Exhibit E
AGREEMENT OF LIMITED PARTNERSHIP
OF
KMT PARTNERS LP
This Agreement of Limited Partnership of KMT Partners LP (this "Agreement")
is entered into by and among ▇▇▇▇▇▇▇▇ Partners L.P., a Texas limited
partnership, as the general partner (the "General Partner"), and those persons
executing limited partner signature pages to this Agreement as the limited
partners (the "Limited Partners"). The General Partner and the Limited Partners
shall be collectively referred to as the "Partners" and individually as a
"Partner."
In consideration of the mutual covenants set forth in this Agreement and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the General Partner and the Limited Partners agree as
follows:
ARTICLE I
Formation
1.1 Agreement. The Partners hereby establish KMT Partners LP as a limited
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partnership (the "Partnership") pursuant to the Texas Revised Limited
Partnership Act, Texas Revised Civil Statutes, Article 6132a-1 (the "Act").
1.2 Filing. The General Partner shall execute and file on behalf of the
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Partners and the Partnership an appropriate Certificate of Limited Partnership
with the Secretary of State of Texas.
1.3 Office Address, Registered Office and Agent. The principal place of
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business, the principal office and the registered office of the Partnership will
be ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or at such other place as
is determined by the General Partner. The registered agent of the Partnership
will be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
ARTICLE I
Name, Business, Term and Partnership Interests
2.1 Partnership Name. The business of the Partnership shall be conducted
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under the name "KMT Partners LP".
2.2 Purposes of Partnership. The principal purposes of the Partnership
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will be (i) to acquire shares of the issued and outstanding capital stock (the
"Investment") of Microtouch Systems, Inc. (the "Company"), in an initial amount
of $2,500,000, through purchases in the open market and privately negotiated
transactions, (ii) to finance the acquisition of the Investment in a manner
determined appropriate by the General Partner, and (iii) to do all things, take
all actions, exercise all rights, cast all votes and perform all functions which
are necessary, appropriate or related to the acquisition and ownership of the
Investment.
2.3 Term. The term of the Partnership shall commence on the effective
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date of this Agreement and continue until December 31, 2019, unless earlier
dissolved and liquidated as provided in this Agreement.
2.4 Partnership Interests. The Partners' percentage interests in the
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income, gains, losses, deductions, voting rights and distributions, as may be
affected by the terms of this Agreement (the "Partnership Interests"), are as
set forth on Exhibit "A" to this Agreement.
ARTICLE III
Capital Contributions
3.1 General Partner's Capital Contribution. Upon and by the execution of
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this Agreement, the General Partner shall contribute an amount equal to 0.10% of
the aggregate capital contributed to the Partnership by the Limited Partners.
3.2 Limited Partners' Capital Contribution. Upon its execution and
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delivery of the signature pages to this Agreement, each Limited Partner shall
make a contribution of cash to the Partnership in the amount set forth opposite
its name on Exhibit "A."
No interest shall be paid by the Partnership by reason of any capital
contribution made by a Partner, whether consisting of property, services or
cash.
3.3 Possible Additional Capital Contributions. No Partner shall be
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obligated to make any capital contributions to the Partnership other than in the
amounts required in Sections 3.1 and 3.2. However, the Partnership may need
additional capital to increase the amount of its Investment to exceed the
initial amount set forth in Section 2.2. In such instances, the General Partner
shall request each Limited Partner to make its pro rata share, based upon its
Partnership Interest, of such required additional capital. The amount requested
to be contributed by a Limited Partner pursuant to this Section 3.3 must be
contributed within twenty (20) days following written notice delivered to the
Limited Partners by the General Partner. No Limited Partner will be personally
liable to make such capital contribution.
3.4 Failure to Make Additional Capital Contributions. If any Limited
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Partner (a "Failing Partner") shall fail or refuse to make timely any additional
capital contribution when requested pursuant to Section 3.3, and such failure or
refusal shall have continued for a period of ten (10) days following written
demand therefor by the General Partner, then after the expiration of the ten
(10) day grace period the General Partner, on behalf of the Partnership, may
pursue one or more of the following remedies: (i) reduce the financial
commitment of the Partnership with respect to the right being exercised; (ii)
borrow the deficiency from a third party (including a Partner or its affiliate);
(iii) sell additional Limited Partner interests in the Partnership on whatever
terms the General Partner, in its sole discretion, deems appropriate to replace
the uncontributed portion of
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additional capital desired by the Partnership; (iv) reallocate Partnership
Interests in a manner that the General Partner thinks equitably reflects the
capital contribution made by the non-Failing Partners, or (v) pursue some
combination of the foregoing.
By execution of this Agreement, each Partner expressly authorizes and
empowers the General Partner, as his or her attorney-in-fact, to effectuate the
rights of the Partnership, and to negotiate, execute and deliver any documents
necessary or appropriate to accomplish the rights of the General Partner on
behalf of the Partnership under this Section 3.4. Such appointment of the
General Partner as attorney-in-fact is an irrevocable appointment coupled with
an interest and full power and authority to deal with the Partnership Interest
in any manner contemplated herein. Each Partner by his or her execution of this
Agreement expressly acknowledges the uniqueness of the Partnership Interest, the
clear need for prompt response to all requests for additional capital
contributions, and the reasonableness and equity of the remedy selected by all
Partners in this Section 3.4.
3.5 Capital Accounts. The Partnership shall establish and maintain a
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capital account ("Capital Account") for each Partner in accordance with Section
704(b) of the Code and Treasury Regulations Section 1.704-1(b)(2)(iv).
ARTICLE IV
Income and Losses
4.1 Accounting Records. The Partnership shall keep its books and records
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using the accounting method determined appropriate by the General Partner in
accordance with accepted accounting principles. The Partnership's books and
records shall be open for inspection and copying by any Partner. The fiscal
year of the Partnership shall be the calendar year.
4.2 Allocation of Income and Loss. Items of income, gain, loss or
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deduction recognized by the Partnership in accordance with the method of
accounting and the books and records of the Partnership, shall be allocated to
and among the Partners, prior to taking into account distributions of cash flow
for the subject tax year, as set forth below:
(a) Net income and gain shall be allocated as follows:
(i) First, to the Partners with deficit Capital Account balances
pro rata in accordance with such deficit balances in an amount to each
such Partner until such Partner's deficit balance has been reduced to
zero;
(ii) Next, among the Limited Partners in the proportion of the
difference between their respective Unreturned Capital Contributions
less their respective Capital Account balances, until the credit
balance of each Limited Partner's Capital Account is equal to such
Limited Partner's Unreturned Capital Contributions;
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(iii) Next, among the Partners in such amounts as necessary to
cause their Capital Account balances, but in the case of the Limited
Partners' only their Capital Account balances in excess of their
Unreturned Capital Contributions, to be in the ratio of their Payout
Percentages; and
(iv) Thereafter, among the Partners pro rata in accordance with
their Payout Percentages.
(b) Net loss and deductions shall be allocated as follows:
(i) First, to the Partners in such amounts as necessary to
cause their Capital Account balances in excess of their Unreturned
Capital Contributions to be in the ratio of their Payout Percentages;
(ii) Next, to the Partners with Capital Account balances in
excess of their Unreturned Capital Contributions, pro rata in
accordance with, and in an amount equal to, such excess positive
balances;
(iii) Next, to the Partners with positive balances in their
Capital Accounts in the ratio of such positive balances, and in
amounts equal to such positive balances; and
(iv) Thereafter, to the Partners in accordance with their
Partnership Interests.
For purposes of this Agreement, the following terms shall have the meanings
ascribed to them below:
"Payout Percentages" shall mean 15% for the General Partner and 85%
for the Limited Partners allocated among the Limited Partners pro rata in
accordance with their Partnership Interests.
"Unreturned Capital Contributions" shall mean as to each Limited
Partner an amount equal to the excess of the aggregate capital
contributions made by a Limited Partner to the Partnership over the
aggregate distributions made to the Limited Partner from the Partnership
pursuant to Section 4.3(a).
4.3 Distributions. The General Partner shall distribute cash flow, when
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it determines it is available, to the Partners. Notwithstanding the frequency
or amounts of distributions, cash flow shall be distributed as follows:
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(a) First, to the Limited Partners pro rata in accordance with their
Unreturned Capital Contributions, in such amount and until such time as
each such Limited Partner's Unreturned Capital Contributions has been
reduced to zero; and
(b) Thereafter, to the Partners pro rata in accordance with their
Payout Percentages.
4.4 Limitations on Allocations. Notwithstanding the provisions contained
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in Sections 4.2 and 4.3 of this Agreement, should any provision conflict with
the provisions contained in Treasury Regulations Section 1.704-1(b)(iv), the
provisions of said Treasury Regulations shall apply so as to cause the
Partnership's provisions relating to allocations and distributions to be in
compliance with such Regulations.
4.5 Distributions in Kind.
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(a) Notwithstanding anything in this Agreement to the contrary, the
General Partner may, in its absolute discretion, distribute all or a
portion of the Investment, or other property, securities or assets of the
Partnership in lieu of, or in addition to, cash flow at such times and in
such amounts as determined by the General Partner in its sole discretion.
At the time of such distribution, the General Partner shall establish the
fair market value of the assets distributed in accordance with Section
4.5(d).
(b) Prior to a distribution of property (other than cash and other
than in complete liquidation of the Partnership or a Partner's Partnership
Interest), the Capital Accounts of the Partners shall be adjusted to
reflect the manner in which the unrealized income, gain, loss and deduction
inherent in such property (that has not previously been reflected in the
Capital Accounts), would be allocated among the Partners if there were a
taxable disposition of the property on the date of distribution.
(c) If the distribution of property (other than cash) is to a Partner
in complete liquidation of the Partner's interest in the Partnership or in
liquidation of the Partnership, prior to such distribution, the Capital
Accounts of all the Partners shall be adjusted to reflect the manner in
which the unrealized income, gain, loss and deduction inherent in all the
Partnership's property (that has not previously been reflected in the
Capital Accounts) would be allocated among the Partners if there were a
taxable disposition of all such property on the date of the liquidating
distribution.
(d) For purposes of determining the value of securities, those
securities which are listed on a national securities exchange shall be
valued at their closing sales price on the trading day immediately prior to
the date of distribution. If no sales occurred on such trading day, then on
the day of distribution. If no trading occurred on either day, then the
value shall be based upon the mean between the "bid" and "asked" prices on
the trading day immediately prior to the date of distribution. Securities
which are not listed on a public exchange shall
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be assigned such value as the General Partner may determine in its sole
discretion, and such value shall be final, binding and conclusive. If
necessary to assure compliance with the General Partner's fiduciary duty,
the General Partner may from time to time seek valuation assistance from
unrelated professionals.
ARTICLE V
Management
5.1 Powers and Duties. The General Partner shall have exclusive control
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and management of the Partnership and shall have all of the rights and powers of
a general partner. Specifically, the General Partner shall have the power to do
all things and perform all acts necessary and appropriate for the successful
accomplishment of the purposes outlined in Section 2.2, including, without
limitation:
(a) to acquire, own and maintain the Investment for the Partnership;
(b) to obtain any and all financing of the Partnership, whether
interim, permanent or otherwise, including loans from Partners;
(c) to sell or otherwise dispose of some or all of the Investment, or
other assets of the Partnership;
(d) to determine the manner in which the Partnership should cast its
vote with respect to its rights as an owner of the Investment, and to
effectuate such vote;
(e) to determine if and when additional capital contributions should
be requested from the Limited Partners in accordance with Section 3.3, and
the amount of such requested contributions;
(f) to determine if the Partnership should exercise, or vote in favor
of the exercise, of any registration rights, co-sale rights, preemptive
rights, buy/sell rights, rights as an owner under any governing
shareholders' agreement or operating agreement, and any other rights the
Partnership has in conjunction with the Investment, to determine the time
and manner in which such rights should be exercised, and to exercise such
rights;
(g) to establish the terms of the relationship among the Partnership,
the Company and the other shareholders of the Company;
(h) to (i) determine if the Partnership needs additional capital and
the amount of capital needed, (ii) accept contributions of capital from any
person and issue Limited Partner interests to such person in exchange for
its contribution, (iii) determine the percentage interests and rights of
such newly admitted Limited Partner, and (iv) amend this Agreement to admit
such person as a Limited Partner in the Partnership and to make such other
changes
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as necessary to reflect the agreement reached between such newly admitted
Limited Partner and the General Partner on behalf of the Partnership;
(i) to negotiate, execute and deliver one or more agreements on such
terms as deemed appropriate in the General Partner's sole discretion with
Cardinal Partners, L.P., providing for the joint pursuit of investments in
the capital stock of the Company; and
(j) to negotiate, execute and deliver any and all documents determined
appropriate or necessary by the General Partner to accomplish and
effectuate any of the rights or authorities of the General Partner on
behalf of the Partnership as provided for or contemplated in this Article V
or elsewhere in this Agreement.
5.2 Compensation of General Partner. The General Partner shall not
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receive any compensation for the services it performs for the Partnership.
However, the General Partner may receive compensation from the Company for
services which it provides to the Company. The General Partner shall be
reimbursed for actual expenditures incurred in the administration of the
Partnership's business.
5.3 Third Party Reliance. The General Partner has full, complete and
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absolute authority over the Partnership's affairs. Any person dealing with the
Partnership shall rely completely and exclusively upon the authority of the
General Partner and shall accept any document, agreement, check or other
instrument executed by the General Partner on behalf of the Partnership as
authorized under this Agreement.
5.4 Indemnification. Upon the determination as set forth in Section 11.06
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of the Act that such indemnification is permissible under Section 11.02 of the
Act, the Partnership (but not the Limited Partners) hereby indemnifies and holds
harmless any person who is or was a General Partner (and its affiliates) against
any and all losses, costs, expenses (including reasonable attorneys' fees),
penalties, taxes, fines, settlements, damages and judgments resulting from the
fact the General Partner was, is or is threatened to be named a defendant or
respondent in a legal proceeding because such party was or is a General Partner
in the Partnership, EVEN IF SUCH LOSSES, COSTS AND EXPENSES ARE ATTRIBUTABLE TO
THE GENERAL PARTNER'S NEGLIGENCE. However, this indemnification shall only be
effective if the General Partner (i) acted in good faith, (ii) reasonably
believed that in instances that the General Partner was acting in its official
capacity that its conduct was in the Partnership's best interest and in all
other instances that the General Partner's conduct was not opposed to the
Partnership's best interests, and (iii) in a criminal proceeding, had no cause
to believe its conduct was unlawful. Notwithstanding the foregoing, this
indemnification shall not be applicable to a legal proceeding in which the
General Partner is found liable for intentional misconduct, gross negligence or
fraud in the performance of the General Partner's duty to the Partnership or the
Limited Partners.
5.5 Tax Matters Partner. The General Partner is hereby designated the
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"tax matters partner" of the Partnership and is authorized and required to
represent the Partnership (at the
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Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities. The Partnership will reimburse the General Partner
for all expenses incurred by it while acting as the "tax matters partner."
ARTICLE VI
Transfer of Interests
6.1 General Prohibition. No Partner may sell, assign, transfer, encumber
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or otherwise dispose of its Partnership Interest (a "Transfer"), or any part
thereof, without the prior written consent of the General Partner.
6.2 Effect of Article. Any purported Transfer of a Partnership Interest
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consummated in violation of this Article shall be null and void and of no force
or effect. Any transferee acquiring an interest in the Partnership shall
acquire the same subject to all the terms and provisions of this Agreement.
ARTICLE VII
Dissolution and Liquidation
7.1 Dissolution. The Partnership shall dissolve upon the expiration of
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its term as set forth in Section 2.3, or if sooner upon the happening of one of
the following events: (i) any event which, in the opinion of the General
Partner, would make it in the best interest of the Partnership to be dissolved;
(ii) the bankruptcy, withdrawal, insolvency or removal of the General Partner;
or (iii) the sale, disposition or liquidation of all or substantially all of the
Investment, and the receipt of all payments with respect thereto.
7.2 Winding Up. Upon dissolution, the General Partner shall proceed
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diligently to wind up the business and affairs of the Partnership, allocate
income and loss among the Partners and distribute its properties and assets, if
any. Distributions to Partners upon the liquidation of the Partnership shall be
made pro rata in accordance with the Partners' positive capital account balances
after all allocations of income, gain and loss. The manner in which the
Partnership is liquidated shall be within the sole and absolute discretion of
the General Partner.
7.3 Deficit Capital Account Balances. Upon liquidation of the
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Partnership, no Partner with a deficit balance in its capital account shall have
any obligation to restore such deficit balance, or to make any contribution to
the capital of the Partnership.
ARTICLE VII
Miscellaneous
8.1 Miscellaneous This Agreement (i) may be amended or restated by an
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instrument executed by the General Partner and Limited Partners owning more than
seventy-five percent (75%) in interest (not number) of the Limited Partner
Partnership Interests; (ii) may be executed in multiple
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counterparts, each of which shall constitute an original and all of which shall
constitute one and the same agreement; (iii) shall be governed by and construed
in accordance with the laws of the State of Texas, and venue of all disputes
shall be in Dallas County, Texas; and (iv) shall be binding upon and shall inure
to the benefit of the Partners and their respective beneficiaries, legal
representatives, successors and assigns.
8.2 NOTICE OF INDEMNIFICATION. THE PARTIES TO THIS AGREEMENT HEREBY
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ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT CONTAINS CERTAIN INDEMNIFICATION
PROVISIONS PURSUANT TO SECTION 5.4.
IN WITNESS WHEREOF, this Agreement was executed the 20th day of August,
1999, effective for all purposes as of the date the certificate of limited
partnership is filed with the Secretary of State of Texas.
GENERAL PARTNER:
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▇▇▇▇▇▇▇▇ PARTNERS L.P.
a Texas limited partnership
By: ▇▇▇▇▇▇▇▇ Management L.P.
Its: General Partner
By: ▇▇▇▇▇▇▇▇ Capital L.L.C.
Its: General Partner:
By:_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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KMT PARTNERS LP
Limited Partner Signature Page
This Limited Partner Signature Page shall be attached to, and made a part
of, the Agreement of Limited Partnership of KMT Partners LP. By execution
hereof, the undersigned accepts and agrees to be bound by all of the terms and
provisions of such partnership agreement.
Amount subscribed for: $_________________________
Name of Limited Partner (Print or Type Please):_________________________________
Trustee, General Partner or other Authorized Signatory if any:__________________
Position, if applicable:__________________
Signature:________________________________
Date of execution:________________________
Additional Signature (if required) Signature:________________________________
Position, if applicable:__________________
Date of execution:________________________
Address for Notice:________________________________________
City:_________________ State:____________ Zip:___________
Phone #:____________ Fax #:____________ E-Mail address:_____________________
Attached to and made a part of this Limited Partner Signature Page are
statements affirming Subscriber Limited Partner's status as an Accredited
Investor:
THE SUBSCRIBER IS AN "ACCREDITED INVESTOR," AS SUCH TERM IS DEFINED IN RULE
501(a) OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), BY REASON OF QUALIFYING UNDER ONE OR MORE OF THE TESTS
CHECKED BELOW: (CHECK AND INITIAL THE SPACE OR SPACES BELOW THAT APPLY)
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---------- (a) Any director, executive officer or general partner of the
Initial if Partnership, or any director, executive officer or general
Applicable partner of a general partner of the Partnership;
---------- (b) Any natural person whose individual net worth, or joint net
Initial if worth with that person's spouse, at the time of his or her
Applicable purchase exceeds $1,000,000;
---------- (c) any private business development company as defined in
Initial if Section 202(a)(22) of the Investment Advisors Act of 1940;
Applicable
---------- (d) Any natural person who had an individual income in excess of
Initial if $200,000 in each of the two most recent years or joint
Applicable income with that person's spouse $200,000 in excess of
$300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year;
---------- (e) Any organization described in Section 501(c)(3) of the
Initial if Internal Revenue Code, corporation, Massachusetts or similar
Applicable business trust, or partnership not formed for the specific
purpose of acquiring the Units, with total assets in excess of
$5,000,000;
---------- (f) Any trust, with total assets in excess of $5,000,000, not
Initial if formed for the specific purpose of acquiring the Units, whose
Applicable purchase is directed by a sophisticated person as described in
Rule 506(b) of Regulation D of the Securities Act;
---------- (g) Any entity in which all of the equity owners are Accredited
Initial if Investors;
Applicable
---------- (h) Any employee benefit plan within the meaning of the Employee
Initial if Retirement Income Security Act of 1974, if the investment
Applicable decision is made by a plan fiduciary (as defined in Section
3(21) of the Act) which is either a bank, savings and loan
association, insurance company or registered investment
advisor, or if such employee benefit plan has total assets of
more than $5,000,000, or if such employee benefit plan is a
self-directed plan and the investment decisions are made
solely by persons that are accredited investors within the
meaning set forth in paragraphs (a)-(g) above.
EXHIBIT "A"
Partners; Capital Contributions: Percentage Interests
Partner Capital Contributions Percentage Interest
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