<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
RHODES, INC.
----------------
(Name of Issuer)
Common Stock Without Par Value
------------------------------
(Title of Class of Securities)
76235P 10 1
--------------
(CUSIP Number)
Mr. Holcombe T. Green, Jr.
3343 Peachtree Road, N.E.
Suite 1420 - East Tower
Atlanta, Georgia 30326 (404) 261-1187
---------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 25, 1994
-----------------------------
(Date of Event Which Requires
Filing of this Statement)
Copy to:
E. William Bates, II
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303 (212) 556-2100
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.
(Continued on Following Pages)
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Exhibit Index on Page _
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STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS UNDER THE
SECURITIES EXCHANGE ACT OF 1934
The information set forth in response to each separate Item shall be deemed to
be a response to all Items where such information is relevant.
ITEM 1. SECURITY AND ISSUER
The class of equity securities to which this statement relates is the
Common Stock, without par value ("Common Stock"), of Rhodes, Inc., a Georgia
corporation (the "Issuer"). The principal executive offices of the Issuer are
located at 4370 Peachtree Road, Atlanta, Georgia 30319.
ITEM 2. IDENTITY AND BACKGROUND
The names of the reporting persons to which this statement relates are WPS
Investors, L.P. ("WPS Investors"), a Georgia limited partnership, HTG Corp., a
Georgia corporation and general partner of WPS Investors, and Mr. Holcombe T.
Green, Jr., the president, sole director and sole shareholder of HTG Corp. In
addition, Green Capital Investors, L.P. ("GCI") and Green and Company, L.P.
("Green and Company"), both Georgia limited partnerships, will be reporting
persons solely for the purpose of amending the Schedule 13D filed by them
previously with the Securities and Exchange Commission on July 6, 1993. Each
reporting person is principally engaged in the business of investing in debt
and equity securities and the principal business address of each reporting
person is 3343 Peachtree Road, N.E., Suite 1420 - East Tower, Atlanta, Georgia
30326. Mr. Green is a citizen of the United States.
During the last five (5) years, Mr. Green has not 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 and, as a result of such proceeding, become subject to
any 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
On February 25, 1994, WPS Investors acquired 4,912,679 shares of Common
Stock of the Issuer from RW Holding(1) pursuant to the WPS
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Agreement, as defined in Item 6, in exchange for a limited partnership interest
in WPS Investors. In addition, HTG Corp. and Mr. Green, through his ownership
of all of the shares of HTG Corp., retained indirect beneficial ownership of
such shares under the WPS Agreement by virtue of the general partnership
interest in WPS Investors acquired by HTG Corp. pursuant to the WPS Agreement.
- ---------------
(1) RW Holding, a wholly owned subsidiary of GCI, obtained all 4,918,379
shares of Common Stock then owned by GCI on December 8, 1993, the date of RW
Holding's formation pursuant to the RW Holding Agreement, as defined in Item 6.
ITEM 4. PURPOSE OF TRANSACTION
RW Holding transferred 4,912,679 shares of Common Stock to WPS
Investors in exchange for a limited partner interest as part of the transaction
pursuant to which WPS Investors has capitalized. WPS Investors, HTG Corp. or
Mr. Green may, from time to time, increase, reduce or dispose of its or his
indirect or indirect investment in the Issuer, depending on general economic
conditions, economic conditions in the markets in which the Issuer operates,
the market price of the Common Stock, the availability of funds, other
opportunities available to WPS Investors, HTG Corp. or Mr. Green, and other
considerations.
On February 28, 1994, the Issuer filed a Registration Statement on
Form S-3 pursuant to which WPS Investors and RHD Capital Investors, C.P. ("RHD
Investors") intend to sell 2,000,000 and 240,494 shares of Common Stock of the
Issuer, respectively, to the public through the underwriters named therein.
Following such sale, WPS Investors would own 2,912,679 shares of Common Stock,
or approximately 29.8% of the outstanding shares of Common Stock of the Issuer,
and RHD Investors would cease to own any shares of Common Stock of the
Issuer(2).
Except as otherwise described in this Item 4, no reporting person has any
present specific plan or proposal that relates to or would result in any of the
matters referred to in paragraphs (a) - (j) of Item 4 of Schedule 13D.
- ---------------
(2) WPS Investors has granted to the underwriters named in the
Registration Statement on Form S-3 an over-allotment option with respect to an
additional 225,000 shares of Common Stock. If the over-allotment option is
exercised in full, WPS Investors would own 2,687,679 shares of Common Stock or
approximately 27.5 percent of the outstanding shares of Common Stock of the
Issuer.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) All aggregate beneficial ownership discussed in this Item 5 is as of
the close of business on February 25, 1994.
(i) Shares held by WPS Investors. WPS Investors directly owns 4,912,679
shares of Common Stock, or 50.2 percent of the outstanding shares of Common
Stock.
(ii) Shares owned by HTG Corp. HTG Corp., by virtue of its status as
general partner of Green and Company, the general partner of both RHD
Investors and GCI, beneficially owns (a) the 240,494 shares of Common Stock
directly owned by RHD Investors and (b) the 5,700 shares of Common Stock
owned directly by RW
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Holding, a wholly owned subsidiary of GCI. HTG Corp., by virtue of its
status as general partner of WPS Investors, also beneficially owns the
4,912,679 shares of Common Stock directly owned by WPS Investors.
Accordingly, HTG Corp. beneficially owns 5,158,873 shares of Common Stock,
or 52.8 percent of the outstanding shares of Common Stock of the Issuer.
(iii) Shares owned by Holcombe T. Green, Jr. Mr. Green, by virtue of
his status as sole shareholder of HTG Corp., beneficially owns all of the
shares of Common Stock identified as being beneficially owned by HTG Corp.
in (ii) above.
(iv) Shares owned by GCI. Through its wholly owned subsidiary, RW
Holding, GCI beneficially owns 5,700 shares of Common Stock (.1% of the
outstanding shares of Common Stock). All other Common Stock previously
owned by GCI were contributed to WPS Investors by RW Holding on February
25, 1994.
(v) Shares owned by Green and Company. As general partner of RHD
Investors and GCI, Green and Company beneficially owns (a) the 240,494
shares of Common Stock owned by RHD Investors and (b) the 5,700 shares of
Common Stock owned by RW Holdings. The 246,194 shares of Common Stock
beneficially owned by Green and Company represent 2.5% of the outstanding
Common Stock.
(b) Dispositive and voting power of the shares of Common Stock identified
in (a) above is controlled as follows:
(i) HTG Corp., as general partner of WPS Investors, has sole dispositive
and voting power with respect to the shares of Common Stock held by WPS
Investors.
(ii) Green and Company, as the general partner of RHD Investors, has
sole dispositive and voting power with respect to the shares of Common
Stock directly owned by RHD Investors. The general partner of Green and
Company is HTG Corp.
(iii) GCI, as one of the general partners in RW Holding, shares
dispositive and voting power with respect to the shares of Common Stock
owned directly by RW Holding with RWI Inc., a Georgia corporation ("RWI")
and the other partner in RW Holding. RWI is principally engaged in the
business of investing in debt and equity securities and also has 3343
Peachtree Road, N.E., Suite 1420 East Tower, Atlanta, Georgia 30326 as its
principal business address. The general partner of GCI is Green and Company
and the sole shareholder of RWI is GCI. The general partner of Green
and Company is HTG Corp.
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As the sole director and shareholder of HTG Corp. and RWI, Mr. Green has
ultimate dispositive and voting control over all shares directly owned by WPS
Investors, RHD Investors and RW Holding.
(c) See Schedule C which is attached hereto and incorporated herein by
this reference.
(d) Not applicable.
(e) GCI and Green and Company both ceased to be beneficial owners of more
than five percent of the outstanding shares of Common Stock of the Issuer on
February 25, 1994.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
HTG Corp. is the general partner of WPS Investors and Green and Company.
Green and Company is the sole general partner of RHD Investors and GCI. GCI and
RWI are the only partners of RW Holding, which, in turn, is a limited partner
of WPS Investors. Mr. Green is the president, sole director and sole
shareholder of HTG Corp. and RWI.
The Amended and Restated Agreement of Limited Partnership of WPS Investors
(the "WPS Agreement"), a copy of which is attached hereto as Exhibit A and
incorporated herein by this reference, was made as of February 25, 1994,
amending and restating the terms of the Agreement of Limited Partnership dated
as of December 8, 1993, which formed WPS Investors. The WPS Agreement vests
exclusive management authority of WPS Investors in its general partner, HTG
Corp. and, under the WPS Agreement, all decisions relating to the affairs of
WPS Investors are to be made by HTG Corp. The WPS Agreement further provides
that WPS Investors shall continue in existence until February 28, 1998.
The Partnership Agreement of RW Holding (the "RW Holding Agreement"), a
copy of which is attached hereto as Exhibit B and incorporated herein by this
reference, was made as of December 8, 1993. The RW Holding Agreement provides
for management of RW Holding by its partners, GCI and RWI, and further provides
that RW Holding shall terminate on December 31, 1998.
The Amended and Restated Agreement of Limited Partnership of Green Capital
Investors, L.P. (the "Green Capital Agreement"), a copy of which is
incorporated by reference as Exhibit C and incorporated herein by this
reference, was made as of January 2, 1988, amending and restating the terms of
the Agreement of Limited Partnership dated November 1, 1987, which formed GCI.
The Agreement of Limited Partnership of RHD Capital Investors, L.P. (the "RHD
Investors Agreement"), a copy of which is incorporated by reference as Exhibit
D and incorporated herein by this reference, was made as of April 3, 1989.
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Each of the Green Capital Agreement and RHD Investors Agreement provides
that the respective partnership shall continue in existence until the earlier
of (i) the close of business on December 31, 1994 (provided that the general
partner (in each case Green and Company, L.P.), at its option, in order to
permit an orderly termination of the partnership, may extend the term of the
partnership for up to three (3) successive one-year terms following the
expiration of such initial term) or (ii) the second anniversary of the death or
disability of Mr. Green. In addition, Green and Company, L.P., as the general
partner of each partnership, in its discretion, may effect the early
dissolution of either or both of GCI and RHD Investors at any time. The Green
Capital Agreement and RHD Investors Agreement vest exclusive management
authority of GCI and RHD Investors, respectively, in their general partner,
Green and Company, L.P.
The Agreement of Limited Partnership of Green and Company, L.P. (the
"Green and Company Agreement"), a copy of which is incorporated by reference as
Exhibit E and incorporated herein by this reference, was made as of November 9,
1987. The Green and Company Agreement provides that Green and Company shall
continue in existence until one year after the date of dissolution of GCI
unless dissolved earlier by the partners of Green and Company upon the death or
retirement of Mr. Green. The Green and Company Agreement provides for
management of Green and Company by its partners.
All of the shares of Common Stock held by WPS Investors have been pledged
to NationsBank of North Carolina, National Association, agent for NationsBank
of North Carolina, National Association, Bankers Trust Company and The Bank of
Nova Scotia, (the "Current Lenders"), as security for a term loan made to New
Street Acquisition Corporation, a wholly owned subsidiary of WPS Investors, by
the Current Lenders.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are attached as exhibits:
Exhibit Description
------- ------------
A Amended and Restated Agreement
of Limited Partnership of WPS
Investors, L.P.
B Partnership Agreement of RW Holding
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F Agreement as to Joint Filing of
Schedule 13D
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SCHEDULE C
II. JANUARY 1994 TRANSACTIONS.
A. Sales by RW Holding. In January 1994, Mr. Green, HTG Corp., Green and
Company and GCI effected the following sales transactions through RW Holding,
which sold shares of Common Stock in over-the-counter trading. The date, the
price per share received, and the number of shares sold in each transaction are
set forth in the chart below.
<TABLE>
<CAPTION>
Date Price Per Share Number of Shares
---- --------------- ----------------
<S> <C> <C>
January 20, 1994 $18.00 5,000
January 21, 1994 $18.25 25,000
January 21, 1994 $18.13 20,000
January 21, 1994 $18.00 15,000
January 24, 1994 $18.25 7,500
January 25, 1994 $18.00 15,000
January 26, 1994 $18.00 7,500
January 27, 1994 $18.13 25,000
January 28, 1994 $18.25 15,000
January 28, 1994 $18.75 7,500
January 31, 1994 $18.50 10,000
</TABLE>
B. Distribution by RHD Investors. On January 30, 1994, RHD Investors
distributed 106,006 shares of Common Stock to certain of its partners who were
not affiliated with Mr. Green, HTG Corp., Green and Company or GCI.
Accordingly, Mr. Green, HTG Corp., Green and Company and GCI, indirectly
disposed of the shares distributed by RHD Investors to those partners. At the
time of distribution, the shares were valued at $18.75 per share.
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SCHEDULE C
(CONT'D)
III. FEBRUARY 1994 TRANSACTIONS.
A. Sales by RW Holding. In February 1994, Mr. Green, HTG Corp., Green and
Company and GCI effected the following sales transactions through RW Holding,
which sold shares of Common Stock in over-the-counter trading. The date, the
price per share received, and the number of shares sold in each transaction are
set forth in the chart below.
<TABLE>
<CAPTION>
Date Price Per Share Number of Shares
---- --------------- ----------------
<S> <C> <C>
February 1, 1994 $ 18.63 10,000
February 1, 1994 $ 18.75 10,000
February 10, 1994 $ 18.50 8,300
</TABLE>
B. Contribution by RW Holding. On February 25, 1994, RW Holding
contributed 4,912,679 shares of Common Stock to WPS Investors. At the time of
contribution, the shares were valued at $19.25 per share. As a result of this
transaction, GCI and Green and Company indirectly disposed of the 4,912,679
shares contributed to WPS Investors, while Mr. Green and HTG Corp. maintained
indirect beneficial ownership of such shares.
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
WPS INVESTORS, L.P.
By: HTG Corp., General Partner
/s/ Holcombe T. Green, Jr.
--------------------------
Holcombe T. Green, Jr.
President
GREEN CAPITAL INVESTORS, L.P.
By: GREEN AND COMPANY, L.P. General
Partner
By: HTG Corp., General Partner
By:/s/ Holcombe T. Green, Jr.
--------------------------
Holcombe T. Green, Jr.
President
GREEN AND COMPANY, L.P.
By: HTG Corp., General Partner
By:/s/ Holcombe T. Green, Jr.
----------------------
Holcombe T. Green, Jr.
President
HTG CORP.
By:/s/ Holcombe T. Green, Jr.
--------------------------
Holcombe T. Green, Jr.
President
/s/ Holcombe T. Green, Jr.
--------------------------
Holcombe T. Green, Jr.
DATED: March 21, 1994
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
A Amended and Restated Agreement
of Limited Partnership of
WPS Investors, L.P.
B Partnership Agreement of RW Holding
F Agreement as to Joint Filing of
Schedule 13D
</TABLE>
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EXHIBIT A
<PAGE> 13
EXHIBIT A
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
WPS INVESTORS, L.P.
This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement") is made and entered into effective as of the 25th day of February,
1994 (the "Effective Date"), by, between and among HTG CORP., a Georgia
corporation, as the general partner hereof (herein sometimes referred to as the
"General Partner") and those persons and entities identified on Schedule of
Partners attached hereto as the limited partners of the Partnership (herein
sometimes referred to individually as a "Limited Partner" and collectively as
the "Limited Partners"). The agreement amends and restates in its entirety the
Agreement of Limited Partnership dated as of December 8, 1993 of WPS Investors,
L.P., a Georgia limited partnership (the "Partnership"). The amendments
reflected herein have been approved by a Majority-In-Interest of the Initial
Limited Partners. The Limited Partners and the General Partner are herein
sometimes referred to individually as a "Partner" and collectively as the
"Partners."
In consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partners, intending to be
legally bound, hereby agree as follows:
ARTICLE I
Formation and Name
1.1 Formation. The General Partner has caused the formation of
a limited partnership (the "Partnership") pursuant to the provisions of the
Georgia Revised Uniform Limited Partnership Act, O.C.G.A. sec.14-9-100, et.
seq., as amended from time to time (the "Act"), and this Agreement, as amended
from time to time in accordance with this Agreement. On December 8, 1993, the
Limited Partners identified on the Schedule of Partners as the "Initial Limited
Partners" contributed cash and/or shares of Valley Fashions Corp. (n/k/a
WestPoint Stevens, Inc.) to the capital of the Partnership. Effective as of
the Effective Date, additional Persons identified on the Schedule of Partners
as the "New Limited Partners" have been admitted to the Partnership as Limited
Partners.
<PAGE> 14
1.2 Name. The name of the Partnership shall be WPS
Investors, L.P. The General Partner may cause the name of the Partnership and
such other trade, fictitious or other name or names as deemed appropriate by
the General Partner to be registered or filed where required in the applicable
local or state records.
1.3 Partnerships Filings. The General Partner has caused
the filing of the Certificate with the Filing Office. Promptly after the
execution and delivery of this Agreement, the Partners shall execute,
acknowledge and/or swear to, as appropriate, and the Partnership shall file or
record with the proper offices in the State of Georgia and each other
jurisdiction and political subdivision in which the Partnership does business,
such other certificates of limited partnership, applications or other
certificates or documents as are required or permitted by any applicable
partnership, assumed or fictitious name statutes, or similar statutes or laws
in effect in such jurisdictions or political subdivisions. The Partners shall
further execute, acknowledge and/or swear to, as appropriate, and the
Partnership shall promptly file or record as aforesaid, such amended
certificates or additional certificates or other documents, as may from time to
time be required by such statutes or laws to permit the continued existence and
operation of the Partnership.
1.4 Defined Terms. Reference is hereby made to Article XVIII
hereof for the definition of certain capitalized terms used herein.
ARTICLE II
Term
The term of the Partnership shall be deemed to commence on the date of
filing of the Certificate with the Filing Office, as required by the Act and
shall continue until terminated as provided in Article XIV. The General
Partner has previously caused the filing of the Certificate in the Filing
Office.
ARTICLE III
Purposes
The principal purposes and business of the Partnership shall be (a) to
invest and trade, on margin or otherwise, in Securities, to sell Securities
short and cover such sales, and to lend funds or properties of the Partnership,
either with or without security, in connection with the purchase of Securities;
(b) to conduct merchant banking directly or indirectly through any wholly-owned
Portfolio
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Company and (c) to enter into, make and perform, all contracts and other
undertakings, engage in all activities and transactions and to incur expenses
on behalf of the Partnership as the General Partner may deem necessary or
advisable to the carrying out of the foregoing objects and purposes, including
without limitation:
(i) to purchase, hold, sell, exchange, transfer, pledge and
otherwise acquire and dispose of and exercise all rights, powers, privileges
and other incidents of ownership, or possession with respect to Securities;
(ii) to acquire a long position or a short position with respect
to any Security and to make purchases or sales increasing, decreasing or
liquidating such position or changing from a long position to a short position
or from a short position to a long position, without any limitation as to the
frequency of the fluctuation in such positions or as to the frequency of the
changes in the nature of such positions;
(iii) to purchase Securities and hold them for investment;
(iv) to borrow or raise moneys, and, from time to time without
limitation as to amount or manner and time of repayment, to issue, accept,
endorse, and execute promissory notes, drafts, bills of exchange, warrants,
bonds, debentures and other negotiable or non-negotiable instruments and
evidences of indebtedness, and to secure the payment of such or other
obligations of the Partnership by hypothecation or pledge of, all or part of
the property of the Partnership, whether at the time owned or thereafter
acquired;
(v) to maintain for the conduct of Partnership affairs one or more
offices and in connection therewith rent or acquire office space, engage
personnel, whether part-time or full-time, and do such other acts and incur
such expenses as the General Partner may deem necessary or advisable in
connection with the maintenance and administration of such office or offices;
and
(vi) to engage independent attorneys, accountants or such other
persons as the General Partner may deem necessary or advisable.
ARTICLE IV
Offices
4.1 Principal Office. The principal office and place of
business of the Partnership shall be located at 3343 Peachtree Road, Suite
1420, Atlanta, Georgia 30326. The General Partner may from time to time
change such principal office and place of business or may change or establish
such additional offices or places of business of the Partnership as it may deem
necessary or appropriate for the operation of the Partnership's business.
3
<PAGE> 16
ARTICLE V
Capital Contributions and Capital Accounts
5.1 Capital Contributions. The Schedule of Partners
attached hereto sets forth the name and address of each Partner and, (a) in the
case of the General Partner and the Initial Limited Partners, their respective
Capital Accounts as adjusted by reason of the admission to the Partnership of
the New Limited Partners, as further provided for in this Section 5.1, and (b)
in the case of RW Holding, one of the Initial Limited Partners, and the New
Limited Partners, their respective capital contributions made as of the date
hereof. RW Holding and each of the New Limited Partners will contribute to the
Partnership as of the date hereof either cash or Securities, with such
Securities being valued as indicated on the Schedule of Partners. The
Securities to be contributed by RW Holding shall consist of 4,912,679 shares of
common stock of Rhodes, Inc. (the "Rhodes Stock") which shares have been
pledged as collateral for a $10,000,000 term loan to RW Holding by NationsBank
of North Carolina, National Association ("NationsBank") pursuant to a certain
loan agreement between such parties dated December 8, 1993. Concurrently with
the contribution of the Rhodes Stock to the Partnership, the Partnership shall
assume (solely) the obligation of RW Holding to pay the principal amount due
under the loan of $10,000,000 and shall pay such sum to NationsBank on the
Effective Date and obtain therefrom a full release of the Rhodes Stock from
such bank's security interest therein under such loan documents. In connection
with the admission of the New Limited Partners on the Effective Date, the
assets of the Partnership shall be revalued and the Capital Accounts of the
then existing Partners shall be adjusted as provided in Section 2.02 of
Appendix A and in Section 5.4 hereof. The Partners agree and acknowledge that
the Securities that have been contributed as capital contributions on the
Effective Date, including the Rhodes Stock contributed by RW Holding and
3,125,000 shares of common stock of Opti-World, Inc. contributed by Green
Capital Investors, L.P. have not been registered under the federal Securities
Act of 1933, as amended (the "1933 Act") or any state securities law (the
"Restricted Shares") and therefore may not be resold unless registered or an
exemption from registration under the 1933 Act is available; that the
Partnership shall hold the Restricted Shares for investment for the account of
the Partnership and not with any present view toward resale or other
distribution thereof; that the Partnership shall not resell or otherwise
dispose of all or any part of the Restricted Shares except as permitted by law,
including, without limitation, any regulations under the 1933 Act. The
Partners acknowledge that the Partners making such contributions of Securities
will rely on the representations set forth above and agree to cause the
Partnership to execute documents containing such representations if requested
by the issuers of the securities in order to induce the issuer to transfer the
Restricted Shares to the Partnership.
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5.2. Additional Funds. Subject to the provisions of Sections 5.1
and 6.3(z) hereof, any additional funds required by the Partnership to meet its
cash requirements may, to the extent possible, be provided by Partnership
borrowings from unaffiliated third parties, upon such terms and conditions as
determined appropriate by the General Partner.
5.3. Limited Partner Liability and Negative Capital Account. The
Limited Partners shall not be liable for any of the debts or liabilities of the
Partnership, and no Partner shall be required to contribute any capital or
other amounts other than the contributions required by the provisions of this
Article V or of Section 2.03 of Appendix A. A negative or deficit balance in
any Partner's Capital Account shall not be deemed to be an asset of the
Partnership, and no Limited Partner with a negative or deficit balance in its
Capital Account shall have any obligation to the Partnership, to any other
Partner or to any third party or creditor to restore said negative or deficit
balance, except to the extent otherwise expressly provided in this Agreement.
The General Partner shall have an obligation to restore the negative or deficit
balance in its Capital Account upon the dissolution and termination of the
Partnership in accordance with Section 2.03 of Appendix A.
5.4. Capital Accounts.
(a) The Capital Accounts of the Partners shall be
determined and maintained throughout the full term of the Partnership in
accordance with the provisions of Article II of Appendix A, and be subject to
the provisions of Section 9.6 hereof. The provisions of Article II of Appendix
A are intended to comply with the requirements of Treas. Reg. Sec.1.704-1(b)(2)
(iv) with respect to substantial economic effect, and shall be
interpreted and applied accordingly.
(b) The Capital Accounts shall be adjusted in accordance with
Section 2.02 of Appendix A to reflect Net Asset Value as of the following
times:
(i) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property (including cash),
unless all Partners receive simultaneous distributions of an undivided
interest in the distributed property in proportion to their Proportionate
Shares; and
(ii) the termination of the Partnership for Federal
income tax purposes pursuant to Section 708(b)(1)(B) of the code.
5.5. Interest on and Return of Capital. Except as specifically
provided herein, no interest shall be paid on any capital contribution to the
Partnership or Capital Account of a Partner. No Partner shall be liable for
the return of the Capital contributions, Capital Account, or any portion
thereof, of any
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<PAGE> 18
other Partner, it being expressly understood and agreed that such return shall
be made solely from the assets of the Partnership. No Partner shall be
entitled to demand and receive property other than cash in return for its
capital contributions to the Partnership, its Capital Account or its
Partnership Interest.
5.6. Loans by a Partner; Withdrawal of Capital. Loans by any
Partner to the Partnership shall not be considered contributions to the capital
of the Partnership and shall not increase the Capital Account of the lending
Partner, and repayment of such loans shall not be deemed withdrawals from the
capital of the Partnership. A Partner shall not be entitled to withdraw any
part of its capital contribution, Capital Account or other capital or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement.
ARTICLE VI
Control and Management
6.1. General. Except as specifically limited herein, the
General Partner shall have full, exclusive and complete discretion in the
management and control of the Partnership for the purposes set forth in Article
III. All decisions relating to the business and affairs of the Partnership,
including, without limitation, all decisions required or permitted to be made
by the General Partner under this Agreement, shall be made by, and all action
proposed to be taken by or on behalf of the Partnership, shall be taken by the
General Partner. Subject to the terms and conditions of this Agreement, in
making such decisions, including without limitation any decisions or elections
in respect of tax matters, the General Partner shall not effect such decisions
or elections so as to unduly benefit the General Partner's interest to the
detriment of some or all of the other Partners. The implementation of
decisions make by the General Partner may be through any person or entity
selected by the General Partner. All such decisions or actions taken or made
by the General Partner hereunder shall be binding upon all of the Partners and
the Partnership. The Limited Partners shall have no part in the management of
the Partnership, and shall have no authority or right to act on behalf of the
Partnership. All approvals and consents required herein may be prospective or
retroactive.
6.2. Specific Power and Authority of the General Partner. Subject
to any limitations expressly set forth in this Agreement, the General Partner
shall have the power by itself in behalf and in the name of the Partnership to
carry out any and all of the objects and purposes of the Partnership set forth
in Article III, and to perform all acts and enter into and perform all
contracts and other undertakings which the General Partner may deem necessary
or advisable or incidental thereto, including without limitation (to the extent
appropriate to carry out the purposes set forth in Article III but subject to
Section 6.3), the power to:
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(a) conduct accounts, including margin accounts, with brokers,
including holding Securities in street name;
(b) open, maintain, and close bank accounts and draw checks or
other orders for the payment of monies;
(c) borrow or raise funds and secure the payment of obligations of
the Partnership by pledge or hypothecation of all or any part of the property
of the Partnership;
(d) do any and all acts on behalf of the Partnership, and exercise
all rights of the Partnership, with respect to its interest in any person,
firm, corporation or other entity, including, without limitation the voting of
Securities, the negotiation and payment of commission in amounts in excess of
any so-called minimum commission, participation in arrangements with creditors,
the institution of suits and administrative proceedings and other like or
similar matters; and
(e) act and incur expenses for and on behalf of the Partnership in
all matters incidental to the foregoing.
6.3. Limitation on Authority. Notwithstanding the generality of
the foregoing, the General Partner shall not be empowered, without the consent
of all the Partners, to:
(a) do any act in contravention of this Agreement;
(b) possess Partnership property or assign any rights in specific
Partnership property for other than a Partnership purpose;
(c) except as otherwise permitted herein, admit a Person to the
Partnership as a general partner;
(d) change or reorganize the Partnership into any other legal form;
(e) require any Limited Partner to make any contribution to the
capital of the Partnership not provided for herein;
(f) issue any additional Partnership Interests or warrants or
other rights therefor, or admit any Person as a Limited Partner, except (i)
pursuant to the excercise of the Warrants, or (ii) to effect any Transfer
permitted hereunder; or
(g) extend the term of the Partnership beyond any required
termination thereof provided in Article XIV hereof.
Notwithstanding the generality of the foregoing, the General
Partner shall not be empowered, without the consent of Unaffiliated Limited
Partners that hold Partnership Interests constituting more than two-thirds of
the total Proportionate Shares in respect of the Partnership Interest of all
Unaffiliated Limited Partners, to:
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(w) cause the Partnership to merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it;
(x) conduct any business of the Partnership other than as provided
for in Article III hereof;
(y) cause the Partnership to invest in, purchase or otherwise
acquire any Securities or other material assets other than the acquisition of
Securities made on or prior to the Effective Date; or
(z) create, incur, assume or suffer to exist any Indebtedness,
except Indebtedness of the Partnership incurred on the Effective Date in
respect of the acquisition of the capital stock of New Street Capital
Corporation, and any extension, renewal, refunding or replacement of such
Indebtedness to the extent that such extension, renewal, refunding or
replacement does not increase the principal amount of such Indebtedness above
the amount existing on the Effective Date as reduced by scheduled payment and
mandatory prepayments of principal made in respect thereof after the Effective
Date.
6.4 Third Party Reliance on Authority of the General Partner. The
signed statement of the General Partner, acting through any of its officers,
reciting that the General Partner, and such officer of the General Partner, has
authority to undertake any act or has the necessary votes or consents of the
Partners, if any, to take any such act, when delivered to any third party
("Third Party"), shall be all of the evidence such Third Party shall need
concerning the capacity of such General Partner and any officer thereof, and
any such Third Party shall be entitled to rely upon such statement and shall
not be required to inquire further as to any of the facts contained in such
statement, said facts being deemed to be true insofar as such Third Party is
concerned. After delivering such statement, the General Partner and any
officer thereof, by its of his signature alone, may sign any instrument and
bind the Partnership and the Partnership property just as though all of the
Partners had also signed. The Limited Partners and/or their assigns hereby
waive any and all defenses or other remedies that may be available against any
such Third Party or other Person to contest, negate or disaffirm any action of
the General Partner in connection with any such statement provided for in this
Section 6.4. Each contract, agreement, pledge, security agreement, promissory
note or other instrument or document executed by the General Partner or its
representative with respect to any business or property of the Partnership
shall be conclusive evidence in favor of any and every person relying thereon
or claiming thereunder that (a) at the time of the execution and delivery
thereof, this Agreement was in full force and effect, (b) such instrument or
document was duly executed in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership and (c) the General Partner or
its representative was duly authorized and empowered to execute and deliver any
and every
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such instrument or document for and on behalf of the Partnership. Such
statement shall not, however, have any effect between the Partners unless the
action in question was in fact authorized pursuant to this Agreement.
6.5. Authority of Limited Partners. The Limited Partners shall not
take any part or otherwise participate in the conduct or control of the
Partnership business and shall have no right or authority to act for or to bind
the Partnership. The exercise of any of the rights and powers of the Limited
Partners pursuant to the terms of this Agreement shall not be deemed taking
part or otherwise participating in the day-to-day affairs of the Partnership or
the exercise of control over Partnership affairs.
6.6. Conflicts. Unless otherwise provided herein (i) whenever a
conflict of interest exists or arises between the General Partner or any of its
Affiliates, on the one hand, and the Partnership or any Limited Partner or its
assigns, on the other hand, or (ii) whenever this Agreement or any other
agreement contemplated herein provides that the General Partner shall act in a
manner that is or provides terms that are fair and reasonable to the
Partnership or any Limited Partner or its assigns, the General Partner shall
resolve such conflict of interest, take such action or provide such terms
considering in each case the relative interest of each party to such conflict,
agreement, transaction or situation and the benefits and burdens relating to
such interest, any customary or accepted industry practices and any applicable
generally accepted accounting principles (to the extent applicable). Any
resolution, action or terms so made, taken or provided by the General Partner,
if made, taken or provided in good faith and without reckless disregard, shall
not constitute a breach of this Agreement or any other agreement contemplated
herein or a breach of any standard of care or duty imposed herein or therein or
under the Act or any other applicable law, rule or regulation. It is
acknowledged that the principal of the General Partner, Mr. Holcombe T. Green,
Jr., is, as of the date hereof, and may from time to time serve as, a director
and/or officer of one or more of the Portfolio Companies, and that Mr. Green
and the General Partner are and may from time to time be, Affiliates of other
Persons which have, or may in the future, invest in Securities, and as Director
and/or officer of any Portfolio Company, or as Affiliates of such other persons
which have or may invest in the Securities, conflicts of interest may exist or
may arise between the General Partner and/or Mr. Green as its principal, on the
one hand, and the Partnership, on the other hand. furthermore, it is
acknowledged that the General Partner and/or Mr. Green as its principal holds
ownership interest in and is a Director, and officer, or (directly or through
Affiliate entities) the general partner of, one or more of the Limited
Partners, and thus a conflict of interest may exist or may arise between the
General Partner and/or Mr. Green as its principal, on the one hand, and the
interest of one or more of the Limited Partners. It is agreed by the partners
that such conflicts shall be resolved as provided in this Section 6.6, and the
consequences thereof, shall be governed by the provisions hereof.
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It is further acknowledged and agreed that the duties of Mr. Green to
any Portfolio company for which he may serve as a Director or officer may
permit him, for and on behalf of the Portfolio company, to pursue certain
policies, and take or refrain from taking certain actions, which are deemed to
be consistent with such duties and in the best interests of such Portfolio
company, but which are not in the overall best interest, or which may conflict
in some respect with the interests, of the Partnership. Any actions or
omissions to act by Mr. Green deemed by him to be required by, or consistent
with, his fiduciary and other duties to any Portfolio company by reason of his
positions therewith, or which he may otherwise take or refrain from taking in
good faith in his capacity as a Director or officer of any Portfolio company,
shall not constitute a breach of this agreement or any other agreement
contemplated herein or a breach of any standard of care or duty imposed herein
or therein or under the Act or any other applicable law.
ARTICLE VII
Other Partner Provisions
7.1. Other Activities. The General Partner shall devote only that
portion of its time to the Partnership affairs as may be reasonably required by
the Partnership business. Any Partner or any of its Affiliates may engage in,
acquire or possess an interest or interests in other business ventures of any
nature or description independently or with others, whether or not competitive
with the business of the Partnership, and neither the Partnership nor any
Partner shall have any rights to or in such independent ventures or the income
or profits derived therefrom. No Partner shall be obligated to present any
particular investment opportunity or other opportunity to the Partnership or to
the other Partners, even if such opportunity is of a character which, if
presented to the Partnership or the other Partners, could or might be taken by
the Partnership or such Partner, and each Partner shall have the right to take
any investment for its own account (individually or as a trustee) or to
recommend any particular investment opportunity to any other person whatsoever.
7.2. Limitation on Liability of general Partner; Indemnification.
Neither the General Partner nor any of its Affiliates or representatives or
agents shall be liable, responsible or accountable in damages or otherwise to
the Partnership or any Limited Partner for any acts performed (or failure to
act) by the General Partner or any of its Affiliates or representatives or
agents, provided such action or inaction was in good faith and reasonably
believed to be (a) within the scope of this Agreement and (b) in the
Partnership's best interest, specifically including any such act or failure to
act which is attributable, in whole or in part, to the negligence of the
General Partner, any of its Affiliates or any of their representatives or
agents, but specifically excluding any such act or failure to act which is
primarily attributable to the malfeasance or fraud of any
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of them. In addition to the foregoing, and not in limitation thereof,
neither the General Partner nor any of its Affiliates (including without
limitation, Mr. Holcombe T. Green, Jr.) or representatives or agents shall be
liable, responsible or accountable in damages or otherwise to the partnership or
any Limited Partner for any acts performed (or failure to act) by Mr. Green
which are deemed in good faith by Mr. Green to be required by, or consistent
with, Mr. Green's fiduciary or other duties to any Portfolio company by reason
of Mr. Green's positions as Director or officer of such Portfolio company, or
which he may otherwise take or refrain from taking in good faith in his
capacity as a Director or officer of such Portfolio company. To the fullest
extent permitted by the Act and in accordance with the provisions of the Act,
in any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, investigative, or otherwise, the Partnership
(but not any Partner) shall hold the General Partner, each of its Affiliates
and their representatives and agents ("Indemnitees") harmless from and against
and shall indemnify each Indemnitee for any loss, damage, judgement or amounts
paid in settlement, liability, cost or expense (including reasonable fees and
disbursements of counsel) arising out of any act or failure to act by any
Indemnitee, if such act or failure to act is in good faith and is reasonably
believed to be (a) within the scope of this Agreement and (b) in the
Partnership's best interest, specifically including any act or failure to act
which is attributable, in whole or in part, to the negligence of any
Indemnitee, but specifically excluding any such act or failure to act which is
primarily attributable to the malfeasance or fraud of any Indemnitee (and the
determination of whether the Indemnitee is entitled to indemnification pursuant
to the terms and coditions of this Section 7.2 shall be made in accordance of
the provisions of the Act). The termination of a proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent,
shall not of itself create a presumption that an Indemnitee did not act in good
faith and in a manner reasonably believed by such Indemnitee to be in the best
interest of the Partnership. The Partnership shall also provide such
indemnification in any action, suit or proceeding by or in the right of the
Partnership. The Partnership shall also provide such indemnification in any
action, suit or proceeding by or in the right of the partnership to procure a
judgment in its favor. Expenses incurred in defending any such action, suit or
porceeding shall be paid by the Partnership in advance of final disposition of
such proceeding upon receipt of an undertaking (which need no be secured) by or
on behalf of the Indemnitee to repay such amount if it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified by the
Partnership as authorized hereunder. The indemnification called for by this
Section 7.2 shall continue as to any Indemnitee who has ceased to serve in such
capacity and shall inure to the benefit of the heirs, successors, assigns,
administrators and personal representatives of such Indemnitee. The
Partnership may purchase and maintain insurance on behalf of any one or more of
the Indemnitees and any other Person as the General Partner shall determine
against any liablitlity that may be asserted against or expense that may be
incurred by such Person in connection with the activities of the parnership,
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whether or not the Partnership would have the power to indemnify such Person
against such liability hereunder. An Indemnitee shall not be denied
indemnification in whole or in part because the Indemnitee had an interest in
the trasaction with respect to which indemnification applies, if the
transaction was otherwise permitted by the terms hereof. The provisions of
this Section 7.2 are for the benefit of the Indemnitees and their heirs,
successors, assigns, administrators and personal representatives, and shall not
be deemed to create any rights for the benefit of any other Person.
7.3. Actions of the General Partner. Subject to the third sentence
of Section 6.1, whenever in this Agreement or any other agreement contemplated
herein, the General Partner is permitted or required to make a decision (i) in
its "discretion" or "sole discretion", with "complete discretion" or under a
grant of similar authority or latitude, and except as otherwise expressly
limited herein, the General Partner shall be entitled to consider only such
interest and factors as it desires and shall have no duty or obligation to
consider any interest of or factors affecting any Limited Partner or its
assigns or (ii) in its "good faith" or under another express standard, the
General Partner shall be subject to only such express standard and shall not be
subject to any other or different standards imposed by the Act, any other
applicable law, statute, rule or regulation, this Agreement or any other
agreement statute, rule or regulation, this Agreement or any other agreement
contemplated herein. Each Limited Partner and each assign hereby agrees that
any standard of care or duty imposed in this Agreement or any other agreement
contemplated herein or under the Act or any other applicable law, rule, or
regulation, shall be modified, waived or limited in each case as required to
permit the General Partner to act under this Agreement or any other agreement
contemplated herein and to make any decision pursuant to the authority
prescribed in this Section 7.3, so long as such action or decision does not
constitute malfeasance or fraud and is reasonably believed by the General
Partner to be consistent with the overall purposes of the Partnership. The
General Partner may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request , consent, order, bond, debenture or other paper or
document believed by the General Partner to be genuine and to have been signed
or presented by the proper party or parties. The General Partner may consult
with legal counsel, accountants, appraisers, management consultants, investment
bankers and other consultants and advisors selected by the General Partner.
The opinion of such Person as to matters which the General Partner believes to
be within such Person's professional or expert competence shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by the General Partner in good faith and in accordance with
such opinion.
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ARTICLE VIII
Allocations of Income and Loss
8.1. Allocations of Book Income. Subject to the provisions of
Article III of Appendix A and the provisions of Section 9.6 hereof, the net
Book income of the Partnership for each fiscal year of the Partnership shall be
allocated to the Partners in the following manner and order of priority:
(a) first, to the General Partner to the extent of the negative
balance, if any, in its Capital Account; and
(b) thereafter, to the Partners in proportion to their respective
Proportionate Shares.
8.2. Allocations of Book Loss. Subject to the provisions of
Article III of Appendix A and the provisions of Section 9.6 hereof, the net
Book loss of the Partnership for each fiscal year of the Partnership shall be
allocated to the Partners in the following manner and order of priority:
(a) first, to the Partners in proportion to their respective
Proportionate Shares, until the Capital Account balance of each Partner has
been reduced to zero; and
(b) thereafter, 100 percent to the General Partner.
8.3. Allocations of Taxable Income and Loss. Except as otherwise
provided in Article IV of Appendix A and subject to the provisions of Section
9.6 hereof, all items of income, gain, loss, and deduction shall be allocated
among the Partners for federal income tax purposes in the same manner as the
corresponding allocation for Book purposes.
ARTICLE IX
Distributions
9.1. Net Cash Flow from Operations. After providing for the
satisfaction of all the current debts and obligations of the Partnership, and
after any required payments on any loan or other financing, and subject to the
provisisons of Section 9.6 hereof, the Partnership shall, as soon as reasonably
practical, make distributions of Net Cash Flow of the Partnership, to the
extent available (after establishment of appropriate and reasonable reserves,
as determined by the General Partner in its sole and absolute discretion) in
the following order and proportions:
(a) first, to the Partners in an amount equal to their respective
tax payment distributions determined pursuant to Section 9.5; and
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(b) second, to the Partners in proportion to their respective
Proportionate Shares; provided, however, that any amounts of Net Cash Flow that
would have been distributed to a Partner but are instead, pursuant to Section
9.5(c), withheld by the Partnership and applied toward the repayment of a Tax
Payment Advance made to such Partner shall be redistributed to the Partners,
including the Partners to whom such Tax Payment Advance was made, pursuant to
successive applications of this Section 9.1(b) and Section 9.5(c) until the
amount of any such Tax Payment Advance is fully repaid.
9.2. Proceeds Available Upon Dissolution and Winding Up.
(a) Notwithstanding the provisions of Section 9.1, and subject to the
provisions of Section 9.6 hereof, upon the dissolution and winding-up of the
Partnership, after providing for the satisfaction of all the debts and
obligations of the Partnership and after any required payments on any loan or
other financing, the Partnership shall, as soon as reasonably practical,
ditribute net proceeds available (after establishment of appropriate and
reasonable reserves, as determined by the General Partner in its sole and
absolute discretion) upon dissolution and winding-up to the Partners in the
following manner and order of priority:
(i) first, an amount up to the aggregate positive balance of the
Capital Accounts of all Partners shall be distributed to the Partners in
the proportion that each such positive balance bears to the aggregate of
such positive balances; and
(ii) thereafter, any remaining net proceeds shall be distributed to
the Partners in accordance with their respective Proportionate Shares.
(b) To the extent any reserves are established for contingent,
unforeseen or other liabilities or obligations of the Partnership, as set forth
above, such reserves shall be held for the purpose of paying such contingent,
unforeseen or other liabilities or obligations and, at the expiration of such
period as deemed reasonably advisable by the General Partner, of distributing
the balance of such reserves in the manner provided herein above in this
Section 9.2.
9.3. Limited Partner Priority. No Limited Partner of the
Partnership shall have any priority over any other Limited Partner of the
Partnership as to the return of its contributions to capital or as to
compensation by way of income.
9.4 Distributions of Property in Kind. If the General Partner
distributes property in kind to the Partners (other than cash), the fair market
value of such property shall be determined by the General Partner, taking into
consideration such factors as the General Partner may deem relevant, but in any
event the General Partner's determination as to fair market value shall be
conclusive.
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9.5. Tax Payment Distributions. (a) Subject to the priorities
and limitations specified in Section 9.1, and subject to Section 9.6, the
amount to be distributed to each Partner as a tax payment distribution pursuant
to Section 9.1(a) shall be an amount equal to the product of (x) the Effective
Tax Rate for such taxable year, multiplied by (y) the total amount of net Book
income allocated to such Partner under Section 8.1(b) for such taxable year.
(b) The Effective Tax Rate for each taxable year of the
Partnership shall be a single rate determined in good faith by the General
Partner to approximate the maximum combined effective marginal federal and
state income tax rates (including any surtaxes) applicable to the taxable
income allocated to the Partners for such taxable year. In determining the
Effective Tax Rate, the General Partner will take into account such factors as
the General Partner, in its reasonable discretion, deems appropriate, such as
the character of the Partnership's taxable income (e.g., ordinary income,
capital gain, or a combination thereof) for such taxable year. In the event
that different tax rates are applicable to different categories of income
(e.g., different rates for ordinary income and capital gains), the General
Partner will use a weighted average of such rates. The state income tax rates
to be applied in such determination shall be those of the State of New York.
The determination of the Effective Tax Rate for each taxable year shall be made
by performing two hypothetical calculations: first, by assuming that all
Partners are individual residents of the State of New York, taxable at the
highest marginal income tax rates applicable to individuals (including any
applicable surtaxes); and second, by assuming that all partners are New York
corporations, taxable at the highest marginal income tax rates applicable to
corporations (including any applicable surtaxes). In the event that the two
such hypothetical calculations for such taxable year produce different combined
marginal tax rates, the greater of the two rates shall be the Effective Tax
Rate for such taxable year.
(c) If the taxable income allocated to any Partner for a taxable year
exceeds the net Book income allocated to such Partner under Section 8.1(b) for
that year, the Partnership shall, if requested by such Partner (a "Borrowing
Partner"), extend a loan to the Borrowing Partner (a "Tax Payment Advance") in
an amount equal to the product of (x) the Effective Tax Rate for such taxable
year multiplied by (y) the amount by which taxable income allocated to the
Borrowing Partner for such taxable year exceeds the net Book income so
allocated under Section 8.1(b). The Tax Payment Advance shall be a personal
obligation of the Borrowing Partner, and shall be payable as follows: (i) the
Partnership shall withhold all amounts distributable to the Borrowing Partner
under Article IX other than tax payment distributions pursuant to Section
9.1(a) and shall apply such amounts toward repayment of the Tax Payment
Advance; and (ii) the remaining principal balance of the Tax Payment Advance,
if any, shall be due and payable in full not later than the date of
commencement of the winding up of the business of
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the Partnership pursuant to Section 14.2. The Tax Payment Advance shall bear
no interest. If and to the extent that interest is imputed on the Tax Payment
Advance for federal income tax purposes, the Borrowing Partner shall for
purposes of this Agreement be deemed to have paid the amount of such interest
to the Partnership; the amount of such interest shall be allocated solely to
the Capital Account of the Borrowing Partner; and the Partnership shall be
deemed to have distributed the amount of such interest to the Borrowing
Partner, with the result that the Tax Payment Advance shall have no net effect
on the Borrowing Partner's Capital Account.
(d) Amounts to be distributed as tax payment distributions pursuant to
Section 9.1(a) or to be advanced as Tax Payment Advances pursuant to Section
9.5(c) with respect to each taxable year shall be distributed or advanced at
such times as the General Partner deems appropriate, but not later than April 1
following the end of such taxable year. In the event that there are
insufficient funds to make such distributions and advances in their entirety,
such distributions and advances shall be made to each Partner pro rata in
proportion to the respective amounts to which each Partner is entitled.
9.6 Warrants. This Agreement, and specifically without limitation,
the provisions of Articles V, VIII and IX hereof, shall be subject to and give
effect to the provisions of the Warrants generally, and specifically without
limitation, in respect of maintenance of Capital Accounts (and computation of
Proportionate Shares), allocation of income and loss and distribution, and all
related items, so as, in computing the Capital Accounts, Proportionate Shares,
allocations of income and loss and distributions, and related items, hereunder
in respect of the Partners, the holders of Warrants will be afforded the full
benefits, and be subject to the other terms and conditions, of the Warrants.
Upon exercise of any Warrant by any holder, such holder will become a Limited
Partner in accordance with the terms of such Warrant.
ARTICLE X
RESERVE ACCOUNT, PARTNERSHIP EXPENSES AND
OTHER OBLIGATIONS OF THE GENERAL PARTNER
10.1. Partnership Reserve Account. The General Partner may establish
one or more reserves for any contingent, unforeseen or other liabilities or
obligations of the Partnership (the "Reserve Accounts") and may deposit therein
from time to time such amounts of the revenues from operations, the net
proceeds from capital transactions, and contributions and other sources, before
any distributions of such amounts to the Partners, as deemed reasonably
necessary by the General Partner, for any proper purpose.
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10.2. Partnership Expenses. Except as otherwise provided herein, the
Partnership shall be responsible for paying all direct and indirect costs and
expenses of managing and otherwise conducting the business and operations of
the Partnership, including, without limitation, all preorganization expenses of
the Partnership and General Partner, legal and accounting expenses, brokerage
commissions and discounts, accounting and bookkeeping costs, office supplies,
premiums for insurance for the General Partner, any extraordinary expenses and
overhead expenses of the General Partner relative to the Partnership,
reimbursements of expenses of the General Partner pursuant to this Section 10.2
and all other fees, costs and expenses of the Securities and the formation,
operation and dissolution of the Partnership. All such expenses shall be
expenses of the Partnership.
ARTICLE XI
TRANSFERS OF PARTNERSHIP INTERESTS
11.1. General Provisions. Notwithstanding any rule of law or statute
to the contrary, no Partner may withdraw from the Partnership or Transfer all
or any part of its Partnership Interest, except as permitted in this Article
XI and then only if a counterpart of the instrument of Transfer, executed and
acknowledged by the parties thereto, is delivered to the Partnership. No
Transfer of all or any part of a Partner's Partnership Interest shall be
effective to relieve the transferring Partner of any of its obligations under
this Agreement, except for obligations arising after a Transfer permitted
hereunder. A permitted Transfer shall be effective as of the date specified in
the instruments relating thereto. Any attempted Transfer not permitted
hereunder shall be deemed void and of no effect.
11.2. Specific Restrictions. (a) Except as provided in Sections
11.3 or 11.4, (a) the General Partner shall not Transfer all or any portion of
his or its Partnership Interest to any Person and (b) a Limited Partner shall
not Transfer all or any portion of its Partnership Interest to any Person.
(b) Notwithstanding the provisions of Section 11.3, no Transfer of
all or any portion of the Partnership Interest of Green Capital Investors, L.P.
("GCI") that would cause the Proportionate Share of GCI immediately after such
Transfer to be less than eight percent (8%) shall be made without the prior
written consent of Unaffiliated Limited Partners that hold Partnership
Interests constituting more than two-thirds of the total Proportionate Shares
in respect of the Partnership Interests of all Unaffiliated Limited Partners,
which consent may be arbitrarily withheld.
11.3. Permitted Transfers by the Limited Partners. A Limited Partner
shall not have any right to directly or indirectly Transfer all or any part of
its Partnership Interest or otherwise withdraw
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or resign from the Partnership, unless the provisions of all of this Section
11.3(a)-(e) below and the provisions of Section 11.7 are complied with and
satisfied.
(a) The Transfer would not result in the "termination" of the
Partnership pursuant to section 708 of the Code, and the Partnership has
received, if requested by the General Partner in its sole discretion, a
satisfactory opinion of tax counsel to the Partnership (the cost of which shall
be borne by the transferor) to the effect that such transfer will not result in
the "termination" of the Partnership pursuant to section 708 of the Code.
(b) The Partnership has received, if requested by the General Partner
in its discretion, a satisfactory opinion of counsel to the Partnership (the
cost of which shall be borne by the transferor) to the effect that such
transaction will not violate and is exempt from registration under the
Securities Act of 1933 (the "Securities Act") or any other applicable
securities laws.
(c) The Partnership has received, if requested by the General Partner
in its discretion, a satisfactory opinion of tax counsel to the Partnership
(the cost of which shall be borne by the transferor) to the effect that the
Partnership's continued tax status as a partnership for federal income tax
purposes would not be jeopardized by such Transfer.
(d) The proposed Transfer has been previously approved in writing by
the General Partner, which approval may be given or withheld in the sole and
absolute discretion of the General Partner, except that a Transfer of a
Partnership Interest or any portion thereof which does not result in the
substitution of the transferee or assignee for the Transferring Partner as a
Partner in the Partnership shall not require such approval if the transferee or
assignee is an Affiliate of the Transferring Partner.
(e) The Transfer shall not cause the Partnership to be deemed and
"investment company" under the Investment Company Act of 1940, as amended.
No Transfer by any Limited Partner of all or any portion of its Partnership
Interest in the Partnership (whether the transferee is an Affiliate of such
Limited Partner or not) shall relieve the Limited Partner from any of its
liabilities or obligations under this Agreement, unless the General Partner
shall agree to such release.
11.4. Permitted Transfers by the General Partner. (a) Notwithstanding
any other provision of this Agreement to the contrary, nothing in this
Agreement shall prohibit the General Partner from making a Transfer of all or
any part of his or its Partnership Interest in the Partnership to:
(i) any person, with the consent of a Majority-in-Interest of the
Limited Partners and the consent of Unaffiliated Limited
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Partners that hold Partnership Interests constituting more than two-thirds of
the total Proportionate Shares in respect of the Partnership Interests of all
Unaffiliated Limited Partners, which consents may be given or withheld in the
sole and absolute discretion of such Limited Partners; or
(ii) an Affiliate of such transferor.
11.5. Substitute Limited Partner. No transferee or assignee of all or
any part of the Partnership Interest of any Limited Partner shall have the
right to become a substitute limited partner, unless:
(a) the transferor has stated such intention in the instrument of
assignment;
(b) the transferee has executed an instrument reasonably satisfactory to
the General Partner accepting and adopting the terms and provisions of this
Agreement and assuming all of the obligations of the transferor;
(c) the transferor and transferee have executed such other instrument or
instruments as the General Partner may deem necessary or desirable to
effectuate the admission of such transferee as a substitute limited partner and
such instrument or instruments are in form and substance satisfactory to the
General Partner;
(d) the transferor or transferee has paid any reasonable expenses in
connection with the admission of the transferee as a substitute limited
partner; and
(e) in the case of an assignee or transferee who is not otherwise a
Partner, the General Partner consents to such person becoming a substitute
limited partner (in the sole discretion of the General Partner).
11.6. Basis Adjustment. In the event of a Transfer of all or part of the
interest of a Partner in the Partnership, at the request of the transferee, the
General Partner shall cause the Partnership to elect, pursuant to Section 754
of the Code, or the corresponding provision of subsequent law, to adjust the
basis of the Partnership property as provided by Sections 734 and 743 of the
Code, and any cost of such election or cost of administering or accounting for
such election shall be at the sole cost and expense of the transferee.
11.7. Allocations Between Transferor and Transferee. Unless otherwise
agreed between the transferor and the transferee, upon the Transfer of all or
any part of the interest of a Partner as hereinabove provided, the net income,
net losses, net gains and credits attributable to the interest so transferred
shall be allocated between the transferor and the transferee, as of the date
set forth in the instrument of transfer, in accordance with the daily proration
allocation method as authorized by the Code and
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applicable Treasury regulations and Internal Revenue Service policies
(that is, based upon the number of days during the applicable fiscal year of
the Partnership that the interest so transferred was held by each of them,
without regard to the results of Partnership activities and operations during
the period in which each was the holder, provided, however, that the net gains
or net losses on the sale of any Partnership assets shall be allocated to the
holder of record of the interest on the date of sale, and provided further,
that any such transferee or transferor shall not be entitled to cause the
Partnership to close its books on an interim basis). Distributions shall be
made to the holder of record of the interest on the date of distribution.
Notwithstanding any other provision of this Agreement to the contrary, both the
Partnership and the General Partner shall be entitled to treat the assignor of
any interest in the Partnership as the absolute owner thereof in all respects
and shall incur no liability for distributions of cash or other property made
in good faith to it until such time as writen instrument of assignment
has been received by the Partnership and recorded on the books of the
Partnership, and both the Partnership and the General Partner shall be under no
obligation to record the instrument of assignment on the books of the
Partnership unless the transferor and transferee, and the Transfer which is
the subject of such written instrument of assignment, all comply with the
provisions of this Article XI and the instrument of assignment otherwise
complies with the provisions of this Article XI. Nothing in this Section 11.7
shall be interpreted or implied to require or impose a duty or obligation upon
the General Partner to approve any Transfer.
ARTICLE XIII
Reports and Statements
12.1. Annual Tax Reports. Within 60 days after the end of each fiscal
year of the Partnership, the General Partner, at the expense of the
Partnership, the General Partner, at the expense of the Partnership, shall
cause to be delivered to the Partners the following:
(a) such information as shall be necessary (including a
statement for the previous year of each Partner's share of items of net income,
net gains, net losses and other items of the Partnership and distributions of
cash made) for the preparation by the Partners of their federal, state and
local income and other tax returns; and
(b) a copy of all income tax and information returns to be
filed by the Partnership for the preceding fiscal year of the Partnership.
12.2. Annual Financial Reports. Within 90 days after the end of each
fiscal year of the Partnership, the General Partner shall cause to be delivered
to the Partners financial statements of the Partnership for such fiscal year,
prepared at the expense of the
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Partnership (except as provided below), which financial statements shall set
forth, as of the end of and for such fiscal year, the following:
(a) a balance sheet (on a consolidated basis) as at the end of such
year,
(b) statements of income and partnership capital and the respective
notes thereto for such year,
(c) statement of changes in financial position,
(d) statement of cash flow for such year, and
(e) statement reflecting Capital Account balances for each Partner,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent certified public accountants,
of recognized national standing, which is unqualified.
12.3. Quarterly Reports. Within 45 days after the end of each
fiscal quarter of the Partnership (other than the last fiscal quarter of the
fiscal year), the General Partner shall cause to be delivered to the Partners
a report (unaudited) of the Partnership for such fiscal quarter, prepared at
the expense of the Partnership, which report shall set forth the following:
(a) a balance sheet (on a consolidated basis) as at the end of such
quarter,
(b) statements of income and partnership capital for such quarter
and (in the case of the second and third quarters) for the portion of the
fiscal year ending with such quarter,
(c) statement of changes in financial position, and
(d) statement reflecting Capital Account balances for each Partner,
setting forth in each case in comparative form the figures for the comparable
period for the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally,
and fairly presenting, in all material respects, the financial position of the
Partnership and its results of operations and changes in its financial
position, subject to changes resulting from year-end adjustments.
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ARTICLE XIII
Accounting
13.1 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
13.2 Records and Accounting. The General Partner shall keep, or cause
to be kept, full and accurate records of all transactions of the Partnership in
accordance with generally accepted accrual basis tax accounting principles and
practices, or such other method as may be required by the Code.
13.3 Books of Account. All of such books of account shall, at all
times, be maintained in the principal office of the Partnership and shall be
open during reasonable business hours for the reasonable inspection and
examination by the Partners and their authorized representatives, at the sole
cost and expense of such Partner, who shall have the right to make copies
thereof at the cost and expense of such Partner.
13.4 Tax Return. The General Partner shall cause firm of independent
certified public accountants of national standing to prepare a federal
partnership information return in compliance with Section 6031 of the Code and
any required state and local income tax returns for the Partnership (but not
the Partners) for each tax year of the Partnership, and, in connection
therewith, subject to the provisions of Section 11.6, the General Partner shall
make any available or necessary elections, including elections with respect to
investment tax credit, the useful lives of the properties of the Partnership
and the rates and periods of cost recovery on such properties.
13.5 Tax Matters Partner. The General Partner is hereby designed as
the "Tax Matters Partner" as referred to in Section 6231(a)(7)(A) of the Code.
ARTICLE XIV
Dissolution and Termination
14.1 Time of Dissolution. (a) Except as provided in Section 14.2,
the Partnership shall be dissolved and its business wound up upon the earliest
to occur of:
(i) February 28, 1998;
(ii) the General Partner, with the consent of a Majority-in-Interest
of the Limited Partners, agree that the Partnership should be
dissolved;
(iii) the Partnership becoming Insolvent or Bankrupt;
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(iv) subject to the provisions of Section 14.3 below, the
happening of any event of withdrawal of or to a General Partner, as
provided below in Section 14.1(b); or
(v) the sale or other disposition of all or substantially all of
the Partnership's assets and the distribution of the proceeds of such
sale to the Partners.
(b) For purposes of this Section 14.1, an event of withdrawal of a
General Partner of the Partnership shall be deemed to occur when:
(i) the withdrawal of a General Partner as a Partner or the
cessation of a General Partner as the general partner of the Partnership;
(ii) the General Partner becomes Insolvent or Bankrupt as defined
below;
(iii) in the case of a General Partner who is a natural person,
such General Partner's death or the entry by a court of competent
jurisdiction adjudicating such General Partner mentally incompetent to
manage the General Partner's person or property;
(iv) in the case of a General Partner that is a trust, the
commencement of winding up activities intended to conclude in the
termination of the trust, but not merely the substitution of a new
trustee;
(v) in the case of a General Partner that is a partnership, the
dissolution and commencement of winding up of such partnership;
(vi) in the case of a General Partner that is a corporation, the
filing of a certificate of dissolution or its equivalent for such
corporation or the revocation of its charter and the expiration of ninety
(90) days after the date of notice to the corporation of revocation
without a reinstatement of its charter; or
(vii) in the case of a General Partner that is an estate, the
distribution by the fiduciary of the estate's entire interest in the
Partnership.
A General Partner who suffers an event that with the passage of the specified
period becomes an event of withdrawal under subparagraph (ii) of this Section
14.1(b) shall notify the other Partners of the event within 30 days after the
date of occurrence of such event. For purposes of this Agreement, a person
shall be deemed to be "Bankrupt" or "Insolvent" when (A) such Person makes a
general assignment for the benefit of creditors, files a voluntary bankruptcy
petition, becomes a subject of an order for relief or is bankruptcy petition,
becomes a subject of an order for relief or is declared insolvent in any
federal or state bankruptcy or insolvency
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proceeding, files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law, files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against such Person in a proceeding of the type described above or seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of such Person or of all or any substantial part of such Person's
properties; or (B) 120 days expire after the date of commencement of a
proceeding against such Person seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
law if the proceeding has not been previously dismissed, or 90 days expire
after the date of the appointment, without such Person's consent or
acquiescence, of a trustee, receiver or liquidator of such Person or of all or
any substantial part of such Person's properties; or (B) 120 days expire after
the date of commencement of a proceeding against such Person seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law if the proceeding has not been
previously dismissed, or 90 days expire after the date of the appointment,
without such Person's consent or acquiescence, of a trustee, receiver or
liquidator of such Person or of all or any substantial part of such Person's
properties if the appointment has not been previously vacated or stayed, or 90
days expire after the date of expiration of a stay, if the appointment has not
previously been vacated.
14.2. Winding Up. Upon any dissolution requiring the winding up
of the business of the Partnership, the Partnership's affairs shall be wound up
as soon as reasonably practical, but in no event later than one year from such
dissolution. The winding up shall be accomplished by the General Partner.
Upon such winding up, all or part of the assets, as determined by such person
as is winding up the business of the Partnership, shall be sold and the
proceeds thereof distributed and/or the remaining assets distributed in kind as
provided in Article IX hereof.
14.3. Continuation of the Business of the Partnership. The
Partnership shall not be dissolved by the admission of additional or substitute
Limited Partners or by the admission of additional or substitute General
Partners in accordance with the terms of this Agreement. The General Partner
(or any reconstituted successor thereto) and, subject to their right to assign
their interest in the General Partner, each of the general partners,
shareholders or other beneficial owners of the General Partner, if it is
dissolved and not reconstituted, agree to serve as General Partners of the
Partnership until the Partnership is terminated without reconstitution or
continuation as provided below.
(a) Upon the occurrence of any event set forth in Sections
14.1(b)(i) or (ii) or 14.1(b)(iv)-(vi) with respect to the General Partner,
such event shall not constitute an event of withdrawal as defined in Section
15.1, if within 90 days after written notice to the Limited Partners of the
occurrence of such event of withdrawal, a Majority-In-Interest of the Limited
Partners elect by written notice to the General Partner to admit one or more
of the Successor Parties (as defined below) to the Partnership as additional or
substitute general partners (such notice to set forth which of the Successor
Parties shall be admitted to the Partnership as additional or substitute
general partners). In such circumstances, the Successor Parties to be admitted
to the Partnership as
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additional or substitute general partners shall execute an instrument accepting
and adopting the terms and provisions of this Agreement and such other
instruments as may be necessary or desirable to effectuate the admission of
such Successor Parties as substitute general partners. Further, in such
circumstances, such Successor Parties shall be permitted to and are hereby
specifically authorized to carry on the business of the Partnership without
dissolution, and in such circumstances, the Partnership shall not be dissolved.
If, pursuant to the foregoing provisions of this Section 14.3(a) a
Majority-In-Interest of the other Partners elect(s) to admit one or more of the
Successor Parties to the Partnership as additional or substitute general
partners, such Successor Parties shall be admitted to the Partnership as
general partners effective as of the day immediately preceding the date of the
event of withdrawal, and the interest of the Successor Parties which are not
admitted to the Partnership as additional or substitute general partners shall
become a Limited Partner's interest, and the new general partners shall have
all the rights, powers, privileges and obligations of the General Partner
hereunder.
(b) Further, upon the occurrence of any event set forth in Section
14.1(b) with respect to the General Partner, the Partnership may be
reconstituted and its business continued without being wound up, if within 90
days after the occurrence of the event of withdrawal, all remaining Partners
agree in writing to the continuation of the business of the Partnership and,
agree to the appointment, effective as of the date of withdrawal, of one or
more new general partners. If, pursuant to the immediately preceding sentence,
all of the remaining Partners agree to continue the business of the Partnership
and to the appointment of one or more new general partners, then the interest
of the General Partner in the Partnership shall become a Limited Partner's
interest, without diminution; the interest of the Limited Partner (or, to the
extent of such interest as the Limited Partner shall thereupon transfer to it,
the party selected by the Limited Partner to be the new general partner) shall
become the interest of a general partner hereunder; and the new general partner
shall have all the rights, powers, privileges and obligations of the General
Partner hereunder.
(c) If the interest of any General Partner is converted to the
interest of a limited partner pursuant to any of the foregoing provisions of
this Section 14.3, the General Partner which has been converted to a limited
partner shall not be liable for any of the obligations accruing thereafter of
the General Partner pursuant to this Agreement. Further, in the event that any
new general partner shall be admitted to the Partnership pursuant to the
foregoing provisions of this Section 14.3, the rights of the Partners to
distributions and allocations hereunder shall not be effected, other than as
agreed to by each such Partner.
(d) As used in this Section 14.3, the term "Successor Parties" shall
mean:
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(i) In the case of a General Partner who withdraws or ceases to
be a General Partner of the Partnership, such General Partner;
(ii) In the case of a General Partner that is a trust, the adult
beneficiaries of such trust or any trust reconstituted with the same
beneficiaries;
(iii) In the case of a General Partner that is a partnership, the
partners of such partnership or any partnership reconstituted with
substantially the same partners;
(iv) In the case of a General Partner that is a corporation, the
shareholders of such corporation or any reconstituted successor
corporation;
(v) In the case of a General Partner that is an estate, the adult
beneficiaries of such estate; and
(vi) Any other Person approved in writing by a Majority-In-Interest
of the other Partners.
Any Successor Parties not admitted to the Partnership as successor General
Partners shall become limited partners of the Partnership, as provided above.
ARTICLE XV
BANK ACCOUNTS
The General Partner shall open and maintain (in the name of the
Partnership) a special bank account or accounts in which shall be deposited all
funds of the Partnership. Withdrawals from such account or accounts shall be
made upon the signature or signatures of such person or persons as the General
Partner shall designate. Except as set forth below, there shall be no
commingling of the assets of the Partnership with the assets of any other
entity or person. Notwithstanding the foregoing, the operating revenues of the
Partnership, capital contributions and the proceeds of any loan obtained by the
Partnership may be deposited in a central account in the name of an entity
affiliated with the General Partner so long as separate entries are made on the
books and records of the Partnership and on the books and records of such other
entity reflecting that deposits in the bank account of such entity with respect
to amounts received from the Partnership have been deposited therein for the
account of the Partnership have been made for the purpose of disbursing funds
to the Partnership or for the purpose of paying costs, expenses or liabilities
of the Partnership.
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ARTICLE XVI
POWER OF ATTORNEY
The Limited Partners hereby irrevocably make, constitute and appoint
the General Partner and each partner, officer and director of the General
Partner as its true and lawful attorney, with full power of substitution and
resubstitution, in its name, place and stead, to make, sign, execute, endorse,
negotiate, consent to, deliver, acknowledge, swear to, file and record with
respect to the Partnership:
(a) such certificates of limited partnership and such amended
certificates of limited partnership as may be required by law or pursuant to
the provisions of this Agreement, including the Certificate, and such other
documents, applications or certificates required to qualify to do business in
any jurisdiction where such qualification is deemed reasonably necessary by the
General Partner;
(b) documents of Transfer of Partner's interests and all other
instruments to effect said Transfers (including amendments to this Agreement or
to any certificate of limited partnership) in the event the provisions of this
Agreement have been complied with;
(c) all amendments to this Agreement regarding a change in the
name of the Partnership, its address or that of its registered agent or office
or that of a General Partner or any Limited Partner, or the admission or
withdrawal of a Partner, but only if there has been compliance with the
applicable provisions of this Agreement;
(d) all amendments to this Agreement and/or any certificate of
limited partnership regarding a change in the terms or provisions of this
Agreement or any certificate of limited partnership, provided (i) such
amendment has been otherwise agreed to, approved or consented to by a
Majority-in-Interest of the Limited Partners and by Unaffiliated Limited
Partners that hold Partnership Interests constituting more than two-thirds of
the total Proportionate Shares in respect of the Partnership Interests of all
Unaffiliated Partners, (ii) such amendment is required to correct a false
statement or error in this Agreement and/or any certificate of limited
partnership, if the correction will not adversely affect the rights and
interests of the Limited Partner nor decrease the obligations and duties of the
General Partner, (iii) such amendment is required as a condition to maintaining
the Partnership's tax status as a partnership for federal income tax purposes
or (iv) such amendment is otherwise required to comply with the Code or the
Act, as either may be amended from time to time (or the successor to either);
(e) a certificate of cancellation of the Partnership and such
other documents, applications or certificates which may be required
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to effectuate the dissolution, termination and winding up of the Partnership
pursuant to the provisions of this Agreement;
(f) any and all checks or other drafts made payable to the Partnership;
and
(g) any and all other documents, instruments, applications or
certificates as the General Partner may deem necessary or desirable to carry
out fully the provisions of this Agreement in accordance with its terms.
It is expressly understood, intended and agreed by each of the Partners for
itself, its administrators, legal representatives, successors and assigns that
(i) the grant of this power of attorney is irrevocable and is coupled with an
interest by reason of the fact, among others, that the General Partner is
relying and will be relying on its power as contemplated by these provisions,
that the General Partner would not have entered into this Agreement were it not
for the powers granted to it by these provisions and the General Partner has
rights in the Partnership property which this power is needed to protect, (ii)
the grant of this power of attorney shall survive the subsequent death, legal
incompetency, disability, incapacity, bankruptcy or withdrawal of any Limited
Partner or any partner, beneficiary, trustee, shareholder or other beneficial
owner of any Limited Partner or the assignment of its or their interest in the
Partnership or any Limited Partner, as the case may be, or the Insolvency,
Bankruptcy or dissolution of the Partnership and (iii) any representation made
by any Person (in its capacity as an attorney-in-fact pursuant to this Article
XVI) in good faith pursuant to such power of attorney shall be binding upon
each of them. Each Partner hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of such attorney-in-fact
taken in good faith under such power of attorney. Each Partner shall execute
and deliver to the Partnership (or to any requesting attorney-in-fact), within
15 days after receipt of such request therefore, such further designations,
powers of attorney and other instruments as are deemed appropriate or necessary
by such requesting party to effectuate this Agreement, the purposes of the
Partnership and this Article XVI. The foregoing power of attorney may be
exercised by the General Partner separately on behalf of each Limited Partner
by its signature so indicating or on behalf of all the Limited Partners by
indicating that the signature of the General Partner is given on behalf of all
the Limited Partners and executing any such instrument with a single signature
as attorney-in-fact for all of the Limited Partners.
ARTICLE XVII
Notices
Whenever any notice is required or permitted to be given under any
provisions of this Agreement, such notice shall be in writing,
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signed by or on behalf of the person giving the notice, and shall be deemed to
have been given on the earlier to occur of (a) actual delivery or (b) five (5)
days after the placement in the United States mail, certified, postage
pre-paid, return receipt requested and addressed to the person or persons to
whom such notice is to be given as follows (or at such other address as shall
be stated in a notice similarly given not less than 10 days prior to such
date):
If to the Partnership or General Partner, such notice shall be given at
the principal office of the Partnership, and if to any Limited Partner, such
notice shall be given at the address of such Partner set forth on the Schedule
of Partners hereto.
ARTICLE XVIII
Certain Defined Terms
18.1. Defined Terms. As used in this Agreement, the following terms have
the meanings assigned to them in this Article XVIII, unless the context clearly
requires otherwise:
"Act": As defined in Section 1.1.
"Affiliate": With regard to any Person (a) any partner in or shareholder
or beneficiary of such Person, (b) any partner in or shareholder or beneficiary
of any Person described in clause (a) above, (c) any Person which controls, is
controlled by or is under common control with (i) such Person or (ii) any
person described in clause (a) or (b) above, or (d) any member of the immediate
family of any such Person or any person described in clauses (a), (b) or (c)
above. As used herein, the term "immediate family" shall mean the spouse,
ancestors, lineal descendants, brothers, sisters, nieces, nephews, aunts,
uncles, spouses of any of them, and trusts established for the benefit of any
of them. As used herein, the term "control," "controlled by" and "under common
control with" shall include the ownership of ten percent (10%) or more of the
beneficial interest in the Person referred to.
"Agreement": This Agreement of Limited Partnership, as amended from time
to time, together with the exhibits attached hereto.
"Bankrupt": As defined in Section 14.1.
"Book": The method of accounting prescribed for compliance with the
capital account maintenance rules set forth in Treas. Reg. sec.1.704-1(b)
(2)(iv) as reflected in Appendix A, as distinguished from any financial
accounting method which the Partnership may adopt for other purposes such
as financial reporting.
"Capital Account": The capital account of a Partner maintained in
accordance with Article II of Appendix A.
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"Capital Lease": At any time, a lease with respect to which the
the lessee is required concurrently to recognize the acquisition of an asset
and the incurrence of a liability in accordance with GAAP.
"Certificate": The Certificate of Limited Partnership of the
Partnership in a form determined by the General Partner to be executed by the
General Partner and filed pursuant to the Act.
"Code": The Internal Revenue Code of 1986, as amended.
"Contributed Capital": At any time with respect to any Partner or
class of Partners, an amount equal to the aggregate capital contributions
theretofore made by such Partner or class of Partners.
"Effective Date": The effective date of this Amended and Restated
Limited Partnership Agreement, referred to in the Preamble to this Agreement.
"Effective Tax Rate": For each taxable year of the Partnership, a
rate determined by the General Partner in accordance with Section 9.5(b).
"Filing Office": The office of the Secretary of State of Georgia.
"GAAP": Generally accepted accounting principles as in effect from
time to time in the United States of America.
"General Partner": HTG Corp., a Georgia corporation, or its
successor or permitted assigns.
"Indebtedness": With respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money, and its redemption
obligations in respect of mandatorily redeemable preferred stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any such
property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not such Person has
assumed or otherwise become liable for such liabilities), but, in the case of
any liability for borrowed money which is non-recourse to such Person, only up
to the fair market value of such property;
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(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account
by banks and other financial institutions whether or not representing
obligations for borrowed money;
(f) all liabilities represented by notes, bonds, debentures
or similar instruments; and
(g) any guarantee of such Person with respect to liabilities
of a type described in any of clauses (a) through (f) hereof.
"Initial Limited Partners": As defined in Section 1.1.
"Insolvent": As defined in Section 14.1.
"Limited Partner" or "Limited Partners": As defined in the first
paragraph of this Agreement.
"Limited Partner Signature Page": A page in the form of Exhibit A
hereto.
"Majority-In-Interest": As to the class of Partners referred to,
required or to be determined, such of those Partners of that class holding
Partnership Interests constituting more than 50% of the total Proportionate
Shares.
"Net Asset Value": As of a specified date, the amount by which the
value of the Partnership's assets, determined by the General Partner in
accordance with the provisions below, exceed the amount of the Partnership's
liabilities, as of that date. For purposes of this Agreement, every asset of
the Partnership shall be valued (on a trade date basis, if applicable) at its
fair market value, as of the date as of which such valuation is to be made (the
"Valuation Date"), unless this Agreement shall specifically provide a different
method for valuing a particular asset in specific circumstances.
(a) The value of any publicly traded security owned by the
Partnership shall be determined as of the close of trading on the date as of
which the value is being determined by taking the last reported sale price of
such security on such date on the exchange where it is primarily traded or, if
such security is not traded on an exchange, such security shall be valued at
the last reported sale price on the NASDAQ National Market List, or, if such
security shall be valued at the closing bid price (or average of bid prices)
last quoted on such date as reported by an established quotation service for
over-the-counter securities. In the discretion of the General Partner, any
such price may be valued at a discount from such price if marketability is
limited by the size of the holding relative to trading volumes and any
restricted securities which are part of a class of publicly-traded securities
may be valued at a discount to the public market price. Investments in high
quality short-term debt obligations, treasury bills and certificates of
31
<PAGE> 44
deposit and other money market instruments may, in the discretion of the
General Partner, be valued based upon their amortized cost which shall not take
into account unrealized gains or losses (i.e., valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument).
(b) The value of any security owned by the Partnership that is not
publicly traded shall be determined by the General Partner in its discretion,
based upon relevant factors, which may include the following: current
financial position and current and historical operating results of the issuer;
sales prices for recent public or private transactions in the same or similar
securities, including transactions on any securities exchange on which such
securities are listed or in the over-the-counter market; general level of
interest rates; recent trading volume of the security; restrictions on
transfer, including restrictions resulting from the General Partner or its
officers, employees or affiliates serving on creditors' or equity committees
formed in accordance with Federal or state bankruptcy laws, of companies the
securities of which are owned by the Partnership; the Partnership's right, if
any, to require registration of its securities by the issuer under the
securities laws; significant recent events affecting the issuer, including
pending mergers and acquisitions; the price paid by the Partnership to acquire
the asset; the percentage of the issuer's outstanding securities that is owned
by the Partnership; the value of any publicly traded security into which such
security is convertible; or the value of any publicly traded security with
respect to which such security represents an indirect beneficial ownership
interest; and all other factors affecting value.
(c) Assets of the Partnership other than securities shall be valued at
their fair market value determined by the General Partner in its discretion.
"Net Cash Flow": For the period for which such sum is being computed,
the excess of all revenues or receipts for the Partnership during such period
including all interest, dividends and other distributions and including net
proceeds from the sale or other disposition of any Security, over all cash
expenses for the Partnership during such period, including without limitation,
fees, commissions, discounts, debt service, and other costs and expenses,
including reimbursements of the General Partner for costs and expenses
incurred. In determining "cash expenses" for purposes of the foregoing
definition, "cash expenses" shall not include payments made pursuant to the
Warrants or constituting distributions to any Partner pursuant to this
Agreement.
"New Capital Contributions": As defined in Section 5.1.
"New Limited Partners": As defined in Section 1.1.
"Partners": The General Partner and the Limited Partners.
32
<PAGE> 45
"Partnership": WPS Investors, L.P., a Georgia limited partnership,
formed pursuant to this Agreement.
"Partnership Interest": For each Partner separately, all of that
Partner's rights in connection with the Partnership, including, but not limited
to, such Partner's Proportionate Share in the Partnership, rights in specific,
Partnership property, if any (including, but not limited to, contract rights),
rights to participate in the management of the Partnership, rights to
distributions, reimbursements or other payments, rights to profits, losses and
other allocations and all other rights under this Agreement and the Act.
"Person": Any individual, partnership, limited partnership, foreign
limited partnership, joint venture, trust, estate, corporation, joint stock
company, association, custodian, trustee, executor, administrator, nominee or
other entity, in its own or a representative capacity.
"Portfolio Company": The issuer of any Security.
"Proportionate Share": With respect to any Partner for any accounting
period, the amount obtained by dividing such Partner's Capital Account balance
as of the Effective Date by the aggregate Capital Account balances of all
Partners as of such date. In the event that all or any portion of any
Partnership Interest is Transferred as permitted herein, the Proportionate
Share of the transferee Partner shall include the Proportionate Share in
respect of the Partnership Interest Transferred to such Partner (to the extent
the Transferring partner substitutes such Partner as the Partner hereunder in
respect of such Transferred Partnership Interest), and the Proportionate Share
of the transferor Partner shall be reduced by an equal amount.
"Related Entity": Any other Person in which the Partnership owns an
interest.
"Schedule of Partners": The schedule of Partners attached hereto, as
revised from time to time as contemplated in Section 5.1(a).
"Security" or "Securities": Any equity or debt security issued by any
corporation, company, partnership, limited liability company, joint stock
company or similar entity.
"Third Party": As defined in Section 6.4.
"Transfer": Any mortgage, pledge, hypothecation, transfer, sale,
assignment or other disposition of any part or all of a Partnership Interest or
any other interest in the Partnership (as the context requires), whether
voluntarily, by operation of law or otherwise.
33
<PAGE> 46
"Unaffiliated Limited Partners": Limited Partners who are not
Affiliates of the General Partner.
"Warrants": Those certain Warrants to Purchase Limited Partnership
Interests issued by the Partnership on the Effective Date, or thereafter issued
to the extent permitted by the terms of this Agreement.
18.2. Accounting Terms. Except as otherwise specifically provided
herein, all terms herein which relate to accounting matters shall be
interpreted in accordance with generally accepted accounting principles in the
United States.
18.3. Additional Terms. Capitalized terms used in this Agreement
and not defined in Section 18.1 hereof shall (unless otherwise expressly
provided herein) have the meanings assigned to them in other portions of this
Agreement.
ARTICLE XIX
MISCELLANEOUS
19.1. Binding Effect. Except as herein otherwise provided to the
contrary, this Agreement shall be binding upon the inure to the benefit of the
parties hereto, their heirs, legal and personal representatives, successors and
assigns; provided, however, that either party's right, power and authority to
assign any rights, powers, duties or obligations hereunder shall be subject to
the other provisions of this Agreement, including Article XII hereof.
19.2. Amendments. No amendment, alteration, modification or waiver
of this Agreement, or any part hereof (other than as specified in Article XVI),
shall be valid or effective unless in writing and signed by all the Partners.
19.3. Applicable Laws. The substantive laws of the State of Georgia
and the applicable federal laws of the United States shall govern the validity,
construction, enforcement and interpretation of this Agreement, and this
Agreement shall be governed by and construed in accordance with the laws of the
State of Georgia and the applicable federal laws of the United States.
19.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute but one and the same instrument which may be
sufficiently evidenced by one counterpart, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
19.5. Waiver. No consent or waiver, either expressed or implied, by
any Partner to or of any breach or default by any other Partner, in the
performance by such other Partner of the obligations thereof under this
Agreement shall be deemed or
34
<PAGE> 47
construed to be a consent or waiver to or of any other breach or default in the
performance by such other Partner of the same or any other obligations of such
other Partner under this Agreement. Failure on the part of any Partner to
complain or to pursue complaints with respect to any acts or failure to act of
any other Partner, or failure on the part of any Partner to declare any other
Partner in default, irrespective of how long such default continues, shall not
constitute a waiver by such Partner of the rights and remedies thereof under
this Agreement or otherwise at law or in equity.
19.6. Additional Acts. In connection with this Agreement, as well
as all transactions contemplated by this Agreement, each Partner agrees to
execute and deliver such additional documents, instruments and take all such
necessary action and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions
and conditions of this Agreement and all such transactions.
19.7. Headings and Titles. The recitals to this agreement and the
headings and titles of the Articles, Sections, Sub-sections and Paragraphs
herein have been inserted as a matter of convenience of reference only and
shall not control or affect the meaning or construction of any of the operative
terms or provisions herein.
19.8. Gender. Whenever the context shall so require, all words
herein in any gender shall be deemed to include the masculine, feminine, or
neuter gender, and all singular words shall include the plural, and all plural
words shall include the singular.
19.9. Construction. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalid, illegal or unenforceable
provision or provisions shall be fully severable and shall not affect any other
provision hereof and this Agreement shall be construed and enforced as if such
invalid, illegal or unenforceable provision had never been contained herein.
Furthermore, in lieu of each such illegal, invalid or unenforceable provision
there shall be added automatically as part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
19.10. Prior Agreement Superseded. This Agreement supersedes any
prior understanding or written or oral agreements between the parties
respecting the within subject matter and contain(s) the entire understanding
between the parties with respect thereto.
19.11. This Agreement. The words "herein," "hereof," "hereunder,"
"hereby," "this Agreement" and other similar reference shall be construed to
mean and include this Agreement and all amendments thereof and supplements
thereto unless the context should clearly indicate or require otherwise.
35
<PAGE> 48
19.12. Non-Exclusive Remedies. Except as otherwise provided herein,
no remedy herein conferred or reserved is intended to be exclusive of any other
available remedy or remedies, and each and every such remedy shall be
cumulative and shall be in addition to every such remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. It
is expressly agreed that the remedy at law for breach by any of the parties of
its obligations hereunder is inadequate in view of the complexities and
uncertainties in measuring the actual damages which would be sustained by
reason of either party's failure to comply fully with each of such obligations.
Accordingly, the obligations of each party hereunder are expressly made
enforceable by specific performance.
19.13. Exhibits. All exhibits, attachments, annexed instruments and
addenda referred to herein shall be considered a part of this Agreement as
fully as if and with the same force and effect as if such exhibit, attachment,
annex or addendum had been included herein in full.
19.14. Representations. Each of the Partners represents and warrants
to the other Partners that (a) the execution, delivery and performance of this
Agreement has been duly and validly authorized by all necessary action,
corporate or otherwise, on the part of it, (b) the execution, delivery and
performance of this Agreement will not result in a breach or violation of or a
default under its articles of incorporation or Partnership Agreement, or under
any loan or other agreement or instrument by which it or any of its properties
is bound or under any statute, rule, regulation, order or other law to which it
or any of its properties is subject, (c) this Agreement is a legal, valid and
binding obligation of it, enforceable against it in accordance with its terms
and conditions, (d) it is a legal entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of formation and has all
necessary power and authority to own its property and carry on its business as
presently conducted (including in the manner contemplated by this Agreement)
and is duly qualified to do business and is in good standing in all
jurisdictions which the ownership or use of its property or its activities
presently make such qualification necessary, except for such jurisdictions in
which the failure to be so qualified or in good standing would not materially
impair its obligations pursuant to this Agreement, and (e) all authorizations,
approvals and consents, if any, required to be obtained from, and all
registrations, declarations and filings, if any, required to be made with, all
governmental authorities and regulatory bodies and all other persons or
entities to permit to execute and deliver, and to perform its obligations,
under this Agreement have been obtained or made and all such authorizations,
approvals, consents, registrations, declarations and filings are in full force
and effect, and all terms and conditions contained in or existing in respect
of, such authorizations, approvals, consents, registrations, declarations and
filings have, to the extent necessary prior to the date of execution and
delivery hereof and thereof, been duly satisfied and performed.
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<PAGE> 49
19.15. Language. The parties hereto acknowledge that each of them
and their counsel have reviewed this Agreement and that the language used in
this agreement shall be deemed to be the language chosen by the Partners to
express their mutual intent, and the parties hereby agree that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or exhibits hereto and that no rule of strict
construction shall be applied against any Partner.
19.16. Confidentiality. Each Partner shall keep confidential and not
use or disclose to others and shall use its best efforts to prevent any of its
employees, former employees, agents and representatives from using or
disclosing without the prior written consent of the other Partner, any
information or data which both (a) pertains to this Agreement, any negotiations
pertaining thereto, any of the transactions contemplated hereby or the business
of the Partnership, and (b) the other Partner hereto has labeled in writing as
confidential or proprietary; provided, however, that nothing in this Section
19.16 shall apply to any information or data (i) which the Partner in question
can show is now known to the public or which hereafter becomes known to the
public other than by its acts or omissions; (ii) the disclosure of which is
required by securities, accounting or other applicable laws or regulations; or
(iii) which it could show was already in its possession prior to receipt from
the other Partner. Nothing in this Section 19.16 shall expand or contract the
rights or obligations of either Partner with respect to any information
previously provided to such Partner pursuant to any other confidentiality
agreement.
37
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Limited Partnership as of the day and year first above written.
General Partner:
HTG CORP.
By: /s/ Holcombe T. Green, Jr.
--------------------------------
Holcombe T. Green, Jr.,
President
Initial Limited Partners:
By: HTG CORP., As Attorney-in-fact
for the Initial Limited Partners
By: /s/ Holcombe T. Green, Jr.
--------------------------------
Holcombe T. Green, Jr.,
President
38
<PAGE> 51
Limited Partner Signature Page
AGREEMENT OF LIMITED PARTNERSHIP
OF
WPS INVESTORS, L.P.
______________________________
(Name of Entity if other
than individual)
_______________________________________________________________________________
(Printed Name of (Authorized Signature
Limited Partner) of Limited Partner)
_______________________________________________________________________________
(S.S. # or Fed. I.D. #) (Title if Applicable)
_______________________________
_______________________________
_______________________________
_______________________________
(Address)
(INDIVIDUAL ACKNOWLEDGMENT)
STATE OF __________________
COUNTY OF__________________
SUBSCRIBED AND SWORN TO before me by the aforesaid ___________________,
this the ______ day of __________________, 19__.
__________________________________
Notary Public in and for
the State of _____________________
My commission expires:
_____________________________
39
<PAGE> 52
(PARTNERSHIP ACKNOWLEDGMENT)
STATE OF _______________________
COUNTY OF ______________________
SUBSCRIBED AND SWORN TO before me on behalf of ______________________, a
partnership, by the aforesaid ___________________________, one of its general
partners, this the ______ day of _________________, 19___.
______________________________
Notary Public in and for
the State of _________________
My commission expires:
________________________________
(CORPORATION ACKNOWLEDGMENT)
STATE OF ______________________
COUNTY OF _____________________
SUBSCRIBED AND SWORN TO before me on behalf of __________________________,
a corporation, by the aforesaid __________________________, its President, this
the ________ day of __________________, 19___.
________________________________
Notary Public in and for
the State of ___________________
My commission expires:
_______________________________
40
<PAGE> 53
SCHEDULE OF PARTNERS
<TABLE>
<CAPTION>
Adjusted
(as of Capital
Effective Date) Contribution Total
Capital on Capital
Name and Address Account Effective Date Account
<S> <C> <C> <C>
GENERAL PARTNER:
HTG Corp.
3343 Peachtree Road
Suite 1420
Atlanta, Georgia 30326 $ 1,329,600 -- $ 1,329,600
INITIAL LIMITED PARTNERS:
Green Capital
Investors II, L.P.
3343 Peachtree Road
Suite 1420
Atlanta, Georgia 30326 $ 6,376,360 -- $ 6,376,360
RW Holding
3343 Peachtree Road
Suite 1420
Atlanta, Georgia 30326 $ 28,793,696 $80,024,843 $108,818,539
Vytech Industries, Inc.
Pearman Dairy Road
Anderson, SC 29623 $ 1,591,707 -- $ 1,591,707
HBO & Company of Georgia
301 Perimeter Center North
Atlanta, Georgia 30346 $ 9,297,666 -- $ 9,297,666
Morgan M. Schuessler
1716 Cherry Drive
Lanett, AL 36863 $ 133,437 -- $ 133,437
Thomas J. Ward
400 East 85th Street
Apt. PH-A
New York, NY 10028 $ 133,437 -- $ 133,437
NEW LIMITED PARTNERS:
Green Capital Investors,
L.P.
3343 Peachtree Road
Suite 1420
Atlanta, Georgia 30326 -- $31,300,000 $ 31,300,000
Green Capital Investors
III, L.P.
3343 Peachtree Road
Suite 1420
Atlanta, Georgia 30326 -- $ 6,000,000 $ 6,000,000
</TABLE>
41
<PAGE> 54
<TABLE>
<CAPTION>
Adjusted
(as of Capital
Effective Date) Contribution Total
Capital on Capital
Name and Address Account Effective Date Account
<S> <C> <C> <C>
Progressive Investment
Company, Inc.
280 Park Avenue
23rd Floor
New York, New York 10017 -- $8,754,909 $8,754,909
UBS Capital Corporation
299 Park Avenue
5th Floor
New York, New York 10171 -- $3,877,455 $3,877,455
Northeast Investors Trust
50 Congress Street
Room 1000
Boston, Massachussetts 02109 -- $2,938,727 $2,938,727
GEM Asset Management
As Investment Advisor for
Delta Airlines, Inc.
70 East 55th Street
12th Floor
New York, New York 10022 -- $1,375,491 $1,375,491
PITT & Co., Nominee for
Baring America Asset
Management Co., As
Investment Advisor for
General Motors Hourly Rate
Pension Plan
150 Federal Street
Boston, Massachusetts 02110 -- $ 197,133 $ 197,133
PITT & Co., Nominee for
Baring America Asset
Management Co., As
Investment Advisior for
SAM - Salaried
(General Motors Salaried
Employees Retirment Fund)
150 Federal Street --
Boston, Massachusetts 02110 $ 150,196 $ 150,196
PELICAN & Co., Nominee for
Baring America Asset
Management Co., As
Investment Advisor for
GTE Corp. Retirement Trust
150 Federal Street
Boston, Massachusetts 02110 -- $ 28,162 $ 28,162
Craig F. Magher
3343 Peachtree Rd., Suite
Atlanta, Georgia 30326 -- $ 500,000 $ 500,000
</TABLE>
42
<PAGE> 55
<TABLE>
<CAPTION>
Adjusted
(as of Capital
Effective Date) Contribution Total
Capital on Capital
Name and Address Account Effective Date Account
<S> <C> <C> <C>
James R. Kuse
400 Perimeter Center Terrace
Suite 595 -- $1,000,000 $ 1,000,000
Atlanta, Georgia 30346
Total Capital Account
As of Effective Date: $183,802,817
</TABLE>
43
<PAGE> 56
WPS INVESTORS, L.P.
APPENDIX A
TAX MATTERS
This Appendix is attached to and is a part of the partnership
agreement (the "Agreement") of WPS INVESTORS, L.P. (the "Partnership"). The
provisions of this Appendix are intended to comply with the requirements of
Treas. Reg. - 1.704-1 (b)(2)(iv) and Treas. Reg. sec.1.704-2 with respect to
maintenance of capital accounts and partnership allocations, and shall be
interpreted and applied accordingly.
ARTICLE I
DEFINITIONS
1.01. Definitions. For purposes of this Appendix, the
capitalized terms listed below shall have the meanings indicated. Capitalized
terms not listed below and not otherwise defined in this Appendix shall have
the meanings specified in the Agreement.
"Account Reduction Item" means (i) and adjustment described in Treas.
Reg sec.1.704-1(b)(2)(ii)(d)(4); (ii) any allocation described in Treas. Reg.
sec.1.704-1(b)(2)(ii)(d)(5), other than a Nonrecourse Deduction or a Partner
Nonrecourse Deduction; or (iii) any distribution described in Treas. Reg. sec.
1.704-1(b)(2)(ii)(d)(6), other than a Nonrecourse Distribution or a Partner
Nonrecourse Distribution.
"Adjusted Capital Account Balance" means a Partner's Capital Account
balance increased by the sum of (i) such Partner's share of Partnership Minimum
Gain and (ii) such Partner's share of Partner Nonrecourse Debt Minimum Gain.
"Adjusted Fair Market Value" of an item of Partnership property means
the greater of (i) the fair market value of such property or (ii) the amount of
any nonrecourse indebtedness to which such property is subject within the
meaning of section 7701(g) of the Code.
"Applicable Federal Rate" means the applicable Federal rate within the
meaning of section 1274(d) of the Code.
<PAGE> 57
2
"Book" means the method of accounting prescribed for compliance with
the capital account maintenance rules set forth in Treas. Reg. sec.1.704-1(b)(2)
(iv) as reflected in this Appendix, as distinguished from any accounting method
which the Partnership may adopt for other purposes such as financial reporting.
"Book Value" means, with respect to any item of Partnership property,
the book value of such property within the meaning of Treas. Reg. sec.1.704-1
(b)(2)(iv) (g).
"Capital Account" means the capital account of a Partner maintained in
accordance with this Appendix.
"Ceiling Rule" means the ceiling rule as set forth in Treas. Reg. sec.
1.704-3(b)(1).
"Code" means the Internal Revenue Code of 1986, as amended.
References to specific sections of the Code shall be deemed to include
references to corresponding provisions of succeeding internal revenue law.
"Deemed Liquidation" means a liquidation of the Partnership that is
deemed to occur pursuant to Treas. Reg. sec.1.708-1(b)(1)(iv) in the event of a
termination of the Partnership pursuant to section 708-1(b)(1)(B) of the Code.
"Excess Deficit Balance" means the amount, if any, by which the
balance in a Partner's Capital Account as of the end of the relevant taxable
year is more negative than the amount, if any, of such negative balance that
such Partner is obligated to restore to the Partnership or is treated as
obligated to restore to the Partnership pursuant to Treas. Reg. sec.1.704-1(b)
(2)(ii)(c), Treas, Reg. sec.1704-1(b)(2)(ii)(h), Treas. Reg sec.1.704-2(g),
or Treas. Reg. sec.1.704-2(i)(5). Solely for purposes of computing a Partner's
Excess Deficit Balance, such Partner's Capital Account shall be reduced by the
amount of any Account Reduction Items that are reasonably expected as of the
end of such taxable year.
"Excess Nonrecourse Liabilities" means excess nonrecourse liabilities
within the meaning of Treas. Reg. sec.1.752-3(a)(3).
"Nonrecourse Deduction" means a nonrecourse deduction determined
pursuant to Treas. Reg. sec.1.704-2(c).
"Nonrecourse Distribution" means a distribution to a Partner that is
allocable to a net increase in Partnership Minimum Gain pursuant to Treas. Reg.
sec.1.704-2(h)(2)
"Partner Nonrecourse Debt" means any liability of the Partnership to
the extent that (i) the liability is nonrecourse for purposes of Treas. Reg.
sec.1.1001-2 and (ii) a Partner or a
<PAGE> 58
3
Related Person bears the economic risk of loss under Treas. Reg. sec.
1.752-2.
"Partner Nonrecourse Debt Minimum Gain" means minimum gain
attributable to Partner Nonrecourse Debt pursuant to Treas. Reg. sec.
1.704-2(i)(2).
"Partner Nonrecourse Deduction" means any item of Book loss or
deduction that is attributable to a Partner Nonrecourse Debt pursuant to
Treas. Reg. sec.1.704-2(i).
"Partner Nonrecourse Distribution" means a distribution to a Partner
that is allocable to a net increase in such Partner's share of Partner
Nonrecourse Debt Minimum Gain pursuant to Treas. Reg. sec.1.704-2(i)(6).
"Partnership Minimum Gain" means partnership minimum gain determined
pursuant to Treas. Reg. sec.1.704-2(d).
"Regulatory Allocation" means (i) any allocation made pursuant to
Section 3.04 (a) to the extent that such allocation is attributable to a prior
distribution that is treated as a Nonrecourse Distribution (after taking into
account Section 5.02 (a); (ii) any allocation made pursuant to Section 3.04(b)
to the extent that such allocation is attributable to a prior distribution
that is treated as a Partner Nonrecourse Distribution (after taking into account
Section 5.02 (b); (iii) any allocation made pursuant to Section 3.04(d) or (e);
or (iv) any reallocation made pursuant to Section 3.05.
"Related Person" means, with respect to a Partner, a person that is
related to such Partner pursuant to Treas. Reg. sec.1.752-4(b).
"Revaluation Event" means (i) a liquidation of the Partnership (within
the meaning of Treas. Reg. sec.1.704-1(b)(2)(ii)(g); or (ii) a contribution of
more than a de minimis amount of money or other property to the Partnership by
a new or existing Partner or a distribution of more than a de minimis amount of
money or other property to a retiring or continuing Partner where such
contribution or distribution alters the Proportionate Share of any Partner.
"Section 705(a)(2)(B) Expenditures" means non-deductible expenditures
of the Partnership that are described in section 705(a)(2)(B) of the Code, and
organization and syndication expenditures and disallowed losses to the extent
that such expenditures or losses are treated as expenditures described in
section 705(a)(2)(B) of the Code pursuant to Treas. Reg. sec.
1.704-1(b)(2)(iv)(i).
<PAGE> 59
4
"Section 751 Property" means unrealized receivables and substantially
appreciated inventory items within the meaning of Treas. Reg. sec.1.751-1(a)(1).
"Tax Basis" means, with respect to any item of Partnership property,
the adjusted basis of such property as determined in accordance with the Code.
"Treasury Regulation" or Treas. Reg." means the temporary or final
regulation(s) promulgated pursuant to the Code by the U.S. Department of the
Treasury, as amended, and any successor regulation(s).
ARTICLE II
CAPITAL ACCOUNTS
2.01. Maintenance. (a) A single Capital Account shall
be maintained for each Partner in accordance with this Article II.
(b) Each Partner's Capital Account shall from time to time be
increased by:
(i) the amount of money contributed by such Partner to
the Partnership (including the amount of any Partnership liabilities which the
partner assumes (within the meaning of Treas. Reg. sec.1.704-1(b)(2)(iv)(c)),
but excluding liabilities assumed in connection with the distribution of
Partnership property and excluding increases in such Partner's share of
Partnership liabilities pursuant to section 752 of the Code);
(ii) the fair market value of property contributed by such
Partner to the Partnership (net of any liabilities secured by such property
that the Partnership is considered to assume or take subject to pursuant to
section 752 of the Code);
(iii) allocations to such Partner of Partnership Book
income and gain (or the amount of any item or items of income or gain included
therein);
(iv) upon the revaluation of Partnership property
pursuant to Section 2.02(a), the Book gain (if any) that would have been
allocated to each Partner if such Partnership property had been sold at its
Adjusted Fair Market Value as of the date of such revaluation; and
(v) upon the distribution of Partnership property to a
Partner, if Partnership property is not revalued pursuant to Section 2.02(a),
the Book gain (if any) that would have been
<PAGE> 60
5
allocated to such Partner if such Partnership property had been sold at
its Adjusted Fair Market Value immediately prior to the distribution.
(c) Each Partner's Capital Account shall from time to
time be reduced by:
(i) the amount of money distributed to such
Partner by the Partnership (including the amount of such Partner's individual
liabilities for which the Partnership becomes personally and primarily liable
but excluding liabilities assumed in connection with the contribution of
property to the Partnership and excluding decreases in such Partner's share of
Partnership liabilities pursuant to section 752 of the Code);
(ii) the fair market value of property distributed
to such Partner by the Partnership (net of any liabilities secured by such
property that such Partner is considered to assume or take subject to pursuant
to section 752 of the Code;
(iii) allocations to such Partner of Partnership
Book loss and deduction (or items thereof);
(iv) upon the revaluation of Partnership property
pursuant to Section 2.02(a), the Book loss (if any) that would have been sold
at its Adjusted Fair Market Value as of the date of such revaluation; and
(v) upon the distribution of Partnership property
to a Partner, if Partnership property is not revalued pursuant to Section 2.02
(a), the Book loss (if any) that would have been allocated to such Partner if
such Partnership property had been sold at its Adjusted Fair market Value
immediately prior to the distribution.
(d) The Partnership shall make such other adjustments to
the Capital Accounts of the Partners as are necessary to comply with the
provisions of Treas. Reg. sec.1.704-1(b)(2)(iv).
2.02 Revaluation of Partnership Property. (a) Upon the
occurrence of a Revaluation Event, all Partnership property (whether tangible
or intangible) shall be revalued for Book purposes to reflect the Adjusted Fair
Market Value of such property immediately prior to the Revaluation Event, and
the Capital Accounts of the Partners shall be adjusted in accordance with Trea.
Reg. sec.1.704-1(b)(2)(iv)(f).
(b) Upon the distribution of Partnership property to a
Partner under circumstances not constituting a Revaluation Event, such property
shall be revalued for Book purposes to reflect the Adjusted Fair Market Value
of such property immediately prior to such distribution, and the Capital
Accounts of all Partners shall
<PAGE> 61
be adjusted in accordance with Treas. Reg. sec.1.704-1(b)(2)(iv)(e).
2.03 Restoration of Negative Balances. (a) Upon the occurrence of a
distribution in complete liquidation of the General Partner's interest in the
Partnership, or upon the liquidation of the Partnership (within the meaning of
Treas. Reg. sec.1.704-1(b)(2)(ii)(g)), the General Partner shall
contribute to the Partnership an amount equal to the deficit balance, if any,
of such General Partner's Capital Account.
(b) For purposes of this Section 2.03, the amount of the General
Partner's Capital Account shall be computed after taking into account (i) the
General Partner's distributive share of the Partnership's income, deductions,
gains and losses (as determined in a manner consistent with section 706(d) of
the Code) for the taxable year in which such liquidation occurs, and (ii) any
other adjustments to the General Partner's Capital Account arising as a result
of such liquidation.
(c) Any contribution required by this Section 2.03 in the event of
a liquidation of the Partnership or of the General Partner's interest in the
Partnership shall be made not later than the later of (i) the end of the
taxable year in which such liquidation occurs, or (ii) a date which is 90 days
after the date of such liquidation. Such contribution shall be in the form of
cash, except that in the event of a Deemed Liquidation, such contribution may
be in the form of a negotiable promissory note of which such Partner is the
maker, bearing interest at no less than the Applicable Federal Rate at the time
of contribution.
(d) Any amounts contributed to the Partnership pursuant to this
Section 2.03 shall, upon liquidation of the Partnership, be paid to the
creditors of the Partnership or distributed to the Partners in accordance with
their positive Capital Account balances.
2.04 Transfers of Partnership Interests. (a) Upon the
transfer of a Partner's entire partnership interest, the Capital account of
such Partner shall carry over to the transferee.
(b) Upon the transfer of a portion of a Partner's partnership
interest, the portion of such Partner's Capital Account attributable to the
transferred portion shall carry over to the transferee. In the event that the
document effecting such transfer specifies the portion of such Partner's Capital
Account to be transferred, such portion shall be deemed to be the portion
attributable to the transferred portion of such Partner's partnership interest
for purposes of this Section 2.04(b).
<PAGE> 62
ARTICLE III
ALLOCATION OF BOOK INCOME AND LOSS
3.01. Book Income and Loss. (a) The Book income or loss of the
Partnership for purposes of determining allocations to the Capital Accounts of
the Partners shall be determined in the same manner as the determination of the
Partnership's taxable income, except that (i) items that are required by
section 703(a)(1) of the Code to be separately stated shall be included; (ii)
items of income that are exempt from inclusion in gross income for federal
income tax purposes shall be treated as Book income; (iii) Section 705(a)(2)(B)
Expenditures shall be treated as deductions; (iv) items of gain, loss,
depreciation, amortization, or depletion that would be computed for federal
income tax purposes by reference to the Tax Basis of an item of Partnership
property shall be determined by reference to the Book Value of such item of
property; and (v) the effects of upward and downward revaluations of
Partnership property pursuant to Section 2.02 shall be treated as gain or loss
respectively from the sale of such property.
(b) In the event that the Book Value of any item of Partnership
property differs from its Tax Basis, the amount of Book depreciation,
depletion, or amortization for a period with respect to such property shall be
computed so as to bear the same relationship to the Book Value of such property
as the depreciation, depletion, or amortization computed for tax purposes with
respect to such property for such period bears to the Tax Basis of such
property. If the Tax Basis of such property is zero, the Book depreciation,
depletion, or amortization with respect to such property shall be computed by
using a method consistent with the method that would be used for tax purposes
if the Tax Basis of such property were greater than zero.
(c) Allocations to the Capital Accounts of the Partners shall be based
on the Book income or loss of the Partnership as determined pursuant to this
Section 3.01. Such allocations shall be made as provided in the Agreement
except to the extent modified by the provisions of this Article III.
3.02 Allocation of Nonrecourse Deductions. Nothwithstanding any other
provisions of the Agreement, Nonrecourse Deductions shall be allocated among
the Partners in proportion to their respective Proportionate Shares.
3.03. Allocation of Partner Nonrecourse Deductions. Nothwithstanding
any other provisions of the Agreement, any item of Partner Nonrecourse
Deduction with respect to a Partner Nonrecourse Debt shall be allocated to the
Partner or Partners who bear the economic risk loss for such Partner
Nonrecourse Debt in accordance with Treas. Reg. sec.1.704-2(i).
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3.04 Chargebacks of Income and Gain. Notwithstanding any other
provisions of the Agreement:
(a) Partnership Minimum Gain. In the event that there is a net
decrease in Partnership Minimum Gain for a taxable year of the Partnership,
then before any other allocations are made for such taxable year, each Partner
shall be allocated items of Book income and gain for such year (and, if
necessary, for subsequent years) to the extent required by Treas. Reg.
sec.1.704-2(f).
(b) Partner Nonrecourse Debt Minimum Gain. In the event that there
is a net decrease in Partner Nonrecourse Debt Minimum Gain for a taxable year
of the Partnership, then after taking into account allocations pursuant to
paragraph (a) immediately preceding, but before any other allocations are made
for such taxable year, each Partner with a share of Partner Nonrecourse Debt
Minimum Gain at the beginning of such year shall be allocated items of Book
income and gain for such year (and, if necessary, for subsequent years) to the
extent required by Treas. Reg. sec.1.704-2(i)(4).
(c) Application for Waiver. In the event that the General Partner
determines, in its reasonable discretion, that the application of the
provisions of Section 3.04(a) or Section 3.04(b) would cause a distortion in
the economic arrangement among the Partners, the General Partner may, on behalf
of the Partnership, request a waiver of the application of either or both of
such provisions pursuant to Treas. Reg. sec.1.704-2(f)(4) or Treas. Reg.
sec.1.704-2(i)(4).
(d) Qualified Income Offset. In the event that any Partner
unexpectedly receives any Account Reduction Item that results in an Excess
Deficit Balance at the end of any taxable year after taking into account all
other allocations and adjustments under this Agreement other than allocations
under Section 3.04(e), then items of Book income and gain for such year (and,
if necessary, for subsequent years) will be reallocated to each such Partner in
the amount and in the proportions needed to eliminate such Excess Deficit
Balance as quickly as possible.
(e) Gross Income Allocation. If, at the end of any taxable year, the
Capital Accounts of any Partners have Excess Deficit Balances after taking into
account all other allocations and adjustments under this Agreement, then items
of Book income and gain for such year will be reallocated to such Partners in
the amount and in the proportions needed to eliminate such Excess Deficit
Balances as quickly as possible.
3.05 Reallocation to Avoid Excess Deficit Balances. Nothwithstanding
any other provisions of the Agreement, no Book loss or deduction shall be
allocated to any Partner to the extent that such allocation would cause or
increase an Excess Deficit
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9
Balance in the Capital Account of such Partner. Such Book loss or deduction
shall be reallocated away from such Partner and to the other Partners in
accordance with the Agreement, but only to the extent that such reallocation
would not cause or increase Excess Deficit Balances in the Capital Accounts of
such other Partners.
3.06 Curative Allocation. Subject to the provisions of Sections 3.02,
3.03, 3.04, and 3.05, but notwithstanding any other provision of the Agreement,
in the event that any Regulatory Allocation is made pursuant to this Appendix
for any taxable year, then remaining Book items for such year (and, if
necessary, Book items for subsequent years) shall be allocated or reallocated
in such amounts and proportions as are appropriate to restore the Adjusted
Capital Account Balances of the Partners to the position in which such Adjusted
Capital Account Balances would have been if such Regulatory Allocation had not
been made.
ARTICLE IV
ALLOCATION OF TAX ITEMS
4.01. In General. Except as otherwise provided in this Article IV,
all items of income, gain, loss, and deduction shall be allocated among the
Partners for federal income tax purposes in the same manner as the corresponding
allocation for Book purposes.
4.02 Section 704(c) Allocations. (a) In the event that the Book
Value of an item of Partnership property differs from its Tax Basis,
allocations of depreciation, depletion, amortization, gain, and loss with
respect to such property will be made for federal income tax purposes in a
manner that takes account of the variation between the Tax Basis and Book Value
of such property in accordance with section 704(c)(1)(A) of the Code and Treas.
Reg. sec.1.704-1(b)(4)(i). The General Partner may select any reasonable method
or methods for making such allocations, including, without limitation, any
method described in Treas. Reg. sec.1.704-3(b) or (c), or Treas. Reg.
sec.1.704-3T(d).
(b) In the event that allocations pursuant to this Article IV with
respect to an item of Partnership property are limited by the Ceiling Rule in
any taxable year, and the Partnership elects to use curative allocations
pursuant to Treas. Reg. sec.1.704-3(c);
(i) the Partnership may make curative allocations in subsequent
taxable years over a reasonable period of time, such as the economic life
of such item of property, to offset the effect of the Ceiling Rule to the
extent permitted by Treas. Reg. sec.1.704-3(c)(3)(ii); and
<PAGE> 65
10
(ii) the Partnership may make curative allocations of gain from
the sale or other taxable disposition of such property to offset the
effect of the Ceiling Rule on allocations of depreciation or other cost
recovery with respect to such property to the extent permitted by Treas.
Reg. sec.1.704-3(c)(3)(iii)(B).
4.03. Tax Credits. Tax credits shall be allocated among the Partners
in accordance with Treas. Reg. sec.1.704-1(b)(4)(ii).
ARTICLE V
OTHER TAX MATTERS
5.01 Excess Nonrecourse Liabilities. For the purpose of determining
the Partners' shares of the Partnership's Excess Nonrecourse Liabilities
pursuant to Treas. Reg. sec.sec.1.752-3(a)(3) and 1.707-5(a)(2)(ii), and solely
for such purpose, the Partners' interests in partnership profits are hereby
specified to be their respective Proportionate Shares.
5.02 Reduction of Basis. In the event that a Partner's interest in
the Partnership may be treated in whole or in part as depreciable property for
purposes of reducing such Partner's basis in such interest pursuant to section
1017(b)(3)(C) of the Code, the Partnership shall, upon the request of such
Partner, make a corresponding reduction in the basis of its depreciable
property with respect to such Partner. Such request shall be submitted to the
Partnership in writing, and shall include such information as may be reasonably
required in order to effect such reduction in basis.
5.03. Withholding. (a) The Partnership shall withhold any amounts
required to be withheld pursuant to any applicable provisions of the Code,
including without limitation sections 1441 through 1446 of the Code, or
pursuant to any applicable provisions of state or local law.
(b) Any amounts withheld with respect to a Partner's distributive
share of Partnership income (whether or not distributed) shall be treated by
the Partnership and by such Partner for all purposes as amounts distributed to
such Partner. Any amounts withheld with respect to any payment to a Partner
shall be treated by the Partnership and by such Partner for all pruposes as
amounts paid to such Partner. Amounts so treated as distributed or paid to any
Partner shall reduce the amount otherwise distributable or payable to such
Partner.
(c) In the event that the Partnership withholds with respect to a
Partner's distributive share of Partnership income for a taxable year, and such
distributive share exceeds the amount distributed to such Partner in such
taxable year, then
<PAGE> 66
subsequent distributions to such Partner shall be deemed to be made first from
income with respect to which the Partnership has already withheld.
(End of Appendix A)
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<PAGE> 67
EXHIBIT B
<PAGE> 68
EXHIBIT B
PARTNERSHIP AGREEMENT
OF
RW HOLDING
THIS PARTNERSHIP AGREEMENT is made and entered into as of the 8th day of
December, 1993, by and between RWI, INC., a Georgia corporation ("RWI") and
GREEN CAPITAL INVESTORS, L.P., a Georgia limited partnership ("GCI"; RWI and
GCI being referred to collectively hereinafter as the "Partners").
ARTICLE I
FORMATION OF PARTNERSHIP
1.1 Formation. The parties to this Agreement hereby form a general
partnership (hereinafter referred to as the "Partnership") under the laws of
the State of Georgia and agree to and adopt the terms and conditions set forth
in this Agreement.
1.2 Name. The Partnership shall be conducted in Georgia under the
name and style RW Holding.
1.3 Principal Place of Business. The principal place of business of
the Partnership shall be at 3343 Peachtree Road, N.E., Suite 1420, Atlanta,
Georgia, 30326, or at such other location as the Partners may from time to time
designate. The Partners may establish such additional offices for the
Partnership as they deem advisable.
1.4 Commencement of Business and Term. The term of the Partnership
shall commence on the date hereof and shall end on December 31, 1998, unless
extended or sooner terminated by law or pursuant to the provisions of this
Agreement.
1.5 Fictitious Name Certificates. The Partners shall execute and file
in the proper offices such certificates as may be required by any fictitious
name act or assumed name act or similar law in effect in the counties or other
governmental jurisdictions in which the Partnership conducts business.
1.6 Offices of Partners. The principal place of business of each
Partner appears on the signature page of this Agreement.
1.7 Further Assurances. Each of the Partners shall hereafter execute
and deliver such further instruments and do such further acts and things as may
be required or useful to carry out the
<PAGE> 69
intent and purpose of this Agreement and that are not inconsistent with
the terms hereof, and shall do all other acts and things requisite to the
formation and operation of this Partnership as a partnership in accordance with
the laws of the State of Georgia and any other jurisdictions in which the
Partnership may elect to do business.
ARTICLE II
Definitions
2.1 Definitions. Whenever used in this Agreement, or any
amendment hereof, the following terms shall have the meanings set forth below:
(a) "Affiliate" of the Partnership shall mean a Partner
or any person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, a partner,
including, but not limited to a partner or a shareholder of a Partner.
(b) "Agreement" shall mean this Partnership Agreement, as
it may be amended from time to time.
(c) "Book" shall have the meaning set forth in Section
1.01 of Appendix A attached hereto.
(d) "Capital Account" shall have the meaning set forth in
Section 1.01 of Appendix A attached hereto.
(e) "Capital Contribution" or "Contribution to Capital"
shall mean the amount of cash or agreed value of property contributed to the
Partnership by or an behalf of each Partner. Any reference in this Agreement
to the Capital Contribution of a then Partner shall include a Capital
Contribution previously made by or on behalf of any prior Partner for the
interest in the Partnership then owned by such Partner.
(f) "Event of Disposition" shall mean a sale, exchange,
voluntary or involuntary conversion, casualty, taking in condemnation or other
disposition of Partnership Property.
(g) "Incapacity" or "Incapacitated" shall mean, as to any
person or entity, the bankruptcy, death, adjudication of incompetence or
insanity, dissolution or termination, as the case may be, of such person or
entity.
(h) "Majority of the Partners" shall mean Partners to
whom are allocated more than fifty percent (50%) of the Profits and Losses of
the Partnership pursuant to Section 6.2 hereof.
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(i) "Managing Partner" shall mean initially RWI and such
successor thereto as is designated in accordance with Section 8.2 hereof.
(j) "Partners" shall mean the persons executing this
Agreement, collectively. Reference to a "Partner" shall be to any one of the
Partners.
(k) "Partnership" shall mean the general partnership
subject to this Agreement.
(l) "Property" shall mean any and all property (real,
personal or mixed, tangible or intangible) or any interest therein or
appurtenant thereto owned or acquired by the Partnership.
(m) "Proportionate Share" shall mean with respect to any
Partner on any date, the amount obtained by dividing such Partner's Capital
Account balance on such date by the aggregate Capital Account Balance of all
Partners on such date. If no Partner has a positive Capital Account balance
on such date, the Partner's Proportionate Shares shall be computed as of the
most recent date on which all Partners had positive Capital Account balances.
The initial Proportionate Share of GCI shall be 99.999% and the initial
Proportionate Share of RWI shall be .001%
ARTICLE III
PURPOSES AND POWERS OF THE PARTNERSHIP
3.1 Purpose and Powers. The character of business and propose
of the Partnership is to acquire, directly and indirectly, hold and dispose of
limited partnership interests in WPS Investors, L.P., a Georgia limited
Partnership shall not engage in any other business.
In pursuing and accomplishing such purpose the Partnership
shall be empowered to:
(a) acquire, own, hold, sell, maintain, pledge and manage
securities and other personal property, and to engage in all aspects of the
said business;
(b) employ such personnel and obtain such legal
accounting, and other professional services and advice as the Partners deem
advisable in the course of the Partnership's operations under this Agreement;
(c) pay all stamp, intangibles, and ad valorem taxes and
other governmental charges levied or assessed against any
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Partnership Property, all taxes upon or measured by the use of Partnership
Property, and all other taxes (other than income taxes of the Partners)
directly relating to the Partnership's operations under this Agreement;
(d) execute all documents or instruments of any kind
appropriate for carrying out the purposes of the Partnership, including,
without limitation, purchase, sale, debt and pledge or other security
agreements;
(e) borrow money from banks, insurance companies, and
other lending institutions or from other third parties or from any Partner of
Affiliates of any Partner of Partnership purposes, issue guarantees in respect
of indebtedness of WPS and pledge or otherwise grant security interests in any
Partnership property for the repayment of such loans or to secure payment or
performance in respect of any guarantees;
(f) enter into contracts for the management and operation
of the Partnership's business, which contracts may be with either nonaffiliated
parities or with an Affiliate; and
(g) perform any and all other acts or activities
customary, incidental, necessary or convenient to the purposes and powers
enumerated hereinabove.
ARTICLES IV
CAPITAL CONTRIBUTIONS
4.1 Acquisition of Partnership Interests.
(a) Property or Cash Contributed. Each Partner shall
acquire its interest as a Partner in the Partnership by contributing to the
capital of the Partnership, concurrently with the execution of this Agreement,
the money or property described (and having the agreed value reflected) in
Appendix B attached hereto and made a part hereof.
(b) Assumption of Liabilities Re: Certain Property
Contributed by GCI. Partnership acknowledges that all the shares of Rhodes,
Inc. Common Stock to be contributed to the capital of the Partnership as
described on Appendix B attached hereto (the "Rhodes Stock") have been pledged
as collateral for a $3,250,000 Term Loan to GCI by NationsBank of Georgia, N.A.
("NationsBank") pursuant to a certain Loan Agreement between such parties dated
December 8, 1992 (such agreement and all other agreements, documents and
instruments contemplated thereby, all as the same have been amended through the
date hereof, being referred to hereinafter as the "Loan Documents").
Concurrently with the
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<PAGE> 72
assignment of the Rhodes Stock to the Partnership, the Partnership shall assume
all obligations of GCI under the Loan Documents and shall pay to NationsBank
all amounts outstanding or accrued but unpaid under the Loan Agreement and
obtain therefrom a full release of the Rhodes Stock from such bank's security
interest therein under the Loan Documents.
(c) Investment Representations Re: Stock Contributed by
GCI. The Partnership agrees and acknowledges that certain of the securities
noted on Appendix B hereto composing a portion of GCI's Capital Contribution
hereunder have not been registered under the federal Securities Act of 1933, as
amended (the "1933 Act") or any state securities law (the "Restricted Shares")
and therefore may not be resold unless registered or an exemption from
registration under the 1933 Act is available; that the Partnership shall hold
the Restricted Shares for investment for the account of the Partnership and not
with any present view toward resale or other distribution thereof; that the
Partnership shall not resell or otherwise dispose of all or any part of the
Restricted Shares except as permitted by law, including, without limitation,
any regulations under the 1933 Act. The Partnership acknowledges that GCI will
rely on the representations set forth in this Subsection 4.1 (c) and agrees to
execute documents containing such representations if requested by the issuers
of the securities in order to induce the issuer to transfer the Restricted
Shares to the Partnership.
4.2 Nature of Contributions. No interest shall be paid on any
capital contributed to the Partnership pursuant to this Article IV.
ARTICLE V
BOOKS, RECORDS, ACCOUNTING, AND REPORTS
5.1 Availability. At all times during the existence of the
Partnership, the Partnership shall keep or cause to be kept full and true
books, records, and accounts, in accordance with the accounting method followed
by the Partnership for federal income tax purposes, which shall reflect all
Partnership transactions and which shall be appropriate and adequate for the
Partnership's business. The book,s records, and accounts, together with a copy
of this Agreement (including all amendments hereto, if any) and all other
records of the Partnership, shall be maintained at the principal place of
business of the Partnership. Any Partner or its duly authorized representative
shall have the right at any time to inspect and copy form the books, records,
and accounts during normal business hours, upon reasonable notice, at its own
expense. All information so obtained by any Partner shall be confidential, and
no Partner shall divulge or disclose any such information to
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<PAGE> 73
any person or entity other than the other Partner or such partner's
professional advisors without the express written consent of the other Partner.
5.2 Reports. As soon as practicable after the close of
each fiscal year, but in no event later than two and one-half (2-1/2) months
following the close of the Partnership's fiscal year, the Partnership shall
prepare and deliver, or cause to be prepared and delivered, to each person who
held a Partnership interest during the fiscal year being reported, a financial
report of the Partnership for such fiscal year, including a balance sheet, a
profit and loss statement, and a report showing (i) distributions to the
Partners and allocations to the Partners of Profits and Losses, (ii) all
necessary tax reporting information required by the Partners for preparation of
their respective income tax returns, and (iii) a copy of the tax returns
(federal, state and local, if any) of the Partnership for such fiscal year.
5.3 Accounting Decisions. All decisions as to accounting matters,
except as specifically provided to the contrary herein, shall be made by the
Managing Partner.
5.4 Taxable Year and Tax Accounting Method. The Partnership's
taxable and fiscal years shall be the calendar year. Subject to Appendix A
hereto, all elections required or permitted to be made by the Partnership under
the Code shall be made by the Managing Partner in such manner as it deems
advisable.
5.5 Tax Returns. Not later than the time or date required by law,
the Partnership shall prepare and file, or cause to be prepared and filed, for
each fiscal year all federal, state, and local income tax returns required of
the Partnership.
5.6 Partnership Accounts. The Partnership shall maintain such
separate bank accounts as the Managing Partner deems appropriate for the
conduct of the Partnership's business, in the name of the Partnership, at such
bank or banks, as from time to time may be designated by the Partners.
5.7 Tax Matters Appendix. Appendix A to this Agreement sets forth
the operative provisions of this Agreement as to the maintenance of Capital
Accounts and tax allocations.
ARTICLES VI
ALLOCATIONS
6.1 Allocation of Profits and Losses. The net Book income or loss
of the Partnership for any fiscal year of the Partnership.
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<PAGE> 74
shall be allocated among the Partners in proportion to their respective
Proportionate Shares.
ARTICLE VII
DISTRIBUTIONS
7.1 Distributable Cash. The Partnership shall retain amounts of
Partnership cash as the Partners deem necessary for the conduct of the
Partnership's business. Partnership cash shall first be applied in payment of
all Partnership obligations and expenses including, but not limited to, all
obligations secured by Partnership property (except income taxes of the
Partners), all amounts owed by the Partnership as payments under Section 707(c)
of the Code, all costs incident to the operation and general management of the
Partnership and its business, and all amounts (or the Partnership's share of
all amounts) necessary to preserve, maintain and repair any partnership
property, including the establishment of reserves to pay costs, expenses and
liabilities and for repair, replacement and working capital. Partnership cash
remaining after payment of Partnership obligations and expenses then due and
owing (including management fees), retention of all amounts necessary for the
aforementioned reserves, and retention of amounts deemed necessary for the
conduct of the Partnership's business shall be available for distribution to
the Partners (such amount or any part thereof being herein referred to as
"Distributable Cash"). If the Partners elect to make a distribution of
Distributable Cash, the distribution shall be made in accordance with this
Article VII.
7.2 Distributions to Partners. When distributed, Distributable Cash
shall be distributed among the Partners in the same ratio as Book income or
loss is allocated to them under Section 6.1 hereof.
7.3 Time of Distributions. Distributable Cash shall be determined by the
Partners and shall be distributed at such convenient periodic intervals as the
Partners deem appropriate.
ARTICLE VIII
RIGHTS, DUTIES AND OBLIGATIONS OF THE PARTNERS
8.1 Management of the Partnership. All decisions relating to the
management of the Partnership and the operation of its business shall be made
by a Majority of the Partners. Notwithstanding the preceding sentence, no
Partner shall have authority, without the concurrence of all other Partners, on
behalf of the Parntership to:
(a) borrow money or otherwise incur any indebtedness;
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<PAGE> 75
(b) sell, lease, transfer, assign, mortgage or otherwise dispose of
any Partnership Property or any interest therein; or
(c) lend the Partnership's money to any person or entity.
8.2 Managing Partner. RWI shall be the initial managing Partner (the
"Managing Partner"). Subject to the provisions of Section 8.1 hereof, the
Managing Partner shall conduct and manage the day-to-day affairs of the
Partnership and the operation of its business. The Partners shall elect and
appoint a Partner to serve as Managing Partner by the vote of a Majority of
Partners.
8.3 Records to be Maintained by the Managing Partner. In order to
properly conduct the business of the Partnership, and in order to keep the
Partners properly informed, the Managing Partner shall establish and maintain
the books, records, and accounts required by Article V hereof.
8.4 Independent Operations of the Partners. Either Partner may own,
purchase or otherwise acquire and deal in property similar to any Property
owned by the Partnership, and otherwise engage in any aspect of business
engaged in by the Partnershp, either for its own account or for the accounts of
others.
8.5 Partner Compensation. The Partners shalll be reimbursed for all
out-of-pocket expenses directly incurred on behalf of the Partnership, but
shall not be entitled to a fee or other compensation for services rendered to
the Partnership in their capacity as Partners.
ARTICLE IX
ASSIGNMENTS, WITHDRAWAL, INCAPACITY AND DISSOLUTION
9.1 Assignments. No partner may sell, transfer, assign or otherwise
dispose of all or any part of its interest in the Partnership without the
express prior written consent of the other Partner.
9.2 Withdrawal. No partner shall have the right to withdraw from the
Partnership without the express prior written consent of the other Partner.
9.3 Termination and Dissolution Date. The Partnership shall be
terminated and dissolved automatically on the termination date specified in
Section 1.4, but the Partnership may be terminated and dissolved or any earlier
date by a Majority of the Partners.
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9.4 Other Events Cause a Termination and Dissolution. The occurrence
of an Event of Disposition with respect to all or substantially all Partnership
Property shall cause a termination and dissolution of the Partnership. For
purposes of this Agreement, the phrase "all or substantially all" shall mean at
least seventy-five percent (75.0%) in value of the total value of all
Partnership Property. The Incapacity of, the making of an assignment for the
benefit of the creditors of, or the appointment of a receiver or trustee with
respect to the property or affairs of any Partner shall cause a termination and
dissolution of the Partnership, unless the other Partner can and does elect to
continue the Partnership.
9.5 Dissolution Procedure. Upon the termination of the Partnership, a
final statement setting forth the assets and liabilities of the Partnership
shall be prepared as soon as practical. A copy of such statement shall be
furnished to each Partner within ninety (90) days after such termination.
Thereupon, all or a portion of the assets of the Partnership shall be
liquidated as promptly as possible, and the assets of the Partnership,
including the proceeds from such liquidation, shall be distributed to the
following order of priority:
(a) to the payment of the debts and liabilities of the
Partnership (including loans by Partners to the Partnership) and the expenses
of liquidation;
(b) to the setting up of such reserves as are reasonably
necessary for any contingent or unforeseen liabilities or obligations of the
Partnership arising out of or in connection with the Partnership; provided
that any such reserve shall be paid over to an escrow agent to be held by such
agent for a reasonable period and for the purpose of disbursing such reserves
in payment of any of the aforesaid contingencies and, at the expiration of such
period, of distributing the balance thereafter remaining in the manner
hereinafter provided;
(c) to the Partners for reimbursement of all monies, if any,
expended by the Partners for the benefit of the Partnership; and
(d) to the Partners in accordance with their Capital Account
balances.
9.6 Right to Distributions on Dissolution. No Partner shall be
entitled to receive any distributions pursuant to Section 9.5 until all
legally enforceable obligations and liabilities of such Partner to the
Partnership have been paid in full or fully satisfied by offset against any
distribution otherwise due to that Partner pursuant to Section 9.5.
9
<PAGE> 77
9.7 Final and Complete Distribution. The distribution provided for in
this Article IX shall constitute a complete return of the Partners'
Contributions to Capital, a final and complete distribution to the Partners of
all their interests in the Partnership Property, and a final termination and
settlement of the Partners' interests in the Partnership.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices, consents, requests, demands, offers,
reports and other communications required or permitted to be given pursuant to
this Agreement shall be in writing and shall be considered properly given or
made when personally delivered to the party entitled thereto, or when sent by
United States Mail, in a sealed envelope, with postage prepaid, addressed, if
to the Partnership, to the Partnership's principal office, or if to a Partner,
to the address set forth on the signature page of this Agreement. Any Partner
may change its address by giving notice to the other Partner.
10.2 Entire Agreement. This Agreement embodies the entire
understanding and agreement between the Partners concerning the Partnership,
and supersedes any and all prior negotiations, understandings or agreements in
regard thereto.
10.3 Exclusivity of Agreement. This Agreement shall govern only
matters relating to the Partnership and the conduct of Partnership business.
Nothing herein shall be construed to refer or relate to any other properties
that any Partner now owns or may hereafter acquire.
10.4 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be considered an original and all of which
shall constitute one and the same instrument.
10.5 Headings. The headings of the various articles and sections in
this Agreement are solely for convenience and shall not be relied upon in
construing any provisions hereof.
10.6 Use of Gender. Use of any gender in this Agreement shall be
deemed to include all genders when appropriate, and use of the singular number
shall be deemed to include the plural when appropriate, and vice versa, in each
instance.
10.7 Governing Law. This Agreement has been executed and delivered in
Atlanta, Georgia and shall be construed, interpreted, and enforced according to
the laws of Georgia.
10
<PAGE> 78
10.8 Time of Essence. Time is of the essence of this Ageement.
10.9 Severability. If any term, covenant or condition of this
Agreement or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement or the
application of such terms, covenants and conditions to persons or
cirucmstwances other than those to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by
law.
10.10 Remedies Cumulative. All rights, powers and privileges
conferred hereunder upon the parties, unless otherwise provided, shall be
cumulative and not restricted to those given by law.
10.11 Waiver. Neither any failure of any party to exercise any power
given under this Agreement or to insist upon strict compliance with any
obligation specified in this Agreement nor any custom or practice at variance
with the terms hereof shall constitute a waiver of the right of such party to
demand exact compliance with the terms hereof.
10.12 Successors and Assigns. Except as otherwise provided herein,
the provisions of this Agreement shall apply to, shall inure to the benefit of,
and shall be binding upon and enforceable against the Partners and their
respective representatives, successors, and permitted assigns to the same
extent as if specified at length throughout this Agreement.
10.13 Amendments. This Agreement may only be amended by a written
agreement executed by both Partners.
IN WITNESS WHEREOF, the undersigned have executed and sealed this
Partnership Agreement as of the day and year first above written.
Signed, sealed and delivered
in the presence of:
/s/ Julie M. Koers
- ------------------------------ RWI, INC.
Witness
/s/ Julia N. Aldrich By: /s/ Holcombe T. Green, Jr.
- ------------------------------ ---------------------------------
Notary Holcombe T. Green, Jr.,
President
(NOTARIAL SEAL) Address:
3343 Peachtree Road, N.E.
Suite 1420
Atlanta, Georgia 30326
11
<PAGE> 79
Signed, sealed and delivered
in the presence of:
/s/ Julie M. Koers
- ------------------------------ GREEN CAPITAL INVESTORS, L.P.
Witness
/s/ Julia N. Aldrich By: Green & Company, L.P.,
- ------------------------------ its General Partner
Notary Public
(NOTARIAL SEAL) By: HTG Corp.,
its General Partner
By: /s/ Holcombe T. Green, Jr.
---------------------------
Holcombe T. Green, Jr.
President
Address:
3343 Peachtree Road, N.E.
Suite 1420
Atlanta, Georgia 30326
12
<PAGE> 80
APPENDIX A
TAX MATTERS
This Appendix is attached to and is a part of the partnership
agreement (the "Agreement") of RW Holding (the "Partnership"). The provisions
of this Appendix are intended to comply with the requirements of Treas. Reg.
sec.1.704-1(b)(2)(iv) and Treas. Reg. sec.1.704-2 with respect to maintenance
of capital accounts and partnership allocations, and shall be interpreted and
applied accordingly.
ARTICLE I
DEFINITIONS
1.01. Definitions. For purposes of this Appendix, the
capitalization terms listed below shall have the meanings indicated.
Capitalized terms not listed below and not otherwise defined in this Appendix
shall have the meanings specified in the Agreement.
"Adjusted Capital Account Balance" means a Partner's Capital Account
balance increased by the sum of (i) such Partner's share of Partnership Minimum
Gain and (ii) such Partner's share of Partner Nonrecourse Debt Minimum Gain.
"Adjusted Fair Market Value" of an item of Partnership property means
the greater of (i) the fair market value of such property or (ii) the amount of
any nonrecourse indebtedness to which such property is subject within the
meaning of section 7701(g) of the Code.
"Applicable Federal Rate" means the applicable Federal rate within
the meaning of section 1274(d) of the Code.
"Book" means the method of accounting prescribed for compliance with
the capital account maintenance rules set forth in Treas. Reg.
sec.1.704-1(b)(2)(iv) as reflected in this Appendix, as distinguished from any
accounting method which the Partnership may adopt for other purposes such as
financial reporting.
"Book Value" means, with respect to any item of Partnership property,
the book value of such property within the meaning of Treas. Reg.
sec.1.704-1(b)(2)(iv)(g).
"Capital Account" means the capital account of a Partner maintained
in accordance with this Appendix.
13
<PAGE> 81
"Code" means the Internal Revenue Code of 1986, as amended.
References to specific sections of the Code shall be deemed to include
references to corresponding provisions of succeeding internal revenue law.
"Deemed Liquidation" means a liquidation of the Partnership that is
deemed to occur pursuant to Treas. Reg. sec.1.708-1(b)(1)(iv) in the event of
a termination of the Partnership pursuant to section 708(b)(1)(B) of the Code.
"Excess Nonrecourse Liabilities" means excess nonrecourse liabilities
within the meaning of Treas. Reg. sec.1.752-3(a)(3).
"Nonrecourse Deduction" means a nonrecourse deduction determined
pursuant to Treas. Reg. sec.1.704-2(c).
"Nonrecourse Distribution" means a distribution to a Partner that is
allocable to a net increase in Partnership Minimum Gain pursuant to Treas. Reg.
sec.1.704-2(h)(2).
"Partner Nonrecourse Debt" means any liability of the Partnership to
the extent that (i) the liability is nonrecourse for purposes of Treas. Reg.
sec.1.1001-2 and (ii) a Partner or a Related Person bears the economic risk of
loss under Treas. Reg. sec.1.752-2.
"Partner Nonrecourse Debt Minimum Gain" means minimum gain
attributable to Partner Nonrecourse Debt pursuant to Treas. Reg. sec.1.704-2
(i)(2).
"Partner Nonrecourse Deduction" means any item of Book loss or
deduction that is attributable to a Partner Nonrecourse Debt pursuant to Treas.
Reg. sec.1.704-2(i).
"Partner Nonrecourse Distribution" means a distribution to a Partner
that is allocable to a net increase in such Partner's share of Partner
Nonrecourse Debt Minimum Gain pursuant to Treas. Reg. sec.1.704-2(i)(6).
"Partnership Minimum Gain" means partnership minimum gain determined
pursuant to Treas. Reg. sec.1.704-2(d).
"Regulatory Allocation" means (i) any allocation made pursuant to
Section 3.04(a) to the extent that such allocation is attributable to a prior
distribution that is treated as a Nonrecourse Distribution (after taking into
account Section 5.02(a)); or (ii) any allocation made pursuant to Section
3.04(b) to the extent that such allocation is attributable to a prior
distribution that is treated as a Partner Nonrecourse Distribution (after
taking into account Section 5.02(b)).
14
<PAGE> 82
"Related Person" means, with respect to a Partner, a person that is
related to such Partner pursuant to Treas. Reg. sec. 1.752-4(b).
"Revaluation Event" means (i) a liquidation of the Partnership
(within the meaning of Treas. Reg. sec. 1.704-1(b)(2)(ii)(g)); or (ii) a
contribution of more than a de minimis amount of money or other property to the
Partnership by a new or existing Partner or a distribution of more than a de
minimis amount of money or other property to a retiring or continuing Partner
where such contribution or distribution alters the profits interest of any
Partner.
"Section 705(a)(2)(B) Expenditures" means non-deductible expenditures
of the Partnership that are described in section 705(a)(2)(B) of the Code, and
organization and syndication expenditures and disallowed losses to the extent
that such expenditures or losses are treated as expenditures described in
section 705(a)(2)(B) of the Code pursuant to Treas. Reg. sec. 1.704-
1(b)(2)(iv)(i).
"Section 751 Property" means unrealized receivables and substantially
appreciated inventory items within the meaning of Treas. Reg.
sec. 1.751-1(a)(1).
"Tax Basis" means, with respect to any item of Partnership property,
the adjusted basis of such property as determined in accordance with the Code.
"Treasury Regulation" or "Treas. Reg." means the temporary or final
regulation(s) promulgated pursuant to the Code by the U.S. Department of the
Treasury, as amended, and any successor regulation(s).
ARTICLE II
CAPITAL ACCOUNTS
2.01. Maintenance. (a) A single Capital Account shall be
maintained for each Partner in accordance with this Article II.
(b) Each Partner's Capital Account shall from time to time be
increased by:
(i) the amount of money contributed by such Partner to
the Partnership (including the amount of any Partnership liabilities which the
Partner assumes (within the meaning of Treas. Reg. sec. 1.704-1(b)(2)(iv)(c)),
but excluding liabilities assumed in
15
<PAGE> 83
connection with the distribution of Partnership property and excluding
increases in such Partner's share of Partnership liabilities pursuant to
section 752 of the Code);
(ii) the fair market value of property contributed by such
Partner to the Partnership (net of any liabilities secured by such property
that the Partnership is considered to assume or take subject to pursuant to
section 752 of the Code);
(iii) allocations to such Partner of Partnership Book
income and gain (or the amount of any item or items of income or gain included
therein);
(iv) upon the revaluation of Partnership property pursuant
to Section 2.02(a), the Book gain (if any) that would have been allocated to
each Partner if such Partnership property had been sold at its Adjusted Fair
Market Value as of the date of such revaluation; and
(v) upon the distribution of Partnership property to a
Partner, if Partnership property is not revalued pursuant to Section 2.02(a),
the Book gain (if any) that would have been allocated to such Partner if such
Partnership property had been sold at its Adjusted Fair Market Value
immediately prior to the distribution.
(c) Each Partner's Capital Account shall from time to time be
reduced by:
(i) the amount of money distributed to such Partner by
the Partnership (including the amount of such Partner's individual liabilities
for which the Partnership becomes personally and primarily liable but excluding
liabilities assumed in connection with the contribution of property to the
Partnership and excluding decreases in such Partner's share of Partnership
liabilities pursuant to section 752 of the Code);
(ii) the fair market value of property distributed to such
Partner by the Partnership (net of any liabilities secured by such property
that such Partner is considered to assume or take subject to pursuant to
section 752 of the Code);
(iii) allocations to such Partner of Partnership Book loss
and deduction (or items thereof);
(iv) upon the revaluation of Partnership property pursuant
to Section 2.02(a), the Book loss (if any) that would have been allocated to
each Partner if such Partnership property had been sold at its Adjusted Fair
Market Value as of the date of such revaluation; and
16
<PAGE> 84
(v) upon the distribution of Partnership property to a
Partner, if Partnership property is not revalued pursuant to Section 2.02(a),
the Book loss (if any) that would have been allocated to such Partner if such
Partnership property had been sold at its Adjusted Fair Market Value
immediately prior to the distribution.
(d) The Partnership shall make such other adjustments to the
Capital Accounts of the Partners as are necessary to comply with the provisions
of Treas. Reg. sec.1.704-1(b)(2)(iv).
2.02. Revaluation of Partnership Property. (a) Upon the occurrence
of a Revaluation Event, all Partnership property (whether tangible or
intangible) shall be revalued for Book purposes to reflect the Adjusted Fair
Market Value of such property immediately prior to the Revaluation Event, and
the Capital Accounts of the Partners shall be adjusted in accordance with
Treas. Reg. sec.1.704-1(b)(2)(iv)(f).
(b) Upon the distribution of Partnership property to a Partner
under circumstances not constituting a Revaluation Event, such property shall
be revalued for Book purposes to reflect the Adjusted Fair Market Value of such
property immediately prior to such distribution, and the Capital Accounts of
all Partners shall be adjusted in accordance with Treas. Reg. sec.1.704-1(b)
(2)(iv)(e).
2.03. Restoration of Negative Balances. (a) Upon the occurrence of
a distribution in complete liquidation of a Partner's interest in the
Partnership, or upon the liquidation of the Partnership (within the meaning of
Treas. Reg. sec.1.704-1(b)(2)(ii)(g)), such Partner shall contribute to the
Partnership an amount equal to the deficit balance, if any, of such Partner's
Capital Account.
(b) For purposes of this Section 2.03, the amount of such
Partner's Capital Account shall be computed after taking into account (i) such
Partner's distributive share of the Partnership's income, deductions, gains and
losses (as determined in a manner consistent with section 706(d) of the Code)
for the taxable year in which such liquidation occurs, and (ii) any other
adjustments to such Partner's Capital Account arising as a result of such
liquidation.
(c) Any contribution required by this Section 2.03 in the event of
a liquidation of the Partnership or of a Partner's interest in the Partnership
shall be made not later than the later of (i) the end of the taxable year in
which such liquidation occurs, or (ii) a date which is 90 days after the date
of such liquidation. Such contribution shall be in the form of cash, except
that in the event of a Deemed Liquidation, such contribution
17
<PAGE> 85
may be in the form of a negotiable promissory note of which such Partner is the
maker, bearing interest at no less than the Applicable Federal Rate at the time
of contribution.
(d) Any amounts contributed to the Partnership pursuant to this
Section 2.03 shall, upon liquidation of the Partnership, be paid to the
creditors of the Partnership or distributed to the Partners in accordance with
their positive Capital Account balances.
2.04. Transfers of Partnership Interests. (a) Upon the transfer of
a Partner's entire partnership interest, the Capital Account of such Partner
shall carry over to the transferee.
(b) Upon the transfer of a portion of a Partner's partnership
interest, the portion of such partner's Capital Account attributable to the
transferred portion shall carry over to the transferee. In the event that the
document effecting such transfer specifies the portion of such Partner's
Capital Account to be transferred, such portion shall be deemed to be the
portion attributable to the transferred portion of such Partner's partnership
interest for purposes of this Section 2.04(b).
ARTICLE III
ALLOCATION OF BOOK INCOME AND LOSS
3.01. Book Income and Loss. (a) The Book income or loss of the
Partnership for purposes of determining allocations to the Capital Accounts of
the Partners shall be determined in the same manner as the determination of the
Partnership's taxable income, except that (i) items that are required by
section 703(a)(1) of the Code to be separately stated shall be included; (ii)
items of income that are exempt from inclusion in gross income for federal
income tax purposes shall be treated as Book income; (iii) Section 705(a)(2)(B)
Expenditures shall be treated as deductions; (iv) items of gain, loss,
depreciation, amortization, or depletion that would be computed for federal
income tax purposes by reference to the Tax Basis of an item of Partnership
property shall be determined by reference to the Book Value of such item of
property; and (v) the effects of upward and downward revaluations of
Partnership property pursuant to section 2.02 shall be treated as gain or loss
respectively from the sale of such property.
(b) In the event that the Book Value of any item of Partnership
property differs from its Tax Basis, the amount of Book depreciation,
depletion, or amortization for a period with respect to such property shall be
computed so as to bear the same
18
<PAGE> 86
relationship to the Book Value of such property as the depreciation, depletion,
or amortization computed for tax purposes with respect to such property for
such period bears to the Tax Basis of such property. If the Tax Basis of such
property is zero, the Book depreciation, depletion, or amortization with
respect to such property shall be computed by using a method consistent with
the method that would be used for tax purposes if the Tax Basis of such
property were greater than zero.
(c) Allocations to the Capital Accounts of the Partners shall be
based on the Book income or loss of the Partnership as determined pursuant to
this Section 3.01. Such allocations shall be made as provided in the Agreement
except to the extent modified by the provisions of this Article III.
3.02. Allocation of Nonrecourse Deductions. Notwithstanding any
other provisions of the Agreement, Nonrecourse Deductions shall be allocated
among the Partners in proportion to their respective profits interests.
3.03. Allocation of Partner Nonrecourse Deductions. Notwithstanding
any other provisions of the Agreement, any item of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt shall be allocated to the
Partner or Partners who bear the economic risk loss for such partner
Nonrecourse Debt in accordance with Treas. Reg. sec.1.704-2(i).
3.04. Chargebacks of Income and Gain. Notwithstanding any other
provisions of the Agreement:
(a) Partnership Minimum Gain. In the event that there is a net
decrease in Partnership Minimum Gain for a taxable year of the Partnership,
then before any other allocations are made for such taxable year, each Partner
shall be allocated items of Book income and gain for such year (and, if
necessary, for subsequent years) to the extent required by Treas. Reg.
sec.1.704-2(f).
(b) Partner Nonrecourse Debt Minimum Gain. In the event that
there is a net decrease in Partner Nonrecourse Debt Minimum Gain for a taxable
year of the Partnership, then after taking into account allocations pursuant to
paragraph (a) immediately preceding, but before any other allocations are made
for such taxable year, each Partner with a share of Partner Nonrecourse Debt
Minimum Gain at the beginning of such year shall be allocated items of Book
Income and gain for such year (and, if necessary, for subsequent years) to the
extent required by Treas. Reg. sec.1.704-2(i)(4).
(c) Application for Waiver. In the event that the Managing
Partner determines, in its discretion, that the
19
<PAGE> 87
application of the provisions of Section 3.04(a) or section 3.04(b) would cause
a distortion in the economic arrangement among the Partners, the Managing
Partner may, on behalf of the partnership, request a waiver of the application
of either or both of such provisions pursuant to Treas. Reg. sec.1.704-2(f)(4)
or Treas. Reg. sec.1.704-2(i)(4).
3.05. Curative Allocation. Subject to the provisions of Sections
3.02, 3.03, and 3.04, but notwithstanding any other provision of the Agreement,
in the event that any Regulatory Allocation is made pursuant to this Appendix
for any taxable year, then remaining Book items for such year (and, if
necessary, Book items for subsequent years) shall be allocated or reallocated
in such amounts and proportions as are appropriate to restore the Adjusted
Capital Account Balances of the Partners to the position in which such Adjusted
Capital Account Balances would have been in such Regulatory Allocation had not
been made.
3.06. Other Allocations. (a) If and to the extent that the
Partnership is finally determined for federal income tax purposes to have
received interest income as the result of any portion of any Partner's capital
contribution being treated as interest under the Code, such Partner's Capital
Account shall be reduced to reflect the treatment of an equal amount of such
Partner's capital contribution as interest for Book purposes, and such interest
income shall then be allocated to the Capital Account of such Partner.
(b) If and to the extent that there is a final determination for
federal income tax purposes that any fee paid to any Partner by the Partnership
is to be treated as a distribution under section 731 of the Code, such
Partner's Capital Account shall be reduced to reflect the treatment of such
amount as a distribution for Book purposes, and the resulting increase in
Partnership Book income shall be allocated to the Capital Account of the
Partner deemed to have received such fee.
(c) If and to the extent that any distribution of Section 751
Property to a Partner in exchange for property other than Section 751 Property
is treated as a sale or exchange of such Section 751 Property by the
Partnership pursuant to Treas. Reg. sec.1.751-1(b)(2), any Book gain or loss
attributable to such deemed sale or exchange shall be allocated only to
Partners other than the distributee Partner.
(d) If and to the extent that any distribution of property other
than Section 751 Property to a Partner in exchange for Section 751 Property is
treated as a sale or exchange of such other property by the Partnership
pursuant to Treas. Reg. sec.1.751-1(b)(3), any Book gain or loss attributable
to such deemed
20
<PAGE> 88
sale or exchange shall be allocated only to Partners other than the distributee
Partner.
ARTICLE IV
ALLOCATION OF TAX ITEMS
4.01. In General. Except as otherwise provided in this Article IV,
all items of income, gain, loss, and deduction shall be allocated among the
partners for federal income tax purposes in the same manner as the
corresponding allocation for Book purposes.
4.02. Section 704(c) Allocations. In the event that the Book Value
of an item of Partnership property differs from its Tax Basis, allocations of
depreciation, depletion, amortization, gain, and loss with respect to such
property will be made for federal income tax purposes in a manner that takes
account of the variation between the Tax Basis and Book Value of such property
in accordance with section 704(c)(1)(A) of the code and Treas. Reg.
sec.1.704-1(b)(2)(iv)(f)(4), sec.1.704-1(b)(2)(iv)(g), and
sec.1.704-1(b)(4)(i). The Managing Partner may select any reasonable method
for making such allocations, including, without limitation, any method
described in Proposed Treas. Reg. sec.1.704-3(b), (c), or (d).
4.03. Tax Credits. Tax credits shall be allocated among the
Partners in accordance with Treas. Reg. sec.1.704-1(b)(4)(ii).
ARTICLE V
OTHER TAX MATTERS
5.01. Excess Nonrecourse Liabilities. For the purpose of
determining the Partners' shares of the Partnership's Excess Nonrecourse
Liabilities pursuant to Treas. Reg. sec.sec.1.752-3(a)(3) and
1.707-5(a)(2)(ii), and solely for such purpose, the Partners' interests in
partnership profits are hereby specified to be their respective profits
interests.
5.02. Treatment of Certain Distributions. (a) In the event that
(i) the Partnership makes a distribution that would (but for this Subsection
(a)) be treated as a Nonrecourse Distribution; and (ii) such distribution, if
it were not treated as a Nonrecourse Distribution, would not cause or increase
a deficit Adjusted Capital Account Balance for the Partner receiving such
distribution as of the end of the Partnership's taxable year in which such
distribution occurs; then the Partnership shall treat such distribution as not
constituting a Nonrecourse Distribution to the extent permitted by Treas. Reg.
sec.1.704-2(h)(3).
21
<PAGE> 89
(b) In the event that (i) the Partnership makes a distribution
that would (but for this Subsection (b)) be treated as a Partner Nonrecourse
Distribution; and (ii) such distribution, if it were not treated as a Partner
Nonrecourse Distribution, would not cause or increase a deficit Adjusted
Capital Account Balance for the Partner receiving such distribution as of the
end of the Partnership's taxable year in which such distribution occurs; then
the Partnership shall treat such distribution as not constituting a Partner
Nonrecourse Distribution to the extent permitted by Treas. Reg.
sec. 1.704-2(i)(6).
5.03. Reduction of Basis. In the event that a Partner's interest in
the Partnership may be treated in whole or in part as depreciable property for
purposes of reducing such Partner's basis in such interest pursuant to section
1017(b)(3)(C) of the Code, the Partnership shall, upon the request of such
Partner, make a corresponding reduction in the basis of its depreciable
property with respect to such Partner. Such request shall be submitted to the
Partnership in writing, and shall include such information as may be reasonably
required in order to effect such reduction in basis.
22
<PAGE> 90
APPENDIX B
Initial Capital Contributions
-----------------------------
Partner Property to be Contributed Value:
- ------- -------------------------- ------
RWI Cash $ 1,000
GCI Rhodes, Inc. Common Stock, $78,730,854
no par value:
-831,898 shares
(acquired 9/88 --
certificate held by
NationsBank) $12,686,444
-4,080,781 shares
(acquired 6/93 --
certificate held by
NationsBank) * $62,231,910
-250,000 shares
(acquired 6/93 --
DTC - Goldman Sachs
account) $ 3,812,500
Valley Fashions Corp.
Class A Common Stock,
$.01 par value:
-730,000 shares
(acquired 10-12-92
DTC - NationsBank
Securities) $11,680,000
-----------
TOTAL $90,411,854
===========
- ---------------------
* Restricted Shares.
23
<PAGE> 91
EXHIBIT F
<PAGE> 92
EXHIBIT F
AGREEMENT REQUIRED UNDER RULE 13d-1
March 21, 1994
TO THE PERSONS ON THE ATTACHED
DISTRIBUTION LIST
Re: Schedule 13D under the Securities Exchange Act
of 1934 Relating to the Acquisition of Common Stock
of Rhodes, Inc.
GENTLEMEN:
This letter will set forth our mutual understanding and agreement that the
captioned statement is filed on behalf of each person and entity set forth
below and that this letter may be attached as an exhibit to such statement.
Please indicate your acceptance and agreement by executing a counterpart hereof
in the space provided below and returning it to the undersigned.
Very truly yours,
WPS INVESTORS, L.P.
By: HTG CORP., General Partner
/s/ Holcombe T. Green, Jr.
-----------------------------------
Holcombe T. Green, Jr.
President
Accepted and Agreed to
as of the date first above written:
GREEN CAPITAL INVESTORS, L.P.
By: Green and Company, L.P.,
General Partner
By: HTG Corp.,
General Partner
/s/ Holcombe T. Green, Jr.
-------------------------------------------
Holcombe T. Green, Jr.
President
Pages __ of __ Pages
<PAGE> 93
GREEN AND COMPANY, L.P.
By: HTG Corp., General Partner
By:/s/ Holcombe T. Green, Jr.
----------------------------
Holcombe T. Green, Jr.
President
HTG CORP.
/s/ Holcombe T. Green, Jr.
- --------------------------
Holcombe T Green, Jr.
President
/s/ Holcombe T. Green, Jr.
- ---------------------------
Holcombe T. Green, Jr.
Page __ of __ Pages
<PAGE> 94
DISTRIBUTION LIST
HTG Corp.
3343 Peachtree Road
East Tower, Suite 1420
Atlanta, Georgia 30326
Green and Company, L.P.
3343 Peachtree Road
East Tower, Suite 1420
Atlanta, Georgia 30326
Mr. Holcombe T. Green, Jr.
3343 Peachtree Road
East Tower, Suite 1420
Atlanta, Georgia 30326
Green Capital Investors, L.P.
3343 Peachtree Road
East Tower, Suite 1420
Atlanta, Georgia 30326
-3-
Page __ of __ Pages
