AGREEMENT OF
LIMITED PARTNERSHIP
OF
TREFOIL ISRAEL FSL, L.P.
This Agreement of Limited Partnership of Trefoil Israel FSL, L.P. (the
"Partnership"), is entered into as of December 17, 1999, by and between
Trefoil Israel FSL, Inc., a Delaware corporation ("Trefoil Israel FSL"), as
general partner (the "General Partner"), and the undersigned limited
partners, including any Persons hereafter admitted, pursuant to the terms
hereof, as limited partners of the Partnership.
ARTICLE 1
DEFINITIONS, ETC.
1.1 Definitions.
As used herein, the following terms shall have the meanings set forth
below:
"Acquisition Expenses" means all costs, fees, expenses and
commissions incurred by the Partnership, the General Partner, SCA, Shamrock
or any of their Affiliates in connection with the preparation for, or the
carrying out, completion, termination, or sale or liquidation (in whole or
in part) of, the investment in the Subject Companies, including, but not
limited to, legal, accounting, investment banking, financing, finders' and
other fees and expenses; provided, however, that such amounts shall not
include any costs, fees, expenses and commissions incurred by the
Partnership, the General Partner, the Limited Partners, SCA or any of their
Affiliates which have been reimbursed to such Person by a Subject Company;
"Act" means the Delaware Revised Uniform Limited Partnership Act
as in effect on the date hereof and as it may be amended hereafter from
time to time;
"Affiliate" means, with respect to any Person, a Person, directly
or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such Person; the term
"control," as used herein, means, with respect to a Person that is a
corporation, the right to elect a majority of its board of directors and,
with respect to a Person that is not a corporation, the possession,
directly or indirectly, of the power to direct or cause the direction of
the management or policies of the Person;
"Agreement" means this Agreement of Limited Partnership of
Trefoil Israel FSL, L.P. as amended from time to time as provided herein;
"Contribution Agreement" means the Contribution Agreement, dated
as of December __, 1999, intended to be entered into between Shamrock and
the Partnership;
"Auditor" has the meaning given it in Section 9.2(a);
"Available Cash" means Cash which is available in the accounts of
the Partnership and not reserved to make any payments due and owing by the
Partnership or otherwise reserved by the General Partner, in its reasonable
discretion, for expenses, operations, or contingencies of the Partnership;
"Base Rate" means, on any date, the rate of interest in effect
for such date charged by Bank of America, N.A. as its "reference
rate" or "prime rate";
"Book Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows;
(i) any adjustments to the adjusted basis of any asset of the
Partnership pursuant to Section 734 or 743 of the Code shall be taken into
account in determining such asset's Book Value in a manner consistent with
Treas. ▇▇▇.▇▇. 1.704-1(b)(2)(iv)(m); and
(ii) if the Book Value of an asset has been determined pursuant
to paragraph (i) above, such Book Value shall thereafter be adjusted in the
same manner as would the asset's adjusted basis for federal income tax
purposes, except that depreciation deductions shall be computed based on
the asset's Book Value as so determined, and not on the asset's adjusted
tax basis;
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to
close;
"Capital Account" means, with respect to any Partner, the capital
account of such Partner maintained pursuant to Section 7.1, including all
additions and subtractions thereto pursuant to this Agreement;
"Capital Commitment Balance" of a Partner shall mean such
Partner's Total Capital Commitment, less the Contributions made by the
Partner;
"Capital Contributions" means the contributions by the Partners
to the Partnership made pursuant to Section 6.1;
"Capital Distributions" means the amount of Available Cash or
property (valued at Fair Market Value) distributed to the Partners pursuant
to Section 7.4.1(a);
"Cash" when capitalized means money and cash equivalents;
"Code" means the Internal Revenue Code of 1986, as amended;
"Contributions" means the contributions to the capital of the
Partnership by the Partners made pursuant to Section 6.1(b)(i);
"Delinquent Partner" has the meaning given it in Section
6.1(b)(iii);
"Designated Account" means (i) marketable direct obligations
issued or unconditionally guaranteed by the government of the United States
of America or issued by any agency thereof and backed by the full faith and
credit of the United States of America, in each case maturing within one
year from the date of acquisition thereof; (ii) marketable direct
obligations issued by any State of the United States of America or any
political subdivision of any such State or any public instrumentality
thereof maturing within one year from the date of acquisition thereof and,
at the time of acquisition, having not less than the second highest rating
obtainable from either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from
the date of the creation thereof and, at the time of acquisition, having
not less than the second highest rating obtainable from either Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc; (iv) certificates of
deposit, repurchase agreements, or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any State thereof or the
District of Columbia which has combined capital and surplus of not less
than $1,000,000,000; and (v) money market funds organized under the laws of
the Unites States of America or any State thereof that invest not less than
75% of their funds in any of the Designated Accounts described in clauses
(i), (ii), (iii), and (iv) above;
"Exchange Act" means the Securities Exchange Act of 1934, as
amended;
"Event of Withdrawal" has the meaning given it in Section 8.1(b);
"Fair Market Value" of an asset means the fair market value of
such asset as determined by the General Partner or liquidating trustee, as
the case may be, in its reasonable discretion; provided, however, in
connection with a distribution of property to the Limited Partners pursuant
to Section 7.4.1, 7.4.3 or 8.3, the fair market value of property which is
a security that is not publicly traded shall be the appraised value thereof
as determined by an independent investment bank or appraisal firm selected
by the General Partner;
"Fiscal Period" shall mean the period beginning on the date
hereof or the first day after the end of any Fiscal Period and ending on
the last day of each calendar quarter;
"Fiscal Year" means each of the taxable years of the Partnership,
as described in Section 9.7;
"General Partner" means Trefoil Israel FSL, Inc. or any new
general partner elected pursuant to the terms of this Agreement;
"Hypothetical Capital Account Distribution" has the meaning given
it in Section 7.2(a);
"Hypothetical Section 7.4 Distribution" has the meaning given it
in Section 7.2(a);
"Indemnified Person" or "Indemnified Persons" have the meanings
given them in Section 4.7(a);
"Initial Contribution Date" means December 23, 1999 or such later
date designated in a written notice delivered to the Limited Partners in
accordance with Section 11.13;
"Interest Rate" means the lesser of (i) 3% in excess of the Base
Rate from time to time in effect, and (ii) the maximum non-usurious rate
permitted by applicable law;
"Invested Capital" means the excess of Contributions over Capital
Distributions;
"Investment Act" has the meaning given it in Section 10.1(j);
"Limited Partners" means each Person named as a limited partner
on the Schedule of Partners, and each Person admitted as a Substituted
Limited Partner pursuant to Section 2.4(c) and named as a limited partner
on the Schedule of Partners;
"Majority in Interest" means, in respect of any consent or other
action of the Limited Partners pursuant to this Agreement, Limited Partners
(other than Delinquent Partners) whose Total Capital Commitments represent
at least 50% of the Total Capital Commitments of all the Limited Partners
(other than Delinquent Partners);
"Management Agreement" means the Management Agreement, dated as
of December 17, 1999, between the Partnership and SCA, as the same may be
amended pursuant to the terms hereof;
"Minimum Fee" means the fee payable to SCA pursuant to Section 3
of the Management Agreement;
"Minimum Fee Contribution" has the meaning given it in Section
6.1(b)(ii);
"Minimum Fee Distributions" means the amount of Available Cash or
property (valued at Fair Market Value) distributed to the Partners pursuant
to Section 7.4.1(b);
"Minimum Fee Payment Date" means December 31, 1999 and each
January 5 and July 5 thereafter (beginning with January 5, 2000) and prior
to the Partnership Dissolution Date;
"Net Profit" and "Net Loss" mean, respectively, for any period
the taxable income and taxable loss of the Partnership for such period as
determined for federal income tax purposes, provided that for purposes of
determining Net Profit and Net Loss and each item thereof (and not for
income tax purposes) (i) there shall be taken into account any tax exempt
income of the Partnership, (ii) any expenditures of the Partnership which
are described in Section 705(a)(2)(B) of the Code or which are deemed to be
described in Section 705(a)(2)(B) of the Code pursuant to Treasury
Regulations under Section 704(b) of the Code shall be treated as deductible
expenses, (iii) if any Partnership asset has a Book Value which differs
from its adjusted tax basis as determined for federal income tax purposes,
income, gain, loss and deduction with respect to such asset shall be
computed based upon the asset's Book Value rather than its adjusted tax
basis and (iv) items of gross income or deduction allocated pursuant to
Section 7.3 shall be excluded from the computation of Net Profit and Net
Loss;
"Partners" means the General Partner and the Limited Partners;
"Partners' 7% Return Amount" means, at the date of determination,
the amount, if any, that would have to be distributed to the Partners at
such time pursuant to Section 7.4.1(c) (after taking into account any
amounts concurrently distributable to the Partners pursuant to Section
7.4.1(a) or (b)) so as to provide the Partners with a Realized Return of at
least 7% per annum;
"Partnership" means the limited partnership created under this
Agreement;
"Partnership Dissolution Date" has the meaning given it in
Section 8.1;
"Permitted Transferee" has the meaning given it in Section
2.4(a);
"Person" means an individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated association
or other entity or association;
"Pro Rata" means in proportion to the Total Capital Commitments
of all of the Partners;
"Qualified Income Offset Amount" means, for any Partner, the
excess, if any, of (i) the negative balance a Partner has in its Capital
Account after taking into account any adjustments, allocations or
distributions described in Treas. Reg. ss. 1.704-1(b)(2)(ii)(d)(4), (5) or
(6) over (ii) the maximum amount of any negative balance in its Capital
Account such Partner may be obligated (or deemed obligated under the
Treasury Regulations) to contribute to the Partnership upon liquidation;
"Realized Return" means, with respect to the Partners, at any
specified time, the internal rate of return, determined on the basis of
annual compounding from the time of contribution, realized by the Partners
(viewed collectively) taking into account: (i) all Contributions and
Minimum Fee Contributions made by the Partners to the Partnership, (ii) all
distributions made (or deemed made pursuant to Section 7.4.4) to the
Partners pursuant to Section 7.4.1(a), (b) and (c) on or before such time,
and (iii) all distributions of property at its Fair Market Value;
"SCA" means Shamrock Capital Advisors, Inc., a Delaware
corporation;
"Schedule of Partners" means Schedule A attached hereto as the
same may be amended from time to time to reflect the addition of Additional
Limited Partners, Substituted Limited Partners and/or changes in Total
Capital Commitments;
"Securities" means the securities of the Subject Companies, all
warrants, options, convertible securities and other interests which may be
exercised in respect of, converted into or otherwise relate to, a Subject
Company's capital stock or other equity interests and any other securities,
including debt securities, of a Subject Company;
"Securities Act" means the Securities Act of 1933, as amended;
"Shamrock" means Shamrock Holdings, Inc., a Delaware corporation;
"Subject Companies" means the Persons listed on Schedule B hereto
as the same may be amended from time to time to include any other Persons
any of whose Securities are owned by the Partnership, including various
publicly traded and private companies of which Formula Systems (1985) Ltd.,
an Israeli public company, owns at least 25% of the equity securities;
"Substituted Limited Partner" has the meaning given it in Section
2.4(c);
"Total Capital Commitment" of a Partner shall mean the amount of
capital that such Partner has committed to contribute to the Partnership as
set forth in Schedule A hereto under the caption "Total Capital
Commitment";
"Transfer" has the meaning given it in Section 2.4(a);
"Two-Thirds in Interest" means, in respect of any consent or
other action of the Limited Partners pursuant to this Agreement, Limited
Partners (other than Delinquent Partners) whose Total Capital Commitments
represent at least 66 and 2/3 percent of the Total Capital Commitments of
all the Limited Partners (other than Delinquent Partners);
"Unrecovered Minimum Fee Contributions" means the excess of (i)
Minimum Fee Contributions over (ii) Minimum Fee Distributions;
"Void Transfer" has the meaning given it in Section 2.4(a).
1.2 Accounting Terms and Determinations.
All accounting terms used herein and not otherwise defined shall have
the meanings accorded to them in accordance with generally accepted
accounting principles and, except as expressly provided herein, all
accounting determinations shall be made in accordance with United States
generally accepted accounting principles, consistently applied.
ARTICLE 2
GENERAL PROVISIONS
2.1 Formation of Limited Partnership.
The Partners hereby agree to form a limited partnership, pursuant to
and in accordance with the provisions of the Act. Except as provided to the
contrary in this Agreement, the rights and obligations of the Partners
shall be governed by the provisions of the Act. The General Partner shall
promptly file in the office of the Secretary of State of the State of
Delaware a certificate of limited partnership conforming to the Act.
2.2 Name.
The name of the Partnership shall be Trefoil Israel FSL, L.P. or such
other name as the General Partner may hereafter designate upon (i) sending
notice thereof to the Limited Partners and (ii) causing an amendment to the
certificate of limited partnership to be properly filed in the office of
the Secretary of State of the State of Delaware; provided, however, that
such other name shall not include the name (or any unique part thereof) of
a Limited Partner or any of its Affiliates without the prior consent of
such Limited Partner.
2.3 Principal Place of Business.
The principal place of business of the Partnership shall be at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ or at such other place as the General
Partner may from time to time determine. The Partnership may establish
additional offices at such other places within or outside the State of
California as the General Partner may from time to time determine.
2.4 Transfer of Partnership Interests.
(a) Conditions for Transfer. No Limited Partner shall, directly or
indirectly, sell, assign, transfer, exchange, mortgage, pledge, dispose of,
hypothecate, grant a security interest in, encumber, or permit or suffer
any encumbrance of (except by negative pledge), all or any portion of its
interest in the Partnership (the commission or occurrence of any such act
referred to as a "Transfer"), without the prior written consent of the
General Partner, which consent may be withheld in the absolute discretion
of the General Partner; provided, however, that no such consent of the
General Partner shall be required for Transfers (i) occurring pursuant to
testamentary instrument or intestate succession or as otherwise set forth
in Section 2.5, (ii) by gift to a spouse, parent, child or grandchild or a
trust for the benefit of any one or more of the foregoing or (iii) to an
Affiliate of, or partner in, such Limited Partner; provided that (x) in
every case such transferee agrees with the Partnership not to make any
subsequent Transfer except with the prior written consent of the General
Partner or to Persons described above, (y) if any Limited Partner shall
make a Transfer to an Affiliate of, or a partner in, such Limited Partner,
such transferor shall guaranty, by instrument reasonably satisfactory to
the General Partner, the making of Capital Contributions by the transferee
and (z) such Transfer would not subject the Partnership to registration
under the Investment Company Act of 1940, as amended. Any Person receiving
a Limited Partner's interest pursuant to (i), (ii) or (iii) above or with
the prior written consent of the General Partner (including, without
limitation, pursuant to Section 6.1(b)(iii)) shall be referred to as a
"Permitted Transferee." Any purported Transfer of a Limited Partner's
interest in the Partnership made other than in accordance with this
Agreement (a "Void Transfer") shall be void and neither the Partnership nor
the General Partner shall be required to recognize any equitable or other
claims to such interest on the part of a Transferee in connection with a
Void Transfer. Any amounts otherwise distributable to a Limited Partner in
respect of a direct or indirect interest in the Partnership that has been
transferred in violation of this Section 2.4 may be withheld until the Void
Transfer has been rescinded, whereupon the amount withheld shall be
distributed without interest. Before the completion of, and as a prior
condition to, any Transfer pursuant to this Section 2.4, if requested by
the General Partner, the transferor shall deliver to the Partnership a
written opinion of counsel, satisfactory in form and substance to the
General Partner, that an exemption from registration under the Securities
Act is available.
(b) Effect of Transfer. A Permitted Transferee shall not become a
Limited Partner as a result of a Transfer, and shall not have any rights
herein conferred upon a Limited Partner, except that upon notification of
the General Partner by the person acquiring such interest, such person
shall be entitled to receive allocations and distributions to which such
Limited Partner would have been entitled under the terms of this Agreement;
provided, however, that any such person may become a Limited Partner upon
compliance with all of the procedures set forth in Section 2.4(c).
(c) Requirements for Substitution. A Permitted Transferee of an
interest in the Partnership of a Limited Partner shall have the right to
become a substituted Limited Partner (a "Substituted Limited Partner") in
place of such Limited Partner with respect to such interest only if all the
following conditions are satisfied:
(i) a duly executed and acknowledged written instrument of
transfer approved by the General Partner has been filed with the
Partnership setting forth the intention of the transferring Limited Partner
that the Permitted Transferee become a Substituted Limited Partner in its
place;
(ii) the transferring Limited Partner and Permitted Transferee
execute, acknowledge and deliver such other instruments as the General
Partner may reasonably deem necessary or desirable to effect such
substitution, including the written acceptance and adoption by the
Permitted Transferee of the provisions of this Agreement, and the
execution, acknowledgment and delivery by the Permitted Transferee of a
power of attorney containing the powers provided for in Section 11.1
hereof;
(iii) the transferring Limited Partner shall have guaranteed the
obligations of the Permitted Transferee hereunder;
(iv) the written consent of the General Partner to such
substitution shall be obtained, which consent may be withheld in the
absolute discretion of the General Partner (regardless of whether the
withholding of such consent is arbitrary and unreasonable); and
(v) the Partnership shall have been reimbursed for all reasonable
expenses, including attorney's fees, incurred by the Partnership in
connection with such Transfer and substitution.
Except to the extent required by the General Partner pursuant to this
Section 2.4 or the Act, the transferring Limited Partner shall be relieved
of its obligations to make further Capital Contributions to the extent of
such transfer.
2.5 Effect of Bankruptcy, Death, Incompetency or Withdrawal of a
Limited Partner.
The dissolution, liquidation, bankruptcy, death, incompetency,
resignation or withdrawal of any Limited Partner shall not cause the
termination or dissolution of the Partnership. Upon the occurrence of any
such event that is not prohibited by Section 5.6, the legal representative
of the Limited Partner shall be deemed to be the assignee of the Limited
Partner's interest in the Partnership and, if the terms and conditions set
forth in Section 2.4(c) hereof are satisfied, may become a Substituted
Limited Partner.
2.6 Both General and Limited Partner.
A Partner may at the same time be both a General Partner and Limited
Partner, in which event its rights and obligations in each such capacity
shall be determined separately in accordance with the provisions hereof.
2.7 Delaware Office; Agent for Service of Process.
The address of the Partnership's registered office in the State of
Delaware shall be c/o Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the name of the registered agent for
service of process on the Partnership in the State of Delaware shall be
Corporation Service Company.
ARTICLE 3
OBJECTIVES, PURPOSES AND POWERS
3.1 Purposes and Powers.
(a) The purpose of the Partnership is to hold, purchase, acquire, sell
or otherwise engage in transactions involving Securities.
(b) the Partnership is empowered
(i) to, directly or indirectly, purchase, hold, exchange, sell,
distribute, transfer, mortgage, pledge, hypothecate, deal in or otherwise
effect any and all transactions of any kind, character or description
whatsoever in or with respect to the Securities, and to do any and all
things which may be useful in connection with the foregoing activities or
incidental to the conduct of such activities;
(ii) to incur indebtedness for borrowed money; to issue
promissory notes, drafts, bills of exchange, warrants, bonds, debentures,
and any other kinds of negotiable and non-negotiable instruments and
evidences of indebtedness, whether or not in connection with borrowing
money, and to secure the payment thereof (and of the interest thereon) by
the creation of any interest in the Securities or any of the property or
rights of the Partnership, or in any property owned by others when the
Partnership has the right so to do, whether owned by or subject to such
right of the Partnership at the time such indebtedness is incurred or
thereafter;
(iii) to purchase, borrow, acquire, hold, exchange, sell,
distribute, assign, transfer, lend, mortgage, pledge, hypothecate, convert,
redeem, escrow, or reissue instruments evidencing its indebtedness incurred
in connection with the conduct of its business;
(iv) to invest Partnership funds, on a temporary basis pending
(x) investment in a Subject Company, (y) distribution to the Partners or
(z) payment of costs, expenses, liabilities or other obligations or
contingencies of the Partnership, in Designated Accounts, or in deposit or
loan accounts with Bank Hapoalim B.M., provided, however, the General
Partner shall not cause the Partnership to invest such funds in currencies
other than U.S. Dollars except as necessary (but not to exceed 10 Business
Days) to convert to or from a foreign currency in connection therewith;
(v) to have and maintain one or more offices within or without
the State of California, in connection therewith, to rent, lease or
purchase office space, facilities and equipment, to engage and pay
consultants and advisors and to do such other acts and things and incur
such other expenses as may be necessary or advisable in connection with the
maintenance of such office or offices or the conduct of the Partnership;
(vi) to open, maintain and close bank accounts and to draw checks
and other orders for the payment of money;
(vii) to form Persons, including partnerships and corporations,
and to enter into, make and perform all such contracts, agreements and
other undertakings, including indemnity agreements, as may be necessary or
advisable or incident to the foregoing or the carrying out of the purposes
of the Partnership;
(viii) to enter into the Management Agreement and the
Contribution Agreement; and
(ix) to take such other actions as may be necessary or advisable
or incident to the foregoing or the carrying out of the purpose of the
Partnership (including, without limitation, the commencement, joining in,
maintenance and defense of any litigation or administrative proceeding, the
retention of agents, independent contractors, legal counsel, accountants,
brokers and investment bankers, and the preparation and filing of
Partnership tax returns) and to do every other act or thing incident
thereto or connected therewith.
Without limiting the foregoing, the Partnership may carry out its
objectives and accomplish its purposes as principal, whether by or through
trustees or agents, alone or with associates, or as a member of or as a
participant in any firm, partnership, joint venture, association, trust,
syndicate or other entity. Although the Partnership may engage in any or
all of the above activities, the Partnership need not engage in any one or
more of them.
ARTICLE 4
GENERAL PARTNER; MANAGEMENT; ETC.
4.1 General Partner.
The General Partner is Trefoil Israel FSL or any additional,
substitute, replacement or successor general partner of the Partnership
admitted as such in accordance with this Agreement in its capacity as
general partner of the Partnership.
4.2 Exclusive Control.
Subject to the terms and provisions of this Agreement and the Act, the
management, operation and policies of the Partnership and the authority to
take all action and make all decisions regarding the business of the
Partnership shall be vested fully and exclusively in the General Partner
who shall have all rights and powers generally conferred by law upon
general partners or necessary or advisable and consistent herewith.
4.3 Other Businesses of Partners.
Until the Partnership Dissolution Date, the General Partner shall
engage in no business other than serving as the general partner of the
Partnership and taking such actions that are reasonably incident thereto.
The General Partner shall devote such time to the Partnership and its
purposes and objectives as shall be necessary in its reasonable judgment to
conduct and manage the Partnership's affairs in an efficient manner after
taking into account the services provided to the Partnership under the
Management Agreement. Except as otherwise specifically set forth herein or
in the Management Agreement, nothing contained in this Agreement shall be
deemed to preclude any Partner or any Affiliate of any Partner or employee
of any Partner from engaging in or pursuing, directly or indirectly,
independently or with others, any interest in other business ventures of
every kind, nature or description, including those which compete with a
Subject Company, and neither the Partnership nor any Partner shall be
entitled to have any interest whatsoever in any such business venture.
4.4 Powers.
The General Partner is hereby authorized and empowered, on behalf and
in the name of the Partnership, to carry out and implement, directly or
through such agents as the General Partner may appoint, including, but not
limited to, SCA, any and all of the purposes and powers of the Partnership
set forth in Article 3 hereof, and, without limiting the generality of the
foregoing:
(a) to do such other acts (including elections under Section 754 of
the Code and any other Code provision or regulation thereunder) as the
General Partner may deem necessary or advisable, or as may be incident to
or necessary for the conduct of the business of the Partnership;
(b) to employ and dismiss from employment any and all employees,
agents, or independent contractors;
(c) to consult with legal counsel, accountants, brokers, investment
bankers, and other experts selected by the General Partner or SCA on behalf
and at the expense of the Partnership; and
(d) to execute, acknowledge and deliver any and all instruments to
effectuate any and all of the foregoing.
4.5 Transactions with Affiliates; Management Agreement.
The General Partner may not engage in any transaction with its
Affiliates or Shamrock and any of its Affiliates in connection with the
operation or management of the Partnership or the carrying out of its
objects or purposes on any basis less favorable to the Partnership than
would be obtained from an unaffiliated Person. Concurrently with the
execution of this Agreement, the Partnership shall enter into the
Management Agreement. Without the consent of Two-Thirds in Interest, the
Partnership may not amend the Management Agreement.
4.6 Exculpation of General Partner.
Neither the General Partner nor any Affiliate of the General Partner
or any employee thereof shall have any liability to the Partnership or the
Limited Partners (i) for any mistake in judgment or (ii) for any act or
failure to act pursuant to this Agreement or the Management Agreement,
except where such mistake in judgment, act or failure to act constitutes
gross negligence, fraud, willful violation of law, bad faith or willful
misconduct. The General Partner shall be entitled to rely upon the advice
of legal counsel, accountants, and other experts (including financial
advice of investment bankers), provided the General Partner believes such
professionals and experts are competent, and any act of or failure to act
by the General Partner in good faith reliance on such advice shall in no
event subject the General Partner, its Affiliates or any of their
respective employees to liability to the Partnership or any Partner.
4.7 Indemnification and Contribution.
(a) The Partnership shall indemnify, defend and hold harmless each
Partner, its Affiliates, and their respective directors, officers,
employees, or agents (severally, the "Indemnified Person," and
collectively, the "Indemnified Persons"), from and against any loss,
damage, liability, cost or expense (including reasonable fees and expenses
of counsel selected by the Indemnified Person) (except as otherwise
specifically provided herein or in the Management Agreement) to which the
Indemnified Person may become subject arising out of or in connection with
(i) the transactions contemplated by this Agreement, including any tender
offer, and any other actions taken by the Partnership in connection with
the Securities of a Subject Company, but solely as a result of an
Indemnified Person (or an Affiliate thereof) being a Partner or (ii) the
business and operation of the Partnership (subject to the Management
Agreement), to the fullest extent permitted by law, except that the
Partnership shall not indemnify any Indemnified Person for any loss,
damage, liability, cost or expense (x) arising from such Indemnified
Person's gross negligence, fraud, willful violation of law, bad faith,
willful misconduct, breach of this Agreement or breach of the
representations or warranties of the respective Partner contained herein,
(y) as to which indemnification is barred under the federal securities law,
the Act, or other applicable laws, or (z) as to its share as Partner in any
losses or expenses of the Partnership, including the indemnification
provided for in this Section. Such counsel fees and expenses shall be paid
by the Partnership as they are incurred upon receipt, in each case, of an
undertaking by or on behalf of the Indemnified Person to repay such amounts
if it is ultimately determined that such Indemnified Person is not entitled
to indemnification with respect thereto.
(b) If the indemnity provided for in Section 4.7(a) and to which an
Indemnified Person is otherwise entitled pursuant to such Section is
unavailable to such Indemnified Person in respect of any losses, damages,
liabilities, costs or expenses referred to therein, then the Partnership,
in lieu of indemnifying such Indemnified Person, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such
losses, damages, liabilities, costs or expenses in the proportion as (i)
the aggregate of the Capital Accounts exclusive of the Capital Account of
such Indemnified Person bears to (ii) the aggregate of all Capital Accounts
of the Partnership (including such respective Indemnified Person's or
Partner's Capital Account).
4.8 Authority.
(a) To the extent that the General Partner is authorized to act for
the Partnership in accordance with this Agreement, the General Partner
shall, either directly or through such officers, partners, employees or
agents of the Partnership or the General Partner as the General Partner
shall appoint, be authorized, with its signature alone, to bind the
Partnership under, and to execute and deliver on behalf of the Partnership,
such documents and instruments as may be necessary and appropriate to carry
out the decisions made by the General Partner.
(b) In dealing with the General Partner, no Person shall be required
to inquire into its authority to bind the Partnership.
4.9 Expenses.
All costs and expenses payable to third parties incurred in connection
with the organization and operation of the business of the Partnership,
including, but not limited to, Acquisition Expenses, the Minimum Fee
payable under the Management Agreement, and fees and expenses incurred
prior to the date hereof by the General Partner, SCA, Shamrock, or any of
their respective Affiliates relating to the organization of the Partnership
or otherwise in furtherance of its purposes, shall be borne by the
Partnership and, to the extent that any such expenses have been paid by the
General Partner, SCA, Shamrock or any of their respective Affiliates, such
person shall be entitled to reimbursement thereof.
4.10 Management Fees.
Pursuant to the Management Agreement, the General Partner on behalf of
the Partnership will retain SCA to provide management services to the
Partnership. The Management Agreement provides, among other things, for the
payment to SCA of the Minimum Fee, payable semi-annually in advance on each
Minimum Fee Payment Date.
4.11 Liability of the General Partner.
Except as provided in Section 4.6, the General Partner shall not be
liable for the debts and obligations of the Partnership except solely to
the extent required by applicable law; provided, however, that all such
debts and obligations for which the General Partner may be liable (except
as provided in Section 4.6) shall be paid or discharged first with the
property of the Partnership (including insurance proceeds) before the
General Partner shall be obligated to pay or discharge any such debt or
obligation with its assets.
ARTICLE 5
LIMITED PARTNERS
5.1 Limited Partners.
The Limited Partners are the persons listed as such in the Schedule of
Partners. Their addresses for receipt of notices are as set forth under
their names in such Schedule.
5.2 No Right to Manage.
Neither any Limited Partner nor the legal representatives of any
Limited Partner, including, but not limited to, representatives of Limited
Partners that have become bankrupt or have been liquidated or dissolved,
shall have any right to take part in the management of the business or
affairs of the Partnership or any right or authority to act for or bind the
Partnership, except that the Limited Partners shall have the rights and
powers granted hereunder and shall also have the rights and powers granted
to Limited Partners under the Act.
5.3 Liability of Limited Partners.
Subject to the provisions of the Act, no Limited Partner shall be
liable to creditors of the Partnership for the repayment, satisfaction and
discharge of any debts, liabilities and obligations of the Partnership.
5.4 Form of Distribution.
Except as contemplated in this Agreement, no Limited Partner shall
have the right to demand or receive (a) property, other than Cash, or (b)
priority over any other Limited Partner, in return of its capital or in
respect of any other distribution.
5.5 Action Requiring Consent of Certain Limited Partners.
Notwithstanding anything to the contrary in this Agreement, the
consent of the General Partner and a Majority in Interest shall be
necessary to:
(a) permit the General Partner or the Partnership, prior to the
Partnership Dissolution Date, to adopt a voluntary plan of liquidation;
(b) permit the General Partner to transfer its interest or withdraw as
the General Partner in the Partnership;
(c) admit any Person as a General Partner of the Partnership;
(d) permit SCA or the Partnership to assign its interest in the
Management Agreement;
(e) permit the merger or consolidation of the Partnership with any
Person; or
(f) permit the General Partner, prior to the Partnership Dissolution
Date, to engage in any activities other than acting as General Partner
and/or a Limited Partner and other actions incidental thereto.
5.6 Withdrawal of Limited Partners.
Without the prior written consent of the General Partner, the granting
or denial of which shall be in the sole discretion of the General Partner,
no Limited Partner shall resign or withdraw from the Partnership prior to
dissolution of the Partnership pursuant to Section 8.1 (except pursuant to
dissolution, liquidation, bankruptcy, death or incompetency as set forth
under Section 2.5). During the term of the Partnership, no Partner shall be
entitled to withdraw any amount from his Capital Account except as provided
in Sections 7.4 and 8.3.
ARTICLE 6
CAPITAL CONTRIBUTIONS
6.1 Capital Contributions.
The Partners have agreed to make contributions to the capital of the
Partnership as follows:
(a) All Capital Contributions shall be made in cash.
(b) (i) The General Partner may at any time and from time to time
prior to the Partnership Dissolution Date, (x) on the Initial Contribution
Date, the Limited Partner shall make contributions pursuant to the
Contribution Agreement which Contribution has fair market value of $
7,514,651.00 and the General Partner shall contribute the amount set forth
opposite such Partner's name under the heading "Initial Capital
Contribution," and (y) thereafter upon notice given at least five Business
Days prior thereto by telex or telecopy, require each Limited Partner to
make contributions to the capital of the Partnership in an amount not to
exceed such Partner's Capital Commitment Balance. All Contributions, other
than the Initial Capital Contribution from the Limited Partner, shall be
made by wire transfer of federal funds to the account of the Partnership
(which account shall be set forth in the notice). Contributions shall be
made Pro Rata by the Partners. Concurrently with the funding of
Contributions by the Limited Partners pursuant to this clause (i), the
General Partner shall make additional contributions to the capital of the
Partnership in an amount so that the aggregate of all Contributions made by
the General Partner equals at least 1% of the aggregate of all
Contributions made by all Partners.
(ii) In addition to Contributions which may be required
pursuant to clause (b)(i) above, on each Minimum Fee Payment Date the
Partners shall be obligated severally, and not jointly, to make additional
contributions (each a "Minimum Fee Contribution") to the Partnership in an
aggregate amount equal to the Minimum Fee payable on such date. All Minimum
Fee Contributions shall be made by wire transfer of federal funds to the
account of the Partnership by 12:00 noon New York City time on each Minimum
Fee Payment Date. All Minimum Fee Contributions shall be made Pro Rata by
the Partners. Minimum Fee Contributions will not reduce the Partners'
Capital Commitment Balance.
(iii) If (x) any Limited Partner fails to contribute timely
all or any portion of any Capital Contribution it has agreed to contribute
pursuant to the provisions of this Agreement, and (y) such failure
continues for a period of (A) in the case of Contributions, three Business
Days after, and (B) in the case of Minimum Fee Contributions, ten days
after, receipt by such Limited Partner (such Limited Partner being
hereinafter referred to as the "Delinquent Partner") of notice from the
General Partner specifying such failure, then the General Partner may,
subject to compliance with applicable law, at its option:
(A) Take such action (including, without limitation,
the filing of a suit) a\s the General Partner deems appropriate
to obtain payment by the Delinquent Partner of that portion of
its contribution which is in default, together with interest
thereon at the Interest Rate, from the date that such
contribution was due until the date that such contribution,
together with all interest accrued thereon, is paid to the
Partnership, all at the cost and expense of the Delinquent
Partner, and until all such amounts have been paid, all
distributions that would otherwise be made to such Delinquent
Partner shall be withheld in partial satisfaction of such
obligations and shall be first applied to interest earned and
unpaid and then to principal;
(B) Advance, together with the Limited Partners (other
than the Delinquent Partner) wishing to participate, on a Pro
Rata basis (determined without regard to the Delinquent Partner),
that portion of such contribution which is in default, on the
following terms: (I) the sums thus advanced shall be deemed to be
demand recourse loans from the Partners participating therein to
the Delinquent Partner and a contribution of such sums to the
Partnership by the Delinquent Partner; (II) such loans shall bear
interest at the Interest Rate, from the date that the advance was
made until the date that such advance, together with all interest
accrued thereon, is repaid to the Partners; (III) unless
otherwise paid, the repayment of these loans shall be made from
the Cash of the Partnership to be distributed to the Delinquent
Partner before any Cash is distributed to the Delinquent Partner
during the term of the Partnership or after dissolution; and (IV)
all such repayments shall be first applied to interest earned and
unpaid and then to principal;
(C) If the delinquency arises from a failure to make a
Contribution, unless the Delinquent Partner shall have
theretofore cured its failure to make a required Contribution
(and reimbursed the Partnership for all costs and expenses
incurred in connection with such delinquency), sell the
Delinquent Partner's interest in the Partnership to the other
Limited Partners wishing to participate on a Pro Rata basis
(determined without regard to the Delinquent Partner), or to any
other Person, to the extent the Limited Partners fail to purchase
their Pro Rata share, without further notice to the Delinquent
Partner on the terms and for such consideration as the General
Partner may reasonably deem appropriate under the circumstances;
proceeds from any such sale shall be retained by the Partnership
or the Partners (as the case may be), to the extent of the
amount, including interest, then owing to the Partnership or the
Partners (as the case may be) (the Delinquent Partner remaining
liable for any deficiency); any excess shall be paid to
Delinquent Partner; and/or
(D) Exercise such other rights and remedies to which
the General Partner may be entitled at law or in equity or by
statute.
(iv) No remedy herein conferred upon or reserved to the
Partnership or any of the Partners is intended to be exclusive of any other
remedy or remedies, and each and every remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. No delay or omission of the
Partnership or the Partners to exercise any right or power accruing upon
any default shall impair any such right or power or shall be construed to
be a waiver of any such default or an acquiescence therein; and every power
and remedy given by this Section 6.1(b) to the Partnership or the Partners
may be exercised from time to time and as often as may be deemed expedient
by the General Partner.
6.2 Return of Contributions.
No Partner shall be entitled to the return of any of its Capital
Contributions to the Partnership or to be paid interest by the Partnership
in respect of its Capital Account except as otherwise specifically provided
herein.
6.3 No Required Additional Contributions.
Except as may be required by law or as otherwise specifically provided
for herein, no Partner shall at any time be required to make any
contributions to the Partnership. The Capital Commitment Balances of the
Partners are solely for the benefit of the Partners, as among themselves,
and may not be enforced by or for the benefit of any other Person
(including any creditor, receiver, or trustee of, or for, the benefit of
any one or more creditors of the Partnership).
6.4 Use of Capital.
The aggregate of all such contributions shall be available to the
Partnership to carry out the purposes and objectives of the Partnership as
set forth in Section 3.1.
ARTICLE 7
ACCOUNTS, ALLOCATIONS AND DISTRIBUTIONS
7.1 Capital Accounts.
(a) Each Partner shall have a Capital Account which shall be
maintained in accordance with Treas. Reg. Section 1.704-1(b)(2)(iv). The
initial balance of each Capital Account shall be zero.
(b) The Capital Account of each Partner shall be increased by (i) any
Capital Contribution by such Partner when such Capital Contribution is
made, (ii) the Net Profit allocated to such Partner pursuant to Section
7.2, and (iii) the gross income allocated to such Partner pursuant to
Section 7.3.
(c) The Capital Account of each Partner shall be reduced by (i) the
amount of any distribution of Cash or the Fair Market Value of any property
(net of any liability secured by such property that the Partner is
considered to assume or take subject to under Section 752 of the Code)
distributed to such Partner, when such distribution is made and (ii) the
Net Loss allocated to such Partner pursuant to Section 7.2.
(d) If the Partnership distributes any property (other than Cash) to
any Partner, the Capital Accounts of the Partners shall be adjusted to
account for each Partner's allocable share (as determined in accordance
with Section 7.2) of Net Profits and Net Losses that would have been
realized by the Partnership had it sold the distributed asset at its Fair
Market Value immediately prior to its distribution.
7.2 Allocation of Net Profit and Loss.
(a) If any Partner has a negative Capital Account balance at the end
of any Fiscal Period, Net Profit for such Fiscal Period shall first be
allocated among those Partners (and credited to their capital accounts)
with negative capital account balances in proportion to their respective
negative capital account balances until such negative balances are reduced
to zero. Net Profit (in excess of Net Profit allocated under the preceding
sentence) or Net Loss for each Fiscal Period shall be allocated among the
Partners (and credited or debited to their Capital Accounts) in such manner
that were the Partnership to liquidate completely at the end of such Fiscal
Period and in connection with such liquidation (i) sell all of its assets
and settle all of its liabilities at their then Book Values (i.e., without
any Net Profit or Net Loss resulting therefrom), and (ii) distribute its
remaining cash to the Partners in accordance with their respective positive
Capital Account balances (after crediting or debiting Capital Accounts for
Net Profit or Net Loss for such Fiscal Period) (the "Hypothetical Capital
Account Distribution"), the resulting distribution would correspond as
closely as possible to the distributions that would result if the
liquidating distributions had instead been made in accordance with the
provisions of Sections 7.4.1 and 7.4.2 (the "Hypothetical Section 7.4
Distribution"). For purposes of maintaining the Capital Accounts, items of
income, gain, loss, deduction, expense and credit shall be allocated to the
Partners in the same manner as are Net Profits and Net Losses, except where
otherwise necessary to more closely conform the Hypothetical Capital
Account Distribution with the Hypothetical Section 7.4 Distribution.
(b) Notwithstanding any other provision of this Agreement, the General
Partner shall at all times, except as otherwise determined in accordance
with Section 704(c) of the Code and the Treasury Regulations promulgated
thereunder, be allocated an aggregate of at least 1% of the Net Profits and
Net Losses as well as 1% of each item of income, gain, loss, deduction,
expense and credit of the Partnership.
(c) For tax purposes, all items of income, gain, loss, deduction,
expense and credit shall be allocated to the Partners in the same manner as
are Net Profits and Net Losses; provided, however, that in accordance with
Section 704(c) of the Code, the Treasury Regulations promulgated thereunder
and Treas. Reg. Section 1.704-1(b)(4)(i), items of income, gain, loss,
deduction, expense and credit with respect to any property whose Book Value
differs from its adjusted basis for tax purposes shall, solely for tax
purposes, be allocated between the Partners so as to take account of both
the amount and character of such variation.
(d) Notwithstanding any other provision of this Agreement, in no event
shall Net Losses be allocated to a Limited Partner if such allocation would
result in such Limited Partner having a Qualified Income Offset Amount.
For purposes of applying this Section 7.2 and Section 7.3, a Partner's
Capital Account shall be increased by such Partner's share of "minimum
gain" and "partner minimum gain" (within the meaning of Treasury
Regulations under Section 704(b) of the Code).
7.3 Allocations of Nonrecourse Deductions; Minimum Gain Chargeback;
Qualified Income Offset.
This Agreement shall be deemed to include "qualified income offset"
and "minimum gain chargeback" provisions within the meaning of Treasury
Regulations under Section 704(b) of the Code. Accordingly, notwithstanding
any other provision of this Agreement, items of gross income shall be
allocated to the Partners on a priority basis to the extent and in the
manner required by such provisions. In particular, if a Limited Partner's
negative Capital Account balance is below such Partner's Capital Commitment
Balance, then, prior to any allocation pursuant to Section 7.2, such
Partner shall be allocated items of gross income until the negative balance
of such Partner's Capital Account, if any, is equal to such Partner's
Capital Commitment Balance. Any special allocation of items pursuant to
this Section 7.3 shall be taken into account in computing subsequent
allocations pursuant to Section 7.2 so that the cumulative net amount of
all items allocated to each Partner shall, to the extent possible, be equal
to the amount that would have been allocated to such Partner if there had
never been any special allocation pursuant to this Section 7.3.
7.4 Distributions.
7.4.1 Distributions.
Distributions of Available Cash or property (including without
limitation net sales proceeds and dividends and interest derived from the
investment) shall be made to the Partners as follows:
(a) First, to the Partners Pro Rata until Invested Capital has
been reduced to zero:
(b) Second, to the Partners Pro Rata until Unrecovered Minimum
Fee Contributions have been reduced to zero;
(c) Third, an amount up to the Partners' 7% Return Amount shall
be distributed to the Partners Pro Rata; and
(d) Fourth, any remaining amounts shall be distributed 80% to the
Partners Pro Rata and 20% to the General Partner.
7.4.2 Distributions Before Liquidation.
Available Cash from the Subject Companies shall be distributed,
from time to time, in accordance with Section 7.4.1 promptly following
receipt thereof by the Partnership, subject to compliance with applicable
laws and regulations.
7.4.3 Distributions in Liquidation.
Cash and any other property shall be distributed upon the
dissolution and liquidation of the Partnership pursuant to Section 8.3 to
each Partner in accordance with Section 7.4.1.
7.4.4 Withholding Requirements.
(a) Notwithstanding any other provision of this Agreement, the
General Partner is authorized to take any action that it determines to be
necessary or appropriate to cause the Partnership to comply with any
withholding requirements imposed under Section 1446 or any other provision
of the Code or state, local or foreign law.
(b) If the Code or any state, local or foreign law requires that
the Partnership remit to the Internal Revenue Service or any other taxing
authority any withholding tax with respect to, or for the account of, any
Partner (in its capacity as a Partner), the General Partner shall provide
notice to such Partner of such obligation and such Partner shall have the
opportunity to make such payment on its own behalf. If such Partner fails,
or is not otherwise able, to make such payment on its own behalf the
Partnership shall so remit to the Internal Revenue Service or other taxing
authority the full required amount of such withholding tax. Any amount so
remitted shall be credited against any distributions that would otherwise
be made to such Partner during such period or thereafter and any excess of
the amount so remitted over amounts so credited against distributions shall
be treated as a recourse demand loan from the Partnership to the Partner,
the outstanding balance of which from time to time shall accrue interest
daily at the Interest Rate. For as long as the Partnership is not dissolved
and the Partner remains a Partner, unless otherwise paid, such loan and
interest shall be payable by credit against the first amounts that would
otherwise be distributed to such Partner (with any such payment being
allocated first to accrued and unpaid interest through the date of such
payment) but may be prepaid in cash by the Partner, in whole or any part,
at any time.
ARTICLE 8
DURATION, DISSOLUTION AND TERMINATION OF PARTNERSHIP
8.1 Partnership Dissolution Date.
The Partnership shall continue until December 31, 2009, unless the
Partnership is dissolved earlier upon:
(a) consent by a Majority in Interest to dissolve the Partnership
at an earlier date fixed by the General Partner;
(b) the bankruptcy or liquidation of the General Partner or any
other event of withdrawal of Trefoil Israel FSL as the General Partner
("Event of Withdrawal") unless at the time of such Event of Withdrawal
there is at least one general partner of the Partnership authorized by this
Agreement to continue the business of the Partnership without dissolution
and does so, or, if there is no such general partner, Limited Partners
whose Total Capital Commitments represent at least two-thirds (2/3) in
Interest (or such greater percentage as is then required by the Act) agree
in writing to continue the Partnership and elect one or more successor
general partners, effective as of the date of such Event of Withdrawal,
such action to be taken within 90 days after such Event of Withdrawal, in
which case the Partnership shall not be dissolved and its business shall be
carried on by the remaining general partners;
(c) a good faith determination by the General Partner that (i)
the assets of the Partnership and the Capital Commitment Balances of the
Partners are insufficient to continue the business of the Partnership or
(ii) changes in laws applicable to the Partnership have made it undesirable
to continue the business of the Partnership; or
(d) the General Partner having been adjudged guilty of fraud or
willful misconduct in connection with the business of the Partnership in a
final, non-appealable judgment of a federal or state court of competent
jurisdiction.
In the case of any dissolution, the General Partner shall give prompt
notice of such event to the Limited Partners. The date of such dissolution
is herein called the "Partnership Dissolution Date."
8.2 Winding Up.
Upon dissolution of the Partnership, the Partnership shall liquidate
in an orderly manner as promptly as shall be practicable under the
supervision and control of the General Partner. The General Partner (as
liquidating trustee for the Partnership) shall have all the rights and
powers over the assets and liabilities of the Partnership in connection
with such liquidation which the General Partner has over the assets and
liabilities of the Partnership during the term of the Partnership;
provided, however, that such liquidation shall proceed with reasonable
diligence. Notwithstanding the foregoing, if the Partnership is dissolved
and not continued pursuant to Section 8.1(b) or dissolved pursuant to
Section 8.1(d), a Majority in Interest (excluding Affiliates of the General
Partner) may elect, within 10 Business Days of the Partnership Dissolution
Date, a liquidating trustee for the Partnership to serve in lieu of the
General Partner.
8.3 Liquidation.
Upon liquidation of the Partnership, the liquidating trustee shall,
out of Partnership assets, make payments and distributions no later than
the end of the Fiscal Year following the Fiscal Year in which such
liquidation occurs in the following manner and order:
(a) to pay and discharge, or make provisions or establish
reserves for, the claims of all creditors of the Partnership and to pay
expenses of liquidation;
(b) to establish such reserves as the liquidating trustee deems
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership; such reserve may be paid over by the
liquidating trustee to any attorney-at-law, or other party acceptable to
the liquidating trustee, as escrow agent to be held for disbursement in
payment of any such liabilities or obligations and, at the expiration of
such period as shall be deemed advisable by the liquidating trustee, for
distribution of the balance in the manner hereinafter provided in this
Section 8.3; and
(c) to make distributions to the Partners in accordance with
Section 7.4.3.
Distributions in liquidation of the Partnership may be made in
property other than Cash, in which case such property shall be valued at
its Fair Market Value for purposes of such liquidating distribution. If a
distribution is made both in Cash and in kind, such distribution shall be
made so that, to the fullest extent practical, the percentage of the Cash
and other property distributed to each Partner is identical.
8.4 Use of Partnership Name After Winding Up.
This Agreement does not confer upon the Partnership or the Partners
any right to the name "Trefoil" except that the Partnership may use the
name Trefoil Israel FSL, L.P., unless the name of the Partnership is
changed as provided in Section 2.2 hereof, and upon the dissolution and
winding up of the Partnership, the right to use such name, and all such
changed names, shall belong to the General Partner for which no
compensation shall be paid to the Partnership or the Partners.
8.5 Cancellation of Certificate.
Upon the completion of the distribution of the Partnership assets as
provided in Section 8.3, the Partnership shall be terminated and the Person
acting as liquidator shall cause the cancellation of the Certificate and
shall take such other actions as may be necessary or appropriate to
terminate the Partnership.
8.6 General Partner Not Personally Liable For Return of Capital
Contributions.
Except as otherwise expressly provided in a final non-appealable
judgment of a federal or state court of competent jurisdiction, the General
Partner shall not be personally liable for the return of any Capital
Contributions of any Limited Partner and such return shall be made solely
from available Partnership assets, if any.
ARTICLE 9
BOOKS OF ACCOUNT, REPORTS
9.1 Books of Accounts.
The General Partner shall keep, or cause to be kept, accurate and
complete records and books of account of all transactions of the
Partnership. Such books and records shall be kept on a parent only basis
(not consolidated with any of its subsidiaries) and otherwise (except as
otherwise provided herein) in accordance with United States generally
accepted accounting principles applicable thereto, shall be maintained at
the principal office of the Partnership and shall be available for
inspection, examination and copying, for a proper purpose and at reasonable
times during usual business hours, by Partners or their duly authorized
representatives. The General Partner shall provide to each Partner all such
information and financial statements of the Partnership as such Partner may
reasonably request. All such information and financial statements shall be
used for Partnership purposes only.
9.2 Reports to Partners.
(a) The books of account and records of the Partnership shall be
audited as of the end of each Fiscal Year by PricewaterhouseCoopers (or
another nationally recognized accounting firm selected by the General
Partner and reasonably acceptable to a Majority in Interest) (the
"Auditor").
(b) Within 120 days after the end of each Fiscal Year, the Auditor
shall prepare and mail to each Partner a report including the following:
(i) the financial statements of the Partnership on a parent only
basis (not consolidated with any of its subsidiaries) for the prior Fiscal
Year; and
(ii) all information necessary for such Partner to include its
participation in Partnership profits and losses in its income tax returns
for the prior Fiscal Year.
(c) Within 120 days after the end of each fiscal year of a Subject
Company prior to the Partnership Dissolution Date, the General Partner
shall mail to each Limited Partner financial statements for the Subject
Company for such fiscal year.
(d) Within 75 days after the end of the first three fiscal quarters of
each fiscal year of a Subject Company prior to the Partnership Dissolution
Date, the General Partner shall mail to each Limited Partner summary
financial information regarding the Subject Company for such fiscal quarter
(including any quarterly financial statements of the Subject Company for
such fiscal quarter which the Partnership, the General Partner or SCA has
theretofore received from the Subject Company).
9.3 Tax Returns.
The General Partner shall cause to be prepared and timely filed, at
the cost and expense of the Partnership, all necessary federal and state
tax returns of the Partnership.
9.4 Final Accounting.
Promptly after the Partnership Dissolution Date, the Auditor shall
commence to take an account of the affairs and financial transactions of
the Partnership and within 120 days after the Partnership Dissolution Date
shall prepare a statement setting forth the financial position of the
Partnership as of the close of business on the Partnership Dissolution
Date, establishing reasonable reserves for contingencies, showing the
Partnership's liabilities and assets and stating each Partner's Capital
Account balance on the Partnership Dissolution Date.
9.5 Conclusiveness of Audit and Accounting.
The determination by the Auditor shall be final and binding upon all
Partners in the absence of manifest error.
9.6 Tax Elections.
The General Partner shall have the power to make or revoke any
elections now or hereafter required or permitted to be made by the Code or
any state or local law.
9.7 Taxable Year.
The Partnership shall elect a taxable year ending December 31 or such
other date as the General Partner may determine and as may either be
approved by the Internal Revenue Service or otherwise available for tax
purposes; provided that the first taxable year of the Partnership shall
begin on the date hereof and end on December 31, 1999. The General Partner
shall give all other Partners notice of any change of the date on which the
taxable year of the Partnership shall end. Except as previously disclosed
in writing to the General Partner, as of the date hereof, each Limited
Partner has a taxable year ending on December 31.
9.8 Designation of Tax Matters Partner.
The General Partner is hereby designated as the "Tax Matters Partner"
under Section 6231(a)(7) of the Code to manage administrative tax
proceedings conducted at the partnership level by the Internal Revenue
Service with respect to partnership matters. The General Partner is
specifically directed and authorized to take whatever steps the General
Partner, in its sole discretion, deems necessary or desirable to perfect
such designation, including, without limitation, filing any forms or
documents with the Internal Revenue Service and taking such other action as
may from time to time be required under Treasury Regulations. The Tax
Matters Partner shall have full authority to extend the statute of
limitations and control any tax audit or other proceeding on behalf of the
Partnership. Expenses of administrative proceedings relating to the
determination of Partnership items at the Partnership level undertaken by
the Tax Matters Partner will be deemed to be Partnership expenses.
ARTICLE 10
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 Representations of Each Partner.
Each of the Partners represents and warrants to and agrees with the
other Partners as follows:
(a) Status. Such Partner has full power and authority to own its
property and to carry on its business as now conducted. Such Partner is
duly incorporated or organized (in the event such Partner is not a
corporation), validly existing and in good standing under the laws of its
state or country of incorporation or organization (as the case may be).
(b) Authority. Such Partner has full power and authority to execute
and deliver this Agreement and to carry out its obligations hereunder in
accordance with the terms and provisions hereof. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite action,
corporate or otherwise, on the part of such Partner. This Agreement
constitutes the valid and legally binding obligation of such Partner,
enforceable against it in accordance with its terms, except as
enforceability may be affected by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally, (ii) the limitation of certain remedies by
certain equitable principles of general applicability, and (iii) the fact
that the rights to indemnification hereunder may be limited by federal or
state securities laws.
(c) No Breach or Default. The execution, delivery and performance by
such Partner of this Agreement and the transactions contemplated hereby
will not constitute a breach of any term or provision of, or a default
under, its certificate or articles of incorporation or by-laws or other
constituent documents.
(d) No Governmental Consents. No material consent, license, approval
or authorization of any governmental body, authority, bureau or agency is
required on the part of any such Partner or any of its Affiliates in
connection with its execution and delivery of this Agreement and its
contributions to the capital of the Partnership.
(e) Use of Partner's Name. With respect to any matters relating to the
Partnership, no Partner shall use the name of any other Partner in a press
release or otherwise, except as may be required by law, without the prior
consent of such other Partner.
(f) Accredited Investor. Such Partner is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities
Act.
(g) Investment Intent. Such Partner is acquiring all legal and
beneficial ownership of its interests in the Partnership for its own
account for investment, and not with a view to any distribution, resale,
subdivision, or fractionalization thereof, and such Partner has no present
plans to enter into any contract, undertaking, agreement, or arrangement
for any such distribution, resale, subdivision, or fractionalization.
(h) Economic Loss and Sophistication. Such Partner is able to bear the
economic risk of losing its entire investment in the Partnership. Such
Partner's overall commitment to investments which are not readily
marketable is not disproportionate to its net worth. Such Partner's
investment in the Partnership will not cause such overall commitment to
become excessive. Such Partner has such knowledge and experience in
financial and business matters that it is capable of evaluating the risks
and merits of this investment.
(i) No Investment Advice. Such Partner acknowledges and agrees that,
pursuant to this Agreement, the General Partner has the exclusive power and
discretion (subject only to certain limited exceptions) to make all
investment decisions in accordance with the terms of this Agreement.
Accordingly, such Partner acknowledges that neither the General Partner nor
any Affiliate thereof has rendered or will render any investment advice or
securities valuation advice to such Partner, and that such Partner is
neither subscribing for nor acquiring any interest in the Partnership in
reliance upon, or with the expectation of, any such advice.
(j) Investment Company Act. Such Partner acknowledges that the
Partnership will not register as an investment company under the Investment
Company Act of 1940, as amended (the "Investment Act"), by reason of the
provisions of Section 3(c)(1) thereof, which excludes from the definition
of an investment company any issuer which has not made and does not
presently propose to make a public offering of its securities and whose
outstanding securities are beneficially owned by not more than 100 persons.
If such Partner is not a natural person, such Partner hereby certifies
that:
(i) it is "one person" for the purpose of Section 3(c)(1) of the
Investment Act; and
(ii) such Partner's interest in the Partnership, together with
its interests in all other corporations, partnerships,
trusts or associations that are or would, but for the
exception set forth in this subsection (iii), be excluded
from the definition of investment company solely by reason
of the provisions of Section 3(c)(1) of the Investment Act
will not represent more than 10% of such Partner's total
assets.
10.2 Representations of Each Limited Partner.
Each Limited Partner represents and warrants to and agrees with the
Partnership and the General Partner as follows:
(a) Accuracy of Information. Such Partner shall promptly furnish to
the General Partner all information regarding such Partner or its
Affiliates reasonably requested by the General Partner as is or may be
required for inclusion in any materials, documents, or instruments to be
prepared or filed in connection with (i) the business of the Partnership,
or (ii) the compliance by the Partnership or the Subject Companies with any
applicable laws, rules or regulations and all such information when
supplied to the Partnership will be true and correct in all material
respects and will not omit to state any material fact necessary to be
stated therein in order that such information shall not be misleading.
(b) Confidentiality. Such Partner shall keep all information regarding
the business, affairs or plans of the Partnership (including, but not
limited to, the terms of this Agreement and information about the Subject
Companies and the other Partners) strictly confidential and shall maintain
and protect all information regarding the business, affairs or plans of the
Partnership in no less careful a manner than it maintains and protects its
own confidential business information provided, however, that such
information may be disclosed by a Partner (1) to its financial advisors
provided that such advisors agree to maintain the information in strictest
confidence or (2) if, in the reasonable opinion of counsel to such Partner,
and after prior consultation with the General Partner and its counsel, such
disclosure is required by law, and provided further that the provisions of
this Section 10.2(b) shall not apply to information which (x) becomes
generally available to the public other than as a result of a disclosure by
such Partner or its representatives, (y) was available to such Partner on a
non-confidential basis prior to its disclosure to such Partner by the
General Partner or its representatives, or (z) becomes available to such
Partner on a non-confidential basis from a source other than the General
Partner or its representatives or any other Partner or its representatives.
(c) No Registration of Interests. Such Partner acknowledges and agrees
that, based in part upon its representations contained herein and in
reliance upon applicable exemptions, no interest in the Partnership
acquired by such Partner has been or will be registered under the
Securities Act or the securities laws of any other domestic or foreign
jurisdiction. Accordingly, no such interest may be offered for sale, sold,
pledged, hypothecated, or otherwise transferred in whole or in part unless
(i) the affected interest has been registered under the Securities Act and
all other applicable securities laws or an exemption from such registration
is available and (ii) all other applicable transfer restrictions set forth
herein have been satisfied.
ARTICLE 11
MISCELLANEOUS
11.1 Special Power-of-Attorney.
Each Partner hereby irrevocably makes, constitutes and appoints the
General Partner, with full power of substitution, the true and lawful
representative and attorney-in-fact of such Partner, and in the name, place
and stead of such Partner, with the power from time to time to make,
execute, sign, acknowledge, swear to, verify, deliver, record, file and/or
publish all such instruments and certificates which, in the opinion of
legal counsel retained by the General Partner, may from time to time be
required by the laws of Israel, the United States, the States of Delaware
or California or any state in which the Partnership shall determine to do
business, or any political subdivision or agency thereof, or which said
legal counsel may deem necessary or appropriate to effectuate, implement
and continue the valid and subsisting existence and business of the
Partnership. If any action by or with respect to the Partnership is taken
by the General Partner in the manner contemplated by this Agreement, each
Partner agrees that the special attorney specified above is 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 action to be lawfully taken or omitted. Each Partner is fully aware
that it and each other Partner has executed this power-of-attorney, and
that each Partner will rely on the effectiveness of such powers with a view
to the orderly administration of the affairs of the Partnership. This
power-of-attorney is a special power-of-attorney and is coupled with an
interest in favor of the General Partner and (i) may be exercised for a
Partner by a facsimile signature of the General Partner or, after listing
all of the Limited Partners including such Partner, and the General
Partner, by a single signature of the General Partner acting as
attorney-in-fact for all of them; and (ii) shall survive the delivery of an
assignment by a Limited Partner of the whole or any portion of its interest
in the Partnership, except that where the assignee thereof has been
approved by the General Partner for admission to the partnership as a
Substituted Limited Partner, this power-of-attorney given by the assignor
shall survive the delivery of such assignment for the sole purpose of
enabling the General Partner to execute, acknowledge, and file any
instrument necessary to effect such substitution.
The powers of attorney granted under this Section 11.1 cannot be
utilized by the General Partner to increase or extend any financial
obligation or liability of a Limited Partner, to alter the method of
division of profits and losses or the method of distributions in connection
with the investment of a Limited Partner or to alter the rights and
obligations of a Limited Partner without the written consent of such
Limited Partner. In addition, the powers of attorney granted under this
Section 11.1 may not be utilized by the General Partner to amend this
Agreement.
11.2 Additional Assurances.
The Limited Partners shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver
all such other agreements, certificates, instruments and documents,
including, without limitation, any amended powers-of-attorney, as are
necessary or appropriate to permit the General Partner to exercise any
authority or power granted to the General Partner hereunder.
11.3 Amendments.
The terms and provisions of this Agreement may be modified or amended
at any time and from time to time by the consent of the General Partner and
a Majority In Interest. Notwithstanding the foregoing, without the consent
of any Limited Partner, the General Partner may amend the Schedule of
Partners or Schedule B to reflect the admission to the Partnership of
Substituted Limited Partners or changes validly made in the Total Capital
Commitments or Subject Companies and may amend this Agreement as to matters
solely of administrative convenience, which the General Partner deems to be
immaterial. Notwithstanding the foregoing provisions of this Section 11.3,
(i) the consent of the General Partner and each Limited Partners shall be
required to increase the Total Capital Commitment of any Partner, to amend
the definition of Subject Companies, Article 3, Section 5.3, Section 6.3,
Section 6.4, Article 7 and clause (i) of this sentence and (ii) the consent
of the General Partner and Two-Thirds in Interest shall be required to
amend the definitions of Two-Thirds in Interest, Section 4.5, Section 8.1,
Article 9 and clause (ii) of this sentence. The effective date of an
amendment to this Agreement which requires written consent shall be the
date stated in the written consent of the Partners or, if no effective date
is stated, the date on which the last of the required consents is given.
Any other amendment shall be effective when made.
11.4 Binding Effects; Benefits.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their legal representatives, successors and assigns, as
applicable.
11.5 Headings.
The section and other headings of this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
11.6 Counterparts.
This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to be one and
the same agreement.
11.7 Grammatical Construction.
Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice
versa.
11.8 Governing Law.
This Agreement shall be governed by and construed both as to validity
and enforceability in accordance with the laws of the State of Delaware,
without regard to the conflict of laws provisions thereof.
11.9 Submission to Jurisdiction.
Each of the Partners consents and submits to the jurisdiction of the
state and federal courts located in the County of New Castle, State of
Delaware in connection with any suits or other actions arising between the
Partners under this Agreement, and consents and waives any objections to
the venue of such action or proceeding in the state or federal courts
located in the County of New Castle, State of Delaware.
11.10 Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of
this Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction.
11.11 Waiver.
No waiver of this Agreement or any part hereof and no notice or
consent required or permitted to be given pursuant to this Agreement shall
be valid or effective unless in writing and signed by the party or parties
sought to be charged; and no waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other subsequent breach or
condition, whether of like or different nature.
11.12 Entire Agreement.
This Agreement and the Management Agreement constitute the entire
agreement between the parties hereto with respect to the subject matter
hereof.
11.13 Notice.
Any notice or other communication contemplated by any provision of
this Agreement shall be in writing and may be delivered personally, sent by
telegram, telecopy, commercial courier or mailed by certified mail, postage
prepaid, return receipt requested, addressed to such Partner at its
address, or sent to its telecopy number, appearing on the Schedule of
Partners. Notice sent by telecopy shall be deemed given when confirmation
of transmission is received, and notice sent by any other means shall be
deemed given when received, at the address set forth in the Schedule of
Partners. A copy of all notices to the General Partner shall be sent to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; but any party may
designate a different address by a notice similarly given to the
Partnership.
11.14 Waiver of Partition.
Each Partner hereby irrevocably waives, during the term of the
Partnership and the winding up thereof, any right that it may have to
maintain any action for partition with respect to any Partnership property.
AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP
This Amendment (the "Amendment"), dated as of January 1, 2000,
hereby amends the Agreement of Limited Partnership of Trefoil Israel FSL,
L.P., a Delaware limited partnership, dated as of December 17, 1999 (the
"Agreement"), by and between Trefoil Israel FSL, Inc., a Delaware
corporation ("Trefoil Israel FSL"), as the sole general partner, and
Shamrock Holdings, Inc., a Delaware corporation ("Shamrock"), as the sole
limited partner. Capitalized terms used herein have the meanings set forth
in the Agreement unless otherwise defined herein.
WHEREAS, Trefoil Israel FSL and Shamrock desire to amend Sections
1.1, 6.1 and 9.2 of the Agreement;
WHEREAS, pursuant to the Purchase Agreement, dated January 1,
2000 (the "Purchase Agreement"), among Shamrock and the purchasers
signatory thereto (the "Purchasers"), Shamrock has agreed to sell to the
Purchasers and the Purchasers have agreed to purchase from Shamrock, a
limited partnership interest in the Partnership, representing an aggregate
ownership interest of 14.4879% (the "Transferred Interest") in the
Partnership;
WHEREAS, in connection therewith, Shamrock and Trefoil Israel FSL
desire to amend Schedule A to the Partnership Agreement to reflect the sale
of the Transferred Interest from Shamrock to the Purchasers; and
WHEREAS, in all other respects, Trefoil Israel FSL and Shamrock
desire to have the Agreement remain in full force and effect;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Section 1.1 (Definitions) of the Agreement is hereby amended
to add the following definition:
"Contributed Securities" shall mean any Securities constituting a
part of any Partner's Capital Contribution made pursuant to Article 6;"
2. Sections 6.1(a) and 6.1(b)(i) (Capital Contributions) of the
Agreement are hereby amended to read in their entirety as follows:
"(a) All Capital Contributions shall be made in cash or
Securities, as determined by the General Partner.
(b) (i) The General Partner may at any time and from time to
time prior to the Partnership Dissolution Date, (x) on the Initial
Contribution Date, the Limited Partner shall make contributions pursuant to
the Contribution Agreement which Contribution has fair market value of $
7,514,651.00 and the General Partner shall contribute the amount set forth
opposite such Partner's name under the heading "Initial Capital
Contribution," and (y) thereafter upon notice given at least five Business
Days prior thereto by telex or telecopy, require each Limited Partner to
make contributions to the capital of the Partnership in an amount not to
exceed such Partner's Capital Commitment Balance. All Contributions shall
be, in the case of a cash Capital Contribution, made by wire transfer of
federal funds to the account of the Partnership (which account shall be set
forth in the notice). Any Capital Contributions of Securities shall be
delivered as directed by the Partnership. Contributions shall be made Pro
Rata by the Partners. Concurrently with the funding of Contributions by the
Limited Partners pursuant to this clause (i), the General Partner shall
make additional contributions to the capital of the Partnership in an
amount so that the aggregate of all Contributions made by the General
Partner equals at least 1% of the aggregate of all Contributions made by
all Partners."
3. A new Section 6.1(c) shall be added to the Agreement to read
in its entirety as follows:
"(c) For the purposes of this Agreement, the value of any
Contributed Securities shall be the Fair Market Value of such Securities."
4. Section 9.2 of the Agreement is hereby amended and restated in
its entirety as follows:
"9.2 Reports to Partners. As soon as practicable after the end of
each Fiscal Year, each Partner shall receive from the Partnership
a U.S. federal income tax form K-1 and a copy of the
Partnership's federal income tax form for such prior Fiscal
Year."
5. Schedule A to the Agreement is hereby superseded by Schedule A
attached hereto.
6. Except as otherwise specifically modified by this Amendment,
all terms and provisions of the Agreement remain unmodified and in full
force and effect.
7. This Amendment, together with the Agreement, constitutes the
entire agreement between the parties hereto relating to the subject matter
hereof and shall not be changed or terminated orally.
8. If any term or other provision of this Amendment, or any
application thereof to any circumstances, is invalid, illegal or incapable
of being enforced by any rule of law or public policy, in whole or in part,
such provision or application shall to that extent be severable and shall
not effect other provisions or applications of this Amendment.
9. This Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one instrument.