Exhibit 10.27
================================================================================
APPENDIX C
----------
▇▇▇▇▇▇ BROTHERS CAPITAL PARTNERS III, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
---------------------
______________, 1995
---------------------
================================================================================
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
▇▇▇▇▇▇ BROTHERS CAPITAL PARTNERS III, L.P.
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
__________, 1995, by and among ▇▇▇▇▇▇ Brothers Holdings Inc., a corporation
organized under the laws of the State of Delaware, as general partner
hereunder (the "General Partner"), the Initial Limited Partner (as
described in Section 4.1 hereof) and the persons who have signed this
Agreement and have been admitted as additional limited partners hereunder
(the "Limited Partners") (the General Partner and the Limited Partners are
collectively referred to as the "Partners").
ARTICLE 1
CERTAIN DEFINED TERMS
As used in this Agreement, the following terms shall have the following
meanings:
Act Delaware Revised Uniform Limited Partnership Act,
6 Del. C. Sec.Sec. 17-101 et seq., as amended from time
to time and any successor to said act
Affiliate Any person or entity that controls, is controlled
by, or is under common control with, any other
person or entity
Agreement This Amended and Restated Agreement of Limited
Partnership, as the same may be amended, modified
or supplemented from time to time
Capital Account As defined in Section 7.1
Capital Commitment Aggregate amount the Limited Partner has agreed to
pay to the Partnership as the purchase price for
his or her Units
Capital Contributions Amounts contributed to the Partnership by the
Partners, which do not include any amount invested
in the Money Funds
Carrying Value With respect to any Partnership asset, the asset's
adjusted basis for Federal income tax purposes,
except that the Carrying Values of all Partnership
assets shall be adjusted to equal their respective
fair market values (as determined by the General
Partner), in accordance with the rules set forth
in Treasury Regulations Section
1.704-1(b)(2)(iv)(f), except as otherwise provided
herein, immediately prior to: (a) the date of the
acquisition of any additional Partnership Interest
by any new or existing Partner in exchange for
more than a de minimis Capital Contribution; (b)
the date of the distribution of more than a
de minimis amount of Partnership property (other
than a pro rata distribution) to a Partner; or (c)
the date of the termination of the Partnership
under Section 708(b)(i)(B) of the Code; provided
that adjustments pursuant to clauses (a) and (b)
above shall be made only if the General Partner
determines in its sole discretion that such
adjustments are necessary or
-1-
appropriate to reflect the relative economic
interests of the Partners. The Carrying Value of
any Partnership asset distributed to any Partner
shall be adjusted immediately prior to such
distribution to equal its Fair Market Value
Cause Termination of employment of a Limited Partner by
▇▇▇▇▇▇ Brothers due to a material breach by a
Limited Partner of his or her employment contract
with ▇▇▇▇▇▇ Brothers, failure by a Limited Partner
to devote substantially all business time
exclusively to the performance of his or her
employment duties for ▇▇▇▇▇▇ Brothers, willful
misconduct or material dishonesty, conviction of a
felony, serious crime or other crime material to
the Limited Partner's employment with ▇▇▇▇▇▇
Brothers (or failure to contest prosecution for
such a crime), substantial and continuing failure
to perform employment duties or obligations
satisfactorily, engaging in Detrimental Activity
or the violation of regulatory requirements or of
policies and practices adopted by ▇▇▇▇▇▇ Brothers
Code Internal Revenue Code of 1986, as amended
Commitment Period The period from the date hereof until the earlier
of (i) December 31, 1999 or June 30, 2000 (with
respect to any proposed investment for which, on
or prior to December 31, 1999, the Partnership has
entered into a letter of intent, agreement in
principle or definitive agreement to invest) and
(ii) any date as of which the General Partner has
determined in its sole discretion to terminate the
obligation of Limited Partners to make Capital
Contributions
Competitive Activity Involvement, at any time between the date of
termination of the Limited Partner's employment
with ▇▇▇▇▇▇ Brothers and June 30, 2000, whether as
an employee, proprietor, consultant or otherwise,
with any person or entity engaged in any business
activity which is materially competitive with any
business carried on by ▇▇▇▇▇▇ Brothers at such
time, as determined in the sole discretion of the
General Partner
Cost of Funds Rate Average daily cost of funds of ▇▇▇▇▇▇ Brothers as
determined by its Treasurer's Office
Detrimental Activity (a) Using information that was received by or
disclosed to such Limited Partner during his or
her employment with ▇▇▇▇▇▇ Brothers relating to
the business affairs of ▇▇▇▇▇▇ Brothers or any of
its clients, in breach of his or her undertakings
to keep such information confidential or (b)
directly or indirectly by any means persuading or
attempting to persuade any employee of ▇▇▇▇▇▇
Brothers to terminate his or her employment or any
customer or client of ▇▇▇▇▇▇ Brothers to terminate
or curtail its business relationship with ▇▇▇▇▇▇
Brothers or to breach any term of any agreement
with ▇▇▇▇▇▇ Brothers or (c)
-2-
any activity deemed to be detrimental to ▇▇▇▇▇▇
Brothers, in each case as determined in the sole
discretion of the General Partner
Disability A disability which meets the criteria under both
the ▇▇▇▇▇▇ Brothers Group Long Term Disability
Plan and the Social Security Disability Act
Eligible Investors Certain key officers, employees, consultants and
directors of ▇▇▇▇▇▇ Brothers designated by ▇▇▇▇▇▇
Brothers in its sole discretion (each such person,
an "Eligible Investor"), provided such person (i)
had income from his or her employer or employers
in excess of $100,000 in 1994 and (ii) has (x) an
individual net worth or net worth with his or her
spouse that exceeds $1,000,000 or (y) an
individual income in excess of $200,000 in each of
1993 and 1994 or joint income with his or her
spouse in excess of $300,000 in each of such years
and has a reasonable expectation of reaching the
same income level in 1995
Fixed Return Cumulative (but not compound) preferred annual
return on the General Partner's aggregate Capital
Contributions equal to the Cost of Funds Rate plus
0.50% or, if higher, an amount determined by the
General Partner with reference to the lowest
United States federal rate available for interest
on loans then utilized by the Internal Revenue
Service in connection with below-market loans
General Partner ▇▇▇▇▇▇ Brothers Holdings Inc., a corporation
organized under the laws of the State of Delaware,
as general partner of the Partnership
Government Service Employment with or appointment under any nation or
government, any state or other political
subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or
administrative functions of or pertaining to
government
Initial Limited
Partner ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, as the Initial Limited Partner
of the Partnership
Initial Payment One-quarter (25%) of the amount of the aggregate
Capital Commitment represented by the Units
subscribed for that is unconditionally due and
payable upon execution and delivery of the
subscription agreement
Investment Committee The Investment Committee of ▇▇▇▇▇▇ Brothers
Holdings Inc.
▇▇▇▇▇▇ Brothers ▇▇▇▇▇▇ Brothers Holdings Inc. and its subsidiaries
Limited Partners Persons who have signed this Agreement and have
been admitted as additional limited partners to
the Partnership
Memorandum Confidential Private Placement Memorandum dated
November 1995 relating to the Partnership, as
amended or supplemented from time to time
-3-
Money Fund ▇▇▇▇▇▇ Brothers Daily Income Fund, a money market
fund sponsored by ▇▇▇▇▇▇ Brothers, or an interest
bearing deposit account denominated in U.S.
dollars at a United States commercial bank
Nonrecourse
Deductions As defined in U.S. Treasury Regulations Section
1.704-2(b). The amount of Partnership Nonrecourse
Deductions for a fiscal year equals the net
increase, if any, in the amount of Partnership
minimum gain during that fiscal year, determined
according to the provisions of U.S. Treasury
Regulations Section 1.704-2(c)
Partner Nonrecourse
Debt An amount with respect to each partner nonrecourse
debt (as defined in Minimum Gain
Treasury Regulations Section 1.704-2(b)(4)) equal
to the Partnership Minimum Gain that would result
if such partner nonrecourse debt were treated as a
nonrecourse liability (as defined in Treasury
Regulations Section 1.752-1(a)(2)) determined in
accordance with Treasury Regulations Section
1.704-2(i)(3)
Partner Nonrecourse
Deductions As defined in U.S. Treasury Regulations Section
1.704-2(i)(2)
Partners Collectively, the General Partner and the Limited
Partners
Partnership ▇▇▇▇▇▇ Brothers Capital Partners III, L.P., the
limited partnership formed by the General Partner
and the Initial Limited Partner and continued by
the General Partner and the parties hereto under
the Act in accordance with this Agreement, under
the laws of the State of Delaware
Partnership Minimum
Gain As defined in Treasury Regulations Section 1.704-
2(b)(2) and 1.704-2(d)
Profits and Losses For each fiscal year or other period, the taxable
income or loss of the Partnership, or particular
items thereof, determined in accordance with the
accounting method used by the Partnership for
federal income tax purposes with the following
adjustments: (a) all items of income, gain, loss
or deduction allocated pursuant to Section 8.2
shall not be taken into account in computing such
taxable income or loss; (b) any income of the
Partnership that is exempt from federal income
taxation and not otherwise taken into account in
computing Profits and Losses shall be added to
such taxable income or loss; (c) if the Carrying
Value of any asset differs from its adjusted tax
basis for federal income tax purposes, any gain or
loss resulting from a disposition of such asset
shall be determined with reference to such
Carrying Value; (d) upon an adjustment to the
Carrying Value of any asset, pursuant to the
definition of Carrying Value, the amount of the
adjustment shall be included as gain or loss in
computing such taxable income or loss; (e) if the
Carrying Value of any asset differs from its
adjusted tax basis for U.S. federal income tax
purposes the amount of depreciation, amortization
or cost recovery deductions with respect to such
asset shall for purposes of determining Profits
and Losses be an amount
-4-
which bears the same ratio to such Carrying Value
as the federal income tax depreciation,
amortization or other cost recovery deductions
bears to such adjusted tax basis (provided that if
the federal income tax depreciation, amortization
or other cost recovery deduction is zero, the
General Partner may use any reasonable method for
purposes of determining depreciation, amortization
or other cost recovery deductions in calculating
Profits and Losses); and (f) except for items in
(a) above, any expenditures of the Partnership not
deductible in computing taxable income or loss,
not properly capitalizable and not otherwise taken
into account in computing Profits and Losses
pursuant to this definition shall be treated as
deductible items
Representative Any executor, administrator, trustee, committee,
guardian, conservator or representative appointed
by a court of competent jurisdiction to act on
behalf of a Limited Partner or the Estate of a
Limited Partner
Repurchase Notice Following the termination of a Limited Partner's
employment with ▇▇▇▇▇▇ Brothers, a writing in
which the General Partner will notify such Limited
Partner by certified mail (or its equivalent) or
via overnight courier of its determination whether
to purchase such Limited Partner's Units
Required Investment As applicable, (i) at any time prior to the date
on which the General Partner has received
distributions, in cash or in kind, in an amount
equal to 75% of its aggregate Capital
Contributions plus the Fixed Return (the
"Distribution Date"), an amount equal to the
amount invested by the Partnership, or (ii) at any
time on or after the Distribution Date, an amount
equal to three times the amount invested by the
Partnership
Retirement Termination of employment with ▇▇▇▇▇▇ Brothers
which meets the criteria for retirement under the
qualified defined benefit pension plan of ▇▇▇▇▇▇
Brothers Holdings Inc. and for the commencement of
benefits under such plan, or for the commencement
of benefits under any other pension plan in a
territory outside the United States which is
sponsored by ▇▇▇▇▇▇ Brothers, if the Limited
Partner is entitled to benefits under such other
pension plan
Transfer As defined in Section 10.1(a)
Transfer Application Written and dated notification of a Transfer of
all or any portion of the Units of a Limited
Partner
Transferring Limited
Partner As defined in Section 10.1(c)
Units Units of limited partnership interests in the
Partnership
-5-
Unvested Interest The unvested portion of such Limited Partner's
interest in the Partnership, determined in
accordance with Section 10.4
Vesting Schedule The schedule according to which a Limited
Partner's interest in the Partnership generally
will vest, as set forth in Section 10.4
ARTICLE 2
FORMATION, NAME AND PLACE OF BUSINESS;
PURPOSE AND LIMITATION ON OPERATIONS; TERM;
CONVERSION TO CORPORATE FORM
2.1. Formation. The General Partner and the Initial Limited Partner
have formed, and the General Partner and the parties hereto hereby
continue, under the Act, a limited partnership for the purposes hereinafter
described. In the event that it shall be necessary for the Partnership to
exist in or qualify to do business under the laws of any state or states
other than, or in addition to, the State of Delaware, the parties hereby
agree that the Partnership shall take such action as may be necessary to
exist or qualify to do business in any state in which such existence or
qualification shall be required, provided that in any such event the
Partnership shall at all times continue to be a limited partnership formed
under and governed by the provisions of the Act.
2.2. Name. The name of the Partnership shall be "▇▇▇▇▇▇ Brothers
Capital Partners III, L.P." The business of the Partnership may be
conducted under any other name deemed necessary or desirable by the General
Partner in order to comply with local law.
2.3. Place of Business. The principal place of business of the
Partnership shall be at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
and/or at such other place within or without the State of New York as the
General Partner hereafter may designate in writing to the Limited Partners.
2.4. Purpose. The purpose and character of the business of the
Partnership is to invest the funds of the Partnership in various
investments, seeking substantial capital appreciation. To achieve its
investment objective, the Partnership, subject to the limitations described
herein, may enter into high risk investment opportunities of all kinds in
all markets globally, directly or indirectly, including, without
limitation, (i) making investments in connection with merger and
acquisition transactions, including leveraged buy-out or liquidation
candidates and corporate reorganizations of all types, including buy-outs
originated by ▇▇▇▇▇▇ Brothers, Affiliates of the General Partner and
others, recapitalizations of leveraged buy-outs or other highly leveraged
companies and minority investments, (ii) investing in equity and debt
securities of all types, whether subordinated or unsubordinated, issued by
sovereigns, governments, municipalities, agencies, companies or other
issuers, secured or unsecured, rated or unrated, listed or unlisted, or
denominated in U.S. dollars or other currencies, (iii) participating in
venture capital activities and other special situations, (iv) investing and
trading in various derivative instruments, (v) investing in foreign
currencies and precious metals, and related derivative instruments,
(vi) participating in classic arbitrage (including, without limitation,
convertible securities arbitrage) and risk arbitrage transactions on
securities exchanges, including, without limitation, in connection with
mergers, acquisitions, sales of assets, exchange offers, cash tender
offers, recapitalizations, liquidations and other similar transactions,
(vii) investing in individual real estate and other types of assets or
interests therein and entities that hold real estate or other types of
assets or interests therein, (viii) investing in joint ventures or directly
in pooled investment vehicles or similar entities managed or
-6-
organized by third parties, (ix) investing in work-outs and special
situations and (x) making short-term investments in mezzanine equity and
debt securities and bridge loans or other short-term instruments.
2.5. Term. (a) The Partnership shall continue until December 31, 2020,
unless the Partnership is dissolved prior to such date or dates pursuant to
the provisions of Article 11 hereof or as otherwise provided by operation
of law.
(b) No Limited Partner's death, incapacity or bankruptcy, resignation
or retirement from ▇▇▇▇▇▇ Brothers or other termination of employment with
▇▇▇▇▇▇ Brothers shall result in the dissolution or termination of the
Partnership as among the remaining Partners.
2.6. Conversion to Corporate Form. In the event of changes in the law,
regulations or interpretations applicable to the Partnership or its
operations or changes in other circumstances which, in the sole judgment of
the General Partner, render it desirable or helpful for the business of the
Partnership to be conducted in a corporate rather than in a partnership
form (including without limitation a limited liability company), the
General Partner, without the approval of the Limited Partners, shall have
the power to incorporate the Partnership or take such other action as it
may deem advisable in light of such changed conditions, including, without
limitation, dissolving the Partnership, transferring its assets as an
entirety to a successor investment vehicle or causing it to merge with a
successor investment vehicle.
ARTICLE 3
GENERAL PARTNER; RELATIONSHIP WITH ▇▇▇▇▇▇ BROTHERS
3.1. General Partner; Management of General Partner. ▇▇▇▇▇▇ Brothers
Holdings Inc. is the sole general partner of the Partnership. The General
Partner will have complete control of the Partnership's business. Such
control shall be exercised by ▇▇▇▇▇▇ Brothers Holding Inc., in its capacity
as general partner of the Partnership, by the appropriate officers of the
General Partner or their designees.
3.2. No Compensation of Officers and Directors; Expenses. (a) No
compensation shall be paid by the Partnership to the General Partner or to
its officers and directors solely for their services as General Partner and
officers and directors thereof, respectively, other than reimbursement for
out-of-pocket expenses incurred in the course of conducting the business of
the Partnership. The General Partner shall be reimbursed for (i) fees paid
to others for Partnership accounting and communication services and
(ii) certain other fees and expenses (including those paid to consultants,
attorneys, accountants or other professionals) incurred by it on behalf of
the Partnership, including, but not limited to, all fees and expenses of
litigation and tax audits of the Partnership and for the outside valuation
of securities or property obtained by the Partnership, whether in a merger,
sale or otherwise. The General Partner shall not be reimbursed for payroll
and other costs of salaried personnel and rent or general office overhead
of the General Partner, which will be borne by the General Partner.
(b) The costs and expenses incurred on behalf of the Partnership with
respect to the organization of the Partnership, pre-offering activities and
offering activities and the selling of Units including, but not limited to,
travel, telephone, postage, legal and accounting expenses, shall be paid by
the Partnership. Except as otherwise provided herein to the contrary, the
Partnership will bear all other expenses of its operations including fees
and expenses of attorneys, accountants and experts, commitment and
investment banking fees, and interest and all expenses related to
investments or potential investments and to the acquisition, holding and
sale or other disposition of investments.
-7-
3.3. Day-to-Day Operations; Acts of Investment Committee. The day-to-
day operations of the Partnership, including the identification, review and
structuring of, and analysis and recommendations with respect to, proposed
investments and realizations will be managed by the Merchant Banking Group
of the General Partner. All final investment and realization decisions will
be made on behalf of the General Partner, in its capacity as general
partner of the Partnership, by members of the Investment Committee. In
connection with Partnership matters, the Investment Committee will operate
in accordance with its corporate authorization.
3.4. Services by ▇▇▇▇▇▇ Brothers; Charges and Expenses. (a) Investment
advisory services for the Partnership will be performed, and brokerage,
custody and other administrative and similar services for the Partnership
may be performed, by ▇▇▇▇▇▇ Brothers, and in connection therewith no charge
shall be made to the Partnership for the time of any employee of ▇▇▇▇▇▇
Brothers (other than for actual out-of-pocket expenses as set forth in
Section 3.2).
(b) The Partnership may borrow funds from ▇▇▇▇▇▇ Brothers in order to
provide funds for investments or to expand the funds available for
investment, and ▇▇▇▇▇▇ Brothers shall be entitled to receive interest on
amounts loaned at the prime rate as charged from time to time by a major
money center bank or at such other rate as the General Partner determines
shall be required to avoid the imputation of interest under the Code. In
connection with the investment activities of the Partnership, ▇▇▇▇▇▇
Brothers and its Affiliates shall be entitled to receive certain fees,
brokerage commissions or other benefits from purchasers, sellers and
portfolio companies (including other investment partnerships, funds or
pooled investment vehicles) in connection with services rendered to these
companies, which fees may be higher or lower than market rates for similar
services to third parties.
3.5. Related Partnerships. The General Partner and any of its
Affiliates in the future may serve as the general partner of other
partnerships formed for the benefit of employees and directors of ▇▇▇▇▇▇
Brothers, which partnerships may have the same or a similar purpose and may
invest or propose to invest in the same types of investments as the
Partnership. However, during the Commitment Period, ▇▇▇▇▇▇ Brothers will
not sponsor or manage another employee investment vehicle which has an
investment objective substantially similar to that of the Partnership
unless at least 50% of the aggregate Capital Commitments have been called.
If ▇▇▇▇▇▇ Brothers establishes such a vehicle thereafter, the Partnership
and such vehicle shall co-invest on a pro rata basis to the extent
practicable.
ARTICLE 4
LIMITED PARTNERS
4.1. Initial Limited Partner. (a) The Initial Limited Partner has
become such only for the purpose of organizing the Partnership and has
contributed $10.00 to the Partnership as a Capital Contribution.
Immediately subsequent to the admission of one or more additional Limited
Partners, the Initial Limited Partner shall withdraw from the Partnership,
the Initial Limited Partner's capital shall be returned and he shall have
no other rights or liabilities with respect to the Partnership in his or
her capacity as Initial Limited Partner.
(b) Unless the context otherwise specifically requires, references in
this Agreement to the Limited Partners, their capital and their rights and
obligations shall not be references to the Initial Limited Partner.
-8-
4.2. Additional Limited Partners. The General Partner is authorized to
admit additional Limited Partners to the Partnership pursuant to the terms
of the Memorandum and this Agreement and upon execution and delivery by
each additional Limited Partner of a subscription agreement and such other
documents as the General Partner deems necessary or advisable, each in form
satisfactory to the General Partner, relating to the Units. The manner of
the offering of the Units, the terms and conditions under which
subscriptions for such Units will be accepted, and the manner of and
conditions to the sale of Units to subscribers therefor will be as provided
in this Agreement and in the Memorandum and the various subscription
agreements between the Partnership and each Limited Partner, and subject to
any provisions of any of them. A person shall be admitted as a Limited
Partner on the day his or her admission is reflected on the books and
records of the Partnership.
4.3. List of Limited Partners. The name, residence and business
address of each additional Limited Partner and the aggregate amount of such
Limited Partner's aggregate Capital Commitment is set forth on Schedule A
hereto, as amended from time to time.
4.4. No Management by Limited Partners. No Limited Partner as such
shall take part in the management of the Partnership's business, transact
any business in the Partnership's name or have the power to sign documents
for or otherwise bind the Partnership. Limited Partners will not
participate in any investment decisions made on behalf of the Partnership,
although members of the Merchant Banking Group and the Investment Committee
may invest in the Partnership if they are Eligible Investors.
4.5. Limitation on Transfer of Limited Partners' Units. Except as set
forth in Article 10 herein, no Limited Partner shall, directly or
indirectly, Transfer any Units.
ARTICLE 5
LIABILITY OF PARTNERS
5.1. General Partner. Except as provided in paragraph 11.2(e), the
General Partner shall not be required to contribute to the capital of, or
lend, the Partnership any funds other than the General Partner's Capital
Contribution. Neither the General Partner nor any of its Affiliates shall
have any personal liability for the return or repayment of the aggregate
Capital Contributions of any Limited Partner.
5.2. Limited Partners. Except as otherwise provided under Delaware
law, no Limited Partner shall be liable for the debts, liabilities,
contracts or any other obligations of the Partnership, except to the extent
of such Limited Partner's Capital Commitment, or for the debts or
liabilities of any other Partner. No Limited Partner shall be required to
lend the Partnership any funds.
ARTICLE 6
POWERS OF GENERAL PARTNER; PROHIBITED TRANSACTIONS
AND RESTRICTIONS; DUTIES OF GENERAL PARTNER;
INDEMNIFICATION AND CONTRIBUTION
6.1. Powers. (a) In addition to and not in limitation of any rights
and powers conferred by law or other provisions of this Agreement, and
except as limited, restricted or prohibited by the express provisions of
this Agreement, the General Partner shall have and may exercise on behalf
of the Partnership all powers and rights necessary, proper, convenient or
advisable to effectuate and carry out
-9-
the purpose and business of the Partnership. These powers shall include,
without limitation, the following powers:
(i) to borrow money in the name of the Partnership for use in the
Partnership business, and, if security is required therefor,
to mortgage or subject to any other security device any
portion of the assets of the Partnership, to obtain
replacements of any mortgage or other security device, and to
prepay, in whole or in part, refinance, increase, modify,
consolidate or extend any mortgage or other security device;
(ii) to enter into transactions and make investments with or
through Affiliates of the General Partner and to participate
in investment transactions sponsored, managed or underwritten
by Affiliates of the General Partner or in entities as to
which Affiliates of the General Partner serve as investment
adviser or placement agent;
(iii) to purchase interests in entities sponsored, managed or
underwritten by Affiliates of the General Partner, or in
which Affiliates of the General Partner have an interest,
including, but not limited to, limited partnership interests
in limited partnerships in which such Affiliates serve as
general partner;
(iv) to lend money to the Partnership on commercially reasonable
terms;
(v) prior to making long-term investments or pending cash
distributions to the Partners, to make temporary investments
of Partnership capital in all types of securities, including,
without limitation, short-term United States government and
agency securities, certificates of deposit, interest-bearing
deposits in United States banks, securities issued by or on
behalf of states, municipalities and their instrumentalities,
the interest from which is exempt from federal income tax,
prime-grade commercial paper, repurchase agreements with
respect to any of the foregoing, securities prime-grade
commercial paper issued by other investment companies
(including unit investment trusts and taxable and tax-exempt
money market funds sponsored and/or advised by Affiliates of
the General Partner);
(vi) to enter into contracts (including, without limitation,
insurance policies and contracts, of any type and coverage)
and make commitments on behalf of the Partnership and, in
general, to do and perform everything which may be necessary,
advisable, suitable or proper for the conduct of the
Partnership's business and for the carrying out of the
purposes and objects herein before enumerated, including the
delegation to any person or persons of such functions and
authority as the General Partner may determine; and
(vii) to employ attorneys and accountants to represent and audit
the books of the Partnership, which attorneys and accountants
may also serve as counsel and auditors to the General Partner
and any of its Affiliates.
(b) Any person not a party to this Agreement dealing with the
Partnership shall be entitled to rely conclusively upon the power and
authority of any officer or director of the General Partner to bind the
Partnership in all respects, and to execute agreements, instruments and
other writings on behalf of and in the name of the Partnership.
6.2. Prohibited Transactions. Notwithstanding anything to the contrary
contained herein, the following transactions are specifically prohibited to
the Partnership:
-10-
(i) the Partnership shall not make any loans to the General
Partner or any of its Affiliates, except that this provision
shall not prohibit the Partnership from entering into
repurchase agreements with ▇▇▇▇▇▇ Brothers;
(ii) the Partnership shall not sell or lease any property to the
General Partner or any of its Affiliates except on terms that
are at least as favorable as those obtainable from
unaffiliated third parties, except that this provision shall
not prohibit any transaction contemplated by Section 10.4 or
Section 11.2 hereof or any transaction that is permitted by
the terms of any partnership agreement or investment contract
into which the Partnership may enter in the future by virtue
of its investment as a general or limited partner of such
partnership, where an Affiliate of the General Partner also
acts as general partner of such partnership;
(iii) the Partnership shall not engage in any transaction with an
affiliated person prohibited by the Investment Company Act of
1940, as amended, unless an exemption therefor has been duly
obtained;
(iv) the Partnership shall not issue any debt securities in
violation of the Investment Company Act of 1940, as amended,
unless an exemption therefor has been duly obtained; and
(v) the Partnership shall not co-invest with ▇▇▇▇▇▇ Brothers or
one or more investment partnerships or funds managed by
▇▇▇▇▇▇ Brothers unless the following conditions are met:
(A) in the case of a co-investment with ▇▇▇▇▇▇ Brothers or a
▇▇▇▇▇▇ Brothers Affiliate, the officers and directors of
the General Partner shall have determined that the
investment by the affiliated co-investor would not
disadvantage the Partnership in making the investment, in
maintaining its investment position or in disposing of
its position;
(B) the amount invested by the co-investor shall be at least
equal to the Required Investment; and
(C) the General Partner obtains from the co-investor an
undertaking (x) to maintain its investment in an amount
at least equal to the Required Investment in the joint
investment, (y) to give the General Partner sufficient,
but not less than one day's, notice of its intent to
dispose of any of its investment in the joint investment,
and (z) to refrain from disposing of its investment
unless the Partnership has the opportunity to dispose of
its investment in the joint investment prior to or
concurrently with, and on the same terms as, the co-
investor;
provided, that an investment may be made in an instance in which
--------
the amount of the affiliated co-investors' investment is less
than the Required Investment if (i) all joint investments by the
Partnership, including any investments by a co-investor in an
amount less than the Required Investment, will in the aggregate
satisfy the undertaking that the amount invested by a co-
investor will be at least equal to the Required Investment, (ii)
the Partnership will be permitted by the co-investor to
determine what portion of the available investment the
Partnership wishes to take so that the Partnership would not be
required to limit its investment in favor of the co-investor,
and (iii) the co-investor undertakes to the
-11-
Partnership that it will abide by the determination of the
Partnership as to (x) disposing of the joint investment or (y)
exercising any right to vote that may accompany the investment.
6.3. Restrictions on the Authority of the General Partner. Without the
approval of a majority in interest of the Limited Partners, the General
Partner shall not have the authority to alter the purpose of the
Partnership.
6.4. Duties. (a) Other than with respect to temporary investments, and
after setting aside suitable reserves, the General Partner shall invest the
Capital Contributions of the Partners and reinvest the revenues of the
Partnership in accordance with the purposes of the Partnership, monitor the
investments of the Partnership and manage the related affairs of the
Partnership.
(b) Except as otherwise expressly provided herein, the General Partner
shall take all action that may be necessary or appropriate for the
continuation of the Partnership's valid existence as a limited partnership
under the laws of the State of Delaware, and for the acquisition, holding
and disposition, in accordance with the provisions of this Agreement and
applicable laws and regulations, of the investments of the Partnership.
(c) The General Partner shall prepare or cause to be prepared and shall
file on or before the due date (or any extension thereof) any United States
federal, state or local tax returns required to be filed by the
Partnership. The General Partner shall cause the Partnership to pay, from
Partnership funds, any taxes payable by the Partnership.
(d) The General Partner shall be under a fiduciary duty and obligation
to conduct the affairs of the Partnership in the best interest (or not
opposed to the best interest) of the Partnership, including the safekeeping
and use of all Partnership funds and assets (whether or not in the
immediate possession or control of the General Partner) for the benefit of
the Partnership. The General Partner shall at all times act with integrity
and good faith and exercise due diligence in all activities relating to the
conduct of the business of the Partnership and in resolving conflicts of
interest.
(e) The General Partner may delegate or assign any action which may be
or is required to be taken by the General Partner to any third party,
including without limitation, an Affiliate of the General Partner.
6.5. Exculpation, Indemnification and Contribution. Neither the
General Partner, any of its officers, directors, agents or representatives
(including any members of the Merchant Banking Group or the Investment
Committee) nor any person who controls the General Partner (a "control
person") within the meaning of Section 15 of the Securities Act of 1933, as
amended, shall be liable to the Partnership or the Limited Partners for any
act or failure to act relating in any way to the Partnership, its assets,
business or affairs so long as such act or failure to act does not
constitute such person's willful misconduct, bad faith or gross negligence
or reckless disregard of the duties involved in the conduct of the
Partnership or such person's office. The General Partner and its officers,
directors, agents, representatives (including members of the Merchant
Banking Group and the Investment Committee) and control persons shall be
indemnified by the Partnership to the fullest extent permitted by law for
any and all losses, claims, damages and expenses arising out of or incurred
in connection with any claim, action or demand against the General Partner,
the Partnership or any such indemnified person relating to the Partnership,
its assets, business or affairs (including, without limitation, attorneys'
fees and expenses and any amounts paid in settlement or compromise of any
such claim, action or demand); provided, however, that the foregoing
indemnification shall not apply if a court of competent jurisdiction makes
a final
-12-
decision that such claim, action or demand resulted directly from such
indemnified person's willful misconduct, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the Partnership
or such person's office.
6.6. General Partner Loans. Subject to the provisions of Sections 3.4
and 6.2, in the event that the Partnership at any time lacks sufficient
funds to meet its financial obligations, the General Partner shall have the
right to, but shall not be required to, lend money to the Partnership on
terms, including interest rates, that are fair and reasonable to the
Partnership (but in no event less than the rate required under United
States tax law to avoid compensation income to the Limited Partners)
without any approval of the Limited Partners. The General Partner may
execute written agreements governing any such loans on behalf of the
Partnership.
ARTICLE 7
CAPITAL CONTRIBUTIONS AND ACCOUNTS; NO FURTHER
CONTRIBUTIONS REQUIRED; INTEREST; ACCOUNTING AND VALUATION
7.1. Capital Contributions and Accounts. (a) Subscriptions for Units
shall be accepted or rejected by the General Partner as it determines in
its sole discretion. Each Unit represents a Capital Commitment of $25,000.
The minimum Capital Commitment of each Limited Partner is one Unit
($25,000). Additional whole Units may be purchased up to a maximum Capital
Commitment as determined on a case-by-case basis by the General Partner in
its sole discretion. The Initial Payment for each unit is unconditionally
due and payable upon execution and delivery of the related subscription
agreement and shall be deposited by the General Partner in the Money Fund
until needed to fund one or more Partnership investments. The balance of
the Capital Commitment is due at any time during the Commitment Period upon
subsequent call dates to be determined by the General Partner upon 30 days'
prior written notice to the Limited Partners. Any Capital Contributions
made to the Partnership by a Limited Partner must be paid in cash. The
obligation of a Limited Partner to pay the purchase price for such Limited
Partner's Units in full shall be limited by the provisions of this
paragraph 7.1(a), paragraph 7.1(b) and Section 10.4.
(b) An investor who does not pay the Initial Payment upon subscription
will not be admitted as a Limited Partner. In the event that any Limited
Partner fails to pay in full any Capital Contribution as the installment
becomes due, the General Partner shall send to the Limited Partner a
written notice by certified mail (or its equivalent) or via overnight
courier stating that the installment is overdue. If the Limited Partner
fails to pay the installment in full within five business days following
the General Partner's mailing of the notice, the Limited Partner will be in
breach of this Agreement and:
(i) such Limited Partner's entire interest in any Money Fund, if
any, shall be applied in partial satisfaction of such installment;
(ii) such Limited Partner's entire interest in the Partnership,
including the positive balance of its capital account, shall be reduced
by one-third (1/3) as liquidated damages;
(iii) the defaulting Limited Partner shall have no further right or
obligation to make future Capital Contributions; and
-13-
(iv) except as required under the Act, any vote, approval or
decision by the Limited Partners provided for in this Agreement shall
be tabulated or made as though such defaulting Limited Partner were not
a Limited Partner.
The defaulting Limited Partner shall continue to share in allocations
of Partnership income, gain, loss, deduction or credit with respect to his
or her remaining two-thirds (2/3) interest in the Partnership. The powers
conferred upon the General Partner in this Article 7 shall not limit any
actions available at law or in equity or by statute that the General
Partner may undertake against a defaulting Limited Partner.
(c) Pending the making of investments for which the Partnership
requires capital, installment payments for the purchase price of each
Limited Partner's Units will be invested in the Money Fund. Shares in the
Money Fund may not be redeemed by Limited Partners, although dividends paid
by the Money Fund will be paid to the Limited Partners periodically. The
General Partner will redeem Money Fund shares from time to time as needed
to fund specific Partnership investments. Amounts remaining in the Money
Fund at the end of the Commitment Period that have not been used for
Partnership purposes and which the Partnership has not committed for future
use shall be distributed to the Limited Partners in proportion to their
allocable share of amounts remaining in the Money Fund.
(d) The General Partner shall contribute to the capital of the
Partnership an amount equal to eight times the aggregate amount contributed
by the Limited Partners. The General Partner shall make its Capital
Contributions in installments by contributing eight times the amounts
withdrawn from the Money Fund to make Partnership investments or otherwise
to fund Partnership expenses.
(e) A separate capital account (the "Capital Account") shall be
established and maintained for each Partner. The Capital Account of each
Partner shall be credited with such Partner's aggregate Capital
Contributions, all Profits allocated to such Partner pursuant to Section
8.1 and any items of income or gain which are specially allocated pursuant
to Section 8.2; and shall be debited with all Losses allocated to such
Partner pursuant to Section 8.1, any items of loss or deduction of the
Partnership specially allocated to such Partner pursuant to Section 8.2,
and all cash and the Carrying Value of any property (net of liabilities
assumed by such Partner and the liabilities to which such property is
subject) distributed by the Partnership to such Partner. To the extent not
provided for in the preceding sentence, the Capital Accounts of the
Partners shall be adjusted and maintained in accordance with the rules of
Treasury Regulations Section 1.704-1(b)(2)(iv), as the same may be amended
or revised; provided that such adjustment and maintenance does not have a
material adverse effect on the economic interests of the Partners. Any
references in any section of this Agreement to the Capital Account of a
Partner shall be deemed to refer to such Capital Account as the same may be
credited or debited from time to time as set forth above. In the event of
any Transfer of any interest in the Partnership in accordance with the
terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred
interest.
7.2. Further Capital Contributions. No Limited Partner shall be
required to purchase additional Units or make any Capital Contribution to
the Partnership in excess of such Limited Partner's Capital Commitment.
After all Capital Contributions in respect of Capital Commitments have been
made and all contributions, including required General Partner
contributions, have been invested by the Partnership, if the General
Partner determines it to be in the best interests of the Partnership, the
Partnership may offer all Limited Partners the opportunity to make
additional contributions to the Partnership's capital on a pro rata basis,
as determined by the General Partner.
-14-
7.3. Interest. No Limited Partner shall receive interest on amounts
credited to such Limited Partner's capital account.
7.4. Fixed Return to the General Partner. The General Partner shall
receive the Fixed Return. The General Partner will determine the amount of
the Fixed Return using the Cost of Funds Rate plus 0.50% per annum for the
applicable period of time or federal rates, if applicable, when the General
Partner, in consultation with counsel, determines doing so to be
appropriate. The General Partner's determination of the Fixed Return shall
be final and binding on the Partners absent a finding of manifest error.
7.5. Accounting Periods and Taxable Years. An accounting period and
taxable year shall mean the calendar year, except that the last accounting
period and taxable year shall mean the period ending with the termination
of the Partnership.
ARTICLE 8
ALLOCATIONS
8.1. Allocation of Profits and Losses; Other Allocations. Except as
otherwise provided in this Agreement, Profit or Loss of the Partnership for
each taxable year shall be allocated annually at the end of the
Partnership's fiscal year in the following order and priority:
(i) Profits shall be allocated as follows:
(A) first, if on a cumulative basis the General Partner has had
Losses previously allocated to it in excess of Profits
previously allocated to it, then to the General Partner to
the extent of such excess;
(B) then, to the General Partner up to an amount equal to the
Fixed Return;
(C) then, if on a cumulative basis the Limited Partners have had
Losses previously allocated to them in excess of Profits
previously allocated to them, to the Limited Partners to the
extent of such excess; and
(D) thereafter, any remaining Profits shall be allocated 90% to
the Limited Partners and 10% to the General Partner.
(ii) Losses of the Partnership shall be allocated as follows:
(A) first, 90% to the Limited Partners and 10% to the General
Partner in an amount equal to the excess, if any, of (x) the
cumulative Profits previously allocated to the Partners
pursuant to clause (i)(D) above over (y) the cumulative
Losses previously allocated to the Partners pursuant to this
clause (ii)(A);
(B) then, 100% to the Limited Partners until the Limited
Partners' capital accounts are reduced to zero; and
-15-
(C) thereafter, 100% to the General Partner;
provided, however, that in no event shall Losses be allocated to the
--------
Limited Partners if the effect of such allocation would reduce their
capital accounts below zero.
8.2. Special Allocation Provisions. Notwithstanding anything to the
contrary in this Agreement, the following special allocations shall be
made:
(a) Minimum Gain Chargeback. Notwithstanding any other provision in
this Article 8, if there is a net decrease in Partnership minimum gain
or partner nonrecourse debt minimum gain (determined in accordance with
the principles of U.S. Treasury Regulations Sections 1.704-2(d) and
1.704-2(i)) during any Partnership taxable year, the Partners shall be
specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to their
respective shares of such net decrease during such year, determined
pursuant to U.S. Treasury Regulations Sections 1.704-2(g) and 1.704-
2(i)(5). The items to be so allocated shall be determined in accordance
with U.S. Treasury Regulations Section 1.704-2(f). This Section 8.2(a)
is intended to comply with the minimum gain chargeback requirements in
such U.S. Treasury Regulations Sections and shall be interpreted
consistently therewith; including that no chargeback shall be required
to the extent of the exceptions provided in U.S. Treasury Regulations
Sections 1.704-2(f) and 1.704-2(i)(4).
(b) Qualified Income Offset. In the event any Limited Partner
unexpectedly receives any adjustments, allocations, or distributions
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5)
or (6), items of Partnership income and gain shall be specially
allocated to such Limited Partner in an amount and manner sufficient to
eliminate the deficit balance in his or her Capital Account created by
such adjustments, allocations or distributions as promptly as possible.
(c) Gross Income Allocation. In the event any Limited Partner has a
deficit Capital Account at the end of any Fiscal Year which is in
excess of the amount such Partner is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations Section
1.704-2(g)(1) and 1.704-2(i)(5), each such Limited Partner shall be
specially allocated items of Partnership income and gain in the amount
of such excess as quickly as possible, provided that an allocation
pursuant to this Section 8.2(c) shall be made only if and to the extent
that a Limited Partner would have a deficit Capital Account in excess
of such amount after all other allocations provided for in this Article
8 have been tentatively made as if Section 8.2(a) and this Section
8.2(c) were not in this Agreement.
(d) Nonrecourse Deductions. Nonrecourse Deductions shall be allocated
10% to the General Partner and 90% among the Limited Partners in
accordance with their respective Capital Account balances.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
for any taxable period shall be allocated to the Partner who bears the
economic risk of loss with respect to the liability to which such
Partner Nonrecourse Deductions are attributable in accordance with U.S.
Treasury Regulations Section 1.704-2(j).
8.3. Tax Allocations. For income tax purposes only, each item of
income, gain, loss and deduction of the Partnership shall be allocated
among the Partners in the same manner as the
-16-
corresponding items of Profits and Losses and specially allocated items are
allocated for Capital Account purposes; provided that in the case of any
Partnership asset the Carrying Value of which differs from its adjusted tax
basis for United States federal income tax purposes, income, gain, loss and
deduction with respect to such asset shall be allocated solely for income
tax purposes in accordance with the principles of Sections 704(b) and (c)
of the Code (in any manner determined by the General Partner) so as to take
account of the difference between Carrying Value and adjusted basis of such
asset.
8.4. Allocation among Limited Partners, Transfers. (a) Profits and
Losses allocated to Limited Partners will be apportioned among each Limited
Partner based upon a fraction, the numerator of which is the aggregate
Capital Contributions by such Limited Partner (or his or her predecessor in
interest) and the denominator of which is the aggregate Capital
Contributions of all Limited Partners, taking into account any change in
such ratio during the period; provided, however, that for purposes of such
calculation the aggregate Capital Contributions of a defaulting Limited
Partner shall be deemed to be reduced by one-third (1/3).
(b) In the event of a permitted Transfer of a Unit or the termination
or reduction of a Partner's interest in the Partnership during a taxable
year of the Partnership, allocations of income, gain, loss, deductions and
credits of the Partnership will be based on an interim closing of the
Partnership's books.
8.5. Tax Elections. The General Partner is hereby authorized and
empowered to make on behalf and in the name of the Partnership any
election, and to prepare or have prepared, to execute or have executed and
to file, on behalf and in the name of the Partnership, any returns,
applications and other instruments and documents, under the Code and the
regulations thereunder, as in effect from time to time, which the General
Partner determines in its sole discretion are desirable or advisable in
connection with determining such allocations.
ARTICLE 9
DISTRIBUTIONS; WITHDRAWAL
9.1. General Partner Discretion. Distributions may be made in cash or
in kind in the General Partner's sole discretion. The General Partner may
in its sole discretion offer Limited Partners the right to elect whether to
receive cash or in kind distributions in connection with any distribution
and, following any such election, may (but shall not be required to) make a
distribution to some Limited Partners in cash and to others in kind. The
General Partner shall have no obligation to make cash or non-cash
distributions to the Limited Partners prior to termination of the
Partnership, and may reinvest the earnings on and proceeds of any of the
Partnership's investments in its sole discretion. The General Partner in
its sole discretion will determine the aggregate amount of and payment
dates for any cash and non-cash distributions to Partners after
establishing such reasonable reserves as the General Partner deems
appropriate in its sole discretion for working capital, contingencies or
other items and for the satisfaction of liabilities (including, without
limitation, contingent liabilities and the Fixed Return) as they come due
or may come due.
9.2. Distributions. (a) Distributions from the Partnership shall be
made in the following order and priority:
(i) first, to the Limited Partners to the extent of available
cash in an amount equal to 35% of the taxable ordinary income
and capital gain allocated to Limited Partners pursuant to
clause (i)(D) of paragraph 8.1 by the Partnership for the
current taxable year; provided that
-17-
the General Partner in its sole discretion may adjust the
percentage of taxable ordinary income and capital gain distributed
to the Limited Partners hereunder to take into account changes in
income tax rates applicable to individuals or for any other
reason;
(ii) then to the General Partner until it has received (x) first an
amount equal to the Fixed Return and (y) then an amount equal to
its aggregate Capital Contributions;
(iii) then to the Limited Partners until they have received an
aggregate amount pursuant to this clause (iii) equal to their
aggregate Capital Contributions; and
(iv) thereafter, to the Limited Partner and the General Partner in
accordance with the ratio which each Partner's positive capital
account balance bears to the sum of all Partners' positive
capital account balances.
(b) Distributions to Limited Partners will be apportioned among each
Limited Partner based upon a fraction, the numerator of which is the
aggregate Capital Contributions by such Limited Partner (or his or her
predecessor in interest) and the denominator of which is the aggregate
Capital Contributions of all Limited Partners, taking into account any
change in such ratio during the period; provided, however, that for
purposes of such calculation the aggregate Capital Contributions of a
defaulting Limited Partner shall be deemed to be reduced by one-third
(1/3).
9.3. Non-Cash Distributions. Whenever possible non-cash distributions,
including distributions under paragraph 11.2(c), shall be made pro rata
among the Partners in accordance with the terms of Section 9.2. The value
of any non-cash assets that are distributed shall be determined by the
General Partner in accordance with Section 12.4 hereof.
9.4. Withholding. The Partnership shall withhold from any amounts
otherwise distributable to any Partner the amounts required by law to be
withheld for income tax or other purposes; any amounts so withheld shall be
treated as having been distributed to such Partner for all purposes of this
Agreement.
9.5. Withdrawal. No Partner shall have the right to withdraw such
Partner's Capital Contribution or any part thereof from the Partnership or
to receive a return of such Partner's Capital Contribution or any part
thereof except upon termination and dissolution of the Partnership, except
as may be permitted by the General Partner in its sole discretion.
ARTICLE 10
TRANSFERABILITY OF INTERESTS; VESTING;
TERMINATION OF EMPLOYMENT
10.1. Restrictions and Conditions on Transfers of Units. (a) Except
for Transfers permitted under Section 10.4, no direct or indirect sale,
exchange, transfer, assignment, pledge, creation of a security interest in,
or encumbrance on, or other disposition by a Limited Partner of all or any
portion of such Limited Partner's Units or any economic interest therein
(including without limitation by means of any participation or swap
transaction (each, a "Transfer") shall be made except, with the prior
written consent of the General Partner (which consent may be withheld in
the sole discretion of the General Partner), to a person who is a member of
the transferor Limited Partner's immediate family or to the General Partner
or any of its Affiliates. Any Units acquired by the General Partner may be
transferred to
-18-
any Eligible Investor, subject to the restrictions contained in Section
10.1(b), provided that the General Partner does not own more than 80% of
the Units.
(b) Any Transfer otherwise permitted under this Article 10 may only be
made if:
(i) such Transfer, when added to the total of all other Transfers
of Units within the preceding twelve months, would not result
in the Partnership being considered to have terminated within
the meaning of Section 708 of the Code;
(ii) such Transfer would not violate any United States securities
laws, or any state securities or "blue sky" laws (including any
investor suitability standards) or the laws of any jurisdiction
outside the United States applicable to the Partnership or the
Units to be Transferred; and
(iii) such Transfer would not cause the Partnership to lose its
status as a partnership for United States federal income tax
purposes.
(c) The General Partner, each Limited Partner, the Partnership and
their respective officers, directors, agents and control persons shall be
indemnified by a Limited Partner (the "Transferring Limited Partner") to
the fullest extent permitted by law for any and all losses, claims, damages
and expenses arising out of or reasonably incurred in connection with any
claim, action or demand against the General Partner, the Partnership or any
such indemnified person relating to the Partnership, its properties,
business or affairs (including, without limitation, attorneys' fees and
expenses and any amounts paid in settlement or compromise of any such
claim, action or demand) against expenses for which the Partnership, the
General Partner or such other person has not otherwise been reimbursed
(including attorneys' fees, judgments, fines and amounts paid in
settlement) actually and reasonably incurred by them in connection with
such action, suit or proceeding and arising out of, relating to, or in
connection with, any Transfer of all or any portion of such Transferring
Limited Partner's Units, or in connection with the admission of a
substituted Limited Partner to the Partnership; provided, however, that the
foregoing indemnification shall not apply if a court of competent
jurisdiction makes a final decision that such claim, action or demand
resulted primarily from such indemnified person's willful misconduct, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the Partnership or such person's office.
(d) Subject to Section 10.4, no Unit may be subdivided into fractional
Units.
10.2. Assignees. (a) The Partnership shall not recognize for any
purpose any purported Transfer of all or any portion of the Units of a
Limited Partner unless the provisions of Section 10.1 shall have been
complied with and there shall have been filed with the Partnership a
Transfer Application, in form satisfactory to the General Partner, executed
and acknowledged by both the seller, transferor or assignor and the
purchaser, transferee or assignee and such Transfer Application
(i) contains the acceptance by the purchaser, transferee or assignee of all
of the terms and provisions of this Agreement, (ii) contains an assumption
by the purchaser, transferee or assignee of the obligations of the
Transferring Limited Partner to pay any unpaid portion of his or her
Capital Commitment, (iii) represents that such Transfer was made in
accordance with all applicable laws and regulations and (iv) contains the
purchaser's, transferee's or assignee's power of attorney identical to that
provided in Section 13.1 and, in addition, appoints the General Partner his
or her attorney-in-fact to execute this Agreement on behalf of such
purchaser, transferee or assignee. Any Transfer shall be recognized by the
Partnership as effective as of the date on which such Transfer Application
is filed with the Partnership.
-19-
(b) Any Limited Partner who shall assign all of his or her Units shall
not cease to be a Limited Partner unless and until a substituted Limited
Partner is admitted in his or her stead.
(c) A person who is the assignee of all or any portion of the Units of
a Limited Partner, but does not become a substituted Limited Partner and
desires to make a further assignment of such Units, shall be subject to all
the provisions of this Article 10 to the same extent and in the same manner
as any Limited Partner desiring to effect a Transfer of his or her Units.
10.3. Substituted Limited Partners. (a) No Limited Partner shall have
the right to substitute a purchaser, assignee, transferee, donee, heir,
legatee, distributee or other recipient of all or any portion of such
Limited Partner's Units as a Limited Partner in his or her place. Any such
purchaser, assignee, transferee, donee, heir, legatee, distributee or other
recipient of Units shall be admitted to the Partnership as a substituted
Limited Partner only (i) with the consent of the General Partner, which
consent shall be granted or withheld in the sole and absolute discretion of
the General Partner and may be arbitrarily withheld, and (ii) by an
amendment to Schedule A to this Agreement executed by all necessary parties
and recorded, as and to the extent required by law, in the proper records
of each jurisdiction in which such recordation is necessary to qualify the
Partnership to conduct business or to preserve the limited liability of the
Limited Partners. The Limited Partners hereby consent to the admission of a
substituted Limited Partner whose admission has been consented to by the
General Partner. Any such consent by the General Partner and the Limited
Partners may be evidenced by the execution by the General Partner of an
amendment to this Agreement on its behalf and on behalf of all Limited
Partners evidencing the admission of such person as a Limited Partner and
the making of any filing required by law.
(b) To the extent required by law, the General Partner shall file an
amended certificate of limited partnership with the appropriate authorities
of each state in which the Partnership transacts business for the purpose
of adding as substituted Limited Partners all assignees of Units previously
approved by the General Partner for admission as substituted Limited
Partners and deleting any person who is no longer a Limited Partner or
reflecting accurately Capital Contributions of the Limited Partners or to
receive any interest thereon.
(c) No person shall become a substituted Limited Partner until such
person shall have delivered a Transfer Application as provided in paragraph
10.2(a) and become a party to this Agreement; provided, however, that for
the purpose of allocating profits, losses and distributable cash, a person
shall be treated as having become, and as appearing in the records of the
Partnership as, a Limited Partner on such date as the Transfer to such
person was recognized by the Partnership pursuant to paragraph 10.2(a).
10.4. Termination of Employment, Death, Disability, Retirement of
Limited Partner.
(a) Generally. If prior to April 1, 1999, a Limited Partner's
employment with ▇▇▇▇▇▇ Brothers is terminated for any reason (other than
termination of employment by ▇▇▇▇▇▇ Brothers without Cause or due to such
Limited Partner's death, Disability, Retirement or Government Service) or
the General Partner determines that a Limited Partner has engaged in
Competitive Activity (other than following termination of employment
without Cause or due to Government Service) or Detrimental Activity, then
the General Partner or its assignee will have the right, exercisable in its
sole discretion by written notice sent by certified mail (or its
equivalent) or via overnight courier (the "Repurchase Notice") to such
Limited Partner (or his or her Representative) within 30 days following
such termination of employment or determination, to purchase the unvested
portion of such Limited Partner's interest in the Partnership (the
"Unvested Interest"), which Unvested Interest shall be determined according
to the following schedule (the "Vesting Schedule"):
-20-
IF SUCH TERMINATION OR DETERMINATION OCCURS
PERCENTAGE OF INTEREST UNVESTED
ON OR AFTER BUT PRIOR TO THAT IS VESTED INTEREST
The date of this
Agreement April 1, 1996 0% 100%
April 1, 1996 April 1, 1997 25% 75%
April 1, 1997 April 1, 1998 50% 50%
April 1, 1998 April 1, 1999 75% 25%
April 1, 1999 100% 0%
provided that upon a Limited Partner's termination of employment prior to
--------
April 1, 1999 due to such Limited Partner's death, Disability or
Retirement, such Limited Partner's Units will immediately become fully
vested and provided, further, that the General Partner shall have authority
to accelerate (but not otherwise modify) the Vesting Schedule at any time,
for any and all of the Limited Partners, in its sole discretion.
If the General Partner does not exercise its right to purchase the
Unvested Interest, the Unvested Interest will remain subject to, and
continue to vest in accordance with, the Vesting Schedule and, if at any
time following termination of a Limited Partner's employment the General
Partner determines in good faith that such Limited Partner has engaged in
any Competitive Activity (other than following termination of employment
without Cause or due to Government Service) or Detrimental Activity,
whether before or after such termination, the General Partner will promptly
notify the Limited Partner of its determination in writing by certified
mail (or its equivalent) or via overnight courier and thereafter the
General Partner will have the right to purchase the Unvested Interest, if
any, as of the date of such determination, upon the same terms and at a
purchase price determined in the same manner as described in paragraph (b)
hereof and such Limited Partner's right to make additional Capital
Contributions in accordance with this Agreement will cease, except as set
forth in paragraph (c) below. To the extent a Limited Partner's interest in
the Partnership has vested, such Limited Partner will be entitled to
continue to share in allocations of Partnership income, gain, loss, expense
or deduction.
The General Partner in its sole discretion may assign all or any part
of its right to purchase any Unvested Interest to any of its Affiliates or
any Eligible Investor (including, without limitation, any Limited Partner)
or, if the General Partner determines a purchase of such interest by the
Partnership to be in the best interests of the Partnership, to the
Partnership. Units representing any Unvested Interest acquired for the
account of the Partnership will be retired.
(b) Purchase Price of Unvested Interest. The purchase price of the
Unvested Interest acquired pursuant to paragraph (a) shall be an amount
payable in cash equal to the sum of (i) the aggregate amount of such
Limited Partner's Capital Contributions (net of any distributions to such
Limited Partner other than distributions pursuant to paragraph 9.2(a)(i))
in respect of such Unvested Interest plus (ii) a rate of return on the
amount determined in clause (i) equal to the Cost of Funds Rate to (but not
including) the date the Unvested Interest is purchased. The General Partner
or its assignee will pay for the Units to be acquired in cash as soon as
practicable but in no event later than 30 days following the date of the
Repurchase Notice. A Limited Partner whose Unvested Interest is purchased
as described above will forfeit the related portion of his or her interest
in the Partnership's profits. The determination of the General Partner of
the purchase price for the Unvested Interest shall be determined in good
faith by the General Partner and shall be final and binding on the Limited
Partner.
(c) Right to Make Further Capital Contributions. A Limited Partner
shall not have any obligation to make and shall not have any right or
otherwise be permitted to make any additional Capital
-21-
Contributions on and after the day on which his or her employment with
▇▇▇▇▇▇ Brothers is terminated for any reason (other than termination of
employment due to such Limited Partner's death, Disability, Retirement or
Government Service) or following any determination that a Limited Partner
has engaged in any Competitive Activity (other than following termination
of employment without Cause or due to Government Service) or Detrimental
Activity, whether or not such Limited Partner's interest has fully vested
in accordance with the Vesting Schedule, unless, within 30 days following
any such termination of employment or determination, the General Partner
sends written notice by certified mail (or its equivalent) or via overnight
courier to such Limited Partner offering the opportunity to continue to
make such Capital Contributions. If the General Partner does not make such
an offer, or if such offer is made but such Limited Partner declines or
does not accept such offer within the time specified for acceptance in such
notice (which date will not be less than 30 days from the date of such
notice (or, if earlier, the date the next Capital Contribution is due)),
such Limited Partner will not be permitted to make any further Capital
Contributions, and the Partnership will return such Limited Partner's
remaining interest in the Money Fund, if any.
(d) Termination by ▇▇▇▇▇▇ Brothers Without Cause. In the case of a
termination of a Limited Partner's employment by ▇▇▇▇▇▇ Brothers without
Cause, (i) the General Partner shall not have the right to purchase such
Limited Partner's Unvested Interest as provided in paragraph (a) hereof,
(ii) such Limited Partner's Unvested Interest will remain subject to, and
continue to vest in accordance with, the Vesting Schedule and (iii) such
Limited Partner's right and obligation to make further Capital
Contributions will cease unless the General Partner sends written notice by
certified mail (or its equivalent) or via overnight courier to such Limited
Partner within 30 days following such termination of employment offering
the opportunity to continue to make Capital Contributions and such Limited
Partner accepts such offer as described in paragraph (c) hereof. If at any
time following any termination of employment by ▇▇▇▇▇▇ Brothers without
Cause the General Partner determines in good faith that such Limited
Partner has engaged in any Detrimental Activity, whether before or after
such termination of employment, the General Partner will promptly notify
the Limited Partner of its determination and the General Partner will have
the right thereafter to purchase such Limited Partner's Unvested Interest,
if any, as of the date of such notice in accordance with paragraphs (a) and
(b) hereof and such Limited Partner's right and obligation to make further
Capital Contributions, if any, will cease unless the General Partner again
determines to offer such Limited Partner the opportunity to continue making
Capital Contributions in accordance with paragraph (c) hereof.
(e) Termination Due to Government Service. Upon a Limited Partner's
termination of employment by ▇▇▇▇▇▇ Brothers due to such Limited Partner's
Government Service, the General Partner shall not have the right to
purchase such Limited Partner's Unvested Interest as provided in paragraph
(a) hereof, and such Limited Partner's Unvested Interest will remain
subject to, and continue to vest in accordance with, the Vesting Schedule.
Except as set forth in the last paragraph of this paragraph (e), such
Limited Partner or his or her Representative will have the right (but not
the obligation) to continue making Capital Contributions pursuant to this
Agreement.
Promptly following termination of employment due to Government Service,
the General Partner will send the Limited Partner or his or her
Representative a written notice by certified mail (or its equivalent) or
via overnight courier requesting such Limited Partner's election with
respect to whether such Limited Partner wishes to continue making Capital
Contributions in the future pursuant to this Agreement. If such Limited
Partner or his or her Representative, as the case may be, does not elect,
by notice to the General Partner within the time specified for acceptance
in such notice (which date will not be less than 30 days from the date of
the notice (or, if earlier, the date the next Capital Contribution is
due)), to continue making Capital Contributions, such Limited Partner or
his or her Representative will
-22-
be deemed to have elected not to exercise such right and will not be
permitted to make any further Capital Contributions and the Partnership
will return any of such Limited Partner's remaining interest in any Money
Fund.
Notwithstanding anything to the contrary contained in this paragraph
(e), if at any time following such termination of employment due to
Government Service the General Partner determines in good faith that such
Limited Partner has engaged in any Detrimental Activity, whether before or
after such termination of employment, (i) the General Partner will have the
right thereafter to purchase such Limited Partner's Unvested Interest, if
any, as of such determination date, in accordance with paragraphs (a) and
(b) hereof and (ii) such Limited Partner's right and obligation to make
further Capital Contributions, if any, will cease unless the General
Partner offers such Limited Partner the opportunity to continue making
Capital Contributions in accordance with paragraph (c) hereof.
(f) Termination Due to Death, Disability or Retirement. Upon a
Limited Partner's termination of employment due to such Limited Partner's
death, Disability or Retirement, such Limited Partner's Units will
immediately become fully vested. Promptly following any termination of
employment due to death, Disability or Retirement, the General Partner will
send such Limited Partner or his or her Representative a notice by
certified mail (or its equivalent) or via overnight courier requesting such
Limited Partner's election with respect to whether such Limited Partner
wishes to continue making Capital Contributions in the future pursuant to
this Agreement. If such Limited Partner or his or her Representative, as
the case may be, does not elect, by notice to the General Partner within
the time specified for acceptance in such notice (which date will not be
less than 30 days from the date of the notice (or, if earlier, the date the
next Capital Contribution is due)), to continue making Capital
Contributions, such Limited Partner or his or her Representative will be
deemed to have elected not to exercise such right and will not be permitted
to make any further Capital Contributions and the Partnership will return
any of such Limited Partner's remaining interest in any Money Fund.
(g) Death; Incompetency; Bankruptcy. If a Limited Partner dies or
becomes an adjudicated incompetent (or equivalent under the laws of any
jurisdiction other than the United States) or bankrupt, as the case may be,
then for purposes of this Agreement the Representative shall have all the
rights of a Limited Partner for the purpose of settling or managing the
Units of such Limited Partner, and such power as such Limited Partner
possessed to assign all or any part of such Limited Partner's Units and to
join with such assignee in satisfying conditions precedent to such assignee
becoming a substituted Limited Partner as provided in Section 10.3. If a
Limited Partner is required in connection with any Government Service to
deposit his or her assets in a blind trust or similar discretionary trust,
the trustee of such blind trust shall have all the rights of a Limited
Partner for the purpose of settling or managing the Units of such Limited
Partner, and such power as the Limited Partner possessed to assign all or
any part of the Limited Partner's Units and to join with such assignee in
satisfying conditions precedent to such assignee becoming a substituted
Limited Partner as provided in Section 10.3.
10.5. Disposition of General Partner's Interest. The General Partner
shall not dispose of its interest in the Partnership as a general partner
except to an entity controlled by, or affiliated with, ▇▇▇▇▇▇ Brothers,
executive officers and directors of which are Eligible Investors. No
disposition of the General Partner's interest shall be effective, and the
General Partner shall not cease to be a general partner of the Partnership,
unless and until the transferee thereof is admitted as a general partner of
the Partnership and agrees in writing to continue the business of the
Partnership with itself as general partner and to be bound by the
provisions of this Agreement.
-23-
ARTICLE 11
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
11.1. Events Causing Dissolution. The Partnership shall be dissolved
upon the expiration of its term as set forth in Section 2.5 hereof, or
sooner upon the happening of any of the following events:
(a) the resignation, withdrawal, dissolution or bankruptcy of the
General Partner or the occurrence of any other event that causes the
General Partner to cease to be a general partner of the Partnership under
the Act; provided that the Partnership shall not be dissolved or required
to be wound up upon the happening of such event if (i) at the time of such
event there is at least one remaining general partner of the Partnership
and such remaining general partner carries on the business of the
Partnership or (ii) within 90 days after such event, all remaining Partners
agree in writing to continue the business of the Partnership and to the
appointment, effective as of the date of such event, of one or more
additional general partners;
(b) the insolvency or bankruptcy of the Partnership;
(c) the sale of all or substantially all of the Partnership's assets
other than in the ordinary course of business;
(d) the conversion of the Partnership to corporate form pursuant to
Section 2.6 hereof; or
(e) the affirmative vote of a majority in interest of the Limited
Partners.
Dissolution of the Partnership shall be effective on the date on which the
event occurs giving rise to the dissolution, but the Partnership shall not
terminate until the Partnership's certificate of limited partnership has
been canceled and the assets of the Partnership have been distributed as
provided in Section 11.2.
11.2. Liquidation. (a) Upon dissolution of the Partnership, its
liabilities shall be paid in the order provided herein. The General Partner
shall cause Partnership assets to be sold in such manner as the General
Partner, in its sole discretion, shall determine. The General Partner may,
to the extent permitted by applicable law, purchase from the Partnership
any Partnership investments upon which there are significant restrictions
or for which another purchaser willing to pay fair market value is not
readily obtainable. Payment of the fair market value of any such investment
at the time of the transfer determined by the General Partner in accordance
with this Section 11.2 shall be deemed fair and reasonable and not a
violation of the General Partner's fiduciary duty to the Partnership.
Pending sale of Partnership assets, the General Partner shall have the
right to continue to operate and otherwise to deal with Partnership assets.
In the event that the General Partner has resigned, withdrawn, dissolved or
is bankrupt, or has otherwise ceased to be a general partner of the
Partnership, the majority in interest of the Limited Partners shall elect a
person (the "liquidating trustee") who is hereby authorized to perform the
functions of the General Partner in liquidating the assets of the
Partnership and in winding up its affairs.
(b) Profits and losses arising from sales upon liquidation shall be
allocated in the manner set forth in Article 8. If, over the term of the
partnership, the amounts distributed to the General Partner in respect of
the Fixed Return pursuant to Section 9.2(a)(ii)(x) exceed the Profits
allocated to the General Partner in respect of the Fixed Return pursuant to
Section 8.1(i)(B), then the amount of such excess shall be treated as a
guaranteed payment and the Partners' capital accounts shall be adjusted
accordingly.
-24-
(c) Proceeds received upon the liquidation of Partnership assets shall
be applied and distributed in the following order:
(i) to the payment of debts and liabilities of the Partnership
(whether by payment or establishment of reasonable reserves),
including those to Partners who are creditors, to the extent
required by law, in the order of priority as provided by law,
and to the payment of the expenses of liquidation;
(ii) if not paid pursuant to clause 11.2(c)(i), to the payment to the
General Partner of the unpaid balance and interest on its loans,
if any, to the Partnership;
(iii) if not paid pursuant to clause 11.2(c)(i), to the payment to
the General Partner of the Fixed Return which payment shall
be treated as a guaranteed payment to the extent it exceeds
profits allocated to the General Partner pursuant to Section
8.1(i)(B);
(iv) to the payment to the General Partner of its aggregate Capital
Contributions;
(v) to the Partners any cash and non-cash assets pro rata in
accordance with their positive capital account balances to the
extent thereof (after giving effect to any allocation of profits
or losses arising from sales on liquidation); and
(vi) thereafter 100% to the Limited Partners apportioned among each
Limited Partner based upon a fraction, the numerator of which is
the aggregate Capital Contributions by such Limited Partner (or
his or her predecessor in interest) and the denominator of which
is the aggregate Capital Contributions of all Limited Partners,
taking into account any change in such ratio during the period;
provided, however, that for purposes of such calculation the
aggregate Capital Contributions of a defaulting Limited Partner
shall be deemed to be reduced by one-third (1/3), and the
aggregate Capital Contributions of each other Limited Partner
shall be deemed to be increased by such non-defaulting Limited
Partner's pro rata interest of such amount.
Any reserves established by the General Partner or any liquidating
trustee pursuant to clause (i) above shall be paid over by the General
Partner or the liquidating trustee, as the case may be, to an escrow agent
who is not an Affiliate of any Partner, with instructions to discharge any
of the liabilities and obligations referred to in such clause (i) and, at
the expiration of such period as the General Partner or the liquidating
trustee, as the case may be, shall provide, to distribute any balance then
remaining in the manner provided in clauses (ii) through (vii) above.
(d) In the sole discretion of the General Partner, payments in
liquidation may be made either in cash or in non-cash assets designated by
the General Partner, or partly in cash and partly in non-cash assets. If
payment is made in non-cash assets, the value of such assets shall be
determined by the General Partner in accordance with Section 12.4 hereof.
In the event of any distribution of non-cash assets to any Limited Partner,
such Limited Partner agrees, if requested by the General Partner at the
time of such distribution, to deliver to the Partnership a letter in form
and substance satisfactory to the General Partner, or which may be deemed
necessary or desirable by the General Partner, to comply with governmental
regulations, including restrictions on the resale of securities.
-25-
(e) In the event that following the final distribution under paragraph
11.2(c) above, the General Partner has a deficit balance in its capital
account balance, the General Partner shall contribute cash to the
Partnership in an amount equal to the deficit balance.
ARTICLE 12
BOOKS AND RECORDS; ACCOUNTING;
APPRAISAL; TAX MATTERS AND ELECTIONS
12.1. Books and Records. The books and records of the Partnership,
including information relating to the sale by the General Partner or any of
its Affiliates of securities, property, goods or services to the
Partnership, and a list of the name, residence or business address and
Units of each Limited Partner, shall be maintained by the General Partner
at the office of the Partnership or of the General Partner and shall be
available for examination there by any Limited Partner or his or her duly
authorized Representatives at any and all reasonable times for any purpose
reasonably related to the Limited Partner's interest as a limited partner
of the Partnership. Any Limited Partner, or his or her duly authorized
Representatives, upon paying the costs of collection, duplication and
mailing, shall be entitled to a copy of the list of the names, residence or
business addresses and Units of the Limited Partners. Such information
shall be used only for a purpose reasonably related to the Limited
Partner's interest as a limited partner of the Partnership. The Partnership
may maintain such other books and records and may provide such financial or
other statements as the General Partner in its sole discretion deems
advisable.
12.2. Accounting Basis, Fiscal Year. The books and records and the
financial statements and reports of the Partnership shall be kept on such
basis as the General Partner shall determine. The fiscal year of the
Partnership shall be the calendar year.
12.3. Bank Accounts. The General Partner shall maintain the
Partnership bank account, and withdrawals shall be made only in the regular
course of the Partnership business on such signature or signatures as the
General Partner may determine. Temporary investments are deemed activities
in the ordinary course of Partnership business.
12.4. Appraisal. If at any time the value of one or more non-cash
assets of the Partnership is required to be determined under this
Agreement, the General Partner shall value such assets, taking into account
all relevant factors, including without limitation restrictions on
transfer, other legal or contractual restrictions and the costs and
expenses of disposition of such assets. In the sole discretion of the
General Partner, the valuation of any non-cash assets may be made by
independent third parties appointed by the General Partner and deemed
qualified by the General Partner to render an opinion as to the value of
Partnership assets, using such methods and considering such information
relating to such assets as such persons may deem appropriate. The valuation
of Partnership assets reflected in an appraisal made in good faith by the
General Partner or any adviser or consultant retained for such purpose
shall be conclusive and binding on the Limited Partners.
12.5. Reports. Within 90 days after the end of each fiscal year, or as
soon as practicable thereafter, the General Partner shall send to each
person who was a Limited Partner at any time during the fiscal year then
ended (i) a statement (which shall be audited by independent certified
public accountants) showing the distributable cash (or assets distributed
in kind) distributed in respect of such year; (ii) such tax information as
shall be necessary for the preparation by such Limited Partner of his or
her United States federal and state income tax returns; (iii) a report of
the investment activities of the Partnership during such year; and (iv)
financial statements of the Partnership audited by its accountants.
-26-
12.6. Tax Matters and Elections. (a) Each Limited Partner hereby
appoints and designates the General Partner as tax matters partner of the
Partnership, as such term is defined under the Code, and hereby agrees that
any action taken by the General Partner in connection with audits of the
Partnership under the Code will be binding upon the Limited Partners. Each
Limited Partner further agrees that he or she will not treat any
Partnership item on his or her individual income tax return in a manner
inconsistent with the treatment of the item on the Partnership's tax return
and that he will not act independently with respect to tax audits or tax
litigation affecting the Partnership, unless, in either case, previously
authorized to do so in writing by the General Partner, which authorization
may be withheld in the sole discretion of the General Partner.
(b) As such tax matters partner, the General Partner may cause the
Partnership to make all elections required or permitted to be made by the
Partnership under the Code (including an election under Section 754 thereof
permitting the adjustment in basis of Partnership assets upon the
occurrence of certain events, such as a sale of Units or the death of a
Limited Partner) and not otherwise expressly provided for in this Agreement
in the manner that the General Partner believes will be most advantageous
to individual taxpayers who (i) are married and filing joint United States
federal income tax returns and (ii) are not "dealers" for United States
federal income tax purposes.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1. Appointment of the General Partner as Attorney-in-Fact. (a) Each
Limited Partner, by his or her execution of this Agreement (which execution
may be by his or her attorney-in-fact pursuant to a power of attorney
contained in a subscription agreement or Transfer Application), hereby
makes, constitutes and appoints the General Partner, acting by any of its
officers or their designees, his or her true and lawful agent and attorney-
in-fact, with full power of substitution and full power and authority in
his or her name, place and ▇▇▇▇▇ to make, execute, sign, acknowledge, swear
to, record and file, on his or her behalf and on behalf of the Partnership
such documents, instruments and conveyances that may be necessary or
appropriate to carry out the provisions or purposes of this Agreement,
including, without limitation:
(i) the original certificate of limited partnership of the
Partnership and all amendments thereto required or permitted
by law or the provisions of this Agreement including, without
limitation, the admission to the Partnership of additional
Limited Partners and substituted Limited Partners, and any
certificate of cancellation with respect thereto and
modifications of Schedule A hereto and all other instruments
that the General Partner deems appropriate to reflect a
change or modification or amendment of this Agreement, in
accordance with this Agreement;
(ii) all certificates and other instruments deemed advisable by the
General Partner to carry out the provisions of this Agreement or
to permit the Partnership to become or to continue in the
jurisdictions where the Partnership may be doing business as a
limited partnership or partnership wherein the Limited Partners
have limited liability;
(iii) all conveyances and other instruments or papers deemed
advisable by the General Partner to effect the dissolution
and termination of the Partnership;
-27-
(iv) all fictitious or assumed name certificates required or
permitted to be filed on behalf of the Partnership; and
(v) all other instruments, documents, undertakings, certificates,
agreements or papers which may be required or permitted by law
to be filed on behalf of the Partnership.
(b) The foregoing power of attorney:
(i) is coupled with an interest, shall be irrevocable, shall not
be affected by and shall survive the subsequent death,
disability, incapacity or incompetence of each Limited
Partner;
(ii) may be exercised by the General Partner either by signing
separately as attorney-in-fact for each Limited Partner or by a
single signature of the General Partner acting as attorney-in-
fact for all of them or by any other legally acceptable means;
and
(iii) shall survive the delivery of an assignment by a Limited
Partner of the whole or any portion of his or her Units;
except that, where the assignee of the whole of such Limited
Partner's Units has been approved by the General Partner for
admission to the Partnership as a substituted Limited
Partner, the power of attorney of the assignor shall survive
the delivery of such assignment for the sole purpose of
enabling the General Partner to execute, swear to,
acknowledge and file any instrument necessary or appropriate
to effect such substitution.
(c) Each Limited Partner shall execute and deliver to the General
Partner within five days after receipt of the General Partner's request
therefor such further designations, powers-of-attorney and other
instruments as the General Partner deems necessary or appropriate to carry
out the terms of this Agreement.
13.2. Amendments of this Agreement. (a) An amendment to this Agreement
may be proposed by the General Partner by submitting to all Limited
Partners (i) the text of such amendment and (ii) a statement of the purpose
of such amendment. Subject to paragraph (c) below, the proposed amendment
shall be deemed adopted (A) 30 days after the General Partner submits such
notice, unless Limited Partners holding two-thirds of the outstanding Units
have, by the end of such notice period, delivered their written disapproval
thereof to the General Partner or (B) if earlier, upon the delivery by
Limited Partners holding two-thirds of the outstanding Units of their
written approval thereof to the General Partner.
(b) An amendment to this Agreement may be proposed by Limited Partners
holding 25% of the outstanding Units. The Limited Partner or Limited
Partners proposing such amendment shall submit to the General Partner
(i) the text of such amendment, (ii) a statement of the purpose of such
amendment, (iii) an opinion of counsel obtained by the Limited Partner or
Partners proposing such amendment to the effect that such amendment is
permitted by the Act and the laws of any other jurisdiction where the
Partnership is qualified to do business, will not impair the limited
liability of the Limited Partners and will not adversely affect the
classification of the Partnership as a partnership for United States
federal income tax purposes. The General Partner shall, within 20 days
after receipt of any proposal under this Section 13.2, give notice to all
Limited Partners of such proposed amendment, which notice shall include all
items submitted by the Limited Partners with respect to such proposed
amendment and a statement of the General Partner with respect to such
proposed amendment. Subject to paragraph (c) below, the proposed amendment
shall be deemed adopted (A) 30 days after the General Partner submits such
notice, unless
-28-
Limited Partners holding two-thirds of the outstanding Units have, by the
end of such notice period, delivered their written disapproval thereof to
the General Partner or (B) if earlier, upon the delivery by Limited
Partners holding two-thirds of the outstanding Units of their written
approval thereof to the General Partner.
(c) Notwithstanding any other provision of this Section to the
contrary, no amendment may:
(i) expand the obligations of any Partner under this Agreement or
convert the Units of any Limited Partner into the interest of
a General Partner or adversely affect the limited liability
of any Limited Partner, in each case without the approval of
such Partner;
(ii) amend Section 6.3 or this Section 13.2 without the approval of
all Partners; or
(iii) modify the method provided in Article 8 or 9 of determining
and allocating or distributing, as the case may be, profits
and losses and distributable cash;
without the approval of the General Partner and Limited Partners holding
75% of the outstanding Units that are adversely affected by such
modification.
(d) Upon the adoption of any amendment to this Agreement, the amended
Agreement shall be executed by the General Partner for itself and on behalf
of the Limited Partners pursuant to the power of attorney granted in
Section 13.1, and, if such amendment affects the certificate of limited
partnership of the Partnership under the Act, or any other filing made in
any other state, the General Partner, pursuant to the power of attorney
granted in Section 13.1, shall execute and file proper amendments and
filings in the State of Delaware and in each jurisdiction in which such
action is necessary for the Partnership to conduct business or to preserve
the limited liability of the Limited Partners.
13.3. Arbitration. Any dispute, controversy or claim arising out of or
in connection with or relating to this Agreement or any breach or alleged
breach hereof shall (to the extent not prohibited by governing law) be
determined and settled by arbitration in The City of New York pursuant to
the rules then in effect of the American Arbitration Association. Any award
rendered shall be final and conclusive upon the parties and a judgment
thereon may be entered in the highest court of the forum, state or federal,
having jurisdiction.
13.4. Notices. Except as otherwise specifically provided herein, all
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if (i) delivered or
mailed, certified or registered mail, first-class postage paid or via
overnight courier or (ii) transmitted via facsimile, if to any Limited
Partner, at such Limited Partner's business address, or to such Limited
Partner's facsimile number, set forth in the Partnership's records, and if
to the Partnership, to the General Partner at the General Partner's
address, or to the General Partner's facsimile number, set forth on
Schedule A, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, or to such other person or address
as any Partner shall have last designated by notice to the Partnership, and
in the case of a change in address by the General Partner, by notice to the
Limited Partners. Any notice shall be deemed to have been duly given if
personally delivered or sent by the mails or by facsimile and will be
deemed received, unless earlier received, (i) if sent by certified or
registered mail, return receipt requested, or via overnight courier, one
business day after mailing, (ii) if sent by overnight mail or courier, when
actually received, (iii) if sent by facsimile transmission, on the date
sent provided confirmatory notice is sent by first-class mail, postage
prepaid, and (iv) if delivered by hand, on the date of receipt.
-29-
13.5. Binding Provisions. The covenants and agreements contained
herein shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the respective parties
hereto.
13.6. Applicable Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Delaware.
13.7. Counterparts. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding
on all parties hereto, notwithstanding that not all the parties have signed
the same counterpart. The General Partner may execute any document by
facsimile signature of a duly authorized officer.
13.8. Separability of Provisions. If for any reason any provision or
provisions hereof that are not material to the purposes or business of the
Partnership or the Limited Partners' Units are determined to be invalid and
contrary to any existing or future law, such invalidity shall not impair
the operation of or affect those portions of this Agreement that are valid.
13.9. Entire Agreement. This Agreement constitutes the entire
agreement among the parties. This Agreement supersedes any prior agreement
or understanding among the parties and may not be modified or amended in
any manner other than as set forth herein.
13.10. Paragraph Titles. Article, section and paragraph titles are for
descriptive purposes only and shall not control or alter the meaning of
this Agreement as set forth in the text.
13.11. Waiver of Right of Partition. Each Partner hereby waives its
right of partition.
13.12. Effectiveness. This Agreement shall become effective as of the
day and year first above written upon execution hereof by the General
Partner and the Initial Limited Partner and, as to each additional Limited
Partner, when the prescribed subscription hereto by such party has been
accepted by the General Partner.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GENERAL PARTNER:
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
By:
-30-
INITIAL LIMITED PARTNER:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
ADDITIONAL LIMITED PARTNERS:
All Limited Partners now and hereafter
admitted as limited partners of the
Partnership pursuant to powers of
attorney now and hereafter executed in
favor of and delivered to the General
Partner.
By: GENERAL PARTNER, as Attorney-in-Fact:
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
By:
-------------------------------
-31-
SCHEDULE A
GENERAL PARTNER:
Name: ▇▇▇▇▇▇ Brothers Holdings Inc.
Registered Office:
c/o Corporation Trust Company
Corporation Trust Center
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Business Address:
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Capital Contributions:
Initial: $90
INITIAL LIMITED PARTNER:
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Business Address:
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Capital Contribution: $10
-32-
TABLE OF CONTENTS
Page
ARTICLE 1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 Formation, Name and Place of Business;
Purpose and Limitation on Operations; Term;
Conversion to Corporate Form . . . . . . . . . . . . . . . . 6
2.1. Formation . . . . . . . . . . . . . . . . . . . . . . . 6
2.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3. Place of Business . . . . . . . . . . . . . . . . . . . 6
2.4. Purpose . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5. Term . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6. Conversion to Corporate Form . . . . . . . . . . . . . . 7
ARTICLE 3 General Partner; Relationship with ▇▇▇▇▇▇ Brothers . . . . . 7
3.1. General Partner; Management of General Partner . . . . . 7
3.2. No Compensation of Officers and Directors;
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3. Day-to-Day Operations; Acts of Investment
Committee . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4. Services by ▇▇▇▇▇▇ Brothers; Charges and Expenses . . . 8
3.5. Related Partnerships . . . . . . . . . . . . . . . . . . 8
ARTICLE 4 Limited Partners . . . . . . . . . . . . . . . . . . . . . . 8
4.1. Initial Limited Partner . . . . . . . . . . . . . . . . 8
4.2. Additional Limited Partners . . . . . . . . . . . . . . 8
4.3. List of Limited Partners . . . . . . . . . . . . . . . . 9
4.4. No Management by Limited Partners . . . . . . . . . . . 9
4.5. Limitation on Transfer of Limited Partners' Units . . . 9
ARTICLE 5 Liability of Partners . . . . . . . . . . . . . . . . . . . . 9
5.1. General Partner . . . . . . . . . . . . . . . . . . . . 9
5.2. Limited Partners . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 6 Powers of General Partner; Prohibited Transactions
and Restrictions; Duties of General Partner;
Indemnification and Contribution . . . . . . . . . . . . . . 9
6.1. Powers . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2. Prohibited Transactions . . . . . . . . . . . . . . . . 10
6.3. Restrictions on the Authority of the General
Partner . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4. Duties . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5. Exculpation, Indemnification and Contribution . . . . . 12
6.6. General Partner Loans . . . . . . . . . . . . . . . . . 13
ARTICLE 7 Capital Contributions and Accounts; No Further
Contributions Required; Interest; Accounting and Valuation . 13
7.1. Capital Contributions and Accounts . . . . . . . . . . . 13
7.2. Further Capital Contributions . . . . . . . . . . . . . 14
(i)
Page
7.3. Interest . . . . . . . . . . . . . . . . . . . . . . . . 14
7.4. Fixed Return to the General Partner . . . . . . . . . . 14
7.5. Accounting Periods and Taxable Years . . . . . . . . . . 15
ARTICLE 8 Allocations . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.1. Allocation of Profits and Losses; Other
Allocations . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2. Special Allocation Provisions . . . . . . . . . . . . . 15
8.3. Tax Allocations . . . . . . . . . . . . . . . . . . . . 16
8.4. Allocation among Limited Partners, Transfers . . . . . . 16
8.5. Tax Elections . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 9 Distributions; Withdrawal . . . . . . . . . . . . . . . . . . 17
9.1. General Partner Discretion . . . . . . . . . . . . . . . 17
9.2. Distributions . . . . . . . . . . . . . . . . . . . . . 17
9.3. Non-Cash Distributions . . . . . . . . . . . . . . . . . 18
9.4. Withholding . . . . . . . . . . . . . . . . . . . . . . 18
9.5. Withdrawal . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 10 Transferability of Interests; Vesting;
Termination of Employment . . . . . . . . . . . . . . . . . . 18
10.1. Restrictions and Conditions on Transfers of
Units . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.2. Assignees . . . . . . . . . . . . . . . . . . . . . . . 19
10.3. Substituted Limited Partners . . . . . . . . . . . . . 19
10.4. Termination of Employment, Death, Disability,
Retirement of Limited Partner . . . . . . . . . . . . . . . 20
10.5. Disposition of General Partner's Interest . . . . . . . 23
ARTICLE 11 Dissolution and Liquidation of the Partnership . . . . . . 23
11.1. Events Causing Dissolution . . . . . . . . . . . . . . 23
11.2. Liquidation . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 12 Books and Records; Accounting;
Appraisal; Tax Matters and Elections . . . . . . . . . . . . 25
12.1. Books and Records . . . . . . . . . . . . . . . . . . . 25
12.2. Accounting Basis, Fiscal Year . . . . . . . . . . . . . 26
12.3. Bank Accounts . . . . . . . . . . . . . . . . . . . . . 26
12.4. Appraisal . . . . . . . . . . . . . . . . . . . . . . . 26
12.5. Reports . . . . . . . . . . . . . . . . . . . . . . . . 26
12.6. Tax Matters and Elections . . . . . . . . . . . . . . . 26
ARTICLE 13 Miscellaneous Provisions . . . . . . . . . . . . . . . . . 27
13.1. Appointment of the General Partner as Attorney-
in-Fact . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.2. Amendments of this Agreement . . . . . . . . . . . . . 28
13.3. Arbitration . . . . . . . . . . . . . . . . . . . . . . 29
13.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . 29
13.5. Binding Provisions . . . . . . . . . . . . . . . . . . 29
13.6. Applicable Law . . . . . . . . . . . . . . . . . . . . 29
(ii)
Page
13.7. Counterparts . . . . . . . . . . . . . . . . . . . . . 29
13.8. Separability of Provisions . . . . . . . . . . . . . . 30
13.9. Entire Agreement . . . . . . . . . . . . . . . . . . . 30
13.10. Paragraph Titles . . . . . . . . . . . . . . . . . . . 30
13.11. Waiver of Right of Partition . . . . . . . . . . . . . 30
13.12. Effectiveness . . . . . . . . . . . . . . . . . . . . 30
(iii)