Exhibit 3.8
GOLFSMITH HOLDINGS, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
THESE PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE PROVISIONS OF ANY STATE SECURITIES ACT
CERTAIN RESTRICTIONS ON TRANSFERS OF INTERESTS
ARE SET FORTH HEREIN
TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS ...................................................................... 1
ARTICLE 2
ORGANIZATION ..................................................................... 7
Section 2.1 FORMATION ........................................................... 7
Section 2.2 NAME, PLACE OF BUSINESS AND OFFICE .................................. 7
Section 2.3 PURPOSES AND CHARACTER OF BUSINESS; POWERS .......................... 8
Section 2.4 TERM ................................................................ 9
ARTICLE 3
PARTNERSHIP CAPITAL .............................................................. 9
Section 3.1 INITIAL CAPITAL CONTRIBUTIONS OF THE PARTNERS ....................... 9
Section 3.2 ADDITIONAL CAPITAL CONTRIBUTIONS OF THE PARTNERS .................... 9
Section 3.3 PARTNERSHIP CAPITAL ................................................. 10
Section 3.4 LIABILITY OF PARTNERS ............................................... 10
Section 3.5 LOANS BY PARTNERS OR AFFILIATES ..................................... 10
Section 3.6 CAPITAL ACCOUNTS .................................................... 10
Section 3.7 UNITS ............................................................... 12
Section 3.8 NO RIGHT TO PRIORITY OF RETURN OF CAPITAL ........................... 12
ARTICLE 4
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER ................................. 12
Section 4.1 MANAGEMENT AND CONTROL OF THE PARTNERSHIP ........................... 12
Section 4.2 AUTHORITY OF THE GENERAL PARTNER AS TO THIRD PERSONS ................ 14
Section 4.3 RESTRICTIONS ON THE AUTHORITY OF THE GENERAL PARTNER ................ 14
Section 4.4 REIMBURSEMENT OF EXPENSES AND COMPENSATION OF THE GENERAL PARTNER ... 14
Section 4.5 DEVOTION OF TIME .................................................... 15
Section 4.6 LIABILITY OF THE GENERAL PARTNER .................................... 15
Section 4.7 INDEMNIFICATION OF THE GENERAL PARTNER .............................. 16
Section 4.8 MANAGEMENT BY LIMITED PARTNER ....................................... 16
Section 4.9 TRANSACTIONS WITH RELATED PARTIES ................................... 16
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ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS ....................................................... 17
Section 5.1 DISTRIBUTIONS ......................................................... 17
Section 5.2 ALLOCATIONS OF PROFITS AND LOSSES ..................................... 17
Section 5.3 COMPLIANCE WITH CODE .................................................. 20
Section 5.4 ALLOCATIONS UPON TRANSFER OF PARTNERSHIP INTEREST ..................... 20
ARTICLE 6
TRANSFERABILITY OF PARTNER'S INTEREST ............................................... 21
Section 6.1 RESTRICTIONS ON TRANSFER OF INTEREST OF A PARTNER ..................... 21
Section 6.2 TRANSFERS BY A PARTNER ................................................ 21
Section 6.3 TAG ALONG RIGHT WITH RESPECT TO SALE OF PARTNERSHIP INTEREST .......... 22
Section 6.4 CONVERSION OF PARTNERSHIP INTEREST .................................... 22
Section 6.5 ASSIGNEES ............................................................. 23
Section 6.6 SUBSTITUTED PARTNERS .................................................. 23
ARTICLE 7
BOOKS AND RECORDS; ACCOUNTING; REPORTING; OFFICERS .................................. 24
Section 7.1 BOOKS AND RECORDS ..................................................... 24
Section 7.2 ACCOUNTING BASIS FOR TAX REPORTING PURPOSES; FISCAL YEAR .............. 24
Section 7.3 REPORTS ............................................................... 24
Section 7.4 OFFICERS; NUMBER ...................................................... 24
Section 7.5 GENERAL DUTIES OF OFFICERS ............................................ 24
Section 7.6 ELECTION, TERM OF OFFICE AND QUALIFICATIONS OF OFFICERS ............... 24
Section 7.7 REMOVAL OF OFFICERS ................................................... 25
Section 7.8 RESIGNATION OF OFFICERS ............................................... 25
Section 7.9 VACANCIES ............................................................. 25
Section 7.10 THE PRESIDENT ......................................................... 25
Section 7.11 THE VICE PRESIDENT .................................................... 25
Section 7.12 THE SECRETARY ......................................................... 25
Section 7.13 THE TREASURER ......................................................... 26
Section 7.14 INDEMNIFICATION ....................................................... 26
ARTICLE 8
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP ......................... 26
Section 8.1 EVENTS CAUSING DISSOLUTION ............................................ 26
Section 8.2 LIQUIDATION; SALE OF SUBSTANTIALLY ALL OF THE ASSETS .................. 27
Section 8.3 DISTRIBUTIONS IN KIND ................................................. 28
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ARTICLE 9
POWER OF ATTORNEY ................................................................... 28
Section 9.1 APPOINTMENT OF THE GENERAL PARTNER AS ATTORNEY-IN-FACT ................ 28
ARTICLE 10
MISCELLANEOUS PROVISIONS ............................................................ 29
Section 10.1 ADDRESS FOR NOTICES .................................................. 29
Section 10.2 ADDITIONAL DOCUMENTS AND ACTS ........................................ 29
Section 10.3 ASSUMED NAME ......................................................... 29
Section 10.4 QUALIFICATION IN FOREIGN JURISDICTIONS ............................... 29
Section 10.5 APPLICABLE LAW ....................................................... 29
Section 10.6 WAIVER OF ACTION FOR PARTITION BY PARTNERS ........................... 30
Section 10.7 CREDITORS NOT BENEFITTED ............................................. 30
Section 10.8 NUMBERS AND GENDER ................................................... 30
Section 10.9 BINDING EFFECT ....................................................... 30
Section 10.10 ENTIRE AGREEMENT ..................................................... 30
Section 10.11 PLACE OF PERFORMANCE ................................................. 30
Section 10.12 AMENDMENT ............................................................ 30
Section 10.13 SEVERABILITY ......................................................... 31
Section 10.14 SECTIONS ............................................................. 31
Section 10.15 CAPTIONS ............................................................. 31
Section 10.16 NO WAIVER ............................................................ 31
Section 10.17 ADDITIONAL REMEDIES .................................................. 31
Section 10.18 U.S. DOLLARS ......................................................... 31
Section 10.19 APPROVALS ............................................................ 31
Section 10.20 COUNTERPARTS ......................................................... 32
SCHEDULE 1 Names, Addresses and Unit Allocation of the Partners
SCHEDULE 2 Initial Officers
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GOLFSMITH HOLDINGS, L.P.
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
This Amended and Restated Limited Partnership Agreement of GOLFSMITH
HOLDINGS, L.P., dated effective as of the 17th day of August, 1998, is made and
entered into by and among Golfsmith GP Holdings, Inc., a Delaware corporation,
as General Partner, and Golfsmith International, Inc., a Delaware corporation,
and DLJ Investment Partners, L.P., DLJ Investment Funding, Inc., and DLJ ESC II
L.P., as Limited Partners.
WHEREAS, GOLFSMITH HOLDINGS, L.P., a Delaware limited partnership, was
formed effective as of May 29, 1998, pursuant to that certain Limited
Partnership Agreement of Golfsmith Holdings, L.P. by and between Golfsmith GP
Holdings, Inc. and Golfsmith International, Inc., dated as of May 29, 1998 (the
"Original Agreement");
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement to read in its entirety in the manner provided herein;
NOW, THEREFORE, in consideration of the mutual promises made herein,
the parties, intending to be legally bound, hereby agree that the Original
Agreement is amended and restated to read in its entirety as follows:
ARTICLE 1
DEFINITIONS
The definitions used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article 1.
1. "ACT" means the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time.
2. "ADDITIONAL CAPITAL CONTRIBUTION" means, as to any Partner, any
amount contributed, required to be contributed or deemed to be contributed to
the capital of the Partnership by the Partner pursuant to Section 3.2.
3. "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(a) Credit to such Capital Account any amounts which such Partner is
deemed to be obligated to restore pursuant to Treasury Regulations Section
1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account Deficit" is
intended to comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and 1.704-2, and shall be interpreted consistently
therewith.
4. "AFFILIATE" means any person who directly or indirectly through one
or more intermediaries controls or is controlled by or is under common control
with the person to whom reference is made. The term "control" as used herein
(including the terms "controlling," "controlled by," and "under common control
with") means the possession, direct or indirect, of the power (a) to vote fifty
percent (50%) or more of the outstanding voting securities of a person, or (b)
otherwise to direct the management policies of such person by contract or
otherwise.
5. "AGREEMENT" means this Amended and Restated Limited Partnership
Agreement of GOLFSMITH HOLDINGS, L.P., as may be amended or supplemented from
time to time.
6. "AVAILABLE FUNDS" means Partnership cash on hand, as of the date of
the computation, including (without limitation) cash derived from any one or
more of the following sources: (a) Capital Contributions of the Partners made
pursuant to the terms of this Agreement, (b) all Partnership operating income,
and (c) the proceeds from any sale, financing, refinancing, condemnation or
casualty.
7. "BOOK VALUE" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except (a) the initial Book Value of any
asset contributed by a Partner to the Partnership shall be the fair market value
of such asset, as reasonably determined by the General Partner; (b) the Book
Value of all Partnership assets shall be adjusted in the event of a revaluation
as provided in Section 3.6(d); (c) the Book Value of any Partnership asset
distributed to any Partner shall be the fair market value of such asset on the
date of distribution as reasonably determined by the General Partner; and (d)
such Book Value shall be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.
8. "CAPITAL ACCOUNT" means with respect to any Partner, the account
maintained for such Partner in a manner which the General Partner determines is
in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv).
9. "CAPITAL CONTRIBUTIONS" means the total of all capital contributions
of the Partners pursuant to Sections 3.1 and 3.2, including, but not limited to,
the Initial Capital Contribution and the Additional Capital Contributions.
10. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
11. "DEPRECIATION" means, for each Fiscal Year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Book Value of an asset differs from its adjusted basis for
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federal income tax purposes at the beginning of such year or other period (as a
result of property contributions or adjustments to such values). Depreciation
shall be adjusted as necessary so as to be an amount which bears the same ratio
to such beginning Book Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year or other period is zero, Depreciation for such year or other
period shall be determined with reference to such beginning Book Value using any
reasonable method selected by the General Partner.
12. "DISPOSE," "DISPOSING" OR "DISPOSITION" means, with respect to any
asset (including, but not limited to, Partnership Interests or any portion
thereof), a sale, assignment, transfer, conveyance, gift, encumbrance, exchange,
mortgage, pledge, hypothecation, grant of security interest or lien in or other
disposition of such asset, whether such disposition be voluntary, involuntary or
by operation of law, including, but not limited to, the following: (a) in the
case of an asset owned by a natural person, a transfer of such asset upon the
death of its owner, whether by will, intestate succession or otherwise; (b) in
the case of an asset owned by an Entity, (i) a merger or consolidation of such
Entity, (ii) a conversion of such Entity into another type of Entity, (iii) a
change in control of such Entity ("control" being defined as a direct or
indirect transfer of fifty percent (50%) or more of the voting securities of
such Entity), or (iv) a distribution of such asset in connection with the
dissolution, liquidation, winding-up or termination of such Entity (unless, in
the case of dissolution, such Entity's business is continued without the
commencement of liquidation or winding-up); and (c) disposition in connection
with, or in lieu of, a foreclosure of an encumbrance. Each Partner agrees that
to the extent its interest in the Partnership is at any time held by a
partnership, corporation, limited liability company, trust or other Entity, such
Partner will seek to transfer such interest only through a direct transfer of
such interest and that no transfer or other disposition, to a single transferee
or related group of transferees, of more than fifty percent (50%) of the stock,
partnership interest, membership interest or other voting securities or
beneficial interest in any such Entity which holds an interest in the
Partnership will be effected, directly or indirectly without the consent of the
General Partner.
13. "DISTRIBUTABLE CASH FLOW" means Available Funds of the Partnership
from any source (other than proceeds of liquidation) after (i) paying or making
adequate provision for the ordinary and necessary expenses of the Partnership,
(ii) paying or making adequate provision for any debts or liabilities of the
Partnership to the extent required under any agreement with any lender or
creditor (other than a Partner) and (iii) establishing reserves to meet current
or reasonably expected obligations of the Partnership to the extent that the
General Partner shall determine such reserves to be necessary or advisable.
14. "DLJ" means, collectively, DLJ Investment Partners, L.P., DLJ
Investment Funding, Inc., and DLJ ESC II L.P., or any successor or successors to
all or part of any interest of any such Entity in the Partnership, each in the
capacity as limited partner of the Partnership.
15. "ENTITY" means any Person other than a natural person.
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16. "FISCAL YEAR" means the fiscal year of the Partnership as
established in Section 7.2 hereof.
17. " GOLFSMITH BUSINESS" means, collectively, the business of
manufacturing and the wholesale, catalog and retail sale and distribution of
golf equipment, components, apparel and other golf accessories.
18. "GENERAL PARTNER" means Golfsmith GP Holdings, Inc., a Delaware
corporation, or any successor in such capacity.
19. "GII" means Golfsmith International, Inc., a Delaware corporation.
20. "GII STOCK AMOUNT" means a number of shares of Qualified Capital
Stock equal to seven and one-half percent (7 1/2%) of the issued and outstanding
Qualified Capital Stock immediately prior to the consummation of a Conversion
Event or an S Termination Event (as such terms are defined in Section 6.4(a)),
in each case as determined after giving effect to the issuance of the GII Stock
Amount; provided, however, that prior to giving effect to the issuance of the
GII Stock Amount, the Qualified Capital Stock issued and outstanding shall be
reduced by any Qualified Capital Stock issued after the effective date hereof
(i) upon the exercise of any stock option granted pursuant to the GII 1997
Incentive Plan (as the same may from time to time be amended, but without regard
to any increase in the authorized number of shares for which options may be
granted over the number of shares authorized under such Plan in effect as of the
date of this Agreement), provided the exercise price of such stock option is no
less than the fair market value of such Qualified Capital Stock (as determined
in good faith by the Board of Directors of GII) as of the date of grant of such
stock option, and (ii) in exchange for cash or property in an amount not less
than the fair market value of such Qualified Capital Stock (as determined in
good faith by the Board of Directors of GII) as of its date of issuance. The GII
Stock Amount shall not be reduced by any other issuance of Qualified Capital
Stock (including the grant of any other stock options to acquire Qualified
Capital Stock to any person affiliated with GII).
21. "INITIAL CAPITAL CONTRIBUTION" means, as to any Partner, any amount
contributed or required to be contributed to the capital of the Partnership by a
Partner pursuant to Section 3.1.
22. "INVESTMENTS" means any real or personal, tangible or intangible
property purchased by or transferred to the Partnership including but not
limited to equity interests in the Subsidiaries and any other assets associated
with or related to the ownership or operation of a Golfsmith Business.
23. "LIMITED PARTNER" means each party listed as Limited Partners on
Schedule 1 of this Agreement, or any successor or successors to all or part of
any such interest, or any party who becomes an additional limited partner of the
Partnership in accordance with this Agreement and the Act, each in the capacity
as a limited partner of the Partnership.
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24. "MAJORITY IN INTEREST" means, with respect to any referenced group
of Partners, a combination of such Partners who, in the aggregate, own more than
fifty percent (50%) of the Units owned by all of the Partners included in such
referenced group.
25. "MINIMUM GAIN" means, with respect to all nonrecourse liabilities
of the Partnership, the minimum amount of gain that would be realized by the
Partnership if the Partnership disposed of the Partnership property subject to
such liability in full satisfaction thereof computed in accordance with Treasury
Regulations Section 1.704-2(d).
26. "MINIMUM GAIN SHARE" means, for each Partner, such Partner's share
of Minimum Gain for the Fiscal Year (after taking into account any decrease in
Minimum Gain for such year), such share to be determined under Treasury
Regulations Section 1.704-2(g).
27. "NONRECOURSE DEDUCTIONS" means, for each Fiscal Year or other
period, an amount of Partnership deductions that are characterized as
"nonrecourse deductions" under Treasury Regulations Section 1.704-2(c).
28. "NOTES" means those certain Senior Subordinated Notes due 2005
issued by the Partnership and the General Partner, payable to the order of DLJ.
29. "OFFICER" means any person appointed by the General Partner to
serve as an officer of the Partnership in accordance with Article 7.
30. "ORIGINAL AGREEMENT" has the meaning assigned to such term in the
preamble to this Agreement.
31. "PARTNER" means the General Partner or one of the Limited Partners,
and "Partners" means such partners collectively.
32. "PARTNER NONRECOURSE DEBT" means any nonrecourse debt (as defined
in Treasury Regulations Section 1.704-2 (b)(4)) of the Partnership for which any
Partner bears the economic risk of loss, in accordance with Treasury Regulations
Sections 1.704-2(b)(4) and 1.752-2.
33. "PARTNER NONRECOURSE DEBT MINIMUM GAIN" means, for each Partner,
the amount of Minimum Gain for the Fiscal Year or other period attributable to
such Partner's Partner Nonrecourse Debt determined in accordance with Treasury
Regulations Section 1.704-2(i)(2).
34. "PARTNER NONRECOURSE DEDUCTIONS" means any Losses or other losses
or deductions of the Partnership that must be allocated to a Partner who bears
the economic risk of loss for the partner nonrecourse liability to which the
Losses or other losses or other deductions relate, determined in accordance with
Treasury Regulations Section 1.704-2(i)(1).
35. "PARTNERSHIP" means Golfsmith Holdings, L.P., a Delaware limited
partnership formed pursuant to the Original Agreement.
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36. "PARTNERSHIP INTEREST" means with respect to any Partner, all of
such Partner's ownership interest as a Limited Partner or General Partner, as
the case may be, including the rights to receive distributions and any
obligations of such Partner under this Agreement and the Act.
37. "PROFITS" AND "LOSSES" means, for each Fiscal Year or other period,
an amount equal to the Partnership's taxable income or loss for such year or
period, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
(b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses pursuant to this
definition, shall be subtracted from such taxable income or loss;
(c) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Book Value of
the property disposed of, notwithstanding that the adjusted tax basis of
such property differs from such Book Value;
(d) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Fiscal Year
or other period, computed in accordance with the definition of
"Depreciation" herein; and
(e) Notwithstanding any other provision of this definition, any
items which are specifically allocated pursuant to Section 5.2(c) shall
not be taken into account in computing Profits and Losses.
38. "QUALIFIED CAPITAL STOCK" means any and all shares, interests,
participations or other equivalents (however designated and whether or not
voting) of GII which does not, by its terms (or by the terms of any security
into which it is convertible or for which it is interchangeable), or, upon the
happening of any event, mature or become mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or become redeemable at the sole option of
the holder thereof on or before the final maturity date of the Notes, including
each class of common stock or preferred stock of GII.
39. "QUALIFIED IPO" means an initial underwritten public offering of
Qualified Capital Stock in which GII receives at least $30,000,000 of gross
proceeds and (ii) immediately following such offering, (y) there shall be at
least 50 holders of Qualified Capital Stack sold in such offering and (z) such
Qualified Capital Stock shall be listed on a national securities exchange or
quoted on the NASDAQ National Market System.
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40. "SECURITIES PURCHASE AGREEMENT" means that certain Securities Purchase
Agreement among Golfsmith GP Holdings, Inc., Golfsmith Holdings, L.P. and DLJ
Investment Partners, L.P., DLJ Investment Funding, Inc., and DLJ ESC II L.P.,
dated as of the date of this Agreement.
41. "SUBSIDIARY" means any partnership, limited liability company,
corporation or other entity of which the Partnership owns, directly or through
one or more intermediate Subsidiaries, more than fifty percent (50%) of either
the outstanding voting securities or equity interests, including but not
limited to Golfsmith GP, L.L.C., Golfsmith Delaware, L.L.C., Golfsmith NU,
L.L.C., Golfsmith USA, L.L.C., Golsfmith Canada, L.L.C., and Golfsmith Europe,
L.L.C., each a Delaware limited liability company, and Golfsmith International,
L.P., a Delaware limited partnership.
42. "TAG ALONG RIGHTS AGREEMENT" means that certain Tag Along Rights
Agreement among ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Golfsmith
International, Inc., DLJ Investment Partners, L.P., DLJ Investment Funding,
Inc., and DLJ ESC II L.P., dated as of the date of this Agreement.
43. "TREASURY REGULATIONS" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
44. "UNIT ALLOCATION" means the allocation of distributions of
Distributable Cash Flow or the allocations of Profits, Losses, income gain,
losses, deductions and credits, as the case may be, which is based on each
Partner's Units relative to all of the outstanding Units of all of the Partners.
45. "UNITS" means all or a portion of a Partnership Interest of a Partner
at any particular time as determined under this Agreement, including the rights
and obligations as a Partner in the Partnership under Section 3.7 and the Act.
ARTICLE 2
ORGANIZATION
Section 2.1 FORMATION
The parties have previously formed the Partnership as a Delaware limited
partnership under and pursuant to the provisions of the Original Agreement and
the Act. The Partnership is hereby continued under and pursuant to the
provisions of this Agreement and the Act.
Section 2.2 NAME, PLACE OF BUSINESS AND OFFICE
(a) The Partnership shall be conducted under the name and style of
GOLFSMITH HOLDINGS, L.P., although such business may be conducted under any
other name as may be required by local law. The Partnership shall maintain its
principal office at the following address: ▇▇▇▇ ▇▇▇▇▇ ▇-▇ ▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
8753 The General Partner may at any time change the location
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of the Partnership's office and may establish additional offices, if it deems
it advisable. The General Partner shall promptly give the Partners written
notice of any change in location of the principal office of the Partnership.
(b) The Corporation Service Company shall serve as agent for service of
process on the Partnership; and the address of such agent shall be ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The General Partner has recorded an
appropriate certificate of limited partnership in the proper records in the
State of Delaware. The General Partner shall take such steps as are necessary
to qualify the Partnership to conduct business in other states as required by
local law.
Section 2.3 PURPOSES AND CHARACTER OF BUSINESS; POWERS
(a) The purposes and character of the business of the Partnership are as
follows:
(1) to acquire, hold, lease, manage, operate, finance, own, develop,
sell, lease or transfer all or any portion of the Investments;
(2) to establish, acquire or invest in, either singularly or with
other parties, other partnerships, corporations, limited liability
companies, joint ventures, associations, trusts and other entities
engaged in all or any of the activities authorized herein;
(3) to acquire, hold, lease, own, develop or improve all or any
portion of any real or personal property required in connection
therewith, including, but not limited to, any equity interests or debt
instruments;
(4) to borrow money, including, but not limited to, incurring
financing to acquire, hold, manage or operate any real or personal
property and to renew, extend, modify, rearrange or refinance such
Partnership borrowings from time to time;
(5) to mortgage, pledge, assign, encumber or grant security interests
in Partnership assets, revenues and/or income;
(6) to sell, lease, sublease, assign, transfer, exchange or otherwise
dispose of all of the property of the Partnership, or any portion
thereof or interest therein;
(7) to make any investment and expenditure, to borrow money and to
take any and all other actions which are incidental or reasonably
related to any of the specific purposes recited above; and
(8) to do any and all things necessary or desirable to carry out the
foregoing activities and any other activity contemplated by this
Agreement.
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(b) The Partnership shall have any and all powers which are necessary or
desirable to carry out the purposes and business of the Partnership. The
Partnership shall carry out the foregoing activities pursuant to the
arrangements set forth in this Agreement.
Section 2.4 TERM
The Partnership term shall commence on the effective date of this
Agreement and shall continue in full force and effect until December 31, 2048,
unless dissolved earlier pursuant to the provisions hereof.
ARTICLE 3
PARTNERSHIP CAPITAL
Section 3.1 INITIAL CAPITAL CONTRIBUTIONS OF THE PARTNERS
Each of the Partners has previously contributed, or shall, upon the
execution of this Agreement, contribute cash or other property to the
Partnership in the aggregate amount or value set forth as the Initial Capital
Contribution of such Partner on Schedule 1 attached hereto and hereby made a
part hereof. Such cash and property shall be the Initial Capital Contributions
of the Partners to the Partnership and, upon making such contribution, each
Partner shall receive its Partnership Interest and its Units. The Partners
agree that the Book Value of the property to be contributed by each Partner in
respect of its Initial Capital Contribution shall be equal to the value of such
property as reflected on Schedule 1 attached hereto, and such contributing
Partner shall receive a credit to its Capital Account equal to the amount of
such Book Value. The Partners agree to make their respective Initial Capital
Contributions. Notwithstanding anything to the contrary in the Securities
Purchase Agreement, each of DLJ (i) be deemed to have made an Initial Capital
Contribution equal to the amount shown on Schedule 1 attached hereto, (ii)
shall receive a credit to its Capital Account equal to such amount, and (iii)
shall not be deemed to have made any other Capital Contribution to the
Partnership.
Section 3.2 ADDITIONAL CAPITAL CONTRIBUTIONS OF THE PARTNERS
No Partner shall be required to make Additional Capital Contributions to
the Partnership. However, at the direction of the General Partner, the
Partnership may from time to time make an offering of additional Limited
Partnership Interests in exchange for Capital Contributions to the Partnership.
Prior to accepting any Capital Contributions and/or Additional Capital
Contributions from any Person, the General Partner shall, if required pursuant
to Paragraph 4F of the Securities Purchase Agreement, send to all Partners the
notice required by such Paragraph 4F (the "Paragraph 4F Notice"). Any Partner
who fails to reply to the Paragraph 4F Notice within the twenty (20) day period
described in Paragraph 4F of the Securities Purchase Agreement shall be deemed
to have elected not to participate. If all Partners elect to contribute their
respective pro rata portion of the total amount of Capital Contributions
described in the Paragraph 4F Notice, no adjustment of Partnership Interests of
the Partners shall be necessary, although the General Partner shall be
authorized to issue additional Units to the Partners. If all Partners do not
elect to contribute their
9
respective pro rata portions of the total amount of Capital Contributions
described in the Paragraph 4F Notice, or if Paragraph 4F of the Securities
Purchase Agreement is not applicable to such offering of additional Limited
Partnership Interests, the General Partner shall (x) accept contributions from
electing Partners of their respective pro rata portions of the Capital
Contributions requested in the Paragraph 4F Notice, if any, and (y) may, in its
sole discretion, take any steps to raise any remaining additional Capital
Contributions from Persons other than Partners ("New Limited Partners"). In the
event that the Partners or any New Limited Partners make Capital Contributions,
the General Partner is authorized to issue Units to such Partners being
adjusted. The General Partner is hereby authorized to make any necessary
amendments to this Agreement, including Schedule 1 attached hereto, to reflect
the issuance of such Units and adjustments of such Partnership Interests. The
Capital Contributions made pursuant to this Section 3.2 shall constitute
Additional Capital Contributions, if made by an existing Partner, or an Initial
Capital Contribution if made by a New Limited Partner.
Section 3.3 PARTNERSHIP CAPITAL
(a) Except as may be otherwise specifically provided in this Agreement,
no Partner shall be paid interest on any Capital Contribution to the
Partnership.
(b) No Partner shall have the right to withdraw all or any part of its
Capital Contribution or to receive any return on any portion of its Capital
Contribution, except as may be otherwise specifically provided in this
Agreement.
(c) Under circumstances involving a return of any Capital Contribution,
no Partner shall have the right to receive property other than cash.
Section 3.4 LIABILITY OF PARTNERS
(a) No Limited Partner shall be liable for the debts, liabilities,
contracts or any other obligation of the Partnership, except to the extent
expressly provided herein or in the Act. No Partner shall be liable for the
debts or liabilities of any other Partner.
(b) No Partner shall be required to contribute to the capital of, or
loan, the Partnership any funds other than as expressly required in this
Agreement.
(c) The General Partner shall not be liable for the return of all or any
portion of the Capital Contributions of any Partner.
Section 3.5 LOANS BY PARTNERS OR AFFILIATES
Subject to obtaining any approvals required under this Agreement for the
Partnership to borrow funds, any Partner or Affiliate may (but shall not be
obligated to) at any time, upon obtaining the consent of each of the Partners,
loan money to the Partnership to finance Partnership operations, to finance or
refinance the property, to pay the debts and obligations of the Partnership, or
for any other Partnership purpose. If any Partner or an Affiliate lends funds
to the Partnership, such Partner
10
or Affiliate shall be entitled to receive interest on such loan at an interest
rate to be agreed upon by such Partner or Affiliate and a Majority in Interest
of the Partners.
Section 3.6 CAPITAL ACCOUNTS
(a) A Capital Account shall be established and maintained for each
partner.
(b) A Partner's Capital Account shall be credited with (i) the amount of
cash and the initial Book Value of any property contributed by such Partner to
the Partnership, (ii) such Partner's allocable share of Profits, income and
gain and (iii) the amount of any Partnership liabilities that are expressly
assumed by such Partner or that are secured by any Partnership property
distributed to such Partner.
(c) A Partner's Capital Account shall be debited with (i) the amount of
cash and the Book Value of any Partnership property distributed to such Partner
pursuant to any provision of this Agreement, (ii) such Partner's allocable
share of Losses, deductions and other losses and (iii) the amount of any
liabilities of such Partner that are expressly assumed by the Partnership or
that are secured by any property contributed by such Partner to the Partnership.
(d) Upon the occurrence of certain events (as described in Treasury
Regulations Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(4) and 1.704-2), the
Partners may agree to increase or decrease the Capital Accounts of the
Partners to reflect a revaluation of Partnership property on the Partnership's
books.
(e) The Capital Account of each Partner shall be determined after giving
effect to all transactions which have been effected prior to the time when such
determination is made giving rise to the allocation of Profits and Loses and to
all contributions and distributions theretofore made. Any person who acquired
a Partnership Interest directly from a Partner, or whose Partnership Interest
shall be increased by means of a transfer to it of all or part of the interest
of another Partner, shall have a Capital Account which includes the Capital
Account balance of the Partnership Interest so acquired or transferred.
(f) In the event that any Partner makes a loan to the Partnership, such
loan shall not be considered a contribution to the capital of the Partnership
and shall not increase the Capital Account of the lending Partner. Repayment
of such loans shall not be deemed withdrawals from the capital of the
Partnership.
(g) Any fees, salary or similar compensation payable to a Partner
pursuant to this Agreement shall be deemed a guaranteed payment for federal
income tax purposes and not a distribution to such Partner for such purposes.
Such payments to a Partner shall not reduce the Capital Account of such
Partner, except to the extent of its distributive share of any Partnership
Loses or other downward capital adjustment resulting from such payment.
(h) From time to time the General Partner may make such modifications to
the manner in which the Capital Accounts are computed to comply with Treasury
Regulations Sections 1.704-
11
1(b) and 1.704-2 provided that such modification is not likely to have a
material effect on the amounts distributable to any Partner pursuant to this
Agreement.
(i) The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted
and applied in a manner consistent with such Treasury Regulations.
(j) The General Partner shall be obligated to restore a deficit balance in
its Capital Account upon dissolution of the Partnership or upon liquidation of
its interest in the Partnership, whichever is earlier. No Limited Partner shall
be obligated to restore a deficit balance in its Capital Account.
Section 3.7 UNITS
The initial Units of each Partner is set forth opposite its respective name
of Schedule 1, attached hereto. The General Partner may issue additional Units
to the existing Limited Partners or any successor or additional Partners, or
redeem Units, from time to time to reflect any change in the relative
Partnership Interests of the Partners to the extent such changes in Partnership
Interests are in accordance with the terms of this Agreement.
Section 3.8 NO RIGHTS TO PRIORITY OF RETURN OF CAPITAL
Except as otherwise expressly provided herein, no partner shall have any
priority over any other Partner as to the return of its contributions to capital
or as to compensation by way of income.
ARTICLE 4
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
Section 4.1 MANAGEMENT AND CONTROL OF THE PARTNERSHIP
The General Partner shall have all the rights, powers and obligations of a
general partner of a limited partnership under the Act. Except as otherwise
provided in Section 4.3, the General Partner shall have the right and obligation
to manage and control the business and affairs of the Partnership and to make
the following decisions on behalf of the Partnership:
(a) to make all decisions relating to the day-to-day arrangement and
operation of the Partnership, subject to the limitations of this Agreement;
(b) to borrow money on behalf of the Partnership in such amounts and on
such terms and the General Partner may deem appropriate and to renew, extend,
modify, rearrange or refinance such Partnership borrowings from time to time;
12
(c) to sell, exchange, lease or otherwise transfer the assets of the
Partnership, whether or not in the ordinary course of business;
(d) to mortgage, pledge, assign, encumber or grant security interests in
Partnership assets, revenues and/or income as security for any borrowing
permitted under Section 4.1(b);
(e) to institute, prosecute, defend and settle any legal, arbitration or
administrative actions or proceedings on behalf of or against the Partnership;
(f) to acquire, lease, hold or sell any or all Partnership real or
personal property or any interest therein;
(g) to hire and terminate employees of the Partnership and engage the
services of attorneys, consultants, accountants and other independent
contractors;
(h) to appoint, elect, remove and supervise the activities of the
Officers of the Partnership and to designate appropriate compensation to be
paid to each such Officer during his or her term, of office;
(i) to collect all payments due and owing to the Partnership;
(j) to pay all expenses, debts and obligations of the Partnership,
including, but not limited to, all operating costs of the Partnership, at such
time or times and from any source of funds of the Partnership as the General
Partner deems necessary or desirable;
(k) to establish such reasonable reserves as the General Partner
determines to be advisable;
(l) to organize partnerships, joint ventures, limited liability
companies, corporations or other entities consistent with he purposes of the
Partnership;
(m) to cause all Partnership activities to be performed in accordance
with applicable laws;
(n) to prepare and file tax returns on behalf of the Partnership in any
federal, state or foreign tax jurisdiction which may apply;
(o) to execute and deliver such documents on behalf of the Partnership as
the General Partner may deem necessary or desirable for the Partnership's
purposes and business;
(p) to perform, or cause to be performed, all the Partnership's
obligations under any agreement (including without limitation any loan
documents) to which the Partnership or any nominee of the Partnership is a
party, except to the extent such obligations may be inconsistent with other
obligations of the General Partner under this Agreement;
13
(q) to obtain and maintain any and all types of insurance coverage on the
assets and business of the Partnership and to protect the General Partner
against liability from third parties in such amounts as the General Partner may
deem necessary or desirable;
(r) to pay all taxes, assessments, and other impositions applicable to
Partnership assets and undertake when appropriate any action or proceeding
seeking to reduce such taxes, assessments or other impositions;
(s) to determine the timing and amount of any distributions to the
Partners, except as otherwise provided for in this Agreement;
(t) to admit one or more additional or substituted Partners;
(u) to open and maintain bank accounts for the deposit of Partnership
funds, with withdrawals to be made upon such signature or signatures as the
General Partner may designate;
(v) to make such elections as are necessary or desirable pursuant to the
Code;
(w) to act as "tax matters partner" for the Partnership in accordance
with the applicable provisions of the Code; and
(x) to perform any and all acts reasonably deemed by the General Partner
as necessary or desirable to conduct the business and affairs of the
Partnership.
Section 4.2 AUTHORITY OF THE GENERAL PARTNER AS TO THIRD PERSONS
Any person dealing with the Partnership or the General Partner may rely
upon a certificate signed by the General Partner, thereunto duly authorized,
concerning:
(a) the identity of the General Partner or any other Partner;
(b) the existence or nonexistence of any fact or facts that constitute
conditions precedent to acts by the General Partner or in any other manner
germane to the affairs of the Partnership;
(c) the person or persons who are authorized to execute and deliver any
instruments or document of the Partnership; or
(d) any act or failure to act by the Partnership or concerning any other
matter whatsoever involving the Partnership, or any Partner as it regards
Partnership business.
Section 4.3 RESTRICTIONS ON THE AUTHORITY OF THE GENERAL PARTNER
Notwithstanding anything to the contrary contained in Section 4.1, without
the consent of each Limited Partner, the General Partner shall not have the
power of authority:
14
(a) to confess a judgment against the Partnership; or
(b) to possess Partnership property, or assign, pledge or
hypothecate its rights in specific Partnership property for other than a
Partnership purpose.
Section 4.4 REIMBURSEMENT OF EXPENSES AND COMPENSATION OF THE
GENERAL PARTNER
(a) The General Partner or any of its Affiliates may be paid
reasonable compensation for its services rendered in managing the business and
affairs of the Partnership.
(b) Each Partner shall be entitled to reimbursement by the
Partnership from time to time for all reasonable out-of-pocket expenses which
are incurred by such Partner in connection with the business and affairs of the
Partnership.
Section 4.5 DEVOTION OF TIME
The General Partner shall devote such time, services and efforts as may
be reasonably necessary for the proper furtherance, management, operation,
maintenance and care of the Partnership business and properties.
SECTION 4.6 LIABILITY OF THE GENERAL PARTNER
(a) It is the intent of this Section 4.6 to restrict the liability
and fiduciary duties of the General Partner as provided herein. Neither the
Partnership nor any Partner shall have any claim against the General Partner by
reason of any act or omission of the General Partner specified in this Section
4.6, provided that such act or omission was performed by the General Partner in
the belief that the General Partner was acting within the scope of its
authority under this Agreement and that such act or omission did not involve
the General Partner's BAD FAITH, WILLFUL MISCONDUCT OR FRAUD. In furtherance of
this limitation of liability and fiduciary duties of the General Partner, the
following provisions shall apply:
(1) It will not constitute a breach of fiduciary or other
duty for the General Partner to engage attorneys, accountants and other
advisors on behalf of the Partnership, even though such persons may also
be retained from time to time by the General Partner or any of its
officers, directors or shareholders, and such persons may be engaged
with respect to any matter in which the interest of the Partnership and
the General Partner may differ, or may be engaged by both the
Partnership and the General Partner with respect to any other matter.
The General Partner shall not be responsible for any misconduct or
negligence on the part of any such attorney, accountant or other
advisor; and
(2) It will not constitute a breach of fiduciary or other
duty for the General Partner to contract or enter into any agreement or
arrangement with the Partnership with respect to any Partnership
property or any aspect of the operations of the Partnership.
15
(b) Notwithstanding anything to the contrary in Section 4.6(a), the
General Partner shall have no liability hereunder for failing to act if such act
required the consent of some or all of the Limited Partners and the required
consent to such action was not granted. Any amendment, modification or repeal of
this Section 4.6 or any provision in this Section 4.6 shall be prospective only
and shall not in any way affect the limitations on the General Partner's
liability to the Partnership and the Limited Partners under this Section 4.6 as
in effect immediately prior to such amendment, modification or repeal with
respect to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when claims relating to such matters may
arise or be asserted.
Section 4.7 INDEMNIFICATION OF THE GENERAL PARTNER
(a) To the fullest extent allowed by the Act and other applicable
law, the Partnership shall indemnify, defend against and save harmless the
General Partner and its Officers, directors, shareholders, employees and agents
from, any expenses (including reasonable attorneys' fees and court costs),
liabilities, claims, causes of action, losses or damages incurred by reason of
any act or omission performed or omitted by or on behalf of the General Partner
in good faith on behalf of the Partnership or the Limited Partners and in a
manner reasonably believed by the General Partner or its Officers, directors,
shareholders, employees or agents to be within the scope of authority granted to
it by this Agreement, or if the General Partner or its Officers, directors,
shareholders, employees or agents to be within the scope of authority granted to
it by this Agreement, or if the General Partner or its Officers, directors,
shareholders, employees or agents reasonably believed the act or omission was
not opposed to the Partnership's best interests and was not unlawful, REGARDLESS
OF WHETHER SUCH ACT OR OMISSION CONSTITUTED THE SOLE, PARTIAL OR CONCURRENT
NEGLIGENCE (WHETHER ACTIVE OR PASSIVE) OF THE GENERAL PARTNER OR ITS OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES OR AGENTS.
(b) The scope of the indemnification provided in this Section shall
not be greater than that permitted pursuant to the provisions of Section 17-108
of the Act, and such provisions of the Act are incorporated herein in their
entirety. The satisfaction of any indemnification under this Section shall be
from and limited to Partnership assets, including insurance proceeds, if any,
and no Limited Partner shall have any personal liability on account thereof.
Section 4.8 MANAGEMENT BY LIMITED PARTNER
No Limited Partner shall participate in the management or business of
the Partnership, use its name in the Partnership's business or perform any
actions prohibited to limited partners under the laws of the State of Delaware
or the laws of any other jurisdiction where the Partnership is qualified to
conduct business. No Limited Partner shall have the power to represent, act for,
sign for or bind the General Partner or the Partnership. The Limited Partner
hereby consents to the exercise by the General Partner of the powers and
authority conferred on the General Partner by this Agreement.
Section 4.9 TRANSACTIONS WITH RELATED PARTIES
The General Partner may agree, contract or arrange with itself or any of
its Affiliates in the name and on behalf of the Partnership, for the performance
of services for the Partnership, or with
16
respect to any other transaction, agreement or arrangement, and the payment of
compensation or consideration therefor, in carrying out the business of the
Partnership, provided that the consideration or compensation under any such
arrangement or other agreement shall be upon commercially reasonable terms with
respect to such transaction, agreement or arrangement.
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
Section 5.1 DISTRIBUTIONS
Except as otherwise provided in Section 10.2, the Distributable Cash Flow
shall be distributed to the Partners, pro rata, in accordance with each
Partner's Unit Allocation as follows:
(a) First, an amount equal to forty percent (40%) of all Profits, income
and gain cumulatively allocated to such Partner pursuant to this Agreement,
less the cumulative cash previously distributed to such Partner pursuant to
this Section 5.1(a) (which percentage may be adjusted by the General Partner
from time to time so that amounts distributed pursuant to this Section 5.1(a)
are an approximation of the cumulative federal, state and local income tax
liabilities of the Partners calculated at the highest marginal rates applicable
to individuals and taking into account those states in which the Partnership
conducts business); and
(b) Then, to the Partners to the extent the General Partner, in its sole
discretion, determines to distribute any remaining Distributable Cash Flow.
Section 5.2 ALLOCATIONS OF PROFITS AND LOSSES
(a) Profits. Except as provided in Sections 5.2(c) and 5.2(d), Profits for
any Fiscal Year will be allocated in the following order:
(1) First, to each Partner until the cumulative Profits allocated to
such Partner under this Section 5.2(a)(1) equals the cumulative Losses
allocated to such Partner under Section 5.2(b)(2) for all prior periods;
and
(2) The balance, if any, to the Partners in proportion to their
respective Unit Allocation.
(b) Losses. Except as provided in Sections 5.2(c) and 5.2(d), Losses for
any Fiscal Year will be allocated in the following order:
(1) First, to each Partner until the cumulative Losses allocated to
such Partner under this Section 5.2(b)(1) equals the cumulative Profits
allocated to such Partner under Section 5.2(a)(2) for all prior periods;
and
17
(2) The balance, if any, to the Partners in proportion to their
respective Unit Allocation.
(c) Special Allocations. Except as otherwise provided in this Agreement,
the following special allocations will be made in the following order and
priority:
(1) Partnership Minimum Gain Chargeback. Notwithstanding any other
provision of this Section, if there is a net decrease in Partnership
Minimum Gain during any taxable year or other period for which allocations
are made, the Partners will be specially allocated items of Partnership
income and gain for that period (and, if necessary, subsequent periods).
The amount allocated to each Partner under this Section 5.2(c)(1) shall be
an amount equal to such Partner's share of the net decrease in Partnership
Minimum Gain during such year or other period determined in accordance
with Treasury Regulations Section 1.704-2(g)(2). This Section 5.2(c)(1) is
intended to comply with the partnership minimum gain chargeback
requirements of the Treasury Regulations and the exceptions thereto and
will be interpreted consistently therewith.
(2) Partner Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Section (other than Section
5.2(c)(1) which shall be applied first), if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain during any taxable year or other
period for which allocations are made, any Partner with a share of such
Partner Nonrecourse Debt Minimum Gain attributable to such Partner
Nonrecourse Debt (determined under Treasury Regulations Section
1.704-(2)(i)(5)) as of the beginning of the year shall be specially
allocated items of Partnership income and gain for that period (and, if
necessary, subsequent periods) in proportion to the portion of such
Partner's share of the net decrease in the Partner Nonrecourse Debt
Minimum Gain with respect to such Partner Nonrecourse Debt that is
allocable to the disposition of Partnership property subject to such
Partner Nonrecourse Debt. The items to be so allocated shall be determined
in accordance with Regulations Section 1.704-2(g). This Section is
intended to comply with the partner nonrecourse debt minimum gain
chargeback requirements of the Treasury Regulations and the exceptions
thereto and shall be interpreted consistently therewith.
(3) Qualified Income Offset. A Partner who unexpectedly receives any
adjustment, allocation or distribution described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be specially allocated
items of Partnership income and gain in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the
Adjusted Capital Account Deficit of the Partner as quickly as possible.
(4) Nonrecourse Deductions. Nonrecourse Deductions for any taxable
year or other period for which allocations are made will be allocated
among the Partners in proportion to their respective Unit Allocation.
(5) Partner Nonrecourse Deductions. Notwithstanding anything to the
contrary in this Agreement, any Partner Nonrecourse Deductions for any
taxable year or other period for which allocations are made will be
allocated to the Partner who bears the economic risk
18
of loss with respect to the Partner Nonrecourse Debt to which the Partner
Nonrecourse Deductions are attributable in accordance with Treasury
Regulations Section 1.704-2(i).
(6) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset under Code Sections 734(b) or
743(b) is required to be taken into account in determining Capital
Accounts under Treasury Regulations Section 1.704-1(b)(2)(iv)(m), the
amount of the adjustment to the Capital Accounts will be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases the basis), and the gain or loss will be
specially allocated to the Partners in a manner consistent with the manner
in which their Capital Accounts are required to be adjusted under Treasury
Regulations Section 1.704-1(b)(2)(iv)(m).
(7) Depreciation Recapture. In the event there is any recapture of
Depreciation or investment tax credit, the allocation of gain or income
attributable to such recapture shall be shared by the Partners in the same
proportion as the deduction for such Depreciation or investment tax credit
was shared.
(8) Reallocation. To the extent Losses allocated to a Partner would
cause the Partner to have an Adjusted Capital Account Deficit at the end
of any Fiscal Year, the Losses will be reallocated to the General Partner.
If the General Partner receives an allocation of Losses otherwise
allocable to a Limited Partner in accordance with this Section, the
General Partner shall be allocated Profits in subsequent Fiscal Years
necessary to reverse the effect of such allocation of Losses. Such
allocation of Profits (if any) shall be made before any allocations under
Section 5.2(a) but after any other allocations under Section 5.2(c).
(9) Interest in Partnership. Notwithstanding any other provision of
this Agreement, no allocation of Profit or Loss or item of Profit or Loss
will be made to a Partner if the allocation would not have "economic
effect" under Treasury Regulations Section 1.704-1(b)(2)(ii) or otherwise
would not be in accordance with the Partner's interest in the Partnership
within the meaning of Treasury Regulations Section 1.704-1(b)(3) or
1.704-1(b)(4)(iv). The General Partner will have the authority to
reallocate any item in accordance with this Section 5.2(c)(9).
(d) Curative Allocations. The allocations set forth in Sections 5.2(c)(1)
through (9) (the "Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulations Section 1.704-1(b) and 1.704-2. The
Regulatory Allocations may not be consistent with the manner in which the
Partners intend to divide Partnership distributions. Accordingly, the General
Partner is authorized to further allocate Profits, Losses, and other items among
the Partners so as to prevent the Regulatory Allocations from distorting the
manner in which Partnership distributions would be divided among the Partners
under Sections 5.1 and 8.2 but for application of the Regulatory Allocations. In
general, the reallocation will be accomplished by specially allocating other
Profits, Losses and items of income, gain, loss and deduction, to the extent
they exist, among the Partners so that the net amount of the Regulatory
Allocations and the special allocations to each Partner is zero. The General
Partner will have discretion to accomplish this result in any reasonable manner
that is consistent with Code Section 704 and the related Treasury Regulations.
19
(e) Tax Allocations--Code Section 704(c). In accordance with Code Section
704(c) and the related Treasury Regulations, income, gain, loss and deduction
with respect to any property contributed to the capital of the Partnership,
solely for tax purposes, will be allocated among the Partners so as to take
account of any variation between the adjusted basis to the Partnership of the
property for federal income tax purposes and the initial Book Value. If the Book
Value of any Partnership asset is adjusted, subsequent allocations of income,
gain, loss and deduction with respect to that asset will take account of any
variation between the adjusted basis of the asset for federal income tax
purposes and its Book Value in the same manner as under Code Section 704(c) and
the related Treasury Regulations. Any elections or other decisions relating to
allocations under this Section 5.2(e) will be made in any manner that the
General Partner determines reasonably reflects the purpose and intention of this
Agreement. Allocations under this Section are solely for purposes of federal,
state and local taxes and will not affect, or in any way be taken into account
in computing, any Partner's Capital Account or share of Profits, Losses or other
items or distributions under any provision of this Agreement.
(f) Other Allocation Rules. The following rules will apply to the
calculation and allocation of Profits, Losses and other items:
(1) Except as otherwise provided in the Agreement, all Profits,
Losses and other items allocated to the Partners will be allocated among
them in proportion to their Unit Allocation.
(2) For purposes of determining the Profits, Losses or any other
item allocable to any period, Profits, Losses and other items will be
determined on a daily, monthly or other basis, as determined by the
General Partner using any permissible method under Code Section 706 and
the related Treasury Regulations.
(3) Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction, credit and other allocations
not provided for in this Agreement will be divided among the Partners in
the same proportions as they share Profits and Losses.
(g) Partner Acknowledgement. The Partners agree to be bound by the
provisions of this Section in reporting their shares of Partnership income and
loss for income tax purposes.
Section 5.3 COMPLIANCE WITH CODE
The foregoing provisions of this Article relating to the allocation of
Profits, Losses and other items for federal income tax purposes are intended to
comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
Notwithstanding anything to the contrary, nothing in this Article shall apply if
it lacks "economic effect."
20
Section 5.4 ALLOCATIONS UPON TRANSFER OF PARTNERSHIP INTEREST
Profits or Losses attributable to any Partnership Interest which has been
transferred during any Partnership Fiscal Year shall be allocated between the
transferor and the transferee as follows:
(a) For the days in such Fiscal Year prior to and including the date of
the transfer, to the transferor.
(b) For the days in such Fiscal Year subsequent to the date of the
transfer, to the transferee.
ARTICLE 6
TRANSFERABILITY OF PARTNER'S INTEREST
Section 6.1 RESTRICTIONS ON TRANSFER OF INTEREST OF A PARTNER
(a) Except as otherwise provided in this Article, unless the General
Partner shall consent, no Partner shall withdraw or retire from the Partnership,
substitute any person in its stead, or Dispose of all or any portion of its
Partnership Interest; and any such prohibited Disposition shall be void. Without
limiting the generality of the foregoing, no General Partner consent under this
Section 6.1 (a) shall be required in connection with a Disposition pursuant to
Sections 6.3 or 6.4, provided that any such Disposition shall be subject to
Sections 6.5 and 6.6.
(b) Notwithstanding anything to the contrary contained herein, unless all
of the Partners shall consent, no Partner may Dispose of all or any portion of
its Partnership Interest if such Disposition would violate the terms and
provisions of the Securities Purchase Agreement or any agreements, instruments
or other writings executed in connection therewith; provided, however, any such
transfer shall be subject to Sections 6.2(b), 6.3, 6.4, 6.5 and 6.6.
Section 6.2. TRANSFERS BY A PARTNER
(a) Subject to the restrictions of Sections 6.1 (b), 6.5 and 6.6, a
Limited Partner may transfer, sell, or assign all or any portion of its
Partnership Interest to an Affiliate of such Limited Partner at any time.
(b) Except in connection with a Disposition pursuant to Sections 6.3 or
6.4, a Partner who desires to Dispose of all or any portion of its Partnership
Interest at any time shall first offer to sell all of the Partnership Interest
which such Partner proposes to Dispose of, together with a pro rata portion of
the Notes held by such partner or its Affiliates (if such a pro rata portion of
the Notes is required to be transferred pursuant to the Securities Purchase
Agreement), to all of the other Partners. Such offer shall be made by an
irrevocable written offer to sell all of the Partnership Interest which the
Partner proposes to Dispose of, together with a pro rata portion of the Notes
held by such partner or its Affiliates, if applicable, for the same price and on
the same terms which the Partner proposes to Dispose of such Partnership
Interest and any such Notes to the proposed transferee. Such offer
21
shall also contain a complete description of any transaction in which the
offering Partner proposes to Dispose of such Partnership Interest and any such
Notes to any third party, including the name of the proposed transferee and the
consideration for and other terms of the proposed transfer. The other Partners
shall have thirty (30) days after actual receipt of such offer within which to
advise the offering Partner whether or not such other Partners will purchase all
or a portion of such Partnership Interest and any such Notes. Each such other
Partner shall have the right to purchase such portion of the Partnership
Interest and any such Notes offered for sale as the number of Units owned by
such Partner at such time shall bear to the total Units owned by all the
Partners, excluding the offering Partner. If any Partner does not elect to
purchase its full portion of such Partnership Interest and any such Notes
offered for sale, the remaining Partnership Interest and any such Notes may be
purchased by the other Partners pro rata in the same manner. If the Partners
decline to purchase all of such Partnership Interest and any such Notes in
accordance with this Section, the offering Partner shall then have thirty (30)
days within which to Dispose of such Partnership Interest and Notes to the third
party named in the offer made by such Partner to the other Partners, upon the
terms described in such offer. Any such Disposition of Partnership Interest and
Notes to a third party shall be subject to all of the other terms and provisions
of this Agreement.
Section 6.3 TAG ALONG RIGHT WITH RESPECT TO SALE OF PARTNERSHIP INTEREST
(a) Subject to the restrictions of Sections 6.1(b), 6.5 and 6.6, when any
Limited Partner has received an offer (a "Third Party Offer") from a third party
(the "Third Party Offeror") to buy all or any part of such Limited Partner's
Partnership Interest, and such Limited Partner desires to accept the Third Party
Offer, and the right of first refusal described in Section 6.2 is not exercised
with respect to all of such Limited Partner's Partnership Interest that is
offered for purchase or sale, such Limited Partner (the "Selling Partner") shall
make an offer to allow the other Limited Partners to participate in any sale of
Partnership Interests (the "Tag Along Right") to the Third Party Offeror, upon
the same terms and conditions as the Third Party Offer. The Selling Partner
shall provide written notice (the "Tag Along Notice") to all other Limited
Partners (the "Tag Along Partners"), which shall state the material terms and
conditions of the Third Party Offer and the name of the Third Party Offeror, and
shall include a copy of all writings relating to the Third Party Offer between
the Third Party Offeror and the Selling Partner. Each Tag Along Partner shall
have 15 days after the Selling Partner gives the Tag Along Notice within which
to provide notice to the Selling Partner (i) specifying whether or not such Tag
Along Partner will exercise its Tag Along Right and (ii) identifying the portion
of such Tag Along Partner's Units which such Tag Along Partner desires to sell
(which portion shall not exceed the maximum portion described in Section
6.3(b)). All Tag Along Partners who fail to give the notice described in the
immediately preceding sentence within such 15-day period shall have no further
Tag Along Rights with respect to such Third Party Offer.
(b) The maximum portion of the Partnership Interest of each Tag Along
Partner that such Tag Along Partner may require the Selling Partner to cause the
Third Party Offeror to purchase pursuant to a Tag Along Notice shall equal the
Tag Along Partner's Units, divided by the aggregate of the Units owned by the
Selling Partner and all of the Tag Along Partners who have timely elected to
exercise their Tag Along Rights, and multiplied by the Units to be purchased in
the Third Party Offer. The Selling Partner and the Tag Along Partner(s) shall
then have 60 days after the expiration
22
of the 15 day period described in Section 6.3(a) within which to sell or
transfer each such Partnership Interest to the Third Party Offeror. upon the
terms described in such Third Party Offer.
Section 6.4 CONVERSION OF PARTNERSHIP INTEREST
(a) From and after the earlier of (i) the consummation of a Qualified IPO
(the "IPO Conversion"), (ii) the consummation of an offering pursuant to a
registration effected under Section 1(a) of the Equity Registration Rights
Agreement (the "Equity Registration Rights Agreement") among GII and DLJ dated
as of the date hereof (the "Demand Registration Conversion"), (iii) the
consummation of a Disposition of stock of GII pursuant to Article III of the Tag
Along Rights Agreement (the "Tag Along Rights Agreement") pursuant to which GII
has agreed to terminate its election as an S corporation under the Code or which
is made at a time at which such S election is otherwise not in effect (the "Tag
Along Conversion"), (iv) the termination of the Partnership pursuant to Section
8.1(b) (the "Liquidation Conversion") (the events giving rise to an IPO
Conversion, a Demand Registration Conversion, a Tag Along Conversion or a
Liquidation Conversion are collectively referred to herein as a "Conversion
Event"), or (v) the twentieth day after the election as an S corporation under
the Code of GII is no longer in effect (the "S Termination Conversion") (such
twentieth day after such S election is no longer in effect being referred to
herein as an "S Termination Event"), (A) DLJ shall have the right to require GII
to purchase, and DLJ, upon exercise of such right, shall be required to sell
(the "DLJ Conversion Right"), or (B) GII shall have the right to require DLJ to
sell and GII, upon exercise of such right, shall be required to purchase (the
"GII Conversion Right") all, but not less than all, of the Partnership Interest
held by DLJ at a price equal to and in the form of the GII Stock Amount to be
paid by GII (the DLJ Conversion Right and the GII Conversion Right are each
referred to herein as a "Conversion Right"). GII shall give notice to DLJ of an
expected Qualified IPO at least 20 days prior to the expected consummation of
such Qualified IPO, notice of an expected termination pursuant to Section 8.1(b)
at least 20 days prior to the expected date of termination, and notice of an S
Termination Event within 10 days after an S Termination Event (the "Conversion
Notice"); provided, however, such notice shall be deemed to be a Conversion
Notice only if it specifically states that it is a Conversion Notice being given
pursuant to this Section 6.4.
(b) The DLJ Conversion Right shall be exercised by the delivery of notice
by DLJ to GII, (i) in the case of a Demand Registration Conversion,
simultaneously with or as part of the notice requesting registration under
Section 1(a) of the Equity Registration Rights Agreement, (ii) in the case of a
Tag Along Conversion, simultaneously with or as part of the Tag Along Response
Notice (as defined in the Tag Along Rights Agreement), (iii) in the case of an
IPO Conversion or a Liquidation Conversion, within ten (10) days after the
Conversion Notice is given, and (iv) in the case of an S Termination Conversion,
at any time after the Conversion Notice is given. The GII Conversion Right shall
be exercised by the delivery of notice by GII to DLJ (i) in the case of a Demand
Registration Conversion, within ten (10) days after notice is given by DLJ
requesting registration under Section 1(a) of the Equity Registration Rights
Agreement, (ii) in the case of a Tag Along Conversion, within ten (10) days
after a Tag Along Response Notice (as defined in the Tag Along Rights Agreement)
is given, (iii) in the case of an IPO Conversion or a Liquidation Conversion,
simultaneously with or as part of the Conversion Notice, and (iv) in the case of
an S Termination Conversion, at any time after the Conversion Notice is given.
The Conversion Right
23
shall in all cases apply with respect to all of the Units then held by DLJ. DLJ
agrees to execute and deliver such documents as the General Partner may
reasonably require in connection with the issuance of the GII Qualified Capital
Stock upon the exercise of a Conversion Right. Any such purchase of the
Partnership Interest of DLJ and payment of the GII Stock Amount in accordance
with this Section 6.4 shall be consummated simultaneously with such Conversion
Event or S Termination Event.
(c) Upon the exercise of any Conversion Right pursuant to Section 6.4(a),
GII, the General Partner and DLJ agree to use their respective reasonable good
faith efforts to structure the purchase and sale of DLJ's Partnership Interest
and issuance of GII Qualified Capital Stock described in this Section 6.4 (the
"Conversion") in a manner that reduces or eliminates the federal income tax
liability, if any, to DLJ arising from the Conversion. Notwithstanding anything
to the contrary in this Section 6.4, (i) GII shall not be required to consummate
any Conversion upon the exercise of the DLJ Conversion Right unless such
Conversion is structured in the manner described in Sections 6.4(a) and (b), or
is otherwise acceptable to GII, and (ii) DLJ shall not be required to consummate
any Conversion upon the exercise of the GII Conversion Right unless such
Conversion is structured (A) in the manner described in Sections 6.4(a) and (b)
and does not cause any net income or net gain to be included in the federal
taxable income of DLJ or (B) in a manner otherwise acceptable to DLJ; provided,
however, that DLJ shall be required in all events to consummate a Conversion in
the manner described in Sections 6.4(a) and (b) in connection with any IPO
Conversion, Demand Registration Conversion or Liquidation Conversion, regardless
of Section 6.4(c)(ii).
Section 6.5 ASSIGNEES
(a) The Partnership shall not recognize for any purpose any purported
Disposition of all or any fraction of the interest of a Partner unless the
provisions of this Article 6 have been satisfied, all costs of such Disposition
have been paid by the assigning Partner, such Disposition is exempt from
registration under the Securities Act of 1933, as amended, the Delaware
Securities Act, as amended, and the securities act of any other state and there
is delivered to the General Partner, if requested by the General Partner, an
opinion of counsel reasonably satisfactory to the General Partner with respect
thereto, and there is filed with the Partnership a written and dated
notification of such Disposition, in form satisfactory to the General Partner,
executed by both the seller, assignor or transferor and the purchaser, assignee
or transferee and such notification (1) contains the acceptance by the
purchaser, assignee or transferee of and agreement to be bound by all the terms
and provisions of this Agreement and (2) represents that such Disposition was
made in accordance with all applicable securities laws and regulations
(including suitability standards). Any Disposition shall be recognized by the
Partnership as effective on the date of such notification if the date of such
notification is within fifteen (15) days of the date on which such notification
is filed with the Partnership, and otherwise shall be recognized as effective on
the date such notification is filed with the Partnership.
(b) Any Partner who Disposes of all its interest in the Partnership shall
cease to be a Partner, except that, unless and until a substituted Partner has
been admitted into the Partnership,
24
such assigning Partner shall retain the statutory rights of the assignor of a
partner's interest under the Act.
(c) A person who is the assignee of all or any fraction of the interest of
a Partner, but does not become a substituted Partner, and desires to make a
further Disposition of such interest, shall be subject to all the provisions of
this Article to the same extent and in the same manner as any Partner desiring
to make a Disposition of its interest.
Section 6.6 SUBSTITUTED PARTNERS
(a) No Partner shall have the right to substitute in its place a
purchaser, assignee, transferee, donee, heir, legatee or other recipient of all
or any portion of the Partnership Interest of such Partner. Any such purchaser,
assignee, transferee, donee, legatee, distributee or other recipient of an
interest shall be admitted to the Partnership as a substituted Partner only with
the consent of the General Partner which consent may be granted or withheld by
any Partner in it sole discretion.
(b) No person shall become a substituted Partner until such person has
satisfied the requirements of this Article 6; provided, however, that for the
purpose of allocating Profits, Losses and other items and distributing cash
available for distribution, a person shall be treated as having become, and as
appearing in the records of the Partnership as, a Partner, as the case may be,
on such date as the Disposition was recognized by the Partnership pursuant to
Section 6.3.
ARTICLE 7
BOOKS AND RECORDS; ACCOUNTING; REPORTING; OFFICERS
Section 7.1 BOOKS AND RECORDS
The books and records of the Partnership shall be maintained by the
General Partner at the principal office of the Partnership and shall be
available for examination at such office by any Partner or its duly authorized
representatives during regular business hours. Any Partner, at its own expense,
may cause an audit of the books and records of the Partnership during regular
business hours and shall furnish a written report thereof to the other Partners.
Section 7.2 ACCOUNTING BASIS FOR TAX REPORTING PURPOSES; FISCAL YEAR
The books and records of the Partnership shall be kept on the accrual
method of reporting for tax and financial reporting purposes. The Fiscal Year of
the Partnership shall end on the Saturday closest to December 31 of each year.
Section 7.3 REPORTS
The General Partner shall cause the Partnership to send to each Partner a
copy of each federal income tax return of the Partnership for the Fiscal Year
that ended, together with such other tax information as shall be necessary for
the preparation by each Partner of its federal and state income
25
tax returns, immediately upon filing of such federal income tax return with the
Internal Revenue Service, but at no time later than the due date for such
return, as may be extended.
Section 7.4 OFFICERS; NUMBER
The principal Officers of the Partnership shall consist of any or all of
the following: the President, one or more Vice Presidents, the Treasurer and the
Secretary, and such other Officers and assistant Officers and agents as may be
deemed necessary and elected or appointed by the General Partner, at such time
and in such manner and for such terms as the General Partner may prescribe. Any
two or more offices may be held by the same person.
Section 7.5 GENERAL DUTIES OF OFFICERS
All Officers and agents of the Partnership, as between themselves and the
Partnership, shall have such authority, perform such duties and manage the
Partnership as may be provided in this Agreement or as may be determined by the
General Partner not inconsistent with this Agreement.
Section 7.6 ELECTION, TERM OF OFFICE AND QUALIFICATIONS OF OFFICERS
(a) The Officers shall be chosen by the General Partner. Each Officer
shall hold office until a successor is chosen and qualified or until the death,
resignation, or removal of such Officer.
(b) The initial Officers of the Partnership are listed on Schedule 2
attached hereto.
Section 7.7 REMOVAL OF OFFICERS
Any Officer or agent appointed by the General Partner may be removed (with
or without cause) by the General Partner whenever in its sole judgment the best
interests of the Partnership will be served by such removal.
Section 7.8 RESIGNATION OF OFFICERS
Any Officer may resign at any time by giving written notice to the General
Partner. Such resignation shall take effect at the time specified in the notice,
and, unless otherwise specified in the notice, the acceptance of such
resignation shall not be necessary to make it effective. Such resignation shall
be without prejudice to the contract rights, if any, of the Partnership.
Section 7.9 VACANCIES
Any vacancy in any office because of death, resignation, removal or any
other cause shall be filled for the unexpired portion of the term in the manner
prescribed in this Agreement for election or appointment to such office.
Section 7.10 THE PRESIDENT
26
The President shall have active management of the operations of the
Partnership, subject, however, to the control of the General Partner. The
President shall, in general, perform all duties incident to the office of
President and such other duties as from time to time may be assigned by the
General Partner.
Section 7.11 THE VICE PRESIDENT
Each Vice President shall have such powers and perform such duties as the
General Partner may from time to time prescribe or as the President may from
time to time delegate to such officer. At the request of the President, any Vice
President may temporarily act in place of the President. In the case of the
death, absence, or inability to act of the President, the General Partner may
designate any Vice President to perform the duties of the President. The General
Partner may appoint different types of vice presidents with different day-to-day
management responsibility over the operations of the Partnership, including but
not limited to the power to employ persons to accomplish the purposes of the
Partnership.
Section 7.12 THE SECRETARY
The Secretary shall keep or cause to be kept in books provided for that
purpose, minutes of the meetings of the Partners; shall see that all notices are
duly given in accordance with the provisions of this Agreement and as required
by law; shall be custodian of the records and, in general, shall perform all
duties incident to the office of the secretary and such other duties as may from
time to time be assigned by the General Partner or the President.
Section 7.13 THE TREASURER
The Treasurer shall be the principal financial officer of the Partnership;
shall have charge and custody of and be responsible for all funds of the
Partnership and deposit all such funds in the name of the Partnership in such
banks, trust companies or other depositories as shall be selected by the General
Partner; shall receive and give receipts for moneys due and payable to the
Partnership from any source; and, in general, shall perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned by the General Partner or the President. The Treasurer shall
render to the General Partner, whenever the same shall be required, an account
of all transactions accomplished as Treasurer and of the financial condition of
the Partnership. The Treasurer shall, if required to do so by the General
Partner, give the Partnership a bond in such amount and with such surety or
sureties as may be ordered by the General Partner, for the faithful performance
of the duties of office and for the restoration to the Partnership, in the case
of death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind belonging to the Partnership
which are held or controlled by the Treasurer.
Section 7.14 INDEMNIFICATION
The Officers shall be indemnified by the Partnership to the extent and in
the manner described in Section 4.7.
27
ARTICLE 8
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP
Section 8.1 EVENTS CAUSING DISSOLUTION
(a) The Partnership shall be dissolved upon the happening of any of the
following events:
(1) the expiration of its term;
(2) the entry of a final judgment, order or decree of a court of
competent jurisdiction adjudicating the Partnership or the General Partner
to be bankrupt, and the expiration without appeal of the period, if any,
allowed by applicable law in which to appeal therefrom;
(3) the election to dissolve the Partnership by the General Partner;
(4) the entry of a decree of judicial dissolution under the Act.
(b) Dissolution of the Partnership shall be effective as of the day on
which the event occurs giving rise to the dissolution, but the Partnership shall
not terminate until there has been a winding up of the Partnership's business
and affairs, and the assets of the Partnership have been distributed as provided
in Section 8.2.
(c) Notwithstanding anything in Section 8.1(a), if a dissolution of the
Partnership would otherwise occur due to the occurrence of an event of
dissolution under Section 8.1(a)(2), the Partnership may be reconstituted if
either (i) there remains at least one General Partner and such remaining General
Partner or General Partners elect to continue the business of the Partnership or
(ii) within ninety (90) days of such event of dissolution all remaining Partners
agree in writing to continue the business of the Partnership and, to the extent
they desire, or if there is no remaining General Partner, the Limited Partners
agree to the appointment of one or more new General Partners effective as of the
date of such event of dissolution.
Section 8.2 LIQUIDATION; SALE OF SUBSTANTIALLY ALL OF THE ASSETS
(a) Upon dissolution of the Partnership, the General Partner may cause any
part or all of the Partnership assets to be sold in such manner as the General
Partner shall reasonably determine in an effort to obtain the best prices for
such assets (provided, however, that the General Partner may distribute
Partnership assets in kind to the Partners to the extent practicable). During
the liquidation period, the General Partner shall have the right to continue to
operate and otherwise to deal with Partnership property to the same extent the
General Partner has such right prior to dissolution of the Partnership. In the
event that the sole remaining General Partner has dissolved, withdrawn or
becomes bankrupt or legally incapacitated, the Limited Partner may, within 30
days after any such occurrence, appoint a person to perform the functions of the
General Partner in liquidating the assets of the Partnership and winding up its
affairs.
28
(b) In settling accounts after dissolution, the assets of the Partnership
shall be paid or distributed in the following order:
(1) to third party creditors, in the order of priority as provided
by law;
(2) then, to the Partners for any unreimbursed costs and expenses
owing to the Partners pursuant to this Agreement;
(3) then, to the repayment of any loans, with interest, made by any
Partner to the Partnership, and if more than one Partner has any
outstanding loans owing from the Partnership, such repayment shall be
made, pro rata, in accordance with the total amount outstanding to each
Partner;
(4) then, an amount equal to the then remaining positive balances in
the Capital Accounts of the Partners shall be distributed to the Partners
in proportion to the amount of such balances; and
(5) then, any remainder shall be distributed to the Partners, pro
rata, in accordance with their respective Unit Allocation.
Section 8.3 DISTRIBUTIONS IN KIND
If any assets of the Partnership are distributed in kind pursuant to this
Agreement, such assets shall be distributed to the Partners entitled thereto as
tenants-in-common in the same proportions as the Partners would have been
entitled to cash distributions if such property had been sold for cash at its
fair market value and the net proceeds thereof distributed to the Partners. In
the event that distributions in kind are made to the Partners, the Capital
Account balances of such Partners shall be adjusted to reflect the Partners'
allocable share of gain or loss which would have resulted if the distributed
property had been sold at its fair market value.
ARTICLE 9
POWER OF ATTORNEY
Section 9.1 APPOINTMENT OF THE GENERAL PARTNER AS ATTORNEY-IN-FACT
(a) Each Limited Partner, by the execution of this Agreement, irrevocably
constitutes and appoints the General Partner, its true and lawful agent and
attorney-in-fact with full power and authority in its name, place and stead to
execute, acknowledge, deliver, swear to, file and record at the appropriate
public offices such documents, instruments and conveyances that may be necessary
or appropriate to carry out the provisions or purposes of this Agreement,
including without limitation:
(1) all certificates and other instruments, including, but not
limited to, counterparts of this Agreement, and any amendment thereof that
the General Partner deems
29
appropriate to qualify or continue the Partnership as a partnership or a
partnership in which the Limited Partner will have limited liability
comparable to that provided by the Act, in the jurisdictions in which the
Partnership may conduct business;
(2) any amendment, supplement or restatement of this Agreement
approved by the Partners in accordance with Section 10.12;
(3) any amendment to this Agreement to reflect the withdrawal,
addition or substitution of a Partner other than the General Partner
pursuant to this Agreement;
(4) all instruments that the General Partner deems appropriate to
reflect a change or modification of the Partnership in accordance with the
terms of this Agreement; and
(5) all conveyances and other instruments that the General Partner
deems appropriate to reflect the dissolution and termination of the
Partnership.
(b) The appointment of the General Partner by each Limited Partner as
agent and attorney-in-fact shall be deemed irrevocable and to be a power coupled
with an interest and shall survive the legal incapacity of any person hereby
giving such power and the Disposition of all or any part of the Partnership
Interest of such person; provided, however, that in the event of the Disposition
by a Limited Partner of all its interest, the foregoing power of attorney shall
survive such Disposition only until such time as the transferee shall have been
admitted to the Partnership as a limited partner, and all required documents and
instruments shall have been duly executed, filed and recorded to effect such
substitution.
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.1 ADDRESS FOR NOTICES
All notices, demands, consents and reports provided for in this Agreement
shall be in writing and shall be given to the parties at the addresses set forth
herein or at such other addresses as the Partner may hereafter specify in
writing. Such notices may be delivered by hand or by telex, telegram or
telecopy, or may be mailed, postage prepaid, by certified or registered mail, by
a deposit in a depository for the receipt of mail regularly maintained by the
United States Postal Service. All notices which are hand delivered or delivered
by telex, telegram or telecopy shall be deemed given on the date of delivery.
All notices which are mailed in the manner provided above shall be deemed given
five (5) days after being mailed.
30
Section 10.2 ADDITIONAL DOCUMENTS AND ACTS
In connection with this Agreement, as well as all transactions
contemplated by this Agreement, the Partners agree to execute such additional
documents and papers, and to perform and do such additional acts as may be
necessary and proper to effectuate and carry out all of the provisions of this
Agreement.
Section 10.3 ASSUMED NAME
The Partners shall execute and file all assumed name certificates required
by applicable law.
Section 10.4 QUALIFICATION IN FOREIGN JURISDICTIONS
The Partners shall take such steps as are necessary or desirable to allow
the Partnership to conduct business in any jurisdiction where the Partnership
desires to conduct business.
Section 10.5 APPLICABLE LAW
This Agreement and the rights of the Partners shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to conflict of law principles. With respect to all matters not expressly
provided for in this Agreement, the Act and other applicable partnership laws of
the State of Delaware shall apply and control. In the event that any provision
in this Agreement conflicts with the Act, such provision in this Agreement shall
control and govern to the extent permitted by applicable law.
Section 10.6 WAIVER OF ACTION FOR PARTITION BY PARTNERS
Each Partner irrevocably waives during the term of the Partnership any
right which it may have to maintain any action for partition with respect to any
asset of the Partnership.
Section 10.7 CREDITORS NOT BENEFITTED
Nothing in this Agreement is intended to nor shall it benefit any creditor
of the Partnership. No creditor of the Partnership will be entitled to require
the General Partner to solicit or accept any loan or Additional Capital
Contribution for the Partnership or to enforce any right which the Partnership
or any Partner may have against a Partner, whether arising under this Agreement
or otherwise.
Section 10.8 NUMBERS AND GENDER
Where the context so indicates, the masculine shall include feminine and
neuter, and the neuter shall include the masculine and feminine, the singular
shall include the plural and any reference to a "person" shall mean a natural
person or a corporation, association, partnership, joint venture, estate, trust
or any other Entity.
31
Section 10.9 BINDING EFFECT
Except as herein otherwise provided to the contrary, this Agreement shall
be binding upon and inure to the benefit of the Partners, their distributees,
heirs, legal representatives, executors, administrators, successors and assigns.
Section 10.10 ENTIRE AGREEMENT
This Agreement constitutes all of the understandings and agreements of
whatsoever kind and nature existing between the Partners with respect to the
subject matter contained herein and supersedes all prior agreements and
undertakings with respect thereto.
Section 10.11 PLAN OF PERFORMANCE
The obligations of the panties hereto are performable in ▇▇▇▇▇▇ County,
Texas.
Section 10.12 AMENDMENT
Except as otherwise expressly set forth in this Agreement, this Agreement
may be amended, supplemented or restated only by a written agreement executed by
each of the Partners; provided, however, that the General Partner may amend the
Agreement without the consent of any other Partner to reflect (a) the
withdrawal, addition, substitution or admission of new Limited Partners pursuant
to this Agreement or (b) an adjustment of interests in the Partnership as
provided in Section 3.2 of this Agreement.
Section 10.13 SEVERABILITY
If any term or provision of this Agreement or the application thereof to
any person or circumstances shall, to any extent, be deemed invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and shall be valid and
enforced to the fullest extent permitted by applicable law.
Section 10.14 SECTIONS
Unless the context requires otherwise, all references in this Agreement to
Sections or Articles shall be deemed to mean and refer to Sections or Articles
of this Agreement.
Section 10.15 CAPTIONS
The titles and captions contained herein are for convenience only and
shall not be deemed part of the context of this Agreement.
32
Section 10.16 NO WAIVER
No waiver, express or implied, by any Partner of any breach or default by
any other Partner in the performance by the other Partner of its obligations
hereunder shall be deemed or construed to be a waiver of any other breach or
default under this Agreement. Failure on the part of any Partner to complain of
any act or omission of any other Partner, or to declare such other Partner in
default irrespective of how long such failure continues, shall not constitute a
waiver hereunder. No notice to or demand on a defaulting Partner shall entitle
such defaulting Partner to any other or further notice or demand in similar or
other circumstances.
Section 10.17 ADDITIONAL REMEDIES
Unless the context requires otherwise, the rights and remedies of the
Partners hereunder shall not be mutually exclusive so that the exercise of one
or more of the provisions hereof shall not preclude the exercise of any other
provision hereof.
Section 10.18 U.S. DOLLARS
All references in this Agreement to dollar amounts shall refer to United
States currency.
Section 10.19 APPROVALS
Except where otherwise indicated, all approval, consent and other similar
rights of the General Partner or of the Limited Partners pursuant to this
Agreement may be exercised by such parties, and such approvals and consents may
be granted or denied by such parties, in their sole and absolute discretion.
Section 10.20 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and shall be binding upon the Partner who executed the
same, but all of such counterparts shall constitute one and the same agreement.
33
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
GENERAL PARTNER:
GOLFSMITH GP HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Title: President
-------------------------------------------
LIMITED PARTNERS:
GOLFSMITH INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Title: Executive Vice President
-------------------------------------------
DLJ INVESTMENT PARTNERS, L.P.
By: /s/ ▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
-------------------------------------------
Title: Vice President
-------------------------------------------
DLJ INVESTMENT FUNDING, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
-------------------------------------------
Title: Vice President
-------------------------------------------
DLJ ESC II L.P.
By: /s/ ▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇
-------------------------------------------
Title: Vice President
-------------------------------------------
GOLFSMITH HOLDINGS, L.P.
SCHEDULE 1
Names, Addresses, Capital Contributions and Unit Allocation of the Partners
Names and Addresses Initial Capital Unit
of Partners Contributions Units Allocation
General Partner:
Golfsmith GP Holdings, Inc $ 1,000.00 1,000 1.000%
Attention: President
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Limited Partners:
Golfsmith International, Inc. $ 91,500.00 91,500 91.500%
Attention: President
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DLJ Investment Partners, L.P. $ 6,060.00 6,060 6.060%
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DLJ Investment Funding, Inc. $ 864.00 864 0.864%
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DLJ ESC II L.P. $ 576.00 576 0.576%
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TOTAL $ 100,000.00 100,000 100.0%
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GOLFSMITH HOLDINGS, L.P.
SCHEDULE 2
Initial Officers
▇▇▇▇ ▇. ▇▇▇▇ Chief Executive Officer and President
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Executive Vice-President
▇▇▇▇ ▇▇▇▇▇▇ Vice-President and Chief Financial Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Vice-President of Operations
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Vice-President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Vice-President and General Manager
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice-President and Chief Technical Officer
▇▇▇▇▇ ▇. ▇▇▇▇▇ Vice-President of Retail
▇▇▇▇▇ ▇▇▇▇▇ Vice-President of Marketing and List Management
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Secretary and Treasurer