Partner will not have the duties nor the liability
of a General Partner until such time as the successor actually assumes the
position of a General Partner. Any successor General Partner shall be required
to possess such capital or profits interest in the Partnership as in the opinion
of the tax counsel for the Partnership is necessary to maintain its tax status
as a limited partnership for federal income tax purposes. A General Partner who
ceases to be a General Partner will not be personally liable for the debts and
obligations of the Partnership incurred following the termination of his service
as a General Partner.
XVII. LIQUIDATION AND TERMINATION.
A. Liquidator.
1. If the Partnership is dissolved under Article XVI, Sections A.2. or
A.3., or if the General Partners have withdrawn and no successors have been
chosen pursuant to Article XVI, Section C.4., a Liquidator will be appointed to
commence to wind up the affairs of the Partnership and to liquidate and sell its
properties. The Partners shall continue to share operating Profits and losses
during the period of liquidation. The Liquidator will proceed, as promptly as
practicable without undue sacrifice, to liquidate and sell all remaining
properties of the Partnership for the best price obtainable in the judgment of
the Liquidator or appropriate to distribute the Property to the Partners in kind
in accordance with their Sharing Ratios. The Liquidator may be required by the
Partners (at the expense of the Partnership) to give a bond to assure faithful
performance of his duties. The Liquidator shall be entitled to receive
compensation for his services as shall be agreed upon, payable out of the assets
of the Partnership. The Liquidator may resign at any time by giving thirty (30)
days' written notice to the Partners. The Liquidator may be removed at any time
by written notice of removal by Unanimous Consent. Upon the death, dissolution,
removal or resignation of the Liquidator, a successor Liquidator (who shall have
and succeed to all of the rights, powers, and duties of the original Liquidator)
will, within thirty (30) days, be appointed in the same manner as
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the appointment of the original Liquidator. The right to appoint a successor
Liquidator shall be recurring and continuing for so long as the functions and
services of the Liquidator are authorized to continue.
2. If, within thirty (30) days following the dissolution of the
Partnership, no person has agreed to serve as the Liquidator or if, within
thirty (30) days after the need for a successor Liquidator arises, such
successor shall not have been appointed and accepted such appointment, any
interested Partner shall have the right to make application to a State or
Federal District Judge (or if any State or Federal District Judge is unwilling,
then the Local Administrative Judge for the county in which the principal office
of the Partnership is located) for appointment of the Liquidator. The Judge,
acting as an individual and not in his judicial capacity, shall be fully
authorized to appoint the Liquidator.
B. Powers of the Liquidator. Subject to Article XVII, Section A., the
Liquidator shall have the powers of the General Partner to the extent necessary
to carry out the duties and functions of the Liquidator, including but not
limited to the following powers:
1. The power to continue to manage any business of the Partnership during
the liquidation, including the power to enter into contracts which may extend
beyond the liquidation.
2. The power to execute deeds, bills of sale, assignments, and transfers
to convey Property of the Partnership; provided, that the Liquidator may not
impose personal liability upon any of the Partners or their legal
representatives or successors in interest under any warranty of title contained
in any instrument.
3. The power to borrow funds, in the Liquidator's best judgment,
reasonably required to pay any obligations of the Partnership, and to execute
security documents encumbering Property as security for the indebtedness of the
Partnership; provided that the Liquidator shall not have the power to create any
personal obligation of any of the Partners or their successors in interest to
repay indebtedness other than out of available proceeds of foreclosure or sales
of the Property as to which a lien is granted.
4. The power to settle, compromise, or adjust any claim asserted to be
owing by or to the Partnership, and the right to file, prosecute, or defend
lawsuits and legal proceedings in connection with any matters.
5. The power to make deeds, bills of sale, assignments and transfers to
the respective Partners incident to final distribution of the remaining Property
(if any); provided, that the Liquidator may not impose personal liability upon
any of the Partners or their legal representatives or successors in interest
under any warranty of title contained in any instrument.
G. Liquidating Distributions. The net liquidation sales proceeds and all
other funds of the Partnership shall be distributed in the following order: (i)
to the payment of all the Partnership's liabilities, other than those to any of
the Partners, including expenses of liquidation; (ii) to the setting up of any
reserves which the Liquidator may deem reasonably necessary for any contingent
or unforeseen liabilities or obligations of the Partnership; (iii) to the
payment and discharge of any liabilities of the Partnership to any of the
Partners; and (iv) after all allocations of income, gains, losses and deductions
pursuant to Article X, to the Partners in payment of the positive balances in
their Capital Accounts.
D. Final Accounting. Within a reasonable time following the completion of
the liquidation of the Partnership, the Liquidator shall supply to each Partner
a statement prepared by the Partnership's accountant which shall set forth the
assets and liabilities of the Partnership as of the date of liquidation, each
Partner's portion of distributions pursuant to liquidation and the amount, if
any, retained as reserves pursuant to Article XVII, Section C.
E. Termination of Partnership. Upon the completion of the liquidation of
the Partnership and the distribution of all Partnership Property, the
Partnership shall terminate and the Liquidator shall have the authority to
execute and record all documents required to effectuate the dissolution and
termination of the Partnership.
F. Rights of Lender. The rights and powers granted to the Partners and the
Liquidator are subject to the rights and powers of the holder of first mortgage
liens (if any) against all or any part of the Property owned by the Partnership.
XVIII. ALTERNATIVE DISPUTE RESOLUTION ("ADR"); BINDING ARBITRATION
A. Agreement to Use Procedure. The Partners have entered into this
Agreement in good faith and in
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AGREEMENT OF LIMITED PARTNERSHIP OF TROUTT PARTNERS, LTD.
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the belief that it is mutually advantageous to them. It is with that same spirit
of cooperation that they pledge to attempt to resolve any dispute amicably
without the necessity of litigation. Accordingly, they agree if any dispute
arises between them relating to this Agreement (the "Dispute"), they will first
utilize the procedures specified in this Section (the "Procedure") prior to any
Additional Proceedings.
B. Initiation of Procedure. The Partner seeking to initiate the Procedure
(the "Initiating Partner") shall give written notice to the other Partners,
describing in general terms the nature of the Dispute, the Initiating Partner's
claim for relief and identifying one or more individuals with authority to
settle the Dispute on such Partner's behalf. The Partner(s) receiving such
notice (the "Responding Partner", whether one or more) shall have five (5)
business days within which to designate by written notice to the Initiating
Partner, one or more individuals with authority to settle the Dispute on such
Partner's behalf. The individuals so designated shall be known as the
"Authorized Individuals". The Initiating Partner and the Responding Partner
shall collectively be referred as the "Disputing Partners" or individually
"Disputing Partner".
C. Direct Negotiations. The Authorized Individuals shall be entitled to make
such investigation of the Dispute as they deem appropriate, but agree to
promptly, and in no event later than thirty (30) days from the date of the
Initiating Partner's written notice, meet to discuss resolution of the Dispute.
The Authorized Individuals shall meet at such times and places and with such
frequency as they may agree. If the Dispute has not been resolved within thirty
(30) days from the date of their initial meeting, the Disputing Partners shall
cease direct negotiations and shall submit the Dispute to mediation in
accordance with the following procedure.
D. Selection of Mediator. The Authorized Individuals shall have five (5)
business days from the date they cease direct negotiations to submit to each
other a written list of acceptable qualified attorney-mediators not affiliated
with any of the Partners. Within five (5) days from the date of receipt of such
list, the Authorized Individuals shall rank the mediators in numerical order of
preference and exchange such rankings. If one or more names are on both lists,
the highest ranking person shall be designated as the mediator. If no mediator
has been selected under this procedure, the Disputing Partners agree jointly to
request a State or Federal District Judge of their choosing (or if they cannot
agree, the Local Administrative Judge for the county in which the principal
office of the Partnership is located) to supply within ten (10) business days a
list of potential qualified attorney-mediators. Within five (5) business days
of receipt of the list, the Authorized Individuals shall again rank the proposed
mediators in numerical order of preference and shall simultaneously exchange
such list and shall select as the mediator the individual receiving the highest
combined ranking. If such mediator is not available to serve, they shall
proceed to contact the mediator who was next highest in ranking until they are
able to select a mediator.
E. Time and Place of Mediation. In consultation with the mediator selected,
the Authorized Individuals shall promptly designate a mutually convenient time
and place for the mediation, and unless circumstances require otherwise, such
time to be not later than forty-five (45) days after selection of the mediator.
F. Exchange of Information. In the event any Disputing Partner to this
Agreement has substantial need for information in the possession of another
Disputing Partner to this Agreement in order to prepare for the mediation, all
Disputing Partners shall attempt in good faith to agree to procedures for the
expeditious exchange of such information, with the help of the mediator if
required.
G. Summary of Views. At least seven (7) days prior to the first scheduled
session of the mediation, each Disputing Partner shall deliver to the mediator
and to the other Disputing Partners a concise written summary of its views on
the matter in Dispute, and such other matters required by the mediator. The
mediator may also request that a confidential issue paper be submitted by each
Disputing Partner to him.
H. Parties to be Represented. In the mediation, each Disputing Partner shall
be represented by an Authorized Individual and may be represented by counsel.
In addition, each Disputing Partner may, with permission of the mediator, bring
such additional Persons as needed to respond to questions, contribute
information, and participate in the negotiations.
I. Conduct of Mediation. The mediator shall determine the format for the
meetings, designed to assure that both the mediator and the Authorized
Individuals have an opportunity to hear an oral presentation of each Disputing
Partner's views on the matter in dispute, and that the authorized parties
attempt to negotiate a resolution of the matter in dispute, with or without the
assistance of counsel or others, but with
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AGREEMENT OF LIMITED PARTNERSHIP OF TROUTT PARTNERS, LTD.
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the assistance of the mediator. To this end, the mediator is authorized to
conduct both joint meetings and separate private caucuses with the Disputing
Partners. The mediation session shall be private. The mediator will keep
confidential all information learned in private caucus with any Disputing
Partner unless specifically authorized by such Disputing Partner to make
disclosure of the information to the other Disputing Partner. The Disputing
Partners agree to sign a document agreeing that the mediator shall be governed
by the provisions of Chapter 154 of the Tex. Civ. Prac. & Rem. Code and such
other rules as the mediator shall prescribe. The Disputing Partners commit to
participate in the proceedings in good faith with the intention of resolving the
Dispute if at all possible.
J. Termination of Procedure. The Disputing Partners agree to participate in
the mediation procedure to its conclusion. The mediation shall be terminated (i)
by the execution of a settlement agreement by the Disputing Partners, (ii) by a
declaration of the mediator that the mediation is terminated, or (iii) by a
written declaration of a Disputing Partner to the effect that the mediation
process is terminated at the conclusion of one full day's mediation session.
Even if the mediation is terminated without a resolution of the Dispute, the
Disputing Partners agree not to terminate negotiations and not to commence any
Additional Proceedings prior to the expiration of five (5) days following the
mediation. Notwithstanding the foregoing, any Disputing Partner may commence
Additional Proceedings within such five (5) day period if the Dispute could be
barred by an applicable statute of limitations.
K. Arbitration. The parties agree to participate in good faith in the ADR
to its conclusion. If the Disputing Partners are not successful in resolving
the dispute through the ADR, then the Disputing Partners agree that the dispute
shall be settled by arbitration in accordance with the provisions of the Texas
General Arbitration Act and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction ("Additional
Proceedings").
L. Fees of Mediation; Disqualification. The fees and expenses of the
mediator shall be shared equally by the Disputing Partners. The mediator shall
be disqualified as a witness, consultant, expert or counsel for any Disputing
Partner with respect to the Dispute and any related matters.
M. Confidentiality. Mediation is a compromise negotiation for purposes of
Federal and State Rules of Evidence and constitutes privileged communication
under Texas law. The entire mediation process is confidential, and no
stenographic, visual or audio record shall be made. All conduct, statements,
promises, offers, views and opinions, whether oral or written, made in the
course of the mediation by any Disputing Partner, their agents, employees,
representatives or other invitees and by the mediator are confidential and
shall, in addition and where appropriate, be deemed privileged. Such conduct,
statements, promises, offers, views and opinions shall not be discoverable or
admissible for any purpose, including impeachment, in any litigation or other
proceeding involving the parties, and shall not be disclosed to anyone not an
agent, employee, expert, witness, or representative of any of the Partners;
provided, however, that evidence otherwise discoverable or admissible is not
excluded from discovery or admission as a result of its use in the mediation.
XIX. MISCELLANEOUS
A. Notices. All notices under this Agreement shall be in writing and shall
be given to the Partner entitled by personal service or by certified or
registered mail, return receipt requested, except that the notice of any meeting
or the furnishing of any financial statement to the Partners may be done by
regular mail. Any notice shall be deemed received after twenty-four (24) hours
from the date and time of postmark if it is deposited with the U.S. Mail
pursuant to the above (if mailed) or when personally received if the mail
service is not used.
B. Construction. Whenever the context so requires, the gender of all words
used in this Agreement includes the masculine, feminine, and neuter, and the
singular shall include the plural, and conversely. All references to articles,
sections, subsections or subparagraphs are to provisions of this Agreement
unless context dictates otherwise.
C. Counterparts. This Agreement may be executed in several counterparts,
and all so executed shall constitute one Agreement binding on all parties,
notwithstanding that all the parties are not signatory to the original or the
same counterpart.
D. Attorney Fees. Subject to provisions of Article XVIII of this
Agreement, in the event a dispute arises between any Partner(s) and the
Partnership or between the Partners themselves, the prevailing party shall be
entitled to recover reasonable attorney's fees and court costs incurred.
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AGREEMENT OF LIMITED PARTNERSHIP OF TROUTT PARTNERS, LTD.
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E. Tax Audit. In the event this Partnership is audited by the Internal
Revenue Service, the costs and expenses incurred to defend and comply with the
audit shall be an expense of the Partnership. Any audit of any individual
Partner shall not be deemed to be an audit of this Partnership.
F. Binding Nature. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
respective Partner.
G. Severance. In the event any sentence or paragraph of this Agreement is
declared by a court to be void or by the Internal Revenue Service, for the
purposes of Section 2704 of the Code, to be noneffective, that sentence or
paragraph shall be deemed severed from the remainder of the Agreement, and the
balance of the Agreement shall remain in effect. To the extent applicable, the
default provisions of the Act shall govern in the place of the severed sentence
or paragraph. This provision shall not prohibit the Partnership or any Partner
from contesting a determination of noneffectiveness of any provision of this
Agreement by the Internal Revenue Service.
H. Amendment of Agreement. This Agreement may be modified or amended at
any time by a writing signed by all the Partners.
I. Applicable Law. This Agreement and all rights and liabilities of the
parties with reference to this Partnership shall be governed by the Act and all
other applicable laws of the State of Texas.
J. Foreign Qualification. Prior to the qualification of the Partnership to
conduct business in any jurisdiction other than Texas, the General Partners
shall cause the Partnership to comply, to the extent procedures are available
and those matters are reasonably within the control of the General Partners,
with all requirements necessary to qualify the Partnership as a foreign limited
partnership in that jurisdiction. At the request of the General Partners, each
Partner shall execute, acknowledge, swear to, and deliver all certificates and
other instruments conforming with the terms of this Agreement that are necessary
or appropriate to qualify, continue, and terminate the Partnership as a foreign
limited partnership in all jurisdictions in which the Partnership may conduct
business.
K. Headings. The headings used in this Agreement are for convenience only
and shall not be construed in interpreting this Agreement.
L. Entire Agreement. This Agreement contains the entire agreement among
the Partners with respect to the matters of this Agreement and shall supersede
and govern all prior agreements, written or oral.
M. Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
N. Creditors. None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditors of the Partnership.
O. Waiver. No failure by any Partner to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any breach or any other covenant, duty, agreement or condition.
P. Offset. Whenever the Partnership is to pay any sum to any Partner, any
amounts that Partner owes the Partnership may be deducted from that sum before
payment.
Q. Disclosure. Each of the Partners acknowledge that he or she (1) was
-------------------------------------------------------
urged in advance by the Attorney who prepared this Agreement to secure separate
- -------------------------------------------------------------------------------
independent legal counsel in connection with signing and making this Agreement
- ------------------------------------------------------------------------------
and its effect upon each of them and their marital property, (2) has carefully
- ------------------------------------------------------------------------------
read and understood the provisions of this Agreement, (3) understands that his
- ----------------------- ------------------------------------------------------
or her marital rights in real property may be adversely affected by this
- ------------------------------------------------------------------------
Agreement, (4) is signing and making this Agreement voluntarily, (5) has been
- -----------------------------------------------------------------------------
provided a fair and reasonable disclosure of the property and financial
- -----------------------------------------------------------------------
obligations of the other Party, and (6) hereby voluntarily and expressly waives
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in this writing any right to disclosure of the property and financial
- ---------------------------------------------------------------------
obligations of the other Partners beyond the disclosure provided.
- ----------------------------------------------------------------
The date of this agreement, for purposes of identification, is the 15/th/ day of
August, 1996.
Acceptance and Approval
By General Partners
THE TROUTT FAMILY TRUST
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AGREEMENT OF LIMITED PARTNERSHIP OF TROUTT PARTNERS, LTD.
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/s/ KENNY ALLAN TROUTT
- ----------------------------------------
Kenny Allan Troutt, Trustee.
KENNY ALLAN TROUTT CHILDREN'S TRUST
/s/ STEVEN JAMES TROUTT
- ----------------------------------------
Steven James Troutt, Trustee.
Acceptance and Approval
By Limited Partner(s)
THE TROUTT FAMILY TRUST
/s/ KENNY ALLAN TROUTT
- ----------------------------------------
Kenny Allan Troutt, Trustee.
LISA ELAINE TROUTT CHILDREN'S TRUST
/s/ STEVEN JAMES TROUTT
- ----------------------------------------
Steven James Troutt, Trustee
KENNY ALLAN TROUTT
/s/ KENNY ALLAN TROUTT
- ----------------------------------------
Kenny Allan Troutt, Individually
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<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP OF TROUTT PARTNERS, LTD.
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CERTIFICATE OF ACKNOWLEDGMENT
- -----------------------------
State of Texas
County of Dallas
On the 15/th/ day of August, 1996, before me, a Notary Public of said State,
personally appeared Kenny Allan Troutt, Trustee of The Troutt Family Trust,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument, and
acknowledged that he executed the same for the purposes and in the capacity
expressed therein.
WITNESS MY HAND and official seal.
/s/ LISA GOERDT
- ----------------------------------------
NOTARY PUBLIC-STATE OF TEXAS
CERTIFICATE OF ACKNOWLEDGMENT
- -----------------------------
State of Texas
County of Dallas
On the 15/th/ day of August, 1996, before me, a Notary Public of said State,
personally appeared Steven James Troutt, Trustee of the Kenny Allan Troutt
Children's Trust, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument, and acknowledged that he executed the same for the purposes and in
the capacity expressed therein.
WITNESS MY HAND and official seal.
/s/ LISA GOERDT
- ----------------------------------------
NOTARY PUBLIC - STATE OF TEXAS
CERTIFICATE OF ACKNOWLEDGEMENT
- ------------------------------
State of Texas
County of Dallas
On the 15/th/ day of August, 1966, before me, a Notary Public of said State,
personally appeared Steven James Troutt, Trustee of the Lisa Elaine Troutt
Children's Trust, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument, and acknowledged that he executed the same for he pusposes and in
the capacity expressed therein.
WITNESS MY HAND and official seal.
/s/ LISA GOERDT
- ------------------------------
NOTARY PUBLIC - STATE OF TEXAS
CERTIFICATE OF ACKNOWLEDGMENT
- -----------------------------
State of Texas
County of Dallas
On the 15/th/ day of August, 1966, before me, a Notay Public of said State,
personally appeared Kenny Allan Troutt, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument, and acknowledged that he executed the same for the
purposes and in the capacity expressed therein.
WITNESS MY HAND and official seal.
/s/ LISA GOERDT
- ----------------------------------
NOTARY PUBLIC - STATE OF TEXAS
Balance of page intentionally left blank.
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<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
TROUTT PARTNERS, LTD.
SCHEDULE "A"
GENERAL PARTNERS
THE TROUTT FAMILY TRUST
Initial Capital Contribution: Four hundred forty eight one hundred
sixty three (448,163) shares of the common stock of Excel
Communications, Inc. from the Separate Trust Estate of Kenny Allan
Troutt.
Sharing Ratio 0.8456%
KENNY ALLAN TROUTT CHILDREN'S TRUST
Initial Capital Contribution: Eighty one thousand eight hundred
thirty seven (81,837) shares of the common stock of Excel
Communications, Inc.
Sharing Ratio 0.1544%
LIMITED PARTNERS:
THE TROUTT FAMILY TRUST
Initial Capital Contribution:
a. Two million (2,000,000) shares of the common stock of Excel
Communications, Inc. from the Community Trust Estate.
Sharing Ratio 3.7736%
b. Thirty million three hundred eighty-eight thousand one hundred
and sixty-three (30,388,163) shares of the common stock of Excel
Communications, Inc. from the Separate Trust Estate of Kenny Allan
Troutt.
Sharing Ratio 57.3362%
KENNY ALLAN TROUTT
Initial Capital Contribution: Twenty million (20,000,000) shares of
the common stock of Excel Communications, Inc. as his sole and
separate property.
Sharing Ratio 37.7358%
LISA ELAINE TROUTT CHILDREN'S TRUST
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP OF TROUTT PARTNERS, LTD.
- --------------------------------------------------------------------------------
Initial Capital Contribution: Eighty one thousand eight hundred
thirty seven (81,837) shares of the common stock of Excel
Communications, Inc.
Sharing Ratio 0.1544%
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<PAGE>
EXHIBIT 2
JOINT FILING STATEMENT
We, the undersigned, hereby express our agreement that the attached Schedule 13D
is filed on behalf of each of us.
THE KENNY ALLAN TROUTT CHILDREN'S TRUST II
By: /s/ STEVEN J. TROUTT
---------------------------- -------------------------------------
Steven J. Troutt, trustee Date: September 9, 1996
/s/ STEVEN J. TROUTT
- ------------------------------- -------------------------------------
Steven J. Troutt, as trustee of Date: September 9, 1996
the Kenny Allan Troutt
Children's Trust II
