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HomeMy WebLinkAbout1990-08-21; City Council; 10779; Agreement For Design Carlsbad City Library ProjectCIT-OF CARLSBAD - AGEND-BILL L’- J”’ /. 2 I . AB#/‘3, 77 “/ MTG eb-i /c/ 0 TITLE: ASSIGNMENT OF AGREEMENT FOR DESIGN OF CARLSBAD CITY LIBRARY PROJECT . I DEPT. ENG:MP I RECOMMENDED ACTION: Adopt Resolution N0.9030~ approving an agreement which assigns the design contract for the Carlsbad City Library Project with Cardwell/Thomas and Associates to Cardwell/McGraw Architects. ITEM EXPLANATION: On April 12, 1990, the City Council approved an agreement for the design of the Carlsbad City Library Project with Cardwell/Thomas and Associates, a Washington state corporation. Mr. Richard Cardwell, President of Cardwell/Thomas, has requested the City assign the design contract with his firm to the newly created California General Partnership of Cardwell/McGraw Architects. Section 18 of the consultant agreement entitled, ASSIGNMENT OF CONTRACT, requires City Council approval of any contract assignment. City staff, in consultation with the City Attorney's Office, has reviewed the assignment agreement and recommends its approval. There will be no change whatsoever in the principals involved in the design of the project nor any modifications to the design schedule. FISCAL IMPACT: None. EXHIBITS: 1. Resolution No. 90 -307 approving an agreement for the assignment of the design contract for the Carlsbad City Library Project to Cardwell/McGraw Architects. 2. Agreement for assignment of contract. I . 3 . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 $4 25 26 27 28 RESOLUTION NO. go-307 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING AN AGREEMENT FOR THE ASSIGNMENT OF THE DESIGN CONTRACT FOR THE CARLSBAD CITY LIBRARY PROJECT WHEREAS, the City Council of the City of Carlsbad has determined it necessary, desirable, and in the public interest to design and construct the Carlsbad City Library Project; and WHEREAS, the City has entered into an agreement on or about April 12, 1990, with Cardwell/Thomas and Associates, a Washington state corporation to design said project: and WHEREAS, consultant has requested an assignment of said contract to a newly created California Partnership of Cardwell/McGraw Architects; and WHEREAS, said assignment will in no way adversely affect the design and design schedule of said project. NOW, THEREFORE, BE IT RESOLVED as follows: 1. That the above recitations are true and correct. 2. That an agreement for the assignment of contract for the design of the Carlsbad City Library Project is hereby approved and the Mayor and City Clerk are hereby authorized and directed to execute said agreement. Following the execution of said agreement, the City Clerk is further authorized and directed to forward certified copies of said agreement and this resolution to /// * /I/ /// /// /// . - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ~ Cardwell/Thomas and Associates, 1221 Second Avenue, Suite 300, Seattle, Washington 98101-2925, and James McGraw and Associates, 654 India Street, Suite G, San Diego, California 92101. PASSED, APPROVED AND ADOPTED at a regular meeting of the Carlsbad City Council held on the zlst day of August , 1990, by the following vote, to wit: AYES: Council Members Lewis, Kulchin, Larson, Mamaux and Pettin NOES: None ABSENT: None ATTEST: d-l&L& ?c1 (LlzcAw . ALETHA L. RAUTENKRANZ, City &ierk (SEAL) AGREEMENT FOR THE ASSIGNMENT OF CONTRACT CARLSBAD CITY LIBRARY PROJECT This Agreement, made and entered into as of the$y&,day of I 1990, between and among CARDWELL/THOMAS AND ASSOCIATES, a Washington corporation (tlCardwell/ThomasVV), CARDWELL/McGRAW ARCHITECTS, a California general partnership (ltCardwell/McGrawU1), and the CITY OF CARLSBAD, a California municipal corporation (llCarlsbadtt). WHEREAS, on or about April 12, 1990, Cardwell/Thomas entered into a contract with Carlsbad for architectural services for the construction of a public library. WHEREAS, Cardwell/Thomas has formed a partnership with James McGraw Associates, Incorporated, called Cardwell/McGraw Architects which was formed in part to facilitate the orderly and timely performance of the Carlsbad contract by combining the respective experience and expertise of Cardwell/Thomas and James McGraw Associates, Incorporated. A copy of the Partnership Agreement is attached as Exhibit IrA1' to this Agreement of Assignment. WHEREAS, Cardwell/Thomas wishes to assign the contract with Carlsbad to Cardwell/McGraw. 1 C NOW, THEREFORE, in consideration of the mutual promises herein contained, it is agreed as follows: 1. Cardwell/Thomas hereby assigns that certain contract dated April' 12, 1990 between Carlsbad and Cardwell/Thomas for architectural services to Cardwell/McGraw. 2. Cardwell/McGraw hereby agrees to accept the assignment and assumes all covenants, agreements and responsibilities under the contract pursuant to its terms, including, but not limited to, obtaining insurance in the name of the partnership in the types and amounts required by the Carlsbad contract. Said Certificates of Insurance as designated in the aforementioned contract shall be provided to Carlsbad within fifteen (15) calendar days of the date of execution of this agreement. 3. Based upon the covenants and agreements stated herein, Carlsbad hereby consents to the assignment of that certain contract dated April 12, 1990, between Carlsbad and Cardwell/Thomas and Associates, a Washington corporation, to Cardwell/McGraw Architects, a California general partnership. 4. Cardwell/Thomas hereby agrees to accept and assume all covenants, agreements, and responsibilities under the aforementioned contract with Carlsbad pursuant to its terms in the event the Cardwell/McGraw partnership defaults. 2 IN WITNESS WHEREOF, the parties have executed this agreement on the date above stated. CITY OF CARLSBAD APPROVED AS TO FORM: L R. 6wt p. VINCENT F. BIONDO, JR. CITY ATTORNEY ATTEST: CITY CLERK CARDWELL/THOMAS AND ASSOCIATES A Washington Corporation RICHARD CARDWELL, PRESIDENT CARDWELL/McGRAW ARCHITECTS BY: -RICHARD CARDWELL, CARDWELL/THOMAS AND ASS CIATES, A WASHINGTON CO ORATION P JAMES MCGRAW AND ASSOCIATES, A CALIFORNIA CORPORATION EXHIBIT "A" PARTNERSHIP AGREEMENT OF CARDUELL/McGFUUl ARCBITECTS This Agreement is made as of June*, 1990 between JAMES MCGRAW ASSOCIATES, INC. ("McGraw"), a California corporation and CARDWELL/THOMAS AND ASSOCIATES, a Washington corporation ("Cardwell"), ("the Partners"). WHEREAS, James McGraw Associates, Inc. has been conductinq the practice of architecture California; and WHEREAS, Cardwell/Thomas the practice of architecture Washington: and and planning in the State of -, and Associates has been conducting and planning in the State of WHEREAS, the Partners desire to form a partnership in the State of California for the purpose of practicing the profession of architecture and planning, specifically of public libraries in California and the southwestern states; and WHEREAS, the parties wish to facilitate the orderly and timely performance of that certain contract dated April 12, 1990 between the City of Carlsbad and Cardwell through the establishment of a partnership to combine their respective experience. NOW THEREFORE, in consideration of the mutual promises herein contained, it is agreed as follows: 1. Firm Name. The parties as Partners by this Agreement wish to operate a general partnership ("the Partnership") under the laws of the State of California in the partnership name of Cardwell/McGraw Architects. 2. Place of Business. The Partners' principal office and place of business, shall be at 654 India Street,.San Diego, California. The principal place of business may be changed from time to time, and other offices may be established by actions taken in accordance with the provisions of this Agreement that govern management of the Partnership's business and affairs. 3. Term and Effective Date. The Partnership shall continue until dissolved and terminated by mutual agreement of the Partners or under the provisions for dissolution and winding up in this Agreement. The effective date of this Agreement shall be June 1, 1990. The Partners acknowledge, however, that prior to the effective date they have received and disbursed funds in connection with the Partnership purpose and the Partners hereby ratify those acts. T245/LMW 4. Purpose. The purpose of this Partnership shall be to practice the profession of architecture, engineering and planning of public libraries in California and the southwestern states. The Partnership may maintain offices and transact all business incidental to this purpose. The Partnership may, if both Partners agree, so long as no principle of ethics, rule or law is violated, engage in the buying, selling, management, and operation of any property and investments owned or hereafter acquired by the Partnership. 5. Fictitious Business Name Statement. The Partners, or either of them on the Partnership's behalf, shall sign and cause to be filed and published an appropriate fictitious business name statement under the California Fictitious Business Name Law within 40 days after the Partnership begins doing business, within 40 days after any subsequent change in its membership, and before the expiration of any previously filed statement. Cardwell appoints McGraw as its agent and attorney-in-fact to execute on its behalf any such fictitious business name statement relating to this Partnership. 6. Address and Agent for Service. The Partnership shall execute and file with the California Secretary of State a statement pursuant to California Corporations Code Section 24003 in which the location and complete address of the Partnership's principal office in California as set forth above is designated and in which an agent of the Partnership for service of process is designated. 7. Capital Contributions. Each Partner shall be required to contribute such sums of money or property as from time to time shall be required by the Partners in accordance with the agreement of the'partners and which shall be reflected on the books and records of the Partnership. Each Partner has contributed the following amounts which have been credited to their respective capital accounts as of June 1, 1990: McGraw: $500.00 Cardwell: $500.00 8. Assignment of Contract with Citv of Carlsbad. Upon execution of this agreement, Cardwell agrees to assign or cause to be assigned to the Partnership that certain contract dated April 12, 1990 between the City of Carlsbad and Cardwell for architectural services for the construction of a public library. The Partnership hereby agrees to accept the assignment and assumes all covenants, agreements and responsibilities under the contract. The Partners agree to cause their applicable insurance carriers to name the Partnership as additionally named insured on the Partner's comprehensive general liability policy and any other policies carried by the Partners which may be required by contract. T245/LMW -2- 9. Assianment of Other Contracts. Upon execution of this Agreement, the Partners shall assign or cause to be assigned to the Partnership any consultant contracts or other contracts which the Partners may have entered into in connection with Partnership projects. The Partnership hereby agrees to accept the assignments and assumes all covenants, agreements and responsibilities under the assigned contracts. 10. Coroorations as Partners and Services of Partners. 10.1 Each Partner is Corporation. Each of the Partners is a corporation. All of the rights and obligations of the Partners under this Agreement are conditional upon such corporations remaining fully qualified as professional corporations under the laws of the state in which the Partner was incorporated. Cardwell agrees to perform whatever acts are necessary to qualify to do business in the State of California and both Partners agree to perform whatever acts are necessary to qualify to do business in any other state in which the Partnership elects to do business. Wherever in this agreement a reference is made to a Partner's personal services, death or retirement, the reference shall be deemed to be made to the personal services, death or retirement of a licensed shareholder or shareholders of the corporate Partner. Each of the Partners shall devote the amount of time reasonably necessary to accomplish the business of the Partnership. Each of the Partners shall give, whenever required, a true account of all business transactions arising out of or connected with the conduct of the Partnership. 10.2 Acknowledoment of Partners' Separate Architectural Practices: Partnership Opaortunity. The Partners acknowledge that each Partner has its separate architectural and planning practice in the states in which the Partner was incorporated. The Partners acknowledge that each Partner intends to continue to practice architecture and planning independent of this Partnership. The Partners agree, however, that neither Partner will en'ter into a contract to provide architecture or planning services in connection with a public library in California or the southwestern states without offering the project to the Partnership for its consideration. If the Partnership agrees to pursue the contract, neither of the Partners will independently pursue the contract. Both Partners must agree to pursue the contract before a proposal is submitted in the Partnerships name. If one of the Partners elects not to pursue the contract, the Partner who wished to pursue the contract may do so independently of the Partnership. The Partners agree to make a good faith and prompt decision whether to pursue a contract so that the opportunity is not lost to the Partner who wishes to pursue the contract. 10.3 Work Done Outside of Partnershio. Neither Partner shall engage in the practice of architecture or planning T245/LXW -3- or employ either the capital or credit of the Partnership, except on behalf of the Partnership, without the affirmative vote of the other Partner. No drawings done by a Partner on its own behalf and not on behalf of the partnership shall be done on Partnership letterhead or title block sheets. A Partner who does work on its own behalf or not on behalf of the Partnership shall inform the person for whom the work is done that the Partner is not acting on behalf of the Partnership. Furthermore, the Partner agrees to indemnify the Partnership and hold it harmless against any claims, demands, causes of action, damages, costs or expenses (including attorney's fees) arising out of any work performed by the Partner which was not performed on behalf of the Partnership. 10.4 No Emplovees. The Partnership shall have no employees. 11. Profit and Loss. The net profits or the net losses of the Partnership shall be distributable or chargeable as the case may be to each of the Partners as follows: Cardwell/Thomas & Associates 50% James McGraw Associates, Inc. 50% 12. Management of the Firm. 12.1 Partners Have Eoual Votes. Each Partner shall participate in the control, management, and direction of the Partnership's business. In exercising this control, management, and direction, each Partner shall have one vote. 12.2 Powers of Partners. The Partners shall supervise by delegation or otherwise the general character and quality of the professional services of the Partnership. The Partners may establish rules applicable to both Partners, and the associates and employees of the Partners. They may decide all matters on the basis of what is in the best interest of the Partnership, and may revise, rescind or replace any decision retrospectively. 12.3 Acts Reouirins Consent of Both of the Partners. The following acts may be done only with the consent of both of the Partners: 12.4.1 Admission of new Partners: name; 12.4.2 Borrowing money in the Partnership's 12.4.3 Transferring, hypothecating, compromising, or releasing any Partnership claim except on payment in full: T245/LMW -4- 12.4.4 Selling, leasing, or hypothecating any Partnership property or entering into any contract for any such purpose: 12.4.5 Knowingly suffering or causing anything to be done whereby Partnership property may be seized or attached or taken in execution, or its ownership or possession otherwise endangered: 12.4.6 Setting the compensation of Partners: 12.4.7 Establishing criteria for Partners' compensation and bonuses: 12.4.8 Revision of the Partnership Agreement: 12.4.9 Incurring liabilities in excess of $3,000; and 12.4.10 Extending credit by the Partnership to any persons in excess of $3,000. 12.5 Annual Meetinq. The Partners shall meet on or before December 31 of each year for the purpose of discussing and/or deciding distributions of net income, changes to the Partnership Agreement, and other matters affecting the Partnership. The Partners shall meet quarterly, if necessary, to transact other business they deem necessary. 12.6 Handlino Partnership Funds. All Partnership funds shall be deposited in the Partnership's name and shall be subject to withdrawal on the signature of either Partner. The Partners agree that McGraw's bookkeeper will keep the books for this Partnership at no cost to the Partnership. The Partners will agree on the certified public accountant ("CPA") who will be retained to prepare the Partnership's tax returns at the Partnership's cost. 13. Compensation and Capital. The Partners' compensation and obligation to contribute capital are as follows: 13.1 Partner's Draw Aaainst Profits. The Partners may decide to permit draws against profits as may from time to time be determined by the written consent or agreement of both of the Partners. Such payments shall not be treated as Partnership expenses in determining the Partnership's profits or losses. 13.2 Calls for Additional Cauital. Whenever it is determined by the written agreement of both of the Partners that the Partnership's capital is or is presently likely to become insufficient for the conduct of its business, the Partners shall obtain a loan from a bank or savings and loan institution or other source approved by both Partners on terms agreed to by the T245/LXW -5- Partners to meet the capital needs of the Partnership. In the event or to the extent funds are not available from these sources, the Partners shall make additional contributions to capital in amounts agreed to by both Partners. These contributions shall.be payable in cash at the time agreed upon by both Partners. Each Partner shall be liable to the Partnership for that Partner's share of the aggregate contributions duly called for under this paragraph. Each Partner's share shall be in proportion to its share of the Partnership's profits and losses. 13.3 Voluntary Contributions. No Partner may make any voluntary contribution of capital to the Partnership without the consent of both of the Partners. 13.4 Withdrawals of Capital. No Partner may withdraw capital from the Partnership without the consent of both of the Partners. 13.5 Interest on Caoital Contributions. No Partner shall be entitled to receive any interest on its capital contribution, except that, if a Partner is entitled to repayment of its contribution, the Partner shall also be entitled to interest on the contribution not repaid at the rate of Bank of America's prime rate of interest plus one percent per annum from the date when repayment should have been made. 13.6 Future Loans. No Partner shall lend or advance money to or for the Partnership's benefit without the approval of both of the Partners. If either Partner, with the requisite consent of the other Partner, lends any money to the Partnership in addition to its contribution to its capital, the loan shall be a debt of the Partnership to that Partner and shall bear interest at a rate per annum as is agreed on by both of the Partners. The liability shall not be regarded as an increase in the lending Partner's capital, and it shall not entitle the lending Partner to any increased share of the Partnership's profits. 13.7 Distribution of Net Profits. The Partners shall meet on a quarterly basis or as appropriate for the purpose of deciding whether a distribution of net profit is appropriate. The Partners agree to keep on hand at all time appropriate reserves. Any decision to make distributions shall be made by both Partners. Distributions shall be made in cash to the Partners, in proportion to their respective shares in the Partnership's profits and losses. 13.8 Net Profits Defined. The net profits of the Partnership shall consist of accrued profits remaining after the accrual of all expenses of the Partnership as defined in this clause. Expenses.of the Partnership shall be all ordinary and necessary business expenses, including, but not limited to: operating costs; marketing expenses for the Partnership business: T245/LMW -6- costs incurred to bid on Partnership projects: premiums paid on insurance: cost of travel, meals and hotel incurred on Partnership business. Any fee, expense or cost paid to any consultant, shall also be treated as an expense of the Partnership before arriving at net profits. 14. Accountinq. 14.1 Fiscal Year. shall be the calendar year. The fiscal year of the Partnership 14.2 Capital Accounts. An individual capital account shall be maintained for each Partner, and the Partner's initial capital contribution in cash or property shall be credited to that account. Capital accounts shall be maintained in accordance with Treasury Regulation Section 1.704-l(b)(2)(iv). No additional share of profits or losses shall inure to any Partner because of changes or fluctuations in the Partner's capital account. 14.3 Increases in Capital Accounts. The capital account for each Partner shall be credited with or increased by the following: 14.3.1 The Partner's initial capital contribution to the Partnership: 14.3.2 Any additional capital contributions made by the Partner from time to time as authorized by this Agreement; l 14.3.3 The Partner's share under this Agreement of the Partnership's profits: and 14.3.4 On the Partnership's dissolution and winding up, the credits authorized by the provisions of this Agreement that relate to adjustments of capital accounts in connection with liquidation. 14.4 Reductions of Capital Accounts. The capital account for each Partner shall be debited with or reduced by the following: 14.4.1 Distributions to the Partner of cash or property, which property shall be valued for this purpose at its fair market value; 14.4.2 The Partner's share under this Agreement of the Partnership's losses and of any items then required under applicable tax laws, rules, and regulations to be debited to capital accounts of Partners, to the extent and in the manner so required; and T245/LMW -7- 14.4.3 On the Partnership's dissolution and in its winding up, the debits authorized by the provisions of this Agreement that relate to adjustments of capital accounts in connection with liquidation. 14.5 Capital Account Adjustments on Liquidation. In connection with the actual liquidation of the properties of the Partnership on its dissolution and winding up, the capital accounts shall be adjusted to reflect the following: 14.5.1 The results of operations for the fiscal period when ended; 14.5.2 The results of transactions in connection with the liquidation; 14.5.3 Unrealized gain or loss on property of the Partnership that is to be or has been transferred to creditors on account of their claims or distributed to Partners on account of their interests in the Partnership. The amount of such unrealized gain or loss shall be computed by comparing the fair market value of any such property to its adjusted basis for federal income tax purposes. Such unrealized gain or loss shall be allocated to the Partners' capital accounts in the same manner as the gain or loss from the actual sale of such property would have been allocated: 14.5.4 The distribution of cash or property to Partners made on the liquidation. If there is a deficit in any Partner's capital account after the capital accounts have been adjusted as provided in this Agreement in connection with the liquidation of the property of the Partnership, that Partner shall contribute the amount of such deficit to the Partnership before the end of the taxable year of the liquidation or by such earlier date as may be required to complete the liquidation in accordance with a duly adopted plan of liquidation. Amounts thus contributed shall,be distributed to or among the creditors and Partners in accordance with the then applicable provisions for distribution of Partnership property on dissolution, winding up, and liquidation. 14.6 Determination of Profit or Loss. The Partnership's net profit or net loss for each fiscal year shall be determined as soon as practicable after the close of that fiscal year in accordance with the accounting principles employed in the preparation of the federal income tax return filed by the Partnership for that year, but without any special provisions for tax exempt or partially tax exempt income. 14.7 Definitions of Profit and Loss. "Profit" and “loss" for all purposes of this Agreement shall be determined in accordance with the accounting method followed by the Partnership T245/LMW -8- C . for federal income tax purposes and otherwise in accordance with generally accepted accounting principles and procedures applied in a consistent manner. However, the calculation of profit and loss shall take into account Partnership income exempt from federal income tax and Partnership expenses and costs not deductible or properly chargeable to capital for federal income tax purposes. Every item of income, gain, loss, deduction, credit, or tax preference entering into the computation of profit or loss shall be considered as allocated to each Partner for any year in which the Partnership operates at a profit, and in the same proportion as loss is allocated to that Partner for any year in which the Partnership operates at a loss. Any increase or reduction in the amount of any item of income, gain, loss, or deduction attributable to an adjustment to the basis of Partnership property made pursuant to a valid election under Section 754 of the Internal Revenue Code of 1986, as amended (or any successor statute corresponding to that section), and pursuant to the corresponding provisions of applicable state and local income tax laws, shall be charged or credited, as the case may be, and any increase or reduction in the amount of any item of credit or tax preference attributable to any such adjustment shall be allocated, top the capital accounts of those Partners entitled to them under such code or laws. 14.8 Annual Report to Partners. As soon as possible after the end of each fiscal year, the Partnership shall furnish to each Partner an annual report consisting of at least (i) a copy of the Partnership's federal income tax returns for that fiscal year, (ii) a supporting statement of income or loss, (iii) a balance sheet showing the Partnership's financial position as of the end of that fiscal year, and (iv) any additional information that the Partners may require for the preparation of their individual federal and state income tax returns. 14.9 Books of Account. Correct books of account of the Partnership business on the cash basis of accounting shall be kept by or under the direction of the Partners. Each year in the months of January and July, or more often if the Partners shall so decide, a general accounting on a cash basis shall be taken of all firm moneys, debts, assets, and of all other things properly included in such an accounting. Tax returns of the Partnership shall be filed on the cash basis of accounting. Proper books of account of the Partnership business on the accrual basis of accounting shall also be kept and statements shall be distributed as the Partners deem appropriate. All books of account of the Partnership shall be open to the inspection of both Partners at all times. 15. New Partners. 15.1 Admitting New Partners. A new Partner may be admitted to the Partnership as of the beginning of any fiscal year of the Partnership, but only with the written approval of T245/LXW -9- 100% in interest of the Partners. Each new Partner shall be admitted only if the new Partner shall have executed this Agreement or an appropriate supplement to it in which the new Partner agrees to be bound by the terms and provisions of this Agreement as they may be modified by that supplement. Admission of a new Partner shall not cause dissolution of the Partnership. 15.2 Interest of New Partner. A newly admitted Partner's capital contribution and share of the Partnership's profits and losses shall be set forth in the written consents of the Partners consenting to the admission of the new Partner. 16. Partner's Withdrawal From The Partnership. On a Partner's withdrawal from the Partnership due to any cause, the Partnership shall dissolve and terminate. 17. Transferabilitv of Partner's Interests. Neither Par shall encumber, hypothecate, sell, assign, or otherwise trans its share or interest in the Partnership without the consent writing of the other Partner which consent may be withheld in Partner's sole discretion. tner , fer in the 18. Dissolution. 18.1 Dissolution. On any dissolution of the Partnership under this Agreement or applicable law, except as otherwise provided in this Agreement, the continuing operation of the Partnership's business shall be confined to those activities reasonably necessary to wind up the Partnership's affairs, discharge its obligations, and preserve and distribute its assets. Promptly on dissolution, a notice of dissolution shall be published under California Corporations Code Section 15035.5 or any equivalent successor statute then applicable. 18.2 Distributions on Liuuidation. On the dissolution of the Partnership, its business shall be wound up and its properties liquidated, and the net proceeds of the liquidation, together with any property to be distributed in kind, shall be distributed as follows: 18.2.1 First, to the payment of the Partnership's debts and obligations that are then due, including any loans or advances that may have been made by any of the Partners (such debts and obligations to creditors other than Partners having priority over debts and obligations to Partners) and the expenses of winding up and liquidation: 18.2.2 Secondly, to the establishment of any reserves that the Partners may consider necessary, appropriate, or desirable for any future, contingent, or unforeseen liabilities, obligations, or debts of the Partnership, which reserves may but need not be deposited with an independent escrow holder with instructions to disburse them in payment of those T24S/LMW - 10 - . . . t liabilities, obligations, and debts and, at the expiration of such period as the Partners may have specified, to distribute the balance remaining as provided in this Agreement: and 18.2.3 Thirdly, to the Partners in proportion to the balances in their respective capital accounts after giving effect to the adjustments of capital accounts in connection with liquidation authorized by this Agreement, but if all capital accounts then have zero balances such distributions to Partners shall be made in proportion to the allocation of profit from the sale of Partnership property applicable under this Agreement as of the date of such distributions. 18.3 Propertv of Partnershio. Except as may otherwise be expressly agreed by all the Partners, the Partnership property includes not only the assets, tangible and intangible, carried on the Partnership's books, but also without limitation the name of the Partnership; its goodwill; its books, records, and files; its interests under leases, licenses, or franchises; the right to bill and collect for services rendered by persons who render senrices on behalf of the Partnership; and its interests in and expectations from engagements for clients. 19. Miscellaneous. 19.1 Indemnification. Each Partner shall indemnify and hold harmless the Partnership and the other Partner from any and all expense and liability resulting from or arising out of any gross negligence or intentional misconduct on its part to the extent that the amount is not covered by the applicable insurance carried by the Partnership. 19.2 Amendments. This Agreement may be amended at any time and from time to time by a vote of both of the Partners but any amendment must be in writing and signed by each person who is then a Partner. 19.3 Notices. Any written notice to either of the Partners required or permitted under this Agreement shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the second day after mailing if mailed to the party to whom notice is to be given, first class postage prepaid, return receipt requested, and addressed to the addressee at the address stated opposite its name below, or at the most recent address specified by written notice given to the sender by the addressee under this provision. Notices to the partnership shall be similarly given, and addressed to it at its principal place of business. 19.4 Counteroarts. The parties may executed this Agreement in two or more counterparts, which shall, in the aggregate, be signed by both of the parties, each counterpart shall be deemed an original instrument as against any party who has signed it. T245/LMW - 11 - 19.5 intended to be of that state interpretation 19.6 Governing Law. This Agreement is executed in and performed in the State of California, and the laws (other than as to choice of laws) shall govern its and effect. Successors. This Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, and personal representatives of the parties, except to the extent of any contrary provision in this Agreement. 19.7 Severability. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the rest of the Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated. 19.8 Entire Aqreement. This instrument contains the entire agreement of the parties relating to the rights granted and obligations assumed in this instrument. Any oral representations or modifications concerning this instrument shall be of no force or effect unless contained in a subsequent written modification signed by the party to be charged. 19.9 Attorneys' Fees. In the event an attorney should be employed in any litigation or arbitration concerning this Agreement, the prevailing party shall be entitled to an award of attorneys fees in addition to any other remedy awarded in the action. IN WITNESS WHEREOF, the partners have executed this agreement as of the date first shown above. CARDWELL/THOMAS AND ASSOCIATES, / JAMES MCGRAW ASSOCIATES, INC., a California'corporation . James McGraw, 'President T245/lXW - 12 -