SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
TRANS WORLD GAMING CORP.
(Name of Issuer)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
0008933751
(CUSIP Number)
Timothy G. Ewing
Value Partners, Ltd.
c/o Fisher Ewing Partners
Suite 4660 West
2200 Ross Avenue
Dallas, Texas 75201-2790
(214) 999-1900
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JULY 1, 1996
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d- 1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [X].
Page 1 of __ Pages
Exhibit Index appears on page __
<PAGE>
(1) Name of Reporting Person. Value Partners, Ltd.
S.S. or I.R.S. Identification 75-2291866
No of Above Person
(2) Check the Appropriate Box if a (a)
Member of a Group (See instructions) (b) X
(3) SEC Use Only
(4) Source of Funds (See instructions) WC
(5) Check if Disclosure of Legal
Proceedings is Required Pursuant
to Items 2(d) or 2(e)
(6) Citizenship or Place of Organization Texas
Number of Shares (7) Sole Voting Power 1,200,000
Beneficially Owned
By The Reporting
Person With * (8) Shared Voting Power ___________
(9) Sole Dispositive Power 1,200,000
(10) Shared Dispositive Power ___________
(11) Aggregate Amount Beneficially 1,200,000
Owned by The Reporting Person
(12) Check if the Aggregate Amount in
Row (11) Excludes Certain Shares
(See instructions)
(13) Percent of Class Represented by 32.0%
Amount in Row (11)
(14) Type of Reporting Person (See PN
Instructions)
---------------------
* But see item 5
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ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (the "Statement") relates to the Common
Stock $.001 par value (the "Common Stock") of Trans World Gaming Corp. (the
"Issuer"). The principal place of business of the Issuer is One Penn Plaza,
Suite 4303, New York 10119-0002.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c) This Statement is filed by Value Partners, Ltd., a Texas
limited partnership ("Value Partners"). Fisher Ewing Partners, a Texas general
partnership ("Fisher Ewing") is the general partner of Value Partners. Richard
W. Fisher and Timothy G. Ewing are the general partners of Fisher Ewing. The
principal place of business for Mr. Fisher, Mr. Ewing, Fisher Ewing and Value
Partners is Suite 4660 West, 2200 Ross Avenue, Dallas, Texas 75201-2790.
The present principal occupation or employment of Mr. Fisher is
managing general partner of Fisher Ewing. The present principal occupation of
Mr. Ewing is general partner of Fisher Ewing. The principal business of Value
Partners is investment in and trading of capital stocks, warrants, bonds, notes,
debentures and other securities. The principal business of Fisher Ewing is the
management of Value Partners.
(d) None of Value Partners, Fisher Ewing, Mr. Fisher or Mr.
Ewing, during the last five years, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) None of Value Partners, Fisher Ewing, Mr. Fisher or Mr.
Ewing has, during the last five years, been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Mr. Fisher and Mr. Ewing are citizens of the United States
of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On July 1, 1996, Value Partners purchased six (6) Units (as defined
below) pursuant to a private offering extended to Value Partners by the Issuer
for a total purchase price of $3,000,000.00. The funds for such purchase came
from the working capital of Value Partners.
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Each Unit issued by the Issuer ("Unit") consists of (i) one (1)
$500,000.00 principal amount 12% secured convertible senior bond due June 30,
1999 (a "Bond") and (ii) one (1) warrant to purchase 100,000 shares of Common
Stock (a "Warrant"). Each Bond may be converted into Common Stock at any time
prior to June 30, 1999 at a conversion price of $5.00 per share (subject to
adjustments described in the Bond and the indenture governing the Bonds). Each
Warrant is exercisable for a period of five (5) years and may be exercised at
any time prior to June 30, 2001 at an exercise price of $1.00 per share.
ITEM 4. PURPOSE OF TRANSACTION
Value Partners has acquired the Units beneficially owned by it solely
for investment purposes. Depending on its evaluation of the Issuer, other
investment opportunities, market conditions, and such other factors as it may
deem material, Value Partners may seek to acquire additional Units or additional
shares of Common Stock in the open market, in private transactions, or
otherwise. Value Partners may also decide to convert all or some Units into
Common Stock and dispose of all or a portion of the shares of Common Stock it
owns.
Except as set forth above, none of Value Partners, Fisher Ewing, Mr.
Fisher or Mr. Ewing has any plans or proposals of the type referred to in
clauses (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) For purposes of Rule 13d-3, as of July 1, 1996, Value Partners may
be deemed to be the beneficial owner of 1,200,000 shares of Common Stock (the
"Resulting Shares"). Such 1,200,000 Resulting Shares would represent
approximately 32.0% of the Issuer's outstanding Common Stock as calculated
pursuant to Rule 13d-3 adopted pursuant to the Securities Exchange Act of 1934.
According to the Issuer's annual report on Form 10-kSB/A dated April
12, 1996, on May 23, 1996, a total of 2,544,286 shares of Common Stock were
issued and outstanding as of such date.
(b) Subject to the qualifications below only, Value Partners has the
sole power to vote and dispose of any of the Resulting Shares. Value Partners
does not have the power to vote or to direct the vote of, or the power to
dispose or to direct the disposition of, any other shares of Common Stock.
However, Fisher Ewing, as general partner of Value Partners, may be
deemed, for purposes of determining beneficial ownership pursuant to Rule 13d-3,
to have the shared power with Value Partners to vote or direct the vote of, and
the shared power with Value Partners to dispose of or to direct the disposition
of, any of the Resulting Shares.
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In addition, Mr. Fisher and Mr. Ewing, as general partners of Fisher
Ewing, may be deemed, for purposes of determining beneficial ownership pursuant
to Rule 13d-3, to have shared power with Value Partners to vote or to direct the
vote of, and the shared power to dispose or to direct the disposition of, the
Resulting Shares.
(c) See response to Item 3 above.
(d) Mr. Fisher and Mr. Ewing may be deemed to have the power to direct
the receipt of dividends from, or the proceeds from the sale of, the Resulting
Shares.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Value Partners, Fisher Ewing, Mr. Fisher and Mr. Ewing have no
contracts, arrangements, understandings or relationships (legal or otherwise)
between themselves and any person with respect to any securities of the Issuer
other than those described below:
(a) The Amended and Restated Agreement of Limited Partnership of Value
Partners, dated as of October 1, 1993, pursuant to the terms of which Fisher
Ewing, as General Partner, has the sole power to manage the affairs of Value
Partners, including the right to vote the shares of the Issuer and to dispose of
such shares.
(b) The Partnership Agreement of Fisher Ewing, dated as of September 1,
1991, pursuant to the terms of which Mr. Fisher and Mr.Ewing, as General
Partners, have the power to manage the affairs of Fisher Ewing, including the
right to vote the shares of the Issuer and to dispose of such shares.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
The following are filed as exhibits to this Statement on Schedule 13D:
Exhibit 1 Form of Amended and Restated Agreement of Limited
Partnership of Value Partners dated as of October 1, 1993.
Exhibit 2 Agreement of General Partnership of Fisher Ewing dated as
of September 1, 1991.
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: July 11, 1996
VALUE PARTNERS, LTD.
By: FISHER EWING PARTNERS
as General Partner
By: /s/ TIMOTHY G. EWING
Timothy G. Ewing
General Partner
EXHIBIT INDEX
PAGE NO.
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Exhibit 1 Form of Amended and Restated Agreement of 8
Limited Partnership of Value Partners
dated as of October 1, 1993.
Exhibit 2 Agreement of General Partnership of Fisher 30
Ewing dated as of September 1, 1991.
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF VALUE PARTNERS, LTD.
OCTOBER 1, 1993
THE LIMITED PARTNERSHIP INTERESTS WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND ARE NOT ASSIGNABLE OR TRANSFERABLE EXCEPT
AS PROVIDED IN THE PARTNERSHIP
AGREEMENT.
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TABLE OF CONTENTS
ARTICLE I Definitions ..................................................... 1
1.1 Definitions .................................................. 1
ARTICLE II Continuation, Name, Purposes, Registered Office,
Registered Agent and Term ........................................ 4
2.1 Continuation ................................................. 4
2.2 Name ......................................................... 4
2.3 Purposes ..................................................... 4
2.4 Registered Office ............................................ 5
2.5 Registered Agent ............................................. 5
2.6 Term of Partnership .......................................... 5
ARTICLE III Capital Contributions ......................................... 5
3.1 Capital Contribution of General Partner ...................... 5
3.2 Capital Contribution of Limited Partners ..................... 5
3.3 Additional Contributions ..................................... 5
ARTICLE IV Allocations of Net Profits and Net Losses ...................... 6
4.1 Allocation of Net Profits .................................... 6
4.2 Allocation of Net Loss ....................................... 6
4.3 Restriction on Allocation to the General Partner ............. 6
4.4 Federal Income Tax Allocations ............................... 6
4.5 Allocation on Transfer ....................................... 7
4.6 Allocation on Distribution of Assets in Kind ................. 7
4.7 Determination by General Partner of Certain Matters .......... 7
ARTICLE V Capital Accounts ................................................ 8
5.1 Capital Accounts ............................................. 8
5.2 Computation of Opening Capital Accounts ...................... 8
5.3 Computation of Closing Capital Accounts ...................... 8
5.4 Obligation to Repay or Restore ............................... 8
5.5 Tax Elections ................................................ 9
ARTICLE VI Partnership Expenses ........................................... 9
6.1 Operating Expenses ........................................... 9
ARTICLE VII Withdrawals and Distributions; Admission of Partners .......... 9
7.1 Interest ..................................................... 9
7.2 Withdrawals by the Partners .................................. 9
7.3 Exclusion of Limited Partners ................................ 10
7.4 Admission of Additional Partners ............................. 10
7.5 Assignment or Transfer of Partnership Interests .............. 10
7.6 Distribution in Kind ......................................... 11
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7.7 Loans to Partners ............................................ 11
ARTICLE VIII Management, Duties and Restrictions .......................... 12
8.1 Management ................................................... 12
8.2 No Control by Limited Partners ............................... 13
8.3 Activities of the Partners of the General Partner ............ 13
ARTICLE IX Dissolution of the Partnership ................................. 13
9.1 Dissolution .................................................. 13
9.2 Events Affecting a Limited Partner ........................... 13
ARTICLE X Liquidation of the Partnership .................................. 14
10.1 Liquidation Procedures ...................................... 14
ARTICLE XI Financial Accounting and Reports ............................... 15
11.1 Financial and Tax Accounting and Reports .................... 15
11.2 Valuation of Assets ......................................... 15
11.3 Supervision; Inspection of Books ............................ 15
11.4 Annual Report; Financial Statements ......................... 15
11.5 Special Meetings ............................................ 16
11.6 Consent in Lieu of Meeting .................................. 16
ARTICLE XII Other Provisions .............................................. 16
12.1 Execution and Filing of Documents ........................... 16
12.2 Other Instruments and Acts .................................. 16
12.3 Binding Agreement ........................................... 16
12.4 Governing Law ............................................... 16
12.5 Notices ..................................................... 16
12.6 Power of Attorney ........................................... 17
12.7 Amendment ................................................... 17
12.8 Entire Agreement ............................................ 17
12.9 Titles; Subtitles ........................................... 18
12.10 Exculpation ................................................ 18
12.11 Indemnification ............................................ 18
12.12 Limitation of Liability of the Limited Partners ............ 18
12.13 Confidentiality ............................................ 18
12.14 Ambiguities ................................................ 18
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF VALUE PARTNERS, LTD.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
is effective as of the 1st day of October 1993, by and between Fisher Ewing
Partners, a Texas partnership, as general partner (the "General Partner") and
the Limited Partners admitted into the Partnership listed on SCHEDULE A. The
General Partner and the Limited Partners, hereby agree as follows:
ARTICLE I
Definitions
1.1 Definitions: Unless the context requires otherwise, the following terms
have the meanings specified in this paragraph:
Act: The Texas Revised Limited Partnership Act.
Agreement: This Agreement of Limited Partnership and any amendments
thereto.
Applicable Rate: Interest at the prime rate announced by Morgan
Guaranty Trust Company of New York, compounded at the beginning of each
Fiscal Quarter.
Bankruptcy: A person or entity shall be deemed bankrupt if:
(a) any proceeding is commenced against such person or entity as
"debtor" for any relief under bankruptcy or insolvency laws, or laws
relating to the relief of debtors, reorganizations, arrangements,
compositions, or extensions and such proceeding is not dismissed
within sixty (60) days after such proceeding has commenced, or
(b) such person or entity commences any proceeding for relief
under bankruptcy or insolvency laws or laws relating to the relief of
debtors, reorganizations, arrangements, compositions, or extensions.
Capital Account: The capital account of a Partner established and
maintained in accordance with paragraph 5.1.
Closing Capital Account: A Partner's Capital Account as of the end of
an Interim Period.
Closing Date: The first day on which the General Partner accepts
Limited Partners into the Partnership.
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Date of Dissolution: The date on which the Partnership is dissolved
pursuant to paragraph 9.1.
Fiscal Year: The 12 month period ending December 31 of each year;
provided, however, that the initial Fiscal Year shall be the period
beginning on July 1, 1989 and ending December 31, 1989 and the last Fiscal
Year shall be the period beginning on January 1 of the calendar year in
which the final liquidation and termination of the Partnership is completed
and ending on the date such liquidation and termination is completed.
General Partner: Fisher Ewing Partners, a Texas partnership, and its
permitted successors and assigns.
Interim Period: A period subsequent to the Closing Date commencing on
the day on which a new Partner is admitted to the Partnership or the day on
which a Partner makes an additional capital contribution to the Partnership
or the day following the day on which the interest of a Partner is reduced
or terminated (if any of the foregoing events occurs other than on the last
day of a Fiscal Year). An Interim Period shall end on the last day of the
Fiscal Year in which the Interim Period began or on the day immediately
preceding the beginning of a new Interim Period, whichever is earlier. An
Interim Period shall also commence on the first day of a Fiscal Year.
Internal Revenue Code: The United States Internal Revenue Code of
1986, as now existing or hereafter amended.
Limited Partners: The Limited Partners listed on SCHEDULE A hereto.
Majority in Interest of the Limited Partners: Limited Partners having
Partnership Percentages representing more than fifty percent (50%) of the
Partnership Percentages of all Limited Partners.
Management Agreement: The amended and restated management agreement
between Fisher Ewing Partners and the Partnership with respect to
managerial and support services to be provided and fees to be charged to
the Partnership, included as Exhibit A hereto.
Net Asset Value: The Net Asset Value of the Partnership shall equal
the total assets, less the total liabilities of the Partnership as of the
relevant valuation date, using the accrual method and determined on the
basis of generally accepted accounting principles consistently applied,
including unrealized profits or losses on open positions and also including
other properly accrued credits or debits. Net Asset Value as of the close
of an Interim Period shall be determined prior to giving effect to any
withdrawals made as of the last day of such Interim Period. Partnership
assets shall be valued in accordance with paragraph 11.2. Those costs
incurred in organizing the Partnership shall
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be amortized over the Partnership's initial sixty months of
operations. Any unamortized costs shall be considered in determining Net
Asset Value.
Net Profit and Net Loss: With respect to any Interim Period, the
difference between (i) the Net Asset Value of the Partnership as of the
close of business on the last day of such Interim Period, and (ii) the Net
Asset Value of the Partnership as of the beginning of business on the first
day of the Interim Period, after giving effect to withdrawals as of the
last day of the previous Interim Period, and contributions as of the first
day of the Interim Period.
Opening Capital Account: A Partner's Capital Account as determined
under paragraph 5.2.
Operating Expenses: Shall have the meaning assigned to it in paragraph
6.1.
Partner: A partner of the Partnership, including the Limited Partners
and the General Partner.
Partnership: Value Partners, Ltd., a Texas limited partnership.
Partnership Percentage: At the beginning of each Interim Period, the
Partnership Percentage for each Partner for such Interim Period shall be
determined by dividing the amount of each Partner's Opening Capital Account
by the sum of the Opening Capital Accounts of all of the Partners for such
Interim Period.
Partnership Term: The period of duration of the Partnership, as set
forth in paragraph 2.6.
Preferred Return: An amount calculated at the end of each Fiscal Year
equal to 6%, on an annualized basis, of a Partner's capital account from
the beginning of the Interim Period immediately following the later of (i)
the last Interim Period for which the General Partner received an
allocation of Net Profits pursuant to paragraph 4.1(c) with respect to such
capital, (ii) the date such capital was contributed to the Partnership (in
the event an allocation of Net Profits to the General Partnership pursuant
to paragraph 4.1(c) has not been made with respect to such capital) and
(iii) the date which is 24 months prior to the date on which the current
allocation of Net Profits is made pursuant to paragraph 4.1(c) with respect
to such capital. The Preferred Return is adjusted, on a time-weighted
basis, for all contributions occurring during a Fiscal Year.
In the event an allocation of Net Profits to the General Partner
pursuant to paragraph 4.1(c) was not made in the previous Fiscal Year, the
Preferred Return in the current Fiscal Year shall be the same amount as
that of the previous Fiscal Year adjusted on a time-weighted basis for any
contributions made during the year. The Preferred Return will accrue only
on capital which remains in the Partnership until the end of an Interim
Period in which an allocation of Net Profits to the General Partner occurs.
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Securities: Capital stock, preorganization certificates and
subscriptions, warrants, bonds, notes, debentures, whether subordinated,
convertible or otherwise, trust receipts and other securities of whatever
kind or nature of any person, corporation, government or entity whatsoever,
whether readily marketable or not, in rights and options relating thereto,
including put and call options written by the Partnership or by others.
Securities Act: The Securities Act of 1933, as amended.
Tax Matters Partner: Fisher Ewing Partners or such other Partner as
the General Partner may designate.
ARTICLE II
Continuation, Name, Purposes, Registered Office,
Registered Agent and Term
2.1 Continuation. The General Partner and the Limited Partners hereby
continue the Partnership pursuant to the Certificate of Limited Partnership of
Value Partners, Ltd. (the "Certificate") filed with the Office of the Secretary
of State of Texas on April 20, 1989.
2.2 Name. The name of the Partnership is Value Partners, Ltd. The business
of the Partnership shall be conducted under the Partnership name. The
Partnership shall have the exclusive right to use the Partnership name as long
as the Partnership continues. Upon termination of the Partnership, the
Partnership shall assign the name and goodwill attached to the Partnership name
to the General Partner.
2.3 Purposes. The Partnership is organized to enter into, make, and perform
all contracts and other undertakings, and 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:
(a) to purchase Securities and hold them for investment;
(b) to purchase, hold, sell, exchange, transfer, mortgage, pledge and
otherwise acquire and dispose of and exercise all rights, powers,
privileges and other incidents of ownership or possession with respect to
Securities;
(c) 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;
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(d) to borrow or raise monies, 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 nonnegotiable instruments and
evidences of indebtedness, and to secure the payment of such or other
obligations of the Partnership by mortgage upon, or hypothecation or pledge
of, all or part of the property of the Partnership, whether at the time
owned or thereafter acquired;
(e) 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
(f) to engage independent attorneys, accountants or such other persons
as the General Partner may deem necessary or advisable.
2.4 Registered Office. The registered office of the Partnership shall be
c/o Fisher Ewing Partners, 4600 Texas Commerce Tower West, Dallas, Texas 75201,
or such other place or places as the General Partner may from time to time
designate.
2.5 Registered Agent. The registered agent of the Partnership for service
of process in the State of Texas shall be Richard W. Fisher, 4600 Texas Commerce
Tower West, Dallas, Texas 75201.
2.6 Term of Partnership. The term of the Partnership commenced upon the
filing and recording of the Certificate, and shall continue until December 31,
2039.
ARTICLE III
Capital Contributions
3.1 Capital Contribution of General Partner. The General Partner shall
contribute from time to time an amount sufficient to maintain its Capital
Account at an amount equal to at least 1% of Partnership Capital.
3.2 Capital Contribution of Limited Partners. Each Limited Partner shall
make a capital contribution on the Closing Date in such amount as may be
required by the General Partner as a condition of such admission. Contributions
of property, if any, shall be valued at their fair market value in accordance
with paragraph 11.2.
3.3 Additional Contributions. No Partner shall be obligated to make any
contributions to the capital of the Partnership other than as required by this
Article III.
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ARTICLE IV
Allocations of Net Profits and Net Losses
4.1 Allocation of Net Profits. Net Profits for each Interim Period shall be
allocated as follows:
(a) Each Partner shall be allocated 100% of his Partnership Percentage
of Net Profits up to an amount which equals the Preferred Return;
(b) Each Limited Partner shall be allocated 80% of his Partnership
Percentage of Net Profits in excess of the Preferred Return;
(c) The remaining Net Profits shall be allocated to the General
Partner. Provided, however, that the allocation of Net Profit to the
General Partner shall only be determined as of the end of the Fiscal Year
(except with respect to a Partner withdrawing at any time other than the
close of the Fiscal Year).
4.2 Allocation of Net Loss. Each Partner shall be allocated a share of Net
Loss equal to his Partnership Percentage.
4.3 Restriction on Allocation to the General Partner. Notwithstanding
paragraph 4.1 to the contrary, if the allocation of Net Profit for any Interim
Period to the General Partner with respect to a Limited Partner would violate
Rule 205-3(c)(3) of the Rules and Regulations under the Investment Advisors Act
of 1940 or any successor provision thereto (the "Rule"), the allocation of Net
Profit to such Limited Partner in Section 4.1(b) shall be increased to 100% of
his Partnership Percentage, but only to the extent necessary to comply with the
Rule, and the allocation to the General Partner shall be correspondingly
reduced. If, in any subsequent Interim Period, the allocation of Net Profit to
the General Partner with respect to such Limited Partner is no longer limited by
the Rule, the allocation of Net Profit to such Limited Partner shall be made in
accordance with paragraph 4.1, taking into account the Net Profit of the
Partnership for such Interim Period as well as each prior Interim Period in
which such limitation was in effect. In connection with such determination, the
Preferred Return shall be adjusted to take account of the actual period for
which the Net Profit allocation is being made.
4.4 Federal Income Tax Allocations. Solely for federal income tax purposes:
(a) Each item of income, gain, loss, deduction or credit for each
Interim Period shall be allocated among the Partners in a manner that
reflects as nearly as possible the amounts of and components of Net Profit
and Net Loss allocated to the Partners pursuant to paragraphs 4.1, 4.2 and
4.3.
(b) Notwithstanding contrary provisions of this Article IV, gain or
loss with respect to non-cash property contributed to the Partnership by
any Partner shall, to the
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extent required by Section 704(c) of the Internal Revenue Code, be
allocated for federal income tax purposes in a manner to take account of
the difference between the basis of such property at the time of
contribution and its initial value on the Partnership's books. The General
Partner shall make allocations of gain or loss with respect to Partnership
property in a manner which takes account of the difference between the tax
basis of such property and the value of the property on the books of the
Partnership at the time of admission of a new Partner or any additional
capital contribution by a Partner, consistent with the method used by the
Partnership in making allocations under Section 704(c) of the Internal
Revenue Code.
(c) Anything contained herein to the contrary notwithstanding, there
shall first be allocated to each Partner with a deficit capital account in
excess of any obligation by the Partner to restore such deficit balance,
resulting from any adjustment, allocation or distribution described in
Treasury regulations ss.1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Partner's
allocable share of all Partnership gross income up to the amount by which
such deficit capital account balance exceeds such Partner's obligation to
restore such deficit balance.
4.5 Allocation on Transfer. If any interest in the Partnership is
transferred during any Interim Period of the Partnership, each item of Net
Profit or Net Loss for such Interim Period shall be assigned pro rata to each
day in the particular period of such Interim Period to which such item is
attributable (i.e., the day on or during which it is accrued or otherwise
incurred) and the amount of each such item so assigned to any such day shall be
allocated to the Partners based upon their respective interests in the
Partnership at the close of such day.
4.6 Allocation on Distribution of Assets in Kind. Income or loss shall be
deemed realized on the distribution of assets in kind and shall be computed as
if the distributed asset were sold for its fair market value and the resulting
Net Profit or Net Loss were allocated among the Partners pursuant to paragraph
4.1, 4.2 or 4.3.
4.7 Determination by General Partner of Certain Matters. All matters
concerning the valuation of Securities, the determination and allocation of Net
Profits and Losses among the Partners, the federal income tax allocations among
the Partners, and accounting procedures, not specifically and expressly provided
for by the terms of this Agreement, shall be determined by the General Partner,
whose determination shall be final and conclusive as to all of the Partners.
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ARTICLE V
Capital Accounts
5.1 Capital Accounts. Each Partner shall have a Capital Account which shall
be maintained in accordance with Treasury Regulations ss. 1.704-1(b)(2)(iv).
Such Capital Account shall be increased by:
(a) the amount of his cash capital contributions and the fair market
value of his property in the case of noncash contributions to the
Partnership pursuant to Article III;
(b) the amount of Net Profit allocated to him pursuant to paragraph
4.1;
(c) the amount allocated to General Partner pursuant to paragraph 4.3;
and shall be decreased by
(d) such Partner's share of expenditures of the Partnership described
in Section 705(a)(2)(B) of the Internal Revenue Code (relating to
expenditures which are neither deductible nor properly chargeable to
capital);
(e) his share of the excess of the adjusted tax basis of distributed
assets over the fair market value of such assets;
(f) the amount of Net Loss allocated pursuant to paragraph 4.2; and
(g) the fair market value of property distributed to him.
5.2 Computation of Opening Capital Accounts. Each Partner's initial Opening
Capital Account shall be an amount equal to the aggregate capital contributions
made by such Partner to the Partnership on the formation of the Partnership (or,
if such Partner was admitted to the Partnership subsequent to such date, on the
date of such Partner's admission to the Partnership). On the first day of each
subsequent Interim Period, each Partner's Opening Capital Account shall be an
amount equal to the Closing Capital Account of such Partner for the immediately
preceding Interim Period.
5.3 Computation of Closing Capital Accounts. As of the last day of each
Interim Period, the Closing Capital Account of each Partner for such Fiscal Year
shall be computed by adjusting each Partner's Capital Account for the items
described in paragraph 5.1 which relate to such period.
5.4 Obligation to Repay or Restore. No Partner shall be required to pay to
the Partnership or to any other Partner any deficit or negative balance which
may exist from time
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to time in his Capital Account as a result of the provisions hereof for the
allocation of the Partnership's Net Loss, for the withdrawal of capital, and for
the distribution of the Partnership's assets in liquidation of the Partnership.
5.5 Tax Elections. The General Partner is authorized, in its sole
discretion, to make all elections permitted or required of the Partnership under
Treasury regulations ss.1.704-1, Section 754 of the Internal Revenue Code and
pursuant to any other provisions of the Internal Revenue Code.
ARTICLE VI
Partnership Expenses
6.1 Operating Expenses. Subject to the provisions of the Management
Agreement, the Partnership shall bear (or reimburse the General Partner for its
payment of) all direct costs and expenses of every kind and description incurred
in connection with the organization, operations, liquidation and dissolution of
the Partnership (collectively, "Operating Expenses"). Fisher Ewing Partners
shall provide managerial and support services for the Partnership, and shall be
entitled to such fees and expense reimbursement as set forth in the Management
Agreement with Fisher Ewing Partners.
ARTICLE VII
Withdrawals and Distributions;
Admission of Partners
7.1 Interest. Except as otherwise provided in this Agreement, no interest
shall be paid to any Partner on account of his interest in the capital of or on
account of his investment in the Partnership.
7.2 Withdrawals by the Partners. Each Partner shall have the right,
exercisable by delivery of written notice to the General Partner prior to thirty
(30) days prior to the close of a Fiscal Year, to withdraw all of a part of his
Closing Capital Account subject to the following conditions: (i) no such
withdrawal shall be permitted which would result in a Limited Partner's Capital
Account being reduced below $200,000 as of the end of the Fiscal Year of
withdrawal, unless the Limited Partner withdraws the total balance of its
Capital Account; (ii) no withdrawal shall be permitted with respect to any
Limited Partner during any period in which the allocation of Net Profit to the
General Partner is restricted pursuant to paragraph 4.3. In addition, the
withdrawing Partner shall pay to the General Partner a fee of 2% of the amount
withdrawn with respect to permitted withdrawals occurring prior to the end of
the second Fiscal Year end after such Partner's original capital contribution.
The General Partner shall deliver the amount determined in accordance with this
paragraph within 90 days after the close of the Fiscal Year, together with
interest on the withdrawn amount from the effective date of withdrawal at the
Applicable Rate. In lieu of delivering cash to a Partner upon a withdrawal of
all or any part
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of his Capital Account, the General Partner may distribute Securities in kind to
satisfy such withdrawal in accordance with paragraph 7.6.
7.3 Exclusion of Limited Partners. The General Partner may, in its sole and
absolute discretion, exclude from the Partnership any Limited Partner upon at
least forty-five (45) days prior notice in writing given to such Limited
Partner. The interest of such Limited Partner shall terminate on the date
specified in such notice and within ninety (90) days after the date of such
termination such Limited Partner shall be paid the amount of his Closing Capital
Account as of the date of such termination, together with interest on the amount
so paid from the effective date of such termination at the Applicable Rate,
after subtracting the legal and accounting costs associated with such
withdrawal. On the effective date of such termination, such Partner's Capital
Account shall be reduced to zero (0) and thereafter he shall be a creditor of
the Partnership to the extent of the amount payable to him by the Partnership
pursuant to this paragraph 7.3.
7.4 Admission of Additional Partners. The General Partner may, from time to
time, admit additional Limited Partners in its sole discretion, provided that
the total number of Partners in the Partnership shall not exceed 99. The General
Partner may admit additional general partners into the Partnership who are
employed by or affiliated with Fisher Ewing Partners without the consent of the
Limited Partners, provided that (i) any interest in Net Profits or income
allocated to such additional general partners shall not affect in any manner the
allocation to the Limited Partners of such items; and (ii) Fisher Ewing Partners
shall be designated the managing General Partner, with exclusive power to sign
for and bind the Partnership.
7.5 Assignment or Transfer of Partnership Interests.
(a) Except as provided in paragraph 7.4, the General Partner shall not
sell, assign or transfer, in whole or in part, its Partnership interest or
its share of the Partnership's capital, assets or property or enter into
any agreement, the result of which would be for another person, firm or
corporation to become directly or indirectly interested in the Partnership
without the prior written consent of a Majority in Interest of the Limited
Partners. Notwithstanding the foregoing to the contrary, the General
Partner shall be entitled to mortgage or pledge its interest in the
Partnership.
(b) No Limited Partner shall sell, assign, pledge, mortgage, or
otherwise dispose of or transfer, in whole or in part, its Partnership
interest or its share of the Partnership's capital, assets or property or
enter into any agreement, the result of which would be for another person,
firm or corporation to become directly or indirectly interested in the
Partnership without the prior written consent of the General Partner.
(c) No transfer, sale or other disposition of the Partnership interest
of a Limited Partner shall be permitted until the General Partner shall
have received an
-20-
opinion of counsel satisfactory to it that the effect of such transfer
or disposition would not:
(i) result in a violation of the Securities Act;
(ii) require the Partnership to register as an investment company
under the Investment Company Act of 1940, as amended;
(iii) result in a termination of the Partnership under Section
708 of the Internal Revenue Code or in any adverse tax consequences to
the Limited Partners; or
(iv) result in a violation of any law, rule, or regulation by the
Limited Partner, the Partnership, the General Partner, or any partner
of the General Partner.
Such legal opinion shall be provided to the General Partner by the
transferring Limited Partner or the proposed transferee (except that the
opinion in clause (iv) regarding the Partnership, the General Partner and
the partners of the General Partner shall be rendered by counsel to the
Partnership or the General Partner), and all reasonable costs associated
with such opinions shall be borne by the transferring Limited Partner or
the proposed transferee.
(d) A person to whom the interest of a Limited Partner has been
transferred in accordance with paragraphs 7.5(b) and (c) (the "Transferee")
above shall be admitted to the Partnership as a substituted Limited Partner
only with the consent of the General Partner, which consent may be granted
or withheld in the absolute discretion of the General Partner and may be
arbitrarily withheld, and then only upon the execution of this Agreement,
and such other instruments as the General Partner may require in order to
evidence the undertaking of such person to perform and comply with the
terms and conditions of this Agreement. The Transferee shall bear all costs
and expenses incident to the procurement of requisite legal opinions and
the substitution of the Transferee as a Limited Partner.
7.6 Distribution in Kind. The General Partner may, in its discretion,
distribute the assets of the Partnership in kind to the Partners. All
distributions of assets in kind shall be made at fair market value as determined
pursuant to paragraph 11.2 in the same manner that the Partners would have
received if the assets were sold, the Net Profit or Loss were allocated in
accordance with paragraphs 4.1, 4.2 and 4.3 and the proceeds from such sale were
distributed in accordance with paragraph 10.1(b)(iii).
7.7 Loans to Partners. Upon the request of a Partner, the Partnership shall
have the power, in the sole discretion of the General Partner, to loan to such
requesting Partner an amount up to 25% of his Opening Capital Account balance.
Each such loan shall be repayable
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in full at the end of the Fiscal Year in which it is made and shall be secured
by the interest of the Partner in the Partnership. If the Partnership incurs
indebtedness to provide such loan, the loan shall bear interest at 200 basis
points in excess of the Partnership's cost of funds; if the Partnership does not
incur indebtedness to provide the loan, the loan shall bear interest at 200
basis points over the Applicable Rate. The General Partner may, from time to
time, adjust the margin and the base on which the interest rate for any loan
under this paragraph is determined (provided that such adjustment shall not
affect the interest rate on outstanding loans). All out-of-pocket expenses
incurred by the General Partner or the Partnership in connection with any loan
made pursuant to this paragraph 7.7 shall be paid by the Partner to whom such
loan is made.
ARTICLE VIII
Management, Duties and Restrictions
8.1 Management. The General Partner shall have the sole and exclusive right
to manage, control, and conduct the business of the Partnership, subject to the
right of the General Partner to delegate as it sees fit such managerial rights
and obligations as are specifically set forth in the Management Agreement, and
to do any and all acts on behalf of the Partnership, including but not limited
to, the following:
(a) conduct accounts, including margin accounts, with brokers, which
power shall include the authority to pay, or authorize the payment and
reimbursement of, brokerage commissions which may be in excess of the
lowest rates available and which are paid to brokers who execute
transactions for the account of the Partnership and who supply or pay the
cost of property or services (such as rent for office space, salaries for
employees, research services, telephone lines, news and quotation equipment
and computer facilities) utilized by the Partnership or any other
investment fund or investment partnership in which the General Partner is
authorized to participate pursuant to paragraph 2.3 hereof, provided that
the Partnership, directly or through any such other investment fund or
investment partnership, in employing such brokers, obtains "best
execution," taking into account the research and execution capabilities of
the brokers and their financial stability and reputation;
(b) open, maintain and close bank accounts and draw checks or other
orders for the payment of moneys;
(c) lend, with or without security, any of the funds or properties of
the Partnership and, from time to time without limit as to amount, borrow
or raise funds and secure the payment of obligations of the Partnership by
mortgage upon, or 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
-22-
entity, including without limitation the voting of securities,
participation in arrangements with creditors, the institution and
settlement or compromise of suits and administrative proceedings and other
like or similar matters; and
(e) act for and on behalf of the Partnership in all matters incidental
to the foregoing.
The signed statement of the General Partner, reciting that it has
authority to undertake any act or has the necessary votes or consents of
the Partners to take any such act, when delivered to any third party, shall
conclusively establish its capacity to act, and any such third party shall
be entitled to rely in good faith upon such statement. Such statement shall
not, however, be determinative as between the Partners unless the action in
question was in fact authorized with this Agreement.
8.2 No Control by Limited Partners. The Limited Partners shall take no part
in the control or management of the business or affairs of the Partnership nor
shall the Limited Partners have any authority to act for or on behalf of the
Partnership except as is specifically permitted by this Agreement.
8.3 Activities of the Partners of the General Partner. The partners of the
General Partner shall devote such time to the business of the Partnership as
they shall deem necessary to manage and supervise the business of the
Partnership in an efficient manner. The partners of the General Partner may have
other business interests and may engage in other activities in addition to those
relating to the Partnership, which shall not be required to be their exclusive
activity and interest, subject to their fiduciary duty to act with the utmost
good faith in all dealings with the Partnership.
ARTICLE IX
Dissolution of the Partnership
9.1 Dissolution. The Partnership shall be dissolved upon the happening of
any of the following events:
(a) The expiration of the Partnership Term, as provided in paragraph
2.6;
(b) The date specified in a notice from the General Partner to the
Limited Partners which states the intention that the Partnership shall be
dissolved as of the specified date; or
(c) Upon the Bankruptcy or dissolution of the General Partner.
9.2 Events Affecting a Limited Partner. The death, temporary or permanent
incapacity, insanity, Incompetency, Bankruptcy, liquidation, dissolution,
reorganization, merger,
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sale of substantially all the stock or assets of, or other change in the
ownership or nature of a Limited Partner shall not dissolve the Partnership.
ARTICLE X
Liquidation of the Partnership
10.1 Liquidation Procedures.
(a) Upon dissolution of the Partnership the General Partner, or if
there is no General Partner, such person or persons as a Majority in
Interest of the Limited Partners shall designate as liquidating trustees
shall commence immediately to wind up the affairs of the Partnership. The
General Partner or such liquidating trustees shall use their best judgment
as to when to dispose of the Partnership's assets or to make distributions
in kind in order to maximize the return to the Partners from such assets.
(b) The assets of the Partnership remaining after payment of the costs
and expenses of winding up shall be applied in the following priority:
(i) to the creditors of the Partnership, other than Partners, all
amounts due them from the Partnership in the order of priority
established by law;
(ii) to the Partners, all amounts due them in repayment of any
debts of the Partnership to the Partners;
(iii) to the Partners, pro rata in proportion to the balances in
their Capital Accounts, after appropriate allocation of Net Profits or
Losses.
(iv) The General Partner or the liquidating trustees may, in
their sole discretion, distribute any assets to a liquidating trust.
In the event a liquidating trust is established, the Partners shall
appoint three (3) trustees (which trustees may include the General
Partner and any of its partners). Two (2) of the trustees shall be
selected by a Majority in Interest of the Limited Partners and one (1)
of the liquidating trustees shall be selected by the General Partner.
The trustees shall supervise the orderly liquidation of the assets
held by such trust. During the term of the trust the trust assets
shall be distributed at such times and in such amounts as the trustees
shall determine. The trust shall terminate at the end of three (3)
years or such later date as the trust assets may be distributed in
kind to the Partners.
(c) Net Profits and Net Losses and all other gains and losses during
the period of liquidation following dissolution of the Partnership shall be
allocated among the Partners in the manner provided in Article IV.
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ARTICLE XI
Financial Accounting and Reports
11.1 Financial and Tax Accounting and Reports. The tax returns of the
Partnership shall be filed on an accrual basis (if the General Partner deems it
advantageous for the Partnership to do so). The General Partner shall cause the
Partnership's tax returns to be prepared and Schedule K-1 or any successor form
to be prepared and delivered in a timely manner to the Limited Partners. In the
event of an income tax audit of the Partnership or any judicial or
administrative proceeding in connection with the income tax returns of the
Partnership the Tax Matters Partner shall be authorized to act for, and, to the
extent provided by the Internal Revenue Code, his decision shall be binding upon
the Partnership and all Partners. The books and records of the Partnership shall
be kept in accordance with generally accepted accounting principles consistently
applied and shall be audited at the end of each Fiscal Year by independent
certified public accountants selected by the General Partner.
11.2 Valuation of Assets. For purposes of determining the value of
Securities, Securities which are listed on a national securities exchange shall
be valued at their last sales price on the date of determination, or, if no
sales occurred on such day, at the mean between the "bid" and "asked" prices on
such day. Securities which are not listed shall be valued at their last closing
"bid" prices if held "long" by the Partnership and their last closing "asked"
prices if held "short" by the Partnership. Securities which are in the form of
put or call options shall be valued at their fair market value, and Securities
which are commodities or commodity contracts shall be valued at their last prior
sales prices. All other Securities and other assets of the Partnership shall be
assigned such fair market value as the General Partner may determine in good
faith, as well as all other values assigned to Securities or other assets by the
General Partner pursuant to this paragraph 11.2, shall be final and conclusive
as to all of the Partners.
11.3 Supervision; Inspection of Books. Proper and complete books of account
of the business of the Partnership shall be kept under the supervision of the
General Partner at the principal place of business of the Partnership. Such
books shall be open to inspection by the Limited Partners, or their accredited
representatives, at any reasonable time during normal business hours.
11.4 Annual Report; Financial Statements. The General Partner shall
transmit to the Limited Partners within ninety (90) days after the close of each
of the Partnership's Fiscal Years or as soon as practicable thereafter, audited
financial statements of the Partnership prepared in accordance with generally
accepted accounting principles consistently applied, including an income
statement for the year then ended, a balance sheet as of the end of such year,
and a statement of changes in the Partners' Capital Accounts. The financial
statements shall be audited by an independent public accounting firm. The
financial statements shall be accompanied by a report from the General Partner
to the Limited Partners commenting on the affairs of the Partnership during the
Fiscal Year then ended.
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11.5 Special Meetings. The termination or continuation of the Partnership,
and any other matter requiring the consent of any of the Limited Partners
pursuant to this Agreement may be considered at a meeting of the Partners held
not less than twenty (20) nor more than sixty (60) days after notification
thereof shall have been given by the General Partner to all Partners. Such
notification (i) may be given by the General Partner, in its sole discretion, at
any time, and (ii) shall be given by the General Partner within thirty (30) days
after receipt by the General Partner of a request for such a meeting made by a
Majority in Interest of the Limited Partners. Any such notification shall state
briefly the purpose, time and place of the meeting. All such meetings may be
held at the principal offices of the Partnership and during normal business
hours, or at such other places as the General Partner deems appropriate.
11.6 Consent in Lieu of Meeting. Any action which may be taken by the
Partners at a meeting may be effected through the execution of written consents
by the requisite percentage in interest of the Partners.
ARTICLE XII
Other Provisions
12.1 Execution and Filing of Documents. The General Partner and each
Limited Partner (or the General Partner as such Partner's attorney-in-fact)
shall execute and file such certificates and other documents as may be required
by the Act and other applicable laws. The General Partner shall cause the
Partnership to be qualified, formed, reformed or registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Partnership owns property or transacts business if such qualification,
formation, reformation or registration is necessary in order to protect the
limited liability of the Limited Partners or to permit the Partnership lawfully
to own property or transact business as a limited partnership. The General
Partner shall execute, file and publish all such certificates, notices,
statements or other instruments appropriate to permit the business and to
maintain the limited liability of the Limited Partners.
12.2 Other Instruments and Acts. The Partners agree to execute any other
instruments or perform any other acts that are or may be necessary to effectuate
and carry on the Partnership created by this Agreement.
12.3 Binding Agreement. This Agreement shall be binding upon the permitted
transferees, successors, assigns, and legal representatives of the Partners.
12.4 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Texas.
12.5 Notices. Any notice or other communication that one Partner desires to
give to another Partner or the Partnership or that the Partnership desires to
give to a Partner shall be in writing, and shall be deemed effectively given
upon personal delivery or upon deposit in any
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United States mail box, by registered or certified mail, postage prepaid, or
upon transmission by telegram or telex, addressed, in the case of a Partner, to
the Partner at the address shown in Schedule A attached hereto or at such other
address as a Partner may designate by fifteen (15) days' advance notice to the
other Partners and, in the case of the Partnership, to its registered office
designated in paragraph 2.4; provided, however, that any notice to a Partner
with an address outside the United States shall be deemed effectively given only
upon personal delivery or upon transmission by telegram or telex with a
confirmation copy sent by air mail.
12.6 Power of Attorney. Each Limited Partner, by his execution hereof,
hereby makes, constitutes and appoints the General Partner as his true and
lawful agent and attorney-in-fact, with full power of substitution and full
power and authority in his name, place and stead to make, execute, sign,
acknowledge, swear to, record and file (a) this Agreement and any amendment to
any thereof; (b) the original certificate of limited partnership of the
Partnership and all amendments thereto required or permitted by law or the
provisions of this Agreement; (c) all certificates and other instruments deemed
advisable by the General Partner to carry out the provisions of this Agreement
and applicable law or to permit the Partnership to become or to continue as a
limited partnership wherein the Limited Partners have limited liability in the
jurisdiction where the Partnership may be doing business; (d) all instruments
that the General Partner deems appropriate to reflect a change or modification
of this Agreement or the Partnership in accordance with this Agreement,
including without limitation the admission, withdrawal, expulsion, or
substitution of Limited Partners; (e) all conveyances and other instruments or
papers deemed advisable by the General Partner to effect the dissolution and
termination of the Partnership; (f) all fictitious or assumed name certificates
required or permitted to be filed on behalf of the Partnership; and (g) all
other instruments or papers which may be required or permitted by law to be
filed on behalf of the Partnership. The foregoing power of attorney is
irrevocable and coupled with an interest.
12.7 Amendment:
(a) Except for such amendments as result from the operation of the
various provisions of this Agreement, this Agreement may be amended only
with the written consent of a Majority in Interest of the Limited Partners.
(b) The General Partner, acting alone, may make ministerial changes in
the Partnership Agreement for the purpose of correcting errors and
inconsistencies and to comply with federal, state and local rules,
regulations and laws, provided that the liability of the Limited Partners
for Partnership debts shall not be increased by such amendment nor shall
the right of the Limited Partners to Partnership allocations or
distributions be adversely affected thereby. The General Partner, acting
alone, may amend this Agreement to reduce the share of Net Profit allocated
to the General Partner for any Interim Period and increase allocations of
such items to Limited Partners.
12.8 Entire Agreement. This Agreement shall constitute the entire agreement
of the Partners and supersede all prior agreements between the Partners with
respect to the Partnership.
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12.9 Titles; Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and shall not be considered in the interpretation of
this Agreement.
12.10 Exculpation. Neither the General Partner, nor any of its partners,
employees, agents, or affiliates, shall be liable to any Limited Partner or the
Partnership for any action taken or failure to act on behalf of the Partnership
within the scope of authority conferred on the General Partner by this
Agreement, or by law, or done in reliance in good faith on the opinion of legal
counsel, unless such act or omission was performed or omitted fraudulently or in
bad faith or constituted gross negligence.
12.11 Indemnification. To the extent permitted by state or federal law, the
Partnership agrees to indemnify, out of the assets of the Partnership only, the
General Partner and its partners, employees, agents and affiliates hereof and to
save and hold them harmless from and in respect of any loss suffered by the
Partnership which arises out of any action or inaction by him or it if the
indemnified party, in good faith, determined that such course of conduct was in
the best interests of the Partnership and such course of conduct did not
constitute gross negligence or misconduct of the indemnified party. To the
extent permitted by state or federal law, the General Partner, its partners,
employees, agents and affiliates shall be indemnified by the Partnership against
any losses, judgments, liabilities, expenses, and amounts paid in settlement of
any claims sustained by him or it in connection with the Partnership, including
but not limited to any judgment, award, settlement, reasonable attorneys' fees,
and other costs or expenses incurred in connection with the defense or
settlement of any actual or threatened action, proceeding or claim, provided
that the same was not the result of gross negligence or misconduct on the part
of the indemnified party.
12.12 Limitation of Liability of the Limited Partners. No Limited Partner
shall be bound by, nor be personally liable for, the expenses, liabilities, or
obligations of the Partnership in excess of its Capital Contribution to the
Partnership plus such additional amounts determined pursuant to paragraph 5.4.
12.13 Confidentiality. Each Partner recognizes and acknowledges that
confidential information of various kinds may exist, from time to time, with
respect to the business and assets of the Partnership. Accordingly, each Partner
covenants that, except with prior written consent of the General Partner or
except pursuant to his ordinary duties on behalf of the Partnership, he shall at
all times keep confidential and not divulge, furnish or make accessible to
anyone (except the Partnership's authorized representatives) any confidential
information to which he has been or shall become privy relating to the business
or assets of the Partnership. The provisions of this paragraph 12.13 shall not
apply to any information to the extent it is or shall become generally known to
the public or the trade (without commission of a tortious act) or to the extent
it is or shall become available in trade or other publications.
12.14 Ambiguities. The General Partner shall have full power and authority
to resolve questions of interpretation and construction arising under this
Agreement, and its resolution of
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such ambiguities or questions shall be final and binding on the Partnership and
all of its Partners and their legal representatives.
IN WITNESS WHEREOF, the Partners have executed this Agreement as of
October 1, 1993.
GENERAL PARTNER:
FISHER EWING PARTNERS
By:
LIMITED PARTNERS:
By:
as General Partner of Fisher
Ewing Partners, Attorney-in
Fact for those persons listed as
Limited Partners in Schedule A
hereto
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AGREEMENT OF GENERAL PARTNERSHIP
OF
FISHER EWING PARTNERS
(Part of the Fisher Capital Management Group)
This Agreement of General Partnership (the "Agreement") is made by and
between Richard Welton Fisher of Dallas, Texas ("RWF") and Timothy Gordon Ewing
of Dallas, Texas ("TGE") (together, the "Partners") as of the 1st day of
September 1991. RECITALS In consideration of the covenants and conditions
contained herein, and other good and valuable considerations, the receipt and
adequacy of which are hereby acknowledged, the Partners agree as follows:
1. FORMATION. The Partners hereby form a general partnership (the
"Partnership") in accordance with the provisions of the Uniform Partnership Act
of the State of Texas and on the terms and conditions set forth in this
Agreement.
2. NAME. The business of the Partnership will be conducted under the name
"Fisher Ewing Partners."
3. TERM. The term of the Partnership commences effective the date of this
Original Agreement and will continue until December 31, 2060, unless previously
terminated in accordance with the terms of this Agreement.
4. PURPOSES. The purposes of the Partnership are (a) to operate the General
Partnership of Value Partners, Ltd.; (b) to engage in any and all activities
related or incident to the rendition of such services; and (c) to engage in any
and all other activities as the Partners may agree. Neither Partner will be
obligated to make available to the Partnership any business opportunities
obtained by either of them that are not within the scope of the business and
purpose of the Partnership described in this SECTION 4.
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5. PARTNERSHIP INTERESTS. The partnership interests of the Partners (the
"Partnership Interest") will be: RWF, 51%; TGE, 49%.
6. CONTRIBUTIONS AND DISTRIBUTIONS. The Partners will fund all capital
requirements of the Partnership in accordance with their Partnership Interests.
The Partnership will annually, as soon as practicable after the close of the
fiscal year of the Partnership, distribute all funds received by it to the
Partners in accordance with their Partnership Interests; provided, that the
Partnership may retain funds within the Partnership to the extent the Managing
Partner determines to be reasonable for the conduct of its business and
fulfillment of its purposes. Notwithstanding the foregoing, the Managing Partner
may, in his discretion, cause the Partnership to make more frequent
distributions to the Partners in accordance with their Partnership Interests.
7. ALLOCATIONS.
(a) All income, gains, losses, and deductions will be allocated to the
Partners in accordance with their Partnership Interests.
(b) If any interest in the Partnership is sold, assigned, or
transferred during any fiscal year, all items of income, gain, loss,
deduction, and credit attributable to the transferred interest for such
period will be divided and allocated between the transferor and the
transferee by taking into account their varying interests during the period
in accordance with section 706(d) of the Internal Revenue Code, using any
conventions permitted by law and selected by the Partners.
8. MANAGEMENT.
(a) The holder or holders of Partnership Interests aggregating more
than 50% may at any time vote to elect new partners or dismiss existing
partners from the Partnership;
(b) The holder or holders of Partnership Interests aggregating more
than 50% will designate a Managing Partner who will serve until his
successor
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is designated. The Managing Partner will have the exclusive
authority to operate and manage the day-to-day business and affairs of the
Partnership. Persons dealing with the Partnership are entitled to rely
conclusively on the power and authority of the Managing Partner as set
forth in this Agreement. In no event will any person dealing with the
Managing Partner with respect to any business, property, or asset of the
Partnership be obligated to ascertain that the terms of this Agreement have
been complied with, or be obligated to inquire into the necessity or
expediency of any act of the Managing Partner; and every contract,
agreement, deed, mortgage, security agreement, promissory note, or other
instrument or document executed by the Managing Partner with respect to any
business, property, or asset of the Partnership will be conclusive evidence
in favor of any and every person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery thereof, this Agreement
was in full force and effect; (ii) such instrument or document was duly
executed in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership and all the Partners; and (iii) the
Managing Partner was duly authorized and empowered to execute and deliver
any and every such instrument or document for and on behalf of the
Partnership.
(c) The Managing Partner is hereby granted the right, power, and
authority to do in the name of and on behalf of the Partnership all things
that, in the Managing Partner's sole judgment, are necessary, proper, or
desirable to carry out its duties and responsibilities including, without
limitation, the right, power, and authority to:
(i) dispose of Partnership assets in the exercise of any rights
or powers possessed by the Managing Partner under this Agreement;
(ii) enter into agreements containing such terms, provisions, and
conditions as the Managing Partner, in his discretion, approves;
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(iii) purchase from or through other contracts of liability,
casualty, and other insurance that the Managing Partner deems
advisable for the protection of the Partnership and the Partners with
respect to the Partnership's operations or for any purpose convenient
or beneficial to the Partnership;
(iv) incur indebtedness, grant mortgage liens on Partnership
assets, pledge, and otherwise encumber Partnership assets, and
subordinate the interest of the Partnership in any asset to any
indebtedness or interest, whether newly created or preexisting;
(v) sell, exchange, lease, or otherwise dispose of, on such terms
and conditions as the Managing Partner deems advisable, appropriate,
or convenient, any of the assets of the Partnership;
(vi) invest in abort-term debt obligations such funds as are
temporarily not required for the purpose of the Partnership's
operations or distributions pursuant to SECTION 6;
(vii) delegate all or any of the Managing Partner's duties under
this Agreement and, in furtherance of any such delegation, appoint,
employ, or contract with any person for the transaction of the
business of the Partnership, which persons may, under the supervision
of the Managing Partner, act as consultants, accountants, attorneys,
brokers, escrow agents, or any other capacity deemed by the Managing
Partner necessary or desirable, and pay appropriate fees to any such
persons;
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(viii) prepare, or have prepared, and file all tax returns for
the Partnership and make all tax elections for the Partnership,
including any special basis adjustments pursuant to section 754 of the
Internal Revenue Code, provided, however, that the Partner benefiting
from such election will reimburse the Partnership for any additional
costs incurred by the Partnership in making the election for and on
behalf of the Partnership;
(ix) institute, prosecute, defend, and settle any legal,
arbitration, or administrative actions or proceedings on behalf of or
against the Partnership; and
(x) employ, terminate the employment of, supervise, and
compensate such persons or entities for and in connection with the
business of the Partnership and the acquisition, development,
improvement, operations, maintenance, management, leasing, financing,
refinancing, sale, exchange, or other disposition of any assets of the
Partnership or any interest in any of such assets as the Managing
Partner, in its sole discretion, deems necessary or desirable.
(d) Notwithstanding the powers of the Managing Partner set forth in
this SECTION 8, without the consent of all the Partners, the Managing
Partner will not have the right or power to:
(i) do any act contravention of this Agreement as amended from
time to time;
(ii) do any act which would make it impossible to carry on the
ordinary business of the Partnership;
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(iii) confess a judgment against the Partnership;
(iv) possess Partnership property, or assign any Partnership
property for other than a Partnership purpose;
(v) admit a person as a Partner other than as provided in this
Agreement; or
(vi) amend this Agreement.
(e) The Managing Partner is hereby designated as the "Tax Matters
Partner" under Section 6331(a)(7) of the Internal Revenue Code, to manage
administrative tax proceedings conducted at the Partnership level by the
Internal Revenue Service with respect to Partnership matters.
9. DISSOLUTION. The Partnership will be dissolved upon the occurrence of
any of the following events: (a) the death, bankruptcy, resignation or dismissal
of any Partner (the "departing Partner"); (b) the receipt by the Partnership of
the final payment due on any sale of all or substantially all of the
Partnership's assets; or (c) the agreement of each of the Partners to dissolve
the Partnership. In the event of a dissolution of the Partnership pursuant to
CLAUSE (A) above, each Partner (or its legal representative or successor) will
submit the cash purchase price at which it would be willing to purchase an
undivided 100% interest in the Partnership in accordance with conditions set by
the Managing Partner. Whichever Partner submits the higher prices will purchase
the interest of the departing Partner for an amount equal to the product of such
price multiplied by the Partnership Interest of such other Partner.
10. TRANSFER.
(a) No Partner will be permitted to assign, transfer, sell, pledge,
hypothecate, mortgage, encumber, give, abandon, or otherwise dispose of all
or any part of its interest in the Partnership (by operation of law or
otherwise) without the prior consent of the voting majority of the other
Partners.
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(b) No transferee or assignee of any interest in the Partnership
(whether by death or divorce of any Partner, voluntary or involuntary
transfer, or otherwise) will, without the consent of a voting majority of
the Partnership, (i) be entitled to influence or interfere in the
management or administration of the business or affairs of the Partnership;
(ii) have any rights or privileges with respect to the Partnership other
than those of any "assignee" under the Texas Uniform Partnership Act; or
(iii) be considered a partner in this Partnership.
11. BINDING EFFECT. Except as otherwise provided in this Agreement, this
Agreement will be binding upon and inure to the benefit of the parties to this
Agreement and their respective heirs, successors, and assigns.
12. ADDITIONAL DOCUMENTS. Each Partner hereby agrees to execute such
additional documents as may be reasonably necessary to carry out the purposes of
the Partnership.
IN WITNESS WHEREOF, the Partners have executed this Agreement as of the day
and year first above written.
/s/ RICHARD W. FISHER
Richard Welton Fisher
/s/ TIMOTHY G. EWING
Timothy Gordon Ewing
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