- 34 - Southampton was required to maintain at least 2 percent of partnership capital. In the event that a substantial widening of the credit spread on Colgate debt caused Southampton's capital account to fall below the 2-percent threshold, unless prevented by insolvency, Southampton would contribute enough additional capital to continue to finance at least a certain minimum amount of the preferred return. Section 4.03 of the Partnership Agreement governed the maintenance of the partners' capital accounts. The capital accounts would be increased by the amount of the partners' contributions, adjusted for allocations of partnership income, gain, expenses, and loss, and reduced by the fair market value of distributed property. Upon the occurrence of Revaluation Events, the capital accounts would be adjusted to reflect the mark-to-market revaluation of partnership assets. Each of the partners was entitled to have its interest redeemed at fair market value upon request. Kannex could request redemption at any time after February 28, 1992. The other two partners could request redemption 1 year later. The redemption provision apparently was not the subject of negotiation. It was the intention of the parties that Kannex would be redeemed within 2 years, before its formal right under the Partnership Agreement ripened. The planned duration of Kannex's participation was dictated by the period prescribed for carryback of the capital loss to Colgate's 1988 taxable year. Colgate's plan afforded ABNPage: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Next
Last modified: May 25, 2011