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CONNING CAPITAL PARTNERS VI, L.P.
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LIMITED PARTNERSHIP AGREEMENT
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Dated
as of
February 25, 2000
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TABLE OF CONTENTS
1. ORGANIZATION............................................................ 1
1.1. Formation of Limited Partnership..................................... 1
1.2. Name................................................................. 1
1.3. Purpose and Powers................................................... 1
1.4. Principal Place of Business.......................................... 1
1.5. Fiscal Year.......................................................... 1
2. CAPITAL COMMITMENTS AND CONTRIBUTIONS................................... 2
2.1. Identity; Commitment................................................. 2
2.2. Capital Contributions................................................ 2
2.3. Additional Limited Partners and Additional Capital Contributions..... 3
3. PARTNERS' CAPITAL ACCOUNTS; ALLOCATIONS................................. 5
3.1. Capital Accounts..................................................... 5
3.2. Allocations.......................................................... 5
3.3. Extraordinary Allocations............................................ 6
3.4. Allocations for Income Tax Purposes.................................. 7
3.5. Interim Accounting Periods........................................... 8
3.6 Defaulting Limited Partner........................................... 8
4. DISTRIBUTIONS........................................................... 12
4.1. Limitations on Distributions......................................... 12
4.2. Timing of Distributions.............................................. 12
4.3. Distributions........................................................ 13
4.4. Final Distribution................................................... 13
4.5. Tax Distributions.................................................... 13
4.6. Distributions of Cash or Securities.................................. 14
4.7. Determination of Carrying Value...................................... 15
4.8. Withholding Taxes.................................................... 16
4.9. General Partner's Obligation to Return Excess Distributions.......... 17
5. MANAGEMENT.............................................................. 19
5.1. Investment Guidelines................................................ 19
5.2. Powers & Duties of General Partner................................... 21
5.3. Advisory Committee................................................... 23
5.4. Other Business Relationships......................................... 24
5.5. Custodian............................................................ 26
5.6. Key Person Trigger Event............................................. 26
6. MATTERS AMONG PARTNERS.................................................. 27
6.1. Liability of General Partner......................................... 27
6.2. Liability of Limited Partners........................................ 27
6.3. No Obligation to Restore Negative Capital Account.................... 28
6.4. Actions of Partners; Bank Limited Partners Voting Percentage......... 28
6.5 Bank Regulatory Matters.............................................. 28
6.6 Exclusions from Investments.......................................... 30]
7. INDEMNIFICATION......................................................... 31]
7.1. General.............................................................. 31]
7.2. Expenses............................................................. 32
7.3. No Waiver, etc....................................................... 32
7.4. Insurance............................................................ 32
8. EXPENSES; MANAGEMENT FEE................................................ 32
8.1. Administrative Expenses.............................................. 32
8.2. Other Expenses....................................................... 33
8.3. Management Fee....................................................... 33
9. BOOKS AND RECORDS; REPORTS TO PARTNERS.................................. 35
9.1. Books and Records.................................................... 35
9.2. Tax Information...................................................... 35
9.3. Reports to Partners.................................................. 35]
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9.4. Meetings............................................................ 36
9.5. Compliance with Laws................................................ 36
10. TRANSFERS............................................................... 37
10.1. Transfer by General Partner......................................... 37
10.2. Removal of General Partner.......................................... 37
10.3. Transfer by Limited Partners........................................ 37
10.4. Certain Restrictions on Transfers................................... 38
10.5 Further Restrictions................................................ 39
10.6. Actions............................................................. 39
11. DURATION AND TERMINATION OF THE PARTNERSHIP............................. 40
11.1. Duration............................................................ 40
11.2. Winding Up.......................................................... 40
11.3. Final Distribution.................................................. 41
12. DEFINITIONS............................................................. 42
13. MISCELLANEOUS........................................................... 52
13.1. Waiver of Partition................................................. 52
13.2. Power of Attorney................................................... 52
13.3. Modifications....................................................... 53
13.4. Severability........................................................ 54
13.5. Notices............................................................. 54
13.6. Governing Law....................................................... 54
13.7. Successors and Assigns.............................................. 54
13.8. Counterparts........................................................ 54
13.9. Headings............................................................ 54
13.10. Further Actions..................................................... 54
13.11. Delivery of Certificate............................................. 55
SCHEDULES
Schedule I -- Partners' Identification and Capital Commitments
Schedule II -- Business Addresses of the Partners
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CONNING CAPITAL PARTNERS VI, L.P.
This LIMITED PARTNERSHIP AGREEMENT of CONNING CAPITAL PARTNERS VI, L.P., a
Delaware limited partnership (the "Partnership"), is made as of this 25th day of
February, 2000 by and among each and all of the undersigned persons.
1. ORGANIZATION.
1.1. Formation of Limited Partnership. Conning Investment Partners VI,
L.L.C., a Delaware limited liability company acting as the general partner of
the Partnership (the "General Partner") together with the undersigned persons
designated as Limited Partners (collectively, the "Partners", which term shall
include any party hereafter admitted to the Partnership and shall exclude any
party that ceases to be a Partner) hereby agree to form the Partnership,
pursuant to and in accordance with the provisions of the Revised Uniform Limited
Partnership Act, as adopted by the State of Delaware, as amended and in effect
(the "LP Act"). Certain capitalized terms used in this Agreement are defined
separately in Section 12.
1.2. Name. The name of the Partnership is "Conning Capital Partners VI,
L.P.". The General Partner, without the prior consent of the Limited Partners,
may change the name of the Partnership from time to time. The General Partner
shall provide the Limited Partners with notice of any new name of the
Partnership and the effective date of such change.
1.3. Purpose and Powers. The Partnership is being formed to operate as
an investment fund principally for the purpose of making investments primarily
in equity, equity-related and other securities issued in expansion financings,
start-ups, buy-outs and recapitalization transactions relating to companies in
the areas of insurance, financial services, e-commerce, healthcare and related
businesses, including, without limitation, service and technology enterprises
supporting such businesses, in order to realize long-term capital returns, all
as determined and managed by the General Partner for the benefit of the
Partners. The Partnership will make investments in accordance with the
Investment Guidelines set forth in Section 5.1, and will engage in such other
activities as are permitted hereby or are incidental or ancillary thereto, all
as the General Partner shall reasonably deem necessary or advisable, upon the
terms and conditions set forth in this Agreement. The Partnership reserves the
authority, and may engage in any lawful act or activity and shall have and
exercise any of the powers available to a limited partnership under the LP Act,
to the extent not contrary to the terms and intent of this Agreement.
1.4. Principal Place of Business. The Partnership shall have and
maintain its principal place of business at CityPlace II, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. The Partnership may have such other place or
additional places of business as the General Partner may determine from time to
time and as indicated by written notice to the Limited Partners; provided that
in no event shall the Partnership's principal place or any other place of
business be outside of the United States.
1.5. Fiscal Year. The fiscal year of the Partnership (the "Fiscal
Year") shall be the period ending on the 31st day of December in each year or,
in the case of the last Fiscal Year of the Partnership, the last day on which
the Partnership conducts any activities and as designated
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by the General Partner for purposes of the dissolution and final liquidation of
the Partnership. The Partnership shall have the same Fiscal Year for income tax
purposes and for financial accounting purposes.
2. CAPITAL COMMITMENTS AND CONTRIBUTIONS.
2.1. Identity; Commitment. The name, address and other identity
information describing each Partner are set forth on Schedule I and Schedule II
hereto. Each Partner has agreed and is obligated to perform with respect to the
full amount of its Capital Commitment set forth opposite each such Partner's
name on Schedule I, subject to and in accordance with the terms and conditions
of this Agreement. The Capital Commitment of the General Partner in respect of
the General Partner Interest shall be equal to at least 1% of all Capital
Commitments of the Partnership. Any additional Capital Commitment of the General
Partner beyond such amount may be treated separately as an Interest by a Limited
Partner, in the sole discretion of the General Partner. The General Partner,
acting on its own, is authorized to amend and revise the information on Schedule
I from time to time to reflect the admission of additional Partners together
with any additional or increased Capital Commitments, the withdrawal of any
Partner, the transfer of any part or all of an interest of any Partner, or such
other change in the information describing any Partner, all as may be determined
by the General Partner and consistent with the purpose and terms of this
Agreement.
2.2. Capital Contributions. Each Partner, upon its execution and
delivery of this Agreement, shall be obligated to make Capital Contributions to
the Partnership in immediately available funds in such amount as shall be called
from time to time by the General Partner hereunder, subject to Section 6.6(b),
determined on a pro rata basis relative to the Capital Commitments of all
Partners, up to a total aggregate amount equal to its Capital Commitment as
shown on Schedule I hereto. The General Partner may determine individual Partner
Capital Contribution call amounts on a pro rata basis relative to the
outstanding or unused Capital Commitments of the Partners to account for Excused
Partner Capital Contributions with respect to Excused Investments under Section
6.6.
(a) Call Procedures, Timing and Contributions. Each Partner
shall make its initial Capital Contribution, in an amount to be determined by
the General Partner, upon at least five (5) business days' prior written notice
from the General Partner. Thereafter, each Limited Partner will make additional
Capital Contributions to the Partnership, each in an amount to be determined by
the General Partner and as called from time to time by the General Partner, upon
prior written notice from the General Partner of not less than ten (10) business
days. Each call notice shall set forth the name of the Partnership and the
following basic information: (i) the scheduled date of the Capital Contribution
and the total amount of Capital Contributions to be made by all Partners on such
date; (ii) the required Capital Contribution to be made by the Limited Partner
to which the notice is directed; (iii) the Partnership account to which such
capital contribution shall be paid, including wiring and routing information;
and (iv) such information relating to the proposed use to be made of the funds
obtained by the Partnership as the General Partner in its discretion determines
to include in that call notice, including a general description of the proposed
Portfolio Investment that contains the business and industry of the related
Portfolio Entity. The General Partner will coordinate the timing of, and amounts
requested pursuant to, the notice of additional Capital Contributions on an "as
needed" basis relative to the Partnership's anticipated funding requirements.
The General Partner shall provide prompt
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written notice to each Limited Partner of the occurrence of the Partnership's
first investment. In the event that the General Partner reasonably determines
that the amount of any Capital Contributions called under this Section 2.2 is
not likely to be used to make a Portfolio Investment, pay expenses of the
Partnership or satisfy obligations or liabilities of the Partnership within a
reasonable period of time (not to exceed ninety (90) days) after the
Partnership's receipt of such Capital Contribution amounts, then within such
ninety-day period the General Partner shall return to the Partners their
respective pro rata portions of such amount of the Capital Contributions as are
not likely to be so used, applied or reserved. The full amount of such returned
Capital Contributions amount shall remain subject to further call by the General
Partner for Capital Contributions in accordance with the other terms of this
Section 2.2.
(b) Investment Period. The General Partner shall be authorized
to call and each Partner is obligated to make additional Capital Contributions
up to an aggregate amount equal to its Capital Commitment throughout the period
ending on the later to occur of: (i) the fifth (5th) anniversary of the date of
the Partnership's final closing (the "Investment Period"). After the Investment
Period the General Partner is authorized to call and each Partner is obligated
to make additional Capital Contributions, up to an aggregate amount equal to its
Capital Commitment remaining to be called, for the purposes of: (i) paying or
satisfying Partnership expenses, obligations or liabilities which may be
outstanding and due or are reasonably anticipated to become due within ninety
(90) days of the General Partner's call for Capital Contributions; (ii) making
additional incremental or follow-on investments in companies in which the
Partnership has established an investment; and (iii) funding the conversion or
exercise price of any warrant, option, purchase right or other security, or
making any installment payment or settlement to acquire any security by contract
or other arrangement, to the extent any of the foregoing is outstanding and was
issued in connection with or as a result of an investment made or committed to
be made during the Investment Period.
(c) General Partner Contributions. Concurrently with each
Capital Contribution to the Partnership by a Limited Partner pursuant to this
Section 2.2, Section 2.3 or Section 3.6, the General Partner will make a Capital
Contribution to the Partnership, in respect of its minimum General Partner
Interest, in an amount in cash which will cause the General Partner's Capital
Contribution to be at least equal to 1% of the aggregate Capital Contributions
of all Partners.
(d) Reinvestment. The Partners acknowledge that the General
Partner may retain certain distributable amounts under Section 4.2 for
reinvestment in accordance with the Investment Guidelines under Section 5.1. No
Partner shall be obligated to contribute additional amounts in excess of such
Partner's Capital Commitment as a result of such reinvestment.
2.3. Additional Limited Partners and Additional Capital Contributions.
After the expiration of two hundred seventy (270) days from the date of this
Agreement, no additional Limited Partners (other than Substitute Limited
Partners admitted pursuant to Section 10.3) shall be admitted to the
Partnership. Until the expiration of such period, the General Partner may admit
one or more persons as additional Limited Partners ("Additional Limited
Partners") to the Partnership or permit any existing Limited Partner to increase
its Capital Commitment.
(a) Conditions of Acceptance. The admission of Additional
Limited Partners and acceptance of additional Capital Commitments from existing
Limited Partners shall not be permitted if, upon the determination of the
General Partner, such admission or acceptance would:
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(i) result in the Partnership becoming subject to additional regulation which
the General Partner determines would have a material effect upon the ability of
the Partnership to pursue its stated purposes; (ii) jeopardize the Partnership's
tax status as an entity taxable as a partnership; or (iii) require the
Partnership to be registered as an investment company under the Investment
Company Act of 1940.
(b) Capital Adjustments among Partners. Any existing Limited
Partner which increases its Capital Commitment shall be considered to have been
admitted to the Partnership as an Additional Limited Partner to the extent of
such additional Capital Commitment upon the contribution of the initial portion
of such additional Capital Commitment to the capital of the Partnership. Each
Additional Limited Partner shall make an initial Capital Contribution to the
Partnership in a percentage of its Capital Commitment which is the same
percentage of the Capital Commitments of the other Limited Partners previously
paid in as Capital Contributions, as determined on the date of its admission to
the Partnership. Each existing Limited Partner which increases its Capital
Commitment pursuant to this Section 2.3 shall make a Capital Contribution to the
Partnership in such an amount as is required in order that the total Capital
Contributions made by such Limited Partner shall be in the same percentage
relationship to its total Capital Commitment (including such additional Capital
Commitment) as the Capital Contributions of all other Partners bear to their
respective Capital Commitments, determined on the date of such Capital
Contribution by the increasing Partner. The balance of such Capital Commitments
of Additional Limited Partners and of additional Capital Commitments from
existing Limited Partners shall be due and paid at the times provided for the
payment of additional Capital Contributions in Section 2.2.
(c) Additional Payments upon Admission. In addition, each
Additional Limited Partner and each existing Limited Partner which increases its
Capital Commitment pursuant to this Section 2.3 shall make additional payments
to the Partnership ("Late Payment Fees") comprised of the following amounts: (i)
interest on the amount of such Partner's Late Management Fee payable to the
General Partner pursuant to Section 8.3(b); (ii) interest on the amount of such
Partner's Late Expenses (other than Late Management Fee) allocated pursuant to
Section 3.3(c); and (iii) interest on any amounts of Capital Contributions used
to fund Portfolio Investments made by the Partnership prior to such Limited
Partner's admission into the Partnership or increase in its Capital Commitment
pursuant to this Section 2.3 which such Limited Partner would have been
obligated to contribute to the Partnership ("Late Portfolio Investment Capital
Contributions") if it had been admitted to the Partnership at the time of its
formation with a Capital Commitment equal to that set forth in Schedule I after
such schedule has been amended to reflect such Limited Partner's admission or
the increase in its Capital Commitment. In the case of interest amounts referred
to in clause (i) above, interest shall be calculated at the prime rate from the
date of the formation of the Partnership to the date of such Limited Partner's
admission into the Partnership or increase in its Capital Commitment pursuant to
this Section 2.3, as the case may be. In the case of interest amounts referred
to in clauses (ii) and (iii) above, interest shall be calculated at the prime
rate plus 2.0% from the date of the allocation of the Expense to the other
Partners which resulted in such Late Expense being allocated to the Limited
Partner or the contribution date of the Capital Contributions to the Partnership
which resulted in such Late Portfolio Investment Capital Contribution to the
Partnership by the Limited Partner, as the case may be, to the date of such
Limited Partner's admission into the Partnership or increase in its Capital
Commitment, as the case may be.
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(d) General Partner Adjustments. Upon the admission of any
Additional Limited Partner or the making of an additional Capital Commitment by
any existing Limited Partner, the General Partner shall increase its Capital
Commitment to an amount equal to at least 1% of the aggregate Capital
Commitments of all Partners.
(e) Update and Amendment of Records. The General Partner,
acting without any Limited Partners, is authorized to cause Schedule I hereto to
be amended to reflect the occurrence of any and all of the foregoing events
referred to in this Section 2.3. The General Partner shall provide written
notice to each Limited Partner of any amendment to Schedule I pursuant to this
Section 2.3 or any other provision of this Agreement within ninety (90) days of
such amendment to Schedule I.
3. PARTNERS' CAPITAL ACCOUNTS; ALLOCATIONS.
3.1. Capital Accounts. There shall be established for each Partner on
the books of the Partnership a Capital Account. Each Partner's Capital Account
shall be credited with the amount of such Partner's Capital Contributions and
shall be: (i) increased by the amount of any Net Income allocated thereto; and
(ii) decreased by the amount of any Net Losses, items defined in Section
705(a)(2)(B) of the Code allocated thereto and by the amount of any
Distributions made to such Partner. Such items shall be credited or charged, as
the case may be, to the Capital Accounts of the Partners at the end of each
Fiscal Period of the Partnership. The General Partner shall maintain the Capital
Accounts of the Partners in accordance with Treas. Reg. Section
1.704-1(b)(2)(iv) (as amended and revised), shall have the authority to make and
shall make such adjustments to the Capital Accounts as are necessary to comply
with such regulations. Any revaluation of the Partnership's assets pursuant to
the previous sentence shall be made in accordance with the principles of Section
4.7 hereof. Other than as specifically provided in this Agreement, no Partner
shall be entitled to any other interest or compensation by reason of its Capital
Contribution.
3.2. Allocations.
(a) Net Income. As of the end of each fiscal quarter of the
Partnership, after giving effect to any allocations made pursuant to Section 3.3
hereof, the Net Income (if any) of the Partnership for such fiscal quarter shall
be allocated to the Partners as follows:
(i) First, to all Partners, in proportion to the
respective amounts of Net Losses (if any) previously allocated
to each such Partner pursuant to 3.2(b)(iii) and not offset by
prior allocations of Net Income made pursuant to this
3.2(a)(i), an amount of Net Income equal to the aggregate
amount of such Net Losses;
(ii) Second, to all Partners, in proportion to their
respective 7% Preferential Return Allocations, an amount of
Net Income equal to the aggregate amount of all such 7%
Preferential Return Allocations; and
(iii) Third, to all Partners in the amounts and
proportions necessary to ensure, as promptly as possible and
to the extent feasible, that the Cumulative Net Income of the
Partnership for all periods since its inception shall have
been
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allocated 80% to all Partners in proportion to their
respective Capital Contributions and 20% to the General
Partner.
(b) Net Losses. Net Losses, if any, for any Fiscal Period of
the Partnership shall be allocated to the Partners as follows:
(i) First, to all Partners, in proportion to the
respective amounts of Net Income (if any) previously allocated
to each such Partner pursuant to 3.2(a)(iii) and not offset by
prior allocations of Net Losses made pursuant to this
3.2(b)(i), an amount of Net Losses equal to the aggregate
amount of such Net Income (if any);
(ii) Second, to all Partners, in proportion to the
respective aggregate amounts of Net Income (if any) previously
allocated to each such Partner pursuant to 3.2(a)(ii) and not
offset by prior allocations of Net Losses made pursuant to
this 3.2(b)(ii), an amount of Net Losses equal to the
aggregate amount of such Net Income (if any); and
(iii) Third, to all Partners in proportion to their
respective Capital Contributions.
3.3. Extraordinary Allocations.
(a) Negative Capital Account. Notwithstanding anything to the
contrary in this Agreement, no Net Losses shall be allocated to a Limited
Partner to the extent any such allocation, after taking into account all
Distributions made or to be made to such Limited Partner with respect to a
Fiscal Year, would cause a negative balance in such Limited Partner's Capital
Account for such Fiscal Year. Any such Net Losses instead shall be allocated to
and among those Partners with positive Capital Account balances until such
Capital Account balances are reduced to zero, and any remaining Net Losses shall
be allocated to the General Partner; and thereafter an equivalent amount of Net
Income subsequently allocated shall be allocated to the Partners to reverse such
reallocation of Net Losses as promptly as possible, subject, however, to the
constraints of this Section 3.3(a).
(b) Qualified Income Offset. If a Partner unexpectedly
receives an adjustment, allocation or distribution described in Treas. Reg.
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Partner shall be
allocated items of income and gain (consisting of a pro rata portion of each
item of Partnership income, including gross income, and gain for the Fiscal
Period in which such event occurs (and, to the extent necessary, each subsequent
Fiscal Period) in an amount and manner sufficient to eliminate (to the extent
required by Treas. Reg. Section 1.704(b)(2)(ii)(d)) any resulting excess
negative balance in such Partner's Capital Account as quickly as possible. In
any such event, appropriate adjustments shall be made to subsequent allocations
pursuant to Section 3.2 to counteract the effect of extraordinary allocations
pursuant to the first sentence of this Section 3.3(b) subject, however, to the
constraints of Section 3.3(a).
(c) Special Situations. If any person or entity is admitted to
the Partnership (or the Capital Commitment of any existing Partner is increased)
in accordance with the
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provisions of this Agreement after the formation of the Partnership, the General
Partner shall adjust the allocations otherwise provided for in this Article 3 of
Net Income and Net Loss (and items of Partnership income, gain, loss and
expense), for the Fiscal Year in which such event occurs and for subsequent
fiscal years if necessary, so that, after such adjustments have been made, each
Partner (including any Partners admitted after the formation of the Partnership
and all Partners whose Capital Commitments have been increased after such time)
shall have been allocated specially an amount of Expenses equal to the aggregate
amount of Expenses such Partner would have been allocated if it had been
admitted to the Partnership at the time of its formation with a Capital
Commitment equal to that set forth in Schedule I after such schedule has been
amended to reflect such Partner's admission or the increase in its Capital
Commitment ("Late Expenses"); provided, however, that: (i) no item of income,
gain or deductible loss realized (or deemed to have been realized on a
distribution in kind) before the admission of any new Partner shall be allocated
to such Partner; (ii) allocations to any existing Partner of items of income,
gain or deductible loss realized (or deemed to have been realized on a
distribution in kind) prior to the increase in the Capital Commitment of such
Partner shall be limited to those permitted by Section 706 of the Code; and
(iii) no special allocations shall be made pursuant to this Section 3.3(c) as a
result of any reductions in the Capital Account of a Defaulting Limited Partner
occurring pursuant to Section 3.6(d) or the adjustments provided for under that
section with respect to such reductions. In addition, the amount of such
Partner's Late Payment Fees relating to interest on Late Expenses (other than
Late Management Fees) (under clause (ii) of Section 2.3(c)) and Late Portfolio
Investment Capital Contributions (under clause (iii) of Section 2.3(c)) shall be
allocated 80% to all other Partners (including the General Partner) in
proportion to their respective Capital Contributions and 20% to the General
Partner.
(d) Guidelines. In making allocations of Net Income or Net
Losses pursuant to Sections 3.2(a) and 3.2(b), the General Partner, after
consulting with the Partnership's tax advisors, is authorized to separate these
aggregate amounts into their components and allocate the components separately
in order to further the intent of such Sections. For example, if with respect to
a particular fiscal period the Partnership realizes a gross loss of $100 on a
sale of Portfolio Securities and a gross gain of $200 on a sale of other
securities resulting in Net Income of $100 ($200 gross gain minus $100 gross
loss = $100 Net Income), the General Partner may allocate the $100 gross loss as
$100 in Net Losses in the manner required by Section 3.2(b), and then allocate
the $200 gross gain as $200 in Net Income in the manner required by Section
3.2(a), if advised by the Partnership's tax advisors that such special
allocations will cause the Capital Accounts of the Partners to reflect more
closely the Partners' relative economic interests in the Partnership.
(e) General Partner Minimum. Subject only to Section 3.3(b)
hereof, the General Partner shall be allocated, in respect of its minimum
General Partner Interest, at least 1% of each material item of Partnership
income, gain, loss, deduction or credit at all times during the existence of the
Partnership. To the extent that any extraordinary allocations to the General
Partner are required pursuant to this Section 3.3(e), appropriate adjustments
shall be made to subsequent allocations pursuant to Section 3.2 (subject to
Section 3.3(b) hereof and to the preceding sentence) to counteract the effects
of such extraordinary allocations.
3.4. Allocations for Income Tax Purposes. Items of Partnership income,
gain, loss, deduction or credit for each Fiscal Year of the Partnership shall be
allocated among the Partners for Federal income tax purposes in accordance with
the allocation of such income, gain, loss or
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deduction (or, in the case of a credit, the allocation of any item to which the
credit relates) pursuant to Section 3.2. All matters concerning allocations for
Federal, state and local income tax purposes, including accounting procedures,
not expressly provided for by the terms of this Agreement shall be equitably
determined in good faith by the General Partner upon advice of the Partnership's
tax advisors. As set forth in Section 5.2(g) hereof, the General Partner shall
be the "tax matters partner", as that term is used in the Code, of the
Partnership.
3.5. Interim Accounting Periods. If:
(i) a Limited Partner becomes a Defaulting Limited
Partner within the meaning of Section 3.6,
(ii) a non-defaulting Partner elects to make an additional
Capital Commitment pursuant to paragraph (c) of
Section 3.6,
(iii) a Distribution is made pursuant to Sections 4.2, 4.3,
4.4 or 4.5 hereof,
(iv) any revaluation of the assets of the Partnership is
made pursuant to Section 3.1 hereof, or
(v) the General Partner is required, or determines in its
discretion to make an interim allocation of Net
Income or Net Losses,
then, and in each such event, the Fiscal Year in which such event occurs shall
be divided into interim accounting periods (each an "Interim Accounting Period")
for purposes of allocations pursuant to Section 3.2. The first Interim
Accounting Period in any such Fiscal Year shall commence on the first day of
such Fiscal Year and shall terminate on the date immediately prior to the date
of the first event giving rise to an Interim Accounting Period in such Fiscal
Year. Each subsequent Interim Accounting Period shall commence on the date of
the event giving rise to such Interim Accounting Period in such Fiscal Year and
shall terminate on the earlier of the last day of such Fiscal Year or the date
immediately prior to the date of the event giving rise to the next Interim
Accounting Period in such Fiscal Year.
3.6. Defaulting Limited Partner. The Partners severally hereby agree
and acknowledge their mutual obligation to make Capital Contributions to the
Partnership in an aggregate amount equal to their total Capital Commitments.
Accordingly, the Partners agree to the default and penalty provisions of this
Section 3.6 for their mutual assurance and to promote the purposes of the
Partnership. The Partners agree that the damages to the Partnership from any
default by a Partner in respect of its Capital Commitment cannot be determined
or estimated with reasonable accuracy, and, accordingly, agree that the penalty
provisions of this Section 3.6 provide reasonable liquidated damages on default.
(a) Default. In the event that any Limited Partner fails to
make payment in full of any Capital Contribution to the Partnership in a timely
manner as called for and due, the General Partner will send written notice to
such Limited Partner of such failure, and if such Limited Partner does not make
full payment of its Capital Contribution within five (5) days after such Limited
Partner has been given written notice thereof from the General Partner, then, at
the
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close of business on such fifth (5th) day, such Limited Partner shall be in
default (a "Defaulting Limited Partner") and shall be subject to the penalty
provisions of this Section 3.6; except that any Partner that is an Excused
Partner under Section 6.6 will not be regarded as a Defaulting Partner in
respect of the Capital Contribution subject to the Excluded Investment
provisions of Section 6.6.
(b) Loss of Voting. Whenever the vote, consent or decision of
a Partner or of the Partners is required or permitted pursuant to this Agreement
or under the LP Act, no Defaulting Limited Partner shall be entitled to
participate in such vote or consent, or to make such decision, and such vote,
consent or decision shall be tabulated or made as if no Defaulting Limited
Partner were a Partner.
(c) Penalty. A Defaulting Limited Partner shall not be
entitled to make any further Capital Contributions to the Partnership. Upon any
such default, there shall be deducted from the Capital Account of such
Defaulting Limited Partner as liquidated damages for such default (which each
Partner hereby agrees is reasonable) an amount equal to 30% of the portion of
such Defaulting Limited Partner's Capital Commitment which remains unpaid, and
the Capital Commitment of the Defaulting Limited Partner shall thereafter be the
amount of the Capital Contribution of such Partner as of the date of default,
less the amount deducted pursuant to this sentence. The amount deducted from the
Capital Account of the Defaulting Limited Partner shall be allocated among the
Capital Accounts of the non-defaulting Partners as of the date of such default,
in proportion to the respective Capital Contributions of the non-defaulting
Partners as of such date, and the amount so allocated to the Capital Account of
each such Partner shall be deemed to be a Capital Contribution by, and an
increase in the Capital Commitment of, such Partner as of such date. The General
Partner shall cause Schedule I hereto to be amended to reflect the Capital
Commitments of the Partners as adjusted pursuant to this Section 3.6(c),
including the deemed Capital Contributions of the non-defaulting Partners under
this Section 3.6(c). Notwithstanding the foregoing: (i) the amount by which a
Defaulting Limited Partner's Capital Account is reduced shall in no case exceed
the positive balance in such Defaulting Partner's Capital Account immediately
before the reduction; (ii) if the Capital Account of the Defaulting Limited
Partner otherwise would be reduced below zero by a reduction occurring pursuant
to the first sentence of this Section 3.6(c), such account shall be reduced to
zero and any excess of the full reduction required by the first sentence of this
Section 3.6(c) over the positive balance in such Defaulting Limited Partner's
Capital Account immediately before such reduction shall be carried over and
applied to reduce the balance in such account at such subsequent time or times
(if ever) as such account has a positive balance; (iii) any resulting increases
in the Capital Accounts of non-defaulting Partners shall occur only at such time
or times as the corresponding reductions in the Defaulting Limited Partner's
Capital Account occurs; and (iv) all adjustments required by the first and
second sentences of this Section 3.6(c) to the Capital Commitments and Capital
Contributions of the Partners shall occur at the time of the initial reduction
in the Capital Account of the Defaulting Limited Partner, notwithstanding that
subsequent adjustments to the Partners' Capital Accounts may occur as a result
of such default.
(d) Treatment of Management Fee. As of the first day of each
fiscal quarter of the Partnership commencing after any such default, there shall
be deducted from the Capital Account of each Defaulting Limited Partner (but in
no event from the Capital Accounts of the non-defaulting Limited Partners) an
amount equal to the Management Fee that would have been
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due in accordance with Section 8.3 on the unpaid portion of the original Capital
Commitment of such Defaulting Limited Partner and the amount so deducted shall
be paid to the General Partner in lieu of the Management Fee which would
otherwise be due on such unpaid Capital Commitment. The General Partner, in its
discretion may defer payment of such amount. Any amounts so deferred shall
accrue interest at the rate of twelve percent (12%) per annum and shall be
charged solely to the Capital Account of the Defaulting Partner. No Distribution
shall be made to a Defaulting Limited Partner until all amounts due the General
Partner under this paragraph (e) shall have been paid in full unless payment
thereof shall have been deferred by the General Partner, in its discretion. No
special allocation of expenses to the Defaulting Partner shall be made, and no
interest on deferred management fee amounts shall accrue, to the extent that
these allocations (or accruals and related allocations) would cause the
Defaulting Partner's Capital Account to be reduced below zero.
(e) Option Repurchase Remedy. Further, the General Partner, in
its sole discretion, may elect to exercise the provisions of this Section 3.6(e)
in respect of any Defaulting Partner, such that the non-defaulting Limited
Partners (the "Optionees") and the General Partner together shall have the right
and the option, but not the obligation, to acquire the remaining Partnership
Interest, as adjusted to reflect any penalty amounts under Section 3.6(c) above,
of the Defaulting Limited Partner (for this purpose, the "Optionor"), as
follows:
(i) The General Partner shall give written notice to
the Optionor stating that the General Partner elects to pursue
the option repurchase remedy in this Section 3.6(e); and the
General Partner shall notify the Optionees of the default,
within twenty (20) days of the date of default by the
Defaulting Limited Partner. Such notice shall advise each
Optionee of the portion and the price of the Optionor's
Interest available to it. The portion available to each
Optionee shall be that portion of the Optionor's Interest that
bears the same ratio to the Optionor's entire Interest as each
Optionee's Capital Contributions bears to the aggregate
Capital Contributions of all Optionees (before the default).
The aggregate price for the Optionor's Interest shall be the
lesser of (A) the amount of the Optionor's Capital Account
calculated as of the due date of the additional contribution
and adjusted to reflect (1) the allocation of the appropriate
proportion of the Partnership's unrealized gains and losses as
of the due date of such defaulted contribution and (2) the
deduction of the penalty amount pursuant to Section 3.6(c), or
(B) the aggregate amount of the Optionor's Capital
Contributions actually made less any Distributions (valued at
their Carrying Value on the date of Distribution) on or prior
to such due date, as adjusted to reflect any penalty amounts
under Section 3.6(c) above. The price for each Optionee shall
be prorated according to the portion of the Optionor's
Interest purchased by each such Optionee. The option granted
hereunder shall be exercisable at any time within twenty (20)
days of the date of the notice from the General Partner to the
Optionees by delivery to the Optionor in care of the General
Partner of a notice of exercise of option together with a
non-recourse promissory note for the purchase price and a
security agreement in accordance with subsection (v) below,
which notice and documents the General Partner shall forward
to the Optionor.
(ii) Should any Optionee not exercise its option
within said twenty (20) day period, the General Partner
immediately shall notify the other Optionees
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who have elected to exercise their option, which Optionees
shall have the right and option ratably among them to acquire
the portion of the Optionor's Interest not so acquired (the
"Remaining Portion") within ten (10) days of the date of the
notice specified in this subsection (ii) on the same terms as
provided in subsection (i).
(iii) The amount of the Remaining Portion not
acquired by the Optionees pursuant to subsection (ii) may be
acquired by the General Partner within ten (10) days of the
expiration of the ten (10) day period specified in subsection
(ii) on the same terms as set forth in subsection (i);
provided, however, that the General Partner shall not be
obligated to make the additional contributions otherwise due
from the Optionor with respect to the Remaining Portion so
acquired.
(iv) The amount of the Remaining Portion not acquired
by the Optionees and the General Partner pursuant to
subsections (ii) or (iii) may, if the General Partner deems it
in the best interest of the Partnership, be acquired by the
Partnership or sold by the General Partner to any other
investor of quality, net worth and standing comparable to the
other Limited Partners, on terms not more favorable to such
parties than those applicable to the Optionees' option, and
upon the consent of the General Partner, any such third party
purchaser may become a Limited Partner to the extent of the
interest purchased hereunder.
(v) The price due from each of the General Partner
and the Optionees shall be payable by a non-interest bearing,
non-recourse promissory note (in such form as the General
Partner shall designate) due upon final liquidation of the
Partnership. Each such note shall be secured by the portion of
the Optionor's Partnership interest so purchased by its maker
pursuant to a security agreement in a form designated by the
General Partner and shall be enforceable by the Optionor only
against such security.
(vi) Upon exercise of any option hereunder, each
Optionee (and, if applicable, any third party purchaser shall
be obligated (A) to contribute to the Partnership that portion
of the additional capital then due from the Optionor equal to
the percentage of the Optionor's Interest purchased by such
person and (B) except as otherwise provided in subsection
(iii), to pay the same percentage of any further contributions
otherwise due from such Optionor on the date such
contributions are otherwise due. Each person who purchases a
portion of the Optionor's Partnership Interest shall be deemed
to have acquired such portion as of the due date of the
additional Capital Contribution with respect to which the
Optionor defaulted, and any distributions made after the due
date on account of the Optionor's Interest shall be
distributed among such purchasers (and, unless the entire
Interest was purchased, the Optionor) in accordance with their
ultimate respective interests in the Optionor's Interest.
Distributions otherwise allocable to the Optionor under the
preceding sentence shall first be used to offset any defaulted
Capital Contribution of the Optionor still due to the
Partnership.
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(vii) Upon completion of any transaction hereunder,
the General Partner shall cause Schedule I to be amended to
reflect all necessary changes resulting therefrom including,
without limitation, admission of a purchaser as a Limited
Partner, and adjustment of Capital Account balances, Capital
Commitment amounts and Capital Contributions as of the date of
the Optionor's default to reflect the acquisition from
Optionor of the appropriate pro rata portion of each such item
(including, if applicable, the reduction of aggregate Capital
Commitments and resulting adjustment of Capital Contributions
in connection with any acquisition of any Remaining Portion by
the General Partner pursuant to subsection (iii)). The
purchase and transfer of the Partnership Interest of the
Optionor shall occur automatically upon exercise by any
Optionee or the General Partner of its option hereunder,
without any action by Optionor.
(f) Reservation of Rights and Remedies. No right, power or
remedy conferred upon the General Partner in this Section 3.6 shall be
exclusive, and each such right, power or remedy shall be cumulative and in
addition to every other right, power or remedy, whether conferred in this
Section 3.6 or now or hereafter available at law or in equity or by statute or
otherwise for the benefit or on behalf of the Partnership relative to any
Defaulting Limited Partner. The General Partner is authorized to exercise its
discretion as to the appropriate remedy and course of action to be taken, and to
enforce any and all such remedy or course of action by and on behalf of the
Partnership. No course of dealing between the General Partner and any Defaulting
Limited Partner and no delay in exercising any right, power or remedy conferred
in this Section 3.6 or now or hereafter existing at law or in equity or by
statute or otherwise shall operate as a waiver or otherwise prejudice any such
right, power or remedy.
4. DISTRIBUTIONS.
4.1. Limitations on Distributions. No distribution will be made to any
Partner if and to the extent that such distribution would not be permitted under
Sections 17-607(a) of the LP Act or if, in the determination of the General
Partner, after giving effect to such distribution the assets of the Partnership
would be insufficient to satisfy the liabilities or obligations of the
Partnership to persons other than the Partners. Except for the Distributions as
otherwise expressly provided for in Sections 4.2 through 4.6, no Partner shall
have the right to withdraw any amount from its Capital Account or otherwise to
demand and receive any distributions from the Partnership.
4.2. Timing of Distributions. The General Partner generally will
endeavor to cause the Partnership to make Distributions to each Partner in the
respective amounts of Net Income distributable to such Partner during such year
by April 30 of the year following the year of the date of any allocation of Net
Income pursuant to paragraph (a) of Section 3.2; provided, however, that (i) the
General Partner will use its reasonable efforts to distribute cash proceeds from
the disposition of any Portfolio Investment within forty-five (45) days after
the Partnership's receipt thereof, and (ii) until the third (3rd) anniversary of
the date of this Agreement, the General Partner, in its discretion, in
accordance with the Investment Guidelines may determine not to make any such
Distributions in respect of Net Income and may elect to retain and reinvest some
or all of such distributable amounts in accordance with the Investment
Guidelines in Section 5.1(a)(iv) below.
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4.3. Distributions. The General Partner, at any time in its discretion,
may cause the Partnership to make Distributions to the Partners from their
Capital Accounts, subject to Section 4.2. Each Distribution pursuant to Section
4.2 and this Section 4.3 shall be apportioned among the Partners as follows:
(i) First, to all Partners in proportion to their
respective Priority Return Amounts until each Partner (other
than any Defaulting Limited Partner) has received aggregate
Distributions equal to such Partner's Priority Return Amount;
(ii) Second, to all Partners in proportion to their
respective 7% Distribution Preferences until each Partner
(other than any Defaulting Limited Partner) has received
aggregate Distributions equal to such Partner's 7%
Distribution Preference;
(iii) Third, 100% to the General Partner until the
General Partner has received Distributions made pursuant to
this 4.3(iii) equal in the aggregate to 20% of all
distributions made pursuant to 4.3(ii) and this 4.3(iii) since
the inception of the Partnership; and
(iv) Thereafter, 80% to all Partners in proportion to
their respective Capital Contributions and 20% to the General
Partner.
4.4. Final Distribution. The Final Distribution shall be made in
accordance with the provisions of Section 11.3.
4.5. Tax Distributions.
(a) General. The General Partner shall use reasonable efforts
to cause the Partnership to distribute in cash to each Partner, either during
such Fiscal Year or within ninety (90) days after the close of such Fiscal Year,
an amount equal to the aggregate Federal and state income tax liability such
Partner would have incurred as a result of the Net Income for such Fiscal Year
allocated to such Partner and reflected in the Partnership Return filed or to be
filed for such Fiscal Year, calculated as follows: as if (i) such Partner was a
natural person resident in the state with the highest applicable state income
tax rate; (ii) such Partner was taxable at the maximum rates provided under
applicable Federal and state income tax laws; and (iii) as if allocations from
the Partnership were the sole source of income and loss for such Partner for
such year. Such tax distribution amount will be reduced by the amount of all
Distributions made to such Partner since the commencement of such Fiscal Year
(other than Distributions required under this Section 4.5 in respect of the
preceding Fiscal Year) in order that the amount of any such tax distributions
will not have the effect of increasing the overall amount of distributions to
the Partners under Section 4.3 with respect to any Fiscal Year.
(b) Special General Partner Tax Distributions. The Partnership
may make Distributions to the General Partner during any Fiscal Year to enable
the members of the General Partner to satisfy their liability to make estimated
tax payments with respect to such Fiscal Year or the preceding Fiscal Year based
on calculations of the General Partner's hypothetical estimated tax liability
made pursuant to paragraph (a) of this Section 4.5 as of such dates as the
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General Partner in its sole discretion may determine; provided, however, that:
(i) if the aggregate amount of Distributions under this Section 4.5 made to the
General Partner with respect to any Fiscal Year exceeds the amount distributable
to the General Partner with respect to such Fiscal Year, calculated as of the
end of such Fiscal Year pursuant to paragraph (a), the Partnership shall treat
such excess amount as an advance against the General Partner's distributive
share of Partnership income and the General Partner shall return such excess to
the Partnership without interest within ten (10) days following determination by
the Partnership that such excess distributions have been made; and (ii) the
Capital Account of the General Partner shall not be reduced by any amounts
treated as advances made to the General Partner pursuant to this paragraph (b)
during any Fiscal Year, but shall be reduced as of the end of such Fiscal Year
by an amount equal to the aggregate of all such amounts treated as advances,
reduced by any part of such advances returned to the Partnership by the General
Partner pursuant to the preceding clause (i) of this paragraph (b).
4.6. Distributions of Cash or Securities. Distributions may be made in
cash or Securities or other assets of the Partnership, at the discretion of the
General Partner, subject to the other provisions of this Section 4.6. The
General Partner will use its reasonable efforts to make all distributions to
Partners in the form of cash or Marketable Securities until such time as the
Partnership commences liquidation.
(a) Guidelines. The General Partner shall give the Partners at
least five (5) business days' prior written notice of any proposed Distribution
in kind of Securities or other assets. In the case of a Distribution which in
whole or in part consists of Securities or other assets: (i) the amount of such
Distribution shall be the sum of the amount of any cash distributed plus the
Carrying Value of the Securities and other assets distributed, as of the close
of business on the valuation date, as determined by the General Partner in
accordance with the provisions of Section 4.7; and (ii) such Securities or other
assets shall be deemed to have been sold for such value at the close of business
on such valuation date and the amount of any gain or loss which would have been
realized upon a sale for such value shall be deemed to have been realized and
recognized at such time for the purpose of determining Net Income or Net Losses
for the Fiscal Period immediately preceding such valuation date. The General
Partner shall distribute such Securities or other assets as soon as practical
after such valuation date. Each Distribution of Securities shall be made to the
Partners in proportion to the amount each is receiving in the Distribution
pursuant to Section 4.3.
(b) Restrictions. The General Partner may cause the
certificates evidencing any Securities to be distributed to be imprinted with
legends as to such restrictions on transfer as may be reasonably necessary or
appropriate, including legends as to applicable Federal or state securities law
or other legal or contractual restrictions, and may require each Limited Partner
to agree in writing: (i) that such Securities will not be transferred except in
compliance with such restrictions and (ii) to such other matters as the General
Partner may deem necessary or appropriate.
(c) Limitations on In Kind Distributions. Prior to the
termination of the Investment Period or, if earlier, the date of the Final
Distribution, or otherwise unless consented to by a Majority in Interest of the
Limited Partners, the General Partner will not distribute Non-Marketable
Securities unless: (i) the issuer of such Securities is a reporting company
under the Securities Exchange Act of 1934, as amended, and such issuer has, or
has agreed to make,
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adequate current public information with respect to the issuer to comply with
Rule 144 of the Securities and Exchange Commission; (ii) in the case of an
issuer which has publicly traded equity Securities, not more than 50% of the
Limited Partners are entitled to cause such Securities to be registered on
demand and sold pursuant to an effective registration statement filed by such
issuer pursuant to the Securities Act of 1933, as amended; (iii) the holders of
such Securities are the beneficiaries of rights pursuant to valid contracts,
charter or otherwise entitling them to "put" such Securities for purchase or
redemption by such issuer or other financially capable third party at market
equivalent pricing; (iv) such Securities represent a debt claim or other self
liquidating contract right; or (v) such Securities are otherwise readily salable
to an identifiable purchaser or class of purchasers, in the reasonable judgment
of the General Partner, at the Carrying Value by the holders thereof or
convertible or exchangeable for a Marketable Security.
(d) Bank Partner Provisions. If, at any time, any Bank
Regulated Partner notifies the General Partner that: (i) its holdings of any
Security from a distribution in kind by the Partnership, combined with the
ownership of securities of the same Portfolio Entity by such Bank Regulated
Partner and its Affiliates, results in aggregate ownership by such Bank
Regulated Partner and its Affiliates of an amount of securities of such
Portfolio Entity in excess of that permitted by the Bank Holding Company Act of
1956; and (ii) despite their best efforts, such Bank Regulated Partner and its
Affiliates are unable to sell such securities of such Portfolio Entity owned by
them other than through the Partnership, then the General Partner shall take
such steps as it deems reasonable, which steps are equitable to all Limited
Partners, so as to avoid such excessive ownership attributable to the Bank
Regulated Partner.
(e) Modification for Regulatory Matters. Notwithstanding any
other provision of this Agreement, in the event of a distribution in kind of any
Securities or other asset that would cause a Limited Partner to own or control
an equity interest in a Portfolio Company that exceeds the amount that such
Limited Partner may lawfully own or control, then, upon written notice to the
General Partner by such Limited Partner prior to the date of such distribution,
(i) the Partners not so affected shall receive their shares of such Securities
or other asset in kind; (ii) the Capital Accounts of the Partners shall be
adjusted in the same manner as if the entire distribution of such Securities or
other asset had been made in kind; and (iii) to the extent practicable, the
General Partner shall be authorized to sell the affected Limited Partner's share
of such Securities or other asset on behalf of such Limited Partner and
distribute the proceeds of such sale, net of all expenses attributable to such
sale, to such Limited Partner in cash.
4.7. Determination of Carrying Value.
(a) Guidelines. The Carrying Value of Marketable Securities
shall be determined in accordance with the following guidelines which shall be
interpreted and applied in the good faith determination of the General Partner:
(i) for purposes other than valuation in connection with a Distribution, their
last sales price on the last trading day on which such Securities were traded
immediately preceding the date of determination on the largest national
securities exchange (measured by dollar volume of transactions in all Securities
traded thereon) on which such Securities shall have traded, or, if available,
such sales price on the consolidated tape; (ii) for purposes of a valuation in
connection with a Distribution, the average of their last sales price on the
five (5) most recent trading days on which such Securities were traded
immediately preceding the date of determination on the largest national
securities exchange
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(measured by dollar volume of transactions on all Securities traded thereon) on
which such Securities shall have been traded, or if available, such sales price
on the consolidated tape; or (iii) if neither determination referred to in
clauses (i) or (ii) can be made, for purposes other than valuation in connection
with a Distribution, the last closing "bid" price on the last trading day on
which such Securities were traded immediately preceding the date of
determination, or for purposes of a valuation in connection with a Distribution,
the average of the last closing "bid" price on the five (5) most recent trading
days on which such securities were traded immediately preceding the date of
determination; provided, however, that if such Marketable Securities are subject
to a restriction on transfer, the General Partner, in good faith and with the
consent of the Advisory Committee, shall discount such sales or "bid" prices 4%
to 20% depending on the nature of such restriction.
(b) General Partner Authority. Except in connection with a
Distribution or any revaluation of the Partnership's assets, which shall be
governed by paragraph (c) of this Section 4.7, the General Partner shall
establish the Carrying Value of Non-Marketable Securities at cost; provided,
however, that the General Partner may revalue such Non-Marketable Securities in
accordance with said paragraph (c) if a good faith basis for such
redetermination exists.
(c) Advisory Committee Review. The Advisory Committee shall
have the authority (but not the obligation) to review the methodology used for
any valuation of Non-Marketable Securities made for the purpose of making any
Distribution or any revaluation of the Partnership's assets. Any valuation
issues of Non-Marketable Securities which are not addressed by or in accordance
with such reviewed methodology shall be made by the General Partner with the
consent of the Advisory Committee. If either: (i) the Advisory Committee shall
object to any such methodology or other valuation or (ii) any such methodology
or other valuation reviewed by the Advisory Committee shall be objected to in
writing by a Majority in Interest of the Limited Partners, then the General
Partner will obtain an appraisal of the value of such Non-Marketable Securities
by an independent investment banking, accounting or financial consulting firm
selected by the General Partner and approved by the Advisory Committee in its
reasonable discretion. Any such appraisal shall be an expense of the Partnership
under Section 8.2 and shall be binding on all Partners.
4.8. Withholding Taxes.
(a) General. The Partnership at all times shall be entitled to
make payments required to discharge any obligation of the Partnership to
withhold or make payments to any governmental authority with respect to any
United States Federal, state or local tax liability or any other tax liability
of any Limited Partner liable for such taxes arising out of such Limited
Partner's interest in the Partnership. Any amount withheld for the payment of
any such tax liability from a Distribution to a Limited Partner shall be deemed
to be a Distribution to that Limited Partner made as of the time the withheld
amount would have actually been distributed and shall reduce the amounts
actually distributed. Any amounts paid by the Partnership for any such tax
liability, but not withheld from a Distribution, shall be deemed to be an
interest-free advance made by the Partnership to such Limited Partner and shall
not be deemed to be a Distribution to such Limited Partner under this Agreement.
Amounts treated as advances to any Limited Partner under this Section 4.8 shall
be repaid by such Limited Partner to the Partnership within thirty (30) business
days after the Partnership delivers a written request to such Limited Partner
for such payment, which notice will be delivered promptly by the General
Partner;
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provided, however, that if any such repayment is not made, the Partnership may
(without prejudice to any other rights of the Partnership) collect such unpaid
amounts from any Distribution that otherwise would be made to such Limited
Partner. Notwithstanding any other provisions of this Agreement, in the event
the Partnership fails to withhold any taxes in respect of any Limited Partner
when required to do so (including as a result of any change in law or
interpretation thereof or otherwise), any liability incurred by the Partnership
(including interest but excluding any penalties) as a result of such failure
shall be borne solely by such Limited Partner (and charged to such Partner's
Capital Account) or, in the event that: (i) the Partnership shall no longer
exist or such Limited Partner's Capital Account shall not be adequate for such
purpose and (ii) any such liability shall have been paid by the General Partner,
then such Limited Partner shall, promptly upon notice thereof, reimburse the
General Partner for any such payment.
(b) Operational Rules. The General Partner, after consulting
with the Partnership's accountants or other advisers, shall determine the amount
(if any) of any tax liability attributable to any Partner taking into account
any differences in the Partners' status, nationality or other characteristics.
Any such determination regarding the amount of tax liability attributable to
particular Partners shall be based on the manner in which the jurisdiction
imposing the related tax would attribute that tax liability and, in making any
such determination, the General Partner shall be entitled to treat any Partner
as ineligible for an exemption from or reduction in rate of such foreign tax
under a tax treaty or otherwise except to the extent that such Partner provides
the General Partner with such written evidence (including but not limited to
forms or certificates executed by its managers and/or beneficial owners) as the
General Partner or the relevant tax authorities may require to establish such
Partner's (or some or all of its beneficial owners') entitlement to such
exemption or reduction. The intent of this Section 4.8(b) is to ensure, to the
maximum extent feasible, that the burden of any taxes withheld at the source or
paid by the Partnership is borne by those Partners to which such tax obligations
are attributable, and this Section 4.8(b) shall be interpreted and applied
accordingly.
4.9. General Partner's Obligation to Return Excess Distributions.
(a) Amount; Timing of Determination. If, as of the
determination date of the Partnership's Final Distribution, (i) the General
Partner has received Distributions in an aggregate amount in excess of 20% of
the Partnership's Cumulative Net Income or (ii) the General Partner has received
any Distributions and there is a shortfall between the aggregate Distributions
made to the Limited Partners from the inception of the Partnership through such
time and the full amount distributable to Limited Partners as of such time
pursuant to clauses (i) and (ii) of Section 4.3, then the General Partner shall
be regarded as having received "Excess Distributions" equal to the greater of
the excess amount referred to in clause (i) above and the shortfall referred to
in clause (ii) above, but not more than the aggregate amount of Distributions
actually received by the General Partner from the inception of the Partnership
through and including such date. The General Partner may elect not to receive
any part or all of any distribution to which the General Partner otherwise may
be entitled under the provisions of Section 4.3 and instead may distribute such
amounts to and among the Partners in accordance with the provisions of clauses
(i) and (ii) of Section 4.3, and thereafter may receive in full distributable
amounts to which it is then entitled under Section 4.3, from time to time and
upon the reasonable determination of the General Partner, as may be deemed to be
appropriate by the General Partner in light of its obligations under this
Section 4.9.
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(b) Repayment on Liquidation. Within 100 days after the
determination date of the Partnership's Final Distribution: (i) the Partnership
shall make a final determination of the amount of Excess Distributions received
by the General Partner and not previously returned to the Partnership; and (ii)
the General Partner shall return all such remaining Excess Distributions to the
Partnership, subject to the conditions and limitations set forth in the other
provisions of this Section 4.9.
(c) Form of Repayment; Other Rules. All returns made to the
Partnership pursuant to this Section 4.9 shall be in the form of cash or of
Securities previously distributed to the General Partner by the Partnership
during the fiscal period for which such determination of Excess Distributions is
being made, valued in accordance with Section 4.7 at the time of their return.
(i) No amount returned to the Partnership by the
General Partner pursuant to this Section 4.9 shall increase
the General Partner's Capital Contribution or reduce the
General Partner's Subscription or remaining Capital
Commitment.
(ii) In no event shall the General Partner be
required to return to the Partnership any amount greater than
the excess, if any, of the total amount of distributions made
by the Partnership to the General Partner as of the
determination date, reduced by the sum of:
(A) the aggregate amount of distributions
that the General Partner would have received from the
Partnership if it had made all of its Contributions
to the Partnership in exchange for an interest as a
limited partner therein and had never owned any
interest in the Partnership as a general partner,
(B) the aggregate amount of tax
Distributions previously received by the General
Partner pursuant to Section 4.5 (net of any amounts
properly taken into account in the preceding clause
(A)), and
(C) the aggregate amount (if any) previously
returned to the Partnership by the General Partner
pursuant to this Section 4.9.
(d) Obligation. The General Partner hereby acknowledges and
agrees that, in the event that the General Partner does not perform its
obligation under this Section 4.9, each of its members shall be severally (not
jointly) liable for the General Partner's obligations to return Excess
Distributions pursuant to this Section 4.9, solely to the extent of their
respective pro rata shares of Distributions actually received by them from the
General Partner. The General Partner agrees to maintain and enforce such
provisions in its Limited Liability Company Agreement for the benefit of the
Limited Partners.
(e) Limitations. Except as provided by the Delaware Act or
other applicable law or Section 4.8 (dealing with Tax Withholding), and (with
respect to the General Partner) this Section 4.9 and Section 11.3, and (with
respect to the Limited Partners) Section 11.3, neither the General Partner nor
any Limited Partner shall be obligated at any time to repay to the Partnership
22
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all or any part of any distributions made to such Partner by the Partnership, or
to make any Contribution or payment to the Partnership with respect to any
deficit in such Partner's Capital Account. Nothing in this Section 4.9(e) shall
affect the obligation of any Partner to contribute capital to the Partnership
pursuant to the additional Capital Contributions provided for herein or to make
any other payments to the Partnership otherwise required by this Agreement.
5. MANAGEMENT.
5.1. Investment Guidelines. The General Partner will invest the assets
of the Partnership principally in companies engaged in various segments of the
insurance, financial services, e-commerce and healthcare industries, including
without limitation, service and technology businesses supporting such
industries. Investments may be made in Securities of all types, including
Marketable and Non-Marketable Securities. Any of the foregoing investments is
hereinafter sometimes referred to as a "Portfolio Investment" and the issuer of
such Portfolio Investment in Securities is hereinafter referred to as a
"Portfolio Entity."
(a) Roster of Items. The General Partner shall manage the
investment activities of the Partnership in accordance with the provisions of
this Section 5.1 (the "Investment Guidelines"), which shall be implemented
subject to the good faith interpretation of the General Partner. The Investment
Guidelines can be waived upon the consent of the Advisory Committee.
(i) At no time shall the aggregate Portfolio
Investment in any Portfolio Entity exceed twenty percent (20%)
of the aggregate Capital Commitments of all Partners.
(ii) At such times as the funds of the Partnership
are not used to make Portfolio Investments or to pay expenses
or other obligations and commitments of the Partnership, the
General Partner shall invest such funds in Short-Term
Investments.
(iii) The General Partner, on behalf of the
Partnership, may enter into arrangements to borrow funds such
that the total outstanding indebtedness of the Partnership at
any time will not exceed $15 million. The Partnership will not
use borrowed funds to make Portfolio Investments except that
the Partnership may incur indebtedness to acquire Securities
in a Portfolio Investment if such indebtedness arises solely
with respect to and in the amount of pending Capital
Contributions called by the General Partner and in any event
is reasonably likely to be paid in full and retired within 90
days of incurrence by the Partnership.
(iv) The General Partner, in its discretion, may
determine to reinvest net proceeds from the sale or other
disposition of Portfolio Investments, at any time during the
period ending on the third (3rd) anniversary of the final
closing date, in other Portfolio Investments under the
Investment Guidelines; provided, however, that the amount
available for reinvestment at any time shall not exceed an
amount equal to the Cost of Disposed Investments.
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(v) The Partnership will not initiate any tender
offer or proxy contest transaction for the purpose of changing
management of a company in a "hostile" transaction formally
opposed by the board of directors (or other appropriate
management of such entity), except that the Partnership may
acquire Securities of any issuer in the ordinary course of
investment activity and may initiate, propose and participate
in any plan for reorganization or change in management of a
Portfolio Entity once a Portfolio Investment is made.
(vi) The Partnership will not invest in any other
pooled investment vehicle or managed investment fund,
including any "fund of funds" or other vehicle as to which any
person or entity is entitled to any separate fee, "carried
interest" or other compensation from the Partnership.
(vii) The Partnership will not be engaged in the
short-term trading of Marketable Securities. Further, the
Partnership will not make open-market purchases of a class of
publicly traded Securities except in anticipation of or in
direct connection with a Portfolio Investment or as a
follow-on investment in a Portfolio Entity. The Partnership
may make Portfolio Investments in Securities which are
convertible or exchangeable into Securities of a class of
Securities which are publicly traded and listed, if such
transaction is negotiated directly with the issuer in a
private placement transaction and as to which the Partnership
acquires a meaningful position with respect to such Portfolio
Entity. For this purpose a "meaningful position" means either
(x) a holding of at least 5% of the issuer's outstanding
capital stock or (y) the right to elect or nominate a
director.
(viii) The Partnership will not engage in market
arbitrage transactions but may enter into put, call, options,
derivative securities and other contractual arrangements on a
selected basis solely for the purposes of hedging the
Partnership's Portfolio Investments.
(ix) The Partnership at any time will not have
Portfolio Investments (valued at cost) exceeding 30% of the
aggregate Capital Commitments in Portfolio Entities with main
offices, domiciled or otherwise conducting their main lines of
business in jurisdictions outside the United States (including
its territories and protectorates), the United Kingdom, Canada
or Bermuda.
(x) The Partnership will not make any Portfolio
Investment in any Portfolio Entity whose principal business
consists of (A) tobacco or tobacco products, (B) alcohol
products, (C) the production of firearms or (D) gambling
operations.
(b) FCC Restrictions. The Partnership will not make any
Portfolio Investment in a Portfolio Entity which is a Media or Common Carrier
Company (as defined herein) if and to the extent that any Limited Partner would
be attributed with an ownership interest as a result of such Portfolio
Investment in such Media or Common Carrier Company under the rules and written
policies of the FCC ("Attribution Rules"). For purposes of this Agreement,
"Media or Common Carrier Company" means any company that, directly or
indirectly, has an interest which is deemed attributable under the Attribution
Rules in a broadcast radio or television
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station, a cable televisions system, a "daily newspaper" (as such term is
defined in 47 C.F.R. Section 73.3555 of the FCC's rules), a multipoint
multichannel distribution system, a local multipoint distribution system, an
open video system, a commercial mobile radio service or any other communications
facility the operations of which are subject to regulation by the FCC under any
of (i) the Communications Act of 1934, as amended; (ii) the Attribution Rules;
and (iii) the rules and written polices of the FCC limiting or restricting
ownership in such Media or Common Carrier Companies.
(c) Confidentiality. Except as otherwise expressly provided
herein, including without limitation, Sections 9.2 through 9.4, the General
Partner shall not be required to disclose information known by the General
Partner as to Portfolio Entities or proposed Portfolio Investments and the
General Partner may, in its discretion, keep such information confidential, to
the extent required or deemed necessary or advisable in the good faith judgment
of the General Partner, consistent with the provisions of Section 17-305 of the
LP Act.
5.2. Powers & Duties of General Partner.
(a) Authority. The management, operation and policy of the
Partnership shall be vested exclusively in the General Partner, which shall be
authorized and empowered on behalf and in the name of the Partnership by itself
to carry out any and all of the objects and purposes of the Partnership and to
perform all acts and enter into and perform all contracts and other undertakings
that it may, in its discretion, deem necessary or advisable or incidental
thereto. The General Partner shall have all the rights and powers and be subject
to all the restrictions and liabilities of a general partner in a partnership
without limited partners.
(b) Specific Actions. Without limiting the general powers and
duties set forth in paragraph (a) of this Section 5.2, the General Partner is
hereby authorized and empowered on behalf and in the name of the Partnership to:
(i) direct the formulation of investment policies and
strategies for the Partnership, and invest Partnership funds,
in accordance with the Investment Guidelines;
(ii) acquire, hold, sell, transfer, exchange and
dispose of Securities, and exercise all rights, powers,
privileges and other incidents of ownership or possession with
respect to Securities, including, without limitation, the
voting of Securities, the approval of a restructuring of an
investment in Securities, participation in arrangements with
creditors, the institution and settlement or compromise of
suits and administrative proceedings and other like or similar
matters;
(iii) purchase Securities for investment and make
such representations to the seller of such Securities, and to
other persons, as the General Partner may deem proper in such
circumstances, including the representation that such
Securities are purchased by the Partnership for investment and
not with a view to their sale or other disposition;
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(iv) obtain on behalf of the Partnership options to
purchase blocks of shares in private transactions under the
Program, and trade in puts, calls, futures, other derivative
securities, or invest in listed options, or write options to
the extent that such vehicles are used for the purpose of
hedging portfolio Securities (including Securities held by the
Partnership as consideration for, or upon exchange, conversion
or otherwise in respect of Portfolio Investment Securities),
as the General Partner deems as appropriate; provided,
however, that the Partnership has a sufficient number of such
type of Securities underlying the hedge in its portfolio and
expected cash flows from the portfolio to cover such hedge;
and provided, further, however, that no such hedge shall
extend for a term greater than six months;
(v) open, maintain and close bank accounts and draw
checks or other orders for the payment of money and open,
maintain and close brokerage, mutual fund and similar
accounts;
(vi) hire consultants, attorneys, accountants,
actuaries and such other agents and employees for itself and
for the Partnership as may be reasonably necessary or
advisable, and authorize any such agent or employee to act for
and on behalf of the Partnership;
(vii) retain any of its Affiliates to provide
services to the General Partner on terms that are no less
favorable than terms for such services offered to or engaged
in with a third party, except as otherwise approved by the
Advisory Committee;
(viii) make any and all elections and other decisions
with respect to tax and accounting matters;
(ix) act on its own behalf and in its own name, as
the General Partner may determine to be reasonably necessary
and appropriate to enforce or secure the powers or rights of
the Partnership; and
(x) make and perform such other agreements and
undertakings as may be necessary or advisable for the carrying
out of any of the foregoing powers, objects or purposes.
(c) Notwithstanding the foregoing provisions of this Section
5.2, the General Partner, acting on behalf of the Partnership, may not:
(i) buy or sell commodities;
(ii) buy or sell real estate; or
(iii) buy or sell currencies other than currencies of
the countries of domicile of Portfolio Entities.
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(d) UBTI Matters. The General Partner agrees to use its
reasonable efforts to avoid the realization of income of the Partnership in the
form of "unrelated business taxable income" attributable to a Limited Partner
that is exempt from taxation under Section 501(a) of the Code, and shall use its
reasonable efforts to conduct the affairs of the Partnership so as to minimize
the risk of incurring such income.
(e) ERISA/VCOC Matters. The General Partner shall use its
reasonable efforts to ensure that the assets of the Partnership shall not be
"plan assets" subject to the Employee Retirement Income Security Act of 1974 and
the regulations thereunder ("ERISA"), and accordingly the General Partner shall
use its reasonable efforts to operate and manage the affairs of the Partnership
so as to qualify the Partnership as a "venture capital operating company" exempt
from regulation as plan assets under ERISA. The General Partner and the
Partnership will not have any obligations or requirements under these
provisions, however, if the participation of "benefit plan" investors in the
Partnership is not "significant" within the meaning of the Plan Asset
Regulations of ERISA, or if such requirements of the Plan Asset Regulations no
longer apply to the Partnership.
(f) Tax Partnership Status. The General Partner agrees that
it: (i) will not cause or permit the Partnership to elect to be excluded from
the provisions of Subchapter K of the Code or to be treated as a corporation for
federal income tax purposes; (ii) will cause the Partnership to make any
election reasonably determined to be necessary or appropriate in order to ensure
the treatment of the Partnership as a partnership for federal income tax
purposes; (iii) will cause the Partnership to file any required tax returns in a
manner consistent with its treatment as a partnership for federal income tax
purposes; and (iv) has not taken, and will not take, any action that would be
inconsistent with the treatment of the Partnership as a partnership for such
purposes.
(g) Tax Matters Partner. The General Partner shall be the tax
matters partner, as defined in Section 6231 of the Code, of the Partnership (the
"Tax Matters Partner"). The General Partner shall receive no additional
compensation from the Partnership for its services in that capacity, but all
reasonable expenses incurred by the Tax Matters Partner (including professional
fees for such accountants, attorneys and agents as the General Partner in its
discretion determines are necessary to or useful in the performance of its
duties in that capacity) shall be borne by the Partnership. The General Partner
shall be entitled to exculpation and indemnification with respect to any action
it takes or fails to take as Tax Matters Partner with respect to any
administrative or judicial proceeding involving "partnership items" (as defined
in Section 6231 of the Code) of the Partnership to the extent provided under
Article 7.
5.3. Advisory Committee.
(a) Designation and Composition. An advisory committee (the
"Advisory Committee"), composed of representatives of certain Limited Partners
and other persons selected by the General Partner, will meet periodically, but
no less often than once each year, with the General Partner and may advise the
General Partner regarding the valuation of the Partnership's assets, interested
party transactions and other similar actions. The Advisory Committee shall have
the authority (but shall not be required) to advise and consult with the General
Partner regarding the valuation of the Partnership's assets, interested party
transactions and other similar actions. The General Partner and its members will
not be regarded as a member of the Advisory
27
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Committee. At all times a majority of the members of the Advisory Committee
shall be representatives of Limited Partners. Initially, the members of the
Advisory Committee will consist of individual representatives or designees of
the Limited Partners, as indicated on Schedule I hereto. Any individual member
may be removed by the action of the General Partner together with a majority of
the members then serving (other than the member who is the subject of such
removal). In the event of any vacancy, whether by removal, resignation or
otherwise, the Limited Partner whose representative is the subject of such
vacancy will be entitled to designate an alternative representative to serve as
the member, with such individual to be subject to the approval of the General
Partner (which shall not be withheld unreasonably or delayed unduly).
(b) Actions. Votes, approvals, consents, assents and other
actions of the Advisory Committee shall be effective upon the action of at least
a majority in number of the members of the Advisory Committee. The Advisory
Committee may adopt rules, procedures and policies for the conduct of its
meetings consistent with the other terms of this Agreement.
(c) Authority; Confidentiality. The General Partner will
retain exclusive authority and responsibility for the selection of investments
and the operation of the business of the Partnership, and no member of the
Advisory Committee or other Limited Partner shall take part in the control of
the Partnership business or have any authority or power to act for or bind the
Partnership or have any liability therefor. Except as otherwise expressly
provided herein, including without limitation, Sections 9.2 through 9.4, the
General Partner shall not be required to disclose to the members of the Advisory
Committee any information known by the General Partner as to Portfolio Entities,
proposed Portfolio Investments or other aspects of the Partnership's business
where the General Partner reasonably and in good faith believes that there is a
contractual basis or other basis for which it is necessary to keep such
information confidential, or otherwise as consistent with the provisions of
Section 17-305 of the LP Act.
5.4. Other Business Relationships.
(a) General Partner and Principals. The General Partner, and
its members (including the Principals), employees and Affiliates are engaged and
may in the future engage, individually or with others, in other business or
investment activities or business ventures, including those which may be similar
to or in competition with the investments or business of the Partnership. The
Principals also may provide management assistance, financial consulting,
investment and asset management services, reporting and accounting, and
investment banking (including merchant banking or other activities in which the
Principals may act as a principal) and similar services to clients, which may
include Portfolio Entities or potential Portfolio Entities. No fees for such
services need be shared with the Partnership. In the event of any potential
conflict of interest due to any other investment or business relationship, the
General Partner will act in the manner which it reasonably and in good faith
believes to be in or not opposed to the best interests of the Partnership.
Obligations of fair dealing, non-disclosure of inside information and the like
also may limit the Principals in acting on behalf of the Partnership.
(b) Other Investment Funds. Subject to the other provisions of
this Agreement, the Principals may at any time organize, sponsor, invest in or
otherwise enter into contracts with other limited partnerships or other entities
with the same or similar investment objectives as the Partnership and in which
any Principal has the same or similar kinds of
28
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responsibilities as in this Agreement; provided, however, that unless approved
in advance by at least Two-Thirds in Interest of the Limited Partners, the
Principals shall not form or serve as general partner or investment manager of
another private U.S. investment fund that has as its investment purpose and
agenda the making of private equity investments in companies substantially
similar to the companies in which the Partnership invests until the earlier of
(i) the fourth anniversary of the date of this Agreement or (ii) such time as an
amount equal to at least 75% of the Capital Commitments of all Partners (A) has
been invested in Portfolio Investments or reserved for potential Portfolio
Investments which are identified and likely to close within ninety (90) days or
(B) reserved for follow-on investments (in an amount consistent with the
Partnership's historical reserves for follow-on investments) and/or (C) paid or
reserved for payment of Partnership expenses and obligations, including any such
investments, expenses or obligations reasonably expected by the General Partner
to be funded or become due within ninety (90) days (such set of conditions being
referred to as "fully invested").
(c) Principal Transactions. Upon the approval of the Advisory
Committee: (i) the Principals may make an investment in any Portfolio Entity in
which the Partnership has invested, and the Partnership may make an investment
in any entity in which a Principal has invested; and (ii) any Principal may also
invest in any Portfolio Entity in which the Partnership is investing, at the
same time as the Partnership invests therein and on terms not more favorable to
any such Principal than those applicable to the Partnership's investment in the
Portfolio Entity, unless such Principal's investment would result in a reduction
of the amount of the investment which the Partnership would otherwise make.
(d) Related Fund Transactions. Notwithstanding anything to the
contrary herein, (i) the Partnership may make an investment in any Portfolio
Entity in which any Related Fund has invested, and any Related Fund may make an
investment in any entity in which the Principal has invested; and (ii) any
Related Fund may also invest in any Portfolio Entity in which the Partnership is
investing at the same time as the Partnership invests therein. For purposes of
this Section 5.4, the term "Related Fund" shall mean any limited partnership or
investment fund currently managed, or to be managed in the future, directly or
indirectly, by any of the Principals, Conning & Company or an Affiliate of
Conning & Company.
(e) Related Party Transactions. The Partnership may not engage
in a purchase or sale transaction of a Non-Marketable Security with a limited
partnership or an investment fund which is managed or controlled by a Related
Party. With regard to a Related Party which is not a limited partnership or an
investment fund, the Partnership may not engage in a purchase or sale
transaction of a Non-Marketable Security with a Related Party: (i) unless the
Non-Marketable Security is of the same class as, or has the same rights to
earnings and distributions as, a Marketable Security of the same issuer and the
price for the Non-Marketable Security is determined by the price of the
Marketable Security, after adjustments for illiquidity; or (ii) if otherwise,
without the prior written consent of a Majority in Interest of the Limited
Partners. The Partnership may not purchase securities in a Public Offering
through which a Related Party is selling its holdings, unless the Securities
purchased by the Partnership constitute 20% or less of the total Public
Offering. For purposes of this Section 5.4 only, the term "Related Party" shall
mean the General Partner and its Affiliates, and each of their respective
stockholders, employees, officers, directors, and agents or, in the case of any
General Partner member who is an individual, any of such person's family
members, and the term "Public Offering" shall mean an offering of securities
under the Securities Act of 1933, as amended.
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(f) General Partner Disclosure. The General Partner shall
devote such resources as it deems in good faith to be reasonably necessary to
manage the affairs of the Partnership. Without the prior written consent of the
Advisory Committee, and notwithstanding any other provision of this Section 5.4,
the General Partner, the Principals and each Related Party shall not engage in
any transaction with the Partnership except on terms that are no less favorable
than the terms of any such transaction offered to or engaged in with a third
party. The General Partner will disclose the nature and terms of any such
Related Party transactions to the Advisory Committee. For purposes of this
Section 5.4, a Limited Partner shall not be deemed to be a Principal, a Related
Party or an Affiliate solely by virtue of its status as a Limited Partner in the
Partnership.
5.5. Custodian. All cash and Securities of the Partnership shall be
held by a custodian appointed by the General Partner, which shall be a bank or
trust company with combined capital, surplus and undivided profits of not less
than $100 million at the time of appointment (the "Custodian"). Any Custodian
may be replaced at the discretion of the General Partner, by another Custodian
meeting the requirements of this Section 5.5, and the General Partner shall
promptly notify the Limited Partners of such replacement.
5.6. Key Person Trigger Event.
(a) Event Occurrence. The failure of (i) any four of the
Principals or (ii) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and any two other Principals to be active in
the affairs of the Partnership in the capacity of investment managers of the
General Partner during the Investment Period shall constitute a "Key Person
Trigger Event." For purposes of this provision, "failure to be active in the
affairs of the Partnership" with respect to any Principal shall mean the failure
of such Principal to devote all or a substantial portion of such Principal's
business time and efforts as a manager of the General Partner. The General
Partner shall provide written notice to all Partners promptly after the
occurrence of any Key Person Trigger Event.
(b) Suspension Period. Immediately upon the occurrence of such
Key Person Trigger Event, the General Partner: (i) shall cause the Partnership
to cease making any new Portfolio Investments other than a proposed Portfolio
Investment to which the Partnership made a commitment evidenced in writing
setting forth the significant terms in definitive form prior to the date of such
Key Person Trigger Event or any follow-on investment that the General Partner
determines is advisable to make in order to preserve the Partnership's rights
and economic benefits of an existing Portfolio Investment; (ii) shall cause the
Partnership not to commit to any new proposed Portfolio Investment unless such
commitment explicitly is made dependent upon the separate approval of a Majority
in Interest of the Limited Partners; (iii) shall not make (and no Partner shall
be obligated to pay) any Capital Contributions in respect of any new or proposed
Portfolio Investments; (iv) shall use its reasonable best efforts to manage the
ownership, conversion, disposition and distribution of the Partnership's assets
so as to preserve the value of the Partnership's assets; and (v) shall be
authorized to make (and each Partner shall be obligated to pay) Capital
Contributions solely to the extent necessary to support the investment
activities permitted in the preceding clause (i) and to satisfy current
outstanding Other Expenses and liabilities or obligations of the Partnership to
third parties (collectively, the "Suspension Period Restrictions").
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(c) Restart Consent. Within sixty (60) days of the occurrence
of the Key Person Trigger Event, the General Partner will deliver written notice
to the other Partners or call a meeting of the Partners in order to disclose the
steps that the General Partner has taken and/or intends to take in order to
continue with management of the investment activities of the Partnership, which
may include the replacement of one or more Principals or an alternative plan of
management. The Suspension Period Restrictions shall terminate immediately only
upon the consent of a Majority in Interest of the Limited Partners, to such
effect, at which time the General Partner shall resume and continue to manage
the full investment activities of the Partnership, including without limitation,
the making of new Portfolio Investments and Capital Contributions for any and
all Partnership purposes.
(d) No Restart Consent. If the Limited Partners do not so
consent to the termination of the Suspension Period Restrictions within sixty
(60) days of the date of the aforementioned General Partner's notice or meeting,
then the General Partner may either (i) continue to manage the activities of the
Partnership as set forth in this Agreement subject to the Suspension Period
Restrictions or (ii) elect to terminate the Partnership and manage the
activities of the Partnership as set forth in Article 11.
6. MATTERS AMONG PARTNERS.
6.1. Liability of General Partner.
(a) Basic Standard of Care. The General Partner, each of its
employees, affiliates, officers, directors and agents from time to time and the
Principals shall not be liable to the Partnership or any Partner for any action
or omission taken or suffered by any Principal which does not constitute a
breach of any fiduciary duty owed by such Principal and is taken or suffered in
good faith and in the belief that such action or omission was in or was not
opposed to the best interests of the Partnership; provided, however, that such
action or omission was not a material violation of this Agreement and did not
constitute gross negligence, willful misconduct, fraud or a material violation
of law and that such acts or omissions do not constitute a knowing failure to
comply with the LP Act such that the liability of any of the Limited Partners
for the liabilities of the Partnership may exceed their Capital Contributions.
None of the General Partner or the Principals shall be liable to the Partnership
or any Partner for any act or omission of any other party other than a
Principal, nor shall any Principal (in the absence of gross negligence, willful
misconduct, fraud, a material violation of this Agreement or a material
violation of law by such Principal) be liable to the Partnership or any Partner
for any act or omission of any employee or agent of the Partnership where
reasonable care was exercised in their appointment, supervision and retention.
Except as otherwise provided in this paragraph (a), neither the General Partner
nor any Principal shall be liable to the Partnership or any Partner for any
mistake of fact or judgment in conducting the affairs of the Partnership or
otherwise acting in respect of and within the scope of this Agreement.
(b) Not Liable for Return. Except as otherwise expressly
provided in paragraph (a) of this Section 6.1, neither the General Partner nor
any Principal shall be liable for the return of all or any portion of any
Limited Partner's Capital Contributions.
6.2. Liability of Limited Partners. Except as may be otherwise provided
by law, the liability of each Limited Partner is limited to its Capital
Commitment, and nothing in this
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Agreement shall remove, diminish or affect such limitation. If a Partner has
received the return of any part of its Capital Contributions, the Partner may
continue to be liable to the Partnership for the amount of the returned Capital
Contribution, but only to the extent necessary to discharge the Partnership's
liabilities to creditors who extended credit to the Partnership during the
period the Capital Contribution was held by the Partnership, and as otherwise
provided under the LP Act or Section 11.3.
6.3. No Obligation to Restore Negative Capital Account. Except as
otherwise provided for by law or by Section 11.3, no Partner shall have any
obligation at any time to contribute any funds to restore any negative balance
in its Capital Account.
6.4. Actions of Partners; Bank Regulated Partner Voting Percentage. The
Partners hereby agree and acknowledge that any vote, consent, approval or other
action to be taken by or on behalf of the Limited Partners hereunder shall be
valid and effective for all purposes hereunder upon the taking of such action at
a meeting or as evidenced in writing by or on behalf of Limited Partners
representing at least the requisite percentage in Interest of all Limited
Partners eligible and entitled to act with regard to such matters, based upon
their relative Limited Partner Percentages at the time such action is to be
taken; provided, however, that for such purposes any Bank Regulated Partner
shall be deemed at all times to have a Limited Partner Percentage equal to the
lesser of (i) 4.9% or (ii) its actual Limited Partner Percentage. Further, with
respect to any action by the Partners: (x) any Limited Partner who is the
subject of such action or against whom such action is to be enforced separate or
apart from other Limited Partners on behalf of the Partnership as a whole, shall
be excluded from taking any such action; (y) any Affiliate of the General
Partner, to the extent it holds a Limited Partner Interest, shall be excluded
from such action; and (z) no Bank Regulated Partner shall take part in action
regarding the admission, removal or approval of replacement of the General
Partner under Section 10.2 and as otherwise referred to in this Agreement.
6.5. Bank Regulatory Matters.
(a) No "Control" Presumption. No Bank Regulated Partner shall
be required to make any Capital Contribution to the Partnership to the extent
that such contribution would result in such Bank Regulated Partner contributing
more than 24.99% of all capital contributed to the Partnership, if such Bank
Regulated Partner shall obtain an opinion of counsel (which counsel and opinion
shall be reasonably acceptable in form and substance to the General Partner) to
the effect that such contribution would cause such Bank Regulated Partner to
violate Regulation Y or otherwise causes a Bank Regulatory Problem.
(b) Adjustment. Anything contained in this Agreement to the
contrary notwithstanding, any Bank Regulated Partner may elect to withdraw
partially from the Partnership but only to the extent necessary to provide that
the Interest of such Bank Regulated Partner in the Partnership shall not exceed
24.99%, if such Bank Regulated Partner shall obtain an opinion of counsel (which
counsel and opinion shall be reasonably acceptable in form and substance to the
General Partner) to the effect that, as a result of Regulation Y, such partial
withdrawal of the Interest such Bank Regulated Partner from the Partnership to
the extent described above is required to enable such Limited Partner to comply
with Regulation Y or otherwise to avoid a Bank Regulatory Problem is necessary.
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(c) Partial Withdrawal Remedy. Any such Bank Regulated Partner
partial withdrawal of Interest shall be effective at the end of the fiscal
quarter in which such election occurs. Upon the partial withdrawal of any Bank
Regulated Partner, either the remaining Partners or the Partnership, within
sixty (60) days after the effective date of such Bank Regulated Partner
withdrawal, shall purchase from the Bank Regulated Partner that amount of such
Bank Regulated Partner's Interest corresponding to such Limited Partner's
partial withdrawal at the price determined below. The purchase price to be paid
for such Bank Regulated Partner's withdrawal Interest shall be the fair market
value thereof as reflected in its Capital Account, determined as if all assets
of the Partnership had been sold for their Carrying Values, all Partnership
liabilities satisfied (to the extent feasible) and the resulting income, gains
and losses to the Partners' Capital Accounts in accordance with Section 3.1 of
this Agreement.
(d) Payments. All payments made to a withdrawing Bank
Regulated Partner pursuant to this Section 6.5 may be made (i) in cash or (ii)
in the form of other consideration mutually acceptable to such Bank Regulated
Partner and the General Partner. If and to the extent that any of the
consideration consists of Securities, the General Partner and the Bank Regulated
Partner shall apply the provisions of Sections 4.6(d) and (e) to determine the
acceptability of such Securities as in-kind consideration.
(e) Election Out. Upon issuance of the regulations
implementing the "merchant banking activities" provisions of amended Section
4(k)(4)(H) of the Bank Holding Company Act, any Bank Regulated Partner may
irrevocably elect, by providing written notice to the General Partner, not to be
governed by this Section 6.5 because such Limited Partner or an Affiliate has
elected to be treated as a "financial holding company" under the Financial
Services Act of 1999 (the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999).
(f) Modification; Definitions. This Section shall not be
amended without the consent of each of the Bank Regulated Partners. For purposes
of this Section 6.5 the following defined terms apply:
"Bank Holding Company Act" means the Bank Holding Company Act of 1956, as
amended (12 U.S.C. 1843(c)(8)), including the Financial Services Act of 1999.
"Bank Regulated Partner" means each Limited Partner that is (or is an Affiliate
of a bank holding company that is) subject to the provisions of Regulation Y.
"Regulation Y" shall mean Regulation Y of the Board of Governors of the Federal
Reserve System (C.F.R. Part 225) or any successor to such Regulation.
"Bank Regulatory Problem" means (i) any set of facts or circumstances wherein it
has been asserted by any governmental regulatory agency (or any Bank Regulatory
Partner believes that there is a significant risk of such assertion) that such
Bank Regulated Partner is not entitled to own, hold, or exercise any material
right with respect to all or any portion of the interest in the Partnership
which such Partner holds or (ii) when a Bank Regulated Partner and its
affiliates would own, control or have power (including voting rights) over a
greater quantity of securities of any kind than are permitted under any
requirement of any governmental rule or regulation directly applicable to the
investment activities of such Bank Regulated Partner in its capacity as a
Limited Partner.
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6.6 Exclusions from Investments.
(a) Request for Exclusion. If participation by a Bank
Regulated Partner in a Portfolio Investment would result in a Bank Regulatory
Problem, and such Bank Regulated Partner provides the General Partner with a
written opinion of counsel to that effect, such Bank Regulated Partner may
request to be excused from making payment of its capital contributions in
respect of such Portfolio Investment (an "Excused Partner") and shall be
excluded from participating in Partnership profits, losses and distributions
attributable to such investment (the "Excluded Investment"). Any such request
shall be submitted to the General Partner in writing, accompanied by the opinion
of counsel, within five (5) business days after the receipt by the Bank
Regulated Partner of the Capital Contribution call notice with respect to such
proposed Portfolio Investment.
(b) Effect of Exclusion. If a Bank Regulated Partner is an
Excused Partner with respect to any Portfolio Investment, then, notwithstanding
any other provision of this Agreement, the following provisions shall be
applied:
(i) The Capital Commitment of the Excused Partner
shall not be reduced by such Excused Partner's share of any
Capital Contributions called for by the Partnership to make
such Excluded Investment;
(ii) Such Excused Partner shall receive no
allocations of items of income, gain, loss, deduction or
expense attributable to that Excluded Investment and no
Distributions attributable to that Excluded Investment (i.e.,
it shall be entitled to no economic returns from, and to the
maximum extent feasible shall suffer no economic detriment
attributable to, the Partnership's participation in that
Excluded Investment);
(iii) For purposes of determining the General
Partner's "carried interest" attributable to Portfolio
Investments made (in part) with such Excused Partner's paid-in
Capital Contributions, and the General Partner's obligation to
return Excess Distributions to such Excused Partner: (A) such
Excused Partner and the General Partner shall be treated as
partners in a separate "sub-partnership" with aggregate
Capital Commitment and Capital Contributions equal to the
Excused Partner's revised Capital Commitment and Capital
Contributions plus a proportionate share of the General
Partner's actual Capital Commitment and Capital Contributions,
and (B) all calculations of the General Partner's carried
interest shall be made separately, in accordance with the
relevant provisions of the Agreement, with respect to this
sub-partnership;
(iv) The amount of Expenses attributable to this
sub-partnership shall be equal to the Expenses attributable to
the Portfolio Investments held by that sub-partnership,
determined as follows: (A) all Expenses incurred solely as a
result of making, holding or disposing of a particular
Portfolio Investment (e.g., indemnification expenses for
claims arising out of that Portfolio Investment) shall be
deemed to be attributable to that Portfolio Investment; (B)
all other Expenses (excluding Expenses attributable to the
Management Fee) shall be apportioned
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among (and shall be deemed to be attributable to) all
Portfolio Investments in proportion to the Capital
Contributions used to acquire such Portfolio Investments; and
(C) the General Partner shall determine the amount of Capital
Contributions used to acquire each Portfolio Investment, and
shall recalculate periodically the amount of Expenses
attributable to each Portfolio Investment as additional
Expenses accrue, in each case in a reasonable and consistent
manner;
(v) The Management Fee payable by the Partnership
shall not be reduced as a result of any reduction in Capital
Commitments occurring pursuant to this Section 6.6, and each
Limited Partner (including each Excused Partner) shall bear
the economic impact of its proportionate share (based on its
relative Capital Commitment and without regard to any
reduction occurring pursuant to this Section 6.6) of the
aggregate amount of the Management Fee expense allocated to
all Limited Partners under this Agreement. The General Partner
is authorized to allocate Expenses attributable to payments or
accruals of the Management Fee to the sub-partnership referred
to in Section 6.6(b)(iii) and (iv) and, within such
sub-partnership, between the General Partner and any Excused
Partners, in such manner as the General Partner reasonably
determines is necessary or advisable to implement the
Partners' economic agreement as set forth in the preceding
sentence;
(vi) No Bank Regulated Partner which has become an
Excused Partner pursuant to Section 6.6 shall be required to
make any additional Capital Contributions to the Partnership
with respect to such Portfolio Investment, but the General
Partner shall adjust Partnership allocations to and within
such sub-partnership to ensure, to the extent feasible, that
such Excused Partner bears the economic burden of any
Management Fee expense attributable to such Excused Partner's
Capital Commitment (determined without regard to any reduction
thereof);
(vii) To the maximum extent feasible, except as
explicitly provided in Sections 6.6(b)(i) through (vi), the
amounts of Net Income or Net Losses allocable to, and the
Distributions made to, the Partners other than the Excused
Partner shall not be affected by the special arrangements
between the General Partner and the Excused Partner
contemplated by this Section 6.6; and
(viii) With respect to Capital Contribution calls
after an Excused Investment, the General Partner may determine
individual Partner Capital Contribution amounts on a pro rata
basis relative to the outstanding or unused Capital
Commitments of all Partners.
7. INDEMNIFICATION.
7.1. General. The General Partner, each Principal, each member of the
Advisory Committee, and each of their respective partners, members, managers,
employees, affiliates, officers, directors and agents from time to time (each an
"Indemnitee") shall be and hereby are: (i) indemnified and held harmless by the
Partnership and (ii) released by the Partners, from and against any and all
claims, demands, liabilities, costs, expenses, damages, losses, suits,
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proceedings and actions, whether civil or criminal, actual or threatened
(collectively, "Liabilities"), whether judicial, administrative, investigative
or otherwise, of any nature whatsoever, known or unknown, liquidated or
unliquidated which Liability or Liabilities arise out of the conduct of the
business or affairs of the Partnership by the respective Indemnitee or otherwise
relate to this Agreement, including, without limitation, any Liability of any
nature whatsoever resulting from an Indemnitee serving as a member of the Board
of Directors of any Portfolio Entity; provided, however, that the satisfaction
of any indemnification and holding harmless shall be from and limited to assets
of the Partnership and no Limited Partner shall have any personal liability on
account thereof; and provided, further, that an Indemnitee shall not be entitled
to indemnification and release hereunder only if it shall have been determined
by a court of competent jurisdiction that: (x) such Indemnitee did not act in
good faith and in the reasonable belief that the Indemnitee's action was in
accordance with such Person's obligations to the Partnership or such Indemnitee
acted with reckless disregard for the duties of his or its office or with
willful malfeasance; (y) such Liability arose from a material violation of this
Agreement or the gross negligence, willful misconduct, or fraud by such
Indemnitee, or from actions of such Indemnitee outside the scope of and
unauthorized by this Agreement, or from any violation of Federal or state
securities laws or (z) with respect to any criminal action or proceeding, such
Indemnitee did have cause to believe beyond any reasonable doubt that the
Indemnitee's conduct was criminal.
7.2. Expenses. Reasonable expenses, including reasonable legal
expenses, incurred by an Indemnitee in defense or settlement of any claim that
may be subject to a right of indemnification hereunder shall be advanced by the
Partnership prior to the final disposition thereof upon receipt of the
Indemnitee's undertaking to repay such amount to the Partnership if it shall be
ultimately determined that the Indemnitee was not entitled to be indemnified
hereunder. The right of any Indemnitee to the indemnification provided herein
shall be cumulative of, and in addition to, any and all rights to which such
Indemnitee may otherwise be entitled by contract or as a matter of law or
equity, and shall extend to such Indemnitee's successors, assigns and legal
representatives. All judgments against the Partnership or any Principal, in
respect of which any of them is entitled to indemnification, must first be
satisfied from Partnership assets before any such party is responsible therefor.
7.3. No Waiver, etc. Nothing contained herein shall constitute a
waiver by any Partner of any right which it may have against any party under
Federal or state securities laws.
7.4. Insurance. The General Partner may cause the Partnership to
purchase and secure insurance, to the extent available at reasonable cost (as
determined by the General Partner), covering the Liabilities described in this
Article 7.
8. EXPENSES; MANAGEMENT FEE.
8.1. Administrative Expenses. Subject to the provisions of Section 8.2,
the General Partner will bear and be charged with all ordinary, necessary and
recurring costs and expenses of administering the Partnership (other than the
Management Fee), and providing such services to the Partnership as are required
to be provided by it pursuant to this Agreement, including office expenses,
travel expenses (other than as provided for in Section 8.2(iv)), salaries and
employee benefits, and other overhead expenses of the Partnership and all
out-of-pocket costs of evaluating and developing potential Portfolio Investments
or Short-Term Investments (other than fees and
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expenses of third-party consultants and other advisors) and of making, holding
or selling Portfolio Investments and Short-Term Investments (collectively,
"Administrative Expenses"). The General Partner, at its expense, may contract
with Conning & Company or its subsidiaries for the furnishing of all of such
services.
8.2. Other Expenses. All reasonable costs and expenses of the
Partnership and (to the extent fairly allocable to the Partnership) of the
General Partner (other than Administrative Expenses) are "Other Expenses" and
will be borne by and charged to the Partnership. Other Expenses will include,
without limitation: (i) out-of-pocket expenses incurred by the Partnership or
the General Partner in connection with the organization of the Partnership and
the offering of the interests therein (but excluding any placement fees and
expenses) ("Organizational Expenses") and fees and expenses of placement agents
and syndication expenses in connection with the offering and formation of the
Partnership ("Syndication Expenses") up to an aggregate of $750,000 with such
expenses in excess of $750,000 to be offset against the Management Fee payable
to the General Partner by the Partnership pursuant to Section 8.3(a); (ii) fees
and expenses of consultants, appraisers, custodians, counsel, independent public
accountants, actuaries and other agents; (iii) finders, placement, brokerage and
other similar fees incurred making Portfolio Investments; (iv) out-of-pocket
costs of meetings with (including travel), and reports to, the Limited Partners;
(v) all expenses of the Advisory Committee; (vi) costs and expenses incurred for
the preparation and distribution of financial reports, tax reports and other
information for the benefit of the Limited Partners or as specifically requested
by a Limited Partner; (vii) any taxes, fees or other governmental charges levied
against the Partnership or its income or assets or in connection with its
business or operations; (viii) costs of any agency or administrative actions or
hearings, any governmental action or third-party litigation or other matters
that are the subject of indemnification pursuant to Article 7 hereof; (ix) costs
of winding-up and liquidating the Partnership; (x) fees and expenses incurred in
connection with potential Portfolio Investments that are not consummated by the
Partnership; and (xi) all other costs and expenses of the Partnership or the
General Partner in connection with this Agreement other than Administrative
Expenses.
8.3. Management Fee.
(a) Amount. The Partnership shall pay to the General Partner
an annual management fee (the "Management Fee") computed as follows: (i) during
the term of the Investment Period, 2.0% of aggregate Capital Commitments of the
Partnership and (ii) during the period following the end of the Investment
Period until the date of the Final Distribution, 2.0% of aggregate amount of
Capital Commitments of the Partnership invested in Portfolio Investments of the
Partnership which are unrealized as of the beginning of such period for which
the Management Fee is due and payable pursuant to Section 8.3(b) below. The
Management Fee shall be payable for the period commencing on the date of
formation of the Partnership and terminating on the date of the Final
Distribution. The amount of the Management Fee shall be reduced by the amount of
Syndication Expenses and Organization Expenses in excess of $750,000. Any amount
of such excess Syndication Expenses and Organization Expenses to be offset
against the Management Fee shall reduce the annual Management Fee due and
payable to the General Partner pursuant to Section 8.3(b) below on a pro rata
basis applied over the five years following the determination date of such
amount.
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(b) Payment. The Management Fee, calculated as provided in
this Section 8.3, shall be payable quarterly in advance, for the period
commencing with the date of this Agreement until the Final Distribution. The
initial payment shall be due as part of the Initial Capital Call and thereafter
will be made on each, January 1, April 1, July 1 and October 1 thereafter.
Quarterly installments for any period less than a full quarter shall be prorated
on the basis of the actual number of days elapsed. Upon the admission of any
Additional Limited Partner or the making of any additional Capital Commitment to
the Partnership by any Limited Partner pursuant to Section 2.3, the Management
Fee (the "Late Management Fee") attributable to the Capital Commitment of such
Additional Limited Partner (or to the additional Capital Commitment of such
existing Limited Partner) for the period commencing on the date of the inception
of the Partnership and terminating on the last day in the fiscal quarter in
which such Partner is admitted (or makes such additional Capital Commitment) and
the amount of such Partner's Late Payment Fees relating to interest on the Late
Management Fee pursuant to Section 2.3(c)(i) shall be payable on the date of
admission (or the date of making such additional Capital Commitment).
(c) Adjustments. The following adjustments shall be made to
the Management Fee:
(i) Director's fees, consulting fees, commitment
fees, monitoring fees, break-up fees and success fees
(excluding any options, warrants or other equity securities
awarded or otherwise issued to directors of a Portfolio
Entity) paid during such year to the General Partner, to any
member of the General Partner by Portfolio Entities for
services rendered by such persons ("Portfolio Entity
Remuneration") shall be used first to offset any transaction
expenses advanced by such service provider and not reimbursed
by the Partnership. Any remaining Portfolio Entity
Remuneration shall be used to reduce the Management Fee (but
not below zero) by 50% of such remaining amount, in accordance
with the terms of Sections 8.3(c)(ii) and (iii) below.
(ii) The amount of any Portfolio Entity Remuneration
to be so applied shall be applied first against the quarterly
payment next following the date of the determination of such
net remuneration and then against each successive quarterly
payment until such net remuneration has been fully utilized,
provided that no amount shall be carried over as a credit from
any fiscal year to the next.
(iii) For purposes of 8.3(c)(ii), a fee reduction
shall be deemed to have occurred when Portfolio Entity
Remuneration is actually received by the remunerated Person
and the amount of the net remuneration (and related reduction)
has been determined in good faith by the General Partner. In
the case of any fees paid in consideration other than cash
(excluding any options, warrants or other equity securities
awarded or otherwise issued to directors of a Portfolio
Entity), such fees shall be deemed to have been received by
the remunerated Person when such consideration has been
disposed of for cash and shall be deemed to be in an amount
equal to the proceeds of such disposition net of acquisition
and other transaction expenses (including taxes, if any).
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9. BOOKS AND RECORDS; REPORTS TO PARTNERS.
9.1. Books and Records.
(a) General. The General Partner shall keep or cause to be
kept complete and accurate records and books of account in which shall be
entered all such transactions and other matters relative to the Partnership's
business as are usually entered into records and books of account maintained by
persons engaged in businesses of like character or which are required by the
Act. Such books and records shall, to the extent consistent with all other
provisions of this Agreement, be maintained for all purposes in accordance with
generally accepted accounting principles consistently applied.
(b) Maintenance; Inspection. The books and records of the
Partnership shall be maintained at the offices of the General Partner, and all
such books and records shall be available for inspection and copying at the
reasonable request, and at the expense, of any Partner during ordinary business
hours. All Partners shall also have the right, at their expense and during
ordinary business hours, to meet with the Partnership's accountants.
9.2. Tax Information. The General Partner shall use its reasonable
efforts to send to each person who was a Partner at any time during a Fiscal
Year such Partnership tax information as shall be necessary for the preparation
by such person of its Federal tax returns (including information returns) within
seventy-five (75) days (but in no event later than ninety (90) days after the
end of each Fiscal Year); and, to this end, upon specific request by a Partner,
the General Partner shall provide each such Partner with a copy of the
Partnership's estimated and unaudited financial statements for each Fiscal Year
within forty-five (45) days after the close of such Fiscal Year. Upon the
request of any Limited Partner, the General Partner will undertake to furnish to
such person such additional information as may be necessary to enable such
person to file other required returns or reports with governmental agencies.
9.3. Reports to Partners.
(a) Annual Period. Within ninety (90) days after the end of
each Fiscal Year of the Partnership, the General Partner shall send to each
Limited Partner the following audited financial statements, prepared in
accordance with generally accepted accounting principles (the "Annual Financial
Statements"):
(i) a balance sheet of the Partnership as of the end
of such year;
(ii) a statement of income of the Partnership for
such year;
(iii) a statement of cash flows of the Partnership
for such year;
(iv) a statement of changes in Partner's Capital
Account for such year;
(v) schedules detailing each Portfolio Investment of
the Partnership as of the end of such year and
setting forth both the cost and the General Partner's
good faith estimate of the Carrying Value of each
Portfolio Investment as of the end of such year
presented substantially in the format
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that such information has been presented to investors
in the Prior Funds; and
(vi) notes to the audited financial statements.
The General Partner shall cause an audit of the Annual Financial Statements to
be made by the Partnership's independent public accountants, which audit shall
be conducted in accordance with generally accepted auditing standards. The
General Partner will select a nationally recognized independent public
accounting firm on behalf of the Partnership. Upon reasonable request of a
Limited Partner, the General Partner will use its reasonable efforts to provide
such other additional information relating directly to the requesting Limited
Partner's interest in the Partnership, subject to Section 17-305 of the LP Act.
(b) Quarterly Period. Within forty-five (45) days after the
end of the first, second, third and fourth fiscal quarters of the Partnership,
the General Partner shall send to each Limited Partner: (i) a report summarizing
the status of the Partnership and each Portfolio Investment of the Partnership
as of the end of such period and setting forth the General Partner's good faith
estimate of the Carrying Value of each Portfolio Investment as of the end of
such period presented substantially in the format that such information has been
presented to investors in the Prior Funds; (ii) a balance sheet, statement of
income and cash flows and statement of changes in Capital Account balances for
the Partnership with respect to such period (prepared on a pro forma basis,
unaudited); and (iii) notice of the commencement of any event during such period
entitling the Limited Partners to vote to terminate the Partnership or to vote
to remove the General Partner.
(c) Notices. The General Partner shall send to each Limited
Partner notice of the bringing of any action or proceeding against the General
Partner by one or more Limited Partners within twenty (20) days of the
commencement thereof.
9.4. Meetings. The General Partner shall hold an annual meeting of the
Partners on such date as the General Partners may determine and give at least
thirty (30) days' prior written notice to the Limited Partner, at which the
General Partner shall report on the Portfolio Investments of the Partnership.
9.5. Compliance with Laws. The General Partner shall conduct its
affairs and shall conduct the affairs of the Partnership in such a manner that
no Limited Partner will have any personal liability with respect to any
obligation of the Partnership except as expressly assumed by any Limited Partner
or as otherwise provided by law and generally so as to comply with all material
laws as applicable to it (including without limitation the Foreign Corrupt
Practices Act). The General Partner shall use its best efforts to cause all
registrations or notices required under the LP Act to be submitted or made in
accordance with the provisions of the LP Act and shall indemnify and keep
indemnified each of the Limited Partners from and against any and all costs,
expenses, claims, damages and liabilities to which they may become subject which
result from the failure by the General Partner to comply with the requirements
of the LP Act; provided, however, that the General Partner shall not be under
any obligation to indemnify and keep indemnified each of the Limited Partners
where such costs, expenses, claim damages or liabilities arise or result from a
breach by a Limited Partner of its representations and warranties contained in
the Subscription Agreement between the General Partner and the Limited Partners.
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10. TRANSFERS
10.1. Transfer by General Partner. The General Partner shall not assign
or otherwise transfer (collectively, "Transfer") its interest, and shall not
voluntarily withdraw as General Partner of the Partnership, except with the
consent of Two-Thirds in Interest of the Limited Partners; provided, however,
that the General Partner may Transfer its interest to any successor of the
General Partner or Affiliate of Conning Corporation without the consent of the
Limited Partners.
10.2. Removal of General Partner.
(a) Actions and Conditions. The General Partner may be removed
by the action, evidenced by a written notice delivered in accordance with the
requirements of Section 13.5, and executed by a Majority in Interest of the
Limited Partners if, but only if: (i) the General Partner shall be in material
violation of this Agreement and such violation shall have continued for a period
of thirty (30) days after receipt by the General Partner of written notice
thereof in accordance with the requirements of Section 13.5, executed by a
Majority in Interest of the Limited Partners; or (ii) the General Partner shall
have been determined by a court of competent jurisdiction to be guilty of gross
negligence, fraud or willful misconduct in the conduct of the business or
affairs of the Partnership or of any felony (it being understood that the
General Partner shall promptly send written notice of any such determination to
the Limited Partners). The General Partner may be removed for any reason by the
action of Eighty Percent (80%) in Interest of the Limited Partners, evidenced by
a written notice delivered in accordance with the requirements of Section 13.5
and executed by Eighty Percent (80%) in Interest of the Limited Partners. Except
as provided in Section 10.2(b), the General Partner shall cease to be the
general partner of the Partnership upon its removal or upon the occurrence of
any other Event of Withdrawal and the provisions of Section 5.4 hereof shall
terminate at such time.
(b) Effect. Upon the removal of the General Partner or upon
the occurrence of any other Event of Withdrawal, the Partnership shall be
dissolved and wound up in accordance with the provisions of Sections 11.2 and
11.3, unless within ninety (90) days thereafter Eighty Percent (80%) in Interest
of the Limited Partners agree in writing to continue the business of the
Partnership and to the appointment of one or more general partners to replace
the General Partner.
10.3. Transfer by Limited Partners. Subject at all times to Sections
10.4 and 10.5 and unless approved in advance by the General Partner under this
Section 10.3, a Limited Partner may not Transfer all or any part of its Interest
in the Partnership to another person (an "Assignee"). Notwithstanding the
foregoing, upon reasonable prior written notice to the General Partner, a
Limited Partner may Transfer all or any part of its Interest in the Partnership
to an Assignee without such consent of the General Partner (but still subject to
Sections 10.4 and 10.5): (i) to any entity that controls, is controlled by or is
under common control with such Limited Partner; (ii) to any successor in
interest upon the sale of all or substantially all of the assets of the Limited
Partner or in connection with a merger, consolidation or dissolution of any
corporate Limited Partner; (iii) as may be required by any law or regulation;
(iv) by testamentary disposition or intestate succession; or (v) to a trust,
profit sharing plan or other entity controlled by, or for the benefit of, such
Limited Partner or one or more family members. Further, any
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change in any trustee or fiduciary of a Limited Partner shall not be considered
to be a Transfer; provided, however, that (i) any replacement trustee or
fiduciary of an ERISA Partner is also a fiduciary under ERISA and (ii) written
notice of such change is given to the General Partner within a reasonable period
of time after the effective date thereof. For purposes of this Section 10.3,
"control" shall mean beneficial ownership of at least sixty percent (60%) of the
outstanding interests of the subject entity. No Assignee shall have the right to
become a Limited Partner (a "Substitute Limited Partner") upon the Transfer of a
Limited Partner's Interest in the Partnership, unless all of the following
conditions are satisfied:
(i) a duly executed and acknowledged written
instrument of assignment shall have been filed with the
Partnership;
(ii) the Limited Partner and the Assignee shall have
executed and acknowledged such other instruments and taken
such other actions as the General Partner shall deem
reasonably necessary or desirable to effect such substitution,
including, without limitation, the execution by the Assignee
of a counterpart of or an appropriate supplement to this
Agreement pursuant to which such Assignee agrees to be bound
by the terms and provisions hereof;
(iii) the conditions set forth in Section 10.4 have
been satisfied, and, if requested by the General Partner, the
Limited Partner or the Assignee shall have obtained an opinion
of counsel reasonably satisfactory to the General Partner
(which may include in-house counsel for such Limited Partner)
as to the legal matters set forth therein;
(iv) the Limited Partner or the Assignee shall have
paid to the Partnership such amount of money as is sufficient
to cover all expenses incurred by or on behalf of the
Partnership in connection with such substitution; and
(v) unless the Assignee is an Affiliate of the
Limited Partner, the General Partner shall have consented in
writing to such substitution, which consent will not be
withheld unreasonably.
10.4. Certain Restrictions on Transfers. Notwithstanding any other
provision of this Agreement, no Partner may Transfer in any manner whatsoever
all or any part of its Interest in the Partnership, and no attempted or
purported Transfer of such Interest shall be effective, unless: (i) such
Transfer would not result in a violation of applicable law including any Federal
or state securities laws or any term or condition of this Agreement; (ii) such
Transfer would not result in a requirement that the Partnership register as an
investment company under the Investment Company Act of 1940, as amended; (iii)
if such Transfer is to an employee benefit plan within the meaning of ERISA, the
General Partner shall have consented thereto; (iv) such Transfer is to an entity
which the General Partner deems to be a Qualified Investor; and (v) such
Transfer would not result in the Partnership being characterized as a
publicly-traded partnership for Federal income tax purposes under Section 7704
of the Code. To this end, the General Partner shall be permitted to require and
rely on representations made by the transferor Partner and the transferee
Partner in connection with any proposed Transfer of all or any portion of any
Interest to the extent that the General Partner determines that such
representations are necessary or appropriate to satisfy the provisions of this
Section 10.4.
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10.5 Further Restrictions. Any Transfer or withdrawal under this
Article 10 shall be subject to the restrictions in this Section 10.5. The
following provisions are included in this Agreement to prevent the Partnership
from being classified as a "publicly traded partnership", as defined in Section
7704 of the Code, that is taxable at the entity level:
(i) The General Partner shall not cause or permit (x)
any offering of Partnership interests to be registered under the
Securities Act, or (y) interests in the Partnership to become "traded
on an established securities market," and shall withhold its consent to
any Transfer that, to the General Partner's knowledge after reasonable
inquiry, would otherwise be accomplished by a trade on a "secondary
market or the substantial equivalent thereof," in each case within the
meaning of Sections 7704 or 469(k) of the Code and/or any Treasury
Regulations;
(ii) No Transfer of any Partnership interest or
portion thereof shall be permitted or recognized (within the meaning of
Treasury Regulation Section 1.7704-1(d)) by the Partnership or the
General Partner if and to the extent that such Transfer, if made, would
(x) fail to qualify as a "transfer not involving trading" pursuant to
Treasury Regulation Section 1.7704-1(e), and (y) cause the Partnership
to fail to qualify for the safe harbor for "private placements" set
forth in Section 1.7704-1(h), and (z) cause the Partnership to fail to
qualify for the "lack of actual trading" safe harbor set forth in
Treasury Regulation Section 1.7704-1(j), unless the General Partner
together with the Partnership's tax advisors determines that such
Transfer would not otherwise cause the Partnership to be treated as a
publicly traded Partnership under Section 7704(b) of the Code; and
(iii) The transferor and transferee shall provide the
General Partner, in connection with any proposed Transfer, written
representations to the effect that (x) the proposed Transfer will not
be effected on or through (1) a United States national, regional or
local securities exchange, (2) a foreign securities exchange or (3) an
interdealer quotation system that regularly disseminates firm buy or
sell quotations by identified brokers or dealers (including, without
limitation, the Nasdaq Automated Quotation System) and (y) such Person
is not, and its proposed Transfer or acquisition (as the case may be)
will not be made by, through or on behalf of, (1) a Person, such as a
broker or a dealer, making a market in interests in the Partnership, or
(2) a Person who makes available to the public bid or offer quotes with
respect to interests in the Partnership; and shall provide such
additional written representations as the General Partner reasonably
may request to enable it to comply with this clause (iii), and the
General Partner and counsel to the Partnership shall be permitted to
rely upon such representations and on written representations from
other Partners made prior to or contemporaneously with such proposed
Transfer.
10.6. Actions. In the event that a Limited Partner completes an
approved Transfer of an Interest, the General Partner is authorized to cause
Schedule I to be amended to reflect as appropriate the occurrence of any of the
transactions referred to in this Article 10.
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11. DURATION AND TERMINATION OF THE PARTNERSHIP.
11.1. Duration. The existence of the Partnership commenced on the date
of the filing of the Certificate of Limited Partnership pursuant to the LP Act
and its term shall continue until the first to occur of any of the following
events (an "Event of Termination"):
(i) the tenth (10th) anniversary of the date of this
Agreement; provided, however, that the General Partner may
extend the term of the Partnership for up to two (2)
additional one year terms to provide for the orderly
termination and liquidation of the Partnership's Portfolio
Investments;
(ii) the decision by the General Partner to terminate
the Partnership, together with the consent of Two-Thirds in
Interest of the Limited Partners;
(iii) the failure by the Limited Partners to continue
the business of the Partnership, in accordance with the
provisions of paragraph (b) of Section 10.2, following an
Event of Withdrawal;
(iv) the vote to terminate the Partnership by a
Majority in Interest of the Limited Partners, in the event the
Internal Revenue Service makes a determination, which is final
except for the right of judicial review, or a court of
competent jurisdiction makes a determination, that the
Partnership is or is taxable as an association taxable as a
corporation for Federal income tax purposes;
(v) the election of the General Partner to terminate
the Partnership after the failure of the Limited Partners to
terminate the Suspension Period Restrictions in accordance
with the provisions of Section 5.6; or
(vi) the vote to terminate the Partnership by Eighty
Percent in Interest of the Limited Partners.
Upon the occurrence of an Event of Termination, the General Partner shall
promptly provide notice thereof to each Limited Partner.
11.2. Winding Up. Upon the occurrence of an Event of Termination, the
Partnership shall be wound up, liquidated and dissolved as promptly as
reasonably practicable. The General Partner or, if there is no General Partner,
a liquidator appointed by a Majority in Interest of the Limited Partners, shall
proceed with the Dissolution Sale. In the Dissolution Sale, the General Partner
or such liquidator shall use its best efforts to reduce the Securities of the
Partnership to cash, subject to obtaining Carrying Value for such Securities and
any tax or legal considerations. In the event that the General Partner or such
liquidator is unable to reduce the Non-Marketable Securities of the Partnership
to cash, the General Partner or liquidator, in its sole discretion, may enter
into arrangements or form a vehicle to manage such Non-Marketable Securities
until they can be reduced to cash. Any such Limited Partner shall give notice of
its desire to have the General Partner or liquidator form such a vehicle within
ten (10) days after notice from the General Partner or liquidator which states
that the General Partner or liquidator is unable to reduce the Securities of the
Partnership to cash, consistent with obtaining Carrying Value, and which sets
forth the proposed terms of such vehicle and may designate a trustee other than
the
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General Partner. The General Partner or liquidator shall be entitled to
reasonable compensation for managing such vehicle and shall not be obligated to
manage such vehicle for more than three (3) years.
11.3. Final Distribution.
(a) Carrying Value of Assets. The Net Income or Net Losses of
the Partnership from the Dissolution Sale shall be allocated to the Partners'
Capital Accounts in accordance with Article 3. All securities remaining in the
Partnership upon completion of the Dissolution Sale shall be deemed to have been
sold at their Carrying Value and the amount of any gain or loss which would have
been realized upon a sale for such value shall be deemed to have been realized
and recognized for the purposes of computing the final allocations to the
Capital Accounts in accordance with Article 3.
(b) General Partner Account. If after final allocations to the
Capital Accounts of the Partners, the Capital Account of the General Partner is
negative, the General Partner shall contribute to the Partnership sufficient
cash or Securities previously distributed to the General Partner (valued as of
the date of return under Section 4.7) so that the balance of the Capital Account
of the General Partner is increased to zero. Notwithstanding the preceding
sentence, in no event shall the General Partner be required to return to the
Partnership an amount that is in excess of the amount described in Section 4.9
hereof. If any Securities are so returned, they shall be valued at their
Carrying Value at the time they are returned by the General Partner.
(c) Limited Partners' Accounts. The General Partner may
require a Limited Partner (including any former Limited Partner) to return
distributions made to such Limited Partner or former Limited Partner for the
purpose of meeting such Limited Partner's pro rata share of the Partnership's
indemnity obligations under Section 7 or any other liability of or claim against
the Partnership for which the Partnership has insufficient funds to pay (after
calling any unpaid Capital Commitments) in an amount up to, but in no event in
excess of, the aggregate amount of Distributions actually received by such
Limited Partner from the Partnership; provided, however, that for such purposes
no Partner shall be required to return an aggregate amount of Distributions in
excess of fifty percent (50%) of such Partner's Capital Commitment.
Notwithstanding the terms of this Agreement, if it is determined under the LP
Act or other applicable law that any Limited Partner has received a Distribution
which it is required to return to or for the account of the Partnership or
Partnership creditors, then such Partner shall be obligated to return such
Distribution in the full amount required under the LP Act or other applicable
law. The obligation of any Limited Partner to return all or any part of a
Distribution made to such Limited Partner shall be the obligation of such
Limited Partner only and not of any other Partner. Any amount returned by a
Limited Partner pursuant to this Section 11.3(c) shall be treated as a
contribution of capital to the Partnership. The General Partner shall be
required to return (at the same time as the Limited Partners) its pro rata
portion (as provided below) of any amounts required to be returned by Limited
Partners under this Section 11.3(c). A Partner's share of the giveback
obligation under this Section 11.3(c) will be based on the amount of
distributions received by such Partner arising out of the Portfolio Investment
giving rise to the Partnership's indemnity obligations under Section 7 or other
liability or claim; provided, however, that if such indemnity obligations or
other liability or claim are not related to a particular Portfolio Investment,
then amounts required to be returned under this Section 11.3(c) will be funded
out of distributions generally to those Partners or former Partners who were
45
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Partners at or after the time of the event giving rise to such indemnity
obligations or other liability or claim. Notwithstanding the foregoing, no
Limited Partner shall be required to return a distribution after the first
anniversary of the Final Distribution; provided, however, that if at the end of
such period, there are any proceedings under Section 7 then pending or any other
liability (whether contingent or otherwise) or claim then outstanding, the
General Partner shall so notify the Limited Partners at such time (which notice
shall include a brief description of each such proceeding (and of the
liabilities asserted in such proceeding) or of such liabilities and claims) and
the obligation of the Limited Partners to return any distribution for the
purpose of meeting their giveback obligations under the Section 11.3 shall
survive with respect to each such proceeding, liability or claim set forth in
such notice (or any related proceeding, liability or claim based upon the same
or similar claim) until the date that such proceeding, liability or claim is
ultimately resolved and satisfied.
(d) Priority of Distributions. The cash and any other property
remaining in the Partnership upon completion of the Dissolution Sale shall be
applied or distributed as a final distribution (a "Final Distribution") in one
or more installments in the following order of priority:
(i) to creditors of the Partnership, including
Partners who are creditors, in the order of priority as provided
by law; and
(ii) to the Partners, in proportion to the amounts
in their Capital Accounts.
12. DEFINITIONS. As used herein, the following terms have the following
meanings:
7% Distribution Preference means, with respect to any Partner and at
any time, an amount which if distributed to such Partner at such time would
cause the aggregate amount of distributions made to such Partner and such
Partner's predecessors in interest by the Partnership (determined, with respect
to distributions in kind, pursuant to Section 4.6) to equal but not exceed an
amount equal to such Partner's (and any such predecessor's) Aggregate 7%
Preferential Return as of such time.
7% Preferential Return means, with respect to any Partner and as of the
end of any fiscal quarter, an amount (not less than zero) equal to such
Partner's Return Base as of the last day of the preceding fiscal quarter
multiplied by 0.017059% (the equivalent, with quarterly compounding, of 7%
compounded annually). A Partner's 7% Preferential Return for any fiscal period
consisting of less than a full fiscal quarter shall be determined through
proration on a daily basis by (1) multiplying 0.017059% times a fraction, the
numerator of which is the actual number of days in such fiscal period and the
denominator of which is the actual number of days in the fiscal quarter that
includes such fiscal period; and (2) multiplying the result by such Partner's
Return Base as of the end of the preceding fiscal quarter.
7% Preferential Return Allocation means, with respect to any Partner
and as of the end of any fiscal period: (a) such Partner's Aggregate 7%
Preferential Return determined as of the end of such fiscal period; reduced, but
not below zero, by (b) the excess (if any) of (1) the aggregate amount of Net
Income previously allocated to such Partner and such Partner's predecessors in
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interest (if any) over (2) the aggregate amount of Net Loss previously allocated
to such Partner and such predecessors, in each case since the inception of the
Partnership.
Additional Limited Partner: An additional Limited Partner admitted to
the Partnership pursuant to Section 2.2.
Administrative Expenses: As defined in Section 8.1.
Advisory Committee: As defined in Section 5.3.
Affiliate: As to any person, any other person directly or indirectly
controlling, controlled by, or under common control with, such person.
Aggregate 7% Preferential Return means, with respect to any Partner and
fiscal period, the sum of such Partner's 7% Preferential Returns for each
calendar quarter (and partial quarter) from the inception of the Partnership
through the end of such fiscal period.
Agreement: This Limited Partnership Agreement, as amended from time to
time.
Annual Financial Statements: As defined in Section 9.3(b).
Assignee: As defined in Section 10.3.
Bank Regulated Partner: A Limited Partner which is a bank holding
company as defined in Section 2 (c) of the Bank Holding Company Act of 1956, or
an Affiliate thereof.
Capital Account: The capital account of each Partner on the books of
the Partnership, as described in Section 3.1.
Capital Commitment: As to any Limited Partner, the amount of capital
committed to be contributed to the Partnership by such Limited Partner as shown
on Schedule I hereto, as revised from time to time in accordance with this
Agreement.
Capital Contribution: As to any Partner at any time, the capital
contributed to the Partnership by such Partner at or before such time, including
any additional Capital Contribution of such Partner under Section 3.6(c) and any
amount allocated to the Capital Account of such Partner under Section 3.6(d),
less any deduction pursuant to such Section.
Carrying Value: The value of Securities as determined in accordance
with the procedures set forth in Section 4.7.
Certificate of Limited Partnership: The Certificate of Limited
Partnership of the Partnership, as amended from time to time.
Code: The Internal Revenue Code of 1986, as amended from time to time;
and Treas. Reg. means the Treasury Regulation and related rules promulgated
under the Code.
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Cost: With respect to Partnership assets and unless the context
otherwise requires, the Partnership's adjusted tax basis in such assets for
federal income tax purposes, provided, however, that, if the Partnership has
made an election under Section 754 of the Code, such tax basis shall be
determined after giving effect to adjustments made under Section 734 of the Code
but (except as provided in Treasury Regulations Section 1.734-2(b)(1)) without
regard to adjustments made under Section 743 of the Code.
Cumulative Net Income: As of the time of any determination, the excess
(if any) of the cumulative Net Income of the Partnership from its inception
through and including such time over the cumulative Net Losses of the
Partnership over that period.
Custodian: As defined in Section 5.5.
Defaulting Limited Partner: As defined in Section 3.6(a).
Disposed Investments: As of any time of determination, all Portfolio
Investments that have been sold, distributed to the Partners, written off as
worthless securities, or otherwise disposed of, in whole or in part, to the
extent so distributed or disposed of at or prior to the date of determination;
provided, however, that any exchange of any securities of a Portfolio Entity for
other securities or property (other than cash or cash equivalents) shall not
constitute a disposition of the original securities. For this purpose, the
following events shall be treated as partial dispositions of securities:
(a) Each principal payment (or portion thereof) on any
security that constitutes a debt instrument for federal income tax purposes
shall be treated as a disposition of a portion of such security that is
equivalent on a percentage basis to the portion of the original principal amount
of such debt instrument represented by such principal payment;
(b) In the event that the Partnership agrees to capitalize any
interest that is accrued but remains unpaid on any security that constitutes a
debt instrument for federal income tax purposes and to add such interest to
principal, the amount so capitalized shall be treated, solely for purposes of
determining whether payments subsequently made to the Partnership with respect
to such security will constitute Distributions, as a follow-on investment in the
debt securities of the issuer, and any determination regarding the extent to
which subsequent payments made to the Partnership with respect to the original
or any such follow-on investment in debt securities is properly treated as a
payment of principal shall be made in accordance with federal income tax
principles;
(c) Each payment (or portion thereof) made to the Partnership
in redemption of any security constituting stock for federal income tax purposes
that is treated for such purposes as a distribution in part or full payment in
exchange for such stock (rather than, for example, a dividend paid on such
security) shall be treated as a disposition of the portion of such security
treated for such purposes as having been exchanged;
(d) Any partial repurchase by the issuer and any lapse or
other termination of part of any security constituting an option or warrant for
federal income tax purposes shall be treated as a disposition of a portion of
such security that is equivalent on a percentage basis to the portion of the
Partnership's investment in such security (as reflected in the Partnership's
48
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financial records maintained in accordance with federal income tax principles)
represented by the portion of such security that was repurchased, lapsed or
terminated; and
(e) With respect to any Portfolio Investment that is subject
to a Net Write-Down, such Portfolio Investment shall be treated as a Disposed
Investment to the extent of such Net Write-Down while such Net Write-Down is in
effect.
In the event that the General Partner determines, pursuant to 4.2, to cause a
portion of the proceeds attributable to the disposition of any Portfolio
Investment to be retained by the Partnership and invested in other Portfolio
Investments, then, for purposes of determining the Partners' Priority Return
Amounts, the following portion of the original Portfolio Investment shall not be
treated as Disposed Investments: the entire amount of such original Portfolio
Investment multiplied by a fraction, the numerator of which is the amount of
such proceeds reinvested in new Portfolio Investments and the denominator of
which is the total amount of proceeds attributable to the disposition of such
original Portfolio Investment.
Dissolution Sale: All sales and liquidations by or on behalf of the
Partnership of all or substantially all of its assets in connection with or in
contemplation of the winding up of the Partnership.
Distribution: Any distribution made by the Partnership to any one or
more Partners.
ERISA Partner: Any Limited Partner which is (a) an "employee benefit
plan" within the meaning of Section 3(3) of ERISA and subject to Part 4 of Title
I of ERISA, (b) a "plan," as defined in Section 4975(e)(1) of the Code, to which
the provisions of section 4975 of the Code are applicable, or (c) any other
Person, any of the assets of which constitute "plan assets," within the meaning
of the Plan Assets Regulation, of a plan described in (a) or (b) above.
Event of Termination: As defined in Section 11.1.
Event of Withdrawal: Any of the following events with respect to the
General Partner:
(a) the General Partner withdraws from the Partnership as
provided in Section 17-602 of the LP Act;
(b) the General Partner ceases to be a member of the
Partnership as provided in Section 10.1;
(c) the General Partner is removed as a General Partner in
accordance with Section 10.2;
(d) the General Partner: (i) makes an assignment for the
benefit of creditors; (ii) files a voluntary petition in bankruptcy; (iii) is
adjudicated a bankrupt or insolvent; (iv) files a petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation; (v) files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against it in any proceeding of this nature; or
(vi) seeks, consents to, or acquiesces in the appointment of
49
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a trustee, receiver, or liquidator of the General Partner or of all or any
substantial part of its properties;
(e) if within one hundred twenty (120) days after the
commencement of any proceeding against the General Partner seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, the proceeding has not
been dismissed, or if within ninety (90) days after the appointment without its
consent or acquiescence of a trustee, receiver or liquidator of the General
Partner or of all or any substantial part of its properties, the appointment is
not vacated or stayed, or if within ninety (90) days after the expiration of any
such stay, the appointment is not vacated; or
(f) the dissolution and commencement of winding up of the
General Partner Excluded Investment: As defined in Section 6.6(a).
Excused Partner: As defined in Section 6.6(a).
Expenses: For any Fiscal Period, expenses or losses of the Partnership
incurred during such Fiscal Period, as determined pursuant to accrual method
Federal income tax accounting principles, including, without limitation, all
amounts borne by and charged to the Partnership pursuant to Sections 8.2 and
8.3.
Final Distribution: As defined in Section 11.3(c).
Fiscal Period: Any Fiscal Year or Interim Accounting Period.
Fiscal Year: As defined in Section 1.5.
General Partner: Conning Investment Partners VI, L.L.C., a limited
liability company organized and existing under the laws of the state of
Delaware.
Income: For any Fiscal Period, all income and gains of the Partnership
recognized for Federal income tax purposes, plus all income earned by the
Partnership which is exempt from Federal income tax.
Indemnitee: As defined in Section 7.1.
Interest: An interest as a Partner in the Partnership.
Interim Accounting Period: As defined in Section 3.5.
Investment Guidelines: As defined in Section 5.1.
Investment Period: As defined in Section 2.2(b).
Key Person Trigger Event: As defined in Section 5.6.
Late Expense: As defined in Section 3.3(c).
Late Management Fee: As defined in Section 8.3(b).
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Late Payment Fees: As defined in Section 2.3(c).
Late Portfolio Investment Capital Contribution: As defined in Section
2.3(c).
Liabilities: As defined in Section 7.1.
Limited Partner Percentage: As to any Limited Partner for any Fiscal
Period, the fraction, expressed as a percentage, having as its numerator the
balance of the Capital Contributions of such Limited Partner immediately prior
to the end of such Fiscal Period and having as its denominator the aggregate
amount of the balances of all of the Capital Contributions of all of the Limited
Partners immediately prior to the end of such Fiscal Period.
Limited Partners: At any time, the limited partners of the Partnership.
LP Act: The Uniform Limited Partnership Act, as adopted by the State of
Delaware and as amended from time to time.
Majority [or Two-Thirds or Eighty Percent or X%] in Interest of the
Limited Partners: At any time, Limited Partners whose Limited Partner
Percentages aggregate more than the requisite designated percentage (i.e.,
Majority, Two-Thirds, Eighty Percent, as the case may be) of the Limited Partner
Percentages of all the Limited Partners in the Partnership.
Management Fee: As defined in Section 8.3.
Marketable Securities: Securities that are traded on a national
securities exchange or reported through the automated quotation system of a
registered securities association and which at the same time are not subject to
restrictions on transfer of the sort referred to in Section 4.6(b).
Net Asset Value: As of any date, the amount by which the value of the
Partnership's assets, determined in accordance with Section 4.7, exceeds the
amount of its liabilities.
Net Income: For any Fiscal Period, the excess, if any, of the Income of
the Partnership over Expenses for such Fiscal Period.
Net Losses: For any Fiscal Period, the excess, if any, of the Expenses
of the Partnership over the Income of the Partnership for such Fiscal Period.
Net Write-Down: As of any time, the sum of the amounts by which any
Portfolio Investment that is not a Disposed Investment in its entirety has been
written down on the Partnership's books in accordance with the rules set forth
below to less than its Cost, but only to the extent that such write-down has not
previously been offset by a corresponding write-up.
(a) In the case of any Portfolio Investment for which market
quotations are readily available, then, solely for purposes of determining the
apportionment of distributions among the Partners:
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(i) the General Partner shall adjust the value of
such investment as shown in the Partnership's financial
records to its Carrying Value (determined in accordance with
Section 4.7) at the end of the fiscal period in question, and
(ii) if the Carrying Value of any such Portfolio
Investment that previously has been subject to a downward
adjustment subsequently increases, the General Partner shall
adjust the value of such investment as shown in the
Partnership's financial records to its Carrying Value at the
end of the period in question.
(b) In the case of any Portfolio Investment for which market
quotations are not readily available:
(i) if the General Partner shall determine in the
good faith exercise of its discretion that there has been a
significant decline as of the end of any fiscal period in the
Carrying Value of such Portfolio Investment, then, solely for
purposes of determining the apportionment of distributions
among the Partners, the General Partner shall write down the
value of such investment in the Partnership's financial
records by the amount of such decline not previously taken
into account in making such a downward adjustment; and
(ii) if the General Partner shall determine in the
good faith exercise of its discretion (after consultation with
the Partnership's independent accountants) that as of the end
of any fiscal period there has been a significant reversal or
mitigation of circumstances previously giving rise to a
write-down in the value of such Portfolio Investment, then,
solely for purposes of determining the apportionment of
distributions among the Partners, the General Partner shall
write up the value of such investment by any amount (as
determined in its sole discretion) not previously taken into
account in making such an upward adjustment; and
(iii) In the case of any such Portfolio Investment
that is a debt obligation,
(A) the determination by the General Partner
of the decline in such Carrying Value shall take into
account only changes in the creditworthiness of the
issuer of the obligation and not any changes which
may have taken place in general interest rate levels,
and
(B) any such determination of
creditworthiness may be made by reference to the
rating of the issuer's outstanding debt by Standard &
Poors Corporation, ▇▇▇▇▇'▇ Investor Service, Inc. or
any other nationally-recognized rating organization
in the United States, the issuer's NAIC rating, and
such other information as the General Partner may
deem relevant.
(c) In no event shall any Portfolio Investment be written up
for these purposes to an amount exceeding the Cost of that security.
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Non-Marketable Securities: Any securities other than Marketable
Securities.
Optionees: As defined in Section 3.6(e).
Optionor: As defined in Section 3.6(e).
Organizational Expenses: As defined in Section 8.2.
Other Expenses: As defined in Section 8.2.
Partners: As defined in Section 1.1.
Partnership: Conning Capital Partners VI, L.P., the Delaware limited
partnership, referred to in the first paragraph of this Agreement.
Partnership Return: The return of partnership income which the
Partnership is required to file with respect to any taxable year pursuant to
Section 6031 of the Code.
Portfolio Entity: As defined in Section 5.1.
Portfolio Investment: As defined in Section 5.1.
Prime Rate: the variable rate of interest, per annum, most recently
published in the Wall Street Journal as its "prime rate."
Principals: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇.
Priority Return Amount: With respect to any Partner and at any time, an
amount which, if distributed to such Partner at such time, would cause the
aggregate amount of distributions made by the Partnership to such Partner and
such Partner's predecessors in interest from the inception of the Partnership
through such time (other than those distributions necessary to satisfy the
requirements of Section 4.3(ii)) to equal but not exceed that portion of such
Partner's Capital Contribution that, at or prior to the time of determination,
is reflected in the Partnership's books as having been used by the Partnership:
(a) To acquire any Portfolio Investments that, as of such
time, are Disposed Investments (including, for avoidance of doubt, any
investments that are subject to a Net Write-Down, to the extent provided for in
clause (e) in the definition of "Disposed Investments"), or
(b) To pay any expenses properly borne by the Partnership
under this Agreement (including but not limited to the Management Fee,
Organizational Expenses and Syndication Expenses not in excess of $750,000 in
the aggregate, and indemnification expenses, if any), but only:
(i) To the extent of such Partner's proportionate
share (based on its relative Capital Contribution) of the
amount of such expenses attributable to investments that, at
such time, are Disposed Investments; and
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(ii) To the extent that the Partnership has not,
subsequent to the payment of such expenses but prior to the
time of determination, used proceeds to acquire additional
Portfolio Investments, at least equal in cost to the expenses
so paid (in which event the Partners' Capital Contributions
that were actually used to pay such expenses shall be deemed,
for purposes of determining their Priority Return Amounts, to
have been used to acquire such additional Portfolio
Investments).
For purposes of this definition, (A) any expenses borne by the Partnership shall
be deemed to have been paid with Partnership funds other than the Partners'
Capital Contributions to the extent that the Partnership has such other funds
available to pay such expenses; (B) the aggregate amount of the Partnership's
expenses from inception through any date of determination that have been paid
with the Partners' Capital Contributions shall be apportioned among all
Portfolio Investments (and the amounts so apportioned shall be deemed to be
attributable to such Portfolio Investment) that were acquired by the Partnership
since inception with the Partners' Capital Contributions in proportion to the
relative Cost of such investments except that, to the extent that a particular
Portfolio Investment has become a Disposed Investment, no further Partnership
expenses shall be deemed to be attributable to that investment; (C) for purposes
of the preceding clause (B), the General Partner may use any reasonable method
(including but not limited to a quarterly or monthly convention) to determine
the amount of expenses incurred from the Partnership's inception through such
date of determination; and (D) in no event shall the Limited Partners' aggregate
Priority Return Amounts exceed, at any time, their aggregate Capital
Contributions at such time reduced (but not below zero) by the aggregate amount
of Distributions previously distributed to them, other than those distributed
pursuant to Section 4.3(ii) as 7% Distribution Preference amounts.
Prior Funds: Conning Insurance Capital Limited Partnership, Conning
Insurance Capital International Partners, Conning Insurance Capital Limited
Partnership II, Conning Insurance Capital International Partners II, Conning
Insurance Capital Limited Partnership III and Conning Insurance Capital
International Partners III, L.P., Conning Connecticut Insurance Fund, L.P., and
Conning Capital Partners V, L.P.
Qualified Investor: An institutional or other sophisticated investor to
which, in the opinion of the General Partner, an interest in the Partnership may
be offered in a private placement without any violation of the Federal
securities laws or any other applicable laws or regulations.
Related Party: As defined in Section 5.4(e).
Remaining Portion: As defined in Section 3.6(e)(ii).
Return Base: shall mean, with respect to any Partner and as of any
determination date, an amount, not less than zero, equal to:
(a) such Partner's Return Base as of the end of the calendar
quarter preceding such determination date (the "Prior Quarter");
(b) increased by
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(i) all Capital Contributions made by such Partner to
fund Portfolio Investments (or pay related expenses subject to
capitalization as part of the Cost of such investments for
federal income tax purposes) to the extent that such
contributions are both (A) received by the Partnership from
such Partner at any time during or prior to the fiscal period
commencing at the end of the Prior Quarter and ending at such
determination date and (B) actually used by the Partnership
during such fiscal period to make such Portfolio Investments,
or pay such expenses (provided that, for this purpose, any
such contributions received by the Partnership during any
fiscal period and held by the Partnership for 60 days after
receipt without being so used shall be deemed to have been so
used as of the first day following the expiration of such
60-day period);
(ii) all Capital Contributions made by such Partner
for any purpose other than to fund Portfolio Investments (or
pay related expenses subject to capitalization as part of the
Cost of such investments for federal income tax purposes) to
the extent that such contributions are received by the
Partnership from such Partner during the fiscal period
commencing at the end of the Prior Quarter and ending at such
determination date; and
(iii) such Partner's full 7% Preferential Return for
the fiscal period commencing at the end of the Prior Quarter
and ending at such determination date; and
(c) reduced by an amount equal to the sum of all distributions
made to such Partner by the Partnership during the fiscal period commencing at
the end of the Prior Quarter and ending at such determination date.
For purposes of the preceding sentence: (1) in determining such Partner's Return
Base as of the Partnership's first determination date, the day on which such
Partner made its initial capital contribution pursuant to this Agreement shall
be deemed to constitute the end of the Prior Quarter; (2) except as provided in
the preceding clause (1), any capital contribution actually received by the
Partnership from such Partner during any calendar quarter or within five
business days thereafter shall be deemed to have been received on the last day
of such quarter; (3) any distribution actually made to such Partner by the
Partnership during any calendar quarter or within five (5) business days
thereafter shall be deemed to have been made on the last day of such quarter;
(4) all contributions made to the Partnership by such Partner's predecessors in
interest (if any), all distributions made by the Partnership to any such
predecessors, and all 7% Preferential Returns of any such predecessors shall be
taken into account as if such contributions had been made by, such distributions
had been made to, and such 7% Preferential Returns had been for the benefit of,
such Partner; (5) in the event the General Partner retains distributable amounts
for reinvestment in accordance with Sections 4.2 and 5.1(a)(iv), only the cost
basis of Securities constituting the Disposed Investment shall be included in
the Return Base; and (6) distributions received by the General Partner shall be
taken into account to reduce the General Partner's Return Base pursuant to
clause (c) of this definition only to the extent of that portion of such
distributions that the General Partner would have received if it had made its
Capital Contributions to the Partnership in exchange for an interest as a
Limited Partner and held no interest as a general partner of the Partnership
(and another person had served as the General Partner hereunder).
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For avoidance of doubt, in the event that any Partner receives distributions
that exceed the sum of such Partner's Aggregate 7% Preferential Return and
Return Base, and subsequently makes contributions to the Partnership that
otherwise would increase such Partner's Return Base, the resulting increase in
such Partner's Return Base shall be limited to the excess, if any, of the amount
so contributed over the sum of all such excess distributions.
Deemed capital contributions attributable to default penalties imposed by
Section 3.6(d) shall be treated for purposes of this definition as provided in
that Section.
Securities: Shares of capital stock, limited partnership interests,
warrants, options, bonds, notes, rights, debentures and other securities and
equity interests of whatever kind of any person, partnership, corporation or
government, whether readily marketable or not.
Securities Act: The Securities Act of 1933, as amended.
Short-Term Investments: Any investment by the Partnership in U.S.
government securities, certificates of deposit, commercial paper, and any other
banking or money market instruments or in pooled investment accounts which in
turn invest in such securities, which will have a rating of "BBB" or higher by
▇▇▇▇▇'▇ Investors Services, Inc. or "Baa" or higher by Standard & Poors
Corporation.
Subscription Agreement: As defined in Section 9.5.
Substitute Limited Partner: As defined in Section 10.3.
Suspension Period Restrictions: As defined in Section 5.6.
Syndication Expenses: As defined in Section 8.2.
Tax Matters Partner: As defined in Section 5.2(g).
Transfer: As defined in Section 10.1.
13. MISCELLANEOUS.
13.1. Waiver of Partition. Each Partner hereby irrevocably waives any
and all rights that it may have to maintain an action for partition of any of
the Partnership's property.
13.2. Power of Attorney.
(a) General. Each Limited Partner hereby makes, constitutes
and appoints the General Partner, with full power of substitution and
resubstitution, its true and lawful attorney for it and in its name, place and
stead for its use and benefit, to sign, execute, certify, acknowledge, file and
record all instruments amending, restating or canceling the Certificate of
Limited Partnership, as the same may hereafter be amended or restated, that may
be appropriate, and to sign, execute, certify, acknowledge, file and record such
other agreements, instruments or documents as may be necessary or advisable: (i)
to reflect the exercise by the General Partner of
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any and all of the powers granted to it under this Agreement; (ii) to reflect
the admission to the Partnership of any Limited Partner or an increase in the
Capital Contributions of any Limited Partner or withdrawal of any Limited
Partner in the manner prescribed in this Agreement; and (iii) which may be
required of the Partnership or of the Partners by the laws of Delaware or any
other jurisdiction. Each Limited Partner hereby gives such attorney-in-fact full
power and authority to do and perform each and every act required by the
foregoing sentence as fully as such Limited Partner might or could do if
personally present, and hereby ratifies and confirms all that such
attorney-in-fact shall lawfully do or cause to be done by virtue thereof.
(b) Scope. The power of attorney granted pursuant to paragraph
(a) of this Section 13.2: (i) is a special power of attorney coupled with an
interest and, except as provided in clause (iii) of this paragraph (b) of
Section 13.2, is irrevocable; (ii) may be exercised by such attorney-in-fact by
listing all of the Limited Partners executing any agreement, certificate,
instrument or document with the single signature of such attorney-in-fact acting
as attorney-in-fact for all of them; and (iii) with respect to any Limited
Partner, shall terminate upon the effectiveness of the admission of a Substitute
Limited Partner pursuant to Section 10.3 except that the power of attorney for
such Limited Partner shall survive such substitution for the sole purpose of
enabling such attorney-in-fact to execute, acknowledge and file any such
agreement, certificate, instrument or document as is necessary to effect such
substitution.
13.3. Modifications.
(a) General. This Agreement may be modified or amended only
with the written consent of the General Partner and Two-Thirds in Interest of
the Limited Partners; provided, however, that no amendment shall be made to this
Agreement which would:
(i) add to, detract from or otherwise modify the
purposes of this Partnership without the consent of all the
Partners;
(ii) increase the Capital Commitment of any Partner
(other than pursuant to Section 2.1 or 3.6); convert a Limited
Partner's Interest into a General Partner's Interest; modify
the limited liability of a Limited Partner; or increase the
liabilities or responsibilities of, or diminish the rights or
protections of, any Partner under this Agreement; in each
case, without the consent of each such affected Partner;
(iii) alter the Interest of any Partner in income,
gains and losses or amend or modify any portion of Section 2.2
or Article 3 or 4 without the consent of each Partner
adversely affected by such amendment or modification;
provided, however, that the admission of Additional Limited
Partners in accordance with the terms of this Agreement shall
not constitute such an alteration, amendment or modification;
(iv) amend or modify any portion of Article 10 hereof
in a manner that would further restrict the transferability of
a Limited Partner's Interest without the consent of all of the
Limited Partners;
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(v) amend any provision hereof which requires the
consent, action or approval of a specified percentage in
Interest of the Limited Partners without the consent of such
specified percentage in Interest of the Limited Partners; or
(vi) amend this Section 13.3 without the consent of
all the Partners.
(b) Special Notice. If the General Partner dismisses or
replaces the Partnership's independent public accountants, it shall notify the
Limited Partners of such action and, if so requested by a Majority in Interest
of the Limited Partners, it shall rescind or amend such action as requested.
13.4. Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement or the application of such provision to
other persons or circumstances shall not be affected thereby. No default
hereunder by a Limited Partner shall excuse a default by any other Limited
Partner.
13.5. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or mailed, first class registered mail or certified mail, postage
prepaid, if to the Partners and air mail if such Partner is outside of the
United States, at the addresses set forth on Schedule II attached hereto, and if
to the Partnership, at the address referred to in Section 1.4, or to such other
address as the Partnership or any Partner shall have last designated by notice
to the Partners or the Partnership and the other Partners, as the case may be.
Notices mailed in accordance with the foregoing shall be deemed to have been
given and made seven (7) days following the date so mailed. All Distributions
made hereunder to any Limited Partner shall be made in accordance with such
reasonable written instructions as may be furnished by such Limited Partner to
the General Partner from time to time.
13.6. Governing Law. This Agreement shall be governed by the laws of
the State of Delaware.
13.7. Successors and Assigns. Except as otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
Partners and their legal representatives, successors and assigns.
13.8. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall constitute one and the same instrument.
13.9. Headings. The Section headings in this Agreement are for
convenience of reference only, and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
13.10. Further Actions.
(a) Non-U.S. Partner Tax Matters. Each Limited Partner which
is a non-U.S. Person under the Code agrees that it will provide the information
and forms requested by the General Partner, including U.S. Tax Form Schedule W-8
(foreign status certificate) and
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Form 1001 (reduced withholding rate certificate), as may be applicable, and
shall cooperate with the General Partner upon its request in order to maintain
appropriate records and provide for withholding amounts, if any, relating to its
Interest in the Partnership, and, further, in the event that such Limited
Partner fails to provide such information regarding U.S. tax withholding, the
General Partner, the Partnership and the other Partners shall have no obligation
or liability to the non-U.S. Limited Partner with respect to any U.S. tax
matters or obligations which may be assessed against the non-U.S. Limited
Partner.
(b) Further Assurances. Each Partner shall execute and deliver
such other certificates, agreements and documents, and take such other actions,
as may reasonably be requested by the General Partner in connection with the
formation of the Partnership and the achievement of its purposes, including,
without limitation, (i) any documents that the General Partner deems necessary
or appropriate to form, qualify, or continue the Partnership as a limited
partnership in all jurisdictions in which the Partnership conducts or plans to
conduct business, and (ii) all such agreements, certificates, tax statements and
other documents as may be required to be filed in respect of the Partnership.
13.11. Delivery of Certificate. The General Partner shall provide a
copy of the Certificate of Limited Partnership to each Limited Partner that
makes a request therefor, but shall not otherwise be required to provide such
copies.
[Remainder of Page Left Blank Intentionally.]
[Signature Pages Follow Immediately.]
59
CONNING CAPITAL PARTNERS VI, L.P.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
GENERAL PARTNER:
CONNING INVESTMENT PARTNERS VI, L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Principal Manager Member
60
CONNING CAPITAL PARTNERS VI, L.P.
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned has executed this Agreement for the
purchase of a limited partnership interest (the "Interest") in Conning Capital
Partners VI, L.P. (the "Partnership"). This page constitutes the signature page
for each of (i) the Subscription Agreement for the purchase of the Interest in
the amount set forth below, and (ii) the Limited Partnership Agreement of the
Partnership. Upon acceptance by the General Partner, the undersigned shall be
admitted as a Limited Partner of the Partnership and hereby authorizes this
signature page to be attached to a counterpart of the such Subscription
Agreement and such Limited Partnership Agreement, each as executed by the
General Partner.
Date: ▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ Life Insurance Company
(Print or Type Name of Investor)
Capital Commitment/Subscription Sign Here:
AMOUNT OF INTEREST PURCHASED: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
$ (SEE NEXT Title (if applic.) Managing Director
PAGE)*____________________
Full name and address of Investor: Preferred address for receiving communications (Do not
complete if already listed in prior column):
Metropolitan Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Metropolitan Life Insurance Company
Attn: Vice-President & Investment Counsel 334 Madison Avenue
(Law, Area 6H) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Director, Corporate Equities
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Social Security or Federal Tax
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ Identification No.:
Email Address: ▇▇-▇▇▇▇▇▇▇
61
Type of Entity: Wire Instructions:
--------------- ------------------
____ Tax exempt under Section 501(c) of Bank: The Chase Manhattan Bank
Tax Code Bank ABA No.: ▇▇▇-▇▇▇-▇▇▇
____ BANK LIMITED PARTNER Address: New York, NY
_X__ Insurance Company Account Name: Metropolitan Life Insurance Company,
____ ERISA Plan Corporate Partnerships
____ Governmental Plan Account Number: ▇▇▇-▇-▇▇▇▇▇▇
*Amount of Interest Purchased. For purposes hereof, a "Closing" shall mean each
date, pursuant to Section 2.1 or 2.3 of the Partnership Agreement, that a
Partner (other than Metropolitan Life Insurance Company ("MetLife")) is admitted
to the Partnership or any existing Partner (other than MetLife) increases its
Capital Commitment. As a result of the initial Closing that occurred on February
25, 2000, as of the date hereof, the Interest hereby purchased, and the Capital
Commitment of MetLife hereunder, is equal to $7,944,444.44. At each subsequent
Closing, the Interest hereby purchased, and the Capital Commitment of MetLife
hereunder, shall be increased by an amount equal to the product of (x) five and
one-half percent (5.5%) and (y) the result of dividing (i) the aggregate Capital
Commitments of the Partnership that are made at such Closing (without regard to
the additional Capital Commitment of MetLife to be made at such Closing) by (ii)
ninety four and one-half percent (94.5%); provided that, in no event shall the
total Capital Commitment of MetLife be increased to exceed $27,500,000.