UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ELSINORE CORPORATION
- -------------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $.001 Per Share
- -------------------------------------------------------------
(Title of Class of Securities)
231624
------------------------------
(CUSIP Number)
Harry C. Hagerty, III
1290 Avenue of the Americas
New York, New York 10104
- -------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 31, 1995
------------------------------
(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 the 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 the 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).<PAGE>
SCHEDULE 13D
CUSIP No. 231624
- -------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Magnolia Partners Limited Partnership;
IRS ID. NO.: Applied for
- -------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / x /
- -------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- -------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
- -------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
1,000,000
- -------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- -------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,000,000
- -------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
- -------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
/ /
- -------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.01%
- -------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- -------------------------------------------------------------<PAGE>
SCHEDULE 13D
CUSIP No. 231624
- -------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Elsco, Inc.: IRS ID. NO. Applied for
- -------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / x /
- -------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- -------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
- -------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7 SOLE VOTING POWER
1,000,000
- -------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- -------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,000,000
- -------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
- -------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
/ /
- -------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.01%
- -------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------<PAGE>
SCHEDULE 13D
CUSIP No. 231624
- -------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Harry C. Hagerty, III; S.S. No. ###-##-####
- -------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / x /
- -------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- -------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
/ /
- -------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
- -------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH
7 SOLE VOTING POWER
1,000,000
- -------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- -------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,000,000
- -------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
- -------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
/ /
- -------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.01%
- -------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------<PAGE>
MAGNOLIA PARTNERS, L.P.
SCHEDULE 13D
Item 1. Security and Issuer.
------ -------------------
The class of securities to which this Statement on Schedule 13D
("Statement") relates is the common stock (the "Common Stock"), par
value $.001 per share, of Elsinore Corporation, a Nevada
corporation (the "Company"), into which the 7-1/2% Convertible
Subordinated Notes Due December 31, 1996 of the Company (the
"Notes") may be converted. The principal executive offices of the
Company are located at 202 Fremont Street, Las Vegas, Nevada 89101.
Item 2. Identity and Background.
------ -----------------------
(a)-(c), (f) This Statement is being filed by Magnolia Partners
Limited Partnership, a Delaware limited partnership (the
"Partnership") and the persons named below (the "Reporting
Persons"). The Partnership is organized for the purpose of
acquiring the Notes and its principal business is to hold the
Notes. The business address of the Partnership is 1290 Avenue of
the Americas, New York, New York 10104.
Elsco, Inc., a Delaware corporation, is the general partner of
the Partnership (the "General Partner"). The principal business
of the General Partner is to serve as the general partner of the
Partnership. The business address of the General Partner is 1290
Avenue of the Americas, New York, New York 10104.
Harry C. Hagerty, III is the sole controlling person, director
and executive officer of the General Partner. Mr. Hagerty is a
Director of C.J.Lawrence/Deutsche Bank Securities Corporation, an
investment banking firm. His business address and that of his
employer is 1290 Avenue of the Americas, New York, New York 10104.
Mr. Hagerty is a U.S. citizen.
(d)-(e) During the last five years, none of the Reporting
Persons has been (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction which resulted in 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.
Item 3. Source and Amount of Funds or Other Consideration.
------ -------------------------------------------------
The Partnership paid an aggregate of $1,125,000 for the Notes,
which amount was derived entirely from capital contributions by the
General Partner and the limited partners of the Partnership.
Item 4. Purpose of Transaction.
------ ----------------------
In connection with the purchase of the Notes, the Company and
the Partnership entered into a Note Purchase Agreement, dated as
of March 30, 1995 (the "Agreement"). Under the Agreement, the
Notes may be converted into shares of Common Stock at a conversion
price per share that is currently $1.125 and that is subject to
adjustment in certain events (the "Conversion"). If the
Partnership were to exercise its conversion right at the current
conversion price, it would have the right to acquire 1,000,000
shares of Common Stock. In addition, until the later of December
31, 1996 or the date the Notes are paid in full, the Partnership
will have preemptive rights to maintain its equity ownership in the
Company in connection with any future financings, on the same terms
and conditions offered to the third parties. The Partnership also
has the right to acquire additional shares of Common Stock upon
default by the Company of certain obligations under the Agreement
or the Notes ("Default") at a price per share equal to 75% of the
average closing price of the Common Stock during the 10 trading
days preceding the Default. The number of shares of Common Stock
subject to such purchase right may not exceed the quotient obtained
by dividing $3 million by such per share purchase price.
Under the Agreement, the Partnership may designate one person
to be appointed to the Board of Directors of the Company. Solely
in the event of Default, the Partnership may designate one
additional director to be appointed to the Board of Directors.
<PAGE>
Except as otherwise disclosed in this Statement, none of the
Reporting Persons has any plans or proposals that relate to or
would result in any of the following:
(a) The acquisition by any person of additional securities of
the Company, or the disposition of securities of the Company;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the
Company or any of its subsidiaries;
(d) Any change in the present board of directors or management
of the Company, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies on
the board;
(e) Any material change in the present capitalization or
dividend policy of the Company;
(f) Any other material change in the Company's business or
corporate structure;
(g) Changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person;
(h) Causing a class of securities of the Company to be delisted
from a national securities exchange or to cease to be authorized
to be quoted in an inter-dealer quotation system of a registered
national securities association;
(i) A class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended; or
(j) Any action similar to those enumerated above.
Item 5. Interest in Securities of the Issuer.
------ ------------------------------------
(a)-(b) The aggregate number and percentage of shares of
Common Stock owned by the Reporting Persons, the number of shares
as to which the Reporting Persons have sole power to vote or direct
the vote, shared power to vote or to direct the vote, sole power
to dispose or to direct the disposition, or shared power to dispose
or to direct the disposition are as follows:
THE PARTNERSHIP
<TABLE>
<CAPTION>
Nature of Number of Percent of Total Number
Ownership Shares of Outstanding Shares
--------- --------- -----------------------
<S> <C> <C>
Sole Power to Vote 1,000,000* 6.01%
or Direct the Vote
Shared Power to Vote -0- n/a
Direct the Vote
Sole Power to Dispose 1,000,000* 6.01%
or to Direct the
Disposition
Shared Power to -0- n/a
Dispose or to
Direct the Disposal
Total Beneficially 1,000,000* 6.01%
Owned
_________________________________
<FN>
* Representing shares of Common Stock which may be acquired upon
Conversion.
</TABLE>
<PAGE>
GENERAL PARTNER
<TABLE>
<CAPTION>
Nature of Number of Percent of Total Number
Ownership Shares of Outstanding Shares
--------- --------- -----------------------
<S> <C> <C>
Sole Power to Vote 1,000,000* 6.01%
or Direct the Vote
Shared Power to Vote -0- n/a
or Direct the Vote
Sole Power to Dispose 1,000,000* 6.01%
or to Direct the
Disposition
Shared Power to -0- n/a
Dispose or to
Direct the Disposal
Total Beneficially 1,000,000* 6.01%
Owned
_________________________________
<FN>
* Representing shares of Common Stock that may be held of record by
the Partnership upon Conversion. Pursuant to Exchange Act Rule
13d-4, the General Partner expressly disclaims beneficial ownership
of such shares.
</TABLE>
MR. HAGERTY
Nature of Number of Percent of Total Number
Ownership Shares of Outstanding Shares
--------- --------- -----------------------
[S] [C] [C]
Sole Power to Vote 1,000,000* 6.01%
Direct the Vote
Shared Power to Vote -0- n/a
or Direct the Vote
Sole Power to Dispose 1,000,000* 6.01%
or to Direct the
Disposition
Shared Power to -0- n/a
Dispose or to
Direct the Disposal
Total Beneficially 1,000,000* 6.01%
Owned
_________________________________
[FN]
* Representing shares of Common Stock that may be held of record by
the Partnership upon Conversion. Pursuant to Exchange Act Rule
13d-4, Mr. Hagerty expressly disclaims beneficial ownership of such
shares.
(c) Except as described in this Statement, none of the
Reporting Persons has bought or sold or otherwise effected any
transactions in the Notes or shares of the Common Stock during the
past 60 days.
(d)-(e) Not applicable.
<PAGE>
Item 6. Contracts, Arrangements, Understandings or
------ Relationships with Respect to Securities of the
Issuer.
------------------------------------------------
The relationship between the Partnership and the General
Partner is set forth in a Limited Partnership Agreement, dated
March 24, 1995 (the "Partnership Agreement"). The Partnership
Agreement describes the rights and obligations of the parties in
the Partnership with respect to the ownership of the Notes.
Item 7. Materials to Be Filed as Exhibits.
------ ---------------------------------
Exhibit 1 -- Filing Agreement among Magnolia
Partners Limited Partnership,
Elsco, Inc. and Harry C.
Hagerty, III, dated April 6,
1995
Exhibit 2 -- Magnolia Partners Limited
Partnership Agreement <PAGE>
SIGNATURE
The undersigned persons certify, after reasonable inquiry and
to the best of the undersigned persons' knowledge and belief, that
the information set forth in this Statement is true, complete and
correct.
Date: April 11, 1995.
MAGNOLIA PARTNERS, L.P.
By Elsco, Inc.
Its General Partner
By HARRY C. HAGERTY, III
----------------------------
Harry C. Hagerty, III
Its President
ELSCO, INC.
By HARRY C. HAGERTY, III
----------------------------------
Harry C. Hagerty, III
Its President
HARRY C. HAGERTY, III
-------------------------------------
HARRY C. HAGERTY, III
FILING AGREEMENT
This Filing Agreement ("Agreement") is made as of
April 6, 1995, among Magnolia Partners Limited Partnership, a
Delaware limited partnership (the "Partnership"), Elsco, Inc.,
a Delaware corporation and the general partner of the
Partnership (the "General Partner"), and Harry C. Hagerty, III,
the sole controlling person, director and executive officer of
the General Partner ("Hagerty").
RECITALS
1. On March 31, 1995, the Partnership acquired
beneficial ownership, within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), of $1,125,000 principal amount of 7-1/2 Convertible
Subordinated Notes (the "Notes") due December 31, 1996 of
Elsinore Corporation, a Nevada corporation (the "Company").
The Notes are convertible into shares of common stock, $.001
par value, of the Company (the "Common Stock") at the
conversion price set forth in the Notes.
2. The General Partner, by virtue of its position as the
General Partner, and Hagerty, by virtue of his position as the
controlling person, director and executive officer of the
General Partner, may be deemed to have also acquired beneficial
ownership, within the meaning of Rule 13d-3 under the Exchange
Act, of the Notes and the Shares.
3. In order to fulfill their obligations under Exchange
Act Rule 13d-1 in a timely and complete manner and pursuant to
Exchange Act Rule 13d-1(f), the parties desire to file jointly
with the Securities and Exchange Commission a statement on
Schedule 13D (the "Statement").
NOW, THEREFORE, the parties agree as follows:
1. Joint Filing. Each party agrees that the
Partnership, the General Partner and Hagerty shall jointly file
the Statement in the form to which this Agreement is attached.
Each party agrees that execution of the Statement by such party
shall constitute an express agreement that the Statement is a
joint filing of the parties hereto.
2. Acknowledgement. Each party acknowledges that,
pursuant to Exchange Act Rule 13d-1(f)(1), each party is
responsible for the timely filing of the Statement and any
further amendments, if necessary, and for the completeness and
accuracy of the information concerning such party contained
therein, and that each party is responsible for the
completeness and accuracy of the information concerning the
other persons making the filing if such party knows or has
<PAGE>
reason to believe that such information is incomplete or
inaccurate.
MAGNOLIA PARTNERS, L.P.
By ELSCO, INC.
Its General Partner
By HARRY C. HAGERTY, III
----------------------------
Harry C. Hagerty, III
Its President
ELSCO, INC.
By HARRY C. HAGERTY, III
----------------------------------
Harry C. Hagerty, III
Its President
HARRY C. HAGERTY, III
-------------------------------------
HARRY C. HAGERTY, III
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAGNOLIA PARTNERS LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP, made and entered
into as of the 24th day of March, 1995, by and among Elsco, Inc.,
a Delaware corporation, as General Partner, and Harry C. Hagerty,
III, Edward Necarsulmer, III, James J. Murren and C.J.
Lawrence/Deutsche Bank Securities Corp., as Limited Partners.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to form a limited
partnership pursuant to the provisions of the Revised Uniform
Limited Partnership Act of the State of Delaware;
NOW, THEREFORE, in consideration of the mutual promises
and obligations herein expressed, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement the following terms shall,
unless the context otherwise requires, have the meanings
specified in this Article I.
1.1 "Act" shall mean the Delaware Revised Uniform Limited
Partnership Act set forth as Delaware Code, Title 6, Chapter 17,
as amended from time to time.
1.2 "Affiliate" shall mean, when used with reference to a
specified Person, (i) any Person that directly or indirectly
through one or more intermediaries controls or is controlled by
or is under common control with the specified Person or (ii) any
Person who is an officer of, partner in, or trustee of, or serves
in a similar capacity with respect to, the specified Person or
of which the specified Person is an officer, partner or trustee,
or with respect to which the specified Person serves in a similar
capacity.
1.3 "Agreement" shall mean this Agreement of Limited
Partnership, as originally executed and as amended, modified,
supplemented, or restated from time to time, as the context
requires.
1.4 "Capital Account" shall mean, for each Partner, the
account established on the books of the Partnership, pursuant to
Section 3.5.
1.5 "Capital Contribution" shall mean the amount of money
or the fair market value of any property or services contributed
to the Partnership by all the Partners or any class of Partners
or any one Partner, as the case may be (or the predecessor
holders of the Interests of such Partner or Partners). In the
event any Person transfers his or her Interest in accordance with
<PAGE>
the terms of this Agreement, the transferee shall succeed to the
Capital Contribution of the transferor to the extent it relates
to the transferred Interest.
1.6 "Certificate" shall mean the certificate (as amended
or restated) referred to in Section 17-201 of the Act.
1.7 "Code" shall mean the Internal Revenue Code of 1986,
as amended, or any corresponding provisions of succeeding law.
1.8 "Distributions" shall refer to cash or to other
property, from any source, distributed to the Partners by the
Partnership, but shall not include any payments to the General
Partner made under the provisions of Article VII.
1.9 "Effective Date" shall mean the date on which the
Certificate is filed with the office of the Secretary of State
of the State of Delaware in accordance with the Act.
1.10 "General Partner" shall mean Elsco, Inc., a Delaware
corporation, or any Person who, at the time of reference thereto,
serves as a general partner of the Partnership.
1.11 "Insolvency" shall mean, with respect to a Person,
that (i) the Person is unable to pay his or her debts as they
become due in the usual course of business, (ii) the sum of the
Person's liabilities is greater than the sum of the Person's
assets, (iii) any petition for relief under the United States
bankruptcy laws is filed by or against the Person, and not
withdrawn or dismissed within thirty (30) days, or (iv) any
petition for a receiver or any arrangement for the benefit of
creditors is made or entered into by or against the Person and
not withdrawn or dismissed within thirty (30) days.
1.12 "Interest" shall mean the entire ownership interest of
a Partner in the Partnership at a particular time, including the
right of such Partner to any and all benefits to which a Partner
may be entitled as provided in this Agreement, together with the
obligations of such Partner to comply with all terms and
provisions of this Agreement.
1.13 "Limited Partner" shall mean any Person who is a
limited partner at the time of reference thereto, in such
Person's capacity as a limited partner of the Partnership.
1.14 "Majority in Interest of Limited Partners" shall mean
Limited Partners whose aggregate Percentage Interests exceed
fifty percent (50%) of the aggregate outstanding Voting Interests
of the Limited Partners. Reference to a specified percentage in
Interest of the Limited Partners shall mean Limited Partners
whose Voting Interests represent such specified percentage of the
outstanding Voting Interests of the Limited Partners.
1.15 "Minimum Gain" shall be determined pursuant to
Treasury Regulations Section 1.704-2(d).
1.16 "Nonrecourse Deductions" shall mean deductions related
to or arising from Nonrecourse Liabilities pursuant to Treasury
Regulations Section 1.704-2.
<PAGE>
1.17 "Nonrecourse Liabilities" shall mean liabilities of
the Partnership treated as nonrecourse liabilities under Treasury
Regulations Section 1.704-2. Subject to the foregoing sentence,
"Nonrecourse Liabilities" means liabilities of the Partnership
(or a portion thereof) with respect to which none of the Partners
has any economic risk of loss as defined in Treasury Regulations
Section 1.704-2(b)(3) (other than through the Partner's indirect
interest as a Partner in the Partnership assets subject to the
liability).
1.18 "Notes" shall mean the Elsinore Corporation 7 1/2%
Convertible Subordinated Notes due December 31, 1996.
1.19 "Partners" shall mean the General Partner and the
Limited Partners.
1.20 "Partnership" shall mean the limited Partnership hereby
formed, as such limited Partnership may from time to time be
constituted.
1.21 "Percentage Interest" with respect to a Partner shall
mean the percentage interest set forth opposite such Partner's
name on Schedule A.
1.22 "Person" shall mean any individual, partnership,
corporation, trust, or other entity.
1.23 "Profits and Losses," "Profits" or "Losses" of the
Partnership shall mean the net income and net losses,
respectively, of the Partnership calculated as provided in
Section 4.3.
1.24 "Partner Nonrecourse Deductions" shall mean the
Partnership deductions, losses, and Section 705(a)(2)(B)
expenditures as the case may be that are treated as deductions,
losses, and expenditures attributable to Partner Nonrecourse Debt
under Treasury Regulations Section 1.704-2(b)(3).
1.25 "Partner Nonrecourse Debt" shall have the meaning
ascribed such term by Treasury Regulations Section 1.704-
2(b)(3).
1.26 "Sale" shall mean any Partnership transaction (other
than the receipt of Capital Contributions) not in the ordinary
course of its business, including, without limitation, sales,
exchanges or other dispositions of real or personal property,
condemnations, recoveries of damage awards and insurance proceeds
(other than business or rental interruption insurance proceeds),
but excluding any Refinancing.
1.27 "Sale Proceeds," shall mean all cash receipts arising
from a Sale less the following:
(i) The amounts necessary for the payment
of all debts and obligations of the Partnership related
to the particular Sale; and
(ii) The amount of cash paid or to be paid
in connection with such Sale.
<PAGE>
1.28 "Syndication Expenses" means all expenditures
classified as syndication expenses pursuant to Treasury
Regulations Section 1.709-2(b). Syndication Expenses shall be
taken into account under this Agreement at the time they would
be taken into account under the Partnership's method of
accounting if they were deductible expenses.
1.29 "Treasury Regulations" shall mean the regulations
promulgated under the Code, as amended, including corresponding
provisions of succeeding regulations.
1.30 "Two Thirds Majority in Interest of Limited Partners"
shall mean Limited Partners whose aggregate Voting Interests
exceed two thirds (2/3) of the aggregate outstanding Voting
Interests of the Limited Partners.
ARTICLE II
THE PARTNERSHIP
2.1 Formation of Limited Partnership. The undersigned
parties hereby agree to form this Partnership pursuant to the
provisions of the Act, and the rights and liabilities of the
Partners shall be as provided in the Act, except as herein
otherwise expressly provided. The General Partner shall cause
a Certificate to be filed in accordance with Section 17-206 of
the Act. The General Partner shall not be required to deliver
or mail to the Limited Partners copies of the Certificate or any
other certificate required by Section 17-201.
2.2 Name of Partnership. The Partnership will be conducted
under the name "MAGNOLIA PARTNERS LIMITED PARTNERSHIP."
2.3 Purpose of Partnership. The primary purposes of the
Partnership are to acquire and own the Notes. In addition, the
Partnership shall have such other purposes as may be necessary,
incidental or convenient to carry on the Partnership's primary
purpose.
2.4 Agent. The Partnership's agent for service of process
in the State of Delaware shall be National Corporate Research,
Ltd.
2.5 Office. The office required by Section 17-104 of the
Act shall be maintained at National Corporate Research, Ltd.,
9 East Loockerman Street, Suite 214, Dover, Delaware 19901, or
such other place or places in the State of Delaware as may be
determined from time to time by the General Partner by the giving
of written notice of change of address of the office of the
Partnership to each Partner. The Partnership may maintain such
other offices in such other places as the General Partner may
determine to be appropriate.
2.6 Term and Dissolution of Partnership.
2.6.1 The Partnership will become effective upon the
Effective Date. The Partnership shall be dissolved upon the
first to occur of the following:
<PAGE>
(a) December 31, 2005;
(b) The passage of ninety (90) days after the
dissolution, withdrawal, removal, death, incompetency,
dissolution or Insolvency of a General Partner, unless
(i) at the time of the occurrence of any such event there
is at least one other General Partner who elects to carry
on the business of the Partnership, or (ii) all of the
Limited Partners consent to carry on the business pursuant
to Section 9.1.3;
(c) The vote or written consent of the General
Partner and a Two Thirds Majority in Interest of Limited
Partners; or
(d) The entry of a decree of judicial dissolution
of the Partnership under the Act.
2.6.2 Dissolution of the Partnership shall be
effective on the day on which the event occurs giving rise to the
dissolution, but the Partnership shall not terminate until the
Partnership's Certificate shall have been canceled and the assets
of the Partnership have been distributed as provided in Section
10.2.2. Notwithstanding the dissolution of the Partnership,
prior to the termination of the Partnership, as aforesaid, the
business of the Partnership and the affairs of the Partners, as
such, shall continue to be governed by this Agreement.
ARTICLE III
PARTNERS' NAMES, ADDRESSES AND CAPITAL
CONTRIBUTIONS; CAPITAL ACCOUNTS
3.1 General Partner.
3.1.1 The name and address of the General Partner are
as set forth under "General Partner" in Schedule A hereto, as
amended from time to time. The General Partner shall make an
initial Capital Contribution to the Partnership in the amount of
$11,250.
3.1.2 (a) The General Partner shall contribute in cash
to the Partnership any amounts necessary or appropriate for the
Partnership to pay, when due, any costs, expenses or liabilities
of the Partnership to the extent such costs or expenses are in
excess of the cash receipts (including cash receipts from borrow-
ing, whether from third parties or from the General Partner or
any Affiliate thereof) of the Partnership.
(b) The General Partner will maintain a minimum
Capital Account balance equal to either one percent of the total
Capital Account balances for the Partnership or $500,000,
whichever is less.
3.1.3 In the event the Partnership is "liquidated"
within the meaning of Treasury Regulations Section 1.704-
1(b)(2)(ii)(g), if the General Partner's Capital Account has a
deficit balance (after giving effect to any contributions,
<PAGE>
distributions or allocations for all taxable years including the
year in which the liquidation occurs) the General Partner shall
contribute to the capital of the Partnership the amount necessary
to restore such deficit balance to zero in compliance with
Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(3).
3.2 Limited Partners.
3.2.1 The names, addresses and initial Capital
Contributions of the Limited Partners are as set forth in
Schedule A hereto, as amended from time to time.
3.2.2 No Limited Partner shall be liable for any debts
of or Losses sustained by the Partnership in excess of his or her
Capital Contributions to the Partnership.
3.3 No Interest; No Return. Except as provided in Section
8.6.2, no Partner shall have any right to demand or receive from
the Partnership or from any General Partner the return of his or
her Capital Contribution to the Partnership. No Partner shall
be entitled to interest on any Capital Contribution to the
Partnership or on such Partner's Capital Account.
3.4 General Partner as Limited Partner. A General Partner
may also be a Limited Partner. To the extent that the General
Partner is also a Limited Partner, the General Partner shall be
treated in all respects as a Limited Partner, and the consent of
the Limited Partners to the transfer of an Interest as a Limited
Partner to the General Partner need not be obtained. A General
Partner's Capital Contribution referred to in Section 3.1 hereof
will be made in its capacity as General Partner, and such
contribution will not entitle such General Partner to any rights
of a Limited Partner.
3.5 Capital Accounts.
3.5.1 A separate Capital Account shall be maintained
for each Partner. Each Partner's Capital Account (a) shall be
increased by (1) the amount of money actually or deemed
contributed by such Partner to the Partnership, (2) the fair
market value of the property actually or deemed contributed by
such Partner to the Partnership (net of liabilities securing such
contributed property that the Partnership is considered to assume
or take subject to under Code Section 752), and (3) allocations
to such Partner of Partnership income and gain (or items
thereof), including income and gain exempt from tax and income
and gain described in Paragraph (b)(2)(iv)(g) of Treasury
Regulations Section 1.704-1, but excluding income and gain
described in Paragraph (b)(4)(i) of Treasury Regulations Section
1.704-1, and (b) shall be decreased by (1) the amount of money
actually or deemed distributed to such Partner by the
Partnership, (2) the fair market value of property actually or
deemed distributed to such Partner by the Partnership (net of
liabilities securing such distributed property that such Partner
is considered to assume or take subject to under Code Section
752), (3) allocations to such Partner of expenditures of the
Partnership of the type described in Code Section 705(a)(2)(B),
and (4) allocations to such Partner of Partnership loss and
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deduction (or items thereof), including loss and deduction
described in Paragraph (b)(2)(iv)(g) of Treasury Regulations
Section 1.704-1, but excluding items described in (b)(3) above
and loss or deduction described in Paragraphs (b)(4)(i) or
(b)(4)(iii) of Treasury Regulations Section 1.704-1, and (c)
shall be otherwise adjusted in accordance with the additional
rules set forth in Treasury Regulations Section 1.704-
1(b)(2)(iv).
3.5.2 For purposes of this Agreement, a Partner who
has more than one Interest in the Partnership shall have a single
Capital Account that reflects all such Interests, regardless of
the class of Interests owned by such Partner (e.g., general or
limited) and regardless of the time or manner in which such
Interests were acquired.
3.5.3 Upon an assignment of an Interest, the Capital
Account of the transferor shall become the Capital Account of the
transferee to the extent assigned.
3.5.4 The Capital Accounts of the Partners shall be
adjusted from time to time to reflect revaluations of the
Partnership assets on the Partnership books as described in
Section 4.3.2.
3.5.5 The foregoing provisions are intended to satisfy
the capital account maintenance requirements of Treasury Regula-
tions Section 1.704-1(b)(2)(iv) and such provisions shall be
modified to the extent required by such regulation or any
successor provision.
ARTICLE IV
ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS
4.1 Distributions to the Partners.
4.1.1 Operating Distributions. Distributions other
than as described in Sections 4.1.2 or 8.6.2 shall be made in
accordance with the Percentage Interests of the Partners.
4.1.2 Liquidating Distributions. Notwithstanding
Section 4.1.1, Distributions in liquidation of the Partnership
shall be made to each Partner in the ratio that the positive
Capital Account of each, after adjustment for Profits or Losses
recognized by the Partnership in connection with such Sale and/or
liquidation, bears to the sum of the positive Capital Accounts
of all Partners (after such adjustment).
4.1.3 Distributions in Kind. Non-cash assets, if any,
shall be distributed at their fair market value in a manner that
reflects how cash proceeds from the Sale of such assets for fair
market value would have been distributed (after any unrealized
Profits or Losses attributable to such non-cash assets have been
allocated among the Partners in accordance with Section 4.2).
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4.1.4 Timing of Distributions.
(a) The General Partner will make Distributions
(other than Distributions pursuant to Section 4.1.2) at such
time as it shall decide. Distributions will be made without
regard to Capital Accounts (except for Distributions
pursuant to Section 4.1.2).
(b) The time and method of distributions
described in Section 4.1.2 shall comply with Treasury
Regulations Section 1.704-1(b), or if no such regulations
apply, as soon as possible.
4.2 Allocation of Profits and Losses.
(a) Allocation of Profits. After the allocations
provided in Section 4.2(c) and (d) Profits shall be
allocated in accordance with the Percentage Interests of
the Partners.
(b) Allocation of Losses. Losses for each fiscal
year of the Partnership shall be allocated as follows:
(i) Except as provided in Sections
4.2(b)(ii) or (iii), Losses shall be allocated in
accordance with the Percentage Interests of the
Partners;
(ii) Nonrecourse Deductions shall be
allocated in the same manner as losses are allocated
in Section 4.2.(b)(i);
(iii) After the allocations described in
Sections 4.2(b)(i) and (ii), Partner Nonrecourse Deduc-
tions shall be allocated among the Partners as
described in Treasury Regulations Section 1.704-2(i)
in accordance with the manner in which the Partner
bears the economic loss corresponding to the Partner
Nonrecourse Deductions;
provided, however, that in no event shall Net Losses be
allocated to any Limited Partner in an amount that would
cause any deficit to his or her Capital Account to exceed
his or her allocable share of Minimum Gain pursuant to
Section 4.2(c) (or zero if no Minimum Gain exists). For
purposes of determining if a Limited Partner's Capital
Account balance would be reduced below a deficit amount
equal to such Limited Partner's share of Minimum Gain (or
zero if no Minimum Gain exists), such Limited Partner's
Capital Account shall be reduced for those items set forth
in Paragraphs (4), (5) and (6) of Treasury Regulations
Section 1.704-1(b)(2)(ii)(d). Any such Losses shall be
allocated 100% to the General Partner.
(c) Minimum Gain Chargeback. Notwithstanding
Section 4.2(a), Profits, beginning in the first year in
which the Partnership has Nonrecourse Deductions makes a
Distribution of proceeds of a Nonrecourse Liability that is
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allocable to an increase in Minimum Gain, shall be allocated
as follows:
(i) If there is a net decrease in Minimum
Gain for a year, each Partner shall be allocated income
or gain in proportion to, and to the extent of the
portion of such Partner's share of the Partnership's
net decrease in Minimum Gain during such year.
However, a Partner shall not be subject to this Section
4.2(c) to the extent that (1) the Partner's share of
the net decrease in Minimum Gain is caused by a
guarantee, refinancing or other change in the debt
instrument causing it to become partially or wholly
recourse debt or a Partner Nonrecourse Liability and
the Partner bears the economic risk of loss (within the
meaning of Treasury Regulations Section 1.752-2) for
the newly guaranteed, refinanced or otherwise changed
liability; or (2) the Partner contributes capital to
the Partnership that is used to repay the nonrecourse
liability, and the Partner's share of the net decrease
in Minimum Gain results for the repayment. Items of
Partnership income and gain equal to the minimum gain
chargeback requirement are allocated as a minimum gain
chargeback in the following order: First, gain from
the disposition of property subject to Partnership
Nonrecourse Liabilities; and second, if necessary, a
pro rata portion of the Partnership's other items of
income and gain for that year.
This Section 4.2(c) is intended to constitute a "minimum
gain chargeback" as that term is defined in Treasury
Regulations Section 1.704-2(f), and this Section 4.2(c)
shall be interpreted and applied so as to meet the
requirements of such Regulation.
(d) Qualified Income Offset. If a Limited
Partner receives an adjustment, allocation, or distribution
described in Paragraphs (4), (5) and (6) of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) that reduces his
or her Capital Account balance below his or her allocable
share of Minimum Gain, or zero if no Minimum Gain exists
(computed after making all Capital Account adjustments for
such fiscal year, debiting, as of the end of such fiscal
year, adjustments, allocations, and distributions described
in such Paragraphs (4), (5) and (6) and crediting any
amounts such Limited Partner is obligated to restore or is
deemed to be obligated to restore pursuant to the
penultimate sentence of Treasury Regulations Section 1.704-
1(b)(4)(iv)(f)), then income of the Partnership shall be
first allocated to the Limited Partner in an amount and
manner sufficient to eliminate such deficit balances as
quickly as possible. Allocations pursuant to this Section
4.2(d) shall be made after allocations under Section 4.2(c)
and before allocations under Section 4.2(a). This provision
is intended to comply with Treasury Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be so interpreted and
applied. Any allocation of income pursuant to this
Section 4.2(d) shall be taken into account in computing
<PAGE>
subsequent allocations of income pursuant to Article IV so
that the net amount of income allocated to the Partners, to
the extent possible, equals the amounts that would have been
allocated if no allocations under Section 4.2(d) had
occurred.
(e) Syndication Expenses. Syndication Expenses
for any fiscal year shall be allocated in proportion to the
Interest of each Partner.
4.3 Determination of Income; Adjustments.
4.3.1 Computation of Profits and Losses. The Profits
and Losses of the Partnership shall be determined at the end of
each fiscal year of the Partnership and at such other time as the
General Partner shall determine. Except as provided in Sections
4.3.2 and 4.3.3, the Profits and Losses of the Partnership shall
be determined and calculated in accordance with federal income
tax rules and principles.
4.3.2 Adjustments to Profits and Losses. For purposes
of computing Profits and Losses on the disposition of a
Partnership asset or for purposes of determining the cost
recovery, depreciation or amortization deductions with respect
to any asset, the Partnership shall use such asset's book value
determined in accordance with Treasury Regulations Section 1.704-
1(b). Consequently, each asset's book value shall be equal to
its adjusted basis for federal income tax purposes except as
follows:
(a) The initial book value of any asset
contributed by a Partner to the Partnership shall be the
gross fair market value of such asset;
(b) The book value of all Partnership assets
shall be adjusted to equal their respective gross fair
market values, as determined by the General Partner, and the
resulting unrealized Profits or Losses shall be allocated
among the Partners in accordance with Section 4.2, as of the
following times: (1) the acquisition of an additional
Interest in the Partnership by a new or existing Partner in
exchange for more than a de minimis Capital Contribution;
(2) the Distribution by the Partnership to a Partner of more
than a de minimis amount of the Partnership property other
than money; (3) the termination of the Partnership for
federal income tax purposes pursuant to the Code
Section 708(b)(1)(B); and (4) the liquidation of the
Partnership or of any Partner's Interest in the Partnership;
(c) If the book value of an asset has been
determined pursuant to this Section 4.3, such book value
shall thereafter be used, and shall thereafter be adjusted
by depreciation or amortization, if any, taken into account
with respect to such asset, for purposes of computing
Profits or Losses.
(d) In determining Profits and Losses, any income
of the Partnership that is exempt from federal income tax
<PAGE>
shall be added to Profits and any expenditures of the
Partnership described in Code Section 705(a)(2)(B) or
treated as Code Section 705(b)(2)(B) expenditures pursuant
to Treasury Regulations Section 1.704-1(b)(2)(iv)(i) shall
be added to Losses.
4.3.3 Allocation of Other Items. Every item of
income, gain, loss, deduction, credit or tax preference entering
into the computation of Profits or Losses, or applicable to the
period during which such Profits or Losses were realized, with
the exception of any items allocated pursuant to Sections 4.2(c),
4.2(d) and 4.4, shall be allocated to each Partner in the same
proportion as Profits and Losses are allocated to such Partner.
4.4 Tax Allocations: Code Section 704(c). In accordance
with Code Section 704(c) and the Treasury Regulations thereunder,
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 into
account of any variation between the adjusted basis of such
property to the Partnership for federal income tax purposes and
its initial book value computed in accordance with Section
4.3.2(a).
In the event the book value of any Partnership property
is adjusted pursuant to Section 4.3.2(b), subsequent allocations
of income, gain, loss and deduction with respect to such asset
shall take account of any variation between the adjusted basis
of such asset for federal income tax purposes and its book value
in the same manner as Code Section 704(c) and the Treasury
Regulations thereunder.
Any elections or other decisions relating to such
allocations shall be made by the General Partner in any manner
that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section 4.4 are solely
for purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any
Partner's Capital Account or share of income or loss, or
distributions pursuant to any provision of this Agreement.
4.5 Allocation Between Assignor and Assignee. The portion
of the income or losses of the Partnership for any fiscal year
of the Partnership during which an Interest in the Partnership
is assigned by a Partner (or by an assignee or successor in
interest of a Partner), that is allocable in respect of such
Interest shall be apportioned between the assignor and the
assignee on the basis of actual performance of the Partnership
during the months of the fiscal year that each is the owner
thereof. The Partnership shall determine the portion of its
Profits or Losses attributable to each half-month of the fiscal
year using a half-month convention and employing a reasonable
interim closing of the books method.
<PAGE>
ARTICLE V
RECORDS AND ACCOUNTING; REPORTS
5.1 Records and Accounting. The Partnership shall maintain
proper and complete records and books of account. The records
and books of account of the Partnership described in (a) through
(e) below shall be kept at the office of the Partnership
described in Section 2.5, above, and each Limited Partner or his
or her duly authorized representative shall have access to them,
upon reasonable notice at all reasonable times during ordinary
business hours. Such records and books of account shall include,
but not be limited to, the following:
(a) A current list of the Partners, including the
full name and address of each;
(b) A copy of the Certificate, and all amendments
thereto, including all Certificates of Amendment, and all
powers of attorney pursuant to which any certificate has
been executed;
(c) Copies of the Partnership's federal, state and
local tax returns and reports, if any, for the three (3)
most recent fiscal years;
(d) Copies of this Agreement; and
(e) Copies of the annual financial statements
described in Section 5.3 for the three (3) most recent
fiscal years.
The books and records are subject to inspection and
copying at the reasonable request, and at the expense, of any
Partner during ordinary business hours.
5.2 Delivery to Limited Partner and Inspection.
5.2.1 Upon the request of a Limited Partner, the
General Partner shall deliver to the requesting Limited Partner,
at the expense of the Partnership, a copy of the information
required to be maintained pursuant to Section 5.1(a), (c) or (e)
above.
5.2.2 Each Limited Partner has the right, upon reason-
able request, to obtain true and full information regarding the
state of business and financial condition of the Partnership, and
other information regarding the affairs of the Partnership as is
just and reasonable.
5.3 Financial Reports.
5.3.1 The General Partner shall cause an annual
financial report to be sent to each Partner not later than one
hundred twenty (120) days after the close of each fiscal year,
which financial report shall contain a balance sheet as of the
end of the fiscal year, an income statement and statement of
<PAGE>
changes in financial position for the fiscal year, and a
statement of changes in each Partner's Capital Account.
5.3.2 The financial statements referred to above in
this Section 5.3 shall be accompanied by a report, if any, from
the independent accountant engaged by the Partnership. If there
is no such report, the financial statements shall be accompanied
by the certificate of the General Partner stating that the
financial statements were prepared without audit from the books
and records of the Partnership.
5.4 Tax Information. Within ninety (90) days after the end
of each fiscal year, the General Partner will cause to be
delivered to each Person who was a Partner at any time during
such fiscal year all information necessary for the preparation
of such Partner's federal income tax return.
5.5 Designation of Tax Matters Partner. The General
Partner is hereby designated as the "Tax Matters Partner" under
Section 6231(a)(7) of the Code, to manage administrative tax
proceedings conducted at the Partnership level by the Internal
Revenue Service with respect to Partnership matters.
Any Partner has the right to participate in
administrative proceedings relating to the determination of
Partnership items at the Partnership level. Expenses of such
administrative proceedings undertaken by the Tax Matters Partner
will be paid for out of Partnership assets. Each other Partner
who elects to participate in such proceedings will be responsible
for any expenses incurred by such Partner in connection with such
participation. Further, the cost of any adjustments to a Partner
and the cost of any resulting audits or adjustments of a
Partner's tax return, will be borne solely by the affected
Partner.
ARTICLE VI
FISCAL AFFAIRS
6.1 Fiscal Year. The fiscal year of the Partnership shall
be the calendar year.
6.2 Partnership Funds. The funds of the Partnership shall
be deposited in such bank account or accounts, or invested in
such interest-bearing or noninterest-bearing investments,
including, without limitation, checking and savings accounts,
certificates of deposit and time or demand deposits in commercial
banks, banker's acceptances, securities issued by money market
mutual funds, savings and loan association deposits or deposits
in members of the Federal Home Loan Bank System, U.S. Government
securities and securities guaranteed by U.S. Government agencies,
as the General Partner shall, in its sole discretion, determine.
Such funds shall not be commingled with funds of any other
Person. Withdrawals therefrom shall be made upon such signatures
as the General Partner may designate.
6.3 Accounting Decisions. All decisions as to accounting
principles, except as specifically provided to the contrary
<PAGE>
herein, shall be made by the General Partner in accordance with
federal income tax accounting principles.
6.4 Section 754 Election. The Partnership may make the
election under Section 754 of the Code.
6.5 Partnership Expenses.
The Partnership shall pay all expenses of the Partner-
ship, which may include, but are not limited to:
(a) All costs of borrowed money, taxes and
assessments on Partnership property, and other taxes appli-
cable to the Partnership;
(b) Legal, auditing, accounting, brokerage and
other fees;
(c) Fees and expenses paid to contractors,
mortgage bankers, brokers and servicers, leasing agents,
consultants, on-site managers, real estate brokers,
insurance brokers and other agents, including Affiliates of
any General Partner;
(d) The cost of insurance obtained in connection
with the business of the Partnership;
(e) Expenses of organizing, revising, amending,
converting, modifying, or terminating the Partnership;
(f) Expenses in connection with Distributions
made by the Partnership to, and communications and
bookkeeping and clerical work necessary in maintaining
relations with, all Partners;
(g) Expenses in connection with preparing and
mailing reports required to be furnished to Partners for
investor or tax reporting purposes;
(h) Costs incurred in connection with any litiga-
tion, proceedings, or investigations, including any examina-
tions or audits by regulatory agencies; and
(i) Costs of preparation and dissemination of
informational material and documentation relating to
potential sale, refinancing or other disposition of
Partnership properties.
6.6 Borrowing by the Partnership.
6.6.1 General. The Partnership may borrow money from
a commercial bank or other financial institution or other source
to provide the financing required by the Partnership and to
provide the balance of the cash required, other than the Capital
Contributions, to satisfy the costs to be incurred in carrying
out the purposes of the Partnership. Subject to approval by a
Majority Interest of Limited Partners, as provided by Section
8.1.2, the General Partner is authorized to give as security for
<PAGE>
such borrowing a security interest in any or all assets of the
Partnership and to negotiate terms and execute, on behalf of the
Partnership, any and all documents required to effect such
borrowing. Subject to approval of a Majority Interest of Limited
Partners, as provided by Section 8.1.2, the General Partner is
hereby authorized to change, substitute, or amend such borrowing
and to execute any and all documents which may be required by the
bank or other financial institution or other source to establish
an escrow, trust agreement, or trust account with the bank,
institution or other source for the receipt of rents, sale
proceeds and other payments and the disbursements thereof to
service such loan(s).
6.6.2 Loans by the General Partner. Any General
Partner, or any Affiliate of any General Partner, may, in the
General Partner's discretion, loan monies to the Partnership for
use by the Partnership in its operations. The aggregate amount
of such loans shall become an obligation of the Partnership to
the General Partner or such Affiliate, and shall be repaid with
interest (at an annual rate not to exceed two percent above the
prime rate as announced by Seattle-First National Bank, as same
shall change from time to time, not to exceed maximum rates under
applicable usury laws) to the General Partner or such Affiliate
out of gross receipts of the Partnership before any cash
Distributions. No prepayment charge or penalty shall be
permitted on such a loan. Such amounts shall constitute a loan
by the General Partner or the Affiliate to the Partnership and
not a Capital Contribution.
ARTICLE VII
RIGHTS AND DUTIES OF THE GENERAL PARTNER
7.1 Management and Control.
7.1.1 Excepting only those matters listed and
described in Section 8.1.2, the General Partner shall have
exclusive management and control of the business of the
Partnership, and all decisions regarding the management and
affairs of the Partnership shall be made by the General Partner.
The General Partner shall have all the rights and powers of
general partners as provided in the Act and as otherwise provided
by law. The signature or other action of the General Partner
acting as such shall be the signature or other action of the
Partnership. Except as otherwise expressly provided in this
Agreement, the General Partner is hereby granted the right, power
and authority to do on behalf of the Partnership all things
which, in its sole judgment, are necessary, proper or desirable
to carry out the aforementioned duties and responsibilities,
including but not limited to the right, power and authority from
time to time to do those things specified elsewhere in this
Agreement and the following:
(a) To spend the capital and revenues of the
Partnership in furtherance of the business of the
Partnership;
<PAGE>
(b) To cause the Partnership to reimburse any
General Partner for reasonable out-of-pocket expenses
actually incurred by such General Partner in connection with
the Partnership's business, including, but not limited to,
any expense incurred in the organization of the Partnership;
(c) To enter into such agreements, contracts and
similar arrangements as the General Partner deems necessary
or appropriate to accomplish the purposes of the
Partnership;
(d) To borrow money on a secured or unsecured
basis from individuals, banks and other lending institutions
in order to finance or refinance Partnership assets, to meet
other Partnership obligations, and for any other Partnership
purpose, and to execute promissory notes, mortgages, deeds
of trust and assignments of Partnership property and such
other security instruments as a lender of funds may require
to secure repayment of such borrowing;
(e) To the extent that funds of the Partnership
are, in the General Partner's judgment, not required for the
conduct of the Partnership's business, temporarily to invest
the excess funds in the manner set forth in Section 6.2;
(f) To sue and be sued, complain, defend, settle
or compromise with respect to any claim in favor of or
against the Partnership, in the name and on behalf of the
Partnership;
(g) To enter into, execute, amend, supplement,
acknowledge and deliver any and all contracts, agreements,
licenses or other instruments necessary, proper or desirable
to carry out the purposes of the Partnership; and
7.1.2 Notwithstanding Section 7.1.1 above, the General
Partner may not engage in any of the following activities without
the affirmative vote or written consent of a Two Thirds Majority
in Interest of Limited Partners:
(a) Enter into any contract or engage in any
transaction on behalf of the Partnership with, or sell any
Partnership assets to, the General Partner or an Affiliate
of the General Partner, other than the contracts and
transactions permitted pursuant to Section 7.2;
(b) Dissolve or terminate the Partnership prior
to December 31, 2045, other than pursuant to Section
2.6.1(b) or (d); or
(c) Effect any sale or conversion of the Notes.
7.2 Compensation; Reimbursement.
7.2.1 The General Partner shall receive no
compensation for performing its duties as General Partner under
this Agreement. This provision shall not affect the General
Partner's rights to receive its share of Distributions of
<PAGE>
Partnership funds as set forth in Article 4 or Section 10.2.2,
or to receive reimbursement for amounts expended as set forth in
Section 7.2.2.
7.2.2 The General Partner shall be entitled to
receive, out of Partnership funds available therefor,
reimbursement of all amounts expended by the General Partner in
payment out of its own funds of properly incurred Partnership
obligations, including amounts expended prior to the organization
of the Partnership. Reimbursement pursuant to this Section 7.2.2
shall not be duplicative of payments to the General Partner under
any other agreement.
7.2.3 A General Partner (or its Affiliates) may
purchase property in its own name, and assume loans in connection
therewith, and hold title thereto for the purpose of facilitating
the acquisition of such property or the borrowing of money or
obtaining financing for the Partnership if purchased by the
Partnership for a price no greater than the cost of such property
to the General Partner or such Affiliate, and provided there is
no difference in the interest rates on the loans secured by the
property at the time acquired by the General Partner or such
Affiliate and the time acquired by the Partnership, nor any other
benefit arising out of such transaction to the General Partner
or such Affiliate apart from compensation otherwise permitted by
this Agreement.
7.2.4 The validity of any transaction, agreement or
payment involving the Partnership and any General Partner or any
Affiliate of any General Partner otherwise permitted by the terms
of this Agreement shall not be affected by reason of the
relationship between the Partnership and the General Partner or
such Affiliate of such General Partner.
7.3 Right of Public to Rely on Authority of General
Partner. Any Person dealing with the Partnership or the General
Partner may rely upon a certificate signed by the General
Partner, thereunto duly authorized, as to (i) the identity of any
General Partner or Limited Partner hereof; (ii) the existence or
nonexistence of any fact or facts which constitute a condition
precedent to acts by a General Partner or in any other manner
germane to the affairs of the Partnership; (iii) the persons who
are authorized to execute and deliver any instrument or document
of the Partnership; or (iv) any act or failure to act by the
Partnership or as to any other matter whatsoever involving the
Partnership or any Partner.
7.4 Obligations of General Partner. The General Partner
shall:
(a) Execute and deliver the Note Purchase
Agreement dated as of March 29, 1995 between the Partnership
and Elsinore Corporation with respect to the Partnership's
purchase of $1,125,000 principal amount of Elsinore 7-1/2%
Convertible Subordinated Notes due December 31, 1996;
(b) Devote to the Partnership and apply to the
accomplishment of Partnership purposes so much of its time
<PAGE>
and attention as in its judgment is reasonably necessary to
manage properly the affairs of the Partnership; provided,
however, the General Partner is at all times specifically
permitted to engage in any other business ventures and
activities, including such activities as may be deemed to
be in competition with the Partnership, and any conflict of
interest which may result shall be resolved by the General
Partner using its best business judgment;
(c) Maintain a Capital Account for each Partner;
(d) Cause the Partnership to carry out the
obligations of the Partnership;
(e) Keep or cause to be kept the books and
records required by Section 5.1; and
(f) Prepare and deliver or cause to be prepared
and delivered the reports required by Sections 5.3 and 5.4.
7.5 Events of Default.
7.5.1 The General Partner shall be in default upon the
occurrence of any of the following events, each of which shall
be a material default:
(a) If Insolvency exists with respect to the
General Partner;
(b) If the General Partner suffers its Interest
to become subject to any attachment, levy, execution or
other judicial seizure and does not, within 60 days, remove
such lien;
(c) If the General Partner attempts or purports
to transfer its Interest in violation of this Agreement;
(d) If the General Partner fails to contribute
capital to the Partnership as provided in this Agreement;
or
(e) If the General Partner breaches or fails to
perform any other material provision of this Agreement and
such material breach or failure is not cured within 30 days
after the earlier of: (i) written notice from any other
Partner, or (ii) actual knowledge by the General Partner of
such breach or failure.
7.5.2 Upon the occurrence of any of the events of
default described in Section 7.5.1, a Two Thirds Majority in
Interest of Limited Partners may:
(a) Dissolve and terminate the Partnership as
provided in Article 10 and offset against any amount to be
distributed to the General Partner the proven damages caused
the Partnership by the General Partner;
<PAGE>
(b) Pursue any remedy at law or in equity against
the General Partner.
7.6 Good Faith. The General Partner shall manage and
control the affairs of the Partnership to the best of its
ability, and the General Partner shall use its best efforts to
carry out the purposes of the Partnership for the benefit of all
of the Partners. In exercising its powers, the General Partner
recognizes its fiduciary responsibilities to the Partnership.
The General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership,
whether or not in its immediate possession and control. The
General Partner shall not employ, or permit another to employ,
such funds or assets in any manner except for the exclusive
benefit of the Partnership.
7.7 Liability; Indemnification. In carrying out its duties
and exercising its powers pursuant to this Agreement, the General
Partner shall exercise reasonable skill, care and business
judgment. Neither the General Partner nor any of its agents
shall be liable to the Partnership or the other Partners for any
act or omission based upon errors of judgment, negligence, or
other fault in connection with the business or affairs of the
Partnership so long as the Person against whom liability is
asserted acted in good faith on behalf of the Partnership and in
a manner reasonably believed by such Person to be within the
scope of his or her authority under this Agreement and in the
best interests of the Partnership, but only if such action or
failure to act does not constitute gross negligence or willful
misconduct. The Partnership agrees to indemnify the General
Partner and its agents to the fullest extent permitted by law and
to save and hold it and them harmless from and in respect of all
(a) fees, costs, and expenses incurred in connection with or
resulting from any claim, action, or demand against the General
Partner, the Partnership or any of the agents of either of them
that arise out of or in any way relate to the Partnership, its
properties, business, or affairs and (b) such claims, actions and
demands and any losses or damages resulting from such claims,
actions and demands, including amounts paid in settlement or
compromise (if recommended by attorneys for the Partnership) of
any such claim, action or demand; provided, however, that this
indemnification shall apply only so long as the Person against
whom a claim, action or demand is asserted has acted in good
faith on behalf of the Partnership or the General Partner and in
a manner reasonably believed by such Person to be within the
scope of his or her authority under this Agreement and in the
best interests of the Partnership, but only if such action or
failure to act does not constitute gross negligence or willful
misconduct. The termination of any action, suit, or proceeding
by judgment, order, settlement, or upon a plea of nolo contendere
or its equivalent, shall not of itself create a presumption that
any Person acted with gross negligence or willful misconduct.
7.8 Dissenting Limited Partners. The Limited Partners are
aware that the terms of this Agreement permit certain amendments
of the Agreement to be effective and certain other actions to be
taken or omitted by or with respect to the Partnership, in each
case with the approval of less than all of the Limited Partners.
<PAGE>
Each Limited Partner agrees that the General Partner, with full
power of substitution, is hereby authorized and empowered to
execute, acknowledge, make, swear to, verify, consent to,
deliver, record, file, and/or publish, for and in the behalf, in
the name, place, and stead of each such undersigned Limited
Partner, any and all instruments and documents which may be
necessary or appropriate to permit such amendment to be lawfully
made or action lawfully taken or omitted, regardless of whether
such Limited Partner has approved such amendment or action.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 No Participation in Management.
8.1.1 Except as otherwise provided in this Agreement,
no Limited Partner (other than a General Partner that is also a
Limited Partner) shall take part in the management of the
Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or
otherwise bind the Partnership.
8.1.2 Major Decisions. Notwithstanding Section 8.1.1,
the Limited Partners shall have the power to vote upon and,
without the approval of a Majority in Interest (or such higher
percentage of Interest provided for in this Agreement) of Limited
Partners, the General Partner shall take no action respecting,
any of the following Partnership matters:
(a) Termination of the Partnership, in accordance
with Section 7.1.2(b) and Section 2.6.1(b) and (d);
(b) Amendment of the Agreement, in accordance
with Section 11.1;
(c) Removal of a General Partner, in accordance
with Section 9.2;
(d) Election of a new or additional General
Partner, in accordance with Section 9.1.2;
(e) Continuation of the Partnership after the
death, resignation, removal, incapacity, dissolution, or
Insolvency of the last remaining General Partner, in accord-
ance with Section 9.1.3;
(f) Approval of certain contracts or transactions
or the sale of Partnership assets between the Partnership
and the General Partner or an Affiliate of the General
Partner, in accordance with Subsection 7.1.2(a);
(g) Sale, transfer, exchange, or otherwise
disposition of the Notes or any material portion thereof or
any other material portion of the property and assets owned
by the Partnership; and
<PAGE>
(h) Any other decision or any action which, by
any provision of this Agreement, is specifically required
to be approved by a percentage Interest of Limited Partners.
8.1.3 Notwithstanding Section 8.1.2, and any other
provisions of this Agreement, the rights of the Limited Partners
to remove a General Partner, to admit one or more additional
General Partners, to dissolve, wind up and terminate the Partner-
ship, to amend this Agreement and to approve or disapprove the
sale of all or substantially all of the assets of the Partnership
shall not have any effect whatsoever or be exercisable until and
unless prior to such exercise the Partnership shall have received
an opinion of counsel satisfactory to the Limited Partners (as
hereinafter provided) to the effect that the exercise of such
rights will not adversely affect the status of the Limited
Partners as limited partners of the Partnership or change the
Partnership's status for federal income tax purposes. For
purposes of this Section 8.1.3, counsel will be deemed
satisfactory to the Limited Partners if approved by a Majority
in Interest of Limited Partners.
8.2 Limitation of Liability. Pursuant to the Act, no
Limited Partner shall have any personal liability whatever in his
or her capacity as a Limited Partner for the debts of the
Partnership or any of its Losses beyond the amount contributed
by him to the capital of the Partnership as set forth from time
to time opposite his or her name on Schedule A hereto.
8.3 Transfer of a Limited Partner's Interest. A Limited
Partner may transfer his or her Interest in the Partnership only
with the unanimous consent of the Partners.
8.4 Indemnification and Terms of Admission. Each Limited
Partner shall indemnify and hold harmless the Partnership, the
General Partner and every Limited Partner against any claim,
action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of or arising from any
actual or alleged misrepresentation or misstatement of facts or
omission to state facts by such Limited Partner in connection
with the acquisition or the assignment, transfer, encumbrance or
other disposition of all or any part of an Interest in the
Partnership, against expenses for which the Partnership or such
other Person has not otherwise been reimbursed (including
attorneys' fees, judgments, fines and amounts paid in settlement)
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding.
8.5 Death or Incapacity of Limited Partner. The death,
legal incapacity, Insolvency or dissolution of a Limited Partner
shall not cause a dissolution of the Partnership, but the rights
of such Limited Partner to share in the Profits or Losses of the
Partnership and to receive Distributions shall, on the happening
of such an event, devolve on his or her personal representative,
or in the event of the death of one whose Interest is held in
joint tenancy, pass to the surviving joint tenants, subject to
the terms and conditions of this Agreement. The estate of the
Limited Partner shall be liable for all the obligations of the
deceased or incapacitated Limited Partner.
<PAGE>
8.6 No Withdrawal.
8.6.1 Except as permitted by Section 8.3 and this
Section, no Limited Partner shall voluntarily withdraw from the
Partnership.
8.6.2 At any time any Limited Partner may at his
election demand a complete or partial liquidation of his Interest
in the Partnership. The amount due to a Limited Partner who
makes a demand pursuant to this Section 8.6.2 shall be not in
excess of his Capital Account balance immediately prior to any
Distribution pursuant to this Section 8.6.2, after adjustment of
the Capital Accounts as required by Section 4.3.2(b)(4).
Distribution of the amount due hereunder shall be made within 30
days of such demand. Distribution shall be made only in Notes
and Section 4.1.3 shall apply to such Distribution of Notes.
ARTICLE IX
WITHDRAWAL AND ADDITION OF GENERAL PARTNERS
9.1 Resignation and Replacement of a General Partner.
9.1.1 A General Partner may voluntarily resign or
withdraw as General Partner upon sixty (60) days written notice
to all the Partners, and such resignation shall not constitute
a breach of this Agreement.
9.1.2 Upon the dissolution, withdrawal, removal,
death, incompetency, or Insolvency of a General Partner of a
General Partner, if there is at least one remaining General
Partner, such remaining General Partner is expressly required to
continue the business of the Partnership and may in its
discretion nominate a successor General Partner who shall be
proposed for election to the Limited Partners and who shall, if
elected by a Two Thirds Majority Interest of Limited Partners,
become a successor General Partner to the General Partner which
was removed, resigned, dissolved, merged, become Insolvent, died
or was incapacitated.
9.1.3 In the event of withdrawal by the last General
Partner or in the event that the last General Partner dies,
becomes Insolvent or incompetent, dissolves, or is removed, the
Limited Partners may by unanimous written consent, within ninety
(90) days of such event, elect to carry on the business of the
Partnership with one or more substituted General Partners.
9.2 Removal and Replacement of a General Partner.
9.2.1 Subject to the provisions set forth in this
Agreement, Limited Partners upon a Two Thirds Majority Interest
of Limited Partners (excluding any Interests owned by the General
Partners as Limited Partners) shall have the right to remove any
General Partner for cause providing a successor General Partner
satisfactory to Two Thirds Majority Interest of the Limited
Partner has been previously admitted as a General Partner. "For
cause" shall be defined as (a) performing any act materially in
contravention of this Agreement, (b) performing any act which
<PAGE>
would make it impossible to carry on the ordinary business of the
Partnership, or (c) breaching a fiduciary obligation to the
Partnership.
9.2.2 Notice of removal (the "Notice of Removal")
shall be served on the General Partner either in person or by
certified or registered mail, and such Notice of Removal shall
state: (a) the date on which the vote or written consent was
obtained authorizing removal; (b) the effective date of the
removal which shall be subsequent to the date of the admission
of the successor General Partner; and (c) the cause for removal.
9.2.3 The removal of a General Partner shall be
effective as of the effective date specified in the Notice of
Removal. Said removal shall not affect the validity or enforce-
ability of any agreements to which the Partnership is a party.
9.3 Purchase of Interest.
9.3.1 Following the removal, resignation, Insolvency,
death, incapacity or dissolution of a General Partner, the
Interest of the General Partner (hereinafter referred to as the
"Terminated General Partner") shall be purchased by the
Partnership for a purchase price equal to the market value of the
Terminated General Partner's interest as determined in accordance
with Subsection 9.3.2 hereof. The purchase price of such
Interest shall be paid by the Partnership to the Terminated
General Partner or its representative by a promissory note of the
Partnership payable to such Terminated General Partner or its
representative in a face amount equal to said purchase price and
containing provisions as would be usual and customary in a
commercial promissory note, including provision for interest at
the prime rate of interest as announced by the New York Main
Branch of Deutsche Bank, as same shall change from time to time,
with such interest to be payable at the time of each installment
of principal, which shall be payable in annual installments of
$20,000 or 1/10 of the face amount of the note, whichever is
less, with the entire balance due ten (10) years from the date
of the Terminated General Partner's removal, Insolvency,
dissolution, death or incompetency, or upon the winding up of the
Partnership, whichever occurs first. No prepayment penalty shall
be charged to the Partnership for the early payment of its note.
9.3.2 The market value of the Terminated General
Partner's Interest shall be determined by agreement between the
Terminated General Partner or its representative and the Partner-
ship, taking into account any obligation of the Terminated
General Partner to restore its negative Capital Account balance
pursuant to Section 3.1.3. If the Terminated General Partner or
its representative and the Partnership cannot agree, each shall
select an independent appraiser within the next thirty (30) days.
If such appraisers fail to agree on the market value of the
Terminated General Partner's Interest within the next ninety (90)
days, then the two appraisers shall jointly appoint a third
appraiser, whose determination shall be final and binding;
provided however, that if the two appraisers are unable to agree
within twenty (20) days on a third appraiser, the third appraiser
shall be selected by the American Arbitration Association. The
<PAGE>
Terminated General Partner or its representative and the
Partnership shall each compensate their respective appraisers,
and the compensation of the third appraiser, if necessary, shall
be borne equally by each party.
9.4 Continuing Liability. Upon the removal or withdrawal
of a General Partner, or upon any permitted withdrawal of a
General Partner, or upon any permitted assignment or transfer of
a General Partner's Interest, the Terminated General Partner
shall remain liable for all obligations of the Partnership which
arise from any acts taken by the Terminated General Partner or
events occurring prior to the effectiveness of the termination,
but the Terminated General Partner shall not be liable for any
obligations of the Partnership which arise out of acts taken or
events occurring after the effectiveness of the termination or
which arise from any acts taken by a successor General Partner,
and the then General Partner shall indemnify and hold the
Terminated General Partner harmless from any liabilities of the
Partnership which arise from acts taken subsequent to the
effectiveness of the termination.
9.5 Certificate of Amendment. Within thirty (30) days
after the admission of a successor General Partner to the
Partnership, the General Partner shall cause to be filed with the
Washington Secretary of State an amendment to the Certificate
reflecting the admission of such General Partner.
9.6 Transfer of General Partner Interest.
Except as otherwise provided in this Article IX, a
General Partner may not assign, sell or otherwise transfer its
General Partner's Interest in the Partnership without the
unanimous written consent of the Limited Partners.
9.7 Additional Conditions to Admission of General Partners.
Notwithstanding any other provision of this Agreement, no with-
drawal or assignment under this Article IX may be made, and no
additional or successor General Partner whatsoever may be
admitted to the Partnership and no right of the Limited Partners
to consent to or approve such admission shall have any effect
whatsoever or be exercisable until and unless prior to such event
the Partnership shall have received an opinion of counsel
satisfactory to the Limited Partners (as hereinafter provided)
to the effect that the giving of consent of the Limited Partners
to such admission will not adversely affect the status of the
Limited Partners as limited partners under applicable state law,
the classification of the Partnership as a Partnership for
federal income tax purposes, or the continuation of the
Partnership under Code Section 708. For purposes of this Section
9.7, counsel will be deemed satisfactory to the Limited Partners
if proposed by the General Partner and approved in writing by or
by vote of a Majority in Interest of Limited Partners.
<PAGE>
ARTICLE X
DISSOLUTION, LIQUIDATION AND DISTRIBUTION
10.1 Assumption of Agreements. No vote by the Partners to
dissolve the Partnership pursuant to Section 2.6 or Section 7.5.2
shall be effective unless, prior to or concurrently with such
vote, there shall have been established procedures for the
assumption of the Partnership's obligations under the agreements
in force immediately prior to such vote regarding dissolution,
and there shall have been an irrevocable appointment of an agent
who shall be empowered to give and receive notices, reports and
payments under such agreements and hold and exercise such other
powers as are necessary to permit all other parties to such
agreements to deal with such agent as if the agent were the sole
owner of the Partnership's interest, which procedures are agreed
to in writing by each of the other parties to such agreements.
10.2 Distribution.
10.2.1 Upon dissolution of the Partnership, the
affairs of the Partnership shall be wound up and all of its debts
and liabilities discharged in the order of priority as provided
by law.
10.2.2 Upon dissolution, the assets of the
Partnership shall be distributed to the General Partner and the
Limited Partners in the following order of priority:
(a) To creditors, including Partners who are
creditors, to the extent otherwise permitted by law, in
satisfaction of the liabilities of the Partnership; and
(b) To the General Partner and Limited Partners,
as provided in Section 4.1.2.
10.2.3 Each such distributee shall receive his or her
share of the assets in cash or in kind, and the proportion of
such share that is received in cash may vary, all as the General
Partner in its sole discretion may decide.
10.2.4 The winding up of the affairs of the
Partnership and the distribution of its assets shall be conducted
exclusively by the General Partner or its successor, which is
hereby authorized to do all acts authorized by law for these
purposes. Without limiting the generality of the foregoing, the
General Partner, in carrying out such winding up and
distribution, shall have full power and authority to sell all or
any of the Partnership assets or to distribute the same in kind
to the Partners and Limited Partners. Any assets distributed in
kind shall be subject to all operating agreements or other
agreements relating thereto which shall survive the termination
of the Partnership. Any property distributed in kind shall be
valued at its fair market value and treated as though the
property were sold and the cash proceeds were distributed. The
difference between the value of the property and its book value
on the Partnership books shall be treated as Profits or Losses
<PAGE>
and shall be credited or charged to the Partners as provided in
Section 4.2.
ARTICLE XI
AMENDMENT
11.1 Amendment by Limited Partners. Except as otherwise
required by law, this Agreement may be amended in any respect,
other than the Limited Partner voting requirement set forth in
Subsection 9.2.1, upon the affirmative vote of a Two Thirds
Majority in Interest of Limited Partners and the consent of the
General Partners, provided that in no event may an amendment
affect the proportionate Profits interest, Losses interest,
Capital Account, and rights on dissolution of a Partner or
materially alter the economic benefits of this Agreement to a
Partner unless that Partner consents thereto in writing.
11.2 Amendment by General Partner.
11.2.1 In addition to any amendments otherwise
authorized herein, this Agreement may be amended from time to
time by the General Partner without the consent of any of the
Limited Partners (i) to add to the representations, duties or
obligations of the General Partner or surrender any right or
power granted to the General Partner herein; (ii) to cure any
ambiguity, correct or supplement any provision herein which may
be inconsistent with any other provision herein, or correct any
printing, stenographic or clerical errors or omissions, in order
that this Agreement shall accurately reflect the agreement among
the Partners hereto; (iii) to delete or add any provision of this
Agreement required to be so deleted or added by the staff of the
Securities and Exchange Commission or other federal or state
securities agency, if such additions or deletions are deemed by
such Commission or agency to be for the benefit or protection of
the Limited Partners; (iv) to add or delete any provisions of
this Agreement deemed necessary by the General Partner to conform
this Agreement to Code Section 704(b) or any regulation adopted
thereunder; and (v) to amend Schedule A hereto to provide the
necessary information regarding any new General Partners, or
Limited Partners; provided, however, that no amendment shall be
adopted pursuant to this Section 11.2 unless the General Partner
reasonably determines that the adoption thereof (1) is not
inconsistent with Article VII; (2) with respect to any amendment
other than an amendment pursuant to clause (iv) or (v) above,
does not alter the interest of any Partner in Profits or Losses
or in cash Distributions of the Partnership; (3) does not, in the
opinion of counsel for the Partnership, by its terms alter, or
result in the alteration of, the limited liability of the Limited
Partners or the status of the Partnership as a partnership for
federal income tax purposes; and (4) is for the benefit of or
not averse to the interests of the Limited Partners.
11.2.2 The Partnership Agreement may be amended
from time to time by the General Partner without the consent of
the Limited Partners, upon notice to the Limited Partners, to
amend Sections 3 or 4 (including, without limitation, provisions
concerning the allocation of Profits, Losses or Distributions)
<PAGE>
(a) to take account of any amendments to Code Section 704 or the
regulations thereunder or any judicial or administrative inter-
pretation thereof or (b) to revise the date upon which a
Partner's share of Profits, Losses and Distributions is
determined and the period of time over which such distributive
share relates.
11.3 Amendment of Certificate. In the event this
Agreement shall be amended pursuant to this Article XI, the
General Partner shall amend the Certificate to reflect such
change if such amendment is necessary under the Act.
11.4 Voting Rights and Procedure.
11.4.1 The vote of each Limited Partners shall bear
such weight as is proportionate with his or her Voting Interest.
11.4.2 Any matter for which the approval or consent
of the Limited Partners is required or for which the Limited
Partners are authorized to take action under this Agreement or
under applicable law may be approved or action may be taken by
the Limited Partners without a meeting and shall be as valid and
effective as action taken by the Limited Partners at a meeting
assembled, if written consents to such action by the Limited
Partners are signed by the Limited Partners owning Interests
constituting in the aggregate the Interest required to approve
or otherwise authorize such action and such written consents are
delivered to the General Partner.
11.4.3 Personal presence of the Limited Partners shall
not be required at any meeting, provided an effective written
consent to or rejection of the action proposed to be taken at
such meeting is submitted to the General Partner. Attendance by
a Limited Partner and voting in person at any meeting shall
revoke any written consents or rejections of such Limited Partner
submitted with respect to action proposed to be taken at such
meeting.
ARTICLE XII
POWER OF ATTORNEY
12.1 Power of Attorney.
12.1.1 The Limited Partners, by their execution
hereof, jointly and severally, hereby make constitute and appoint
the General Partner as their true and lawful agent and attorney-
in-fact, with full power of substitution, in their name, place
and stead to make, execute sign, acknowledge, swear by, record
and filed on behalf of them and on behalf of the Partnership (i)
the original Certificate and all amendments thereto required or
permitted by law or the provisions of this Agreement; (ii) all
certificates and other instruments deemed advisable by the
General Partner to permit the Partnership to become or to
continue as a limited partnership or partnership wherein the
Limited Partners have limited liability in the jurisdiction where
the Partnership may be doing business; (iii) all instruments that
effect a change or modification of the Partnership in accordance
<PAGE>
with this Agreement; (iv) all conveyances and other instruments
deemed advisable by the General Partner to effect the dissolution
and termination of the Partnership; (v) all fictitious or assumed
name certificates required or permitted to be filed on behalf of
the Partnership; and (vi) all other instruments which may be
required or permitted by law to be filed on behalf of the
Partnership.
12.1.2 The foregoing power of attorney:
(i) Is coupled with an interest and shall be
irrevocable and survive the death or incapacity of each
Limited Partner;
(ii) May be exercised by the General Partner
either by signing separately as attorney-in-fact for each
Limited Partner or, after listing all of the Limited
Partners executing an instrument, by a signature of the
General Partner acting as attorney-in-fact for all of them;
and
(iii) Shall survive the delivery of an
assignment by a Limited Partner of the whole or any portion
of his or her Interest in the Partnership; except that,
where the assignee of the whole of such Limited Partner's
Interest in the Partnership has been approved by the General
Partner for admission to the Partnership, the power of
attorney of the assignor shall survive the delivery of such
assignment for the sole purpose of enabling the General
Partner to execute, acknowledge and file any instrument
necessary to effect such substitution.
12.1.3 Each Limited Partner shall execute and deliver
to the General Partner, within five (5) days after receipt of the
General Partner's request therefor, such further designation,
powers-of-attorney and other instruments as the General Partner
deems necessary.
ARTICLE XIII
MISCELLANEOUS
13.1 Notices. Any notice, offer, consent or other
communication required or permitted to be given or made hereunder
shall be in writing and shall be deemed to have been sufficiently
given or made when delivered personally to the party (or an
officer of the party) to whom the same is directed, or (except
in the event of a mail strike) five (5) days after being mailed
by first-class mail, postage prepaid, if to the Partnership, to
the offices described in Section 2.5, or if to a Partner, to the
address set forth in Schedule A. Any Partner may change his or
her address for the purpose of this Article by giving notice of
such change to the Partnership, such change to become effective
on the tenth (10th) day after such notice is given.
13.2 Waiver of Partition. Each Partner hereby irrevocably
waives during the term of the Partnership any right that it or
<PAGE>
he or she may have to maintain any action for partition with
respect to any Partnership property.
13.3 Governing Law; Successors; Severability. This
Agreement shall be governed by the laws of the State of Delaware
as such laws are applied by Delaware courts to agreements entered
into and to be performed in Delaware by and between residents of
Delaware and shall, subject to the restrictions on trans-
ferability set forth herein, bind and inure to the benefit of the
heirs, executors, personal representatives, successors and
assigns of the parties hereto. If any provision of this
Agreement shall be held to be invalid, the remainder of this
Agreement shall not be affected thereby.
13.4 Entire Agreement. This Agreement constitutes the
entire agreement among the parties; it supersedes any prior
agreement or understandings among them, oral or written, all of
which are hereby canceled. This Agreement may not be modified
or amended other than pursuant to Article XI.
13.5 Headings, Etc. The headings in this Agreement are
inserted for convenience of reference only and shall not affect
interpretation of this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or
the plural shall include the singular and the plural, and the
pronouns stated in either the masculine, feminine or the neuter
gender shall include the masculine, the feminine and the neuter.
13.6 No Waiver. The failure of any Partner to seek redress
for violation, or to insist on strict performance, of any
covenant or condition of this Agreement shall not prevent a
subsequent fact which would have constituted a violation from
having the effect of an original violation.
13.7 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same instrument.
13.8 Other Business Ventures. Any Partner, or any
shareholder, director, employee, Affiliate or other Person
holding a legal or beneficial interest in any entity which is a
Partner, may engage in or possess an interest in other business
ventures of every nature and description, independently or with
others, whether such ventures are competitive with the Partner-
ship or otherwise; and neither the Partnership nor the Partners
shall have any right by virtue of this Agreement in or to such
independent venture or to the income or profits derived
therefrom.
13.9 Venue. In the event that any suit is brought arising
out of or in connection with this Agreement, the parties consent
to the jurisdiction of, and agree that sole venue will lie, win
the state and federal courts located in New York, New York.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
GENERAL PARTNER:
Elsco, Inc.
By HARRY C. HAGERTY, III
__________________________________
Harry C. Hagerty, III
Its President
LIMITED PARTNERS:
HARRY C. HAGERTY, III
____________________________________
Harry C. Hagerty, III
EDWARD NECARSULMER, III
____________________________________
Edward Necarsulmer, III
JAMES J. MURREN
____________________________________
James J. Murren
C.J. Lawrence/Deutsche Bank
Securities Corp.
By__________________________________
Its_______________________________<PAGE>
SCHEDULE A
NAME AND ADDRESS OF CAPITAL PERCENTAGE VOTING
PARTNER CONTRIBUTION INTEREST INTEREST
- ------------------- ------------ ---------- --------
[S] [C] [C] [C]
GENERAL PARTNER:
Elsco, Inc. $11,250 1%
Attn: Harry C. Hagerty,
III,
President
1290 Ave. of the
Americas
New York, New York
10104
$163,750 14.56% 25%
LIMITED PARTNERS:
Harry C. Hagerty, III
1290 Ave. of the
Americas $175,000 15.56% 25%
New York, New York
10104
Edward Necarsulmer, III $175,000 15.56% 25%
1290 Ave. of the
Americas
New York, New York
10104
$600,000 53.33% 25%
James J. Murren
1290 Ave. of the
Americas
New York, New York
10104
C.J. Lawrence/Deutsche
Bank Securities Corp.
1290 Ave. of the
Americas
New York, New York
10104
<PAGE>
CERTIFICATE OF LIMITED PARTNERSHIP
OF
MAGNOLIA PARTNERS LIMITED PARTNERSHIP
A DELAWARE LIMITED PARTNERSHIP
This Certificate of Limited Partnership is executed by the
undersigned pursuant to Section 17-201 of the Delaware Revised
Uniform Limited Partnership Act (the "Act").
A. Name of Limited Partnership.
---------------------------
The name of the limited partnership is Magnolia Partners
Limited Partnership, a Delaware limited partnership (the
"Partnership").
B. Address of the Registered Office and Name and Address
of the Registered Agent Required to be Maintained by Section
17-104 of the Act.
- -----------------------------------------------------------------
The address of the registered office of the Partnership is
________________________. The name and address of the agent for
service of process are:_____________________________________.
C. The Name and Mailing Address of Each General Partner.
----------------------------------------------------
The name and mailing address of each General Partner is as
follows:
Harry C. Hagerty, III
________________________
________________________
________________________
By executing the foregoing Certificate, the undersigned
General Partner affirms under penalty of perjury that to the best
of his knowledge and belief, the facts stated therein are true.
GENERAL PARTNER(S):
HARRY C. HAGERTY, III
-------------------------------------
Harry C. Hagerty, III
<PAGE>
CONSENT TO APPOINTMENT AS REGISTERED AGENT
The undersigned hereby consents to serve as Registered
Agent in the state of Delaware for the limited partnership named
in the foregoing Certificate. The undersigned understands that as
agent for the limited partnership it will be the undersigned's
responsibility to accept service of process in the name of the
limited partnership and to immediately notify the Office of the
Secretary of State in the event of the undersigned's resignation
or any change in the Registered Office address of the limited
partnership for which the undersigned is agent.
Dated: March ___, 1995.
_____________________________
