Estate Planning

Clauses Relating to Dividends, Distributions

Example 1 (General Partnership):

Section 1.01. Distributions and Withdrawals.

(a) Distributions and capital withdrawals of cash shall be made in accordance with subsection (b) of this Section 1.01 and Section [describing liquidation distributions];

(b) The Venture shall distribute such cash or other property of the Venture as may be approved by the Managing Board from time to time, to the Venturers in shares equal to their respective interests in the Venture.

Example 2 (Limited Partnership Venture):

Section 1.01. Distribution of Cash and Property. The amount of cash or other property available for distribution to or repayment of loans from the Partners shall be determined from time to time by the . Such cash or other property shall be distributed to the Partners at such times as the determines in the following order of priority:

(a) First, to the payment of principal and interest on any outstanding loans made by any Partner to the Partnership;

(b) Any cash or other property remaining for distribution after such loans are repaid in full shall be distributed to the Partners in accordance with their respective Sharing Percentages.

Example 3 (Limited Partnership Venture):

Section 1.01. Distribution of Net Cash Flow.

(a) Net Cash Flow shall be distributed in cash to Partners as follows:

(i) First, within thirty (30) days after the end of each Partnership Year, to each Limited Partner in an amount in each Partnership Year equal to ten percent (10%) of the Capital Contributions made by such Limited Partner, except that in the last Partnership Year, if such Partnership Year is less than 365 days, distributions pursuant to this paragraph shall be calculated on the basis of an annual return of ten percent (10%) multiplied by the number of days the Partnership is in existence during such Partnership Year divided by 365.

(ii) Second, within thirty (30) days after the end of each Partnership Year, to the General Partner in an amount in each Partnership Year equal to ten percent (10%) of the Capital Contributions made by the General Partner, to the extent there is sufficient Net Cash Flow after the distributions made pursuant to clause (i) above, except that in the last Partnership Year, if such Partnership Year is less than 365 days, distributions pursuant to this paragraph shall be calculated on the basis of an annual return of ten percent (10%) multiplied by the number of days the Partnership is in existence during such Partnership Year divided by 365;

(iii) Then, within thirty (30) days after the end of each Partnership Year, to the extent there is sufficient Net Cash Flow after the distributions made pursuant to clauses (i) and (ii) above, the balance to each Partner, in proportion to each Partner's respective Percentage Interest; provided, however, that to the extent there is insufficient Net Cash Flow to make the distributions to the Limited Partners pursuant to Subsection (i) of this Section 1.01(a) in full, the Partnership shall draw on its reserves, and to the extent such reserves are insufficient, such distributions shall be made to the extent of Net Cash Flow and available reserves and any balance remaining due shall be deferred and paid at the end of the next Partnership Year in which there is sufficient Net Cash Flow and reserves to pay such balances. Any deferred distributions shall accrue interest at the rate of 10% per annum.

Section 1.02. Distributions from Capital Transactions. Net Proceeds from Capital Transactions [defined to include, e.g., substantial asset sales and refinancings] shall be distributed to the Partners as soon as is practicable thereafter to each Partner pro rata in accordance with the positive balances, if any, in the Partners' Capital Accounts, after adjustment to reflect all Profits and Losses (including unrealized depreciation and depreciation allocable in accordance with Section ) and all other Capital Account adjustments for the Partnership Year.

Section 1.03. Withholding by General Partner. If the General Partner withholds or pays tax with respect to a Partner in accordance with applicable law, the amount of the distribution to such Partner with respect to which such tax was required to be withheld (or in the case of a tax required to be paid with respect to a Partner other than by reason of a distribution to such Partner, subsequent distributions to such Partner) shall be reduced by the amount of such tax withheld or paid.

Example 4 (Limited Liability Company Venture):

Section 1.01. Distributions.

(a) Cash available or property available to be distributed in-kind by the LLC to the Members ("Distributions") shall be determined for each Fiscal Year by the Board of Managers and shall be distributed to the Members in proportion to their Percentage Interests within seventy-five (75) days following the end of each Fiscal Year. Distributions also may be distributed at such other time or times during any Fiscal Year in anticipation of the year-end determination thereof, and such Distributions shall be subject to year-end adjustment. The Members agree that, within thirty (30) days after determination by the LLC that an overpayment was made to any Member for any Fiscal Year pursuant to this Section 1.01, such member shall repay the overpayment unless the Members otherwise agree to allow such overpayment to be a credit against future Distributions, or make such other adjustments as the Members determine to be appropriate to remedy the overpayment.

Example 5 (Provision Shifting Burden of Foreign Currency Decline to U.S. Partner and Benefits of Local Currency Appreciation to Venture):

The following is an example of a joint venture provision providing for adjustments in the amount of fixed dollar payments to a U.S. venture partner in the event of an increase in the exchange rate beyond specified levels. The effect of this provision is to shift the burden of a decline in the local currency from the venture to the U.S. partner if the currency decreases below a specified point and also to permit the U.S. partner to benefit if the local currency appreciates in value above a specified point.

Distributions by the Venture to the U.S. Venture Partner pursuant to Section [relating to preferred return] and payments by the Venture to the U.S. Venture Partner under the agreements described in Section [describing supply and technology licensing agreements] shall be made in U.S. dollars in the amounts provided for in Sections and for so long as the "Average Exchange Rate" (as defined below) in effect on the date the distribution or payment is due does not exceed eight (i.e., eight pesos for each U.S. dollar). If the Average Exchange Rate exceeds eight, then the distribution or payment shall be adjusted so that the amount due equals the multiple of (i) the amount of the distribution or payment provided for in Section or Section , as relevant, and (ii) a fraction the numerator of which is seven and the denominator of which is the Average Exchange Rate. The Average Exchange Rate shall be computed on the first business day of each month, shall remain in effect for such month and shall equal the average of the daily Mexican pesos to United States dollar exchange rate as reported by for each business day during the preceding calendar month.

Thus, for example, if a fixed dollar payment of is due to the U.S. partner, and the exchange rate remains at eight or below, the payment to the U.S. partner remains fixed at . If the exchange rate rises to nine, the payment to the U.S. partner drops to approximately ($1,000 X 7/9).

Example 6 (Provision Sharing Burden of Foreign Currency Decline Between U.S. Partner and the Venture):

The following is an example of a joint venture provision that adjusts the amount of fixed dollar payments to a U.S. venture partner in the event of increases or decreases in the exchange rate so long as the exchange rate remains within specified levels. If the exchange rate falls above or below the specified levels, then the dollar payments are fixed. The effect of this provision is that the U.S. partner bears the burden of a currency decline so long as the decline remains within acceptable levels. Once this level is exceeded, the venture bears the risk.

For so long as the "Average Exchange Rate" (as defined below) is greater than or equal to (i.e., six pesos for each U.S. dollar) and less than or equal to (i.e., eight pesos to one dollar), the distributions by the Venture to the U.S. Venture Partner pursuant to Section [relating to preferred return] and the payments by the Venture to the U.S. Venture Partner under the agreements described in Section [describing supply and technology licensing agreements] shall be made in U.S. dollars in the amounts provided for in such Sections, multiplied by a fraction, the numerator of which is seven and the denominator of which is the Average Exchange Rate in effect on the date the payment or distribution is due. If the Average Exchange Rate is less than six, the payments or distributions by the Venture to the U.S. Venture Partner pursuant to Sections and shall be made in U.S. dollars in the amounts provided for in such Sections, multiplied by (7/6). If the Average Exchange Rate is greater than eight, the payments or distributions by the Venture to the U.S. Venture Partner pursuant to Sections and shall be made in U.S. dollars in the amounts provided for in such Sections, multiplied by (7/8). The Average Exchange Rate shall be computed on the first business day of each month, shall remain in effect for such month and shall equal the average of the daily Mexican pesos to United States dollars exchange rate as reported by for each business day during the preceding calendar month.

Thus, for example, if a dollar payment of is due to the U.S. partner and the exchange rate is seven, no adjustment is made. If the exchange rate rises to 7.5, the payment to the U.S. partner is adjusted to approximately ($1,000 X 7/7.5). If the exchange rate rises above eight, the payment is fixed at approximately ($1,000 X 7/8). If the exchange rate falls below six, the payment is fixed at approximately ($1,000 X 7/6).