UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)*
Neff Corp.
(Name of Issuer)
Class A Common Stock
(Title of Class of Securities)
0006400941
(CUSIP Number)
Kevin P. Fitzgerald, 3750 NW 87th Avenue, Miami, Florida 33178
(305 513-3350)
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 18, 2000
(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 that is the subject of this
Schedule 13D, and is filing this schedule because of 240.13d-
1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [x]
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
See 240.13d-7 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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CUSIP No. 0006400941 Schedule 13D Page 2 of 10 Pages
1. NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
Kevin P. Fitzgerald
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE
INSTRUCTIONS):
(a) [ ] (b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC, PF
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER: 436,610
8 SHARED VOTING POWER 900,000
9 SOLE DISPOSITIVE POWER 436,610
10 SHARED DISPOSITIVE POWER 900,000
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
1,336,610
12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS): [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9):
8.3%
14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
IN
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Item 1 Security and Issuer
(a) Title of class of securities
This statement on Schedule 13D relates to the shares of
Class A Common Stock of Neff Corp. (the "Company").
(b) Name and Address of Issuer's Principal Executive
Offices
Neff Corp.
3750 N.W. 87th Avenue
Miami, FL 33178
Item 2 Identity and Background
(a) Name
The person filing this Schedule 13D is Kevin P.
Fitzgerald.
(b) Business Address
The principal business address for Mr. Fitzgerald is:
3750 N.W. 87th Avenue
Miami, FL 33178
(c) Present principal occupation
Mr. Fitzgerald is the President and Chief Executive
Officer of Neff Corp. Mr. Fitzgerald is also a member
of the board of directors of Neff Corp. The principal
business address for Neff Corp. is:
3750 N.W. 87th Avenue
Miami, FL 33178
(d) Conviction in a criminal proceeding
Mr. Fitzgerald has never been convicted in a criminal
proceeding.
(e) Party to a civil proceeding
Mr. Fitzgerald has never been a party to a civil
proceeding of a judicial or administrative body as a result
of which he 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 of any violation with respect to such laws.
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(f) Citizenship
Mr. Fitzgerald is a United States citizen.
Item 3 Source and Amount of Funds or Other Consideration
Mr. Fitzgerald beneficially owns 8,000 shares of Class A
Common Stock. The funds used to purchase these shares came
from Mr. Fitzgerald's personal funds. Mr. Fitzgerald is also a
limited partner of Santos Fund I, L.P. ("Santos"), which owns
900,000 shares of Class A Common Stock. The funds used to
purchase these shares came from Santos' working capital. Mr.
Fitzgerald also beneficially owns 424,610 shares of Class A
Common Stock issuable upon the exercise of outstanding options
to purchase Class A Common Stock.
Until the date hereof, Mr. Fitzgerald has filed his
beneficial ownership positions in the Class A Common Stock on
Schedule 13G under the Securities Exchange Act of 1934, s
amended (the "Exchange Act"). In accordance with Rule 13d-1(e)
of the Exchange Act, Mr. Fitzgerald is now filing this Schedule
13d not because of additional purchases of Class A Common Stock
but because an entity controlled by Mr. Fitzgerald, Neff
Investors, Inc. ("Neff Investors"), has delivered a letter,
dated February 18, 2000, to the Board of Directors of the
Company pursuant to which Neff Investors made a non-binding
offer to acquire all of the outstanding voting securities of
the Company (the "Letter").
Item 4 Purpose of Transaction
Mr. Fitzgerald purchased the shares of Class A Common
Stock which are the subject of this Schedule 13D for the
purposes of investment. Pursuant to the Letter, Neff Investors
indicated a preliminary interest in acquiring the Company in a
merger in which the Company's public stockholders would receive
$9.00 per share in cash in exchange for their Class A Common Stock
(the "Transaction"). As part of the Transaction, Neff Investor's
proposed that forty percent of the Class A Common Stock beneficially
owned by Jorge Mas, Juan Carlos Mas and Jose Ramon Mas (collectively,
the "Mas Group") would be acquired in the merger in exchange for
$9.00 per share in cash and the remaining sixty percent of the Class
A Common Stock held by the Mas Group would be exchanged for
preferred stock in the surviving corporation in the merger.
The Mas Group beneficially owns approximately 40% of the
outstanding Class A Common Stock of the Company.
The Letter provides that Neff Investors intends to obtain
the required financing for the transaction through debt and
equity financing arrangements. These arrangements have not
been finalized and the financiers referred to in the Letter
have not committed to provide financing for the Transaction.
<PAGE>
According to the Letter, consummation of the Transaction
would be subject to, among other things: (i) the negotiation
and execution of definitive acquisition documentation, (ii) the
receipt by Neff Investors, on satisfactory terms, of all
financing necessary to complete the Transaction, (iii)
satisfactory completion of due diligence and (iv) the approval
of the Company's Board of Directors.
The Transaction, if consummated, would involve one or more
of the following, the specific plans concerning which have not
yet been definitively established: (i) the acquisition by Neff
Investors of Class A Common Stock and/or Class B Common Stock
of the Company, (ii) an extraordinary corporate transaction
involving the Company, (iii) a material change in the present
capitalization of the Company, (iv) changes in the Company's
charter and by-laws, (v) causing a class of securities of the
Company to be delisted from a national securities exchange and
(vi) causing a class of securities of the Company to become
eligible for termination of registration pursuant to Section
12(g)(4) of the Exchange Act.
Except as described above and elsewhere herein, neither
Mr. Fitzgerald nor Neff Investors has a present plan or
proposal which relates to, or could result in, the occurrence
of any of the events referred to in subparagraphs (a) through
(j) of Item 4 of Schedule 13D.
Item 5 Interest in Securities of the Issuer
(a) Amount Beneficially Owned and Percent of Class
Mr. Fitzgerald beneficially owns a total of 1,336,610
shares of the Class A Common Stock, par value $.01 of Neff Corp.
(the "Shares"). Mr. Fitzgerald beneficially owns 8.3% of the
Class A Common Stock of Neff Corp.
(b) Number of shares as to which such person has:
(i) sole power to vote or to direct the vote
Mr. Fitzgerald has the sole power to direct the
vote of an aggregate of 436,610 Shares.
(ii) shared power to vote or to direct the vote
Mr. Fitzgerald shares power to direct the vote of
900,000 Shares.
(iii) sole power to dispose or to direct the disposition
of
<PAGE>
Mr. Fitzgerald has the sole power to dispose of
436,610 Shares.
(iv) shared power to dispose or to direct the
disposition of
Mr. Fitzgerald shares power to dispose of
900,000 Shares.
(c) Recent transactions
Not applicable.
(d) Right to receive dividends of proceeds
Not applicable.
Item 6 Contracts, Arrangements, Understandings or
Relationships with respect to Securities of the
Issuer
Neff Investors has delivered the Letter to the Board of Directors of
the Company pursuant to which Neff Investors made a non-binding offer
to acquire all of the outstanding securities of the Company. The
Letter is a preliminary indication of interest in consummating a
transaction and not a binding commitment with respect to a transaction.
Pursuant to the Agreement of Limited Partnership (the "Agreement")
of Santos Fund I, L.P. by and among Santos Fund, Inc., a Texas
corporation, as the general partner, and Jorge Mas, Mr. Fitzgerald,
Juan Carlos Mas and Jose Mas, as the limited partners, Mr. Fitzgerald,
as a limited partner, shares the power to direct the vote of 900,000
Shares.
The Company has granted Mr. Fitzgerald options to purchase
424,610 Shares.
Item 7 Material to be Filed as Exhibits
1. Letter from Neff Investors, Inc. to the Board of
Directors of Neff Corp., dated February 18, 2000.
2. Agreement of Limited Partnership of Santos Fund I, L.P.,
dated March 24, 1998.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the
undersigned's knowledge and belief, the undersigned certifies
that the information set forth in this statement is true,
complete and correct.
/s/Kevin P. Fitzgerald
______________________________
Kevin P. Fitzgerald
Dated: March 8, 2000
February 18, 2000
PRIVATE AND CONFIDENTIAL
Neff Corp.
3750 N.W. 87th Avenue
Miami, FL 33178
Attention: Board of Directors
Gentlemen:
I am writing this letter on behalf of Neff Investors, Inc.
(the "Purchaser"), a newly formed corporation in which General
Electric Capital Corporation ("GECC") and Kevin Fitzgerald will
be stockholders. The Purchaser is pleased to submit a proposal
for the purchase of certain stock of Neff Corp. ("Neff" or the
"Company") as follows:
1. Purchase all publicly held shares of Neff for a cash price
of $9.00 per share.
2. Purchase 40% of the shares of Neff now held by Jorge Mas,
Juan Carlos Mas and Jose Mas (collectively the "Mas Group")
for $9.00 per share in cash. The balance of the shares held
by the Mas Group would be exchanged for newly
issued Neff redeemable convertible preferred stock (the "Mas
Preferred"). The Mas Preferred would have the following
general terms:
Redemption: Mandatorily redeemable upon a change in
control or 10 years after issuance; and,
Conversion: Convertible into Neff common stock at a
conversion price of $13.00 per share at any
time.
Liquidation
Preference: $10.00 per share.
Dividend and
other terms: To be determined.
The Purchaser would acquire Neff in a merger in which Neff's
public stockholders receive cash and the Mas Group receives cash
for 40% of the Neff common stock they now hold. The balance of
the Mas Group common stock would be exchanged for Mas Preferred.
We believe that the Purchaser will have sufficient funds
available to finance the proposed transaction. We propose to
obtain the required funding through debt and equity financing
arrangements with GECC, Deutsche Bank, and others. In this
regard, please find attached a specific proposal letter with
respect to this financing.
Although we have performed a substantial amount of work in
connection with this proposal, our work is not yet complete. The
parties providing the financing must complete a customary due
diligence review, including accounting, tax, environmental, and
employee benefits matters. We expect that the remaining due
diligence process could be completed expeditiously, and are
prepared to direct our advisors to do so. We would expect to
have firm commitments for all of the required financing within 60
days of the acceptance of this proposal.
<PAGE>
In addition to the matters discussed above, our proposal is
subject to Neff Board approval and the negotiation and execution
of definitive acquisition documentation. We are confident that
our respective advisors will be able to work together quickly to
finalize the documentation required for the contemplated
transaction.
We recognize that because senior management and significant
stockholders of the Company are participating in this proposal,
the Board of Directors is likely to establish a special committee
to review and negotiate the transaction on behalf of Neff. We
welcome the formation of such a committee on an expeditious
basis.
As you know, the law firm of Fried, Frank, Harris, Shriver &
Jacobson, which has acted as counsel to Neff in the past, has
been assisting us with the preparation of this proposal. We
request that you consent to an arrangement in which Fried, Frank
continues to represent us and, if you wish, the Company.
We would recommend that if this proposal is satisfactory to
the Board then we immediately enter into a definitive Merger
Agreement between the Purchaser and Neff. The Agreement would be
subject to, among other things, Purchaser obtaining the necessary
financing. In this regard, the Agreement would contain customary
terms and conditions for a transaction of this type including a
break-up fee due the Purchaser in the event a that a third party
proposes to buy Neff at a price the Board accepts. We are
prepared to provide you with a draft of a Merger Agreement in the
next three days.
If the Board concludes that the transaction we are proposing
should be pursued, we would like to make an immediate
announcement. We would want to discuss the timing and content of
this announcement with the Board.
This proposal, and the attached financing proposal, is
confidential and is submitted on the understanding that its
existence and contents will be held in strict confidence.
<PAGE>
Lastly, as you would expect, we must inform our financing
sources promptly whether or not we will proceed. As a result,
this proposal will expire on February 25, 2000. We are hopeful
that you can respond quickly and that we can proceed with a
transaction that will benefit everyone involved.
Very truly yours,
Neff Investors, Inc.
By: /s/ Kevin P. Fitzgerald
____________________________
Kevin P. Fitzgerald
President
AGREEMENT OF LIMITED PARTNERSHIP
OF
SANTOS FUND I, L.P.
March 20, 1998
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
SANTOS FUND I, L.P.
This Agreement of Limited Partnership of Santos Fund I, L.P.
(the "Agreement") is made and entered into effective the 20th day
of March 1998, by and among Santos Fund, Inc., a Texas
corporation, as the General Partner, and Jorge Mas Holding, I,
L.P., a Texas limited partnership, Kevin P. Fitzgerald, Juan
Carlos Mas and Jose Mas, as the Limited Partners (the General
Partner and Limited Partners are referred to herein as the
"Partners"). For and in consideration of the mutual covenants,
rights and obligations set out in this Agreement, the benefits to
be derived therefrom, and other good and valuable consideration,
the receipt and sufficiency of which each Partner acknowledges,
the Partners do hereby agree as follows:
ARTICLE 1
Formation of the Partnership
1.1. Formation. The Partners hereby agree to form, pursuant
to the provisions of the Texas Revised Limited Partnership Act
(the "Act"), a limited partnership (the "Partnership"). The
Partnership shall commence effective with the filing of the
Certificate of Limited Partnership (the "Certificate") with the
Secretary of State of the State of Texas or such later date as
may be expressly set forth within the Certificate.
1.2. Name. The name of the Partnership shall be, and the
business of the Partnership shall be conducted under the name of,
"Santos Fund I, L.P." The Partnership may conduct its business
from time to time under the Partnership name or such other names
as the General Partner shall deem appropriate from time to time.
1.3. General Partner. The General Partner, whether one or
more, may herein sometimes be referred to as the "General
Partner." As of the date of this Agreement, the name and address
of the sole General Partner is as follows:
Name Address
Santos Fund, Inc., c/o Neff Corp.
a Texas corporation 3750 N.W. 87th Avenue
Miami, Florida 33178
The General Partner's interest in the Partnership shall be the
General Partner's Sharing Ratio as set forth on Schedule A. As
used herein, "Sharing Ratio" means, for any Partner, the
percentage interest in the Partnership as set forth on Schedule
A.
<PAGE>
1.4. Limited Partners. The Limited Partners, whether one or
more, may hereinafter sometimes be referred to collectively as
the "Limited Partners." As of the date of this Agreement, the
name and address of the Limited Partners are as follows:
Name Address
Jorge Mas Holding, I, L.P., c/o Neff Corp.
a Texas limited partnership 3750 N.W. 87th Avenue
Miami, Florida 33178
Kevin P. Fitzgerald c/o Neff Corp.
3750 N.W. 87th Avenue
Miami, Florida 33178
Juan Carlos Mas c/o Neff Corp.
3750 N.W. 87th Avenue
Miami, Florida 33178
Jose Mas c/o Neff Corp.
3750 N.W. 87th Avenue
Miami, Florida 33178
Each Limited Partner's interest in the Partnership shall be his
Limited Partner's Sharing Ratio as set forth on Schedule A.
1.5. Filing of Certificate. Promptly following the
execution of this Agreement, the General Partner shall execute
and cause to be filed with the Secretary of the State of the
State of Texas a Certificate containing information required by
the Act and such additional information as the General Partner
may deem appropriate. Prior to the Partnership's conducting
business in any jurisdiction other than Texas, the General
Partner shall have the authority to cause the Partnership to
comply, to the extent those matters are reasonably within the
control of the General Partner, with all requirements necessary
to qualify the Partnership as a foreign limited partnership (or a
partnership in which the Limited Partners have limited liability)
in that jurisdiction. At the request of the General Partner,
each Partner shall execute, in the manner required and deliver
all certificates and other instruments conforming with this
Agreement that are necessary or appropriate to form, qualify,
continue and, where appropriate, terminate the Partnership as a
limited partnership under the laws of the State of Texas and to
qualify, continue and, where appropriate, terminate the
Partnership as a foreign limited partnership (or a partnership in
which the Limited Partners have limited liability) in all other
jurisdictions in which the Partnership may conduct business. In
the event a Limited Partner shall fail to execute such
documentation upon the request of the General Partner, the
General Partner may execute
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such documentation on behalf of the Limited Partner and is
hereby vested with the power of attorney described within the
terms of this Agreement for the purpose of carrying out such
acts on behalf of a Limited Partner, from time to time.
1.6. Principal Place of Business. The principal place of
business of the Partnership in Texas shall be _________, but
substitute or additional offices of the Partnership may be
established at such other addresses as may from time to time be
designated by the General Partner, in its discretion.
1.7. Registered Office. The Partnership shall have a
registered office in the State of Texas. The initial registered
office shall be 1212 Guadalupe, Suite 102, Austin, Texas 78701.
The General Partner shall be entitled to change the Registered
Office of the Partnership from time-to-time. Upon such change
the General Partner shall cause execution and filing of proper
documentation with the Secretary in accordance with the Act.
1.8. Registered Agent. The Partnership shall have a
Registered Agent at the Registered Office of the Partnership.
The Registered Agent shall be Capital Corporate Services, Inc.
who shall serve as such until the date it no longer qualifies to
act as Registered Agent or the date it withdraws as Registered
Agent. In the event a Registered Agent no longer qualifies to
act as Registered Agent or withdraws as Registered Agent, the
General Partner shall appoint a new Registered Agent.
1.9. Partnership Term. The Partnership commenced on the
date set forth in Article 1.1, above, and will remain effective
until the date on which the Partnership is terminated pursuant to
the Act or any provision of this Agreement following dissolution.
In the event the Partnership is dissolved it shall continue in
existence after dissolution until finally terminated for the sole
purpose of winding up its affairs, as provided herein.
1.10. Representations and Warranties. Each Partner
represents and warrants to the Partnership and to each other
Partner that (a) if that Partner is a corporation, it is duly
organized, validly existing, and in good standing under the laws
of the state of its incorporation and is duly qualified and in
good standing as a corporation in the jurisdiction of its
principal place of business (if not incorporated therein) and if
a General Partner, in the State of Texas, (b) if that Partner is
a partnership, trust, or other entity, it is duly formed, validly
existing and (if applicable) in good standing under the laws of
the state of its formation, and if required by law is duly
authorized to do business and (if applicable) in good standing in
the jurisdiction of its principal place of business (if not
formed therein) and if a General Partner, in the State of Texas,
and the representations and warranties in Clauses (a) or (b) as
applicable, are true and correct with respect to each partner
(other than the limited partners), trustee, or other members
thereof, (c) such Partner has full power and authority to enter
into this Agreement and to perform its obligations hereunder and
all necessary actions by the Board of Directors, shareholders,
partners, trustees, beneficiaries or other persons necessary for
the due authorization, execution, delivery, and performance of
this Agreement by that Partner have been duly taken, (d) such
Partner has duly executed and delivered this Agreement, (e)
Partner's authorization, execution, delivery, and
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<PAGE>
performance of this Agreement do not conflict with any other
agreement or arrangement to which that Partner is a party or by
which it is bound, (f) this Agreement is a valid and binding
obligation of such Partner, enforceable against such Partner in
accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and to
general equitable principles, and (g) such Partner is under no
legal disability, contractual or otherwise, that prohibits such
Partner from entering into this Agreement and performing the
obligations of such Partner hereunder.
1.11 Securities Act Investment. Each Partner represents and
warrants to the Partnership and to each Partner that such Partner
is acquiring interest in the Partnership for the account of such
Partner and not with a view to distribution thereof within the
meaning of the Securities Act of 1933, as amended, or any state
securities laws. Such interest will not be sold, transferred,
hypothecated, or assigned by such Partner in contravention of
that act or any applicable state securities laws.
ARTICLE 2
Purpose of Partnership
The purpose and intent of this Partnership will be to
acquire, own, hold, dispose of and manage one or more investments
in Neff Corporation as well as such other investment interests
which the Partnership may acquire, own, hold dispose of and
manage and any other investment activities the Partnership may
from time to time decide to participate in (the "Investments")
and to engage in all other activities incident to or related to
the management and ownership of the Investments, so long as the
same shall be for the benefit of the Partnership.
ARTICLE 3
Capital Contributions
3.1 Capital Contributions of the Partner. Each Partner
shall contribute such amount as is set forth on Schedule A as his
initial capital contribution. No further capital contributions
are required to be made to the Partnership by its Partners.
3.2. Optional Capital Contributions. The Limited Partners
shall have the option, but not the obligation, to contribute
additional assets to the Partnership as additional capital on
terms acceptable to the Partners contributing such capital. In
the event a Limited Partner contributes additional capital, the
General Partner immediately shall contribute to capital an amount
equal to 1.01% of such Limited Partner's contribution or a lesser
amount that causes the sum of the General Partner's capital
account balance to equal 1.00% of total positive capital account
balances for the Partnership. For this purpose, capital accounts
and the value of contributions shall be determined in accordance
with Treas. Reg. 1.704-1(b)(2)(iv) or any successor regulations.
For the purpose of this Agreement references to "Treas. Reg.,"
Treasury
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Regulations or Regulations shall mean the Treasury Regulations
relating to the section of the Code referenced in that article
of this Agreement.
ARTICLE 4
The General Partner
4.1. Authority of the General Partner. Except for those
decisions which expressly require a vote of all of the Partners
as set out in this Agreement, the General Partner shall conduct,
direct and exercise full management and control over all
activities, business and assets of the Partnership. In
furtherance of its duties hereunder, the General Partner will
have all necessary powers to carry out all activities necessary
or useful to achieve the purposes, business and objectives of the
Partnership, except to the extent that such powers are expressly
limited under the terms and conditions contained in this
Agreement. The powers of management of the General Partner shall
include all things necessary to carry out the activities of the
Partnership according to its purpose, including but not limited
to:
4.1.1. Coordinating and contracting with all accountants,
lawyers, managers, agents and other management service
personnel on behalf of, and at the expense of the
Partnership, as may from time to time be required or
appropriate in the judgment of the General Partner on such
terms and conditions as the General Partner may determine in
its sole discretion. In this regard the General Partner
shall be entitled to hire any person who is an affiliate of
any Partner without the consent of the other Partners,
provided the terms of such business relationship call for
the payments to be made to the affiliate to be no greater
than those which are customary in the industry for similar
services conducted on similar terms.
4.1.2. Applying such funds as may become available to the
Partnership for the payment of all fees, costs, expenses and
other obligations of the Partnership which may arise from
time to time out of the operations of the Partnership.
4.1.3. Executing and delivering on behalf of and in the
name of the Partnership any contract or arrangement on
behalf of the Partnership which the General Partner deems,
in its sole discretion, to be in the best interest of the
Partnership.
4.1.4. Responding by answer or otherwise to any legal
action filed against the Partnership and causing the
Partnership to take such actions as may be necessary, as
determined by the General Partner, to defend such legal
action.
4.1.5. Settling legal actions in regard to any claim, or
confessing a judgment on behalf of the Partnership.
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<PAGE>
4.1.6. Taking any and all actions or steps, and executing
any and all documents or agreements which the General
Partner deems useful or necessary, in his sole discretion,
in connection with the management or operation of the
Partnership.
4.1.7. Incurring any indebtedness on behalf of the
Partnership on a secured or unsecured basis for any purpose
the General Partner shall deem useful or necessary in its
sole discretion. The General Partner shall have authority
to execute all documentation in connection therewith and to
bind the Partnership for such purposes. In addition, the
Partnership may subsequently finance or refinance
indebtedness when the General Partner deems it advantageous
to the Partnership to do so on terms and conditions it may
deem appropriate, in its sole discretion, and may execute
all documentation in connection therewith.
4.1.8. Taking such other actions and executing such other
instruments as may be reasonably required or appropriate in
connection with the conduct of the business of the
Partnership and the overall purpose of the Partnership.
4.1.9. Opening and maintaining bank or 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; determining distributions of
Partnership cash and other property as provided below.
In carrying out the activities as General Partner, as
described above, the General Partner may carry out such actions
without the requirement of obtaining the consent or any approval
from the Limited Partners.
4.2 Limitations on Powers and Authority of the General
Partner. Notwithstanding the provisions of Article 4.1, the
General Partner may not cause the Partnership to do any of the
following without the consent of the majority, as determined in
accordance with their Sharing Ratios ("Majority-in-Interest"), of
the Limited Partners:
(a) do any act in violation of this Agreement;
(b) do any act that would make it impossible to carry
on the business of the Partnership (except in connection
with the winding up of the Partnership's business);
(c) admit a person as a Partner except as otherwise
expressly permitted by this Agreement;
(d) sell, assign, exchange, transfer, convey, or
otherwise dispose of, or consent to the sale, assignment,
exchange, transfer conveyance, or other disposition of, all
or substantially all the Partnership's assets or the
Partnership's interest in the Investments (other than in
connection with the winding up of the Partnership's business
if the
6
<PAGE>
liquidating trustee (as defined in Article 11.4 hereof)
does not believe there is a reasonable alternative to pay,
satisfy, and discharge the debts, liabilities, and
obligations of the Partnership or if the Limited Partners
holding a Majority-in-Interest do not agree in writing,
after being requested to do so, to the in-kind distribution
of such assets and/or Property;
(e) possess Partnership property or assign its rights
in Partnership property, other than for a Partnership
purpose;
(f) cause the Partnership to enter into or agree to
any merger, consolidation, or organization with any other
person; or
(g) permit any agent designated by the General Partner
to do any of the foregoing.
4.3. Meeting of Partners. At any time, the General Partner
or any Limited Partner or Limited Partners owing at least 50% of
the Sharing Ratios may call a meeting of the Partners to transact
business that the Partners or any group of Partners may conduct
as provided in this Agreement. The General Partner shall provide
notice and the time, place and topic of each meeting. Meetings
of the Partners (both general and limited) shall be held at such
places as the General Partner may indicate in the notice of the
meeting. Meetings of the Partners may be called after ten (10)
days written notice has been delivered to each Partner or such
shorter period of time as may be agreed to by all of the
Partners. Any Partner may waive notice of a meeting, if it
should so elect, by providing the Partnership with written notice
of its waiver. Partners may participate in and hold a meeting by
conference telephone or similar communication equipment on which
all persons participating in the meeting can hear and speak to
each other. Participation in such a meeting will constitute
presence in person at the meeting, except where a person
participates in the meeting for the express purpose of objecting
to the transaction of business to be conducted at the meeting on
the grounds that the meeting is not properly conducted.
4.4. Action Without Meeting. Any action required or
permitted to be taken at a meeting of the Partners may be taken
without a meeting if consent, in writing, setting forth the
actions so taken, or to be taken, is signed by the number of
Partners required to approve such action at a meeting properly
called. Such consent shall have the same force and effect as a
vote of the Partners at a meeting properly called. If such
action is taken by less than unanimous consent of the Partners,
prompt notice thereof shall be given to all nonconsenting
Partners.
4.5. Liability; Indemnification. (a) Neither the General
Partner nor any of its officers, directors, employees or agents
shall be liable, responsible or accountable to the Partnership or
the other Partners in damages or otherwise for any act or
omission performed or omitted by such person in connection with
its acts carried out on behalf of the Partnership SPECIFICALLY
INCLUDING SUCH PERSON'S SOLE, PARTIAL OR CONCURRENT NEGLIGENCE,
provided, however, the General Partner or any of its officers,
directors, employees or agents shall
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be liable for any material breach of any obligation under this
Agreement by such person, or for fraud, willful misconduct, gross
negligence committed by such person toward the Partnership.
(b) The Partnership shall and does hereby indemnify and
save harmless the General Partner, and each of its officers,
directors, agents, or employees from any loss, damage, claim or
liability, including but not limited to reasonable attorneys'
fees and expenses, that they may incur by reason of any act, or
failure to act, performed by such person on behalf of the
Partnership in the furtherance of the Partnership's interest to
the full extent a Partnership may indemnify such General Partner
or its officers, directors, agents or employees under the terms
of Article 11 of the Act (or any successor provision); provided,
however, in no event shall the Partnership indemnify the General
Partner, its officers, directors, agents, or employees for any
act or performance which is a material breach of any obligation
under this Agreement, or the General Partner's, its officer's,
director's, agent's or employee's, respective act of fraud,
willful misconduct, or gross negligence. It is the express
intent of this Article 4.5(b) to provide an indemnify to the
General Partner and its officers, directors, employees or agents
for their acts or omissions of negligence or comparative,
contributory negligence or similar liability SPECIFICALLY
INCLUDING SUCH PERSON'S SOLE, PARTIAL OR CONCURRENT NEGLIGENCE.
4.6. Reimbursement of Partners. The Partnership shall
reimburse each Partner for any direct out-of-pocket expenses
incurred by such Partner on behalf of, or reasonably allocated
to, the Partnership, including but not limited to reimbursement
of all operating, general and administrative expenses of the
Partnership as determined under generally accepted accounting
principles, including but not limited to rent, utilities, capital
equipment, salaries, fringe benefits, travel expenses and other
administrative items.
4.7. Insurance Coverage. The General Partner is authorized
to procure and maintain such insurance for the Partnership as may
be deemed advisable by the General Partner as protection against
liability for loss and damages which may be occasioned by the
activities engaged in by Partnership and which is customary in
the industry in which the Partnership is operating.
4.8. Removal of General Partner. The General Partner may be
removed with the written consent of Limited Partners holding 50%
of the Sharing Ratios of all Limited Partners. The Limited
Partners requesting such removal shall provide the General
Partner with 60 days prior written notice of their election to
remove the General Partner. At the time of the removal of the
General Partner, its General Partner's Partnership interest will
automatically be converted to that of a limited partner with the
same rights in the Partnership as a Limited Partner; however, the
former General Partner shall continue to participate in the
profits, losses and distributions from the Partnership on the
same basis as it would have had as a General Partner except as
may have been reduced by the provisions of Article 11.2;
provided, however, the former General Partner shall have no
further voting rights in the Partnership.
4.9 New General Partner. Any action for removal is
conditioned on a new General Partner, selected by the Majority-in-
Interest of the Limited Partners being admitted to the
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Partnership immediately prior to the effective date of such
removal. In connection with such admission, the new General
Partner shall (i) make or agree to make such capital contribution
as the Majority-in-Interest of the Limited Partners specify in
exchange for an interest in the Partnership entitling it to such
allocations of profits and losses and distributions as the
Majority-in-Interest of the Limited Partners specify, and (ii)
execute a written instrument pursuant to which it agrees to be
bound by this Agreement, specifies its address for notices, and
makes such representations, warranties, and covenants as the
Majority-in-Interest of the Limited Partners specify; the new
General Partner so selected shall be admitted to the Partnership
as a General Partner on such terms, and the removal of the old
General Partner is effective only immediately subsequent to that
admission.
ARTICLE 5
Limited Partners
5.1. Identity of Limited Partners. Unless otherwise
specified in this Agreement to the contrary, decisions of the
Limited Partners, as a group, shall be made by a Majority-in-
Interest of the Limited Partners.
5.2. Limitation on Rights and Obligations of Limited
Partners. The Limited Partners will not be, and no term or
provision of this Agreement shall be deemed to allow a Limited
Partner to be:
5.2.1. Personally liable in excess of their capital
contribution to the Partnership for any of the
obligations, debts or Losses of the Partnership or the
General Partner, unless the Limited Partner otherwise
agrees in writing with respect to a specified
liability, or unless a liability of the Partnership or
the General Partner are specifically founded on some
unauthorized activity of the Limited Partner.
5.2.2. Other than as provided herein or expressly
required under the Act, permitted to take part in the
management or control of the business of the
Partnership or to sign for or bind the Partnership,
such power being vested solely and exclusively in the
General Partner.
5.2.3. Entitled to have a Partnership drawing
account.
ARTICLE 6
Capital Accounts
6.1 Capital Accounts, Generally. A capital account shall
be established for each Partner and shall be maintained in
accordance with standard tax accounting principles as
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established under Treas. Reg. 1.704-1(b)(2)(iv) of the Internal
Revenue Code of 1986, as amended (the "Code"), or any successor
provision.
6.2. Withdrawal of Contributions. A Partner shall not be
entitled to withdraw any part of such Partner's capital account
or to receive any distribution from the Partnership, except as
specifically provided in this Agreement. There shall be no
obligation to return to any Partner any part of such Partner's
capital contributions to the Partnership until such time as the
Partnership is dissolved and terminated.
6.3. Interest on Contributions. No interest will be paid to
any Partner on any part of such Partner's capital contribution.
In the event a Partner is to receive a distribution based upon a
percentage capital contributed to the Partnership, the
distribution shall not be considered "interest" on the Partners
capital account.
6.4 Loans or Advances Not Contributions. Loans by any
Partner to the Partnership shall not be considered contributions
to the capital of the Partnership and shall not increase the
capital account of the lending Partner. Any Partner may loan to
the Partnership funds upon such terms and conditions and upon
such interest rates as may be agreed to by the General Partner as
part of its management duties hereunder. The interest and
expense of such loan shall be paid and charged as an expense of
the Partnership's business. The Partnership shall execute a note
payable to the Partner advancing such loan reflecting the terms
and conditions of the loan.
6.5. Liability of Limited Partners. Except as hereinafter
set out, the Partners shall not be personally liable for any of
the debts of the Partnership or be required to contribute any
capital to the Partnership other than the contribution described
in Article 3 above.
6.6 Negative Capital Account. No Partner (general or
limited) shall at any time have any liability to the Partnership
or any other Partner, be obligated to restore, or otherwise be
responsible for any negative capital account except to the extent
the negative capital account is created by reason of
distributions in violation of this Agreement or other actions in
violation of this Agreement.
6.7. No Priorities. Except as otherwise specifically
provided in this Agreement, no Partner shall have any priority or
preference over any other Partner with respect to distributions
from the Partnership.
6.8. NOTICE TO CREDITORS. THE PROVISIONS OF THIS AGREEMENT
ARE FOR THE SOLE AND EXCLUSIVE BENEFIT OF THE PARTNERS. IT BEING
THE EXPRESS INTENT OF THE PARTNERS THAT SUCH PROVISIONS ARE NOT
FOR THE BENEFIT OF ANY THIRD PARTY.
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ARTICLE 7
Distributions
The General Partner shall determine the amount of the
distributions of cash and/or other property to be made by the
Partnership to the Partners from time to time. Any distributions
made in the form of property which is other than cash shall be
deemed to have that value determined by the General Partner in
its sole discretion, reasonably applied. In the event any one or
more Partners feel the value placed on such property is too great
or too low, the Partners may require the Partnership to obtain an
appraisal of such value, which appraisal shall be carried out as
an expense of the Partnership. Distributions shall be made only
in the event that the General Partner determines, in its sole
discretion that such distribution is to be made.
ARTICLE 8
Allocation of Profits and Losses
8.1 Generally. All of the income, gain, losses, deductions
and credits (the "Partnership Profits and Losses") from the
Partnership shall be allocated to the capital account of each
Partner in accordance with this Article 8. In the event property
other than cash is contributed to the Partnership, the capital
account shall be credited with the fair market value of such
property as described in Article 6, above.
8.2 Allocation of Profits and Losses. All items of loss,
deductions, expense or credit (taxable or non-taxable) generated
by the Partnership and all items of income or gain generated by
the Partnership shall be allocated to the Partners in accordance
with their relative Sharing Ratios.
8.3 Qualification Income Offset. Notwithstanding any other
provision of this Article 8, in the event any Partner
unexpectedly receives any adjustments, allocations, or
distributions described in Treas. Reg. 1.704(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specifically allocated to
each such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit (as described herein) of such
Partner as quickly as possible, provided that an allocation
pursuant to this Article 8.3 shall be made if and only to the
extent that such Partner would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article
8.3 have been tentatively made as if this Article 8.3 were not in
the Agreement.
"Adjusted Capital Account Deficit" means, with respect to
any Partner, the deficit balance, if any, in such Partnership's
Capital Account as of the end of the relevant fiscal year, after
giving effect to the following adjustments:
(i) Credit to such Capital Account amounts which such
Partner is obligated to restore (pursuant to terms of such
Partners' promissory note or otherwise) or is deemed to
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be obligated to restore pursuant to Treas. Reg. 1.704-2(g)
or would be deemed to be obligated to restore if Partner
Loan Nonrecourse Deductions were treated as Nonrecourse
Deductions; and
(ii) Debit to such Capital Account the items described
in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-
1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"Nonrecourse Deductions" has the meaning set forth in
Section 1.704-2(b) of the Regulations.
"Partner Loan Nonrecourse Deductions" means any Partner
deductions that would be Nonrecourse Deductions if they were not
attributable to a loan on which a Partner is obligated or which
is made or guaranteed by a Partner within the meaning of Treas.
Reg. 1.704-2(i).
8.4 Minimum Gain Chargeback. Except as otherwise provided
in Treas. Reg. 1.704-2(f), notwithstanding any other provision
to this Article 8, if there is a net decrease in Partnership
Minimum Gain during any Partnership fiscal year and it is
required for the allocations under this Article 8 to have
substantial economic effect, each Partner shall be specially
allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such
Partners' share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treas. Reg. 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in
proportion the respective amounts required to be allocated to
each Partner pursuant thereto. The items to be so allocated
shall be determined in accordance with Treas. Reg. 1.704-
2(f)(6) and 1.704-2(j)(2). This Article 8.4 is intended to
comply with the minimum gain chargeback requirements of Treas.
Reg. 1.704-2(e) and shall be interpreted consistently therewith.
8.5. Curative Allocations. The allocations set forth in
this Article 8 (the "Regulatory Allocations") are intended to
comply with certain requirements of Treas. Reg. 1.704-1(b).
Notwithstanding any other provisions of this Article 8, the
Regulatory Allocations shall be taken into account in allocating
other profits, losses and items of income, gain, loss, and
deduction among the Partners so that, to the extent possible, the
net amount of such allocations of other profits, losses, and
other items and the Regulatory Allocations to each Partner shall
be equal to the net amount that would have been allocated to each
such Partnership if the Regulatory Allocations has not occurred.
Notwithstanding the preceding sentence, Regulatory Allocations
relating to (a) Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a reduction in
Partnership Minimum Gain, and (b) Partner Loan Nonrecourse
Deductions shall not be taken into account except to the extent
that there would have been a reduction in Partnership Minimum
Gain if the loan to which such deductions are attributable were
not made or guaranteed by a Partner within the meaning of Treas.
Reg. 1.704-2(i). The
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General Partner shall have the discretion to make any modific-
ation to this Agreement it deems reasonably necessary to cause
the allocations described in this Article 8 to more properly
reflect the allocations intended hereunder, and each Partner does
hereby appoint the General Partner attorney-in-fact through a
power of attorney coupled with an interest, to do so.
8.6 Tax Allocations: Code Section 704(c). The above
notwithstanding, income, gain, loss, and deduction with respect
to any property contributed to the capital of the Partnership
shall, solely for tax purposes, be allocated among the Partners
so as to take account of any variation between the adjusted basis
of such property to the Partnership for federal income tax
purposes and its fair market value as required in accordance with
Section 704(c) of the Code, and the Treasury Regulations relating
thereto. In the event any decisions, allocations or elections
are required or useful for the Partnership to comply with the
provisions of Section 704(c) of the Code, and the Treasury
Regulations relating thereto, the General Partner shall have the
right to make such decisions, allocations or elections in its
sole and absolute discretion.
ARTICLE 9
ACCOUNTING
9.1. Books and Records. The books, records and accounts of
the Partnership shall be kept and maintained at all times in the
principal place of business of the Partnership and shall be
separate and distinct from all other books and records of any
other entity. Except as otherwise required by this Agreement,
all accounting books and records shall be kept in accordance with
generally accepted accounting principles consistently applied.
Each Partner (or assignee of a Partnership interest) shall have
access during normal business hours to the information to which
it is entitled under Article 1.07 of the Act.
9.2. Banking, Deposit and Withdrawal of Funds. The General
Partner will be responsible for depositing Partnership funds in
such accounts as it may establish from time to time in one or
more financial institutions and may make deposits and withdrawals
of such funds pursuant to this Agreement at such times and in
such amounts as the General Partner may deem necessary from time
to time.
9.3. Tax Returns. The General Partner shall cause all tax
returns of the Partnership to be prepared, and at the election of
the General Partner, reviewed by the Partnership's certified
public accountant at the expense of the Partnership. Any expense
incurred in the preparation and review of the tax return shall be
at the expense of the Partnership.
9.4. Federal Income Elections. Any elections to be made by
the Partnership in regard to the federal income tax, other than
an election under Section 754 of the Code or other than to be
made by the Tax Matters Partners (as defined below) shall be made
by an affirmative decision of Partners holding a Majority-in-
Interest. Upon the request of any Partner to which an election
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by the Partnership under Section 754 of the Code would be of
benefit, if Partners holding a Majority-in-Interest agree, the
General Partner shall cause such election to be made by the
Partnership.
9.5. Tax Matters Partner. Any provisions hereof to the
contrary notwithstanding, solely for Federal Income Tax purposes,
each of the Partners hereby recognizes that the Partnership will
be subject to all provisions of Subchapter K of Chapter 1 of
Subtitle A of the Code.
Subject to the provisions hereof, the General Partner is
designated as Tax Matters Partner of the Partnership, as defined
in the Code and is authorized and required to represent the
Partnership and its Partners at the Partnership's expense, in
connection with all examinations of the Partnership's affairs by
tax authorities, including any resulting administrative affairs
and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. The
Partners agree to cooperate with the Tax Matters Partner and to
do or refrain from doing any and all things reasonably required
by the Tax Matters Partner to conduct such proceedings. The Tax
Matters Partner is authorized to file a copy of this Agreement
with the Internal Revenue Service ("Service") pursuant to Section
6224(b) (or successor provisions) of the Code if necessary to
perfect the Partners' waiver of rights hereunder.
The Tax Matters Partner shall take such action as may be
necessary to cause to the extent possible each other partner to
become a Notice Partner within the meaning of Section 6223 of the
Code. The Tax Matters Partner shall inform each other partner of
all significant matters that may come to its attention in its
capacity as Tax Matters Partner by giving notice thereof on or
before the fifth business day after becoming aware thereof and,
within that time, shall forward to each other partner copies of
all significant written communications it may receive in that
capacity. The Tax Matters Partner may not take any action
contemplated by Sections 6222 through 6232 of the Code without
the consent of Partners holding at least 50% of the Sharing
Ratios. Nothing in this Article 9.5 does authorize the Tax
Matters Partner to take any action left to the determination of
an individual Partner under Sections 6222 through 6232 of the
Code.
ARTICLE 10
Transfer or Sale of Interest in Partnership
10.1. Prohibition Against Transfers. Except as
otherwise herein provided, a Partner shall not sell, assign,
transfer, encumber or otherwise dispose of all or any portion of
any of its interests in the Partnership or other aspects of
ownership in the Partnership except to another Partner. Any
attempted transfer in violation of this Article 10.1 shall be
null and void.
10.2. Applicability of Agreement to Transferor.
Notwithstanding any other provision of this Agreement, no sale or
other transfer of any kind shall in any event result in the non-
applicability of the provisions of this Agreement at any time to
any interest in this Partnership.
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10.3. Attempted Transfers. Any attempted transfer not
in full compliance with the terms of this Agreement, except for
the limited rights provided to a transferee hereunder, shall be
null and void.
10.4. Substitute Partner. In the event an assignment or
transfer of all or a part of any interest in the Partnership held
by a Partner should occur, no transferee or assignee shall
succeed to the transferor's rights and obligations unless and
until:
(a) The transferee or assignee provides evidence of the
transfer or assignment acceptable to the General
Partner;
(b) The transferee or assignee has executed an instrument
reasonably satisfactory to the General Partner
accepting and adopting the terms and provisions of this
Agreement and agreeing to be bound by the terms and
conditions hereof; and
(c) At the election of the General Partner, legal counsel
for the Partnership has rendered its opinion that such
assignment would not result in the termination of the
Partnership for Federal Income Tax purposes or produce
any adverse income tax consequence to Partners, and
that registration under the Securities Act of 1933 is
not required in connection with such assignment.
10.5. Liability of Transferor. In the event a transfer
is made in accordance with the terms of this Article 10 of a
Partner's interest in the Partnership (the "Transferred
Interest") and the transferee is substituted as a Partner in
place of the transferor, the transferee who is substituted as a
Partner shall become liable for all the terms, covenants,
conditions and obligations relating to the Transferred Interest.
In addition, the transferor, and its predecessors who have
conveyed the Transferred Interests in the Partnership pursuant to
this Article shall in no event be relieved of their liability,
responsibility or obligations relating to such Transferred
Interest, and such transferor and their transferee shall, at all
times, remain jointly and severally liable for such liability,
responsibility or obligations relating to such Transferred
Interest.
10.6. Permitted Transfer. Notwithstanding the provisions
of Article 10, the interest of any Partner may be transferred
without the consent of the other Partners if the transfer occurs
by reason of or incident to the death, dissolution, divorce,
liquidation, merger or termination of the transferor Partner or
the transferee is a Permitted Transferee (as defined below). If
a Partner who is an individual dies or a court of competent
jurisdiction adjudges him to be incompetent to manage his person
or his property, the Partner's executor, administrator, guardian,
conservator or other legal representative may exercise all of the
Partner's rights for the purpose of settling his estate or
administering his property. As used herein, "Permitted
Transferee" means any member of such Partner's immediate family
or a trust, corporation, limited liability company,
unincorporated association or partnership controlled by such
Partner or members of such Partner's immediate family or another
person controlling, controlled by or under common control with
such Partner.
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ARTICLE 11
Dissolution and Termination of the Partnership
11.1. Events Causing Dissolution. The Partnership shall
be dissolved upon the first to occur of any of the following:
11.1.1. March 20, 2018;
11.1.2. The express written agreement of the General
Partner and a Majority-in- Interest of the Limited
Partners;
11.1.3. The express written agreement of 50% of the
Sharing Ratios of all Partners;
11.1.4. At the election of the General Partner within
a reasonable period of time after the sale,
condemnation, foreclosure or other similar disposition
of all or substantially all of the assets of the
Partnership;
11.1.5. Upon the bankruptcy or dissolution of any
Partner;
11.1.6. Any circumstances required under the terms of
the Act; or
11.1.7. Upon the occurrence of an Event Of
Withdrawal, as defined in Article 4.02 of the Act, of a
General Partner.
11.2. Election to Continue Partnership. Upon the
occurrence of an Event Of Withdrawal of a General Partner, as
defined in Article 11.1.7 above, the Partnership may, at the
election of 50% of the Sharing Ratios of all other Partners, be
continued (without being wound up). In the event the General
Partner that is the subject of the Event Of Withdrawal is the
sole General Partner in the Partnership, and 50% of the Sharing
Ratios of all other Partners agree to continue the Partnership,
all of such Partners agree to continue the business of the
Partnership and to appoint a replacement General Partner within
ninety (90) days after the occurrence of the event of
dissolution, which appointment shall be made by 50% of the
Sharing Ratios of such other Partners. The appointment of any
such replacement General Partner shall be effective of as the
date of the occurrence of the applicable Event Of Withdrawal of
such General Partner. The Partners' obligations under this
Article 11.2 shall not be subject to a remedy of specific
performance. In the event a new General Partner is substituted
in place of a General Partner pursuant to the terms of this
Article 11.2, a new General Partner shall be allocated interests
in the Partnership in an amount equal to 1% of the interests of
the Partnership out of the interests in the Partnership
previously held by the former General Partner. The interest in
the Partnership allocated to the new General Partner shall be
held by such new General Partner on the same terms and conditions
as previously held by the former General Partner.
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11.3 Accounting Upon Dissolution and Termination. Upon the
dissolution of the Partnership, unless continued as set out in
Article 11.2, above, an accounting shall be made of (i) the
accounts of the Partnership, (ii) the account of each Partner,
and (iii) the Partnership's assets, liabilities and operations,
from the date of the last annual accounting to the date of such
termination.
11.4. Liquidating Trustee. Upon the occurrence of any
event which causes the termination of the Partnership, the
General Partner, or in the absence of the General Partner, one of
the remaining Partners, shall act as liquidating trustee and
immediately proceed to liquidate and dissolve the Partnership.
11.5. Distributions Upon Termination. No distribution
will be made by the Partnership upon liquidation until a complete
accounting (and if requested by a Partner, an audited, review or
compilation report) of the Partnership has been completed and
either (i) all Partners have approved the accounting or (ii) in
the alternative, the accounting has been conducted by the
Certified Public Accountant for the Partnership. The review or
audit will be at the expense of the Partnership. When
distributed, all cash of the Partnership and undivided interests
in any other assets of the Partnership shall be distributed in
accordance with the following priorities:
11.5.1 First, to the Partnership creditors, including
creditors who are Partners, in the order of priority
provided by law, provided, however, that nothing contained
herein shall be construed as an agreement to pay any debt,
liability or obligation with respect to which the
Partnership has no personal liability to pay, and no such
debt, liability or obligation shall be paid by the
Partnership unless the liquidating trustee shall deem the
payment thereof to be in the best interests of the
Partnership or in order to prevent the loss of the
Partnership assets by virtue of the foreclosure by any such
creditor against the security, if any, for any such debt,
liability or obligation;
11.5.2. Next, to establish a reserve against unanticipated
liabilities or expenses of the Partnership. The amount of
such reserve will be determined by the General Partner; and
11.5.3. Next, to each Partner in an amount equal to each
Partner's positive capital account in the Partnership as
determined after taking into account all capital account
adjustments for the Partnership's taxable year during which
such liquidation occurs, which distribution shall be made by
the end of such taxable year or, if later, within 90 days
after the date of such liquidation.
11.6. Deemed Sale for Adjustment to Capital Account. In
the event that there is any dissolution of the Partnership and
all of the assets of the Partnership are not first liquidated for
cash before making the distributions in liquidation, any assets
to be distributed to the Partners shall be deemed sold at its
then fair market value for the purpose of computing each
Partner's capital account in the Partnership.
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ARTICLE 12
Notice
Except as may be otherwise specifically provided in this
Agreement, all notices required or permitted hereunder shall be
(a) in writing, (b) addressed to the parties at the respective
addresses set forth herein, or at such other addresses as may
hereafter be specified by written notice delivered to the
principal office of the Partnership, (c) sent by United States
Mail, overnight delivery service, personal delivery or facsimile
transmission, and (d) deemed effective only upon actual receipt
(or refusal to accept receipt) by the intended recipient.
ARTICLE 13
Amendments
13.1. Amendments - General. Except as hereinafter
specifically provided to the contrary, this Agreement may be
amended or modified by the General Partner from time to time, as
to any items other than the provisions stating the interests in
the Partnership, and distributions to the Partners. The
provisions of this Agreement relating to interests in the
Partnership and distributions to the Partners may be modified by
written instrument approved by Partners holding 50% of the
Sharing Ratios; provided, however, that no amendment may decrease
a Partner's interest in the Partnership without the consent of
such Partner.
13.2. Mergers and Conversions. The General Partner may
cause the Partnership to merge with, or convert into, another
limited partnership, general partnership, corporation, limited
liability company or other business entity, or enter into an
agreement to do so, and the approval of the other Partners shall
not be required for the General Partner to take such action. The
above notwithstanding, in the event the Partnership is to merge
with, or convert into, a general partnership, the Limited
Partners shall be provided those rights which are extended to
limited partners under the terms of the Act for conversions, to
withdraw from the partnership.
13.3 Issuance of New Partnership Interests. The General
Partner may admit additional limited partners to the Partnership
(the "New Limited Partners") and may cause the interests in the
Partnership, and provisions relating to distributions to Limited
Partners to be adjusted on a pro rata basis to all of the
existing Limited Partners to reflect the terms and conditions
under which such New Limited Partners will be admitted into the
Partnership.
13.4. Registered Limited Liability Partnership. The
General Partner is authorized to take all of those steps which it
deems useful or necessary to cause this Partnership to comply
with the Registered Limited Liability Partnership provisions of
the Act. In addition, the Partnership shall pay all costs, fees
or expenses in connection with the Partnership's compliance with
the provisions necessary to qualify the Partnership as a
Registered Limited Liability Partnership.
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ARTICLE 14
Partnership Opportunity
14.1. Time Devoted to Partnership Business. Neither the
General Partner nor any Limited Partner will be required to
devote its full time and effort to the affairs of this
Partnership, but the General Partner will devote whatever time,
effort and skill that may be reasonably necessary for the
management of the Partnership's business.
14.2. Partnership Opportunities. Each Partner reserves
the right to invest in, pursue, develop, own, manage, operate or
otherwise participate in (including, without limitation, as an
investor in, lender to, consultant or advisor to, or director,
officer or manager of, any other person or business entity), all
business opportunities of any nature for its own account,
including opportunities that may directly or indirectly compete
with the Partnership. No Partner shall have any obligation to
first present such business opportunities to the Partnership or
its Partners.
ARTICLE 15
Miscellaneous
15.1. Texas Laws. This Agreement shall be construed
under and in accordance with the laws of the State of Texas
(exclusive its conflict-of-laws principles), and all obligations
of the parties created hereunder are performable in Dallas
County, Texas.
15.2. Future Instruments. The parties hereto covenant
and agree that they will execute such other and further
instruments and documents as are may become necessary or
convenient to effectuate and carry out the Partnership created by
this Agreement.
15.3. Binding on Heirs. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, legal
representatives, successors, and assigns where permitted by this
Agreement.
15.4. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original.
15.5. Gender. Words of any gender used in this
Agreement shall be held and construed to include any other
gender, and words in the singular number shall be held to include
the plural, unless the context otherwise requires.
15.6. Supersedes Prior Agreements. This Agreement
supersedes any prior understandings or written or oral agreements
between the parties concerning the written subject matter.
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15.7. Power of Attorney. Each Limited Partner, by
acceptance of its Partnership interests, irrevocably constitutes,
appoints and empowers the General Partner its attorney-in-fact,
with full power of substitution, as the true and lawful agent and
attorney-in-fact of such Limited Partner with full power and
authority in such Limited Partner's name, place and stead and for
such Limited Partner's use of benefit, to make, execute, verify,
consent to, swear to, acknowledge, make oath as to, publish,
renew, deliver, file and/or record in the appropriate public
office all financing statements and certificates, instruments and
documents that may be requested by the General Partner pursuant
to its rights and obligations under the terms of this Agreement
or required to be provided by the Limited Partner in accordance
with the terms of this Agreement or to correct any typographical
errors in the Partnership's Certificate of Limited Partnership or
this Agreement. The appointment by each Limited Partner hereto
of the General Partner as its attorney-in-fact for purposes set
out in this paragraph, is a power of attorney coupled with an
interest in recognition of fact that the power of attorney is for
the orderly administration of the affairs of Partnership. The
foregoing power of attorney is hereby declared to be irrevocable,
and it shall survive, and shall not be affected by the subsequent
death, incompetency, dissolution, disability, bankruptcy or
termination of any Limited Partner and it shall extend to such
Limited Partner's heirs, successors and assigns. Each Limited
Partner hereby waives any and all defenses that may be available
to contest, negate or disaffirm the action of any person taken as
attorney-in-fact under this power of attorney in accordance with
the Agreement.
EXECUTED effective the 20th day of March, 1998.
GENERAL PARTNER:
SANTOS FUND, INC.
_________________________
Jorge Mas
President
LIMITED PARTNERS:
JORGE MAS HOLDING, I, L.P.
By: _________________,
its general partner
By:______________________
Name:____________________
Its:_____________________
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____________________________________
Kevin P. Fitzgerald
____________________________________
Juan Carlos Mas
____________________________________
Jose Mas
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SCHEDULE A
Initial
Capital Sharing
Member Contribution Ratio
- ------------------------------------------------------------
Santos Fund, Inc. 1.00%
Jorge Mas Holding, I, L.P. 48.90%
Kevin P. Fitzgerald 30.00%
Juan Carlos Mas 10.05%
Jose Mas 10.05%
22
