1
EXHIBIT (a)(2)
WYNSTONE PARTNERS, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
------------------------------------
LIMITED PARTNERSHIP AGREEMENT
DATED AS OF [SEPTEMBER ___], 1998
-------------------------------------
CIBC ▇▇▇▇▇▇▇▇▇▇▇ TOWER
ONE WORLD FINANCIAL CENTER, 31ST FLOOR
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
2
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS......................................................
ARTICLE II ORGANIZATION; ADMISSION OF PARTNERS..............................
2.1 Formation of Limited Partnership....................................
2.2 Name................................................................
2.3 Principal and Registered Office.....................................
2.4 Duration............................................................
2.5 Objective and Business of the Partnership...........................
2.6 General Partners....................................................
2.7 Limited Partners....................................................
2.8 Special Advisory Limited Partner....................................
2.9 Organizational Limited Partner......................................
2.10 Both General and Limited Partner....................................
2.11 Limited Liability...................................................
ARTICLE III MANAGEMENT.......................................................
3.1 Management and Control..............................................
3.2 Actions by Individual General Partners..............................
3.3 Meetings of Partners................................................
3.4 Custody of Assets of the Partnership................................
3.5 Other Activities of Partners........................................
3.6 Duty of Care........................................................
3.7 Indemnification.....................................................
3.8 Fees, Expenses and Reimbursement....................................
-i-
3
ARTICLE IV TERMINATION OF STATUS OF ADVISER AND INDIVIDUAL GENERAL
PARTNERS, TRANSFERS AND REPURCHASES............................
4.1 Termination of Status of the Adviser................................
4.2 Termination of Status of an Individual General Partner..............
4.3 Removal of Individual General Partners..............................
4.4 Transfer of Interests of Individual General Partners................
4.5 Transfer of Interests of Limited Partners...........................
4.6 Transfer of Interests of Special Advisory Limited Partner...........
4.7 Repurchase of Interests.............................................
ARTICLE V CAPITAL............................................................
5.1 Contributions to Capital............................................
5.2 Rights of Partners to Capital.......................................
5.3 Capital Accounts....................................................
5.4 Allocation of Net Profit and Loss...................................
5.5 Allocation of Insurance Premiums and Proceeds.......................
5.6 Allocation of Certain Withholding Taxes and Other Expenditures......
5.7 Reserves............................................................
5.8 Incentive Allocation................................................
5.9 Allocation of Organizational Expenses...............................
5.10 Tax Allocations.....................................................
5.11 Distributions.......................................................
5.12 Foreign Withholding.................................................
ARTICLE VI DISSOLUTION AND LIQUIDATION......................................
6.1 Dissolution.........................................................
6.2 Liquidation of Assets...............................................
ARTICLE VII ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS....................
-ii-
4
7.1 Accounting and Reports..............................................
7.2 Determinations By Individual General Partners.......................
7.3 Valuation of Assets.................................................
ARTICLE VIII MISCELLANEOUS PROVISIONS........................................
8.1 Amendment of Partnership Agreement..................................
8.2 Special Power of Attorney...........................................
8.3 Notices.............................................................
8.4 Agreement Binding Upon Successors and Assigns.......................
8.5 Applicability of 1940 Act and Form N-2..............................
8.6 Choice of Law; Arbitration..........................................
8.7 Not for Benefit of Creditors........................................
8.8 Consents............................................................
8.9 Merger and Consolidation............................................
8.10 Pronouns............................................................
8.11 Confidentiality.....................................................
8.12 Certification of Non-Foreign Status.................................
8.13 Severability........................................................
8.14 Filing of Returns...................................................
8.15 Tax Matters Partner.................................................
8.16 Section 754 Election................................................
-iii-
5
WYNSTONE PARTNERS, L.P.
LIMITED PARTNERSHIP AGREEMENT
THIS LIMITED PARTNERSHIP AGREEMENT of Wynstone Partners, L.P. (the
"Partnership") is dated as of [September 2,] 1998 by and among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as the Individual General Partners, CIBC
▇▇▇▇▇▇▇▇▇▇▇ Advisers, L.L.C., as the Special Advisory Limited Partner, and those
persons hereinafter admitted as General Partners and as Limited Partners.
W I T N E S S E T H :
WHEREAS, the Partnership has heretofore been formed as a limited
partnership under the Delaware Revised Uniform Limited Partnership Act pursuant
to an initial Certificate of Limited Partnership (the "Certificate") dated and
filed with the Secretary of State of Delaware on August 13, 1998;
NOW, THEREFORE, for and in consideration of the foregoing and the
mutual covenants hereinafter set forth, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
ADVISER CIBC ▇▇▇▇▇▇▇▇▇▇▇ Advisers, L.L.C., a limited
liability company organized under Delaware law,
or any person who may hereinafter serve as the
investment adviser to the Partnership pursuant
to an Investment Advisory Agreement.
ADVISERS ACT The Investment Advisers Act of 1940 and the
rules, regulations and orders thereunder, as
amended from time to time, or any successor law.
AFFILIATE An affiliated person of a person as such term is
defined in the 1940 Act.
AGREEMENT This Limited Partnership Agreement, as amended
from time to time.
6
ALLOCATION CHANGE With respect to each Limited Partner for each
Allocation Period, the difference between:
(1) the sum of (a) the balance of such Limited
Partner's Capital Account as of the close of
the Allocation Period (after giving effect
to all allocations to be made to such
Limited Partner's Capital Account as of such
date other than any Incentive Allocation to
be debited against such Limited Partner's
Capital Account), plus (b) any debits to
such Limited Partner's Capital Account
during the Allocation Period to reflect any
actual or deemed distributions or
repurchases with respect to such Limited
Partner's Interest, plus (c) any debits to
such Limited Partner's Capital Account
during the Allocation Period to reflect any
Insurance premiums allocable to such Limited
Partner, plus (d) any debits to such Limited
Partner's Capital Account during the
Allocation Period to reflect any items
allocable to such Limited Partner's Capital
Account pursuant to Section 5.6 hereof other
than Management Fees; and
(2) the sum of (a) the balance of such Limited
Partner's Capital Account as of the
commencement of the Allocation Period, plus
(b) any credits to such Limited Partner's
Capital Account during the Allocation Period
to reflect any contributions by such Limited
Partner to the capital of the Partnership,
plus (c) any credits to such Limited
Partner's Capital Account during the
Allocation Period to reflect any Insurance
proceeds allocable to such Limited Partner.
If the amount specified in clause (1) exceeds
the amount specified in clause (2), such
difference shall be a POSITIVE ALLOCATION
CHANGE, and if the amount specified in clause
(2) exceeds the amount specified in clause (1),
such difference shall be a NEGATIVE ALLOCATION
CHANGE.
-2-
7
ALLOCATION PERIOD With respect to each Limited Partner, the period
commencing as of the date of admission of such
Limited Partner to the Partnership, and
thereafter each period commencing as of the day
following the last day of the preceding
Allocation Period with respect to such Limited
Partner, and ending at the close of business on
the first to occur of the following:
(1) the last day of a Fiscal Year;
(2) the day as of which the Partnership
repurchases the entire Interest of such
Limited Partner;
(3) the day as of which the Partnership admits
as a substituted Limited Partner a person to
whom the Interest of such Limited Partner
has been Transferred (unless there is no
change of beneficial ownership); and
(4) the day as of which the Adviser's status as
the Special Advisory Limited Partner is
terminated pursuant to Section 4.1 hereof.
CAPITAL ACCOUNT With respect to each Partner, the capital
account established and maintained on behalf of
each Partner pursuant to Section 5.3 hereof.
CAPITAL PERCENTAGE A percentage established for each Limited
Partner on the Partnership's books as of each
Expense Allocation Date. The Capital Percentage
of a Limited Partner on an Expense Allocation
Date shall be determined by dividing the amount
of capital contributed to the Partnership by the
Limited Partner pursuant to Section 5.1 hereof
by the sum of the capital contributed to the
Partnership by each Limited Partner pursuant to
Section 5.1 hereof on or prior to such Expense
Allocation Date. The sum of the Capital
Percentages of all Limited Partners on each
Expense Allocation Date shall equal 100%.
CERTIFICATE The Certificate of Limited Partnership of the
Partnership and any amendments thereto as filed
with the office of the Secretary of State of
Delaware.
CIBC OPCO CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., or any successor
thereto.
-3-
8
CIBC OPCO SERVICES Such administrative services as CIBC Opco shall
provide to the Partnership pursuant to a
separate written agreement with the Partnership
as contemplated by Section 3.9(a) hereof.
CLOSING DATE The first date on or as of which a Limited
Partner other than the Organizational Limited
Partner is admitted to the Partnership.
CODE The United States Internal Revenue Code of 1986,
as amended and as hereafter amended from time to
time, or any successor law.
DELAWARE ACT The Delaware Revised Uniform Limited Partnership
Act as in effect on the date hereof and as
amended from time to time, or any successor law.
EXPENSE ALLOCATION DATE The Closing Date, and thereafter each day on or
before [October 1, 1999,] as of which a
contribution to the capital of the Partnership
is made pursuant to Section 5.1 hereof.
FISCAL PERIOD The period commencing on the Closing Date, and
thereafter each period commencing on the day
immediately following the last day of the
preceding Fiscal Period, and ending at the close
of business on the first to occur of the
following dates:
(1) the last day of a Fiscal Year;
(2) the day preceding any day as of which a
contribution to the capital of the
Partnership is made pursuant to Section 5.1;
or
(3) any day (other than one specified in clause
(2) above) as of which this Agreement
provides for any amount to be credited to or
debited against the Capital Account of any
Partner, other than an amount to be credited
to or debited against the Capital Accounts
of all Partners in accordance with their
respective Partnership Percentages.
-4-
9
FISCAL YEAR The period commencing on the Closing Date and
ending on December 31, 1998, and thereafter each
period commencing on January 1 of each year and
ending on December 31 of each year (or on the
date of a final distribution pursuant to Section
6.2 hereof), unless the Individual General
Partners shall elect another fiscal year for the
Partnership that is a permissible taxable year
under the Code.
FORM N-2 The Partnership's Registration Statement on Form
N-2 filed with the Securities and Exchange
Commission, as amended from time to time.
GENERAL PARTNERS The Individual General Partners in such persons'
capacity as general partners of the Partnership.
INCENTIVE ALLOCATION With respect to each Limited Partner, 20% of the
amount, determined as of the close of each
Allocation Period with respect to such Limited
Partner, by which such Limited Partner's
Positive Allocation Change for such Allocation
Period, if any, exceeds any positive balance in
such Limited Partner's Loss Recovery Account as
of the most recent prior date as of which any
adjustment has been made thereto.
INDEPENDENT GENERAL Those Individual General Partners who are not
PARTNERS "interested persons" of the Partnership as such
term is defined in the 1940 Act.
INDIVIDUAL GENERAL Those natural persons admitted to the
PARTNERS Partnership as General Partners.
INSURANCE One or more "key man" insurance policies on the
life of any principal of a member of the
Adviser, the benefits of which are payable to
the Partnership.
INTEREST The entire ownership interest in the Partnership
at any particular time of a Limited Partner or
the Special Advisory Limited Partner, or other
person to whom an Interest of a Limited Partner
or portion thereof has been transferred pursuant
to Sections 4.4 or 4.5 hereof, including the
rights and obligations of such Limited Partner
or other person under this Agreement and the
Delaware Act.
-5-
10
INVESTMENT ADVISORY A separate written agreement entered into by the
AGREEMENT Partnership pursuant to which the Adviser
provides investment advisory services to the
Partnership.
LIMITED PARTNER Any person who shall have been admitted to the
Partnership as a limited partner (including any
General Partner in such person's capacity as a
limited partner of the Partnership but excluding
any General Partner in such person's capacity as
a general partner of the Partnership) until the
Partnership repurchases the entire Interest of
such person as a limited partner pursuant to
Section 4.7 hereof or a substituted Limited
Partner or Limited Partners are admitted with
respect to any such person's entire Interest as
a limited partner pursuant to Section 4.5
hereof; such term includes the Adviser to the
extent the Adviser makes a capital contribution
to the Partnership and shall have been admitted
to the Partnership as a limited partner, and
shall not include the Special Advisory Limited
Partner.
LOSS RECOVERY A memorandum account to be recorded in the books
ACCOUNT and records of the Partnership with respect to
each Limited Partner, which shall have an
initial balance of zero and which shall be
adjusted as follows:
(1) As of the first day after the close of each
Allocation Period for such Limited Partner,
the balance of the Loss Recovery Account
shall be increased by the amount, if any, of
such Limited Partner's Negative Allocation
Change for such Allocation Period and shall
be reduced (but not below zero) by the
amount, if any, of such Limited Partner's
Positive Allocation Change for such
Allocation Period.
(2) The balance of the Loss Recovery Account
shall be reduced (but not below zero) as of
the first date as of which the Capital
Account balance of any Limited Partner is
reduced as a result of repurchase or
transfer with respect to such Limited
Partner's Interest by an amount determined
by multiplying (a) such positive balance by
(b) a fraction, (i) the numerator of which
is equal to the amount of the repurchase or
transfer, and (ii) the denominator of which
is equal to the balance of such Limited
Partner's
-6-
11
Capital Account immediately before giving
effect to such repurchase or transfer.
No transferee of any Interest shall succeed to
any Loss Recovery Account balance or portion
thereof attributable to the transferor unless
the Transfer by which such transferee received
such Interest did not involve a change of
beneficial ownership.
NEGATIVE ALLOCATION The meaning given such term in the definition of
CHANGE Allocation Change.
NET ASSETS The total value of all assets of the
Partnership, less an amount equal to all accrued
debts, liabilities and obligations of the
Partnership, calculated before giving effect to
any repurchases of Interests.
NET PROFIT OR NET LOSS The amount by which the Net Assets as of the
close of business on the last day of a Fiscal
Period exceed (in the case of Net Profit) or are
less than (in the case of Net Loss) the Net
Assets as of the commencement of the same Fiscal
Period (or, with respect to the initial Fiscal
Period of the Partnership, at the close of
business on the Closing Date), such amount to be
adjusted to exclude:
(1) the amount of any Insurance premiums or
proceeds to be allocated among the Capital
Accounts of the Partners pursuant to Section
5.5 hereof;
(2) any items to be allocated among the Capital
Accounts of the Partners on a basis which is
not in accordance with the respective
Partnership Percentages of all Partners as
of the commencement of such Fiscal Period
pursuant to Sections 5.6 and 5.7 hereof; and
(3) Organizational Expenses allocated among the
Capital Accounts of the Limited Partners
pursuant to Section 5.9 hereof.
1940 ACT The Investment Company Act of 1940 and the
rules, regulations and orders thereunder, as
amended from time to time, or any successor law.
-7-
12
1934 ACT The Securities Exchange Act of 1934 and the
rules, regulations and orders thereunder, as
amended from time to time, or any successor law.
ORGANIZATIONAL EXPENSES The expenses incurred by the Partnership in
connection with its formation, its initial
registration as an investment company under the
1940 Act, and the initial offering of Interests.
ORGANIZATIONAL LIMITED [____________________]
PARTNER
PARTNERS The General Partners, the Limited Partners and
the Special Advisory Limited Partner,
collectively.
PARTNERSHIP The limited partnership governed hereby, as such
limited partnership may from time to time be
constituted.
PARTNERSHIP PERCENTAGE A percentage established for each Limited
Partner on the Partnership's books as of the
first day of each Fiscal Period. The Partnership
Percentage of a Limited Partner for a Fiscal
Period shall be determined by dividing the
balance of the Limited Partner's Capital Account
as of the commencement of such Fiscal Period by
the sum of the Capital Accounts of all of the
Limited Partners as of the commencement of such
Fiscal Period. The sum of the Partnership
Percentages of all Limited Partners for each
Fiscal Period shall equal 100%.
POSITIVE ALLOCATION The meaning given such term in the definition of
CHANGE Allocation Change.
SECURITIES Securities (including, without limitation,
equities, debt obligations, options, and other
"securities" as that term is defined in Section
2(a)(36) of the ▇▇▇▇ ▇▇▇) and any contracts for
forward or future delivery of any security, debt
obligation or currency, or commodity, all manner
of derivative instruments and any contracts
based on any index or group of securities, debt
obligations or currencies, or commodities, and
any options thereon.
SPECIAL ADVISORY ACCOUNT A capital account established and maintained on
behalf of the Special Advisory Limited Partner
pursuant to Section 5.3 hereof solely for the
purpose of receiving the Incentive Allocation.
-8-
13
SPECIAL ADVISORY LIMITED The Adviser in its capacity as the investment
PARTNER adviser to the Partnership.
TRANSFER The assignment, transfer, sale, encumbrance,
pledge or other disposition of all or any
portion of an Interest, including any right to
receive any allocations and distributions
attributable to an Interest.
-9-
14
ARTICLE II
ORGANIZATION; ADMISSION OF PARTNERS
2.1 FORMATION OF LIMITED PARTNERSHIP.
The General Partners shall execute and file in accordance with the
Delaware Act any amendment to the Certificate and shall execute and file with
applicable governmental authorities any other instruments, documents and
certificates which, in the opinion of the Partnership's legal counsel, may from
time to time be required by the laws of the United States of America, the State
of Delaware or any other jurisdiction in which the Partnership shall determine
to do business, or any political subdivision or agency thereof, or which such
legal counsel may deem necessary or appropriate to effectuate, implement and
continue the valid existence and business of the Partnership.
2.2 NAME.
The name of the Partnership shall be "Wynstone Partners, L.P." or
such other name as the Individual General Partners may hereafter adopt upon (i)
causing an appropriate amendment to the Certificate to be filed in accordance
with the Delaware Act and (ii) sending notice thereof to each Partner.
2.3 PRINCIPAL AND REGISTERED OFFICE.
The Partnership shall have its principal office at CIBC ▇▇▇▇▇▇▇▇▇▇▇
Tower, One World Financial Center, 31st Floor, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, or at such other place designated from time to time by the
Individual General Partners.
The Partnership shall have its registered office in Delaware at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and shall have Corporation Service
Company as its registered agent for service of process in Delaware, unless a
different registered office or agent is designated from time to time by the
Individual General Partners.
2.4 DURATION.
The term of the Partnership commenced on the filing of the
Certificate with the Secretary of State of Delaware and shall continue until the
Partnership is dissolved pursuant to Section 6.1 hereof.
2.5 OBJECTIVE AND BUSINESS OF THE PARTNERSHIP.
(a) The objective and business of the Partnership is to purchase,
sell (including short sales), invest and trade in Securities, on margin or
otherwise, and to engage in any financial or
-10-
15
derivative transactions relating thereto or otherwise. The Partnership may
execute, deliver and perform all contracts, agreements and other undertakings
and engage in all activities and transactions as may in the opinion of the
Individual General Partners be necessary or advisable to carry out its objective
or business.
(b) The Partnership shall operate as a closed-end,
non-diversified, management investment company in accordance with the 1940 Act
and subject to any fundamental policies and investment restrictions set forth in
the Form N-2.
2.6 GENERAL PARTNERS.
(a) Prior to the Closing Date, the Organizational Limited Partner
may admit such persons who shall agree to be bound by all of the terms of this
Agreement to serve as the initial Individual General Partners, subject to the
election of such persons prior to the Closing Date by the Organizational Limited
Partner. By signing this Agreement or the signature page of the Partnership's
subscription agreement, a Limited Partner admitted on the Closing Date shall be
deemed to have voted for the election of each of the initial Individual General
Partners. After the Closing Date, the Individual General Partners may, subject
to the provisions of paragraphs (a) and (b) of this Section 2.6 with respect to
the number of and vacancies in the position of Individual General Partners and
the provisions of Section 3.3 hereof with respect to the election of Individual
General Partners by Partners, admit any person who shall agree to be bound by
all of the terms of this Agreement as an Individual General Partner. The names
and mailing addresses of the Individual General Partners shall be set forth in
the books and records of the Partnership. The number of Individual General
Partners shall be fixed from time to time by the Individual General Partners
but, at the Closing Date, shall not be less than three. At and after the Closing
Date, all of the Individual General Partners shall be Independent General
Partners.
(b) Each Individual General Partner admitted to the Partnership
shall serve for the duration of the term of the Partnership, unless his status
as an Individual General Partner shall be sooner terminated pursuant to Section
4.2 hereof. In the event of any vacancy in the position of an Individual General
Partner, the remaining Individual General Partners may appoint an individual to
serve in such capacity, so long as immediately after such appointment at least
two-thirds (2/3) of the Individual General Partners then serving would have been
elected by the Partners. The Individual General Partners may call a meeting of
Limited Partners to fill any vacancy in the position of an Individual General
Partner, and shall do so within 60 days after any date on which Individual
General Partners who were elected by the Limited Partners cease to constitute a
majority of the Individual General Partners then serving.
(c) In the event that no Individual General Partner remains to
continue the business of the Partnership, the Adviser shall promptly call a
meeting of the Limited Partners, to be held within 60 days after the date on
which the last Individual General Partner ceased to act in that capacity, for
the purpose of determining whether to continue the business of the Partnership
and, if the business shall be continued, of electing the required number of
Individual General Partners. If the Limited Partners shall determine at such
meeting not to continue the business of the Partnership or if the required
number of Individual General Partners is not elected within 60 days after the
date
-11-
16
on which the last Individual General Partner ceased to act in that capacity,
then the Partnership shall be dissolved pursuant to Section 6.1 hereof and the
assets of the Partnership shall be liquidated and distributed pursuant to
Section 6.2 hereof.
2.7 LIMITED PARTNERS.
For the first six months from the date of commencement of operations
of the Partnership, the Individual General Partners may admit one or more
Limited Partners as of the beginning of each calendar month. Thereafter, the
Individual General Partners may admit one or more Limited Partners as of the
beginning of each calendar quarter. Subject to the foregoing terms, Limited
Partners may be admitted to the Partnership subject to the condition that each
such Limited Partner shall execute an appropriate signature page of this
Agreement or of the Partnership's subscription agreement pursuant to which such
Limited Partner agrees to be bound by all the terms and provisions hereof. The
Individual General Partners may in their absolute discretion reject
subscriptions for limited partnership Interests in the Partnership. The
admission of any person as a Limited Partner shall be effective upon the
revision of the books and records of the Partnership to reflect the name and the
contribution to the capital of the Partnership of such additional Limited
Partner.
2.8 SPECIAL ADVISORY LIMITED PARTNER.
Upon signing this Agreement, the Adviser shall be admitted to the
Partnership as the Special Advisory Limited Partner, subject to due approval, in
accordance with the requirements of the 1940 Act, of the Investment Advisory
Agreement. The Interest of the Special Advisory Limited Partner shall be
non-voting. If at anytime the Investment Advisory Agreement between the
Partnership and the person then serving as Adviser terminates, the Individual
General Partners shall admit as a substitute Special Advisory Limited Partner,
upon its signing this Agreement, such person as may be retained by the
Partnership to provide investment advisory services pursuant to an Investment
Advisory Agreement, subject to the due approval of such Investment Advisory
Agreement in accordance with the requirements of the 1940 Act.
2.9 ORGANIZATIONAL LIMITED PARTNER.
Upon the admission of any Limited Partner, the Organizational
Limited Partner shall withdraw from the Partnership as the Organizational
Limited Partner and shall be entitled to the return of his Capital Contribution,
if any, without interest or deduction.
2.10 BOTH GENERAL AND LIMITED PARTNER.
A Partner may at the same time be an Individual General Partner and
a Limited Partner, or a Special Advisory Limited Partner and Limited Partner, in
which event such Partner's rights and obligations in each capacity shall be
determined separately in accordance with the terms and provisions hereof or as
provided in the Delaware Act.
-12-
17
2.11 LIMITED LIABILITY.
Except as provided under applicable law, a Limited Partner and the
Special Advisory Limited Partner shall not be liable for the Partnership's
obligations in any amount in excess of the capital account balance of such
Partner, plus such Partner's share of undistributed profits and assets.
--------------------------
ARTICLE III
MANAGEMENT
--------------------------
3.1 MANAGEMENT AND CONTROL.
(a) Management and control of the business of the Partnership
shall be vested in the Individual General Partners, who shall have the right,
power and authority, on behalf of the Partnership and in its name, to exercise
all rights, powers and authority of general partners under the Delaware Act and
to do all things necessary and proper to carry out the objective and business of
the Partnership and their duties hereunder. No Individual General Partner shall
have the authority individually to act on behalf of or to bind the Partnership
except within the scope of such Individual General Partner's authority as
delegated by the IGPs. The parties hereto intend that, except to the extent
otherwise expressly provided herein, (i) each Individual General Partner shall
be vested with the same powers, authority and responsibilities on behalf of the
Partnership as are customarily vested in each director of a Delaware corporation
and (ii) each Independent General Partner shall be vested with the same powers,
authority and responsibilities on behalf of the Partnership as are customarily
vested in each director of a closed-end management investment company registered
under the 1940 Act that is organized as a Delaware corporation who is not an
"interested person" of such company as such term is defined in the 1940 Act.
During any period in which the Partnership shall have no Individual General
Partners, the Adviser shall continue to serve as the Adviser to the Partnership.
During such time period, CIBC Opco shall continue to provide the CIBC Opco
Services to the Partnership.
(b) An Individual General Partner shall be the designated tax
matters partner for purposes of Section 6231(a)(7) of the Code. Each Partner
agrees not to treat, on his personal return or in any claim for a refund, any
item of income, gain, loss, deduction or credit in a manner inconsistent with
the treatment of such item by the Partnership. The Individual General Partners
shall have the exclusive authority and discretion to make any elections required
or permitted to be made by the Partnership under any provisions of the Code or
any other revenue laws.
(c) Limited Partners shall have no right to participate in and
shall take no part in the management or control of the Partnership's business
and shall have no right, power or authority to act for or bind the Partnership.
Limited Partners shall have the right to vote on any matters only as provided in
this Agreement or on any matters that require the approval of the holders of
voting securities under the 1940 Act or as otherwise required in the Delaware
Act.
-13-
18
(d) The Individual General Partners may delegate to any other
person any rights, power and authority vested by this Agreement in the
Individual General Partners to the extent permissible under applicable law.
3.2 ACTIONS BY INDIVIDUAL GENERAL PARTNERS.
(a) Unless provided otherwise in this Agreement, the Individual
General Partners shall act only: (i) by the affirmative vote of a majority of
the Individual General Partners (which majority shall include any requisite
number of Independent General Partners required by the ▇▇▇▇ ▇▇▇) present at a
meeting duly called at which a quorum of the Individual General Partners shall
be present (in person or, if in person attendance is not required by the 1940
Act, by telephone) or (ii) by unanimous written consent of all of the Individual
General Partners without a meeting, if permissible under the 1940 Act.
(b) The Individual General Partners may designate from time to
time a Principal Individual General Partner who shall preside at all meetings.
Meetings of the Individual General Partners may be called by the Principal
Individual General Partner or by any two Individual General Partners, and may be
held on such date and at such time and place as the Individual General Partners
shall determine. Each Individual General Partner shall be entitled to receive
written notice of the date, time and place of such meeting within a reasonable
time in advance of the meeting. Notice need not be given to any Individual
General Partner who shall attend a meeting without objecting to the lack of
notice or who shall execute a written waiver of notice with respect to the
meeting. Individual General Partners may attend and participate in any meeting
by telephone except where in person attendance at a meeting is required by the
1940 Act. A majority of the Individual General Partners shall constitute a
quorum at any meeting.
3.3 MEETINGS OF LIMITED PARTNERS.
(a) Actions requiring the vote of the Limited Partners may be
taken at any duly constituted meeting of the Limited Partners at which a quorum
is present. Meetings of the Limited Partners may be called by the Individual
General Partners or by Limited Partners holding 25% or more of the total number
of votes eligible to be cast by all Limited Partners, and may be held at such
time, date and place as the Individual General Partners shall determine. The
Individual General Partners shall arrange to provide written notice of the
meeting, stating the date, time and place of the meeting and the record date
therefor, to each Limited Partner entitled to vote at the meeting within a
reasonable time prior thereto. Failure to receive notice of a meeting on the
part of any Limited Partner shall not affect the validity of any act or
proceeding of the meeting, so long as a quorum shall be present at the meeting.
Only matters set forth in the notice of a meeting may be voted on by the Limited
Partners at a meeting. The presence in person or by proxy of Limited Partners
holding a majority of the total number of votes eligible to be cast by all
Limited Partners as of the record date shall constitute a quorum at any meeting.
In the absence of a quorum, a meeting of the Limited Partners may be adjourned
by action of a majority of the Limited Partners present in person or by proxy
without additional notice to the Limited Partners. Except as otherwise required
by any provision of this Agreement or of the 1940 Act, (i) those candidates
receiving a plurality of the votes cast at any meeting of Limited Partners shall
be elected as Individual General Partners and
-14-
19
(ii) all other actions of the Limited Partners taken at a meeting shall require
the affirmative vote of Partners holding a majority of the total number of votes
eligible to be cast by those Limited Partners who are present in person or by
proxy at such meeting.
(b) Each Limited Partner shall be entitled to cast at any meeting
of Limited Partners a number of votes equivalent to such Limited Partner's
Partnership Percentage as of the record date for such meeting. The Individual
General Partners shall establish a record date not less than 10 nor more than 60
days prior to the date of any meeting of Limited Partners to determine
eligibility to vote at such meeting and the number of votes which each Limited
Partner will be entitled to cast thereat, and shall maintain for each such
record date a list setting forth the name of each Limited Partner and the number
of votes that each Limited Partner will be entitled to cast at the meeting.
(c) A Limited Partner may vote at any meeting of Limited Partners
by a proxy properly executed in writing by the Limited Partner and filed with
the Partnership before or at the time of the meeting. A proxy may be suspended
or revoked, as the case may be, by the Limited Partner executing the proxy by a
later writing delivered to the Partnership at any time prior to exercise of the
proxy or if the Limited Partner executing the proxy shall be present at the
meeting and decide to vote in person. Any action of the Limited Partners that is
permitted to be taken at a meeting of the Limited Partners may be taken without
a meeting if consents in writing, setting forth the action taken, are signed by
Limited Partners holding a majority of the total number of votes eligible to be
cast or such greater percentage as may be required in order to approve such
action.
3.4 CUSTODY OF ASSETS OF THE PARTNERSHIP.
The physical possession of all funds, Securities or other properties
of the Partnership shall at all times, be held, controlled and administered by
one or more custodians retained by the Partnership in accordance with the
requirements of the 1940 Act and the rules thereunder.
3.5 OTHER ACTIVITIES OF PARTNERS.
(a) The Individual General Partners shall not be required to
devote full time to the affairs of the Partnership, but shall devote such time
as may reasonably be required to perform their obligations under this Agreement.
(b) Any Partner, and any Affiliate of any Partner, may engage in
or possess an interest in other business ventures or commercial dealings of
every kind and description, independently or with others, including, but not
limited to, acquisition and disposition of Securities, provision of investment
advisory or brokerage services, serving as directors, officers, employees,
advisors or agents of other companies, partners of any partnership, members of
any limited liability company, or trustees of any trust, or entering into any
other commercial arrangements. No Partner shall have any rights in or to such
activities of any other Partner, or any profits derived therefrom.
3.6 DUTY OF CARE.
-15-
20
(a) An Individual General Partner shall not be liable to the
Partnership or to any of its Partners for any loss or damage occasioned by any
act or omission in the performance of his services under this Agreement, unless
it shall be determined by final judicial decision on the merits from which there
is no further right to appeal that such loss is due to an act or omission of
such Individual General Partner constituting willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such Individual General Partner's office.
(b) Limited Partners not in breach of any obligation hereunder or
under any agreement pursuant to which the Limited Partner subscribed for an
Interest shall be liable to the Partnership, any Partner or third parties only
as provided under the Delaware Act.
3.7 INDEMNIFICATION.
(a) To the fullest extent permitted by law, the Partnership shall,
subject to Section 3.7(b) hereof, indemnify each Individual General Partner
(including for this purpose their executors, heirs, assigns, successors or other
legal representatives), against all losses, claims, damages, liabilities, costs
and expenses, including, but not limited to, amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties, and reasonable counsel fees,
incurred in connection with the defense or disposition of any action, suit,
investigation or other proceeding, whether civil or criminal, before any
judicial, arbitral, administrative or legislative body, in which such indemnitee
may be or may have been involved as a party or otherwise, or with which such
indemnitee may be or may have been threatened, while in office or thereafter, by
reason of being or having been a general partner of the Partnership or the past
or present performance of services to the Partnership by such indemnitee, except
to the extent such loss, claim, damage, liability, cost or expense shall have
been finally determined in a decision on the merits in any such action, suit,
investigation or other proceeding to have been incurred or suffered by such
indemnitee by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of such indemnitee's
office. The rights of indemnification provided under this Section 3.7 shall not
be construed so as to provide for indemnification of an Individual General
Partner for any liability (including liability under federal securities laws
which, under certain circumstances, impose liability even on persons that act in
good faith) to the extent (but only to the extent) that such indemnification
would be in violation of applicable law, but shall be construed so as to
effectuate the applicable provisions of this Section 3.7 to the fullest extent
permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred by
any such indemnitee (but excluding amounts paid in satisfaction of judgments, in
compromise, or as fines or penalties), may be paid from time to time by the
Partnership in advance of the final disposition of any such action, suit,
investigation or proceeding upon receipt of an undertaking by or on behalf of
such indemnitee to repay to the Partnership amounts so paid if it shall
ultimately be determined that indemnification of such expenses is not authorized
under Section 3.7(a) hereof; provided, however, that (i) such indemnitee shall
provide security for such undertaking, (ii) the Partnership shall be insured by
or on behalf of such indemnitee against losses arising by reason of such
indemnitee's failure to fulfill his or its undertaking, or (iii) a majority of
the Independent General Partners (excluding any Individual General Partner who
is either seeking advancement of expenses hereunder or is or has been a party to
any other action, suit, investigation or proceeding involving
-16-
21
claims similar to those involved in the action, suit, investigation or
proceeding giving rise to a claim for advancement of expenses hereunder) or
independent legal counsel in a written opinion shall determine based on a review
of readily available facts (as opposed to a full trial-type inquiry) that there
is reason to believe such indemnitee ultimately will be entitled to
indemnification.
(c) As to the disposition of any action, suit, investigation or
proceeding (whether by a compromise payment, pursuant to a consent decree or
otherwise) without an adjudication or a decision on the merits by a court, or by
any other body before which the proceeding shall have been brought, that an
indemnitee is liable to the Partnership or its Partners by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of such indemnitee's office, indemnification shall be
provided pursuant to Section 3.7(a) hereof if (i) approved as in the best
interests of the Partnership by a majority of the Independent General Partners
(excluding any Individual General Partner who is either seeking indemnification
hereunder or is or has been a party to any other action, suit, investigation or
proceeding involving claims similar to those involved in the action, suit,
investigation or proceeding giving rise to a claim for indemnification
hereunder) upon a determination based upon a review of readily available facts
(as opposed to a full trial-type inquiry) that such indemnitee acted in good
faith and in the reasonable belief that such actions were in the best interests
of the Partnership and that such indemnitee is not liable to the Partnership or
its Partners by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of such indemnitee's
office, or (ii) the Individual General Partners secure a written opinion of
independent legal counsel based upon a review of readily available facts (as
opposed to a full trial-type inquiry) to the effect that such indemnification
would not protect such indemnitee against any liability to the Partnership or
its Partners to which such indemnitee would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of such indemnitee's office.
(d) Any indemnification or advancement of expenses made pursuant
to this Section 3.7 shall not prevent the recovery from any indemnitee of any
such amount if such indemnitee subsequently shall be determined in a decision on
the merits in any action, suit, investigation or proceeding involving the
liability or expense that gave rise to such indemnification or advancement of
expenses to be liable to the Partnership or its Partners by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of such indemnitee's office. In (i) any suit brought by
an Individual General Partner (or other person entitled to indemnification
hereunder) to enforce a right to indemnification under this Section 3.7 it shall
be a defense that, and (ii) in any suit in the name of the Partnership to
recover any indemnification or advancement of expenses made pursuant to this
Section 3.7 the Partnership shall be entitled to recover such expenses upon a
final adjudication that, the Individual General Partner or other person claiming
a right to indemnification under this Section 3.7 has not met the applicable
standard of conduct set forth in this Section 3.7. In any such suit brought to
enforce a right to indemnification or to recover any indemnification or
advancement of expenses made pursuant to this Section 3.7, the burden of proving
that the Individual General Partner or other person claiming a right to
indemnification is not entitled to be indemnified, or to any indemnification or
advancement of expenses, under this Section 3.7 shall be on the Partnership (or
any Partner acting derivatively or otherwise on behalf of the Partnership or its
Partners).
-17-
22
(e) An indemnitee may not satisfy any right of indemnification or
advancement of expenses granted in this Section 3.7 or to which he or it may
otherwise be entitled except out of the assets of the Partnership, and no
Partner shall be personally liable with respect to any such claim for
indemnification or advancement of expenses.
(f) The rights of indemnification provided hereunder shall not be
exclusive of or affect any other rights to which any person may be entitled by
contract or otherwise under law. Nothing contained in this Section 3.7 shall
affect the power of the Partnership to purchase and maintain liability insurance
on behalf of any Individual General Partner or other person.
3.8 FEES, EXPENSES AND REIMBURSEMENT.
(a) So long as CIBC Opco provides CIBC Opco Services to the
Partnership, it shall be entitled to receive fees for such services as may be
agreed to by CIBC Opco and the Partnership pursuant to a separate written
agreement.
(b) The Individual General Partners may cause the Partnership to
compensate each Individual General Partner for his services as such. In
addition, the Individual General Partners shall be reimbursed by the Partnership
for reasonable out-of-pocket expenses incurred by them in performing their
duties under this Agreement.
(c) The Partnership shall bear all expenses incurred in the
business of the Partnership other than those specifically required to be borne
by the Adviser pursuant to the Investment Advisory Agreement or by CIBC Opco
pursuant to the agreement referred to in Section 3.8(a) hereof. Expenses to be
borne by the Partnership include, but are not limited to, the following:
(1) all costs and expenses related to portfolio transactions
and positions for the Partnership's account, including,
but not limited to, brokerage commissions, research
fees, interest and commitment fees on loans and debit
balances, borrowing charges on Securities sold short,
dividends on Securities sold short but not yet
purchased, custodial fees, margin fees, transfer taxes
and premiums, taxes withheld on foreign dividends and
indirect expenses from investments in investment funds;
(2) all costs and expenses associated with the organization
and registration of the Partnership, certain offering
costs and the costs of compliance with any applicable
federal or state laws;
(3) Attorneys' fees and disbursements associated with
updating the Partnership's Confidential Memorandum and
subscription documents (the "Offering Materials"); the
costs of printing the Offering Materials; the costs of
distributing the Offering Materials to prospective
investors; and attorneys' fees and disbursements
associated with the review of subscription documents
executed and
-18-
23
delivered to the Partnership in connection with
offerings of interests in the Partnership;
(4) the costs and expenses of holding meetings of Individual
General Partners and any meetings of Limited Partners;
(5) fees and disbursements of any attorneys, accountants,
auditors and other consultants and professionals engaged
on behalf of the Partnership;
(6) the costs of a fidelity bond and any liability insurance
obtained on behalf of the Partnership or its General
Partners;
(7) any fees payable to CIBC Opco for CIBC Opco Services and
the fees of custodians and persons providing
administrative services to the Partnership;
(8) all expenses of computing the Partnership's net asset
value, including any equipment or services obtained for
such purposes;
(9) all charges for equipment or services used in
communicating information regarding the Partnership's
transactions among the Adviser and any custodian or
other agent engaged by the Partnership; and
(10) such other types of expenses as may be approved from
time to time by the Individual General Partners, other
than those required to be borne by the Adviser or CIBC
Opco.
The Adviser shall be entitled to reimbursement from the Partnership for any of
the above expenses that it pays on behalf of the Partnership.
(d) Subject to procuring any required regulatory approvals, from
time to time the Partnership may, alone or in conjunction with other accounts
for which the Adviser, or any Affiliate of the Adviser, acts as general partner
or investment adviser, purchase Insurance in such amounts, from such insurers
and on such terms as the Individual General Partners shall determine.
-19-
24
---------------------------------
ARTICLE IV
TERMINATION OF STATUS OF ADVISER AND INDIVIDUAL GENERAL
PARTNERS, TRANSFERS AND REPURCHASES
---------------------------------
4.1 TERMINATION OF STATUS OF THE ADVISER.
The status of the Adviser as the Special Advisory Limited Partner
shall terminate if the Investment Advisory Agreement with the Adviser terminates
and the Partnership does not enter into a new Investment Advisory Agreement with
the Adviser, effective as of the date of such termination.
4.2 TERMINATION OF STATUS OF AN INDIVIDUAL GENERAL PARTNER.
The status of an Individual General Partner shall terminate if the
Individual General Partner (i) shall die; (ii) shall be adjudicated incompetent;
(iii) shall voluntarily withdraw as an Individual General Partner (upon not less
than 90 days' prior written notice to the other Individual General Partners);
(iv) shall be removed; (v) shall be certified by a physician to be mentally or
physically unable to perform his duties hereunder; (vi) shall be declared
bankrupt by a court with appropriate jurisdiction, file a petition commencing a
voluntary case under any bankruptcy law or make an assignment for the benefit of
creditors; (vii) shall have a receiver appointed to administer the property or
affairs of such Partner; or (viii) shall otherwise cease to be a general partner
of the Partnership under the Delaware Act.
4.3 REMOVAL OF INDIVIDUAL GENERAL PARTNERS.
Any Individual General Partner may be removed either by (a) the vote
or written consent of at least two-thirds (2/3) of the Individual General
Partners not subject to the removal vote or (b) the vote or written consent of
Limited Partners holding not less than two-thirds (2/3) of the total number of
votes eligible to be cast by all Partners.
4.4 TRANSFER OF INTERESTS OF INDIVIDUAL GENERAL PARTNERS.
Individual General Partners may not Transfer their Interests as
Individual General Partners.
4.5 TRANSFER OF INTERESTS OF LIMITED PARTNERS.
(a) An Interest or portion thereof of a Limited Partner may be
Transferred only (i) by operation of law pursuant to the death, bankruptcy,
insolvency or dissolution of such Limited Partner or (ii) with the written
consent of the Individual General Partners (which may be withheld in their sole
and absolute discretion), provided, however, that the Individual General
Partners may not consent to any Transfer other than a Transfer (i) in which the
tax basis of the interest in the
-20-
25
hands of the transferee is determined, in whole or in part, by reference to its
tax basis in the hands of the transferor (e.g., certain Transfers to affiliates,
gifts and contributions to family partnerships), (ii) to members of the
Partner's immediate family (brothers, sisters, spouse, parents and children), or
(iii) a distribution from a qualified retirement plan or an individual
retirement account, unless it consults with counsel to the Partnership and
counsel to the Partnership confirms that such Transfer will not cause the
Partnership to be treated as a "publicly traded partnership" taxable as a
corporation.
(b) The Individual General Partners may not consent to a Transfer
of an Interest or a portion thereof of a Limited Partner unless: (i) the person
to whom such Interest is Transferred (or each of such person's beneficial owners
if such a person is a "private investment company" as defined in paragraph
(d)(3) of Rule 205-3 under the Advisers Act) is a person whom the Individual
General Partners believe meets the requirements of paragraph (d)(1) of Rule
205-3 under the Advisers Act or successor rule thereto; (ii) the entire Interest
of the Limited Partner is Transferred to a single transferee; and (iii) after
the Transfer, the balance of the Capital Account of the Transferee is not less
than $150,000. Any transferee which acquires an Interest by operation of law as
the result of the death, bankruptcy, insolvency or dissolution of a Limited
Partner or otherwise, shall be entitled to the allocations and distributions
allocable to the Interest so acquired and to Transfer such Interest in
accordance with the terms of this Agreement, but shall not be entitled to the
other rights of a Limited Partner unless and until such transferee becomes a
substituted Limited Partner. If a Limited Partner transfers an Interest with the
approval of the Individual General Partners, the Individual General Partners
shall promptly take all necessary actions so that the transferee to whom such
Interest is transferred is admitted to the Partnership as a Limited Partner.
Each Limited Partner effecting a Transfer and its transferee agree to pay all
expenses, including attorneys' and accountants' fees, incurred by the
Partnership in connection with such Transfer.
(c) Each Limited Partner shall indemnify and hold harmless the
Partnership, the Individual General Partners, the Adviser, each other Limited
Partner and any Affiliate of the foregoing against all losses, claims, damages,
liabilities, costs and expenses (including legal or other expenses incurred in
investigating or defending against any such losses, claims, damages,
liabilities, costs and expenses or any judgments, fines and amounts paid in
settlement), joint or several, to which such persons may become subject by
reason of or arising from (i) any Transfer made by such Limited Partner in
violation of this Section 4.5 and (ii) any misrepresentation by such Limited
Partner in connection with any such Transfer.
4.6 TRANSFER OF INTERESTS OF SPECIAL ADVISORY LIMITED PARTNER.
The Adviser may not Transfer its Interest as the Special Advisory
Limited Partner.
4.7 REPURCHASE OF INTERESTS.
(a) Except as otherwise provided in this Agreement, no Partner or
other person holding an Interest or portion thereof shall have the right to
withdraw or tender to the Partnership for repurchase that Interest or portion
thereof. The Individual General Partners may from time to time, in their
complete and exclusive discretion and on such terms and conditions as they may
determine, cause the Partnership to repurchase Interests or portions thereof
pursuant to written
-21-
26
tenders. However, the Partnership shall not offer to repurchase Interests on
more than two occasions during any one Fiscal Year unless it has received an
opinion of counsel to the effect that such more frequent offers would not cause
any adverse tax consequences to the Partnership or the Limited Partners. In
determining whether to cause the Partnership to repurchase Interests or portions
thereof pursuant to written tenders, the Individual General Partners shall
consider the recommendation of the Adviser, and shall also consider the
following factors, among others:
(1) whether any Partners have requested to tender Interests
or portions thereof to the Partnership;
(2) the liquidity of the Partnership's assets;
(3) the investment plans and working capital requirements of
the Partnership;
(4) the relative economies of scale with respect to the size
of the Partnership;
(5) the history of the Partnership in repurchasing Interests
or portions thereof;
(6) the economic condition of the securities markets; and
(7) the anticipated tax consequences of any proposed
repurchases of Interests or portions thereof.
The Individual General Partners shall cause the Partnership to repurchase
Interests or portions thereof pursuant to written tenders only on terms fair to
the Partnership and to all Partners or one or more classes of Partners
(including persons holding Interests acquired from Partners), as applicable.
(b) A Limited Partner who tenders for repurchase only a portion of
such Limited Partner's Interest shall be required to maintain a Capital Account
balance equal to the greater of (i) $150,000, net of the Incentive Allocation,
if any, that would be debited against such Capital Account if the date of
repurchase of such Interest or portion thereof were a date on which an Incentive
Allocation would otherwise be made (the "Tentative Incentive Allocation") or
(ii) the amount of the Tentative Incentive Allocation.
(c) The Adviser may tender its Interest or a portion thereof as a
Limited Partner or Special Advisory Limited Partner of the Partnership under
Section 4.7(a) hereof.
(d) If the Adviser's status as Special Advisory Limited Partner is
terminated pursuant to Section 4.1 hereof, it (or its trustee or other legal
representative) may, by written notice to the Individual General Partners within
60 days of the effective date of such termination, tender to the Partnership for
repurchase all or any portion of its Special Advisory Account. Not later than
thirty (30) days after the receipt of such notice, the Individual General
Partners shall cause such tendered portion of the Special Advisory Account to be
repurchased by the Partnership for cash.
-22-
27
(e) The Individual General Partners may cause the Partnership to
repurchase an Interest or portion thereof of a Limited Partner or any person
acquiring an Interest or portion thereof from or through a Limited Partner in
the event that the Individual General Partners determine or have reason to
believe that:
(1) such an Interest or portion thereof has been transferred
in violation of Section 4.5 hereof, or such an Interest
or portion thereof has vested in any person by operation
of law as the result of the death, dissolution,
bankruptcy or incompetency of a Partner;
(2) ownership of such an Interest by a Partner or other
person will cause the Partnership to be in violation of,
or require registration of any Interest or portion
thereof under, or subject the Partnership to additional
registration or regulation under, the securities laws of
the United States or any other relevant jurisdiction;
(3) continued ownership of such an Interest may be harmful
or injurious to the business or reputation of the
Partnership, the Individual General Partners or the
Adviser, or may subject the Partnership or any of the
Partners to an undue risk of adverse tax or other fiscal
consequences;
(4) any of the representations and warranties made by a
Partner in connection with the acquisition of an
Interest or portion thereof was not true when made or
has ceased to be true; or
(5) it would be in the best interests of the Partnership, as
determined by the Individual General Partners in their
absolute discretion, for the Partnership to repurchase
such an Interest or portion thereof.
(f) Repurchases of Interests or portions thereof by the
Partnership shall be payable promptly after the effective date of such
repurchase in accordance with the terms of the Partnership's repurchase offer.
Payment of the purchase price shall consist of: (i) cash in an aggregate amount
equal to such percentage, as may be determined by the Individual General
Partners, of the estimated unaudited net asset value of Interests repurchased by
the Partnership determined as of the effective date of such repurchase (the
"Cash Payment"); and, if determined to be necessary or appropriate by the
Individual General Partners, (ii) a promissory note entitling the holder thereof
to a contingent payment equal to the excess, of any, of (x) the net asset value
of the Interests repurchased by the Partnership as of the effective date of such
repurchases, determined based on the audited financial statements of the
Partnership for the Fiscal Year in which such repurchases were effective, over
(y) the Cash Payment. Notwithstanding anything in the foregoing to the contrary,
the Individual General Partners, in their discretion, may pay any portion of the
purchase price in marketable Securities (or any combination of marketable
Securities and cash) having a value, determined as of the date of repurchase,
equal to the amount to be repurchased. All such repurchases shall be subject to
any and all conditions as the Individual General Partners may impose in their
sole discretion and shall be effective as of a date set by the Individual
General
-23-
28
Partners which is not less than 60 days after receipt by the Partnership
of all eligible written tenders of Interests or portion thereof. The amount due
to any Partner whose Interest or portion thereof is repurchased shall be equal
to the value of such Partner's Capital Account or portion thereof as applicable
as of the effective date of repurchase, after giving effect to all allocations
to be made to such Partner's Capital Account as of such date.
------------------------------------
ARTICLE V
CAPITAL
------------------------------------
5.1 CONTRIBUTIONS TO CAPITAL.
(a) The minimum initial contribution of each Partner to the
capital of the Partnership shall be such amount as the Individual General
Partners, in their discretion, may determine from time to time, but in no event
shall be less than $150,000. The amount of the initial contribution of each
Partner shall be recorded on the books and records of the Partnership upon
acceptance as a contribution to the capital of the Partnership. Individual
General Partners shall not be entitled to make voluntary contributions of
capital to the Partnership as general partners of the Partnership, but may make
voluntary contributions to the capital of the Partnership as limited partners.
The Adviser may make voluntary contributions to the capital of the Partnership
as a limited partner.
(b) The Limited Partners and the Adviser, as a Limited Partner,
may make additional contributions to the capital of the Partnership of at least
$25,000, effective as of such times as the Individual General Partners in their
discretion may permit, subject to Section 2.7 hereof, but no Limited Partner
shall be obligated to make any additional contribution to the capital of the
Partnership except to the extent provided in Section 5.7 hereof.
(c) Except as otherwise permitted by the Individual General
Partners, (i) initial and any additional contributions to the capital of the
Partnership by any Partner shall be payable in cash or in such Securities that
the Individual General Partners, in their absolute discretion, may agree to
accept on behalf of the Partnership, and (ii) initial and any additional
contributions in cash shall be payable in readily available funds at the date of
the proposed acceptance of the contribution. The Partnership shall charge each
Partner making a contribution in Securities to the capital of the Partnership
such amount as may be determined by the Individual General Partners not
exceeding 2% of the value of such contribution in order to reimburse the
Partnership for any costs incurred by the Partnership by reason of accepting
such Securities, and any such charge shall be due and payable by the
contributing Partner in full at the time the contribution to the capital of the
Partnership to which such charges relate is due. The value of contributed
Securities shall be determined in accordance with Section 7.3 hereof as of the
date of contribution.
(d) The minimum initial and additional contributions set forth in
(a) and (b) of this Section 5.1 may be reduced by the Individual General
Partners.
-24-
29
5.2 RIGHTS OF PARTNERS TO CAPITAL.
No Partner shall be entitled to interest on his contribution to the
capital of the Partnership, nor shall any Partner be entitled to the return of
any capital of the Partnership except (i) upon the repurchase by the Partnership
of a part or all of such Partner's Interest pursuant to Section 4.7 hereof, (ii)
pursuant to the provisions of Section 5.7(c) hereof or (iii) upon the
liquidation of the Partnership's assets pursuant to Section 6.2 hereof. No
Partner shall be liable for the return of any such amounts. No Partner shall
have the right to require partition of the Partnership's property or to compel
any sale or appraisal of the Partnership's assets.
5.3 CAPITAL ACCOUNTS.
(a) The Partnership shall maintain a separate Capital Account for
each Limited Partner.
(b) Each Limited Partner's Capital Account shall have an initial
balance equal to the amount of cash and the value of any Securities (determined
in accordance with Section 7.3 hereof) constituting such Limited Partner's
initial contribution to the capital of the Partnership.
(c) Each Limited Partner's Capital Account shall be increased by
the sum of (i) the amount of cash and the value of any Securities (determined in
accordance with Section 7.3 hereof) constituting additional contributions by
such Limited Partner to the capital of the Partnership permitted pursuant to
Section 5.1 hereof, plus (ii) all amounts credited to such Limited Partner's
Capital Account pursuant to Sections 5.4 through 5.7 or 5.9 hereof.
(d) Each Limited Partner's Capital Account shall be reduced by the
sum of (i) the amount of any repurchase of the Interest, or portion thereof, of
such Limited Partner or distributions to such Limited Partner pursuant to
Sections 4.7, 5.11 or 6.2 hereof which are not reinvested, plus (ii) any amounts
debited against such Capital Account pursuant to Sections 5.4 through 5.9
hereof.
(e) The Partnership shall maintain a Special Advisory Account for
the Adviser in its capacity as Special Advisory Limited Partner solely for
purposes of receiving the Incentive Allocation pursuant to Section 5.8 hereof.
The Special Advisory Account shall have an initial balance of zero.
5.4 ALLOCATION OF NET PROFIT AND LOSS.
As of the last day of each Fiscal Period, any Net Profit or Net Loss
for the Fiscal Period shall be allocated among and credited to or debited
against the Capital Accounts of the Partners in accordance with their respective
Partnership Percentages for such Fiscal Period.
5.5 ALLOCATION OF INSURANCE PREMIUMS AND PROCEEDS.
(a) Any premiums payable by the Partnership for Insurance
purchased pursuant to Section 3.9(d) hereof shall be apportioned evenly over
each Fiscal Period or portion thereof
-25-
30
falling within the period to which such premiums relate under the terms of such
Insurance, and the portion of the premiums so apportioned to any Fiscal Period
shall be allocated among and debited against the Capital Accounts of each
Partner who is a partner of the Partnership during such Fiscal Period in
accordance with such Partner's Partnership Percentage for such Fiscal Period.
(b) Proceeds, if any, to which the Partnership may become entitled
pursuant to such Insurance shall be allocated among and credited to the Capital
Accounts of each Partner who is a partner of the Partnership during the Fiscal
Period in which the event which gives rise to recovery of proceeds occurs in
accordance with such Partner's Partnership Percentage for such Fiscal Period.
5.6 ALLOCATION OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES.
(a) If the Partnership incurs a withholding tax or other tax
obligation with respect to the share of Partnership income allocable to any
Limited Partner, then the Individual General Partners, without limitation of any
other rights of the Partnership or the General Partners, shall cause the amount
of such obligation to be debited against the Capital Account of such Partner
when the Partnership pays such obligation, and any amounts then or thereafter
distributable to such Partner shall be reduced by the amount of such taxes. If
the amount of such taxes is greater than any such distributable amounts, then
such Partner and any successor to such Partner's Interest shall pay to the
Partnership as a contribution to the capital of the Partnership, upon demand of
the Individual General Partners, the amount of such excess. The Individual
General Partners shall not be obligated to apply for or obtain a reduction of or
exemption from withholding tax on behalf of any Limited Partner that may be
eligible for such reduction or exemption; provided, that in the event that the
Individual General Partners determine that a Limited Partner is eligible for a
refund of any withholding tax, the Individual General Partners may, at the
request and expense of such Partner, assist such Partner in applying for such
refund.
(b) Except as otherwise provided for in this Agreement and unless
prohibited by the 1940 Act, any expenditures payable by the Partnership, to the
extent determined by the Individual General Partners to have been paid or
withheld on behalf of, or by reason of particular circumstances applicable to,
one or more but fewer than all of the Partners, shall be charged to only those
Partners on whose behalf such payments are made or whose particular
circumstances gave rise to such payments. Such charges shall be debited from the
Capital Accounts of such Partners as of the close of the Fiscal Period during
which any such items were paid or accrued by the Partnership.
5.7 RESERVES.
(a) Appropriate reserves may be created, accrued and charged
against Net Assets and proportionately against the Capital Accounts of the
Limited Partners for contingent liabilities, if any, as of the date any such
contingent liability becomes known to the Adviser or the Individual General
Partners, such reserves to be in the amounts which the Individual General
Partners in their sole discretion deem necessary or appropriate. The Individual
General Partners may increase or reduce any such reserves from time to time by
such amounts as the Individual General Partners in their sole discretion deem
necessary or appropriate. The amount of any such
-26-
31
reserve, or any increase or decrease therein, shall be proportionately charged
or credited, as appropriate, to the Capital Accounts of those parties who are
Limited Partners at the time when such reserve is created, increased or
decreased, as the case may be; provided, however, that if any such individual
reserve item, adjusted by any increase therein, exceeds the lesser of $500,000
or 1% of the aggregate value of the Capital Accounts of all such Partners, the
amount of such reserve, increase, or decrease shall instead be charged or
credited to those parties who were Limited Partners at the time, as determined
by the Individual General Partners in their sole discretion, of the act or
omission giving rise to the contingent liability for which the reserve was
established, increased or decreased in proportion to their Capital Accounts at
that time.
(b) If at any time an amount is paid or received by the
Partnership (other than contributions to the capital of the Partnership,
distributions or repurchases of Interests or portions thereof) and such amount
exceeds the lesser of $500,000 or 1% of the aggregate value of the Capital
Accounts of all Limited Partners at the time of payment or receipt and such
amount was not accrued or reserved for but would nevertheless, in accordance
with the Partnership's accounting practices, be treated as applicable to one or
more prior Fiscal Periods, then such amount shall be proportionately charged or
credited, as appropriate, to those parties who were Limited Partners during such
prior Fiscal Period or Periods.
(c) If any amount is required by paragraph (a) or (b) of this
Section 5.7 to be charged or credited to a party who is no longer a Limited
Partner, such amount shall be paid by or to such party, as the case may be, in
cash, with interest from the date on which the Individual General Partners
determine that such charge or credit is required. In the case of a charge, the
former Limited Partner shall be obligated to pay the amount of the charge, plus
interest as provided above, to the Partnership on demand; provided, however,
that (i) in no event shall a former Partner be obligated to make a payment
exceeding the amount of such Partner's Capital Account at the time to which the
charge relates; and (ii) no such demand shall be made after the expiration of
three years since the date on which such party ceased to be a Partner. To the
extent that a former Limited Partner fails to pay to the Partnership, in full,
any amount required to be charged to such former Partner pursuant to paragraph
(a) or (b), whether due to the expiration of the applicable limitation period or
for any other reason whatsoever, the deficiency shall be charged proportionately
to the Capital Accounts of the Limited Partners at the time of the act or
omission giving rise to the charge to the extent feasible, and otherwise
proportionately to the Capital Accounts of the current Limited Partners.
5.8 INCENTIVE ALLOCATION.
(a) So long as the Adviser serves as the Special Advisory Limited
Partner of the Partnership, the Incentive Allocation shall be debited against
the Capital Account of each Limited Partner as of the last day of each
Allocation Period with respect to such Limited Partner and the amount so debited
shall simultaneously be credited to the Special Advisory Account or, subject to
compliance with the 1940 Act and the Advisers Act, to the Capital Accounts of
such Partners as have been designated in any written notice delivered by the
Adviser to the Individual General Partners within 90 days after the close of
such Allocation Period.
-27-
32
(b) By the last business day of the month following the date on
which an Incentive Allocation is made, the Special Advisory Limited Partner may
withdraw up to 100% of the Incentive Allocation (computed on the basis of
unaudited data) that was credited to the Special Advisory Account. Within 30
days after the completion of the audit of the books of the Partnership for the
year in which allocations to the Special Advisory Account are made, the
Partnership shall pay to the Special Advisory Limited Partner any additional
amount of Incentive Allocation determined to be owed to the Special Advisory
Limited Partner based on the audit, and the Special Advisory Limited Partner
shall pay to the Partnership any excess amount of Incentive Allocation
determined to be owed to the Partnership.
5.9 ALLOCATION OF ORGANIZATIONAL EXPENSES.
(a) As of the first Expense Allocation Date, Organizational
Expenses shall be allocated among and debited against the Capital Accounts of
the Limited Partners in accordance with their respective Capital Percentages on
such Expense Allocation Date.
(b) As of each Expense Allocation Date following the first Expense
Allocation Date, all amounts previously debited against the Capital Account of a
Limited Partner pursuant to this Section 5.9 on the preceding Expense Allocation
Date will be credited to the Capital Account of such Limited Partner, and
Organizational Expenses shall then be re-allocated among and debited against the
Capital Accounts of all Limited Partners in accordance with their respective
Capital Percentages on such Expense Allocation Date.
5.10 TAX ALLOCATIONS.
For each fiscal year, items of income, deduction, gain, loss or
credit shall be allocated for income tax purposes among the Partners in such
manner as to reflect equitably amounts credited or debited to each Partner's
Capital Account for the current and prior fiscal years (or relevant portions
thereof). Allocations under this Section 5.10 shall be made pursuant to the
principles of Sections 704(b) and 704(c) of the Internal Revenue Code of 1986,
as amended (the "Code"), and in conformity with Regulations Sections
1.704-1(b)(2)(iv)(f), 1.704-1(b)(4)(i) and 1.704-3(e) promulgated thereunder, as
applicable, or the successor provisions to such Section and Regulations.
Notwithstanding anything to the contrary in this Agreement, there shall be
allocated to the Partners such gains or income as shall be necessary to satisfy
the "qualified income offset" requirement of Treasury Regulation Section
1.704-1(b)(2)(ii)(d).
If the Partnership realizes capital gains (including short-term
capital gains) for Federal income tax purposes ("gains") for any fiscal year
during or as of the end of which one or more Positive Basis Partners (as
hereinafter defined) withdraw from the Partnership pursuant to Articles IV or
VI, the Individual General Partners, unless otherwise determined by the
Individual General Partners, in their sole discretion, shall allocate such gains
as follows: (i) to allocate such gains among such Positive Basis Partners, pro
rata in proportion to the respective Positive Basis (as hereinafter defined) of
each such Positive Basis Partner, until either the full amount of such gains
shall have been so allocated or the Positive Basis of each such Positive Basis
Partner shall have been eliminated and (ii) to allocate any gains not so
allocated to Positive Basis Partners to the other Partners in such manner as
shall equitably reflect the amounts allocated to such
-28-
33
Partners' Capital Accounts pursuant to Section 5.3; provided, however, that if,
following such fiscal year, the Partnership realizes gains from a sale of
Securities the proceeds of which are designated on the Partnership's books and
records as being used to effect payments of all or part of the interest in the
Partnership of any Positive Basis Partner, there shall be allocated to any
Positive Basis Partner an amount of such gains equal to the amount, if any by
which his or its Positive Basis as of the effective date of his or its
withdrawal exceeds the amount allocated to him or it pursuant to clause (i) of
this sentence.
If the Partnership realizes capital losses (including long-term
capital losses) for Federal income tax purposes ("losses") for any fiscal year
during or as of the end of which one or more Negative Basis Partners (as
hereinafter defined) withdraw from the Partnership pursuant to Articles IV or
VI, the Individual General Partners, unless otherwise determined by the
Individual General Partners, in their sole discretion, shall allocate such
losses as follows: (i) to allocate such losses among such Negative Basis
Partners, pro rata in proportion to the respective Negative Basis (as
hereinafter defined) of each such Negative Basis Partner, until either the full
amount of such losses shall have been so allocated or the Negative Basis of each
such Negative Basis Partner shall have been eliminated and (ii) to allocate any
losses not so allocated to Negative Basis Partners to the other Partners in such
manner as shall equitably reflect the amounts allocated to such Partners'
Capital Accounts pursuant to Section 5.3; provided, however, that if, following
such fiscal year, the Partnership realizes losses from a sale of Securities the
proceeds of which are designated on the Partnership's books and records as being
used to effect payments of all or part of the interest in the Partnership of any
Negative Basis Partner, there shall be allocated to any Negative Basis Partner
an amount of such losses equal to the amount, if any by which his or its
Negative Basis as of the effective date of his or its withdrawal exceeds the
amount allocated to him or it pursuant to clause (i) of this sentence.
As used herein, (i) the term "Positive Basis" shall mean, with
respect to any Partner and as of any time of calculation, the amount by which
its interest in the Partnership as of such time exceeds its "adjusted tax
basis", for Federal income tax purposes, in its interest in the Partnership as
of such time (determined without regard to any adjustments made to such
"adjusted tax basis" by reason of any transfer or assignment of such interest,
including by reason of death, and without regard to such Partner's share of the
liabilities of the Partnership under Section 752 of the Code), and (ii) the term
"Positive Basis Partner" shall mean any Partner who withdraws from the
Partnership and who has Positive Basis as of the effective date of its
withdrawal, but such Partner shall cease to be a Positive Basis Partner at such
time as it shall have received allocations pursuant to clause (i) of the second
paragraph of this Section 5.10 equal to its Positive Basis as of the effective
date of its withdrawal.
As used herein, (i) the term "Negative Basis" shall mean, with
respect to any Partner and as of any time of calculation, the amount by which
its interest in the Partnership as of such time is less than its "adjusted tax
basis", for Federal income tax purposes, in its interest in the Partnership as
of such time (determined without regard to any adjustments made to such
"adjusted tax basis" by reason of any transfer or assignment of such interest,
including by reason of death, and without regard to such Partner's share of the
liabilities of the Partnership under Section 752 of the Code), and (ii) the term
"Negative Basis Partner" shall mean any Partner who
-29-
34
withdraws from the Partnership and who has Negative Basis as of the effective
date of its withdrawal, but such Partner shall cease to be a Negative Basis
Partner at such time as it shall have received allocations pursuant to clause
(i) of the third paragraph of this Section 5.10 equal to its Negative Basis as
of the effective date of its withdrawal.
Notwithstanding anything to the contrary in the foregoing, if the
Partnership realizes taxable gains in any fiscal year with respect to which the
Special Advisory Limited Partner is entitled to an Incentive Allocation under
Section 5.8 hereof, the Individual General Partners (, at the request of the
Special Advisory Limited Partner,) may specially allocate such gains to the
Special Advisory Limited Partner in an amount by which the Incentive Allocation
exceeds the Special Advisory Limited Partner's "adjusted tax basis" (determined
without regard to any allocation to be made pursuant to this paragraph) in its
interest in the Partnership as of the time it withdraws such Incentive
Allocation. The Special Advisory Limited Partner's "adjusted tax basis", for
these purposes, shall be increased by any amount of the Incentive Allocation
withdrawal which it elects to contribute as a Limited Partner to the Partnership
as of the date of the withdrawal of the Incentive Allocation.
5.11 DISTRIBUTIONS.
(a) The Individual General Partners may, in their sole
discretion, authorize the Partnership to make distributions in cash at any time
to all of the Partners on a pro rata basis in accordance with the Partners'
Partnership Percentages.
(b) The Individual General Partners may withhold taxes from
any distribution to any Partner to the extent required by the Code or any other
applicable law. For purposes of this Agreement, any taxes so withheld by the
Partnership with respect to any amount distributed by the Partnership to any
Partner shall be deemed to be a distribution or payment to such Partner,
reducing the amount otherwise distributable to such Partner pursuant to this
Agreement and reducing the Capital Account of such Partner.
5.12 FOREIGN WITHHOLDING.
Notwithstanding any provision of this Agreement to the contrary, the
Individual General Partners shall withhold and pay over to the Internal Revenue
Service, pursuant to Sections 1441, 1442, 1445 or 1446 of the Code, or any
successor provisions, at such times as required by such Sections, such amounts
as the Partnership is required to withhold under such Sections, as from time to
time are in effect. To the extent that a foreign Limited Partner claims to be
entitled to a reduced rate of, or exemption from, U.S. withholding tax pursuant
to an applicable income tax treaty, or otherwise, the foreign Limited Partner
shall furnish the Individual General Partners with such information and forms as
such foreign Limited Partner may be required to complete where necessary to
comply with any and all laws and regulations governing the obligations of
withholding tax agents. Each foreign Limited Partner represents and warrants
that any such information and forms furnished by such foreign Limited Partner
shall be true and accurate and agrees to indemnify the Partnership and each of
the Limited Partners from any and all damages, costs and expenses resulting from
the filing of inaccurate or incomplete information or forms relating to such
withholding taxes.
-30-
35
Any amount of withholding taxes withheld and paid
over by the Individual General Partners with respect to a foreign Limited
Partner's distributive share of the Partnership's gross income, income or gain
shall be treated as a distribution to such foreign Limited Partner and shall be
charged against the Capital Account of such foreign Limited Partner.
--------------------------
ARTICLE VI
DISSOLUTION AND LIQUIDATION
---------------------------
6.1 DISSOLUTION.
(a) The Partnership shall be dissolved:
(1) upon the affirmative vote to dissolve the
Partnership by: (i) the Individual General
Partners or (ii) Limited Partners holding at
least two-thirds (2/3) of the total number
of votes eligible to be cast by all
Partners;
(2) upon the failure of Limited Partners to
elect successor Individual General Partners
at a meeting called by the Adviser in
accordance with Section 2.6(c) hereof when
no Individual General Partner remains to
continue the business of the Partnership;
(3) upon the expiration of any two year period
which commences on the date on which any
Limited Partner has submitted a written
notice to the Partnership requesting to
tender its entire Interest for repurchase by
the Partnership if such Interest has not
been repurchased by the Partnership;
(4) as required by operation of law.
Dissolution of the Partnership shall be effective on the later of the day on
which the event giving rise to the dissolution shall occur or the conclusion of
any applicable 60 day period during which the Individual General Partners and
Limited Partners may elect to continue the business of the Partnership as
provided above, but the Partnership shall not terminate until the assets of the
Partnership have been liquidated in accordance with Section 6.2 hereof and the
Certificate has been canceled.
(b) Upon the occurrence of an event of withdrawal under
Section 17-402 of the Delaware Act with respect to any General Partner
(including any event specified in Section 4.1, 4.2, 4.3 or 4.4 hereof that
causes such General Partner to cease to be a Partner in the Partnership), all
remaining General Partners are authorized to carry on the business of the
Partnership as permitted by Section 17-801(3) of the Delaware Act and to the
extent permitted by this Agreement. Except as
-31-
36
provided in Section 6.1(a) hereof or in the Delaware Act, the death, mental
illness, dissolution, termination, liquidation, bankruptcy, reorganization,
merger, sale of substantially all of the stock or assets of or other change in
the ownership or nature of a Partner, the admission to the Partnership of a new
Partner, the withdrawal of a Partner from the Partnership, or the transfer by a
Partner of his Interest to a third party shall not cause the Partnership to
dissolve.
6.2 LIQUIDATION OF ASSETS.
(a) Upon the dissolution of the Partnership as provided in
Section 6.1 hereof, the Individual General Partners shall promptly appoint the
Administrator as the liquidator and the Administrator shall liquidate the
business and administrative affairs of the Partnership, except that if the
Individual General Partners do not appoint the Administrator as the liquidator
or the Administrator is unable to perform this function, a liquidator elected by
Limited Partners holding a majority of the total number of votes eligible to be
cast by all Limited Partners shall promptly liquidate the business and
administrative affairs of the Partnership. Net Profit and Net Loss during the
period of liquidation shall be allocated pursuant to Section 5.4 hereof. The
proceeds from liquidation (after establishment of appropriate reserves for
contingencies in such amount as the Individual General Partners or liquidator
shall deem appropriate in their or its sole discretion as applicable) shall be
distributed in the following manner:
(1) the debts of the Partnership, other than
debts, liabilities or obligations to
Partners, and the expenses of liquidation
(including legal and accounting expenses
incurred in connection therewith), up to and
including the date that distribution of the
Partnership's assets to the Partners has
been completed, shall first be paid on a pro
rata basis;
(2) such debts, liabilities or obligations as
are owing to the Partners shall next be paid
in their order of seniority and on a pro
rata basis;
(3) The Special Advisory Limited Partner shall
next be paid any balance in the Special
Advisory Account after giving effect to the
Incentive Allocation, if any, to be made
pursuant to Section 5.8 hereof; and
(4) the Limited Partners shall next be paid on a
pro rata basis the positive balances of
their respective Capital Accounts after
giving effect to all allocations to be made
to such Partners' Capital Accounts for the
Fiscal Period ending on the date of the
distributions under this Section 6.2(a)(3).
(b) Anything in this Section 6.2 to the contrary notwithstanding, upon
dissolution of the Partnership, the Individual General Partners or other
liquidator may distribute ratably in kind any assets of the Partnership;
provided, however, that if any in-kind distribution is to be made (i) the assets
distributed in kind shall be valued pursuant to Section 7.3 hereof as of the
actual date of their distribution and charged as so valued and distributed
against amounts to be paid under Section 6.2(a) above, and (ii) any profit or
loss attributable to property distributed in-kind
-32-
37
shall be included in the Net Profit or Net Loss for the Fiscal Period ending on
the date of such distribution.
-----------------------------
ARTICLE VII
ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS
-----------------------------
7.1 ACCOUNTING AND REPORTS.
(a) The Partnership shall adopt for tax accounting purposes
any accounting method which the Individual General Partners shall decide in
their sole discretion is in the best interests of the Partnership. The
Partnership's accounts shall be maintained in U.S. currency.
(b) After the end of each taxable year, the Partnership shall
furnish to each Partner such information regarding the operation of the
Partnership and such Partner's Interest as is necessary for Partners to complete
federal and state income tax or information returns and any other tax
information required by federal or state law.
(c) Except as otherwise required by the 1940 Act, or as may
otherwise be permitted by rule, regulation or order, within 60 days after the
close of the period for which a report required under this Section 7.1(c) is
being made, the Partnership shall furnish to each Limited Partner a semi-annual
report and an annual report containing the information required by such Act. The
Partnership shall cause financial statements contained in each annual report
furnished hereunder to be accompanied by a certificate of independent public
accountants based upon an audit performed in accordance with generally accepted
accounting principles. The Partnership may furnish to each Partner such other
periodic reports as it deems necessary or appropriate in its discretion.
7.2 DETERMINATIONS BY INDIVIDUAL GENERAL PARTNERS.
(a) All matters concerning the determination and allocation
among the Partners of the amounts to be determined and allocated pursuant to
Article V hereof, including any taxes thereon and accounting procedures
applicable thereto, shall be determined by the Individual General Partners
unless specifically and expressly otherwise provided for by the provisions of
this Agreement or required by law, and such determinations and allocations shall
be final and binding on all the Partners.
(b) The Individual General Partners may make such adjustments
to the computation of Net Profit or Net Loss, the Allocation Change with respect
to any Limited Partner, or any components comprising any of the foregoing as it
considers appropriate to reflect fairly and accurately the financial results of
the Partnership and the intended allocation thereof among the Partners.
-33-
38
7.3 VALUATION OF ASSETS.
(a) Except as may be required by the 1940 Act, the Individual
General Partners shall value or have valued any Securities or other assets and
liabilities of the Partnership as of the close of business on the last day of
each Fiscal Period in accordance with such valuation procedures as shall be
established from time to time by the Individual General Partners and which
conform to the requirements of the 1940 Act. In determining the value of the
assets of the Partnership, no value shall be placed on the goodwill or name of
the Partnership, or the office records, files, statistical data or any similar
intangible assets of the Partnership not normally reflected in the Partnership's
accounting records, but there shall be taken into consideration any items of
income earned but not received, expenses incurred but not yet paid, liabilities,
fixed or contingent, and any other prepaid expenses to the extent not otherwise
reflected in the books of account, and the value of options or commitments to
purchase or sell Securities or commodities pursuant to agreements entered into
prior to such valuation date.
(b) The value of Securities and other assets of the
Partnership and the net worth of the Partnership as a whole determined pursuant
to this Section 7.3 shall be conclusive and binding on all of the Partners and
all parties claiming through or under them.
---------------------------
ARTICLE VIII
MISCELLANEOUS PROVISIONS
-----------------------------
8.1 AMENDMENT OF PARTNERSHIP AGREEMENT.
(a) Except as otherwise provided in this Section 8.1, this
Agreement may be amended, in whole or in part, with: (i) the approval of the
Individual General Partners (including the vote of a majority of the Independent
General Partners, if required by the ▇▇▇▇ ▇▇▇) and (ii) if required by the 1940
Act, the approval of the Limited Partners by such vote as is required by the
▇▇▇▇ ▇▇▇.
(b) Any amendment that would:
(1) increase the obligation of a Partner to make
any contribution to the capital of the
Partnership;
(2) reduce the Capital Account of a Partner or
Special Advisory Account other than in
accordance with Article V; or
(3) modify the events causing the dissolution of
the Partnership;
may be made only if (i) the written consent of each Partner adversely affected
thereby is obtained prior to the effectiveness thereof or (ii) such amendment
does not become effective until (A) each
-34-
39
Limited Partner has received written notice of such amendment and (B) any
Limited Partner objecting to such amendment has been afforded a reasonable
opportunity (pursuant to such procedures as may be prescribed by the Individual
General Partners) to tender his entire Interest for repurchase by the
Partnership.
(c) The power of the Individual General Partners to amend this
Agreement at any time without the consent of the other Partners as set forth in
paragraph (a) of this Section 8.01 shall specifically include the power to:
(1) restate this Agreement together with any
amendments hereto which have been duly
adopted in accordance herewith to
incorporate such amendments in a single,
integrated document;
(2) amend Section 2.7 hereof to authorize the
admittance of Limited Partners more
frequently than quarterly;
(3) amend this Agreement (other than with
respect to the matters set forth in Section
8.1(b) hereof) to effect compliance with any
applicable law or regulation, including but
not limited to, to satisfy the requirements,
or to reflect any relaxation of such
requirements in the future, of the Bank
Holding Company Act or other U.S. or
Canadian banking laws, or any regulations,
guidelines or policies or interpretations of
the banking regulatory agencies or the staff
thereof, or to cure any ambiguity or to
correct or supplement any provision hereof
which may be inconsistent with any other
provision hereof, provided that such action
does not adversely affect the rights of any
Partner in any material respect; and
(4) amend this Agreement to make such changes as
may be necessary or desirable, based on
advice of legal counsel to the Partnership,
to assure the Partnership's continuing
eligibility to be classified for U.S.
federal income tax purposes as a partnership
which is not treated as a corporation under
Section 7704(a) of the Code.
(d) The Individual General Partners shall cause written notice
to be given of any amendment to this Agreement (other than any amendment of the
type contemplated by clause (1) of Section 8.1(c) hereof) to each Partner, which
notice shall set forth (i) the text of the amendment or (ii) a summary thereof
and a statement that the text thereof will be furnished to any Partner upon
request.
8.2 SPECIAL POWER OF ATTORNEY.
(a) Each Limited Partner hereby irrevocably makes, constitutes
and appoints each of the Individual General Partners, acting severally, and any
liquidator of the Partnership's assets appointed pursuant to Section 6.2 hereof
with full power of substitution, the true and lawful representatives and
attorneys-in-fact of, and in the name, place and stead of, such Partner, with
the
-35-
40
power from time to time to make, execute, sign, acknowledge, swear to, verify,
deliver, record, file and/or publish:
(1) any amendment to this Agreement which
complies with the provisions of this
Agreement (including the provisions of
Section 8.1 hereof);
(2) any amendment to the Certificate required
because this Agreement is amended,
including, without limitation, an amendment
to effectuate any change in the membership
of the Partnership; and
(3) all such other instruments, documents and
certificates which, in the opinion of legal
counsel to the Partnership, may from time to
time be required by the laws of the United
States of America, the State of Delaware or
any other jurisdiction in which the
Partnership shall determine to do business,
or any political subdivision or agency
thereof, or which such legal counsel may
deem necessary or appropriate to effectuate,
implement and continue the valid existence
and business of the Partnership as a limited
partnership under the Delaware Act.
(b) Each Limited Partner is aware that the terms of this
Agreement permit certain amendments to this Agreement to be effected and certain
other actions to be taken or omitted by or with respect to the Partnership
without such Partner's consent. If an amendment to the Certificate or this
Agreement or any action by or with respect to the Partnership is taken in the
manner contemplated by this Agreement, each Limited Partner agrees that,
notwithstanding any objection which such Partner may assert with respect to such
action, the attorneys-in-fact appointed hereby are authorized and empowered,
with full power of substitution, to exercise the authority granted above in any
manner which may be necessary or appropriate to permit such amendment to be made
or action lawfully taken or omitted. Each Limited Partner is fully aware that
each Partner will rely on the effectiveness of this special power-of-attorney
with a view to the orderly administration of the affairs of the Partnership.
(c) This power-of-attorney is a special power-of-attorney and
is coupled with an interest in favor of each of the Individual General Partners
and as such:
(1) shall be irrevocable and continue in full
force and effect notwithstanding the
subsequent death or incapacity of any party
granting this power-of-attorney, regardless
of whether the Partnership or Individual
General Partners shall have had notice
thereof; and
(2) shall survive the delivery of a Transfer by
a Limited Partner of the whole or any
portion of such Partner's Interest, except
that where the transferee thereof has been
approved by the Individual General Partners
for admission to the Partnership as a
substituted Limited
-36-
41
Partner, this power-of-attorney given by the
transferor shall survive the delivery of
such assignment for the sole purpose of
enabling the Individual General Partners to
execute, acknowledge and file any instrument
necessary to effect such substitution.
8.3 NOTICES.
Notices which may or are required to be provided under this
Agreement shall be made, if to a Limited Partner, by regular mail, or if to an
Individual General Partner or the Adviser, by hand delivery, registered or
certified mail return receipt requested, commercial courier service, telex or
telecopier, and shall be addressed to the respective parties hereto at their
addresses as set forth in the books and records of the Partnership. Notices
shall be deemed to have been provided when delivered by hand, on the date
indicated as the date of receipt on a return receipt or when received if sent by
regular mail, commercial courier service, telex or telecopier. A document that
is not a notice and that is required to be provided under this Agreement by any
party to another party may be delivered by any reasonable means.
8.4 AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors, assigns,
executors, trustees or other legal representatives, but the rights and
obligations of the parties hereunder may not be Transferred or delegated except
as provided in this Agreement and any attempted Transfer or delegation thereof
which is not made pursuant to the terms of this Agreement shall be void.
8.5 APPLICABILITY OF 1940 ACT AND FORM N-2.
The parties hereto acknowledge that this Agreement is not
intended to, and does not, set forth the substantive provisions contained in the
1940 Act and the Form N-2 which affect numerous aspects of the conduct of the
Partnership's business and of the rights, privileges and obligations of the
Partners. Each provision of this Agreement shall be subject to and interpreted
in a manner consistent with the applicable provisions of the 1940 Act and the
Form N-2.
8.6 CHOICE OF LAW; ARBITRATION.
(a) Notwithstanding the place where this Agreement may be
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed under the laws of the State of
Delaware, including the Delaware Act without regard to the conflict of law
principles of such State.
(b) UNLESS OTHERWISE AGREED IN WRITING, EACH PARTNER AGREES TO
SUBMIT ALL CONTROVERSIES ARISING BETWEEN PARTNERS OR ONE OR MORE PARTNERS AND
THE PARTNERSHIP TO ARBITRATION IN ACCORDANCE WITH THE PROVISIONS SET FORTH BELOW
AND UNDERSTANDS:
(1) ARBITRATION IS FINAL AND BINDING ON THE PARTIES;
-37-
42
(2) THEY ARE WAIVING THEIR RIGHT TO SEEK
REMEDIES IN COURT, INCLUDING THE RIGHT TO A
JURY TRIAL;
(3) PRE-ARBITRATION DISCOVERY IS GENERALLY MORE
LIMITED AND DIFFERENT FROM COURT
PROCEEDINGS;
(4) THE ARBITRATOR'S AWARD IS NOT REQUIRED TO
INCLUDE FACTUAL FINDINGS OR LEGAL REASONING
AND A PARTY'S RIGHT TO APPEAL OR TO SEEK
MODIFICATION OF RULINGS BY ARBITRATORS IS
STRICTLY LIMITED; AND
(5) THE PANEL OF ARBITRATORS WILL TYPICALLY
INCLUDE A MINORITY OF ARBITRATORS WHO WERE
OR ARE AFFILIATED WITH THE SECURITIES
INDUSTRY.
(b) ALL CONTROVERSIES THAT MAY ARISE AMONG PARTNERS AND ONE OR
MORE PARTNERS AND THE PARTNERSHIP CONCERNING THIS AGREEMENT SHALL BE DETERMINED
BY ARBITRATION IN NEW YORK CITY IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT,
TO THE FULLEST EXTENT PERMITTED BY LAW. ANY ARBITRATION UNDER THIS AGREEMENT
SHALL BE DETERMINED BEFORE AND IN ACCORDANCE WITH THE RULES THEN OBTAINING OF
EITHER THE NEW YORK STOCK EXCHANGE, INC. (THE "NYSE") OR THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. (THE "NASD"), AS THE PARTNER OR ENTITY
INSTITUTING THE ARBITRATION MAY ELECT. IF THE NYSE OR NASD DOES NOT ACCEPT THE
ARBITRATION FOR CONSIDERATION, THE ARBITRATION SHALL BE SUBMITTED TO, AND
DETERMINED IN ACCORDANCE WITH THE RULES THEN OBTAINING OF, THE CENTER FOR PUBLIC
RESOURCES, INC. IN NEW YORK CITY. JUDGMENT ON ANY AWARD OF ANY SUCH ARBITRATION
MAY BE ENTERED IN THE SUPREME COURT OF THE STATE OF NEW YORK OR IN ANY OTHER
COURT HAVING JURISDICTION OF THE PERSON OR PERSONS AGAINST WHOM SUCH AWARD IS
RENDERED. ANY NOTICE OF SUCH ARBITRATION OR FOR THE CONFIRMATION OF ANY AWARD IN
ANY ARBITRATION SHALL BE SUFFICIENT IF GIVEN IN ACCORDANCE WITH THE PROVISIONS
OF THIS AGREEMENT. EACH PARTNER AGREES THAT THE DETERMINATION OF THE ARBITRATORS
SHALL BE BINDING AND CONCLUSIVE UPON THEM.
(c) NO PARTNER SHALL BRING A PUTATIVE OR CERTIFIED CLASS
ACTION TO ARBITRATION, NOR SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT
AGAINST ANY PERSON WHO HAS INITIATED IN COURT A PUTATIVE CLASS ACTION; OR WHO IS
A MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO
ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS ACTION UNTIL: (i) THE CLASS
CERTIFICATION IS DENIED; OR (ii) THE CLASS IS DECERTIFIED; OR (iii) THE PARTNER
IS EXCLUDED FROM THE CLASS BY THE COURT. SUCH FORBEARANCE TO ENFORCE AN
AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS
AGREEMENT EXCEPT TO THE EXTENT STATED HEREIN.
8.7 NOT FOR BENEFIT OF CREDITORS.
The provisions of this Agreement are intended only for the
regulation of relations among past, present and future Partners and the
Partnership. This Agreement is not intended for the benefit of non-Partner
creditors and no rights are granted to non-Partner creditors under this
Agreement.
-38-
43
8.8 CONSENTS.
Any and all consents, agreements or approvals provided for or
permitted by this Agreement shall be in writing and a signed copy thereof shall
be filed and kept with the books of the Partnership.
8.9 MERGER AND CONSOLIDATION.
(a) The Partnership may merge or consolidate with or into one
or more limited partnerships formed under the Delaware Act or other business
entities pursuant to an agreement of merger or consolidation which has been
approved in the manner contemplated by Section 17-211(b) of the Delaware Act.
(b) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, an agreement of merger or consolidation approved in
accordance with Section 17-211(b) of the Delaware Act may, to the extent
permitted by Section 17-211(g) of the Delaware Act, (i) effect any amendment to
this Agreement (ii) effect the adoption of a new partnership agreement for the
Partnership if it is the surviving or resulting limited partnership in the
merger or consolidation, or (iii) provide that the partnership agreement of any
other constituent partnership to the merger or consolidation (including a
limited partnership formed for the purpose of consummating the merger or
consolidation) shall be the partnership agreement of the surviving or resulting
limited partnership.
8.10 PRONOUNS.
All pronouns shall be deemed to refer to the masculine,
feminine, neuter, singular or plural, as the identity of the person or persons,
firm or corporation may require in the context thereof.
8.11 CONFIDENTIALITY.
(a) A Limited Partner may obtain from the Partnership such
information regarding the affairs of the Partnership as is just and reasonable
under the Delaware Act, subject to reasonable standards (including standards
governing what information and documents are to be furnished, at what time and
location and at whose expense) established by the Individual General Partners.
(b) Each Partner covenants that, except as required by
applicable law or any regulatory body, it will not divulge, furnish or make
accessible to any other person the name and/or address (whether business,
residence or mailing) of any Limited Partner (collectively, "Confidential
Information") without the prior written consent of the Individual General
Partners, which consent may be withheld in their sole discretion.
(c) Each Partner recognizes that in the event that this
Section 8.11 is breached by any Partner or any of its principals, partners,
members, directors, officers, employees or agents or any of its affiliates,
including any of such affiliates' principals, partners, members, directors,
-39-
44
officers, employees or agents, irreparable injury may result to the
non-breaching Partners and the Partnership. Accordingly, in addition to any and
all other remedies at law or in equity to which the non-breaching Partners and
the Partnership may be entitled, such Partners shall also have the right to
obtain equitable relief, including, without limitation, injunctive relief, to
prevent any disclosure of Confidential Information, plus reasonable attorneys'
fees and other litigation expenses incurred in connection therewith. In the
event that any non-breaching Partner or the Partnership determines that any of
the other Partners or any of its principals, partners, members, directors,
officers, employees or agents or any of its affiliates, including any of such
affiliates' principals, partners, members, directors, officers, employees or
agents should be enjoined from or required to take any action to prevent the
disclosure of Confidential Information, each of the other non-breaching Partners
agrees to pursue in a court of appropriate jurisdiction such injunctive relief.
8.12 CERTIFICATION OF NON-FOREIGN STATUS.
Each Limited Partner or transferee of an Interest from a
Limited Partner shall certify, upon admission to the Partnership and at such
other time thereafter as the Individual General Partners may request, whether he
is a "United States Person" within the meaning of Section 7701(a)(30) of the
Code on forms to be provided by the Partnership, and shall notify the
Partnership within 30 days of any change in such Partner's status. Any Limited
Partner who shall fail to provide such certification when requested to do so by
the Individual General Partners may be treated as a non-United States Person for
purposes of U.S. federal tax withholding.
8.13 SEVERABILITY.
If any provision of this Agreement is determined by a court of
competent jurisdiction not to be enforceable in the manner set forth in this
Agreement, each Partner agrees that it is the intention of the Partners that
such provision should be enforceable to the maximum extent possible under
applicable law. If any provisions of this Agreement are held to be invalid or
unenforceable, such invalidation or unenforceability shall not affect the
validity or enforceability of any other provision of this Agreement (or portion
thereof).
8.14 FILING OF RETURNS.
The Individual General Partners or their designated agent
shall prepare and file, or cause the accountants of the Partnership to prepare
and file, a Federal information tax return in compliance with Section 6031 of
the Code and any required state and local income tax and information returns for
each tax year of the Partnership.
8.15 TAX MATTERS PARTNER.
An Individual General Partner shall be designated on the
Partnership's annual Federal income tax return, and have full powers and
responsibilities, as the Tax Matters Partner of the Partnership for purposes of
Section 6231(a)(7) of the Code. Each person (for purposes of this Section 8.15,
called a "Pass-Thru Partner") that holds or controls an interest as a Limited
-40-
45
Partner on behalf of, or for the benefit of, another person or persons, or which
Pass-Thru Partner is beneficially owned (directly or indirectly) by another
person or persons, shall, within 30 days following receipt from the Tax Matters
Partner of any notice, demand, request for information or similar document,
convey such notice or other document in writing to all holders of beneficial
interests in the Partnership holding such interests through such Pass-Thru
Partner. In the event the Partnership shall be the subject of an income tax
audit by any Federal, state or local authority, to the extent the Partnership is
treated as an entity for purposes of such audit, including administrative
settlement and judicial review, the Tax Matters Partner shall be authorized to
act for, and its decision shall be final and binding upon, the Partnership and
each Partner thereof. All expenses incurred in connection with any such audit,
investigation, settlement or review shall be borne by the Partnership.
8.16 SECTION 754 ELECTION.
In the event of a distribution of Partnership property to a
Partner or an assignment or other transfer (including by reason of death) of all
or part of the interest of a Limited Partner in the Partnership, at the request
of a Partner, the Individual General Partners, in their discretion, may cause
the Partnership to elect, pursuant to Section 754 of the Code, or the
corresponding provision of subsequent law, to adjust the basis of the
Partnership property as provided by Sections 734 and 743 of the Code.
-41-
46
THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY
BEFORE SIGNING, INCLUDING THE PRE-DISPUTE ARBITRATION CLAUSE SET FORTH IN
SECTION 8.6 AND THE CONFIDENTIALITY CLAUSE SET FORTH IN SECTION 8.11.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
INDIVIDUAL GENERAL PARTNERS:
/s/
-----------------------------------
/s/
-----------------------------------
/s/
-----------------------------------
LIMITED PARTNERS:
Each person who shall sign
a Limited Partner Signature
Page and who shall be
accepted by the Individual
General Partners to the
Partnership as a Limited
Partner.
SPECIAL ADVISORY LIMITED PARTNER:
CIBC ▇▇▇▇▇▇▇▇▇▇▇ ADVISERS, L.L.C.
By: CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.
Managing Member
By: /s/
----------------------------
Name:
Title:
-42-