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EXHIBIT 10.21
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TALITY, LP,
A DELAWARE LIMITED PARTNERSHIP
Dated as of ______________, 2000
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TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINITIONS..............................................................1
Section 1.1. Definitions.............................................1
Section 1.2. Accounting Terms and Determinations.....................7
Section 1.3. Directly or Indirectly; Without Limitation..............7
Section 1.4. References..............................................7
ARTICLE II ORGANIZATION....................................................................7
Section 2.1. Organization............................................7
Section 2.2. Name....................................................7
Section 2.3. Registered Office; Registered Agent; Principal Office in
the United States; Other Offices........................7
Section 2.4. Term....................................................8
ARTICLE III PURPOSE AND POWERS.............................................................8
Section 3.1. Purpose.................................................8
Section 3.2. Powers..................................................8
Section 3.3. Other Authority.........................................8
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP UNITS........................8
Section 4.1. Capital Contributions...................................8
Section 4.2. Additional Capital Contributions........................9
Section 4.3. Return of Contributions................................10
Section 4.4. Advances by Partners...................................10
Section 4.5. No Preemptive Rights...................................10
Section 4.6. Other Contribution Provisions..........................10
Section 4.7. Additional Contributions by Tality; Relationship of
Tality Common Shares to Partnership Units..............10
Section 4.8. Incentive Plans........................................12
Section 4.9. Additional Contributions by Holdings...................13
Section 4.10. Splits and Reclassifications...........................14
ARTICLE V CAPITAL ACCOUNTS, ALLOCATIONS AND DISTRIBUTIONS.................................14
Section 5.1. Capital Accounts.......................................14
Section 5.2. Allocation of Net Profit or Net Loss...................15
Section 5.3. Additional Allocations.................................15
Section 5.4. Allocations for Tax Purposes...........................16
Section 5.5. Distributions..........................................16
Section 5.6. Tax Distributions......................................17
Section 5.7. Withholding............................................18
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ARTICLE VI MANAGEMENT.....................................................................18
Section 6.1. Management by General Partner..........................18
Section 6.2. Management Policies....................................19
Section 6.3. No Compensation of General Partner.....................19
Section 6.4. Officers...............................................19
Section 6.5. Business Opportunities.................................19
Section 6.6. Related Transactions/Intercompany Agreements...........20
Section 6.7. Certificate of Limited Partnership.....................21
Section 6.8. Title to Partnership Assets............................21
Section 6.9. Reimbursement of General Partner Expenses..............21
Section 6.10. Liability of the General Partner.......................22
Section 6.11. Other Matters Concerning the General Partner...........22
Section 6.12. Rights of Limited Partners.............................23
ARTICLE VII TRANSFERS AND EXCHANGES OF PARTNERSHIP INTERESTS..............................23
Section 7.1. Transfer Restrictions..................................23
Section 7.2. Permitted Transfers....................................23
Section 7.3. Exchange of Partnership Units..........................23
ARTICLE VIII LIMITED LIABILITY; INDEMNIFICATION...........................................24
Section 8.1. Limited Liability......................................24
Section 8.2. Indemnification........................................25
Section 8.3. Contribution...........................................26
ARTICLE IX TAXES..........................................................................26
Section 9.1. Tax Matters Partner; Tax Returns.......................26
Section 9.2. Partnership Status.....................................27
Section 9.3. Fiscal Year............................................27
ARTICLE X BOOKS, RECORDS AND BANK ACCOUNTS................................................27
Section 10.1. Maintenance of Books...................................27
Section 10.2. Accounting Principles..................................27
Section 10.3. Bank Accounts..........................................27
Section 10.4. Tax Information........................................27
Section 10.5. Public Filings.........................................28
ARTICLE XI ADMISSION OF PARTNERS; WITHDRAWAL; CLASSES OF PARTNERSHIP INTERESTS............28
Section 11.1. Substitution of Partners...............................28
Section 11.2. Admission of Additional Partners.......................28
Section 11.3. Withdrawal.............................................28
Section 11.4. Classes of Partnership Interests.......................28
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ARTICLE XII DISSOLUTION, LIQUIDATION AND TERMINATION......................................29
Section 12.1. Dissolution............................................29
Section 12.2. Liquidation and Termination............................30
Section 12.3. Distribution in Kind...................................31
Section 12.4. Deficit Capital Accounts...............................31
Section 12.5. Cancellation of Filings................................31
ARTICLE XIII GENERAL PROVISIONS...........................................................31
Section 13.1. Representations and Warranties of Partners.............31
Section 13.2. Offset.................................................32
Section 13.3. Notices................................................32
Section 13.4. Entire Agreement; Waivers and Modifications............32
Section 13.5. No Third-Party Beneficiaries...........................33
Section 13.6. Governing Law..........................................33
Section 13.7. Further Assurances.....................................33
Section 13.8. Waiver of Certain Rights...............................33
Section 13.9. Severability...........................................33
Section 13.10. Successors and Assigns.................................34
Section 13.11. Specific Performance...................................34
Section 13.12. Interpretation of Agreement............................34
Section 13.13. Multiple Counterparts..................................34
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TALITY, LP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF TALITY, LP
(this "Agreement") is made and entered into as of __________, 2000 by and
between Tality Corporation, a Delaware corporation, as general partner and as a
limited partner ("Tality"), and Cadence Holdings, Inc., a Delaware corporation,
as a limited partner ("Holdings").
WHEREAS, Tality and Holdings desire to form a limited partnership under
the Act (as defined below) with Tality as the initial general partner and
Holdings as the initial limited partner;
WHEREAS, Tality and Holdings intend that this Agreement shall be the
initial limited partnership agreement of such partnership, which was formed by
the filing of a Certificate of Limited Partnership with the Secretary of State
in accordance with the Act;
WHEREAS, Cadence, Holdings and Tality have entered into certain, and
intend to enter into certain other, Separation Agreements (as defined below),
whereby, at the time of the Separation (as defined below), certain assets will
be contributed to the Partnership in a manner consistent with the Separation
Agreements and Section 4.1(b);
WHEREAS, Holdings and Tality entered into that certain Agreement of
Limited Partnership of Tality, LP, dated as of July 21, 2000, which prior to the
date hereof has governed the matters described above (the "Prior Agreement");
and
WHEREAS, each of the parties now desires to amend and restate the Prior
Agreement in its entirety pursuant to Section 13.4 thereof.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
the sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1. Definitions. As used herein, the following terms shall have the
respective meanings set forth below:
"Acquired Entity" has the meaning set forth in Section 4.7(a)(i).
"Act" means the Delaware Revised Uniform Limited Partnership Act, 6 Del.
C. Section 17-101, et seq., as amended from time to time, and any successor
statute.
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"Adjusted Capital Account" of a Partner means such Partner's Capital
Account increased by such Partner's share of partnership nonrecourse debt
minimum gain and partnership minimum gain as defined in Treas. Reg. Section
1.704-2.
"Affiliate" means, with respect to a specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified.
"Available Cash" means, at any specified time, (x) the sum of all cash
receipts of the Partnership prior to such time from any and all sources, less
(y) all cash disbursements (including all distributions made to Partners, cash
payments made by the Partnership for purposes of operating expenses, loan
repayments, capital improvements and replacements) prior to such time and the
amount of Reserves at such time.
"Business" means the business of providing electronic design engineering
services, and intellectual property in connection therewith, to electronic
equipment manufacturers.
"Business Day" means any day other than a Saturday or Sunday or a
holiday on which national banking associations in California are required or
permitted by law to be closed.
"Cadence" has the meaning ascribed thereto in the recitals hereto.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 5.1, including all additions and subtractions thereto
pursuant to this Agreement.
"Capital Contribution" means, with respect to any Partner, any money and
property (net of any liability that the Partnership is considered to assume or
take subject to under Section 752 of the Code) contributed by such Partner to
the Partnership.
"Carrying Value" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) the Carrying 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 agreement of the contributing Partner and the General
Partner;
(ii) the Carrying 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 Carrying Value of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as
reasonably determined by the General Partner, as of:
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(1) the date of the acquisition of an additional interest in
the Partnership by any new or existing Partner in
exchange for more than a de minimis contribution to the
capital of the Partnership; or
(2) the distribution by the Partnership to a retiring or
continuing Partner of more than a de minimis amount of
money or other Partnership property in reduction of such
Partner's interest in the Partnership; or
(3) the liquidation of the Partnership within the meaning of
Treas. Reg. Section 1.704-1(b)(2)(ii)(g);
provided, however, that an adjustment described in clauses (1) and (2)
above shall be made only if the General Partner reasonably determines
that such adjustment is necessary to reflect the relative economic
interests of the Partners in the Partnership; and, provided further,
that the General Partner may use such thresholds and other conventions
as it deems appropriate and consistent with the intent of the Treasury
regulations under Code Section 704(b) in aggregating contributions
described in clause (1) and distributions in clause (2) for purposes of
determining when and the extent to which Carrying Values will be
adjusted under this paragraph (iii);
(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 Carrying Value in a manner
consistent with Treas. Reg. Section 1.704-1(b)(2)(iv)(m); and
(v) if the Carrying Value of an asset has been determined
pursuant to clauses (i) through (iv) above, such Carrying Value shall
thereafter be adjusted in the same manner as would the asset's adjusted
tax basis for federal income tax purposes, except that depreciation,
cost recovery and amortization deductions shall be computed as provided
in Treas. Reg. Section 1.704-1(b)(2)(iv)(g), and if the asset has a zero
adjusted basis for federal income tax purposes, depreciation, cost
recovery or amortization deductions shall be determined using any
reasonable method selected by the General Partner.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Secretary of State, as amended or
restated or otherwise modified from time to time in accordance with the Act.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Control," "controls" or "controlling" means the possession, directly or
indirectly, through one or more intermediaries, of the power or authority,
through ownership of voting securities, as manager, general partner, trustee or
executor, by contract or otherwise, to direct the management, activities or
policies of a Person.
"Covered Person" has the meaning set forth in Section 6.10.
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"DGCL" means the Delaware General Corporation Law, as amended and in
effect from time to time.
"Disinterested Directors" means the directors of Tality who are not
officers, directors or employees of any of the Holdings Partners.
"Equity Award" means any compensatory stock option, stock appreciation
right, stock award, restricted stock award or other or similar right to receive
Tality Class A Shares.
"Fiscal Year" has the meaning set forth in Section 9.3.
"GAAP" means generally accepted accounting principles consistently
applied.
"General Partner" means Tality and any other Person admitted to the
Partnership as a general partner of the Partnership pursuant to this Agreement
until such Person's status as a General Partner is terminated in accordance with
this Agreement.
"General Partner Interest" means a Partnership Interest of a General
Partner that is held in its capacity as a General Partner.
"Holdings" has the meaning ascribed thereto in the preamble hereto.
"Holdings Partners" means Holdings, Cadence and any Subsidiary of
Holdings or Cadence other than any of the Tality Partners.
"Incentive Plan" means any incentive compensation plan adopted by Tality
or by the Partnership and approved by the General Partner.
"IPO" means an initial public offering of Tality Common Shares.
"Limited Partner" means Tality in its capacity as a limited partner of
the Partnership, Holdings and any other Person admitted to the Partnership as a
limited partner pursuant to this Agreement, in each case until such Person's
status as a limited partner is terminated in accordance with this Agreement; any
reference herein to a "Limited Partner" shall refer to any one of the Limited
Partners.
"Limited Partner Interest" means a Partnership Interest of a Limited
Partner that is held in its capacity as a Limited Partner.
"Liquidator" means or one or more Persons appointed by the General
Partner to wind up the affairs of the Partnership and make final distributions
to Partners upon the dissolution of the Partnership as provided in Section 12.2.
"Master Separation Agreement" means the Master Separation Agreement
dated as of July 14, 2000 by and among Cadence, Holdings and Tality, as may be
amended from time to time.
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"Net Profit" and "Net Loss" mean, respectively, for any period, the
taxable income and taxable loss of the Partnership for the period as determined
for federal income tax purposes, provided that for purpose of determining Net
Profit and Net Loss and each item thereof (and not for income tax purposes) (i)
there shall be taken into account any tax-exempt income of the Partnership; (ii)
any expenditures of the Partnership that are described in Section 705(a)(2)(B)
of the Code or that 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 Carrying
Value that differs from its adjusted tax basis as determined for federal income
tax purposes, income, gain, loss and deduction (including but not limited to
depreciation) with respect to such asset shall be computed based upon the
asset's Carrying Value rather than its adjusted tax basis; (iv) items of gross
income or deduction allocated pursuant to Section 5.3 shall be excluded from the
computation of Net Profit and Net Loss; (v) there shall be taken into account
any separately stated items under Section 702(a) of the Code; and (vi) if the
Carrying Value of any Partnership asset is adjusted pursuant to the definition
thereof, the amount of such adjustment shall be taken into account in the Fiscal
Year or other period of adjustment as gain or loss from the disposition of such
asset for purposes of computing Net Profit and Net Loss.
"Notices" has the meaning set forth in Section 13.3.
"Partners" means the General Partner and the Limited Partners; any
reference herein to a "Partner" shall refer to any one of the Partners. As the
context may require, in connection with the allocation of any item of income,
gain, loss, deduction, profit or distribution, but not otherwise, the term
"Partner" shall include a transferee of a Partnership Interest in accordance
with Article VII who is not admitted as a Partner but who is treated as a
partner of the Partnership for federal income tax purposes.
"Partnership" means Tality, LP, the Delaware limited partnership formed
pursuant to the filing of the Certificate.
"Partnership Interest" means an interest of a Limited Partner or General
Partner in the Partnership and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Partnership Interest may be expressed as a
number of Partnership Units.
"Partnership Opportunity" has the meaning set forth in Section 6.5(b).
"Partnership Unit" means the equal units into which the Partnership
Interests of all Partners issued pursuant to Article IV are divided and includes
any class or series of Partnership Units established after the date hereof. The
ownership of Partnership Units shall be evidenced by such form of certificate
for Partnership Units as the General Partner may adopt from time to time unless
the General Partner determines that the Partnership Units shall be
uncertificated securities. The number of Partnership Units outstanding and the
Percentage Interests in the Partnership represented by such Partnership Units
are set forth on Exhibit A, as such Exhibit may be amended from time to time.
References to Partnership Units shall be deemed to exclude Preferred Interests,
unless and to the extent otherwise provided in Section 11.4.
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"Percentage Interest" means the quotient, expressed as a percentage,
determined from time to time, by dividing the number of Partnership Units held
by such Partner at that time by the aggregate number of Partnership Units then
outstanding.
"Person" means any natural person, corporation, limited liability
company, partnership, limited partnership, joint venture, trust, estate,
association, governmental entity or other individual or entity.
"Preferred Interests" has the meaning set forth in Section 11.4.
"Proportionate Capital Account" of a Partner means such Partner's
Adjusted Capital Account at any specified time as a percentage of the Adjusted
Capital Accounts of all Partners as of such time.
"Reserves" means funds of the Partnership set aside by the General
Partner for working capital and the payment of taxes, insurance, debt service,
repairs, replacements, renewals or other costs or expenses incident to the
business of the Partnership.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Separation" has the meaning set forth in the Master Separation
Agreement.
"Separation Agreements" means, collectively, the Master Separation
Agreement and all other agreements entered into by Cadence or one of its
Subsidiaries (other than Tality and its Subsidiaries), on the one hand, and
Tality or one of its Subsidiaries, on the other hand, as contemplated by the
Master Separation Agreement.
"Subsidiary" means, with respect to any Person, any other Person in
which such first Person owns, directly or indirectly, more than 50% of the
capital stock (or other voting interests) the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such Person or otherwise controls such Person (whether by contract or
otherwise). For purposes of clarification, the Partnership and all Subsidiaries
of the Partnership are Subsidiaries of Tality.
"Tality" has the meaning ascribed thereto in the preamble hereto.
"Tality Class A Shares" means the shares of Class A Common Stock of
Tality, par value $.001 per share.
"Tality Class B Shares" means the shares of Class B Common Stock of
Tality, par value $.001 per share.
"Tality Class C Shares" means the shares of Class C Common Stock of
Tality, par value $.001 per share.
"Tality Common Shares" means the shares of any class of Common Stock of
Tality, par value $.001 per share.
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"Tality Partners" means Tality and any Subsidiary of Tality.
"Tax-Free Spin-Off" shall mean a transaction or series of transactions
pursuant to which Tality Common Shares are distributed to holders of common
stock of Cadence in a manner intended to qualify as a tax-free distribution
under Section 355(a) of the Code.
"Tax Matters Partner" has the meaning set forth in Section 9.1(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 GAAP, and, except as expressly provided herein, all accounting
determinations shall be made in accordance with GAAP, consistently applied.
1.3. Directly or Indirectly; Without Limitation. Where any provision in
this Agreement refers to an action to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such Person, including actions
taken by or on behalf of any Affiliate of such Person. Throughout this
Agreement, the term "including" and words to the same or similar effect shall be
interpreted and construed to mean "including without limitation."
1.4. References. All references herein to one gender shall include the
other and the singular shall include the plural and vice versa as appropriate.
Unless otherwise expressly provided, all references to "Articles" and "Sections"
are to Articles and Sections, respectively, of this Agreement and all references
to "Exhibits" and "Schedules" are to the exhibits and schedules, respectively,
attached hereto, each of which is made a part hereof for all purposes.
ARTICLE II
ORGANIZATION
2.1. Organization. The General Partner has caused the Partnership to be
formed as a Delaware limited partnership by filing the Certificate in the office
of the Secretary of State pursuant to the Act.
2.2. Name. The name of the Partnership is "Tality, LP" and all
Partnership business shall be conducted under that name or such other name or
names as the General Partner may determine from time to time.
2.3. Registered Office; Registered Agent; Principal Office in the United
States; Other Offices. The registered office of the Partnership in the State of
Delaware shall be the initial registered office designated in the Certificate or
such other office (which need not be a place of business of the Partnership) as
the General Partner may designate from time to time in the manner provided by
law. The registered agent of the Partnership in the State of Delaware shall be
the initial registered agent designated in the Certificate or such other Person
or Persons as the General Partner may designate from time to time in the manner
provided by law. The principal office of the Partnership in the United States of
America shall be in such place (which need not be within the State of Delaware)
as the General Partner may designate from time to time. The
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Partnership shall have such other offices (which need not be within the State of
Delaware) as the General Partner may determine to be appropriate.
2.4. Term. The Partnership shall commence on the date the Certificate is
filed with the Secretary of State and shall continue in existence until December
31, 2099, unless earlier dissolved pursuant to Section 12.1 or as otherwise
provided by law.
ARTICLE III
PURPOSE AND POWERS
3.1. Purpose. The nature of the business or purpose of the Partnership
is to engage in any lawful act or activity for which limited partnerships may be
formed under the Act, including entering into any lawful transaction and
engaging in any lawful activities in furtherance of the foregoing purposes and
as may be necessary, incidental or convenient to carry out the business of the
Partnership as contemplated by this Agreement.
3.2. Powers. The Partnership is empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other Persons, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property.
3.3. Other Authority. Notwithstanding anything to the contrary contained
in this Agreement, the Partnership shall have the authority to enter into,
deliver and perform the Separation Agreements, and any amendments to the
Separation Agreements and any such action taken prior to the date of this
Agreement is hereby ratified and confirmed in all respects.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP UNITS
4.1. Capital Contributions.
(a) At or before the time of the Separation, Tality shall
contribute to the capital of the Partnership cash in the amount of $_______ in
exchange for the issuance to Tality of a number of Partnership Units set forth
on Schedule 4.1(a), which shall represent General Partner Interests and Limited
Partner Interests as specified in Section 4.2(c) of this Agreement. The Capital
Account of Tality shall be increased by the amount of such cash contribution.
(b) At the time of the Separation, Holdings shall contribute, and
Cadence shall contribute or cause to be contributed on behalf of Holdings, to
the capital of the Partnership their entire right, title and interest in and to
the assets, properties and rights of Cadence and its Subsidiaries identified in
the Separation Agreements as assets to be transferred to the Partnership, and
the Partnership shall assume such liabilities and other obligations as specified
in
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the Separation Agreements as liabilities and other obligations to be assumed by
the Partnership. Subject to Section 4.1(d), in exchange for its contribution
under this Section 4.1(b), Holdings shall receive the number of Partnership
Units constituting Limited Partner Interests set forth on Schedule 4.1(b), the
Capital Account of Holdings shall be increased as agreed upon by Holdings and
the General Partner, and upon such agreement Exhibit A shall be modified
accordingly.
(c) If an IPO occurs, Tality shall, immediately after receiving
the net proceeds of the IPO (and immediately after receiving the net proceeds
from any exercise of the underwriters' overallotment option), contribute to the
capital of the Partnership an amount in cash equal to the net proceeds of the
IPO, in exchange for:
(i) such additional number, if any, of Partnership Units
constituting General Partner Interests (after taking into account
Partnership Units constituting General Partner Interests issued in
exchange for the contribution that is made to the Partnership pursuant
to Section 4.1(a) of this Agreement) as would cause Tality to have,
immediately after the contribution pursuant to this Section 4.1(c), a
one percent (1%) Percentage Interest; and
(ii) such number of Partnership Units constituting Limited
Partner Interests equal to the number of Tality Class A Shares issued in
the IPO, less that number of Partnership Units, if any, issued pursuant
to clause (i) above, and Exhibit A shall thereafter be modified to
reflect such additional contribution and issuance of Partnership Units.
(d) The number of Partnership Units to be issued to Holdings
pursuant to Section 4.1(b) is based on negotiations between representatives of
Holdings and Tality and reflects the intent that, if the IPO occurs in the
manner contemplated as of the date hereof by Holdings and Tality and the net
proceeds of the IPO are contributed to the Partnership as provided in Section
4.1(c), Tality will own an aggregate Percentage Interest equal to that set forth
on Schedule 4.1(d). If the IPO is undertaken with the understanding that Tality
will own a different Percentage Interest following the IPO, the number of
Partnership Units owned by Holdings shall be adjusted to equal that number of
Partnership Units necessary to give Holdings a Percentage Interest equal to one
(1) minus the Percentage Interest of Tality immediately after the IPO and
contribution, subject to any dilution that occurs from issuances of Partnership
Interests (other than as contemplated by Sections 4.1(a), (b) and (c)), if any,
between the date hereof and the IPO.
4.2. Additional Capital Contributions.
(a) The terms of any contribution of cash (or promissory
obligations), property or services to the Partnership other than as provided in
this Agreement shall be determined by the General Partner at the time of such
contribution.
(b) Except as may be required by law or as specifically provided
herein, no Partner shall have any obligation to make any further Capital
Contribution to the Partnership.
(c) At all times while Tality is a General Partner and holds
Partnership Units, such Partnership Units shall constitute General Partner
Interests to the extent they represent at
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least one percent (1%) of the outstanding Partnership Units, and any additional
Partnership Units owned by Tality shall be Limited Partner Interests.
(d) Each of Tality and Holdings acknowledges and agrees that the
Separation Agreements provide for assets to be transferred to or by the
Partnership in certain circumstances following the effectiveness of such
agreements (for example, in the case of adjustments made to the purchase price
for certain assets or payments made pursuant to indemnity obligations). Each of
Tality and Holdings agrees that such transfers have been taken into account in
establishing the initial Capital Accounts and Partnership Units of the Partners,
and that, except as otherwise provided herein or in any other written agreement
between a Holdings Partner and the General Partner, such transfers shall not be
treated as Capital Contributions or distributions under this Agreement and shall
not affect the Capital Account of or Partnership Units owned by the Partners. In
the event of such a transfer, the Carrying Values of the assets of the
Partnership shall be revised in a manner determined by the General Partner,
subject to the consent of Holdings (not to be unreasonably withheld).
4.3. Return of Contributions. A Partner is not entitled (except as
otherwise expressly provided otherwise by this Agreement) to the return of any
part of its Capital Contributions or to be paid interest in respect of either
its Capital Account or its Capital Contributions. An unrepaid Capital
Contribution is not a liability of the Partnership or of the other Partners. A
Partner is not required to contribute or to lend any cash or property to the
Partnership to enable the Partnership to return any other Partner's Capital
Contributions.
4.4. Advances by Partners. Except as approved by the General Partner, or
otherwise provided for specifically herein, no Partner may advance any money or
other property to, or contribute any money or property to, the Partnership.
4.5. No Preemptive Rights. Except as provided in this Article IV, no
Person shall have any preemptive, preferential or other similar right with
respect to (i) additional Capital Contributions or loans to the Partnership; or
(ii) the issuance or sale of any Partnership Interests.
4.6. Other Contribution Provisions. If any Person is admitted as a
Partner and is given a Capital Account in exchange for services rendered to the
Partnership or to the General Partner on behalf of the Partnership, such
transaction shall be treated by the Partnership and the affected Partner as if
the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership.
4.7. Additional Contributions by Tality; Relationship of Tality Common
Shares to Partnership Units.
(a) Issuances of Tality Securities. Tality shall not issue any
additional Tality Common Shares or rights, options, warrants or other securities
convertible into or exchangeable for equity securities of Tality (other than
Tality Common Shares issued pursuant to Section 4.8, 4.10 or 7.3 or as otherwise
provided in the Certificate of Incorporation of Tality (as the same may be
amended, but only to the extent such amendment has been approved by the Holdings
Partners) or incur any indebtedness, unless:
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(i) Tality transfers to the Partnership or a Subsidiary of
the Partnership, as an additional Capital Contribution, the net cash
proceeds or other property received by Tality (or any direct or indirect
wholly owned Subsidiary of Tality) from, and causes the Partnership to
assume, or take such cash or other property subject to, the liabilities
incurred in connection with, the grant, award or issuance of such
additional Tality Common Shares or other securities or indebtedness, as
the case may be, or from the exercise of rights contained in such
additional Tality Common Shares or other securities, as the case may be;
provided, however, that if the property received by Tality in exchange
for such issuance consists of stock of another Person that becomes a
direct or indirect wholly owned Subsidiary of Tality (including an
acquisition by means of a reverse triangular merger), or if such
property is received by a direct or indirect wholly owned Subsidiary of
Tality (in either case, the "Acquired Entity"), then Tality may cause
the Acquired Entity to transfer all (but not less than all) of its
assets to the Partnership or a Subsidiary of the Partnership, and cause
the Partnership or such Subsidiary of the Partnership to assume or take
such assets subject to all liabilities and other obligations of the
Acquired Entity, in lieu of Tality transferring its equity interest in
the Acquired Entity; provided further, that if any third party consent
or approval shall be necessary to effect the transfer of any such asset
or assumption of any such liability, the General Partner shall not be
required to effect such transfer or assumption until such consent or
approval has been obtained (and during the pendency of such transfer or
assumption the General Partner or such Acquired Entity shall hold such
asset or liability in trust for the benefit or account of the
Partnership, as the case may be, and the General Partner and Partnership
shall enter into such agreement (including indemnities) or other
arrangements as necessary to reflect the transfer to the Partnership or
one of its Subsidiaries of all beneficial interest in such asset or
responsibility for such liability); and
(ii) the Partnership issues to Tality (or, in the case of
an Acquired Entity that has transferred all of its assets as described
in clause (i) above, to the Acquired Entity) Partnership Units or
rights, options, warrants or convertible or exchangeable securities or
indebtedness of the Partnership having designations, preferences and
other rights, all such that the economic interests are substantially the
same as those of such additional Tality Common Shares or other
securities or indebtedness, as the case may be.
(b) Acquisition of Tality Securities by Tality. If Tality
acquires Tality Common Shares for any reason and in any manner, then (i) the
Tality Common Shares so acquired shall be cancelled, (ii) the Partnership shall
pay to Tality an amount equal to the amount, if any, paid by Tality to acquire
such shares, and (iii) Tality shall surrender to the Partnership for
cancellation that number of Partnership Units held by Tality equal to the number
of Tality Common Shares so acquired. Similar requirements shall apply with
respect to the reacquisition by Tality of any of its securities other than
Tality Common Shares, such that the securities issued by the Partnership to
Tality that correspond to such Tality securities are surrendered to the
Partnership and the Partnership pays to Tality the amount paid by Tality to
reacquire such securities.
(c) Acquisition of Tality Common Shares or Other Securities by
the Partnership. Except as provided in Section 4.8, if the Partnership or any of
its Subsidiaries acquires Tality Common Shares (or other equity securities) for
any reason and in any manner,
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then (i) the Partnership may (but shall not be required to) transfer such shares
(or other securities) to Tality for cancellation and (ii) if the Partnership
effects such transfer, Tality shall surrender an equal number of Partnership
Units (or other Partnership Interests or securities issued by the Partnership
that relate to such securities, as the case may be) to the Partnership for
cancellation.
4.8. Incentive Plans.
(a) At any time Tality issues Tality Class A Shares pursuant to
an Incentive Plan (whether pursuant to an Equity Award or otherwise) to
directors, officers or employees of the Partnership or any of its Subsidiaries,
the following shall occur:
(i) Tality shall contribute the amount of any exercise or
purchase price received by Tality in connection with the issuance of
such Tality Class A Shares, and Tality shall be deemed to contribute to
the capital of the Partnership an amount of cash equal to the excess of
the current market price of such Tality Class A Shares on the date such
shares are issued (or if earlier, the date the related option is
exercised (if the Equity Award is a stock option)) over the amount of
such exercise or purchase price actually contributed, and such amounts
shall be treated as Capital Contributions under this Agreement;
(ii) the Partnership shall be deemed to purchase such
Tality Class A Shares from Tality for an amount of cash equal to the
amount of cash contributed and deemed contributed by Tality to the
Partnership in subsection (a) above (and such shares shall be deemed
delivered to their owner by the Partnership);
(iii) the net proceeds actually received by the
Partnership with respect to such Tality Class A Shares, if any, shall be
retained by the Partnership; and
(iv) the Partnership shall issue to Tality that number of
Limited Partnership Units equal to the number of Tality Class A Shares
so issued.
(b) At any time Tality issues Tality Class A Shares pursuant to
an Incentive Plan (whether pursuant to an Equity Award or otherwise) to Tality
employees, officers or directors, and provided the General Partner reasonably
determines that the issuance of such Tality Class A Shares relates to Tality's
ownership or operation of, or was for the benefit of, the Partnership as
provided in Section 6.9(a), the following shall occur (unless the General
Partner reasonably determines that such issuance should be governed by Section
4.8(a) in which case Section 4.8(a) shall apply):
(i) Tality shall be treated as issuing such Tality Class A
Shares in the same manner as if this Section 4.8(b) did not apply;
(ii) the Partnership shall be deemed to have reimbursed
Tality for the issuance of such Tality Class A Shares as provided in
Section 6.9(a) in an amount equal to the excess of the current market
price of such Tality Class A Shares on the date such shares are issued
(or, if earlier, the date the related option is exercised (if the Equity
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Award is a stock option)) over the amount of the exercise or purchase
price received by Tality upon the issuance of such Tality Class A
Shares;
(iii) Tality shall contribute to the capital of the
Partnership the exercise or purchase price received by Tality upon the
issuance of such Tality Class A Shares, and shall be deemed to have
contributed to the capital of the Partnership the amount of the deemed
reimbursement paid by the Partnership pursuant to clause (ii) above; and
(iv) the Partnership shall issue to Tality that number of
Partnership Units equal to the number of Tality Class A Shares so
issued.
4.9 Additional Contributions by Holdings. If the Partnership issues
additional Partnership Units to a Tality Partner or any other Person (other than
a Holdings Partner) for any reason other than pursuant to Section 4.8 or 4.10
(including in connection with an acquisition or other business combination
between the Partnership and any Person other than Tality), then:
(a) Holdings shall have the right, but not the obligation, to
contribute to the Partnership cash or other property, if of a type acceptable to
the General Partner and subject to Section 6.6, in an amount equal to the
product obtained by multiplying:
(i) the amount of cash or value of other property
contributed by such Tality Partner or other Person to the Partnership in
exchange for such additional Partnership Units, times
(ii) a fraction, the numerator of which shall be the
aggregate Percentage Interest then held by the Holdings Partners and the
denominator of which shall be the aggregate Percentage Interest held by
all Partners other than the Holdings Partners (in each case, determined
immediately prior to the contribution referred to in clause (i) above).
(b) In exchange for any such contribution by Holdings pursuant to
Section 4.9(a), Holdings shall receive that number of Partnership Units equal to
the product obtained by multiplying:
(i) the number of such additional Partnership Units issued
to the Tality Partner or such other Person, times
(ii) a fraction, the numerator of which shall be the
aggregate Percentage Interest then held by the Holdings Partners and the
denominator of which shall be the aggregate Percentage Interest held by
all Partners other than the Holdings Partners (in each case, determined
immediately prior to the issuance of Partnership Units referred to in
clause (i) above).
(c) In connection with any additional capital contribution made
in the form of property under this Section 4.9, such property shall be valued at
its fair value as determined by a nationally recognized independent appraiser
(including an investment banker, public accounting firm or other expert)
selected by Holdings and reasonably satisfactory to the General Partner.
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4.10. Splits and Reclassifications. The Partnership shall not in any
manner subdivide (by any unit split, distribution, reclassification,
recapitalization or otherwise) or combine (by reverse unit split,
reclassification, recapitalization or otherwise) the outstanding Partnership
Units (or other Partnership Interests or securities) unless Tality is
subdividing or combining the Tality Class A Shares (or, if applicable, such
other securities of Tality issued in connection with the issuance of such
Partnership Interests or other securities), in which event the Partnership Units
shall be subdivided or combined concurrently with, to the same extent as, and in
the same manner as, the Tality Class A Shares (or such other securities).
ARTICLE V
CAPITAL ACCOUNTS, ALLOCATIONS AND DISTRIBUTIONS
5.1. Capital Accounts.
(a) The Partnership shall maintain for each Partner owning a
Partnership Interest a single, separate Capital Account with respect to such
Partnership Interest in accordance with the rules of Treas. Reg. Section
1.704-1(b)(2)(iv). The initial Capital Account balance of each of the Partners
shall be as set forth on Exhibit A.
(b) Subject to rules of Treas. Reg. Section 1.704-1(b)(2)(iv),
the Capital Account of each Partner shall be increased by (i) except as
otherwise provided in this Agreement, the amount of any money and the fair
market value of any property (net of any liabilities of such Partner assumed by
the Partnership or which are secured by any property contributed by such Partner
to the Partnership) contributed by such Partner to the Partnership, (ii) the Net
Profit allocated to such Partner pursuant to Section 5.2, and (iii) the items in
the nature of income or gain allocated to such Partner pursuant to Section 5.3.
If the General Partner and the contributing Partner agree as the value of an
item of property contributed to the Partnership, such agreement shall govern the
amount credited to such Partner's Capital Account. Absent such an agreement,
subject to Section 4.9(c), the value of any property contributed to the
Partnership shall be determined by the General Partner.
(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 Partnership liabilities assumed by such Partner or secured by any
property distributed to such Partner) distributed to such Partner when such
distribution is made, (ii) the Net Loss allocated to such Partner pursuant to
Section 5.2, and (iii) any items in the nature of deduction or loss allocated to
such Partner pursuant to Section 5.3. If the General Partner and the distributee
Partner agree as the value of an item of property distributed from the
Partnership, such agreement shall govern the amount debited to such Partner's
Capital Account. Absent such an agreement, the value of any property distributed
by the Partnership shall be determined by the General Partner.
(d) Except as otherwise provided in this Agreement, whenever it
is necessary to determine the Capital Account of any Partner, the Capital
Account of such Partner shall be determined after giving effect to the
allocations of Net Profit, Net Loss and other items realized prior or
concurrently to such time (including, without limitation, any Net Profits and
Net Losses attributable to adjustments to Carrying Values with respect to any
concurrent distribution), and
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all contributions and distributions made prior or concurrently to the time as of
which such determination is to be made. The General Partner may use such
accounting conventions and other methods for computing interim balances of the
Partners' Capital Accounts as the General Partner deems appropriate.
(e) A transferee of a Partnership Interest shall succeed to a pro
rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred.
5.2. Allocation of Net Profit or Net Loss. Except as otherwise necessary
in connection with a liquidation or dissolution of the Partnership or as
required pursuant to the terms of any Preferred Interests:
(a) Net Profit for any Fiscal Year or other period shall be
allocated to the Partners as follows:
(i) First, to each Partner whose Proportionate Capital
Account is less than its Percentage Interest, an amount of Net Profit
necessary to cause its Proportionate Capital Account to equal its
Percentage Interest, provided that if there is not sufficient Net Profit
to cause each Partner's Proportionate Capital Account to equal its
Percentage Interest, Net Profits shall be allocated to each Partner so
as to cause a pro rata percentage reduction in such difference for each
such Partner; and
(ii) Second, pro rata among the Partners in accordance
with their Percentage Interests.
(b) Net Loss for any Fiscal Year or other period shall be
allocated to the Partners as follows:
(i) First, to each Partner whose Proportionate Capital
Account is greater than its Percentage Interest, an amount of Net Loss
necessary to cause its Proportionate Capital Account to equal its
Percentage Interest, provided that if there is not sufficient Net Loss
to cause each Partner's Proportionate Capital Account to equal its
Percentage Interest, Net Loss shall be allocated to each Partner so as
to cause a pro rata percentage reduction in such difference for each
such Partner; and;
(ii) Second, pro rata among the Partners in accordance
with their Percentage Interests.
5.3. Additional Allocations.
(a) Notwithstanding any other provision of this Agreement, (i)
"partner nonrecourse deductions" (as defined in Treas. Reg. Section 1.704-2(i)),
if any, of the Partnership shall be allocated to the Partner that bears the
economic risk of loss within the meaning of Treas. Reg. Section 1.704-2(i), (ii)
"nonrecourse deductions" (as defined in Treas. Reg. Section 1.704-2(b)), if any,
of the Partnership with respect to each period shall be allocated in proportion
to the Partners' respective Percentage Interests, and (iii) a Partner's
proportionate share of the "excess nonrecourse liabilities" of the Partnership
within the meaning of Treas. Reg. Section 1.752-3(a)(3) shall be in proportion
to its Percentage Interest.
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(b) This Agreement shall be deemed to include "qualified income
offset," "minimum gain chargeback" and "partner non-recourse debt minimum gain
chargeback" provisions within the meaning of the Treasury Regulations
promulgated 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.
(c) Any special allocation of items pursuant to Sections
5.3(a) and (b), including anticipated reversals of such items, shall be taken
into account in computing subsequent allocations pursuant to Section 5.2 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 Sections
5.3(a) and (b).
(d) Any income, gain, loss or deduction realized as a direct
or indirect result of the issuance of Partnership Units by the Partnership to a
Partner (the "Issuance Items") shall be allocated among the Partners so that, to
the extent possible, the net amount of such Issuance Items, together with all
other allocations under this Agreement to each Partner, shall be equal to the
net amount that would have been allocated to each such Partner if the Issuance
Items had not been realized.
5.4. Allocations for Tax Purposes. For income tax purposes only, (i) all
items of income, gain, loss, deduction and expense shall be allocated to the
Partners in the same manner as the correlative items of "book" income, gain,
loss, deduction and expense are allocated pursuant to Sections 5.2 and 5.3 and
(ii) each tax credit for any period shall be allocated to Partners in proportion
to their Percentage Interests; provided, however, that in accordance with
Section 704(c) of the Code, the Treas. Reg. promulgated thereunder and Treasury
Regulation Section 1.704-1(b)(4)(i), items of income, gain, loss, deduction,
expense and credit with respect to any property whose Carrying Value differs
from its adjusted basis for tax purposes shall, solely for income tax purposes,
be allocated among the Partners so as to take account of both the amount and
character of such variation. Absent the prior written consent of Holdings, the
Partnership shall use the "traditional method" described in Treas. Reg. Section
1.704-3(b) in making such allocations in accordance with Code Section 704(c)
with respect to any such property contributed by or on behalf of a Holdings
Partner.
5.5. Distributions.
(a) Except as otherwise required by law or as provided in this
Agreement (including pursuant to the terms of any Preferred Interest), no
Partner shall have any right to withdraw any portion of its Capital Account
without the consent of both the General Partner and of Partners holding a
majority of the Partnership Units constituting Limited Partner Interests.
(b) Except as otherwise provided herein or pursuant to the terms
of any Preferred Interests, the Partnership shall distribute Available Cash or
other property available to be distributed in-kind to the Partners to each
Partner in proportion to such Partner's Percentage Interest, at such times and
in such amounts as the General Partner shall determine; provided, however, that,
absent the prior written consent of Holdings, no in-kind distribution of any
asset
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may be made other than on a pro rata basis in accordance with the Partners'
Percentage Interests; provided further, that with the prior written consent of
Holdings, an in-kind distribution of any asset may be made on other than a pro
rata basis in accordance with the Partners' Percentage Interests so long as the
total value of all cash and other in-kind distributions made in connection with
such in-kind non-pro rata distribution when combined with such distribution is
distributed in accordance with the Partners' Percentage Interests.
(c) If a Holdings Partner exchanges or transfers its
Partnership Units for Tality Class A Shares or Tality Class C Common Shares,
pursuant to the Amended and Restated Certificate of Incorporation of Tality (as
the same may be amended from time to time), on any date after a record date for
a distribution to the Partners of Available Cash or other property but before
actual payment thereof, such exchanging or transferring Partner shall be
entitled to receive the full amount of such distribution as if such Partner
continued to hold the exchanged or transferred Partnership Units on the date of
such distribution.
5.6. Tax Distributions.
(a) Until such time as an event causing a dissolution of the
Partnership has occurred pursuant to Section 12.1, at least 10 days prior to any
Estimated Tax Payment Date (as hereinafter defined), the Partnership shall make
a distribution to each Partner equal to the Estimated Tax Distribution (as
hereinafter defined) for such date. Unless otherwise specified by the General
Partner in writing, all distributions made with respect to a given year (as
determined by the General Partner) shall be applied against and reduce the
Estimated Tax Distribution due from the Partnership with respect to that year.
(b) Within one hundred eighty (180) days after the end of each
Fiscal Year, the Partnership shall provide to each Partner a report for the
prior Fiscal Year computing for each Partner the amount by which the sum of the
Estimated Tax Distributions for the prior year exceeds or falls short of the
product of (i) the taxable income of Partnership allocated to such Partner for
such prior year, and (ii) the Applicable Tax Rate for such year, less any Excess
Tax Distribution (as hereinafter defined) with respect to such prior year. An
amount equal to any shortfall shall be distributed to such Partner with the
report. Any excess will be treated as an "Excess Tax Distribution" for such year
and credited against future Estimated Tax Distributions pursuant to Section
5.6(e)(iii) and this Section 5.6(b).
(c) Notwithstanding anything to the contrary herein, (i)
distributions under this Section 5.6 shall be made in proportion to the
Partners' Percentage Interests, and this clause (i) shall operate to increase
the distribution to be otherwise made under Section 5.6 to any Partner to the
extent necessary so that distributions under this Section 5.6 are made in
proportion to the Partners' Percentage Interests, and (ii) in all events the
Estimated Tax Distributions shall be sufficient to enable Tality to pay when due
its corporate income and franchise tax liability arising from its interest in
the Partnership (taking into account the carryforward of losses available to
Tality Inc and any alternative minimum tax).
(d) In making the computations under this Section 5.6 with
respect to any Partner, capital losses of the Partnership shall be taken into
account only to the extent of capital gains of the Partnership against which
such capital losses may be offset by such Partner (taking
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into account the applicable carryback and carryover period for such Partner),
determined as if such Partner had no income or loss from any source other than
the Partnership.
(e) Definitions:
(i) "Applicable Tax Rate" means, for any year, the highest
marginal combined tax rate, as reasonably determined by the Tax Matters
Partner, under the U.S. federal and applicable state, local and foreign
franchise or income tax laws as in effect for such year to which a
Holdings Partner or a Tality Partner is subject by reason of its
ownership of Partnership Units, taking into account the deductibility of
state, local and foreign income taxes for federal income tax purposes.
(ii) "Estimated Tax Payment Date" means, with respect to
any calendar year, any of April 15, June 15, September 15 and December
15 of such year.
(iii) "Estimated Tax Distribution" means, with respect to
any Partner and any Estimated Tax Payment Date, an amount equal to the
excess (if any) of (A) the product of (x) an estimate of the
Partnership's taxable income for the year, as estimated in good faith by
the Tax Matters Partner, allocable to such Partner for such year, less
the excess, if any, of cumulative tax losses of the Partnership over
cumulative taxable income allocated to such Partner in prior years, (y)
the Applicable Tax Rate, and (z) the Proration Percentage over (B) the
sum of (u) the prior Estimated Tax Distributions distributed to such
Partner with respect to the same year and (v) Excess Tax Distributions
with respect to the prior year.
(iv) "Proration Percentage" means with respect to April
15, 25%; June 15, 50%; September 15, 75%; and December 15, 100%.
5.7. Withholding. The Partnership shall comply with all income tax
withholding requirements under federal, state, local or foreign law. To the
extent that the Partnership is required to withhold and pay over to any taxing
authority any amount resulting from an allocation of income or distribution to
any Partner, the amount withheld shall be treated as an advance distribution to
such Partner of amounts to which such Partner is otherwise entitled pursuant to
this Agreement or as a loan to such Partner immediately payable to the
Partnership, as determined by the General Partner. Each Partner shall use all
commercially reasonable efforts to minimize the amount that the Partnership is
required to withhold; provided, however, that the foregoing shall not be deemed
to prohibit the Partnership from making distributions. Notwithstanding any
provision to the contrary contained in this Agreement, the Partnership, and the
General Partner on behalf of the Partnership, shall not be required to make a
distribution to any Partner on account of its interest in the Partnership if
such distribution would violate Section 17-607 of the Act or any other
applicable law.
ARTICLE VI
MANAGEMENT
6.1. Management by General Partner.
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(a) The General Partner shall manage the business and affairs
of the Partnership. The General Partner shall have the power and authority to
make all decisions regarding the business, affairs and properties of the
Partnership and to perform any and all other lawful acts or activities necessary
or convenient to the conduct, promotion or attainment of the business, purposes
and activities of the Partnership, including the execution, delivery and
performance of the Separation Agreements on behalf of the Partnership. No
Limited Partner shall have any authority to act for, or undertake or assume any
obligation or responsibility on behalf of, the Partnership.
(b) The General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through duly appointed agents
(who may be designated as officers of the Partnership), attorneys-in-fact, or
other Persons and each such agent, attorney-in-fact or other Person shall, to
the extent delegated by the General Partner, have full power and authority to do
and perform all and every act and duty which is permitted or required to be done
by the General Partner hereunder. Any approval or action taken by the General
Partner in accordance with this Agreement shall constitute approval or action
taken by the Partnership and shall be binding on the Partners.
6.2. Management Policies. The General Partner and officers of the
Partnership will develop and implement management policies consistent with the
general policies and programs established by this Agreement, the Certificate and
the Separation Agreements.
6.3. No Compensation of General Partner. Except as provided in Section
6.9, the General Partner shall not be entitled to any compensation from the
Partnership solely for acting in its capacity as the General Partner.
6.4. Officers. The General Partner may appoint such officers of the
Partnership (including, but not limited to, a president and chief executive
officer, one or more vice presidents, a secretary, one or more assistant
secretaries, a treasurer and one or more assistant treasurers) upon such terms
and conditions as the General Partner deems necessary and appropriate.
6.5. Business Opportunities.
(a) Except as Cadence may otherwise agree in writing, Cadence
may engage or invest, and avail itself of opportunities, in the same or similar
business activities or lines of business as the Partnership. Except in the case
of a Partnership Opportunity (as defined in subsection (b) below), the
Partnership shall have no interest or expectancy in any such engagement,
investment or opportunity or that Cadence will not engage in, any of the
foregoing activities, any such interest or expectancy being hereby renounced by
the Partnership so that Cadence shall not violate any duty to the Partnership by
engaging in, investing in or availing itself of opportunities in any such
business activities or line of business.
(b) For purposes of this Agreement, "Partnership Opportunity"
shall mean a transaction, potential transaction or other business opportunity
that (i) the Partnership is financially able to undertake, (ii) relates
exclusively to the Business, (iii) is one in which the Partnership has or, but
for the effect of subsection (a) above the Partnership would have, an
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interest or reasonable expectancy and (iv) if offered to a director, officer or
employee of the Partnership who is also a director, officer or employee of
Cadence, such transaction, potential transaction or other business opportunity
is offered to him or her solely in his or her capacity as a director, officer or
employee of the Partnership; provided, however, that a "Partnership Opportunity"
not include (A)(1) any transaction in which the Partnership or Cadence is
permitted to participate pursuant to any agreement between them or their
Affiliates in effect as of the time any Partnership Interest is first held of
record by any Person other than Cadence, or as may be amended thereafter with
the approval of a majority of the Disinterested Directors, or (2) any such
transaction provided for in any subsequent agreement between the Partnership and
Cadence approved by a majority of the Disinterested Directors; (B) any
transaction, potential transaction or other business opportunity that is also
offered to or learned of by a director, officer or employee of Cadence (other
than as described in clause (iv) above) by or from a Person other than the
Partnership; or (C) any transaction, potential transaction or other business
opportunity that arises from ideas independently conceived, acquired or
developed by Cadence.
(c) For purposes of this Section 6.5 and Section 6.6,
"Partnership" shall mean the Partnership, the General Partner and Subsidiaries
of the Partnership and the General Partner, collectively, and any successors
thereto and assigns thereof; provided, however, that where, in order to
effectuate the intent of this definition to provide Cadence with protection in
its dealings with an Affiliate of the Partnership, action on the part of any
such Affiliate of the Partnership is required (e.g., without limitation, to
renounce an interest in a transaction, potential transaction or other business
opportunity, or to adopt guidelines pursuant to Section 6.6), the Partnership
and the General Partner shall cause such Affiliate to take such action. For
purposes of this Section 6.5 and Section 6.6, "Cadence" shall mean Cadence and
all of its Affiliates (other than Tality, the Partnership and Subsidiaries of
Tality or the Partnership), collectively, and any successors thereto and assigns
thereof.
(d) In the case of a Partnership Opportunity, Cadence shall
have such duties as would exist in the absence of this Section 6.5.
6.6. Related Transactions/Intercompany Agreements. In any action by or
in the right of the Partnership against Cadence or any of its officers,
directors, employees or agents in which the fairness of any agreement or
transaction to which any such Person is a party or in which any such Person may
have a financial interest, shall be an issue: (i) the burden of proof on the
issue of fairness shall be on the Person seeking to establish unfairness; and
(ii) fairness shall be deemed to have been established in any of the following
circumstances:
(a) the conditions set forth in Section 144 of the DGCL or any
successor provision, as in effect from time to time, are
satisfied;
(b) the agreement or transaction is effected in accordance with
guidelines approved by the General Partner or a majority of the
Disinterested Directors; or
(c) the terms of the transaction or agreement are not materially less
favorable to the Partnership than those made available by Cadence
to unaffiliated Persons under similar circumstances.
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The provisions of this Section 6.6 shall not be construed to limit or
restrict any defenses that would be available to Cadence or any of its officers,
directors, employees or agents in the absence of this provision.
To the extent that Cadence or any of its officers, directors, employees
or agents or any Covered Person has duties (including fiduciary duties) and
liabilities relating thereto to the Partnership or to any other Covered Person
under applicable law, neither Cadence, nor any such officer, director, employee,
agent or Covered Person acting under this Agreement, shall be liable to the
Partnership or to any other Covered Person for its good faith reliance on the
provisions of this Agreement. To the extent that they restrict the duties and
liabilities of Cadence or any of its officers, directors, employees or agents or
any Covered Person otherwise existing under applicable law, the provisions of
this Agreement shall replace such other duties and liabilities.
6.7. Certificate of Limited Partnership. The General Partner has filed
the Certificate with the Secretary of State prior to the effectiveness of this
Agreement. To the extent that such action is determined by the General Partner
to be reasonable and necessary or appropriate, the General Partner shall file or
cause to be filed amendments to and restatements of the Certificate and shall do
all the things to maintain the Partnership as a limited partnership (or other
entity in which the Limited Partners have limited liability) under the laws of
the State of Delaware and each other state, the District of Columbia or other
jurisdiction in which the Partnership may elect to do business or own property.
The General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate or any amendment thereto to any Limited Partner.
The General Partner shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or other entity in which the Limited Partners have limited
liability) in the State of Delaware and any other state, the District of
Columbia or other jurisdiction in which the Partnership may elect to do business
or own property.
6.8. Title to Partnership Assets. Title to Partnership assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partners, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof.
6.9. Reimbursement of General Partner Expenses.
(a) General Partner Expenses. The General Partner shall be
reimbursed on a quarterly basis, or on a more frequent basis as the General
Partner may reasonably determine, for all expenses it incurs relating to the
ownership and operation of, or for the benefit of, the Partnership (including
expenses related to the operations of the General Partner, the status of the
General Partner as a public company, and the management and administration of
any Subsidiaries of the General Partner or the Partnership, such as auditing
expenses and filing fees).
(b) Reimbursement Treated as a Distribution. If and to the extent
any reimbursement made pursuant to Section 6.9(a) is determined for federal
income tax purposes not to constitute a payment of expenses of the Partnership,
the General Partner shall take such actions as it deems appropriate (including
causing the Partnership to make allocations of items of
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gross income or deduction) to cause the economic and tax results to be as
similar as possible to the results that would have occurred if such amounts were
treated as expenses of the Partnership.
6.10. Liability of the General Partner.
(a) General. Notwithstanding anything to the contrary set
forth in this Agreement, neither the General Partner, nor any of its Affiliates,
and no officer, director, stockholder, member, partner, employee or agent of the
General Partner or its Affiliates (each a "Covered Person"), shall be personally
liable to the Partnership or any Partner, or any Person claiming by or through
the Partnership or any Partner, for any losses sustained, liabilities incurred
or benefits not derived as a result of errors in judgment or mistakes of fact or
law or of any other act or omission relating to the conduct of the business of
the Partnership; provided, however, that nothing contained herein shall protect
any Covered Person against any liability to the Partnership or any Partner to
which such Covered Person would otherwise be subject by reason of (i) any act or
omission of such Covered Person that involves actual fraud or willful misconduct
or (ii) any transaction from which such Covered Person derived an improper
personal benefit.
(b) Actions of Agents. The General Partner may exercise any of
the powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. Neither the
General Partner nor any Covered Person shall be responsible for any misconduct
or negligence on the part of any such agent appointed by the General Partner in
good faith.
(c) Effect of Amendment. Notwithstanding any other provision
contained herein, any amendment, modification or repeal of this Section 6.10
shall be prospective only and shall not in any way affect the limitations on the
liability of the General Partner, any officers, directors, shareholders,
employees or agents of the General Partner to the Partnership and the Partners
under this Section 6.10 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.
6.11. Other Matters Concerning the General Partner.
(a) Reliance on Documents. The General Partner may rely and
shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
(b) Reliance on Advisors. The General Partner may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers and other consultants and advisers selected by it, and any act taken or
omitted to be taken in reliance upon the opinion of such Persons as to matters
which the General Partner reasonably believes to be within its professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
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(c) Limitation on General Partner's Business Activities;
Acquisitions. Notwithstanding anything to the contrary set forth herein or in
the Certificate of Incorporation of the General Partner, as the same may be
amended, so long as any Person other than the General Partner or one of its
Subsidiaries shall own any Limited Partnership Units, the General Partner agrees
not to own any assets or conduct any activities other than the management of the
Partnership as the general partner thereof and the ownership and management of
its Partnership Interests and its interest in any Acquired Entities with respect
to which the requirements of Section 4.7(a) have been satisfied.
6.12. Rights of Limited Partners. No Limited Partner shall participate
in the management, control or direction of the Partnership's operations,
business or affairs, transact any business for the Partnership, or have the
right, power or authority to act for or on behalf of or to bind the Partnership,
the same being vested solely and exclusively in the General Partner.
ARTICLE VII
TRANSFERS AND EXCHANGES OF PARTNERSHIP INTERESTS
7.1. Transfer Restrictions. Except as otherwise provided in Section 7.2,
no Partner shall, directly or indirectly, transfer any right, title or interest
in any of its Partnership Interest. Any attempted transfer in violation hereof
shall be void.
7.2. Permitted Transfers. Notwithstanding Section 7.1:
(a) The Holdings Partners may transfer their Partnership
Interest to any Person in compliance with applicable law.
(b) The Tality Partners may only transfer their Partnership
Interest to (i) any wholly owned Subsidiary of Tality or (ii) the transferee of
all or substantially all of the assets of Tality.
(c) Notwithstanding anything to the contrary in this
Agreement, no Partner may transfer all or any portion of its Partnership
Interest, and no transferee of a Partnership Interest shall be admitted as a
Partner, unless the General Partner has determined that such transfer is not
reasonably expected to cause the Partnership to become a "publicly traded
partnership" within the meaning of Code Section 7704; provided, however, that
under no circumstances shall an exchange of Partnership Units for Tality Common
Shares pursuant to Section 7.3 be expected or deemed to cause such a result.
7.3 Exchange of Partnership Units.
(a) Unless otherwise agreed by the Partnership and any Partner in
writing, each Limited Partner, other than Tality and its Subsidiaries, shall
have the right to exchange, at any time and from time to time, each Partnership
Unit owned by such Limited Partner, free and clear of any liens and
encumbrances, for one (1) fully paid and non-assessable Tality Class A Share.
The Partnership and the General Partner agree that, at all times, they
collectively shall have available for issuance sufficient Tality Class A Shares
to satisfy the exchange rights under this Section 7.3. Such Tality Class A
Shares shall consist first of any Tality Class A Share then
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held by the Partnership (in which case the Partnership Unit shall be surrendered
to the Partnership) and any additional shares shall be newly issued Tality Class
A Shares (in which case the Partnership Unit shall be transferred to Tality).
(b) The right to exchange Partnership Units for Tality Class A
Shares pursuant to Section 7.3(b) shall be exercised by surrender to the
Partnership of any certificate or certificates representing the Partnership
Units to be exchanged at any time during normal business hours at the principal
executive offices of the Partnership, accompanied by a written notice of such
Limited Partner stating that such Limited Partner desires to exchange such
Partnership Units, or a stated number of such units less than the number
represented by any such certificate or certificates, into Tality Class A Shares,
and by instruments of transfer in form satisfactory to the General Partner and,
if the General Partner requires, the Transfer Agent of the General Partner, duly
executed by such holder or such holder's duly authorized attorney (plus, if the
Limited Partner requests that the certificate or certificates for such Tality
Class A Shares be issued in the name of someone other than such Limited Partner,
transfer tax stamps or funds therefor).
(c) The Partnership and the General Partner, as promptly as
practicable following the receipt of notice and such other items required to
effect the exchange described in this Section 7.3, deliver or cause to be
delivered a certificate or certificates representing the number of Tality Class
A Shares issuable upon such exchange, issued in such name or names as such
Limited Partner may direct. Such exchange shall be deemed to have been effected
immediately prior to the close of business on the date of the giving of the
required written notice and surrender of any certificate or certificates
representing Partnership Units; provided, however, that the General Partner may
delay the effective date of such exchange with respect to no more than one (1)
Partnership Unit for up to fifteen (15) days to the extent it reasonably deems
such delay necessary in order implement steps to avoid a dissolution of the
Partnership under the Act by reason of the Partnership having only one partner.
Upon the date any such exchange is made or effected, all rights of the Limited
Partner with respect to the Partnership Units so exchanged shall cease.
(d) The exchange of Partnership Units pursuant to this Section
7.3 shall be adjusted to the extent there has been a transaction described in
Section 4.10 with respect to Tality Common Shares and there has been no
corresponding transaction with respect to Partnership Units, such that the
exchanging Limited Partner shall receive the same number of Tality Class A
Shares it would have received in exchange for each Partnership Unit had all such
adjustments pursuant to Section 4.10 been made.
ARTICLE VIII
LIMITED LIABILITY; INDEMNIFICATION
8.1. Limited Liability. Except as otherwise provided under the Act, the
debts, obligations and liabilities of the Partnership, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Partnership and no Limited Partner shall be obligated or
liable for any such debt, obligation or liability of the Partnership. Except as
otherwise provided by the laws of the State of Delaware, the debts, obligations
and liabilities of
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any Partner, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liability of such Partner and neither the Partnership nor
any other Partner shall be obligated or liable for any such debt, obligation or
liability of such Partner.
8.2. Indemnification.
(a) The Partnership shall, to the fullest extent permitted by
law, indemnify, defend and hold harmless each Covered Person against any and all
losses, claims, damages, expenses and liabilities (including, but not limited
to, any investigation, legal and other reasonable expenses incurred in
connection with, and any amounts paid in settlement of, any action, suit,
proceeding or claim, whether civil, criminal or administrative) of any kind or
nature whatsoever that such Covered Person may at any time become subject to or
liable for by reason of the formation, operation or termination of the
Partnership, or the Covered Person's acting as a General Partner (or on behalf
of any such Person), or the authorized actions of such Covered Person in
connection with the conduct of the affairs of the Partnership or any Person in
which the Partnership has an investment (including, without limitation,
indemnification against negligence, gross negligence or breach of duty);
provided, however, that no Covered Person shall be entitled to indemnification
if and to the extent that the liability otherwise to be indemnified for results
from (i) any act or omission of such Covered Person that involves actual fraud
or willful misconduct or (ii) any transaction from which such Covered Person
derived improper personal benefit.
(b) Expenses incurred in defending a civil or criminal action,
suit or proceeding shall be paid by the Partnership in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of any Covered Person to repay such amount if it shall be
ultimately determined by a court of competent jurisdiction from which no further
appeal may be taken or the time for appeal has lapsed that such Person is not
entitled to be indemnified by the Partnership pursuant to the terms and
conditions of this Section 8.2.
(c) The Partnership shall use all commercially reasonable
efforts to maintain insurance on behalf of any Person who is or was a Covered
Person or is or was serving at the request of the Partnership as an officer,
director, manager, employee or agent of another Person against any liability
asserted against and incurred by such Person in any such capacity, or arising
out of such Person's status as such, whether or not the Partnership would have
the power to indemnify such Person against such liability under this Section
8.2.
(d) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 8.2 shall continue as to a Person who
has ceased to be a Covered Person, and shall inure to the benefit of the heirs,
executors, administrators and other legal successors of such Person.
(e) The indemnification provided by this Section 8.2 shall not
be deemed exclusive of any other rights to indemnification to which those
seeking indemnification may be entitled under any agreement, determination of
Partners or otherwise.
(f) Any indemnification hereunder shall be satisfied only out of
the assets of the Partnership (including insurance and any agreements pursuant
to which the Partnership and
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indemnified Persons are entitled to indemnification), and the Partners shall
not, in such capacity, be subject to personal liability by reason of these
indemnification provisions.
(g) No Person shall be denied indemnification in whole or in
part under this Section 8.2 because such Person had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
8.3. Contribution. If there shall ever be more than one General Partner,
each of such General Partners covenants for itself, its successors and assigns
that it will at any time, on demand, both during the time it is a Partner and
after its withdrawal from the Partnership (upon the sale of its interests or
otherwise), contribute its share (determined based upon the aggregate Percentage
Interest of such General Partner as of the time of such withdrawal or demand),
of any liability, judgment or cost of any kind (including the reasonable cost of
the defense of any suit or action and any sums which may be paid in settlement
thereof) which any other General Partner may be required to pay or for which
such other General Partner is liable in excess of its share (determined based
upon the aggregate Percentage Interest of such General Partner as of the time of
such withdrawal or demand) on account of any matter or transaction that occurred
during the time that it was a General Partner and for which such other General
Partner is entitled to indemnification under Section 8.2 or for which the
Partnership is liable (in excess of amounts actually paid to such other General
Partner), except that no such contribution need be made to any General Partner
who acted with gross negligence, willful misconduct or a knowing violation of
law and the same resulted in such liability, judgment or cost. Each General
Partner agrees to keep all former General Partners reasonably informed with
respect to any potential claim for contribution pursuant to this Section 8.3.
ARTICLE IX
TAXES
9.1. Tax Matters Partner; Tax Returns.
(a) Tality shall, as long as it is a Partner, be the "tax
matters partner" of the Partnership pursuant to Section 6231(a)(7) of the Code
(the "Tax Matters Partner"). Subject to the provisions of this Section 9.1, the
Tax Matters Partner shall be entitled to take any action or decline to take any
action, all as required by applicable law. The Tax Matters Partner shall take
such action as may be necessary to cause the other Partners to become "notice
partners" within the meaning of Section 6231(a)(8) of the Code.
(b) The Tax Matters Partner shall cause to be prepared and
filed all necessary foreign, federal, state and local income tax returns for the
Partnership, including making elections on the Partnership's tax returns or
otherwise relating to tax matters. Each other Partner shall furnish to the Tax
Matters Partner all pertinent information in its possession relating to
Partnership operations that is necessary to enable the Partnership's income tax
returns to be prepared and filed.
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(c) To the extent permitted by applicable law, the Tax Matters
Partner shall determine, in its reasonable discretion, whether or not to permit
the other Partners to participate in the defense of all pending tax proceedings
involving the Partnership, including, without limitation, participation in any
meeting with the Internal Revenue Service or other taxing authority.
(d) The Partnership shall reimburse the Tax Matters Partner
for any costs and expenses incurred in connection with such Person serving as
the Tax Matters Partner, including costs and expenses incurred in the
preparation or filing of any such income tax returns and the defense of any such
tax proceedings.
9.2. Partnership Status. It is the intent of the Partners that the
Partnership be treated as a partnership for federal income tax purposes and, to
the extent permitted by applicable law, for state, local and foreign franchise
and income tax purposes. Neither the Partnership nor any Partner may make an
election for the Partnership to be excluded from the application of the
provisions of subchapter K of Chapter 1 of Subtitle A of the Code or any similar
provisions of applicable state or local law, and no provision of this Agreement
shall be construed to sanction or approve such an election.
9.3. Fiscal Year. The fiscal year of the Partnership for financial,
accounting and federal, state and local income tax purposes shall be the year
ending on the Saturday closest to December 31 or such other fiscal year that is
the same as the taxable year that is required by law for federal income tax
purposes (the "Fiscal Year").
ARTICLE X
BOOKS, RECORDS AND BANK ACCOUNTS
10.1. Maintenance of Books. The books of account for the Partnership
shall be maintained on an accrual basis in accordance with the terms of this
Agreement.
10.2. Accounting Principles. Except as otherwise expressly provided
herein, the books and records of the Partnership shall be maintained in
accordance with GAAP; provided, however, that Capital Accounts shall be
maintained in accordance with Section 5.1.
10.3. Bank Accounts. The General Partner shall cause the Partnership to
establish, maintain and designate signatories on one or more separate bank and
investment accounts for Partnership funds in the Partnership name with such
financial institutions and firms as the General Partner may select and designate
signatories thereon. The Partnership's funds shall not be commingled with the
funds of any other Person.
10.4. Tax Information. Within one hundred eighty (180) days after the
end of each Fiscal Year, the Tax Matters Partner shall prepare and send, or
cause to be prepared and sent, to each Person who was a Partner at any time
during such Fiscal Year, copies of such information as may be required for
federal, state, local and foreign income tax reporting purposes, including
copies of Schedule K-1 or any successor schedule or form, for such Person and
such other information as a Partner may reasonably request for the purpose of
complying with applicable laws.
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10.5. Public Filings. The Partnership shall assemble and prepare such
information and documentation with respect to the Partnership that Tality
reasonably requests in connection with the filing by Tality of all registration
statements, periodic reports and other documents required to be filed by Tality
pursuant to Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder, and
shall deliver such documents to Tality a reasonable period of time in advance of
the date such documents are required to be filed.
ARTICLE XI
ADMISSION OF PARTNERS; WITHDRAWAL; CLASSES OF PARTNERSHIP INTERESTS
11.1 Substitution of Partners. Unless otherwise agreed in writing by the
General Partner and a transferee of a Partnership Interest (which agreement may
be a condition to the General Partner's approval of the transfer where such
approval is required hereunder), any transferee of a Partnership Interest from a
Partner, if such transfer complies with Article VII, shall be admitted as a
Partner, such admission to be effective immediately prior to such transfer, only
if such substitute Partner shall have agreed to be bound by the terms and
conditions of this Agreement by executing a counterpart hereof. Whether or not
such a counterpart is executed, such transferee shall be deemed, by acquiring
such interest in the Partnership, to have agreed to hold it subject to the terms
and conditions of this Agreement. Upon such admission, such substitute Partner
shall be a Partner for all purposes of this Agreement.
11.2 Admission of Additional Partners. Other than pursuant to Section
11.1 in connection with a transfer, the Partnership may admit additional
Partners only upon the satisfactory completion of the following:
(a) such admission of an additional Limited Partner shall have
been approved by the General Partner;
(b) such admission of an additional or new General Partner shall
be approved by all the Limited Partners; and
(c) such additional Partner shall have agreed to be bound by
the terms and conditions of this Agreement by executing a counterpart hereof.
11.3. Withdrawal. No Partner shall have any right to withdraw or resign
from the Partnership, except in connection with a transfer of such Partner's
entire interest in the Partnership permitted by Section 7.2, in which case such
transferring Partner shall cease to be a Partner of the Partnership.
11.4 Classes of Partnership Interests.
(a) The General Partner may cause the Partnership to issue a
class of Partnership Interests (including pursuant to Section 4.7(a)) in
exchange for a Capital Contribution to a new or existing Partner having rights,
preferences and privileges senior to the rights, preferences and privileges of
the other Partners ("Preferred Interests"); provided, however, that no Preferred
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Interest may be issued by the Partnership (other than in connection with the
issuance by Tality of preferred equity pursuant to Section 4.7(a)) without the
advance written consent of the Holdings Partners, which consent may be given or
withheld in their sole and absolute discretion. Except as provided in connection
with the issuance of a Partnership Interest pursuant to Section 4.7(a), no
Partnership Interest shall be treated as a Preferred Interest unless the
issuance and specific terms of such Preferred Interest are set forth in writing
by the Partnership and the Partner owning such Preferred Interest.
(b) Except as agreed upon in writing by the General Partner
and the Partner to whom a Preferred Interest is issued, references in this
Agreement to Partnership Units shall be deemed to exclude references to
Preferred Interests, and any Partner that owns both Partnership Units and
Preferred Interests shall, unless so agreed, be treated (other than for income
tax purposes or otherwise as required by law) as a separate Partner with respect
to each class of Partnership Interests owned.
(c) It is the intention of the Partners that the Partnership
Interests represented by the Partnership Units constitute the residual equity of
the Partnership after taking into account the rights, preferences and privileges
of any outstanding Preferred Interests.
ARTICLE XII
DISSOLUTION, LIQUIDATION AND TERMINATION
12.1. Dissolution. The Partnership shall be dissolved and its affairs
shall be wound up upon the first to occur of any of the following:
(a) the expiration of the Partnership's term pursuant to Section
2.4;
(b) the written consent of Tality and the Holdings Partners (if
any);
(c) the entry of a decree of judicial dissolution under the Act;
(d) the sale or other disposition of all, or substantially
all, the assets of the Partnership (excluding a lease, mortgage, pledge, grant
of security interest or other encumbrance);
(e) an event of withdrawal of a General Partner has occurred
under the Act; provided, however, that the Partnership shall not be dissolved or
required to be wound upon an event of withdrawal of a General Partner if (i) at
the time of such event of withdrawal, there is at least one (1) other General
Partner of the Partnership who carries on the business of the Partnership (any
remaining General Partner being hereby authorized to and shall carry on the
business of the Partnership), or (ii) within ninety (90) days after the
occurrence of such event of withdrawal, remaining Partners owning more than 75%
of the outstanding Partnership Units (other than Partnership Units owned by such
withdrawing General Partner) agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of the event of
withdrawal, of one (1) or more additional General Partners of the Partnership;
or
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(f) at any time there are no Limited Partners, unless the
Partnership is continued in accordance with the Act.
12.2. Liquidation and Termination.
(a) On dissolution of the Partnership, the General Partner
shall act as Liquidator or may appoint one or more other Persons as Liquidator.
The Liquidator shall proceed diligently to wind up the affairs of the
Partnership and make final distributions as provided herein and in the Act by
the end of the taxable year of the Partnership in which its liquidation (as such
term is defined in Treas. Reg. Section 1.704-1(b)(2)(ii)(g)) occurs or, if
later, within ninety (90) Business Days after the date of such liquidation. The
costs of liquidation shall be borne as a Partnership expense. Until final
distribution, the Liquidator shall continue to operate the Partnership
properties with all of the power and authority of the Partners and the General
Partner. The steps to be accomplished by the Liquidator are as follows:
(i) as promptly as possible after dissolution and again
after final liquidation, the Liquidator shall cause a proper accounting
to be made by an accounting firm of the Partnership's assets,
liabilities and operations through the last day of the calendar month in
which the dissolution shall occur or the final liquidation shall be
completed, as applicable;
(ii) the Liquidator shall have full power and authority to
sell, assign and encumber any or all of the Partnership's assets and to
wind up and liquidate the affairs of the Partnership in an orderly and
business-like manner; and
(iii) all proceeds from liquidation shall be distributed
in the following order of priority:
(A) first, to the satisfaction of the debts and
liabilities of the Partnership both to Partners, to the extent
otherwise permitted by law, and to persons other than Partners
(but, in the case of nonrecourse debts and liabilities, only to
the extent required under the applicable credit and security
agreement) and expenses of liquidation (whether by payment or the
making of reasonable provision for payment thereof, including the
setting up of such reserves as the Liquidator may reasonably deem
necessary for any liability of the Partnership);
(B) second, pro rata to the Partners in accordance
with the positive balances in their Capital Accounts (as
determined after taking into account the adjustments required
under Treas. Reg. Section 1.704-1(b)(2)(ii)(b)(2)), provided that
the terms of any Preferred Interests shall be taken into account
in determining whether proceeds are distributed first to the
holders of Preferred Interests prior to holders of other
Partnership Interests; and
(C) last, to the Partners in accordance with their
respective Percentage Interests.
(b) Notwithstanding the provisions of this Section 12.2 which
require the liquidation of the assets of the Partnership, but subject to the
order of priorities set forth above, if
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upon or following dissolution of the Partnership the Liquidator determines that
an immediate sale of part or all of the Partnership's assets would be
impractical or would cause undue loss to the Partners, the Liquidator may, in
its reasonable discretion, defer for a reasonable time the liquidation of any
assets except those necessary to satisfy liabilities of the Partnership (other
than those to Partners as creditors).
12.3. Distribution in Kind. If the Liquidator shall determine that all
or a portion of the Partnership's assets should be distributed in kind to the
Partners, the Liquidator, on behalf of the Partnership, shall obtain an
independent appraisal of the fair market value of each such asset as of a date
reasonably close to the date of liquidation. Any unrealized appreciation or
depreciation with respect to such assets shall be allocated among the Partners'
Capital Accounts (in accordance with Article V, assuming that the assets of the
Partnership were sold for such appraised fair market value) and distribution of
any such assets in kind to a Partner shall be considered a distribution of an
amount equal to the assets' appraised fair market value for purposes of Section
12.2.
12.4. Deficit Capital Accounts. Notwithstanding any other provision
hereof to the contrary, to the extent that a deficit, if any, exists in the
Capital Account of any Partner, such deficit shall not be an asset of the
Partnership and such Partner shall not be obligated to contribute such amount to
the Partnership to bring the balance of such Partner's Capital Account to zero.
12.5. Cancellation of Filings. Upon completion of the distribution of
Partnership assets as provided herein, the Liquidator and, if the Liquidator so
directs, the General Partner, shall file a certificate of cancellation with the
Secretary of State, cancel any other filings made pursuant to Sections 2.1 and
6.7 as may be necessary and take such other actions as may be necessary to
terminate the Partnership.
ARTICLE XIII
GENERAL PROVISIONS
13.1. Representations and Warranties of Partners. Each Partner hereby
represents and warrants to the Partnership and each other Partner that:
(a) such Partner is duly organized, validly existing and in
good standing under the law of the jurisdiction of its organization and is duly
qualified and in good standing in the jurisdiction of its principal place of
business (if not organized therein);
(b) such Partner has full corporate, or other applicable power
and authority to execute and agree to this Agreement and to perform its
obligations hereunder and all necessary actions by the board of directors,
shareholders, members or other Persons necessary for the due authorization,
execution, delivery and performance of this Agreement by that Partner have been
duly taken;
(c) such Partner has duly executed and delivered this Agreement;
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(d) such Partner's authorization, execution, delivery and
performance of this Agreement do not conflict with any other agreement or
arrangement to which that Partner is a party or by which it is bound or with any
law or regulation to which that Partner is subject;
(e) such Partner has such knowledge and experience in business
and financial matters and is capable of evaluating the merits and risks of an
investment in the Partnership and making an informed investment decision with
respect thereto;
(f) such Partner is able to bear the economic and financial risk
of an investment in the Partnership for an indefinite period of time;
(g) such Partner is acquiring its Partnership Interests for
its own account, for investment only and not with a view to a sale or
distribution thereof in violation of any securities laws;
(h) such Partner has received, or has had access to, all
information which it considers necessary or advisable to that Partner's decision
concerning its acquisition of the Partnership Interest; and
(i) this Agreement constitutes a valid and binding agreement
of such Partner, enforceable against such Partner in accordance with its terms,
subject to general equitable principles and except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws of general application relating to creditors' rights.
13.2. Offset. Whenever the Partnership is to pay any sum to a Partner,
any amounts that such Partner owes the Partnership may be deducted from that sum
before payment.
13.3. Notices. All notices and other communications (collectively,
"Notices") provided for or permitted to be given under this Agreement shall be
in writing and shall be given by depositing the Notice in the United States
mail, addressed to the Person to be notified, postage paid and registered or
certified with return receipt requested, or by such Notice being delivered in
person or by facsimile communication to such party. Unless otherwise expressly
set forth herein, notices given or served pursuant hereto shall be effective
upon receipt by the Person to be notified. All Notices to be sent to a Partner
shall be sent to or made at, and all payments hereunder shall be made at the
address of such Partners set forth on Exhibit A, or such other address as that
Partner or any additional Partner may specify by Notice to the Partnership.
13.4. Entire Agreement; Waivers and Modifications.
(a) This Agreement constitutes the entire agreement of the
Partners relating to the Partnership and supersedes any and all prior contracts,
understandings, negotiations and agreements with respect to the Partnership and
the subject matter hereof, whether oral or written.
(b) This Agreement may be amended or modified from time to time
only by a written instrument executed by each of the Partners; provided,
however, that the General Partner may amend Exhibit A from time to time to
reflect the admission or withdrawal of Partners, the issuance, redemption or
transfer of Partnership Units, changes in Percentage Interests, or changes
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in the names or addresses of Partners, in each case pursuant to transactions
otherwise permitted by the terms of this Agreement; and provided further, that
the General Partner may amend this Agreement from time to time to make
ministerial changes that are not materially adverse, in the good faith judgment
of the General Partner, to the interests of any Partner.
(c) Any waiver or consent, express, implied or deemed, in
whatever form, to or of any breach or default by any Person in the performance
by that Person of its obligations with respect to the Partnership or any action
inconsistent with this Agreement is not a waiver of or consent to any other
breach or default in the performance by that Person of the same or any other
obligations of that Person with respect to the Partnership or any other such
action. Failure on the part of a Person to complain of any act of any Person or
to declare any Person in default with respect to the Partnership, irrespective
of how long that failure continues, does not constitute a waiver by that Person
of its rights with respect to that default until the applicable
statute-of-limitations period has run. All waivers and consents hereunder shall
be in writing and shall be delivered to the other Partners in the manner set
forth in Section 13.3.
13.5. No Third-Party Beneficiaries. Except as expressly provided
otherwise herein, nothing in this Agreement shall provide any benefit to any
third party or entitle any third party to any claim, cause of action, remedy or
right of any kind, it being the intent of the parties that this Agreement shall
not be construed as a third-party beneficiary contract.
13.6. Governing Law. This Agreement is governed by and shall be
construed in accordance with the law of the State of Delaware, excluding any
conflict-of-laws rule or principle that might refer the governance or
construction of this agreement to the law of another jurisdiction.
13.7. Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Partner shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
13.8. Waiver of Certain Rights. To the fullest extent permitted by law,
each Partner irrevocably waives any right (but not any power) it might have to
maintain any action for dissolution of the Partnership or for partition of the
property of the Partnership. If any Partner maintains any action for such
dissolution or partition, such Partner shall, to the fullest extent permitted by
law, be liable to the Partnership and the other Partners for all monetary
damages suffered by them as a result thereof (including, indirect, incidental
and consequential damages).
13.9. Severability. The provisions of this Agreement are severable. The
invalidity, in whole or in part, of any provision of this Agreement shall not
affect the validity or enforceability of any other of its provisions. If one or
more provisions hereof shall be so declared invalid or unenforceable, the
remaining provisions shall remain in full force and effect and shall be
construed in the broadest possible manner to effectuate the purposes hereof. The
Partners further agree to replace such void or unenforceable provisions with
provisions which will achieve, to the extent possible, the economic, business
and other purposes of the void or unenforceable provisions.
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13.10. Successors and Assigns. Subject to the limitations and
restrictions set forth in this Agreement, this Agreement shall be binding on and
inure to the benefit of the successors and assigns of the Partnership Interests
of the parties hereto.
13.11. Specific Performance. Without intending to limit the remedies
available to any party, each party hereto acknowledges that a breach of any of
the covenants contained in this Agreement may result in irreparable injury to
the other party for which there is no adequate remedy at law, that it will not
be possible to measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, each party hereto shall be entitled to
obtain a temporary restraining order and a preliminary or permanent injunction
restraining or requiring actions prohibited or required by this Agreement or
such other relief as may be requested to enforce specifically any of the
covenants of this Agreement.
13.12. Interpretation of Agreement. The table of contents of and
headings in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
13.13. Multiple Counterparts. This Agreement may be executed in multiple
counterparts with the same effect as if each of the signing parties had signed
the same document. All counterparts shall be construed together and constitute
the same instrument.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
GENERAL PARTNER:
TALITY CORPORATION
By:
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
LIMITED PARTNERS:
CADENCE HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
TALITY CORPORATION
By:
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
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EXHIBIT A -- PARTNERSHIP INTERESTS
INITIAL
NAME AND ADDRESS PARTNERSHIP CAPITAL PERCENTAGE
OF PARTNER UNITS* ACCOUNT** INTEREST
---------- ----------- --------- --------
GENERAL PARTNER:
Tality Corporation...................... [$________] 1%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇
LIMITED PARTNERS:
Cadence Holdings, Inc................... [$________]
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇
Tality Corporation...................... [$________]
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇
Total................................ [$________] 100%
2.1-1