EXHIBIT 10
AGREEMENT OF
LIMITED PARTNERSHIP
OF
TREFOIL GILAT INVESTORS, L.P.
This Agreement of Limited Partnership of Trefoil Gilat Investors,
L.P. (the "Partnership"), is entered into as of July 26, 2000, by and
between Trefoil Gilat, Inc., a Delaware corporation ("Trefoil Gilat"), as
general partner (the "General Partner"), and the undersigned limited
partners, including any Persons hereafter admitted, pursuant to the terms
hereof, as limited partners of the Partnership.
ARTICLE 1
DEFINITIONS, ETC.
1.1 Definitions.
As used herein, the following terms shall have the meanings set
forth below:
"Acquisition Expenses" means all costs, fees, expenses and
commissions incurred by the Partnership, the General Partner, SCA, Shamrock
or any of their Affiliates in connection with the preparation for, or the
carrying out, completion, termination, or sale or liquidation (in whole or
in part) of the Investment, including, but not limited to, legal,
accounting, investment banking, financing, finders' and other fees and
expenses; provided, however, that such amounts shall not include any costs,
fees, expenses and commissions incurred by the Partnership, the General
Partner, the Limited Partners, SCA or any of their Affiliates which have
been reimbursed to such Person by the Subject Company;
"Act" means the Delaware Revised Uniform Limited Partnership Act
as in effect on the date hereof and as it may be amended hereafter from
time to time;
"Affiliate" means, with respect to any Person, a Person, directly
or indirectly, through one or more intermediaries, controlling, controlled
by, or under common control with such Person; the term "control," as used
herein, means, with respect to a Person that is a corporation, the right to
elect a majority of its board of directors and, with respect to a Person
that is not a corporation, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
Person;
"Agreement" means this Agreement of Limited Partnership of
Trefoil Gilat Investors, L.P. as amended from time to time as provided
herein;
"Available Cash" means Cash which is available in the accounts of
the Partnership and not reserved to make any payments due and owing by the
Partnership or otherwise reserved by the General Partner, in its reasonable
discretion, for expenses, operations, or contingencies of the Partnership;
"Base Rate" means, on any date, the rate of interest in effect
for such date charged by Bank of America, N.A. as its "reference rate" or
"prime rate";
"Book Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows;
(i) the Book Value of any asset contributed or deemed contributed
by a Partner to the Partnership shall be the gross fair market value of
such asset at the time of contribution as reasonably determined by the
General Partner;
(ii) the Book Value of any asset distributed or deemed
distributed by the Partnership to any Partner shall be adjusted immediately
prior to such distribution to equal its gross fair market value at such
time as reasonably determined by the General Partner;
(iii) the Book Values of all Partnership assets may be adjusted
in the discretion of the General Partner to equal their respective gross
fair market values, as reasonably determined by the General Partner as of:
(1) the date of the acquisition of an additional interest in
the Partnership by any new or existing Partner in exchange for a
contribution to the capital of the Partnership; or
(2) upon the liquidation of the Partnership, or the
distribution by the Partnership to a retiring or continuing Partner of
money or other Partnership property in reduction of such Partner's interest
in the Partnership;
(iv) any adjustments to the adjusted basis of any asset of the
Partnership pursuant to Section 734 or 743 of the Code shall be taken into
account in determining such asset's Book Value in a manner consistent with
Treas. Reg. ss. 1.704-1(b)(2)(iv)(m); and
(v) if the Book Value of an asset has been determined pursuant to
clauses (i) through (iii) above, such Book Value shall thereafter be
adjusted in the same manner as would the asset's adjusted basis for federal
income tax purposes, except that depreciation and amortization deductions
shall be computed based on the asset's Book Value as so determined, and not
on the asset's adjusted tax basis;
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to
close;
"Capital Account" means, with respect to any Partner, the capital
account of such Partner maintained pursuant to Section 7.1,
including all additions and subtractions thereto pursuant to this
Agreement;
"Capital Commitment Balance" of a Partner shall mean such
Partner's Total Capital Commitment, less the Capital Contributions made by
the Partner;
"Capital Contributions" means the contributions by the Partners
to the Partnership made pursuant to Section 6.1;
"Capital Distributions" means the amount of Available Cash or
property (valued at Fair Market Value) distributed to the Partners pursuant
to Section 7.4.1(a);
"Cash" when capitalized means money and cash equivalents;
"Code" means the Internal Revenue Code of 1986, as amended;
"Commitments" means the amount of capital that each Partner shall
be required to commit to the Partnership for purposes of making an
Investment and making Minimum Fee Contributions with respect thereto. In no
event shall a Commitment be approved which exceeds such Partner's remaining
Capital Commitment Balance.
"Delinquent Partner" has the meaning given it in Section
6.1(b)(iii);
"Designated Account" means (i) marketable direct obligations
issued or unconditionally guaranteed by the government of the United States
of America or issued by any agency thereof and backed by the full faith and
credit of the United States of America, in each case maturing within one
year from the date of acquisition thereof; (ii) marketable direct
obligations issued by any State of the United States of America or any
political subdivision of any such State or any public instrumentality
thereof maturing within one year from the date of acquisition thereof and,
at the time of acquisition, having not less than the second highest rating
obtainable from either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from
the date of the creation thereof and, at the time of acquisition, having
not less than the second highest rating obtainable from either Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc; (iv) certificates of
deposit, repurchase agreements, or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any State thereof or the
District of Columbia which has combined capital and surplus of not less
than $1,000,000,000; and (v) money market funds organized under the laws of
the Unites States of America or any State thereof that invest not less than
75% of their funds in any of the Designated Accounts described in clauses
(i), (ii), (iii), and (iv) above;
"Event of Withdrawal" has the meaning given it in Section 8.1(b);
"Exchange Act" means the Securities Exchange Act of 1934, as
amended;
"Fair Market Value" of an asset means the fair market value of
such asset as determined by the General Partner or liquidating trustee, as
the case may be, in its reasonable discretion; provided, however, in
connection with a distribution of property to the Limited Partners pursuant
to Section 7.4.1, 7.4.3 or 8.3, the fair market value of property which is
a security that is not publicly traded shall be the appraised value thereof
as determined by an independent investment bank or appraisal firm selected
by the General Partner;
"Fiscal Period" shall mean the period beginning on the date
hereof or the first day after the end of any Fiscal Period and ending on
the last day of each calendar quarter;
"Fiscal Year" means each of the taxable years of the Partnership,
as described in Section 9.7;
"General Partner" means Trefoil Gilat, Inc. or any new general
partner elected pursuant to the terms of this Agreement;
"Indemnified Person" or "Indemnified Persons" have the meanings
given them in Section 4.7(a);
"Initial Contribution Date" means August 1, 2000 or such later
date designated in a written notice delivered to the Limited Partners in
accordance with Section 11.13;
"Interest Rate" means the lesser of (i) 3% in excess of the Base
Rate from time to time in effect, and (ii) the maximum non-usurious rate
permitted by applicable law;
"Investment" means a direct or indirect investment or acquisition
(including by means of a tender offer, cash merger or management leveraged
buy out transaction) by the Partnership (in one transaction or in a series
of related transactions) in or of securities of the Subject Company;
"Investment Act" has the meaning given it in Section 10.1(j);
"Limited Partners" means each Person named as a limited partner
on the Schedule of Partners, and each Person admitted as a Substituted
Limited Partner pursuant to Section 2.4(c) and named as a limited partner
on the Schedule of Partners;
"Majority in Interest" means, in respect of any consent or other
action of the Limited Partners pursuant to this Agreement, Limited Partners
(other than Delinquent Partners) whose Total Capital Commitments represent
at least 50% of the Total Capital Commitments of all the Limited Partners
(other than Delinquent Partners);
"Management Agreement" means the Management Agreement, dated as
of July 26, 2000, between the Partnership and SCA, as the same may be
amended pursuant to the terms hereof;
"Minimum Fee" means the fee payable to SCA pursuant to Section 3
of the Management Agreement;
"Minimum Fee Contribution" has the meaning given it in Section
6.1(b)(ii);
"Minimum Fee Payment Date" means August 1, 2000 and each January
5 and July 5 thereafter (beginning with January 5, 2000) and prior to the
Partnership Dissolution Date;
"Net Profit" and "Net Loss" mean, respectively, for any period
the taxable income and taxable loss of the Partnership for such period as
determined for federal income tax purposes, provided that for purposes of
determining Net Profit and Net Loss and items of gross income, deductions
and expenses (for the purposes of Section 7.2 (other than Section 7.2(c))
and 7.3) and not for income tax purposes (i) there shall be taken into
account any tax exempt income of the Partnership, (ii) any expenditures of
the Partnership which are described in Section 705(a)(2)(B) of the Code or
which are deemed to be described in Section 705(a)(2)(B) of the Code
pursuant to Treasury Regulations under Section 704(b) of the Code shall be
treated as deductible expenses, (iii) if any Partnership asset has a Book
Value which differs from its adjusted tax basis as determined for federal
income tax purposes, income, gain, loss and deduction with respect to such
asset shall be computed based upon the asset's Book Value rather than its
adjusted tax basis, (iv) items of gross income or deduction allocated
pursuant to Section 7.3 shall be excluded from the computation of Net
Profit and Net Loss; (v) there shall be taken separately stated items under
Section 702(a) of the Code; and (vi) if the Book Value of any Partnership
asset is adjusted pursuant to clauses (ii) or (iii) of the definition
thereof, the amount of such adjustment shall be taken into account in the
taxable year of adjustment as gain or loss from the disposition of such
asset for purposes of computing Net Profit and Net Loss;
"Partners" means the General Partner and the Limited Partners;
"Partnership" means the limited partnership created under this
Agreement;
"Partnership Dissolution Date" has the meaning given it in
Section 8.1;
"Permitted Transferee" has the meaning given it in Section
2.4(a);
"Person" means an individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated association
or other entity or association;
"Pro Rata" means in proportion to the Total Capital Commitments
of all of the Partners;
"Qualified Income Offset Amount" means, for any Partner, the
excess, if any, of (i) the negative balance a Partner has in its Capital
Account after taking into account any adjustments, allocations or
distributions described in Treas. ▇▇▇.▇▇. 1.704-1(b)(2)(ii)(d)(4), (5) or
(6) over (ii) the maximum amount of any negative balance in its Capital
Account such Partner may be obligated (or deemed obligated under the
Treasury Regulations) to contribute to the Partnership upon liquidation;
"SCA" means Shamrock Capital Advisors, Inc., a Delaware
corporation;
"Schedule of Partners" means Schedule A attached hereto as the
same may be amended from time to time to reflect the addition of Additional
Limited Partners, Substituted Limited Partners and/or changes in Total
Capital Commitments;
"Securities" means the securities of the Subject Company, all
warrants, options, convertible securities and other interests which may be
exercised in respect of, converted into or otherwise relate to, the Subject
Company's capital stock or other equity interests and any other securities,
including debt securities, of the Subject Company;
"Securities Act" means the Securities Act of 1933, as amended;
"Shamrock" means Shamrock Holdings of California, Inc., a
California corporation;
"Subject Company" means Gilat Communications, Ltd.
"Substituted Limited Partner" has the meaning given it in Section
2.4(c);
"Total Capital Commitment" of a Partner shall mean the amount of
capital that such Partner has committed to contribute to the Partnership
for the purpose of making Investments as set forth in Schedule A hereto
under the caption "Total Capital Commitment";
"Transfer" has the meaning given it in Section 2.4(a);
"Two-Thirds in Interest" means, in respect of any consent or
other action of the Limited Partners pursuant to this Agreement, Limited
Partners (other than Delinquent Partners) whose Total Capital Commitments
represent at least 66 and 2/3 percent of the Total Capital Commitments of
all the Limited Partners (other than Delinquent Partners);
"Void Transfer" has the meaning given it in Section 2.4(a).
1.2 Accounting Terms and Determinations.
All accounting terms used herein and not otherwise defined shall
have the meanings accorded to them in accordance with generally accepted
accounting principles and, except as expressly provided herein, all
accounting determinations shall be made in accordance with United States
generally accepted accounting principles, consistently applied.
ARTICLE 2
GENERAL PROVISIONS
2.1 Formation of Limited Partnership.
The Partners hereby agree to form a limited partnership, pursuant
to and in accordance with the provisions of the Act. Except as provided to
the contrary in this Agreement, the rights and obligations of the Partners
shall be governed by the provisions of the Act. The General Partner shall
promptly file in the office of the Secretary of State of the State of
Delaware a certificate of limited partnership conforming to the Act.
2.2 Name.
The name of the Partnership shall be Trefoil Gilat Investors,
L.P. or such other name as the General Partner may hereafter designate upon
(i) sending notice thereof to the Limited Partners and (ii) causing an
amendment to the certificate of limited partnership to be properly filed in
the office of the Secretary of State of the State of Delaware; provided,
however, that such other name shall not include the name (or any unique
part thereof) of a Limited Partner or any of its Affiliates without the
prior consent of such Limited Partner.
2.3 Principal Place of Business.
The principal place of business of the Partnership shall be at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ or at such other place as the
General Partner may from time to time determine. The Partnership may
establish additional offices at such other places within or outside the
State of California as the General Partner may from time to time determine.
2.4 Transfer of Partnership Interests.
(a) Conditions for Transfer. No Limited Partner shall, directly
or indirectly, sell, assign, transfer, exchange, mortgage, pledge, dispose
of, hypothecate, grant a security interest in, encumber, or permit or
suffer any encumbrance of (except by negative pledge), all or any portion
of its interest in the Partnership (the commission or occurrence of any
such act referred to as a "Transfer"), without the prior written consent of
the General Partner, which consent may be withheld in the absolute
discretion of the General Partner; provided, however, that no such consent
of the General Partner shall be required for Transfers (i) occurring
pursuant to testamentary instrument or intestate succession or as otherwise
set forth in Section 2.5, (ii) by gift to a spouse, parent, child or
grandchild or a trust for the benefit of any one or more of the foregoing
or (iii) to an Affiliate of, or partner in, such Limited Partner; provided
that (x) in every case such transferee agrees with the Partnership not to
make any subsequent Transfer except with the prior written consent of the
General Partner or to Persons described above, (y) if any Limited Partner
shall make a Transfer to an Affiliate of, or a partner in, such Limited
Partner, such transferor shall guaranty, by instrument reasonably
satisfactory to the General Partner, the making of Capital Contributions by
the transferee and (z) such Transfer would not subject the Partnership to
registration under the Investment Company Act of 1940, as amended. Any
Person receiving a Limited Partner's interest pursuant to (i), (ii) or
(iii) above or with the prior written consent of the General Partner
(including, without limitation, pursuant to Section 6.1(b)(iii)) shall be
referred to as a "Permitted Transferee." Any purported Transfer of a
Limited Partner's interest in the Partnership made other than in accordance
with this Agreement (a "Void Transfer") shall be void and neither the
Partnership nor the General Partner shall be required to recognize any
equitable or other claims to such interest on the part of a Transferee in
connection with a Void Transfer. Any amounts otherwise distributable to a
Limited Partner in respect of a direct or indirect interest in the
Partnership that has been transferred in violation of this Section 2.4 may
be withheld until the Void Transfer has been rescinded, whereupon the
amount withheld shall be distributed without interest. Before the
completion of, and as a prior condition to, any Transfer pursuant to this
Section 2.4, if requested by the General Partner, the transferor shall
deliver to the Partnership a written opinion of counsel, satisfactory in
form and substance to the General Partner, that an exemption from
registration under the Securities Act is available.
(b) Effect of Transfer. A Permitted Transferee shall not become a
Limited Partner as a result of a Transfer, and shall not have any rights
herein conferred upon a Limited Partner, except that upon notification of
the General Partner by the person acquiring such interest, such person
shall be entitled to receive allocations and distributions to which such
Limited Partner would have been entitled under the terms of this Agreement;
provided, however, that any such person may become a Limited Partner upon
compliance with all of the procedures set forth in Section 2.4(c).
(c) Requirements for Substitution. A Permitted Transferee of an
interest in the Partnership of a Limited Partner shall have the right to
become a substituted Limited Partner (a "Substituted Limited Partner") in
place of such Limited Partner with respect to such interest only if all the
following conditions are satisfied:
(i) a duly executed and acknowledged written instrument of
transfer approved by the General Partner has been filed with the
Partnership setting forth the intention of the transferring Limited Partner
that the Permitted Transferee become a Substituted Limited Partner in its
place;
(ii) the transferring Limited Partner and Permitted
Transferee execute, acknowledge and deliver such other instruments as the
General Partner may reasonably deem necessary or desirable to effect such
substitution, including the written acceptance and adoption by the
Permitted Transferee of the provisions of this Agreement, and the
execution, acknowledgment and delivery by the Permitted Transferee of a
power of attorney containing the powers provided for in Section 11.1
hereof;
(iii) the transferring Limited Partner shall have guaranteed
the obligations of the Permitted Transferee hereunder;
(iv) the written consent of the General Partner to such
substitution shall be obtained, which consent may be withheld in the
absolute discretion of the General Partner (regardless of whether the
withholding of such consent is arbitrary and unreasonable); and
(v) the Partnership shall have been reimbursed for all
reasonable expenses, including attorney's fees, incurred by the Partnership
in connection with such Transfer and substitution.
Except to the extent required by the General Partner pursuant to this
Section 2.4 or the Act, the transferring Limited Partner shall be relieved
of its obligations to make further Capital Contributions to the extent of
such transfer.
2.5 Effect of Bankruptcy, Death, Incompetency or Withdrawal of a
Limited Partner.
The dissolution, liquidation, bankruptcy, death, incompetency,
resignation or withdrawal of any Limited Partner shall not cause the
termination or dissolution of the Partnership. Upon the occurrence of any
such event that is not prohibited by Section 5.6, the legal representative
of the Limited Partner shall be deemed to be the assignee of the Limited
Partner's interest in the Partnership and, if the terms and conditions set
forth in Section 2.4(c) hereof are satisfied, may become a Substituted
Limited Partner.
2.6 Both General and Limited Partner.
A Partner may at the same time be both a General Partner and
Limited Partner, in which event its rights and obligations in each such
capacity shall be determined separately in accordance with the provisions
hereof.
2.7 Delaware Office; Agent for Service of Process.
The address of the Partnership's registered office in the State
of Delaware shall be c/o Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the name of the registered agent for
service of process on the Partnership in the State of Delaware shall be
Corporation Service Company.
ARTICLE 3
OBJECTIVES, PURPOSES AND POWERS
3.1 Purposes and Powers.
(a) The purpose of the Partnership shall be to invest in capital
stock, membership interests, bonds, notes, debentures, trust receipts and
other obligations, choses in action, instruments or evidences of
indebtedness of the Subject Company and in rights and options relating
thereto and in any securities received in exchange for any of the foregoing
(all such items being hereinafter collectively called "Securities") and in
bank and money market accounts, certificates of deposit, United States
Government securities and cash and cash equivalents;
(b) the Partnership is empowered
(i) to, directly or indirectly, purchase, hold, exchange,
sell, distribute, transfer, mortgage, pledge, hypothecate, deal in or
otherwise effect any and all transactions of any kind, character or
description whatsoever in or with respect to the Securities or assets of
the Subject Company, and to do any and all things which may be useful in
connection with the foregoing activities or incidental to the conduct of
such activities;
(ii) to incur indebtedness for borrowed money; to issue
promissory notes, drafts, bills of exchange, warrants, bonds, debentures,
and any other kinds of negotiable and non-negotiable instruments and
evidences of indebtedness, whether or not in connection with borrowing
money, and to secure the payment thereof (and of the interest thereon) by
the creation of any interest in the Securities or any of the property or
rights of the Partnership, or in any property owned by others when the
Partnership has the right so to do, whether owned by or subject to such
right of the Partnership at the time such indebtedness is incurred or
thereafter;
(iii) to purchase, borrow, acquire, hold, exchange, sell,
distribute, assign, transfer, lend, mortgage, pledge, hypothecate, convert,
redeem, escrow, or reissue instruments evidencing its indebtedness incurred
in connection with the conduct of its business;
(iv) to invest Partnership funds, on a temporary basis
pending (x) investment in the Subject Company, (y) distribution to the
Partners or (z) payment of costs, expenses, liabilities or other
obligations or contingencies of the Partnership, in Designated Accounts;
(v) to have and maintain one or more offices within or
without the State of California, in connection therewith, to rent, lease or
purchase office space, facilities and equipment, to engage and pay
consultants and advisors and to do such other acts and things and incur
such other expenses as may be necessary or advisable in connection with the
maintenance of such office or offices or the conduct of the Partnership;
(vi) to open, maintain and close bank accounts and to draw
checks and other orders for the payment of money;
(vii) to form Persons, including partnerships and
corporations, and to enter into, make and perform all such contracts,
agreements and other undertakings, including indemnity agreements, as may
be necessary or advisable or incident to the foregoing or the carrying out
of the purposes of the Partnership;
(viii) to enter into the Management Agreement; and
(ix) to take such other actions as may be necessary or
advisable or incident to the foregoing or the carrying out of the purpose
of the Partnership (including, without limitation, the commencement,
joining in, maintenance and defense of any litigation or administrative
proceeding, the retention of agents, independent contractors, legal
counsel, accountants, brokers and investment bankers, and the preparation
and filing of Partnership tax returns) and to do every other act or thing
incident thereto or connected therewith.
Without limiting the foregoing, the Partnership may carry out its
objectives and accomplish its purposes as principal, whether by or through
trustees or agents, alone or with associates, or as a member of or as a
participant in any firm, partnership, joint venture, association, trust,
syndicate or other entity. Although the Partnership may engage in any or
all of the above activities, the Partnership need not engage in any one or
more of them.
ARTICLE 4
GENERAL PARTNER; MANAGEMENT; ETC.
4.1 General Partner.
The General Partner is Trefoil Gilat or any additional,
substitute, replacement or successor general partner of the Partnership
admitted as such in accordance with this Agreement in its capacity as
general partner of the Partnership.
4.2 Exclusive Control.
Subject to the terms and provisions of this Agreement and the
Act, the management, operation and policies of the Partnership and the
authority to take all action and make all decisions regarding the business
of the Partnership shall be vested fully and exclusively in the General
Partner who shall have all rights and powers generally conferred by law
upon general partners or necessary or advisable and consistent herewith.
4.3 Other Businesses of Partners.
Until the Partnership Dissolution Date, the General Partner shall
engage in no business other than serving as the general partner of the
Partnership and taking such actions that are reasonably incident thereto.
The General Partner shall devote such time to the Partnership and its
purposes and objectives as shall be necessary in its reasonable judgment to
conduct and manage the Partnership's affairs in an efficient manner after
taking into account the services provided to the Partnership under the
Management Agreement. Except as otherwise specifically set forth herein or
in the Management Agreement, nothing contained in this Agreement shall be
deemed to preclude any Partner or any Affiliate of any Partner or employee
of any Partner from engaging in or pursuing, directly or indirectly,
independently or with others, any interest in other business ventures of
every kind, nature or description, including those which compete with the
Subject Company, and neither the Partnership nor any Partner shall be
entitled to have any interest whatsoever in any such business venture.
4.4 Powers.
The General Partner is hereby authorized and empowered, on behalf
and in the name of the Partnership, to carry out and implement, directly or
through such agents as the General Partner may appoint, including, but not
limited to, SCA, any and all of the purposes and powers of the Partnership
set forth in Article 3 hereof, and, without limiting the generality of the
foregoing:
(a) to do such other acts (including elections under Section 754
of the Code and any other Code provision or regulation thereunder) as the
General Partner may deem necessary or advisable, or as may be incident to
or necessary for the conduct of the business of the Partnership;
(b) to employ and dismiss from employment any and all employees,
agents, or independent contractors;
(c) to consult with legal counsel, accountants, brokers,
investment bankers, and other experts selected by the General Partner or
SCA on behalf and at the expense of the Partnership; and
(d) to execute, acknowledge and deliver any and all instruments
to effectuate any and all of the foregoing.
4.5 Transactions with Affiliates; Management Agreement.
The General Partner may not engage in any transaction with its
Affiliates or Shamrock and any of its Affiliates in connection with the
operation or management of the Partnership or the carrying out of its
objects or purposes on any basis less favorable to the Partnership than
would be obtained from an unaffiliated Person. Concurrently with the
execution of this Agreement, the Partnership shall enter into the
Management Agreement. Without the consent of Two-Thirds in Interest, the
Partnership may not amend the Management Agreement.
4.6 Exculpation of General Partner.
Neither the General Partner nor any Affiliate of the General
Partner or any employee, director, officer, partner, stockholder or agent
thereof shall have any liability to the Partnership or the Limited Partners
(i) for any mistake in judgment or (ii) for any act or failure to act
pursuant to this Agreement or the Management Agreement, except where such
mistake in judgment, act or failure to act constitutes gross negligence,
fraud, willful violation of law, bad faith or willful misconduct. The
General Partner shall be entitled to rely upon the advice of legal counsel,
accountants, and other experts (including financial advice of investment
bankers), provided the General Partner believes such professionals and
experts are competent, and any act of or failure to act by the General
Partner in good faith reliance on such advice shall in no event subject the
General Partner, its Affiliates or any of their respective employees to
liability to the Partnership or any Partner.
4.7 Indemnification and Contribution.
(a) The Partnership shall indemnify, defend and hold harmless
each Partner, its Affiliates, and their respective directors, officers,
employees, or agents (severally, the "Indemnified Person," and
collectively, the "Indemnified Persons"), from and against any loss,
damage, liability, cost or expense (including reasonable fees and expenses
of counsel selected by the Indemnified Person) (except as otherwise
specifically provided herein or in the Management Agreement) to which the
Indemnified Person may become subject arising out of or in connection with
(i) the transactions contemplated by this Agreement, including any tender
offer, and any other actions taken by the Partnership in connection with
the Securities of the Subject Company, but solely as a result of an
Indemnified Person (or an Affiliate thereof) being a Partner or (ii) the
business and operation of the Partnership (subject to the Management
Agreement), to the fullest extent permitted by law, except that the
Partnership shall not indemnify any Indemnified Person for any loss,
damage, liability, cost or expense (x) arising from such Indemnified
Person's gross negligence, fraud, willful violation of law, bad faith,
willful misconduct, breach of this Agreement or breach of the
representations or warranties of the respective Partner contained herein,
(y) as to which indemnification is barred under the federal securities law,
the Act, or other applicable laws, or (z) as to its share as Partner in any
losses or expenses of the Partnership, including the indemnification
provided for in this Section. Such counsel fees and expenses shall be paid
by the Partnership as they are incurred upon receipt, in each case, of an
undertaking by or on behalf of the Indemnified Person to repay such amounts
if it is ultimately determined that such Indemnified Person is not entitled
to indemnification with respect thereto.
(b) If the indemnity provided for in Section 4.7(a) and to which
an Indemnified Person is otherwise entitled pursuant to such Section is
unavailable to such Indemnified Person in respect of any losses, damages,
liabilities, costs or expenses referred to therein, then the Partnership,
in lieu of indemnifying such Indemnified Person, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such
losses, damages, liabilities, costs or expenses in the proportion as (i)
the aggregate of the Capital Accounts exclusive of the Capital Account of
such Indemnified Person bears to (ii) the aggregate of all Capital Accounts
of the Partnership (including such respective Indemnified Person's or
Partner's Capital Account).
4.8 Authority.
(a) To the extent that the General Partner is authorized to act
for the Partnership in accordance with this Agreement, the General Partner
shall, either directly or through such officers, partners, employees or
agents of the Partnership or the General Partner as the General Partner
shall appoint, be authorized, with its signature alone, to bind the
Partnership under, and to execute and deliver on behalf of the Partnership,
such documents and instruments as may be necessary and appropriate to carry
out the decisions made by the General Partner.
(b) In dealing with the General Partner, no Person shall be
required to inquire into its authority to bind the Partnership.
4.9 Expenses.
All costs and expenses payable to third parties incurred in
connection with the organization and operation of the business of the
Partnership, including, but not limited to, Acquisition Expenses, the
Minimum Fee payable under the Management Agreement, and fees and expenses
incurred prior to the date hereof by the General Partner, SCA, Shamrock, or
any of their respective Affiliates relating to the organization of the
Partnership or otherwise in furtherance of its purposes, shall be borne by
the Partnership and, to the extent that any such expenses have been paid by
the General Partner, SCA, Shamrock or any of their respective Affiliates,
such person shall be entitled to reimbursement thereof. Costs and expenses
described in this Section 4.9 shall be paid for through Capital
Contributions and, to the extent such costs and expenses are attributable
to the Subject Company, shall be treated as part of the Invested Capital of
such Subject Company for purposes of determining distributions of Available
Cash pursuant to Section 7.4.1.
4.10 Management Fees.
Pursuant to the Management Agreement, the General Partner on
behalf of the Partnership will retain SCA to provide management services to
the Partnership. The Management Agreement provides, among other things, for
the payment to SCA of the Minimum Fee, payable semi-annually in advance on
each Minimum Fee Payment Date.
4.11 Liability of the General Partner.
Except as provided in Section 4.6, the General Partner shall not
be liable for the debts and obligations of the Partnership except solely to
the extent required by applicable law; provided, however, that all such
debts and obligations for which the General Partner may be liable (except
as provided in Section 4.6) shall be paid or discharged first with the
property of the Partnership (including insurance proceeds) before the
General Partner shall be obligated to pay or discharge any such debt or
obligation with its assets.
ARTICLE 5
LIMITED PARTNERS
5.1 Limited Partners.
The Limited Partners are the persons listed as such in the
Schedule of Partners. Their addresses for receipt of notices are as set
forth under their names in such Schedule.
5.2 No Right to Manage.
Neither any Limited Partner nor the legal representatives of any
Limited Partner, including, but not limited to, representatives of Limited
Partners that have become bankrupt or have been liquidated or dissolved,
shall have any right to take part in the management of the business or
affairs of the Partnership or any right or authority to act for or bind the
Partnership, except that the Limited Partners shall have the rights and
powers granted hereunder and shall also have the rights and powers granted
to Limited Partners under the Act.
5.3 Liability of Limited Partners.
Subject to the provisions of the Act, no Limited Partner shall be
liable to creditors of the Partnership for the repayment, satisfaction and
discharge of any debts, liabilities and obligations of the Partnership.
5.4 Form of Distribution.
Except as contemplated in this Agreement, no Limited Partner
shall have the right to demand or receive (a) property, other than Cash, or
(b) priority over any other Limited Partner, in return of its capital or in
respect of any other distribution.
5.5 Action Requiring Consent of Certain Limited Partners.
Notwithstanding anything to the contrary in this Agreement, the
consent of the General Partner and a Majority in Interest shall be
necessary to:
(a) permit the General Partner or the Partnership, prior to the
Partnership Dissolution Date, to adopt a voluntary plan of liquidation;
(b) permit the General Partner to transfer its interest or
withdraw as the General Partner in the Partnership;
(c) admit any Person as a General Partner of the Partnership;
(d) permit SCA or the Partnership to assign its interest in the
Management Agreement;
(e) permit the merger or consolidation of the Partnership with
any Person; or
(f) permit the General Partner, prior to the Partnership
Dissolution Date, to engage in any activities other than acting as General
Partner and/or a Limited Partner and other actions incidental thereto.
5.6 Withdrawal of Limited Partners.
Without the prior written consent of the General Partner, the
granting or denial of which shall be in the sole discretion of the General
Partner, no Limited Partner shall resign or withdraw from the Partnership
prior to dissolution of the Partnership pursuant to Section 8.1 (except
pursuant to dissolution, liquidation, bankruptcy, death or incompetency as
set forth under Section 2.5). During the term of the Partnership, no
Partner shall be entitled to withdraw any amount from his Capital Account
except as provided in Sections 7.4 and 8.3.
ARTICLE 6
CAPITAL CONTRIBUTIONS
6.1 Capital Contributions.
The Partners have agreed to make contributions to the capital of
the Partnership as follows:
(a) All Capital Contributions shall be made in cash.
(b) (i) On the Initial Contribution Date, each Partner shall
contribute the amount set forth opposite such Partner's name under the
heading "Initial Capital Contribution" on Schedule A hereto. The General
Partner may at any time and from time to time prior to the Partnership
Dissolution Date, upon notice given at least five Business Days prior
thereto by telex or telecopy, require each Limited Partner to make
contributions to the capital of the Partnership in an amount not to exceed
such Partner's Capital Commitment Balance. All Capital Contributions shall
be made by wire transfer of federal funds to an account of the Partnership
designated by the General Partner (which account shall be set forth in the
notice). Contributions shall be made Pro Rata by the Partners. Concurrently
with the funding of Contributions by the Limited Partners pursuant to this
clause (i), the General Partner shall make additional contributions to the
capital of the Partnership in an amount so that the aggregate of all
Contributions made by the General Partner equals at least 1% of the
aggregate of all Contributions made by all Partners.
(ii) In addition to contributions which may be required
pursuant to clause (b)(i) above, on each Minimum Fee Payment Date the
Partners shall be obligated severally, and not jointly, to make additional
contributions (each a "Minimum Fee Contribution") to the Partnership in an
aggregate amount equal to the Minimum Fee payable on such date. All Minimum
Fee Contributions shall be made by wire transfer of federal funds to the
account of the Partnership by 12:00 noon New York City time on each Minimum
Fee Payment Date. All Minimum Fee Contributions shall be made Pro Rata by
the Partners. Minimum Fee Contributions will not reduce the Partners'
Capital Commitment Balances.
(iii) If (x) any Limited Partner fails to contribute timely
all or any portion of any Capital Contribution or Minimum Fee Contribution
it has agreed to contribute pursuant to the provisions of this Agreement,
and (y) such failure continues for a period of (A) in the case of Capital
Contributions, three Business Days after, and (B) in the case of Minimum
Fee Contributions, ten days after, receipt by such Limited Partner (such
Limited Partner being hereinafter referred to as the "Delinquent Partner")
of notice from the General Partner specifying such failure, then the
General Partner may, subject to compliance with applicable law, at its
option:
(A) Take such action (including, without limitation, the
filing of a suit) as the General Partner deems appropriate to
obtain payment by the Delinquent Partner of that portion of its
contribution which is in default, together with interest thereon
at the Interest Rate, from the date that such contribution was
due until the date that such contribution, together with all
interest accrued thereon, is paid to the Partnership, all at the
cost and expense of the Delinquent Partner, and until all such
amounts have been paid, all distributions that would otherwise be
made to such Delinquent Partner shall be withheld in partial
satisfaction of such obligations and shall be first applied to
interest earned and unpaid and then to principal;
(B) Advance, together with the Limited Partners (other than
the Delinquent Partner) wishing to participate, on a Pro Rata
basis (determined without regard to the Delinquent Partner), that
portion of such contribution which is in default, on the
following terms: (I) the sums thus advanced shall be deemed to be
demand recourse loans from the Partners participating therein to
the Delinquent Partner and a contribution of such sums to the
Partnership by the Delinquent Partner; (II) such loans shall bear
interest at the Interest Rate, from the date that the advance was
made until the date that such advance, together with all interest
accrued thereon, is repaid to the Partners; (III) unless
otherwise paid, the repayment of these loans shall be made from
the Cash of the Partnership to be distributed to the Delinquent
Partner before any Cash is distributed to the Delinquent Partner
during the term of the Partnership or after dissolution; and (IV)
all such repayments shall be first applied to interest earned and
unpaid and then to principal;
(C) If the delinquency arises from a failure to make a
Capital Contribution or Minimum Fee Contribution, unless the
Delinquent Partner shall have theretofore cured its failure to
make a required Capital Contribution or Minimum Fee Contribution
(and reimbursed the Partnership for all costs and expenses
incurred in connection with such delinquency), sell the
Delinquent Partner's interest in the Partnership to the other
Limited Partners wishing to participate on a Pro Rata basis
(determined without regard to the Delinquent Partner), or to any
other Person, to the extent the Limited Partners fail to purchase
their Pro Rata share, without further notice to the Delinquent
Partner on the terms and for such consideration as the General
Partner may reasonably deem appropriate under the circumstances;
proceeds from any such sale shall be retained by the Partnership
or the Partners (as the case may be), to the extent of the
amount, including interest, then owing to the Partnership or the
Partners (as the case may be) (the Delinquent Partner remaining
liable for any deficiency); any excess shall be paid to
Delinquent Partner; and/or
(D) Exercise such other rights and remedies to which the
General Partner may be entitled at law or in equity or by
statute.
(iv) No remedy herein conferred upon or reserved to the
Partnership or any of the Partners is intended to be exclusive of any other
remedy or remedies, and each and every remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. No delay or omission of the
Partnership or the Partners to exercise any right or power accruing upon
any default shall impair any such right or power or shall be construed to
be a waiver of any such default or an acquiescence therein; and every power
and remedy given by this Section 6.1(b) to the Partnership or the Partners
may be exercised from time to time and as often as may be deemed expedient
by the General Partner.
6.2 Return of Contributions.
No Partner shall be entitled to the return of any of its Capital
Contributions to the Partnership or to be paid interest by the Partnership
in respect of its Capital Account except as otherwise specifically provided
herein.
6.3 No Required Additional Contributions.
Except as may be required by law or as otherwise specifically
provided for herein, no Partner shall at any time be required to make any
contributions to the Partnership. The Capital Commitment Balances of the
Partners are solely for the benefit of the Partners, as among themselves,
and may not be enforced by or for the benefit of any other Person
(including any creditor, receiver, or trustee of, or for, the benefit of
any one or more creditors of the Partnership).
6.4 Use of Capital.
The aggregate of all such contributions shall be available to the
Partnership to carry out the purposes and objectives of the Partnership as
set forth in Section 3.1.
ARTICLE 7
ACCOUNTS, ALLOCATIONS AND DISTRIBUTIONS
7.1 Capital Accounts.
(a) Each Partner shall have a Capital Account which shall be
maintained in accordance with Treas. Reg. Section 1.704-1(b)(2)(iv). The
initial balance of each Capital Account shall be zero.
(b) The Capital Account of each Partner shall be increased by (i)
any Capital Contribution by such Partner when such Capital Contribution is
made, (ii) the Net Profit allocated to such Partner pursuant to Section
7.2, and (iii) the gross income allocated to such Partner pursuant to
Section 7.3.
(c) The Capital Account of each Partner shall be reduced by (i)
the amount of any distribution of Cash or the Fair Market Value of any
property (net of any liability secured by such property that the Partner is
considered to assume or take subject to under Section 752 of the Code)
distributed to such Partner, when such distribution is made, (ii) the Net
Loss allocated to such Partner pursuant to Section 7.2 and (iii) any
"partner nonrecourse deductions" (as defined in Treas. Reg ss. 1.704-2(i))
and "nonrecourse deductions" (as defined in Treas. Reg. ss. 1.704-2(b))
allocated to such Partner pursuant to Section 7.3(a).
(d) If the Partnership distributes any property (other than Cash)
to any Partner, the Capital Accounts of the Partners shall be adjusted to
account for each Partner's allocable share (as determined in accordance
with Section 7.2) of Net Profits and Net Losses that would have been
realized by the Partnership had it sold the distributed asset at its Fair
Market Value immediately prior to its distribution.
7.2 Allocation of Net Profit and Loss.
(a) Net Profit or Net Loss and items thereof for each Fiscal
Period shall be allocated among the Partners (and credited or debited to
their Capital Accounts) in such manner that were the Partnership to
liquidate completely immediately after the end of such Fiscal Period and in
connection with such liquidation sell all of its assets and settle all of
its liabilities at their then Book Values (i.e., without any Net Profit or
Net Loss resulting therefrom): (i) the distribution by the Partnership of
any remaining cash to the Partners in accordance with their respective
positive Capital Account balances (after crediting or debiting Capital
Accounts for Net Profit or Net Loss for such Fiscal Period) would
correspond as closely as possible to the distributions that would result if
the liquidating distributions had instead been made in accordance with the
provisions of Section 7.4.1 and (ii) any resulting deficit Capital Account
balances (after crediting or debiting Capital Accounts for Net Profit or
Net Loss for such Fiscal Period) would correspond as closely as possible to
the manner in which economic responsibility for Partnership deficit
balances (as determined in accordance with the principles of Treasury
Regulations under Section 704 of the Code) would be borne by the Partners
under the terms of this Agreement and any collateral agreements.. If the
Partnership has an Aggregate Unrealized Net Loss as of the end of any
Fiscal Period, the General Partner in its discretion, may apply the
preceding sentence by assuming a liquidating sale of the Partnership's
assets at a Net Loss equal to such Aggregate Unrealized Net Loss (rather
than at no Net Profit or Net Loss). For purposes of maintaining the Capital
Accounts, items of income, gain, loss, deduction, expense and credit shall
be allocated to the Partners in the same manner as are Net Profits and Net
Losses, except where otherwise necessary to more closely achieve the result
contemplated by the first sentence of this Section 7.2(a).
(b) Notwithstanding any other provision of this Agreement, the
General Partner shall at all times, except as otherwise determined in
accordance with Section 704(c) of the Code and the Treasury Regulations
promulgated thereunder, be allocated an aggregate of at least 1% of the Net
Profits and Net Losses as well as 1% of each item of income, gain, loss,
deduction, expense and credit of the Partnership.
(c) For tax purposes, all items of income, gain, loss, deduction,
expense and credit, other than tax items corresponding to items allocated
pursuant to Section 7.3, shall be allocated to the Partners in the same
manner as are Net Profits and Net Losses; provided, however, that in
accordance with Section 704(c) of the Code, the Treasury Regulations
promulgated thereunder and Treas. Reg. Section 1.704-1(b)(4)(i), items of
income, gain, loss, deduction, expense and credit with respect to any
property whose Book Value differs from its adjusted basis for tax purposes
shall, solely for tax purposes, be allocated between the Partners so as to
take account of both the amount and character of such variation.
(d) Notwithstanding any other provision of this Agreement, in no
event shall Net Losses be allocated to a Limited Partner if such allocation
would result in such Limited Partner having a Qualified Income Offset
Amount.
For purposes of applying this Section 7.2, a Partner's Capital Account
shall be increased by such Partner's share of "minimum gain" and "partner
minimum gain" (within the meaning of Treasury Regulations under Section
704(b) of the Code).
7.3 Allocations of Nonrecourse Deductions; Minimum Gain
Chargeback; Qualified Income Offset.
(a) Notwithstanding any other provision of this Agreement, (i)
"partner nonrecourse deductions" (as defined in Treas. ▇▇▇.▇▇. 1.704-2(i)),
if any, of the Partnership shall be allocated for each Fiscal Period to the
Partner which bears the economic risk of loss within the meaning of Treas.
▇▇▇.▇▇. 1.704-2(i), and (ii) "nonrecourse deductions" (as defined in Treas.
Reg. ss. 1.704-2(b)), if any, of the Partnership shall be allocated for
each Fiscal Period in the same proportion as Net Profits and Net Losses for
such Fiscal Period.
(b) This Agreement shall be deemed to include "qualified income
offset" and "minimum gain chargeback" provisions within the meaning of
Treasury Regulations under Section 704(b) of the Code. Accordingly,
notwithstanding any other provision of this Agreement, items of gross
income shall be allocated to the Partners on a priority basis to the extent
and in the manner required by such provisions. In particular, if a Limited
Partner's negative Capital Account balance is below such Partner's Capital
Commitment Balance, then, prior to any allocation pursuant to Section 7.2,
such Partner shall be allocated items of gross income until the negative
balance of such Partner's Capital Account, if any, is equal to such
Partner's Capital Commitment Balance. Any special allocation of items
pursuant to this Section 7.3 shall be taken into account in computing
subsequent allocations pursuant to Section 7.2 so that the cumulative net
amount of all items allocated to each Partner shall, to the extent
possible, be equal to the amount that would have been allocated to such
Partner if there had never been any special allocation pursuant to this
Section 7.3.
7.4 Distributions.
7.4.1 Distributions.
Distributions of Available Cash or property (including
without limitation net sales proceeds and dividends and interest derived
from the Investment) by the Partnership shall be made to the Partners as
follows:
(a) First, to each of the Partners (including the General
Partner) in proportion to their respective Capital Contributions until all
Partners have received an amount equal to their Capital Contributions;
(b) Second, to each of the Partners (including the General
Partner) in proportion to their respective Capital Contributions until all
Partners have received pursuant to this clause (b) an amount equal to an
annual rate of return of 7%, compounded annually, on their Capital
Contributions;
(c) Third, 80% of all remaining Available Cash to the
Partners, in proportion to their Capital Contributions, and 20% of all
remaining Available Cash to the General Partner.
7.4.2 Distributions Before Liquidation.
Available Cash from the Subject Company shall be distributed,
from time to time, in accordance with Section 7.4.1 promptly following
receipt thereof by the Partnership, subject to compliance with applicable
laws and regulations.
7.4.3 Distributions in Liquidation.
Cash and any other property shall be distributed upon the
dissolution and liquidation of the Partnership first pursuant to Section
8.3 and then to each Partner in accordance with Section 7.4.1.
7.4.4 Withholding Requirements.
(a) Notwithstanding any other provision of this Agreement,
the General Partner is authorized to take any action that it determines to
be necessary or appropriate to cause the Partnership to comply with any
withholding requirements imposed under Section 1446 or any other provision
of the Code or state, local or foreign law.
(b) If the Code or any state, local or foreign law requires
that the Partnership remit to the Internal Revenue Service or any other
taxing authority any withholding tax with respect to, or for the account
of, any Partner (in its capacity as a Partner), the General Partner shall
provide notice to such Partner of such obligation and such Partner shall
have the opportunity to make such payment on its own behalf. If such
Partner fails, or is not otherwise able, to make such payment on its own
behalf the Partnership shall so remit to the Internal Revenue Service or
other taxing authority the full required amount of such withholding tax.
Any amount so remitted shall be credited against any distributions that
would otherwise be made to such Partner during such period or thereafter
and any excess of the amount so remitted over amounts so credited against
distributions shall be treated as a recourse demand loan from the
Partnership to the Partner, the outstanding balance of which from time to
time shall accrue interest daily at the Interest Rate. For as long as the
Partnership is not dissolved and the Partner remains a Partner, unless
otherwise paid, such loan and interest shall be payable by credit against
the first amounts that would otherwise be distributed to such Partner (with
any such payment being allocated first to accrued and unpaid interest
through the date of such payment) but may be prepaid in cash by the
Partner, in whole or any part, at any time.
ARTICLE 8
DURATION, DISSOLUTION AND TERMINATION OF PARTNERSHIP
8.1 Partnership Dissolution Date.
The Partnership shall continue until December 31, 2010, unless
the Partnership is dissolved earlier upon:
(a) consent by a Majority in Interest to dissolve the Partnership
at an earlier date fixed by the General Partner;
(b) the bankruptcy or liquidation of the General Partner or any
other event of withdrawal of Trefoil Gilat as the General Partner ("Event
of Withdrawal") unless at the time of such Event of Withdrawal there is at
least one general partner of the Partnership authorized by this Agreement
to continue the business of the Partnership without dissolution and does
so, or, if there is no such general partner, Limited Partners whose Total
Capital Commitments represent at least two-thirds (2/3) in Interest (or
such greater percentage as is then required by the Act) agree in writing to
continue the Partnership and elect one or more successor general partners,
effective as of the date of such Event of Withdrawal, such action to be
taken within 90 days after such Event of Withdrawal, in which case the
Partnership shall not be dissolved and its business shall be carried on by
the remaining general partners;
(c) a good faith determination by the General Partner that (i)
the assets of the Partnership and the Capital Commitment Balances of the
Partners are insufficient to continue the business of the Partnership or
(ii) changes in laws applicable to the Partnership have made it undesirable
to continue the business of the Partnership; or
(d) the General Partner having been adjudged guilty of fraud or
willful misconduct in connection with the business of the Partnership in a
final, non-appealable judgment of a federal or state court of competent
jurisdiction.
In the case of any dissolution, the General Partner shall give
prompt notice of such event to the Limited Partners. The date of such
dissolution is herein called the "Partnership Dissolution Date."
8.2 Winding Up.
Upon dissolution of the Partnership, the Partnership shall
liquidate in an orderly manner as promptly as shall be practicable under
the supervision and control of the General Partner. The General Partner (as
liquidating trustee for the Partnership) shall have all the rights and
powers over the assets and liabilities of the Partnership in connection
with such liquidation which the General Partner has over the assets and
liabilities of the Partnership during the term of the Partnership;
provided, however, that such liquidation shall proceed with reasonable
diligence. Notwithstanding the foregoing, if the Partnership is dissolved
and not continued pursuant to Section 8.1(b) or dissolved pursuant to
Section 8.1(d), a Majority in Interest (excluding Affiliates of the General
Partner) may elect, within 10 Business Days of the Partnership Dissolution
Date, a liquidating trustee for the Partnership to serve in lieu of the
General Partner.
8.3 Liquidation.
Upon liquidation of the Partnership, the liquidating trustee
shall, out of Partnership assets, make payments and distributions no later
than the end of the Fiscal Year following the Fiscal Year in which such
liquidation occurs in the following manner and order:
(a) to pay and discharge, or make provisions or establish
reserves for, the claims of all creditors of the Partnership and to pay
expenses of liquidation;
(b) to establish such reserves as the liquidating trustee deems
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership; such reserve may be paid over by the
liquidating trustee to any attorney-at-law, or other party acceptable to
the liquidating trustee, as escrow agent to be held for disbursement in
payment of any such liabilities or obligations and, at the expiration of
such period as shall be deemed advisable by the liquidating trustee, for
distribution of the balance in the manner hereinafter provided in this
Section 8.3; and
(c) to make distributions to the Partners in accordance with
Section 7.4.3.
Distributions in liquidation of the Partnership may be made in
property other than Cash, in which case such property shall be valued at
its Fair Market Value for purposes of such liquidating distribution. If a
distribution is made both in Cash and in kind, such distribution shall be
made so that, to the fullest extent practical, the percentage of the Cash
and other property distributed to each Partner is identical.
8.4 Use of Partnership Name After Winding Up.
This Agreement does not confer upon the Partnership or the
Partners any right to the name "Trefoil" except that the Partnership may
use the name Trefoil Israel FSL, L.P., unless the name of the Partnership
is changed as provided in Section 2.2 hereof, and upon the dissolution and
winding up of the Partnership, the right to use such name, and all such
changed names, shall belong to the General Partner for which no
compensation shall be paid to the Partnership or the Partners.
8.5 Cancellation of Certificate.
Upon the completion of the distribution of the Partnership assets
as provided in Section 8.3, the Partnership shall be terminated and the
Person acting as liquidator shall cause the cancellation of the Certificate
and shall take such other actions as may be necessary or appropriate to
terminate the Partnership.
8.6 General Partner Not Personally Liable For Return of Capital
Contributions.
Except as otherwise expressly provided in a final non-appealable
judgment of a federal or state court of competent jurisdiction, the General
Partner shall not be personally liable for the return of any Capital
Contributions of any Limited Partner and such return shall be made solely
from available Partnership assets, if any.
ARTICLE 9
BOOKS OF ACCOUNT, REPORTS
9.1 Books of Accounts.
The General Partner shall keep, or cause to be kept, accurate and
complete records and books of account of all transactions of the
Partnership. Such books and records shall be kept on a parent only basis
(not consolidated with any of its subsidiaries) and otherwise (except as
otherwise provided herein) in accordance with United States generally
accepted accounting principles applicable thereto, shall be maintained at
the principal office of the Partnership and shall be available for
inspection, examination and copying, for a proper purpose and at reasonable
times during usual business hours, by Partners or their duly authorized
representatives. The General Partner shall provide to each Partner all such
information and financial statements of the Partnership as such Partner may
reasonably request. All such information and financial statements shall be
used for Partnership purposes only.
9.2 Reports to Partners.
As soon as practicable after the end of each Fiscal Year, each
Partner shall receive from the Partnership a U.S. federal income tax form
K-1 and a copy of the Partnership's federal income tax return for such
prior Fiscal Year.
9.3 Tax Returns.
The General Partner shall cause to be prepared and timely filed,
at the cost and expense of the Partnership, all necessary federal and state
tax returns of the Partnership.
9.4 Final Accounting.
Promptly after the Partnership Dissolution Date, the Auditor
shall commence to take an account of the affairs and financial transactions
of the Partnership and within 120 days after the Partnership Dissolution
Date shall prepare a statement setting forth the financial position of the
Partnership as of the close of business on the Partnership Dissolution
Date, establishing reasonable reserves for contingencies, showing the
Partnership's liabilities and assets and stating each Partner's Capital
Account balance on the Partnership Dissolution Date.
9.5 Tax Elections.
The General Partner shall have the power to make or revoke any
elections now or hereafter required or permitted to be made by the Code or
any state or local law.
9.6 Taxable Year.
The Partnership shall elect a taxable year ending December 31 or
such other date as the General Partner may determine and as may either be
approved by the Internal Revenue Service or otherwise available for tax
purposes; provided that the first taxable year of the Partnership shall
begin on the date hereof and end on December 31, 2000. The General Partner
shall give all other Partners notice of any change of the date on which the
taxable year of the Partnership shall end. Except as previously disclosed
in writing to the General Partner, as of the date hereof, each Limited
Partner has a taxable year ending on December 31.
9.7 Designation of Tax Matters Partner.
The General Partner is hereby designated as the "Tax Matters
Partner" under Section 6231(a)(7) of the Code to manage administrative tax
proceedings conducted at the partnership level by the Internal Revenue
Service with respect to partnership matters. The General Partner is
specifically directed and authorized to take whatever steps the General
Partner, in its sole discretion, deems necessary or desirable to perfect
such designation, including, without limitation, filing any forms or
documents with the Internal Revenue Service and taking such other action as
may from time to time be required under Treasury Regulations. The Tax
Matters Partner shall have full authority to extend the statute of
limitations and control any tax audit or other proceeding on behalf of the
Partnership. Expenses of administrative proceedings relating to the
determination of Partnership items at the Partnership level undertaken by
the Tax Matters Partner will be deemed to be Partnership expenses.
ARTICLE 10
CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 Representations of Each Partner.
Each of the Partners represents and warrants to and agrees with
the other Partners as follows:
(a) Status. Such Partner has full power and authority to own its
property and to carry on its business as now conducted. Such Partner is
duly incorporated or organized (in the event such Partner is not a
corporation), validly existing and in good standing under the laws of its
state or country of incorporation or organization (as the case may be).
(b) Authority. Such Partner has full power and authority to
execute and deliver this Agreement and to carry out its obligations
hereunder in accordance with the terms and provisions hereof. The
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
requisite action, corporate or otherwise, on the part of such Partner. This
Agreement constitutes the valid and legally binding obligation of such
Partner, enforceable against it in accordance with its terms, except as
enforceability may be affected by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally, (ii) the limitation of certain remedies by
certain equitable principles of general applicability, and (iii) the fact
that the rights to indemnification hereunder may be limited by federal or
state securities laws.
(c) No Breach or Default. The execution, delivery and performance
by such Partner of this Agreement and the transactions contemplated hereby
will not constitute a breach of any term or provision of, or a default
under, its certificate or articles of incorporation or by-laws or other
constituent documents.
(d) No Governmental Consents. No material consent, license,
approval or authorization of any governmental body, authority, bureau or
agency is required on the part of any such Partner or any of its Affiliates
in connection with its execution and delivery of this Agreement and its
contributions to the capital of the Partnership.
(e) Use of Partner's Name. With respect to any matters relating
to the Partnership, no Partner shall use the name of any other Partner in a
press release or otherwise, except as may be required by law, without the
prior consent of such other Partner.
(f) Accredited Investor. Such Partner is an "accredited investor"
as defined in Rule 501(a) of Regulation D promulgated under the Securities
Act.
(g) Investment Intent. Such Partner is acquiring all legal and
beneficial ownership of its interests in the Partnership for its own
account for investment, and not with a view to any distribution, resale,
subdivision, or fractionalization thereof, and such Partner has no present
plans to enter into any contract, undertaking, agreement, or arrangement
for any such distribution, resale, subdivision, or fractionalization.
(h) Economic Loss and Sophistication. Such Partner is able to
bear the economic risk of losing its entire investment in the Partnership.
Such Partner's overall commitment to investments which are not readily
marketable is not disproportionate to its net worth. Such Partner's
investment in the Partnership will not cause such overall commitment to
become excessive. Such Partner has such knowledge and experience in
financial and business matters that it is capable of evaluating the risks
and merits of this investment.
(i) No Investment Advice. Such Partner acknowledges and agrees
that, pursuant to this Agreement, the General Partner has the exclusive
power and discretion (subject only to certain limited exceptions) to make
all investment decisions in accordance with the terms of this Agreement.
Accordingly, such Partner acknowledges that neither the General Partner nor
any Affiliate thereof has rendered or will render any investment advice or
securities valuation advice to such Partner, and that such Partner is
neither subscribing for nor acquiring any interest in the Partnership in
reliance upon, or with the expectation of, any such advice.
(j) Investment Company Act. Such Partner acknowledges that the
Partnership will not register as an investment company under the Investment
Company Act of 1940, as amended (the "Investment Act"), by reason of the
provisions of Section 3(c)(1) thereof, which excludes from the definition
of an investment company any issuer which has not made and does not
presently propose to make a public offering of its securities and whose
outstanding securities are beneficially owned by not more than 100 persons.
If such Partner is not a natural person, such Partner hereby certifies
that:
(i) it is "one person" for the purpose of Section 3(c)(1)
of the Investment Act; and
(ii) such Partner's interest in the Partnership, together
with its interests in all other corporations,
partnerships, trusts or associations that are or would,
but for the exception set forth in this subsection
(iii), be excluded from the definition of investment
company solely by reason of the provisions of Section
3(c)(1) of the Investment Act will not represent more
than 10% of such Partner's total assets.
10.2 Representations of Each Limited Partner.
Each Limited Partner represents and warrants to and agrees with
the Partnership and the General Partner as follows:
(a) Accuracy of Information. Such Partner shall promptly furnish
to the General Partner all information regarding such Partner or its
Affiliates reasonably requested by the General Partner as is or may be
required for inclusion in any materials, documents, or instruments to be
prepared or filed in connection with (i) the business of the Partnership,
or (ii) the compliance by the Partnership or the Subject Company with any
applicable laws, rules or regulations and all such information when
supplied to the Partnership will be true and correct in all material
respects and will not omit to state any material fact necessary to be
stated therein in order that such information shall not be misleading.
(b) Confidentiality. Such Partner shall keep all information
regarding the business, affairs or plans of the Partnership (including, but
not limited to, the terms of this Agreement and information about the
Subject Company and the other Partners) strictly confidential and shall
maintain and protect all information regarding the business, affairs or
plans of the Partnership in no less careful a manner than it maintains and
protects its own confidential business information provided, however, that
such information may be disclosed by a Partner (1) to its financial
advisors provided that such advisors agree to maintain the information in
strictest confidence or (2) if, in the reasonable opinion of counsel to
such Partner, and after prior consultation with the General Partner and its
counsel, such disclosure is required by law, and provided further that the
provisions of this Section 10.2(b) shall not apply to information which (x)
becomes generally available to the public other than as a result of a
disclosure by such Partner or its representatives, (y) was available to
such Partner on a non-confidential basis prior to its disclosure to such
Partner by the General Partner or its representatives, or (z) becomes
available to such Partner on a non-confidential basis from a source other
than the General Partner or its representatives or any other Partner or its
representatives.
(c) No Registration of Interests. Such Partner acknowledges and
agrees that, based in part upon its representations contained herein and in
reliance upon applicable exemptions, no interest in the Partnership
acquired by such Partner has been or will be registered under the
Securities Act or the securities laws of any other domestic or foreign
jurisdiction. Accordingly, no such interest may be offered for sale, sold,
pledged, hypothecated, or otherwise transferred in whole or in part unless
(i) the affected interest has been registered under the Securities Act and
all other applicable securities laws or an exemption from such registration
is available and (ii) all other applicable transfer restrictions set forth
herein have been satisfied.
ARTICLE 11
MISCELLANEOUS
11.1 Special Power-of-Attorney.
Each Partner hereby irrevocably makes, constitutes and appoints
the General Partner, with full power of substitution, the true and lawful
representative and attorney-in-fact of such Partner, and in the name, place
and stead of such Partner, with the power from time to time to make,
execute, sign, acknowledge, swear to, verify, deliver, record, file and/or
publish all such instruments and certificates which, in the opinion of
legal counsel retained by the General Partner, may from time to time be
required by the laws of Israel, the United States, the States of Delaware
or California or any state in which the Partnership shall determine to do
business, or any political subdivision or agency thereof, or which said
legal counsel may deem necessary or appropriate to effectuate, implement
and continue the valid and subsisting existence and business of the
Partnership. If any action by or with respect to the Partnership is taken
by the General Partner in the manner contemplated by this Agreement, each
Partner agrees that the special attorney specified above is authorized and
empowered, with full power of substitution, to exercise the authority
granted above in any manner which may be necessary or appropriate to permit
such action to be lawfully taken or omitted. Each Partner is fully aware
that it and each other Partner has executed this power-of-attorney, and
that each Partner will rely on the effectiveness of such powers with a view
to the orderly administration of the affairs of the Partnership. This
power-of-attorney is a special power-of-attorney and is coupled with an
interest in favor of the General Partner and (i) may be exercised for a
Partner by a facsimile signature of the General Partner or, after listing
all of the Limited Partners including such Partner, and the General
Partner, by a single signature of the General Partner acting as
attorney-in-fact for all of them; and (ii) shall survive the delivery of an
assignment by a Limited Partner of the whole or any portion of its interest
in the Partnership, except that where the assignee thereof has been
approved by the General Partner for admission to the partnership as a
Substituted Limited Partner, this power-of-attorney given by the assignor
shall survive the delivery of such assignment for the sole purpose of
enabling the General Partner to execute, acknowledge, and file any
instrument necessary to effect such substitution.
The powers of attorney granted under this Section 11.1 cannot be
utilized by the General Partner to increase or extend any financial
obligation or liability of a Limited Partner, to alter the method of
division of profits and losses or the method of distributions in connection
with the investment of a Limited Partner or to alter the rights and
obligations of a Limited Partner without the written consent of such
Limited Partner. In addition, the powers of attorney granted under this
Section 11.1 may not be utilized by the General Partner to amend this
Agreement.
11.2 Additional Assurances.
The Limited Partners shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver
all such other agreements, certificates, instruments and documents,
including, without limitation, any amended powers-of-attorney, as are
necessary or appropriate to permit the General Partner to exercise any
authority or power granted to the General Partner hereunder.
11.3 Amendments.
The terms and provisions of this Agreement may be modified or
amended at any time and from time to time by the consent of the General
Partner and a Majority In Interest. Notwithstanding the foregoing, without
the consent of any Limited Partner, the General Partner may amend the
Schedule of Partners to reflect the admission to the Partnership of
Substituted Limited Partners or changes validly made in the Total Capital
Commitments or Subject Company and may amend this Agreement as to matters
solely of administrative convenience, which the General Partner deems to be
immaterial. Notwithstanding the foregoing provisions of this Section 11.3,
(i) the consent of the General Partner and each Limited Partners shall be
required to increase the Total Capital Commitment of any Partner, to amend
the definition of Subject Company or Investment, Article 3, Section 5.3,
Section 6.3, Section 6.4, Article 7 and clause (i) of this sentence and
(ii) the consent of the General Partner and Two-Thirds in Interest shall be
required to amend the definitions of Two-Thirds in Interest, Section 4.5,
Section 8.1, Article 9 and clause (ii) of this sentence. The effective date
of an amendment to this Agreement which requires written consent shall be
the date stated in the written consent of the Partners or, if no effective
date is stated, the date on which the last of the required consents is
given. Any other amendment shall be effective when made.
11.4 Binding Effects; Benefits.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their legal representatives, successors and assigns,
as applicable.
11.5 Headings.
The section and other headings of this Agreement are for
reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
11.6 Counterparts.
This Agreement may be executed in any number of counterparts and
by the parties hereto in separate counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed to be
one and the same agreement.
11.7 Grammatical Construction.
Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice
versa.
11.8 Governing Law.
This Agreement shall be governed by and construed both as to
validity and enforceability in accordance with the laws of the State of
Delaware, without regard to the conflict of laws provisions thereof.
11.9 Submission to Jurisdiction.
Each of the Partners consents and submits to the jurisdiction of
the state and federal courts located in the County of New Castle, State of
Delaware in connection with any suits or other actions arising between the
Partners under this Agreement, and consents and waives any objections to
the venue of such action or proceeding in the state or federal courts
located in the County of New Castle, State of Delaware.
11.10 Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of
this Agreement or affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction.
11.11 Waiver.
No waiver of this Agreement or any part hereof and no notice or
consent required or permitted to be given pursuant to this Agreement shall
be valid or effective unless in writing and signed by the party or parties
sought to be charged; and no waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other subsequent breach or
condition, whether of like or different nature.
11.12 Entire Agreement.
This Agreement and the Management Agreement constitute the entire
agreement between the parties hereto with respect to the subject matter
hereof.
11.13 Notice.
Any notice or other communication contemplated by any provision
of this Agreement shall be in writing and may be delivered personally, sent
by telegram, telecopy, commercial courier or mailed by certified mail,
postage prepaid, return receipt requested, addressed to such Partner at its
address, or sent to its telecopy number, appearing on the Schedule of
Partners. Notice sent by telecopy shall be deemed given when confirmation
of transmission is received, and notice sent by any other means shall be
deemed given when received, at the address set forth in the Schedule of
Partners. A copy of all notices to the General Partner shall be sent to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; but any party may
designate a different address by a notice similarly given to the
Partnership.
11.14 Waiver of Partition.
Each Partner hereby irrevocably waives, during the term of the
Partnership and the winding up thereof, any right that it may have to
maintain any action for partition with respect to any Partnership property.