AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF [NAME OF PARTNERSHIP]
Exhibit 10.21
AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
[NAME OF PARTNERSHIP]
[______], 2012
THE LIMITED PARTNERSHIP INTERESTS (THE “PARTNERSHIP INTERESTS”) OF [NAME OF PARTNERSHIP]
(THE “PARTNERSHIP”) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MUST BE ACQUIRED FOR INVESTMENT
ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY
TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE STATE SECURITIES LAWS, AND
ANY OTHER APPLICABLE SECURITIES LAWS; AND (II) THE TERMS AND CONDITIONS OF THIS PARTNERSHIP
AGREEMENT. THE PARTNERSHIP INTERESTS MAY NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH
SUCH LAWS AND THIS PARTNERSHIP AGREEMENT. THEREFORE, PURCHASERS OF SUCH INTERESTS WILL BE REQUIRED
TO BEAR THE RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Table of Contents
Page | ||||
ARTICLE I. DEFINITIONS |
4 | |||
1.01 Certain Definitions |
4 | |||
1.02 Other Definitions |
14 | |||
1.03 Directly or Indirectly |
14 | |||
1.04 Construction |
14 | |||
ARTICLE II. ORGANIZATION |
15 | |||
2.01 Organization |
15 | |||
2.02 Name |
15 | |||
2.03 Registered Office and Registered Agent |
15 | |||
2.04 Purpose |
15 | |||
2.05 Organizational Certificates and Other Filings; Limitations on Conduct
of Business |
15 | |||
2.06 Term |
15 | |||
2.07 Merger, Consolidation or Conversion |
16 | |||
2.08 Series of Partnership Interests |
16 | |||
2.09 Alternative Investment Vehicles |
17 | |||
2.10 Feeder Fund |
18 | |||
ARTICLE III. Partners; DISPOSITIONS OF INTERESTS |
18 | |||
3.01 Partners |
18 | |||
3.02 Withdrawal of Initial Limited Partner |
18 | |||
3.03 Sharing Ratios |
18 | |||
3.04 Admission of Additional Limited Partners |
19 | |||
3.05 Restrictions on the Disposition of a Partnership Interest |
20 | |||
3.06 Interests in a Partner |
23 | |||
ARTICLE IV. CAPITAL CONTRIBUTIONS |
23 | |||
4.01 Initial Contributions |
23 | |||
4.02 Additional Capital Contributions |
23 | |||
4.03 Clawback Contributions |
24 | |||
4.04 True-Up Contributions |
26 | |||
4.05 Failure to Contribute |
26 | |||
4.06 Return of Contributions |
28 | |||
4.07 Advances by Partners |
28 | |||
4.08 Capital Accounts |
28 | |||
4.09 Fund-Level Holdback |
29 | |||
ARTICLE V. ALLOCATIONS AND DISTRIBUTIONS |
29 | |||
5.01 Allocations for Capital Account Purposes |
29 | |||
5.02 Distributions |
29 | |||
5.03 Class B Escrow Account |
31 |
i
Page | ||||
ARTICLE VI. MANAGEMENT AND OPERATIONS OF THE PARTNERSHIP |
33 | |||
6.01 Management Generally |
33 | |||
6.02 Authority of the General Partner |
34 | |||
6.03 Transactions with Affiliates |
36 | |||
6.04 Expenses |
36 | |||
6.05 Advances by the General Partner |
36 | |||
6.06 Duty of Care; Other Activities |
36 | |||
6.07 Reliance by Third Parties |
37 | |||
6.08 Indemnification |
37 | |||
6.09 Officers |
38 | |||
6.10 Power of Attorney |
38 | |||
ARTICLE VII. RIGHTS OF PARTNERS |
39 | |||
7.01 Access to Information |
39 | |||
7.02 Confidentiality |
39 | |||
7.03 Non-Disparagement |
40 | |||
7.04 Non-Solicitation/Non-Interference |
41 | |||
7.05 Liability to Third Parties |
41 | |||
ARTICLE VIII. TAXES |
42 | |||
8.01 Federal Income Tax |
42 | |||
8.02 Tax Returns |
42 | |||
8.03 Tax Elections |
42 | |||
ARTICLE IX. BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS |
42 | |||
9.01 Maintenance of Books |
42 | |||
9.02 Bank Accounts |
43 | |||
ARTICLE X. WITHDRAWAL, EXPULSION, BANKRUPTCY, ETC. |
43 | |||
10.01 Withdrawal |
43 | |||
10.02 Bankrupt Partners |
43 | |||
10.03 Forfeiture of Class B Limited Partner Interests |
44 | |||
10.04 Termination of Employment and Similar Arrangements |
46 | |||
ARTICLE XI. DISSOLUTION, LIQUIDATION, AND TERMINATION |
46 | |||
11.01 Dissolution and Termination |
46 | |||
11.02 Liquidation and Termination |
47 | |||
11.03 Withdrawal of a Limited Partner |
48 | |||
11.04 Cancellation of Filing |
48 | |||
ARTICLE XII. GENERAL PROVISIONS |
48 | |||
12.01 Offset |
48 | |||
12.02 Notices |
49 | |||
12.03 Entire Agreement; Supersedure |
49 | |||
12.04 Effect of Waiver or Consent |
49 | |||
12.05 Amendment or Modification |
49 | |||
12.06 Binding Effect |
50 |
ii
Page | ||||
12.07 Governing Law; Submission to Jurisdiction; Severability |
50 | |||
12.08 Further Assurances |
50 | |||
12.09 Counsel to the Partnership |
51 | |||
12.10 Representations and Warranties |
51 | |||
12.11 Interpretation |
54 | |||
12.12 Counterparts |
54 |
iii
This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) of [NAME OF
PARTNERSHIP], a Delaware limited partnership (the “Partnership”), is entered into by and among the
Partners (as defined below) on [____], 2012, effective as of [____], 2012 (the “Effective Date”).
WHEREAS, the General Partner (as defined below) and [____________] (the “Initial Limited
Partner”) have entered into a limited partnership agreement dated [________________] (the “Limited
Partnership Agreement”) and formed the Partnership as a limited partnership under the laws of the
State of Delaware; and
WHEREAS, the parties hereto desire to enter into this Agreement to permit the admission of the
Limited Partners and further to make the modifications hereinafter set forth.
ACCORDINGLY, FOR AND IN CONSIDERATION OF the mutual covenants, rights and obligations set
forth in this Agreement, the benefits to be derived therefrom, and other good and valuable
consideration, the receipt and the sufficiency of which each Partner acknowledges and confesses,
the Partners agree to amend and restate the Limited Partnership Agreement in its entirety as
follows:
ARTICLE I.
DEFINITIONS
DEFINITIONS
1.01 Certain Definitions. As used in this Agreement, the following terms have the following meanings:
“Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101 et
seq., as it may be amended from time to time, and any successor to such statute.
“Additional Capital Contributions” has the meaning given to that term in Section 4.02.
“Affiliate” means, with respect to any Person, any other Person Controlling, Controlled
by, or under common Control with such first Person. No portfolio company of any Carlyle
collective investment fund shall be deemed an Affiliate of the General Partner or any of its
Affiliates.
“Agreement” has the meaning given to that term in the introductory paragraph hereof.
“Alternative Investment Vehicle” has the meaning given to such term in Section 2.09(a).
5
“Bankrupt Partner” means any Partner:
(a) that (i) makes a general assignment for the benefit of creditors, (ii) files a
voluntary bankruptcy petition, (iii) becomes the subject of an order for relief or is
declared insolvent in any federal or state bankruptcy or insolvency proceeding, (iv) files a
petition or answer seeking for such Partner a reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any law, (v) files an answer
or other pleading admitting or failing to contest the material allegations of a petition
filed against such Partner in a proceeding of the type described in clauses (i)-(iv), (vi)
seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator
of the Partner or of all or any substantial part of the Partner’s properties, or (vii) dies
or is declared incompetent, or
(b) with respect to which (i) a proceeding is commenced seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar relief under
any law and 90 days have expired without the proceeding being dismissed, or (ii) without
that Partner’s consent or acquiescence, a trustee, receiver, or liquidator is appointed of
that Partner or of all or any substantial part of its properties and 90 days have expired
without the appointment being vacated or stayed, or if stayed, 90 days have expired after
the date of expiration of a stay, unless the appointment has been vacated.
“Business Day” means any day other than a Saturday, a Sunday, or a holiday on which
banks in the State of New York generally are closed.
“Capital Account” has the meaning given to such term in Section 4.08.
“Capital Contribution” means as to any Partner and any Series and at any time, any
contribution by such Partner to the capital of the Partnership with respect to such Series
at such time.
“Capital Investment Distributable Proceeds” means, for each separate Investment in a
given Series, the Capital Investment Proceeds received by the Partnership from the Fund
Entities plus the amount of proceeds received by the Partnership from the Disposition of the
Partnership’s ownership interest in one or more of the Fund Entities related to such Series
to the extent such proceeds are attributable to the Disposition of the right to receive
Capital Investment Proceeds in respect of such Investment and such Series.
“Capital Investment Proceeds” means, for any period and for each separate Investment in
a given Series, the amount of cash and property of the Partnership with respect to such
Series (other than Profits Interest Proceeds) that has been distributed to the Partnership
by the Fund Entities related to such Series with respect to such Investment and such Series
during such period.
“Carlyle”
means Carlyle Investment Management L.L.C., a Delaware limited liability company, together with
its Affiliates. The term “Carlyle” shall be deemed not to include any portfolio company of
any Carlyle collective investment fund.
6
“Carrying Value” means with respect to a Partnership asset, the asset’s adjusted basis
for federal income tax purposes, except that the Carrying Values of all Partnership assets
shall be adjusted to equal their respective fair market values, in accordance with the rules
set forth in Treasury Regulations Section 1.704–1(b)(2)(iv)(f), except as otherwise provided
herein, as of: (a) the date of the acquisition of any additional Partnership Interest by any
new or existing Partner in exchange for more than a de minimis Capital Contribution, other
than pursuant to the initial formation of the Partnership; (b) the date of the distribution
of more than a de minimis amount of Partnership assets to a Partner; (c) the date a
Partnership Interest is relinquished to the Partnership; or (d) any other date specified in
Treasury Regulations; provided that such adjustments shall be made only if the
General Partner determines such adjustments are appropriate to reflect the relative economic
interests of the Partners. The Carrying Value of any Partnership asset distributed to any
Partner shall be adjusted immediately prior to such distribution to equal its fair market
value and depreciation shall be calculated by reference to Carrying Value, instead of tax
basis, once Carrying Value differs from tax basis. The carrying value of any asset
contributed (or deemed contributed under Treasury Regulations Section 1.704–1(b)(1)(iv)) by
a Partner to the Partnership will be the fair market value of the asset at the date of its
contribution thereto.
“Class A Limited Partner” means any Person executing this Agreement on the date hereof
as a Class A Limited Partner or hereafter admitted to the Partnership as a Class A Limited
Partner, as provided in this Agreement, in its capacity as a Class A Limited Partner of the
Partnership, but does not include any Person who has ceased to be a Class A Limited Partner.
“Class A Distributions Interest” has the meaning given to such term in Section
3.05(b)(i).
“Class B Distributions Interest” has the meaning given to such term in Section
3.05(b)(ii).
“Class B Escrow Account” has the meaning given to such term in Section 5.03(a).
“Class B Limited Partner” means any Person executing this Agreement on the date hereof
as a Class B Limited Partner or hereafter admitted to the Partnership as a Class B Limited
Partner, as provided in this Agreement, in its capacity as a Class B Limited Partner of the
Partnership, but does not include any Person who has ceased to be a Class B Limited Partner
of the Partnership. Where applicable, references herein to Class B Limited Partner shall
include each Feeder Fund Investor in a Feeder Fund that is a Class B Limited Partner.
“Class C Limited Partner” means any Person executing this Agreement on the date hereof
as a Class C Limited Partner or hereafter admitted to the Partnership as a Class C Limited
Partner, as provided in this Agreement, in its capacity as a Class C Limited Partner of the
Partnership, but does not include any Person who has ceased to be a Class C Limited Partner
of the Partnership. For the avoidance of doubt, Class C Limited Partners shall not be
assigned Sharing Ratios.
7
“Clawback Amount” has the meaning given to such term in Section 4.03(a).
“Code” means the Internal Revenue Code of 1986, as amended.
“Confidential Information” has the meaning given to such term in Section 7.02(a).
“Control” (or variations thereof) means the possession, directly or indirectly, through
one or more intermediaries, of the following: (a) in the case of a corporation, more than
50% of the voting power of the outstanding voting securities thereof; (b) in the case of a
limited liability company, partnership, limited partnership or venture, the right to more
than 50% of the distributions therefrom (including liquidating distributions) or ownership
of more than 50% of the capital interests therein or ownership of more than 50% of the
ownership interests therein; (c) in the case of a trust or estate, more than 50% of the
beneficial interest therein; (d) in the case of any other Entity, more than 50% of the
economic or beneficial interest therein; or (e) in the case of any Entity, the power or
authority, through ownership of voting securities, by contract or otherwise, to direct the
management, activities or policies of the Entity.
“Default Interest Rate” means a rate per annum equal to the lesser of (a) 4% plus a
varying rate per annum that is equal to the interest rate publicly quoted by Citibank, N.A.
(or any successor thereto) from time to time as its prime rate in effect at its principal
office in New York City, with adjustments in that varying rate to be made on the same date
as any change in that rate, and (b) the maximum rate permitted by applicable law.
“Delinquent Partner” has the meaning given to such term in Section 4.05.
“Disability” means, with respect to any individual, such individual’s incapacitation by
accident, sickness or other circumstance which renders him mentally or physically incapable
of performing the duties and services required of him hereunder for a period of at least 180
days during any 12-month period.
“Dispose,” “Disposing” or “Disposition” means a sale, assignment, transfer, exchange,
pledge, grant of a security interest, or other voluntary or involuntary disposition or
encumbrance, or the acts thereof.
“Distribution Ratio” means, for each Partner in a Series, the ratio of (i) the
cumulative amount of all distributions of Profits Interest Distributable Proceeds
distributed to such Partner with respect to such Series plus all amounts deemed
distributed to such Partner with respect to such Series pursuant to Sections 5.02(b),
5.02(c) and 5.03(h) hereof, plus any True-Up Distribution Amounts received by such
Partner with respect to such Series pursuant to Section 4.04 minus any True-Up
Contribution Amounts in respect of such Series contributed to the Partnership by such
Partner pursuant to Section 4.04 to (ii) the cumulative amount of all distributions of
Profits Interest Distributable Proceeds distributed to all Partners with respect to such
Series (plus all amounts deemed distributed to any Partner with respect to such
Series pursuant to Sections 5.02(b), 5.02(c) and 5.03(h) hereof).
8
“Economic Risk of Loss” has the meaning set forth in Treasury Regulation Section
1.752-2(a).
“Enforcement Expenses” has the meaning given to such term in Section 4.05(b)(iv).
“Entity” means any corporation, limited liability company, general partnership, limited
partnership, venture, trust, business trust, estate or other entity.
“Equity Pools” means limited liability companies or other entities established for each
calendar year to indirectly hold a portion of the “carried” profits interest earned in
respect of certain investments made during such year by certain investment funds controlled
by Carlyle. Carlyle may determine in its sole and absolute discretion not to form a
separate entity to hold such interest in which case the entity designated by Carlyle will
continue to hold such interest.
“Family Member” means, for any Partner who is an individual, a spouse, lineal ancestor,
lineal descendant, brother or sister of such Partner, or lineal descendant of a brother or
sister of such Partner, or such other related individual deemed to be a Family Member by the
General Partner in the General Partner’s sole and absolute discretion.
“First Anniversary Date” has the meaning given to such term in Section 10.03(a)(iv).
“Feeder Fund” A Limited Partner that is (a) formed to serve as a collective investment
vehicle which will invest substantially all of its investable assets in the Partnership, any
Alternative Investment Vehicle, any Fund Entity, and/or the general partner of any Fund
Entity and (b) designated as such in writing by the General Partner upon its admission to
the Partnership.
“Feeder Fund Investor” means a partner or similar investor in any Feeder Fund.
“Fund Agreements” means, with respect to each Series of the Partnership, the limited
partnership agreements, or similar governing documents, as amended or modified from time to
time, of the Fund Entities making the Investments that comprise the assets of such Fund
Entity and, indirectly, such Series, including, where applicable, the Main Fund Partnership
Agreement.
“Fund AIV” means an alternative investment vehicle of any Fund Entity.
“Fund Entity” means any Entity or vehicle or series thereof designated by the General
Partner as a Fund Entity for purposes hereof.
“General Interest Rate” means a rate per annum equal to the lesser of (a) a varying
rate per annum that is equal to the interest rate publicly quoted by Citibank, N.A. (or any
successor thereto) from time to time as its prime rate in effect at its principal office in
New York City, with adjustments in that varying rate to be made on the same date as any
change in that rate, and (b) the maximum rate permitted by applicable law.
9
“General Partner” means [_________], a Delaware company, or any successor approved by
the General Partner, or, if there is no General Partner, by a Majority in Interest of the
Class A Limited Partners, as General Partner of the Partnership. The General Partner shall
be the general partner associated with each Series.
“Guarantee” has the meaning given to such term in Section 4.03(h).
“Indemnified Party” has the meaning given to such term in Section 6.08(a).
“Industry Deal Team” means one or more Persons who the General Partner determines to
have investment expertise in a particular industry (e.g., telecommunications or healthcare)
or in a particular geography (e.g., Asia or Europe), and who devote a substantial majority
of their business efforts on behalf of Carlyle to the analysis, acquisition, monitoring and
disposition of investments in such industry or geography.
“Initial Capital Contribution” has the meaning given to such term in Section 4.01.
“Initial Limited Partner” has the meaning given to such term in the preamble.
“Initial Vesting Date” has the meaning given to such term in Section 10.03(a)(v).
“Investment” means each separate direct or indirect investment that is acquired or made
by one or more of the Fund Entities (for the avoidance of doubt, for the purpose of this
Agreement the date an Investment was “acquired” shall mean the date on which the Fund
Entities closed on the Investment as determined by the General Partner in its sole and
absolute discretion). In the sole and absolute discretion of the General Partner, if the
Fund Entities acquire interests in a single property or a single portfolio company in
multiple tranches at different times, each separate tranche may be treated as a separate
Investment (and Series) for the purposes of this Agreement. Furthermore, in the sole and
absolute discretion of the General Partner, if one or more of the Fund Entities is a special
purpose vehicle created to coinvest alongside (or in lieu of) the Main Fund or its successor
funds, each investment acquired by such special purpose vehicle may be treated as a separate
Investment (and Series) for the purposes of this Agreement. The portion of the
Partnership’s ownership interest in the Fund Entity that relates to the Investment or
Investments made by related Fund Entities shall be allocated to and represented by a single
Series of Partnership Interests pursuant to Section 2.08 and as designated by the General
Partner.
“Investment Gains” with respect to (i) any Realized Investment, means the Realized
Investment Gains relating to such Realized Investment and (ii) any Investment that is not a
Realized Investment, means any current proceeds received with respect to such Investment
other than any “Reduction in Capital Proceeds” for purposes of the Main Fund Partnership
Agreement.
“Investment Sharing Ratio Letter” means the letter designating the Sharing Ratio of
each Partner for each Investment and the Series of Partnership Interests of which such
Investment shall constitute a part of the assets. A record of each Investment Sharing Ratio
Letter shall be maintained by the General Partner. The Investment Sharing Ratio
10
Letter shall be prepared at least annually, and shall provide each Limited Partner’s expected initial Sharing Ratio for all Investments acquired in a defined time period, which is expected to be one year, but may be varied by the General Partner. The General Partner may adjust the Sharing Ratio in accordance with this Agreement with respect to a specific Investment, but shall deliver a separate Investment Sharing Ratio Letter setting forth the adjusted Sharing Ratio. The General Partner shall issue a separate Investment Sharing Ratio Letter to each Feeder Fund in respect of each Feeder Fund Investor therein that has a Sharing Ratio. |
“Key Participants” means the Class B Limited Partners (including Feeder Fund Investors)
listed as Key Participants on the books and records of the Partnership. Notwithstanding any
other provision of this Agreement, the General Partner may amend the books and records of
the Partnership in its sole and absolute discretion (without the consent of any other
Partner) to list additional Class B Limited Partners (including Feeder Fund Investors) as
Key Participants or to remove a Class B Limited Partner (including a Feeder Fund Investor)
as a Key Participant.
“Limited Partner” means any Class A Limited Partner, Class B Limited Partner or Class C
Limited Partner, in its capacity as a limited partner of the Partnership.
“Losses” has the meaning given to such term in Section 6.08(a).
“Main Fund” means [NAME OF UNDERLYING FUND], a Delaware limited partnership.
“Main Fund Partnership Agreement” means the Amended and Restated Limited Partnership
Agreement of the Main Fund, as the same may be amended, modified or supplemented from time
to time.
“Majority in Interest” means, in combination and with respect to any Series,
Partnership Interests of one or more Class A Limited Partners of such Series which, in the
aggregate, are entitled to the combined Sharing Ratio of more than 50% of the Sharing Ratio
of all of the Class A Limited Partners of that Series.
“Minimum Percentage” means, for each Key Participant, the percentage designated in such
Key Participant’s Minimum Percentage Letter. Except as provided in Section 10.03 or as may
be provided by written agreement between a Key Participant (or, in the case of a Key
Participant that is a Feeder Fund Investor, the applicable Feeder Fund on such Key
Participant’s behalf) and the General Partner, a Class A Limited Partner or their respective
Affiliates (whether such agreement is entered into before or after the Effective Date), the
General Partner may decrease the Minimum Percentage of a Key Participant (a) to the extent
necessary to dilute the Key Participant to accommodate the addition of new members to a deal
team, (b) to the extent the General Partner determines that a decrease of the Minimum
Percentage of a Key Participant is necessary or desirable to accommodate the assignment of a
Sharing Ratio for an Investment to one or more Limited Partners who are part of an Industry
Deal Team that the General Partner has determined in its sole and absolute discretion is
responsible, in whole or in part, for
11
sourcing, negotiating or managing such Investment, (c) to reflect inadequate performance by the Key Participant as determined by the General Partner in its sole and absolute discretion, (d) to reflect a change in the role that a Key Participant serves with respect to the Fund Entities, (e) if the General Partner determines in good faith that a Key Participant’s Minimum Percentage should be reduced to reflect the quality or extent of such Key Participant’s services to the Partnership or its Affiliates relative to the services provided by other Key Participants, or (f) if the General Partner determines in good faith that a valid business reason justifies the reduction of a Key Participant’s Minimum Percentage. The General Partner in its sole and absolute discretion (without the consent of any other Partner) may increase the Minimum Percentage of a Key Participant. Adjustments to the Minimum Percentage of a Key Participant will be effective prospectively. |
“Minimum Percentage Letter” means the letter from the General Partner to each Key
Participant (or, in the case of a Key Participant that is a Feeder Fund Investor, to the
applicable Feeder Fund in respect of such Feeder Fund Investor) designating the Minimum
Percentage of such Key Participant. A record of each Minimum Percentage Letter shall be
maintained by the General Partner. In the event the General Partner adjusts the Minimum
Percentage of a Key Participant in accordance with this Agreement, the General Partner shall
deliver a Minimum Percentage Letter setting forth the Key Participant’s adjusted Minimum
Percentage.
“Net Income” or “Net Loss” for any fiscal period means the taxable income or loss of
the Partnership for such period as determined in accordance with the accounting method used
by the Partnership for U.S. federal income tax purposes with the following adjustments: (i)
any income of the Partnership that is exempt from U.S. federal income taxation and not
otherwise taken into account in computing Net Income (and Net Loss) shall be added to such
taxable income or loss; (ii) if the Carrying Value of any asset differs from its adjusted
tax basis for federal income tax purposes, any depreciation, amortization or gain resulting
from a disposition of such asset shall be calculated with reference to such Carrying Value;
(iii) upon an adjustment to the Carrying Value of any asset, pursuant to the definition of
Carrying Value, the amount of the adjustment shall be included as a gain or loss in
computing such taxable income or loss; and (iv) any expenditures of the Partnership not
deductible in computing taxable income or loss, not properly capitalizable and not otherwise
taken into account in computing Net Income (and Net Loss) pursuant to this definition shall
be treated as deductible items.
“1940 Act” has the meaning given to that term in Section 3.06.
“Nominee” has the meaning given to that term in Section 3.03(c).
“Non-Delinquent Partners” has the meaning given to such term in Section 4.05.
“Officer” means any Person designated as an officer of the Partnership pursuant to
Section 6.09.
12
“Operating Expenses” means, for any period and any Series of Partnership Interests, the
total amount of operating and other transaction expenses incurred or paid by or on behalf of
the Partnership and allocated by the General Partner in its sole and absolute discretion to
such Series during such period, including all legal fees, accounting fees, management fees,
disposition fees, organization expenses, startup costs, overhead costs and reimbursements
during such period of advances made by Partners of such Series to pay such expenses of the
Partnership with respect to such Series.
“Participants” has the meaning given to such term in Section 12.10.
“Partner” means any General Partner or Limited Partner.
“Partnership” means [NAME OF PARTNERSHIP], a Delaware limited partnership, which is
organized, operated and governed pursuant to this Agreement.
“Partnership Counsel” has the meaning given to such term in Section 12.09.
“Partnership Interest” has the meaning given to such term in Section 2.08.
“Percentage Cap” has the meaning given to such term in Section 3.03(e).
“Person” means any natural person or Entity.
“PIDP Actual Amount” means, for each Partner as of the applicable date of calculation
hereunder, the sum of (a) the actual amount of Profits Interest Distributable Proceeds
distributed to such Partner as of such date with respect to all Investments plus (b) the
amount of reserves of Profits Interests Distributable Proceeds in the Class B Escrow Account
with respect to such Investments that the General Partner determines is being held on behalf
of such Partner as of such date plus (c) any other amount of Profits Interests Distributable
Proceeds deemed distributed to such Partner as of such date with respect to such
Investments.
“PIP Ratio” means, for each Investment in a given Series as of the applicable date of
calculation hereunder, the ratio of (A) the Profits Interest Proceeds for such Investment as
of such date to (B) the cumulative total Profits Interest Proceeds for all Investments in
such Series as of such date.
“Potential Clawback” has the meaning given to such term in Section 5.03(a).
“Profits Interest Distributable Proceeds” means for each separate Investment in a given
Series, the excess of (i) the Profits Interest Proceeds received by the Partnership from the
Fund Entities for that Investment plus the amount received by the Partnership of proceeds
from the Disposition of the Partnership’s ownership interest in one or more of the Fund
Entities related to such Series to the extent such proceeds are attributable to the right to
receive Profits Interest Proceeds in respect of such Investment and such Series, over (ii)
the Operating Expenses incurred by the Partnership in respect of such Series and not
previously paid or reimbursed from the proceeds of any other Investment in such Series.
13
“Profits Interest Proceeds” means, for each separate Investment in a given Series, the
amount of cash and other property of the Partnership and such Series that has been
distributed (or deemed distributed) to the Partnership by the Fund Entities and is directly
attributable to the Partnership’s carried interest in the Fund Entities.
“Purchasing Partners” has the meaning given to such term in Section 10.02.
“Realized Investment Gains” means, for each Realized Investment, the excess of (i) the
cumulative amount of all distributions made (or deemed to have been made) by the Fund
Entities (to all their members in the aggregate) that were generated from such Realized
Investment, over (ii) the sum of the aggregate amount of capital contributions made by all
Persons to the Fund Entities that were used to acquire such Realized Investment.
“Realized Investments” means, as of any date and with respect to any Series, all
Investments of that Series that have been (or have been deemed to be) the subject of a
Disposition (including partial Dispositions) on or before such date; provided that
an Investment shall be treated as not having been the subject of a Disposition to the extent
that the proceeds from such Investment constitute “Reduction in Capital Proceeds” for
purposes of the Main Fund Partnership Agreement.
“RIG Ratio” means, for each Investment in a given Series as of the applicable date of
calculation hereunder, the ratio of (A) Investment Gains for such Investment as of such date
to (B) the cumulative total of Investment Gains for all Investments in such Series as of
such date.
“Rules” has the meaning given to such term in Section 12.09.
“SEC” has the meaning given to such term in Section 10.03(d).
“Second Anniversary Date” has the meaning given to such term in Section 10.03(a)(iii).
“Securities Act” has the meaning given to such term in Section 12.10(c)(vii).
“Series” means a separate series of Partnership Interests corresponding to a specified
Investment or Investments by related Fund Entities which is designated as a separate
“Series” of Partnership Interests by the General Partner in accordance with Section 2.08
hereof. The relative, participating, optional or other rights of each Series and the
qualifications, limitations or restrictions thereof shall be defined in an Investment
Sharing Ratio Letter, which shall adopt a name for such Series (e.g., “First Series”) which
is distinct from the name of any then-existing Series. With respect to Partners, “Series”
means those Partners holding the Partnership Interests that constitute a specified Series of
Partnership Interests.
“Seventh Anniversary Date” has the meaning given to such term in Section 10.03(a)(i).
14
“Sharing Ratio” means, subject to adjustments as provided herein, with respect to a
particular Limited Partner (other than a Class C Limited Partner) and for each separate
Investment in a given Series, the percentage set forth opposite such Limited Partner’s name
on the Investment Sharing Ratio Letter for such Investment and such Series. The Limited
Partners’ Sharing Ratios with respect to a Series shall be subject to adjustment as provided
under this Agreement, including, without limitation, on account of (i) the admission of
Limited Partners to the Series, (ii) forfeitures by a Class B Limited Partner of such Series
pursuant to Section 10.03, and (iii) Dispositions pursuant to Section 3.05.
“Special
Limited Partner” means
[ ].
“Tax Advances” has the meaning given to such term in Section 5.02(b).
“Temporary Investments” means short-term investments in money market funds, bank
accounts and other money market instruments reasonably determined by the General Partner to
be of high quality.
“Termination Date” has the meaning given to such term in Section 10.03(a).
“Third Anniversary Date” has the meaning given to such term in Section 10.03(a)(ii).
“Transferring Partner” has the meaning given to such term in Section 3.05(b)(ii).
“True-Up Contribution Amount” means, for each Partner as of the applicable date of
calculation hereunder, the excess, if any, of (x) the PIDP Actual Amount of such Partner as
of such date, over (y) the amount of all Profits Interest Distributable Proceeds allocated
to such Partner in such Partner’s investment tracking account as of such date pursuant to
Section 5.02(a)(ii)(B).
“True-Up Distribution Amount” means, for each Partner as of the applicable date of
calculation hereunder, the excess, if any, of (a) the amount of all Profits Interest
Distributable Proceeds allocated to such Partner in such Partner’s investment tracking
account as of such date pursuant to Section 5.02(a)(ii)(B) over (b) the PIDP Actual Amount
of such Partner as of such date.
1.02 Other Definitions. Other terms defined herein have the meanings so given them.
1.03 Directly or Indirectly. Where any provision in this Agreement refers to 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.
1.04 Construction. Whenever the context requires, the gender of all words used in this Agreement includes the
masculine, feminine, and neuter. All references to Articles and Sections refer to articles and
sections of this Agreement, and all references to Exhibits are to Exhibits attached hereto, each of
which is made a part hereof for all purposes.
15
ARTICLE II.
ORGANIZATION
ORGANIZATION
2.01 Organization. The parties hereto continue the Partnership as a limited partnership formed on
[___________] pursuant to the Act.
2.02 Name. The name of the Partnership is “[NAME OF PARTNERSHIP]” and all Partnership business must be
conducted in such name or such other names that comply with applicable law as the General Partner
may select from time to time. The General Partner is authorized to make any variations in the
Partnership’s name, which the General Partner may deem necessary or advisable; provided
that (a) such name shall contain the words “Limited Partnership” or the letters “LP” or “L.P.” or
the equivalent translation thereof, (b) such name shall not contain the name of any Limited Partner
without the consent of such Limited Partner and (c) the General Partner shall promptly give written
notice of any such variation to the Limited Partners.
2.03 Registered Office and Registered Agent. The Partnership shall maintain a registered office at The Corporation Trust Company, 0000
Xxxxxx Xxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The General Partner may at any time
change the location of the Partnership’s offices and may establish additional offices. The name
and address of the Partnership’s registered agent are The Corporation Trust Company, 0000 Xxxxxx
Xxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
2.04 Purpose. The Partnership and each Series is formed to engage in any lawful activity for which
limited partnerships may be formed under the Act.
2.05 Organizational Certificates and Other Filings; Limitations on Conduct of Business. The General Partner has executed, delivered and filed the Certificate of Limited
Partnership of the Partnership with the Secretary of State of the State of Delaware. The General
Partner or an authorized designee shall execute, deliver and file any other certificates (and any
amendments and/or restatements thereof) necessary for the Partnership to qualify to do business in
any jurisdiction in which the Partnership may wish to conduct business. If requested by the
General Partner, the Limited Partners shall promptly execute all certificates and other documents
consistent with the terms of this Agreement necessary for the General Partner to accomplish all
filing, recording, publishing and other acts as may be appropriate to comply with all requirements
for (a) the formation and operation of a limited partnership under the laws of the State of
Delaware, (b) if the General Partner deems it advisable, the operation of the Partnership as a
limited partnership, or partnership in which the Limited Partners have limited liability, in all
jurisdictions where the Partnership proposes to operate, (c) legal effect to be given to the
limitation on interseries liability as set forth in Section 2.08, and (d) all other filings
required to be made by the Partnership.
2.06 Term. The Partnership commenced on the date the certificate of limited partnership of the
Partnership was filed with the Secretary of State of the State of Delaware, and shall continue in
existence until the Partnership is dissolved, its affairs wound up and the certificate of limited
partnership of the Partnership is cancelled in accordance with the Act.
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2.07 Merger, Consolidation or Conversion. Notwithstanding any other provision of this agreement, the Partnership may merge,
consolidate or convert with or into another business entity, or enter into an agreement to do so,
only with the consent and agreement of the General Partner, and without the consent of any other
Person, including any other Partner.
2.08 Series of Partnership Interests. The Partners intend hereby to establish separate Series of interests in the Partnership
(each such interest, a “Partnership Interest”) each with a separate Series of Partners in the
Partnership having separate rights, powers and/or duties with respect to specified property or
obligations of the Partnership or profits and losses associated with specified property or
obligations of the Partnership. Each Series shall correspond to a specified Investment or
Investments by related Fund Entities (as designated by the General Partner) and shall be designated
as a separate “Series” by the General Partner. The General Partner in its sole and absolute
discretion may create and issue additional Series of Partnership Interests and Partners with such
rights, powers and duties, including rights, powers, and duties different from or senior to
existing Series of Partnership Interests, all as the General Partner may determine in its sole and
absolute discretion subject to the terms and provisions hereof, and may admit any Person as a
Partner of any such additional Series without the consent of any other existing Partner ; provided
that any Investment deemed to be a co-investment in the sole and absolute discretion of the General
Partner shall not be included in any Series with Investments that are not deemed to be
co-investments in the sole and absolute discretion of the General Partner. Each Partner, by its
execution hereof, shall be deemed to have granted the General Partner the irrevocable power of
attorney (which, it is hereby agreed among the Partners, is coupled with an interest, shall be
irrevocable and shall survive and not be affected by the subsequent disability or incapacity of
such Partner (or if such Partner is a corporation, partnership, trust, association, limited
liability company or other legal entity, by the dissolution or termination thereof)) to amend this
Agreement in such ways as may be necessary to create and issue any separate Series and to admit any
Person as a Partner of the Partnership associated with any such Series as permitted by this Section
2.08 without any further action or approval by any other Partner. The power of attorney granted in
this Section 2.08 shall be deemed to be coupled with an interest, shall be irrevocable, shall
survive and not be affected by the dissolution, bankruptcy or legal disability of a Partner and
shall extend to its successors and assigns; and may be exercisable by such attorney-in-fact and
agent for all Partners (or any of them) required to execute any such instrument, and executing such
instrument acting as attorney-in-fact. No Partner shall revoke the above power of attorney. The
debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular Series shall be enforceable only against the assets of such Series, and not
against the assets of any other Series or the assets of the Partnership generally, and, except to
the extent otherwise provided in this Agreement, none of the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to the Partnership generally
or any other Series shall be enforceable against the assets of such Series. Notwithstanding any
other provision hereof, records shall be maintained with respect to each Series that account for
the assets associated with such Series separately from the other assets of the Partnership or any
other Series thereof. Expenses incurred in organizing the Partnership and any Series, and expenses
deemed to be expenses of the Partnership generally shall, in each case, be allocated to the various
Series in such amounts and proportions as the General Partner shall determine appropriate.
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2.09 Alternative Investment Vehicles. (a) Notwithstanding any other provision of this
Agreement, if the General Partner determines, in its sole and absolute discretion, that it is in
the best interests of one or more Partners, Carlyle or any Fund Entity that one or more Partners
participate in one or more Investments through an alternative investment vehicle, the General
Partner may structure the making of such Investment or Investments outside of the Partnership by
requiring each such Partner to make any such Investment directly or through a partnership or other
similar vehicle organized by or at the request of the General Partner (an “Alternative Investment
Vehicle”) that will invest on behalf of such Partners in lieu of the Partnership. Each Partner
participating in an Alternative Investment Vehicle shall make Capital Contributions, directly or
indirectly, to such Alternative Investment Vehicle to the extent, for the same purposes and on
substantially the same terms and conditions, in each case in all material respects, to the extent
appropriate in furtherance of the purposes of this Section 2.09 as each such Partner would be
required to make Capital Contributions to the Partnership. In the event one or more Partners
participate in an Investment through an Alternative Investment Vehicle, distributions of cash and
other property and the allocations of income, gain, loss, deduction, expense and credit from any
such Alternative Investment Vehicle, and the determination of allocations and distributions
pursuant to Article V hereof and of any capital contributions in respect of any Clawback Amount,
shall be determined as if such Partners had participated in such Investment through the
Partnership.
(b) In the case of an Investment made through a Fund AIV, distributions of cash and other
property and the allocations of income, gain, loss, deduction, expense and credit from any such
Fund AIV, and the determination of allocations and distributions pursuant to Article V hereof and
of any capital contributions in respect of any Clawback Amount, shall be determined as if each such
Investment made by such Fund AIV were an investment made by the Main Fund.
(c) Each Partner hereby irrevocably constitutes and appoints the General Partner, with full
power of substitution, the true and lawful attorney-in-fact and agent of such Partner, to execute,
acknowledge, verify, swear to, deliver, record and file, in its or its assignee’s name, place and
stead, all in accordance with the terms of this Agreement, all agreements and instruments necessary
or advisable to form each Alternative Investment Vehicle and admit such Partner as a security
holder thereof and to consummate any Investment related thereto, including the execution of the
organizational documents with respect to such Alternative Investment Vehicle (and amendments
thereto consistent with this Section 2.09(c)). The power of attorney granted in this Section
2.09(c) is coupled with an interest, shall be irrevocable, shall survive and not be affected by the
dissolution, bankruptcy or legal disability of a Partner and shall extend to its successors and
assigns; and may be exercisable by such attorney-in-fact and agent for all Partners (or any of
them) required to execute any such instrument, and executing such instrument acting as
attorney-in-fact. No Partner shall revoke the above power of attorney. Any Person dealing with
the Partnership may conclusively presume and rely upon the fact that any instrument referred to
above, executed by such attorney-in-fact and agent, is authorized, regular and binding, without
further inquiry. If required, each Partner shall execute and deliver to the Partnership within ten
(10) calendar days after the receipt of a request therefore, such further designations, powers of
attorney or other instruments as the General Partner shall reasonably deem necessary for the
purposes hereof.
18
2.10 Feeder Fund. The Partnership Interests of a Feeder Fund shall be treated as Partnership
Interests held by more than one Limited Partner for purposes of determining the appropriate
treatment of such Feeder Fund in connection herewith, in light of the multiple Feeder Fund
Investors in such Feeder Fund. This shall include reflecting on the books and records of the
Partnership a separate Partnership Interest held by such Feeder Fund with respect to each Feeder
Fund Investor therein.
ARTICLE III.
PARTNERS; DISPOSITIONS OF INTERESTS
PARTNERS; DISPOSITIONS OF INTERESTS
3.01 Partners. Each of the Persons executing this Agreement effective as of the Effective
Date is hereby admitted to or continues as a partner of the Partnership associated with the Series
set forth in its Investment Sharing Ratio Letter(s) effective as of the Effective Date.
3.02 Withdrawal of Initial Limited Partner. The Initial Limited Partner shall be deemed to have withdrawn from the Partnership upon
execution of this Agreement by the General Partner and the first additional Limited Partner.
3.03 Sharing Ratios.
(a) A separate Sharing Ratio shall be assigned by the General Partner to each Partner (other
than Class C Limited Partners) of a Series for each separate Investment within such Series. The
Sharing Ratios for each separate Investment in a given Series shall be set forth on a separate
Investment Sharing Ratio Letter for each Partner for such Investment within such Series.
(b) The Sharing Ratio assigned to any Key Participant with respect to each Investment shall
not be less than the Minimum Percentage of such Key Participant in effect as of the date the Fund
Entities acquire such Investment; provided, however, that (i) any Key Participant
(or, in the case of a Key Participant that is a Feeder Fund Investor, the applicable Feeder Fund on
such Key Participant’s behalf) may agree with the General Partner to a Sharing Ratio for any
Investment that is less than such Key Participant’s Minimum Percentage, (ii) all Sharing Ratios are
subject to adjustment pursuant to Section 10.03 hereof notwithstanding the designated Minimum
Percentage, and (iii) the Sharing Ratio assigned to any Key Participant for an Investment may be
less than such Key Participant’s Minimum Percentage (A) to the extent necessary to dilute the Key
Participant to accommodate the addition of new members to a deal team, (B) to the extent the
General Partner determines that such a dilution of the Sharing Ratio of a Key Participant for an
Investment is necessary or desirable to accommodate the assignment of a Sharing Ratio for such
Investment to one or more Limited Partners who are part of an Industry Deal Team that the General
Partner has determined in its sole and absolute discretion is responsible, in whole or in part, for
sourcing, negotiating or managing such Investment, (C) to reflect inadequate performance by the Key
Participant, as determined by the General Partner in its sole and absolute discretion, (D) to
reflect a change in the role that a Key Participant serves with respect to the Fund Entities, (E)
if the General Partner determines in good faith that a Key Participant’s Sharing Ratio should be
reduced to reflect the quality or extent of such Key Participant’s services to the Partnership or
its Affiliates relative to the services provided by other Key Participants, or (F) if the General
Partner determines in good faith that a valid business reason justifies the reduction of a Key
Participant’s Sharing Ratio.
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(c) Unless otherwise set forth in writing for a particular Investment, for each Investment a
Sharing Ratio will be assigned to The Carlyle Group Employee Co., L.L.C. in its capacity as nominee
of the annual Equity Pools (the “Nominee”); provided that such Sharing Ratio shall be
subject to adjustment as provided herein.
(d) Subject to Section 3.03(e), the General Partner in its sole and absolute discretion is
authorized to increase the Sharing Ratio of a Class B Limited Partner for a particular Investment
within a Series at any time. Any such adjustments shall dilute the Sharing Ratios of the Class A
Limited Partners (other than the Sharing Ratio held by the Nominee) in proportion to their
respective Sharing Ratios with respect to such Series.
(e) Notwithstanding anything to the contrary expressed or implied by this Agreement, the
aggregate Sharing Ratios of the Class B Limited Partners of a Series (including Persons hereafter
admitted as Class B Limited Partners pursuant to Section 3.04 below) for any Investment within any
Series shall in no event exceed the percentage set forth in the books and records of the
Partnership (including the Sharing Ratio directly or indirectly held by the Nominee in its capacity
as a Class B Limited Partner) without the prior written consent of the General Partner and each
Class A Limited Partner of that Series, which consent may be granted or denied in the sole and
absolute discretion of the General Partner and each such Class A Limited Partner in that Series (as
adjusted from time to time with such consent, the “Percentage Cap”). Notwithstanding the
foregoing, the aggregate of all Sharing Ratios assigned to the Class B Limited Partners for a
particular Investment within a Series is not required to be the Percentage Cap and may be less than
the Percentage Cap.
(f) The Sharing Ratios for each Limited Partner with respect to separate Investments within a
Series shall be designated by the General Partner on a separate Investment Sharing Ratio Letter for
such Limited Partner with respect to such Investment, and each such Investment Sharing Ratio Letter
shall be deemed a part of this Agreement without any further action by or on behalf of any other
Limited Partner. In addition, within 120 days after the end of a calendar year, the General
Partner shall deliver to each Class B Limited Partner a letter setting forth the initial Sharing
Ratio of such Limited Partner for Investments acquired during the previous calendar year and the
Series of Partnership Interests of which such Investments will constitute part of the assets.
3.04 Admission of Additional Limited Partners.
(a) Class A Limited Partners and Class C Limited Partners. The General Partner is authorized
to admit additional Persons as Class A Limited Partners and Class C Limited Partners of any Series
in the sole and absolute discretion of the General Partner without the consent of any other Partner
or any other Person; provided that such Class A Limited Partners and Class C Limited
Partners agree in writing to be bound by this Agreement and the terms applicable to such Series.
The Sharing Ratios assigned by the General Partner to any such Class A Limited Partner admitted to
the Partnership in an existing Series with respect to any Investment of such Series shall reduce
the respective Sharing Ratios of each Class A Limited Partner (other than the Sharing Ratio held by
the Nominee (either directly or indirectly through a Feeder Fund) in the annual Equity Pool) with
respect to that Investment pro rata in proportion to their Sharing Ratios with respect to such
Investment.
20
(b) Class B Limited Partners. The General Partner is authorized to admit additional Persons
as Class B Limited Partners of any Series in the sole and absolute discretion of the General
Partner; provided that such Class B Limited Partners agree in writing to be bound by this
Agreement and the terms applicable to such Series. The Sharing Ratios assigned by the General
Partner to any such Class B Limited Partner admitted to the Partnership in an existing Series with
respect to any Investment of such Series shall reduce the respective Sharing Ratios of each Class A
Limited Partner (other than the Sharing Ratio held by the Nominee (either directly or indirectly
through a Feeder Fund) in the annual Equity Pool) with respect to that Investment pro rata in
proportion to their Sharing Ratios with respect to such Investment; provided that at such
time as the aggregate percentage interest held by all Class B Limited Partners for that Investment
equals the Percentage Cap, the Sharing Ratios assigned by the General Partner to any such
Class B Limited Partner shall reduce the Sharing Ratios of all Class B Limited Partners in that
Investment (other than the Sharing Ratio held by a Nominee (either directly or indirectly through a
Feeder Fund) in the annual Equity Pool) on a pro rata basis in proportion to their Sharing Ratios
with respect to such Investment.
3.05 Restrictions on the Disposition of a Partnership Interest.
(a) Except as provided in this Section 3.05, a direct or indirect Disposition by a Partner of
all or any part of its Partnership Interest in any Series may be effected only with the prior
express written consent of the General Partner which may be withheld in the sole and absolute
discretion of the General Partner and upon compliance with this Section 3.05. To the fullest
extent permitted by law, any attempted Disposition by a Person of a Partnership Interest in any
Series, or any part thereof, other than in accordance with this Section 3.05, is void and the
Partnership shall not recognize it.
(b) Subject to the provisions of Sections 3.05(a) above, (c) (to the extent applicable), (d)
and (e) and Section 3.06:
(i) the General Partner and, subject to the consent of the General Partner, which consent may
be withheld in the General Partner’s sole and absolute discretion, any Class A Limited Partner, may
assign to any other Person, or, pledge, assign for security purposes, or otherwise grant a security
interest in (and the pledgee, assignee or secured party may foreclose on) all or part of such
Partner’s interest in distributions from the Partnership with respect to any Series (any such
interest in distributions being referred to herein as a “Class A Distributions Interest"), and in
each case (A) such Disposition of a Class A Distributions Interest shall not affect such Disposing
Partner’s right to freely exercise management and voting rights hereunder or its ability to
discharge its corresponding obligations relating thereto and such Disposing Partner shall not
thereby cease to be a partner of the Partnership or a Partner associated with such Series, and (B)
any such assignee, pledgee or secured party shall have only the rights accorded to an assignee of
the economic rights assigned thereby, and shall not be entitled to be admitted to the Partnership
as a Partner in such Series, except as set forth in Section 3.04; and
(ii) any Class B Limited Partner who is an individual may transfer (a “Transferring Partner”)
all or any portion of his or her interest in distributions from the Partnership with respect to any
Series (any such interest in distributions being referred to herein as a “Class B Distributions
Interest") to a Family Member of such Limited Partner, to a
21
charitable organization, or to a trust
or other entity whose sole and exclusive beneficiaries, partners or shareholders, as applicable,
are such Transferring Partner and/or one or more Family Members of such Transferring Partner and/or
a charitable organization (with such transferee becoming either an assignee or a substitute Class B
Limited Partner in such Series), but only to the extent (A) such transferee shall agree in writing,
as a condition of such transfer, to be bound by the terms of this Agreement and such Series as a
Class B Limited Partner of such Series, (B) such transferee shall execute a Guarantee, (C) the
General Partner consents to such transfer, which consent may be withheld by the General Partner in
its sole and absolute discretion, (D)
such Transferring Partner shall execute a guarantee, in form and substance satisfactory to the
General Partner in its sole and absolute discretion, pursuant to which such Transferring Partner
shall guarantee the performance of such transferee’s obligations under this Agreement; and (E) if
such transferee is a corporation, partnership or other entity, such transferee shall agree in
writing not to permit transfers of its stock, partnership interests or other equity interests, as
applicable, to Persons other than such Transferring Partner and/or Family Members of such
Transferring Partner; notwithstanding any transfer of a Partnership Interest by a Class B Limited
Partner, (x) unless any such transferee is admitted as a substitute Class B Limited Partner
associated with the applicable Series of Partnership Interests transferred in the sole and absolute
discretion of the General Partner, the transfer shall consist only of a Class B Distributions
Interest, and such transferee shall have only the rights accorded to an assignee of the economic
rights assigned thereby and shall not otherwise have any rights under this Agreement or governing
law afforded a Class B Limited Partner, including, without limitation, any rights under Section
7.01, (y) in the case of any such transfer of a Class B Distributions Interest, the Partnership
shall be entitled to continue to make all distributions attributable to such Class B Distributions
Interest to the Transferring Partner (and the transferee shall be required to look solely to the
Transferring Partner to obtain any such distributions and none of the Partnership, the General
Partner or any other Indemnified Party shall have any liability to the transferee for making any
such distributions to the Transferring Partner as contemplated by this clause (y)), and (z) the
forfeiture provisions of Section 10.03 and any other provision in this Agreement that reference the
Transferring Partner’s services shall continue to apply to the transferred interest as if the
interest was not transferred and was still held by the original Class B Limited Partner; and
(iii) the Nominee is authorized but not required to transfer to the annual Equity Pool at or
before the end of each calendar year the portion of the Partnership Interest held by the Nominee in
respect of Investments acquired during such calendar year; and
(iv) the General Partner may, without the consent of any Limited Partner, transfer all or any
portion of its interest as general partner of the Partnership to one of its Affiliates. In the
event of a transfer of all of its interest as a general partner of the Partnership in accordance
with this clause (iv), upon execution of a counterpart to this Agreement, its assignee or
transferee shall be substituted in its place and admitted as general partner of the Partnership
effective immediately prior to such transfer and immediately thereafter the General Partner shall
withdraw as a general partner of the Partnership and cease to be a general partner of the
Partnership.
(c) The Partnership may not recognize for any purpose any purported Disposition of all or part
of a Partnership Interest in any Series unless and until the other applicable provisions of this
Section 3.05 have been satisfied and the Partnership has received a transfer document (i)
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executed by the Partner effecting the Disposition (or if the transfer is on account of the death or
incapacity of the transferor, its personal representative) and the transferee, (ii) if the
transferee is to be admitted to the Partnership as a Partner of such Series, including the notice
address of the Person to be so admitted and its agreement to be bound by this Agreement and the
terms of such Series in respect of the Partnership Interest or part thereof being obtained, (iii)
if the Disposition involves a Partnership Interest in Profits Interest Distributable Proceeds,
setting forth the Sharing Ratios for each Investment of such Series after the Disposition of the
Partner effecting the Disposition and the Person to which the Partnership Interest or part thereof
is Disposed and, if the Disposition involves a Partnership Interest in Capital Investment Distributable Proceeds,
setting forth the Partnership Interest in Capital Investment Distributable Proceeds for each
Investment after the Disposition of the Partner effecting the Disposition and the Person to which
the Partnership Interest or part thereof is Disposed (which, in each case, together must total the
Sharing Ratio and Partnership Interest in Capital Investment Distributable Proceeds for each
Investment of the Partner effecting the Disposition before the Disposition), and (iv) containing a
representation and warranty by each of the Transferring Partner and the transferee that the
Disposition was made in accordance with all laws and regulations (including securities laws)
applicable to it. Each Disposition of a Partnership Interest and, if applicable, admission
complying with the provisions of this Section 3.05(c) is effective as of the first day of the
calendar month immediately succeeding the month in which the requirements of this Section 3.05 have
been met.
(d) For the right of a Partner to Dispose of a Partnership Interest in any Series or any part
thereof or a Class A Distributions Interest or a Class B Distributions Interest, or of any Person
to be admitted to the Partnership in connection therewith, to exist or be exercised (if
applicable), the Partnership Interest or part thereof or Class A Distributions Interest or a Class
B Distributions Interest subject to the Disposition or admission must be registered under
applicable securities laws or the Partnership must receive a favorable opinion of the Partnership’s
legal counsel or of other legal counsel acceptable to the General Partner to the effect that the
Disposition or admission is exempt from registration under those laws. The General Partner may
waive the requirements of this Section 3.05(d).
(e) The Partner effecting a Disposition of a Partnership Interest and any Person admitted to
the Partnership in connection with that Disposition shall, as a condition to the effectiveness of
such Disposition and admission pay, or reimburse the Partnership for, all costs incurred by the
Partnership in connection with the Disposition or admission (including, without limitation, the
legal fees incurred in connection with the legal opinions referred to in Section 3.05(d)), and the
General Partner may also impose a reasonable fee on such Partner for administrative expenses
incurred on account of a Disposition arising from a divorce or separation (including reasonable
charges for in-house legal counsel and related personnel), on or before the 10th Business Day after
the receipt by that Person of the Partnership’s invoice for the amount due. At the election of the
General Partner, any subsequent costs or expenses or other obligations incurred by the Partnership
as the result of any Disposition by any Partner may be charged to such Partner.
(f) Any Class B Limited Partner who makes a transfer in accordance with the provisions of this
Section 3.05 and who is a Key Participant may designate at the time of transfer that the transfer
includes a portion of his or her Minimum Percentage, in which case (i) the
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transferee’s Minimum
Percentage may not be decreased except as provided in the definition of “Minimum Percentage” in
Section 1.01 (read as if the transferor were still the Key Participant with respect to the
transferred interest) and (ii) the transferee’s Sharing Ratio with respect to an Investment shall
not be less than the transferee’s Minimum Percentage in effect as of the date the Fund Entities
acquire such Investment except as provided in Section 3.03(b) (read as if the transferor were still
the Key Participant with respect to the transferred interest, except that the transferee rather
than the transferor would have to agree if the Sharing Ratio is to be less than the Minimum
Percentage by agreement as provided therein). The provisions of this Section 3.05(f)
shall survive any Disposing Partner’s ceasing to be a partner of the Partnership or as a
Partner associated with any particular Series.
3.06 Interests in a Partner. Notwithstanding the foregoing, without the prior express written
consent of the General Partner which may be withheld in the sole and absolute discretion of the
General Partner, no Partner shall Dispose of all or any part of its Partnership Interest in any
Series in such a manner that, after the Disposition, (i) the Partnership would be considered to
have terminated within the meaning of Section 708 of the Code, (ii) the Partnership would become an
association taxable as a corporation for federal income tax purposes or (iii) the Partnership or
any Fund Entity would be subject to the registration requirements of the Investment Company Act of
1940, (the “1940 Act”) as amended, as reasonably determined by the General Partner.
ARTICLE IV.
CAPITAL CONTRIBUTIONS
CAPITAL CONTRIBUTIONS
4.01 Initial Contributions. Each Partner shall, contemporaneously with the execution hereof
and/or at the time of the admission of such Partner to the Partnership associated with any Series,
make the Capital Contribution with respect to such Series, if any, set forth opposite such
Partner’s respective name in such Partner’s Investment Sharing Ratio Letter for each Investment in
such Series (the “Initial Capital Contribution") or as otherwise maintained in records kept in the
offices of the Partnership and communicated to such Partner. Except as otherwise provided in
Section 4.02, Section 4.03 and Section 4.04, no Partner shall be required to make any additional
Capital Contribution to the Partnership with respect to any Series. No Partner shall have any
obligation to restore any negative balance in such Partner’s Capital Account upon dissolution of
the Partnership or termination of any Series.
4.02 Additional Capital Contributions. With respect to each Series to the extent that (i)
capital contributions are required to be made by the Partnership pursuant to the Fund Agreements
for the purpose of enabling the Fund Entities related to such Series to acquire Investments and
(ii) the General Partner determines in its sole and absolute discretion that the Partnership should
make such capital contributions to the Fund Entities, then the General Partner shall, in its sole
and absolute discretion, make, or provide for the making of, all additional Capital Contributions
(“Additional Capital Contributions") to the Partnership that are necessary for the Partnership to
make its capital contributions to the Fund Entities with respect to such Series. The General
Partner, in its capacity as general partner of the Partnership, is authorized in its sole and
absolute discretion to invite any one or more other Limited Partners to participate in the making
of such Additional Capital Contributions with respect to a particular Series; and the Limited
Partners acknowledge and agree that the General Partner in no event shall be required to
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extend any
such invitation to all Limited Partners, and, for the avoidance of doubt, no Limited Partner so
invited shall, unless otherwise agreed by such Limited Partner, be obligated to make any Additional
Capital Contributions pursuant to this Section 4.02 without such Limited Partner’s consent.
4.03 Clawback Contributions(a) . (a) Each Partner acknowledges that in the event the
Partnership is required to return or recontribute to the Main Fund or any other Fund Entity a
portion or all of the amounts representing Profits Interest Proceeds that were previously
distributed by the Fund Entities (the “Clawback Amount"), each Partner unconditionally and
irrevocably agrees, on a several (but not joint and several) basis, to make a Capital Contribution
(or return or recontribute prior distributions) to the Series of Partnership Interests with respect
to such Fund Entity in an amount equal to such Partner’s pro rata share, based on its respective
Distribution Ratios for such Fund Entity, of the Clawback Amount (net of any prior fundings to the
Partnership from such Partner to pay such amount). The Partnership (at its own expense) shall use
its reasonable efforts to collect any amounts from any such direct and indirect owner or former
owner of the Partnership that initially fails to meet the foregoing obligation. None of the
Partners shall have any obligation to pay the amounts owed under this Section 4.03 by any other
Partner. A Partner’s contribution obligation under this Section 4.03(a) shall be reduced by its
share of the amount, if any, that is considered to have been paid to the Fund Entities on behalf of
such Partner pursuant to Section 5.03(f) hereof, as applicable. For the avoidance of doubt, a
Partner’s pro rata share of any Capital Contribution required to be made by the Partnership in
respect of a Clawback Amount or a True-Up Contribution Amount shall not be reduced to the extent
Carlyle advances funds or makes a payment that reduces (or otherwise foregoes any other economic
benefit that has the effect of reducing) the amount that would otherwise be required to be made by
the Partnership in respect of such Clawback Amount and/or True-Up Contribution Amount, except to
the extent such amounts were indirectly borne by such Partner.
(b) The capital contribution (or return or recontribution) obligations provided in this
Section 4.03 shall, to the fullest extent permitted by law, be binding upon each of the Partners
and former Partners and shall, to the fullest extent permitted by law, remain in full force and
effect irrespective of, and shall not be terminated by, the existence of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting the terms of such capital
contribution obligation. The liability of each of the Partners under this Section 4.03 shall, to
the fullest extent permitted by law, be absolute, unconditional and irrevocable irrespective of:
(i) any change, whether or not agreed to by such Partner, in the time, manner or place of any
payment or performance of the obligation to pay its pro rata share of the Clawback Amount, or in
any other term of this Agreement, the Fund Agreements or any other amendment, renewal, extension,
acceleration, compromise or waiver of or any consent or departure from the terms of the Clawback
Amount, this Agreement or the Fund Agreements;
(ii) the lack of power or authority of such Partner to execute and deliver this Agreement, the
Partnership to execute and deliver any Fund Agreement; any defense which may at any time be
available to, or asserted by, the Partnership against the Fund Entities under the Fund Agreements
or by the Partners against the Partnership; the existence or continuance of the Partnership as a
legal entity; or the bankruptcy or insolvency of the Partnership, the admission in writing by the
Partnership of its inability to pay its debts as they mature, or its making of a
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general assignment for the benefit of, or entering into a composition or arrangement with creditors;
(iii) any act, failure to act, delay or omission whatsoever on the part of the Partnership,
any failure to give to the Partnership notice of default in the making of any payment due and
payable under the Clawback Amount or notice of any failure on the part of the Partnership to do any
act or thing or to observe or perform any covenant, condition or agreement by it to be observed or
performed under the Fund Agreements or this Agreement, respectively; or
(iv) any other event or circumstance which might otherwise constitute a defense available to,
or a discharge of the Partners in respect of, the Clawback Amount (other than an express discharge
or release by the consent of
[ ] in interest of the Fund Entity Limited Partners), it being
the purpose and intent of this Section 4.03 that the obligations of each Partner hereunder shall be
absolute, unconditional and irrevocable and shall not be discharged or terminated except by payment
by such Partner of his, her or its obligations as set forth in this Section 4.03.
(c) Each of the Partners, to the fullest extent he, she or it may legally do so, waives notice
of acceptance of the obligations provided for in this Section 4.03 and of the Clawback Amount and
also waives promptness, diligence, presentment, demand of payment, notice of default, dishonor,
non-payment, non-performance or any other notice to or upon the Partnership or to such Partner.
(d) Each of the Partners, to the fullest extent he, she or it may legally do so, waives any
right now or hereafter existing requiring the Fund Entities, or any Limited Partner, as a condition
to proceeding against such Partner hereunder, to proceed against the Partnership or any other
Person, or pursue any other remedy in the Fund Entity’s or such Limited Partner’s power.
(e) Each of the Partners, to the fullest extent he, she or it may legally do so, waives the
benefit of any statute of limitations affecting the liability of such Partner under this Section
4.03 or the enforcement hereof as amended or recodified from time to time, and agrees that any
payment or performance of the Clawback Amount or other act which tolls any statute of limitations
applicable thereto shall similarly operate to toll such statute of limitations applicable to any
liability of such Partner hereunder.
(f) Each of the Partners, to the fullest extent he, she or it may legally do so, waives all
rights and benefits under any applicable law (to the extent applicable to such Partner hereunder)
requiring the beneficiaries of the provisions of this Section 4.03 to pursue the Partnership or any
other Person or remedy or exhaust any security before proceeding against such Partner.
(g) If the General Partner or any Limited Partner is required to pursue any remedy against a
Partner under this Section 4.03, such Partner shall pay to the Partnership or such Limited Partner,
as applicable, upon demand, all reasonable attorney’s fees and expenses and all other costs and
expenses incurred by such party in enforcing this Section 4.03 against such Partner.
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(h) Each Class B Limited Partner (other than the Nominee) shall, contemporaneously with the
execution hereof and/or at the time of the admission of such Limited Partner (i) execute and
deliver to the General Partner the guarantee, a form of which is attached hereto as Exhibit A
(the “Guarantee”) as the same may hereinafter be amended or modified from time to time and
(ii) cause each Person to which it distributes Profits Interest Distributable Proceeds to execute
and deliver to the General Partner the Guarantee, as the same may hereinafter be amended or
modified from time to time; provided that the individual Person that received a Sharing
Ratio in respect of the Profits Interest Distributable Proceeds payable to such ultimate recipient
may execute a Guarantee in lieu of such ultimate recipient and provided, further
that no Feeder Fund shall be required to execute a Guarantee so long as each Feeder Fund Investor
thereof (other than the Nominee) executes a Guarantee. Each such Limited Partner further
acknowledges and agrees that in the event such Limited Partner fails for any reason to execute and
deliver the Guarantee or any amendments thereto, the General Partner shall be authorized to execute
the Guarantee or such amendment thereto on behalf of such Limited Partner pursuant to the power of
attorney granted to the General Partner in Section 6.10. Notwithstanding anything to the contrary
set forth in this Agreement, to the extent any Limited Partner returns its pro rata share of the
Clawback Amount in full to the Fund Entities pursuant to the Guarantee, such Limited Partner shall
not be required to make any Capital Contributions to the Partnership in respect of the Clawback
Amount pursuant to this Section 4.03.
4.04 True-Up Contributions. Without limitation of the obligation of any Partner to make a
Capital Contribution (or return or recontribute prior distributions) pursuant to Section 4.03, at
the time of liquidation of a Fund Entity or Fund Entities that correspond to one or more Series,
each Partner shall be unconditionally obligated to make a Capital Contribution (or return prior
distributions) to the Partnership in an amount equal to such Partner’s True-Up Contribution Amount
for such Series. Each Partner shall contribute his, her or its True-Up Contribution Amount to the
Partnership no later than thirty days after the General Partner delivers written notice to the
Partners setting forth the Partners’ respective True-Up Contribution Amounts. The Partnership
shall promptly distribute the aggregate True-Up Contribution Amounts to the Partners in the ratio
of the Partners’ respective True-Up Distribution Amounts. Notwithstanding anything to the contrary
in this Agreement, the General Partner may require a Partner to contribute all or a portion of a
then existing True-Up Contribution Amount with respect to such Partner at any time in advance of
the liquidation of a Fund Entity, and in calculating the amount of such True-Up Contribution Amount
(and related True-Up Distribution Amounts) the General Partner in its sole and absolute discretion
may include such Partner’s share of any potential Clawback Amount as estimated in good faith by the
General Partner at such time and may make such other adjustments to such Partner’s True-Up
Contribution Amount (and related True-Up Distribution Amounts) as the General Partner determines in
good faith are necessary to implement the intent of the economic provisions of this Agreement with
respect to the allocation and distribution of Profits Interest Distributable Proceeds.
4.05 Failure to Contribute. If a Partner does not contribute by the time required the Capital
Contribution (or return of prior distributions) that Partner (the “Delinquent Partner") is required
to make as provided in Sections 4.01, 4.02, 4.03 and 4.04, then the General Partner (if not a
Delinquent Partner) acting alone, or, if the General Partner is a Delinquent Partner, the Class A
Limited Partners of the applicable Series in respect of which such default occurred other
27
than any Delinquent Partner (“Non-Delinquent Partners"), acting unanimously and jointly as a group, may
exercise any of the following remedies:
(a) take such action as the General Partner or Non-Delinquent Partners may deem appropriate to
obtain specific performance by the Delinquent Partner of its obligation to make that portion of the
Delinquent Partner’s Capital Contribution that is in default, together with interest thereon at the
Default Interest Rate from the date that such Capital Contribution was due until the date that it
is made, all at the cost and expense of the Delinquent Partner.
(b) deliver to the Partnership in respect of such Series all or any portion of the Delinquent
Partner’s Capital Contribution that is in default, in proportion to the General Partner’s and/or
the Non-Delinquent Partners’ respective Sharing Ratios for the Investment in respect of which such
Capital Contribution was to be made or in such other ratio as they may agree, with the following
results:
(i) the sum delivered constitutes a loan from the General Partner and/or the Non-Delinquent
Partners, in proportion to such Partners’ respective Sharing Ratios for the Investment in respect
of which such Capital Contribution was to be made or in such other ratio as they may agree, to the
Delinquent Partner;
(ii) the principal balance of the loan and all accrued unpaid interest thereon is due and
payable on the 10th Business Day after written demand therefor by the General Partner and/or the
Non-Delinquent Partners to the Delinquent Partner;
(iii) the unpaid principal balance of the loan bears interest at the Default Interest Rate
from the date that the advance is made until the date that the loan, together with all interest
accrued on it, is repaid to the General Partner and/or Non-Delinquent Partners, as applicable; and
(iv) all distributions from the Partnership that would otherwise be made to the Delinquent
Partner (whether before or after dissolution of the Partnership) instead shall be paid to the
General Partner and/or the Non-Delinquent Partners, as applicable, in proportion to their
respective Sharing Ratios for the Investment for which such Capital Contribution was to be made or
in such other ratio as they may agree, for credit against the unpaid balance of the loan, until the
loan and all interest accrued thereon shall have been paid in full (with payments being applied
first to accrued and unpaid interest and then to principal), together with all other costs and
expenses incurred by the Partnership in enforcing against such Delinquent Partner the obligation to
pay such amounts (“Enforcement Expenses”).
(c) set-off as appropriate from any payment hereunder or any amounts otherwise payable to such
Delinquent Partner by the Partnership or any of its Affiliates (including, without limitation,
distributions of Capital Investment Distributable Proceeds, Profits Interest Distributable
Proceeds, other amounts payable to such Delinquent Partner from any other partnership or other
entity of which such Delinquent Partner is a partner, member or stockholder and which is an
Affiliate of the Partnership, and, to the extent permitted by applicable law, employee
compensation) and apply such set-off amounts against such Partner’s obligation to
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make such Capital Contribution, any interest thereon accruing at the Default Interest Rate
pursuant to Section 4.05(b) and any Enforcement Expenses.
(d) For purposes of this Section 4.05, if any Delinquent Partner is a Feeder Fund, the General
Partner shall treat the Feeder Fund Investor that was responsible for such default as the
Delinquent Partner and shall invoke the rights, powers and remedies specified herein separately
with respect to such Feeder Fund Investor.
4.06 Return of Contributions. Except as expressly provided herein, in the Act or other
applicable law, a Partner is not entitled to the return of any part of its Capital Contributions in
respect of any Series or to be paid interest in respect of either its capital account or its
Capital Contributions related thereto. An unrepaid Capital Contribution is not a liability of the
Partnership, any Series 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 the other
Partner’s Capital Contributions.
4.07 Advances by Partners. If the Partnership or any Series does not have sufficient cash to
pay its obligations, the General Partner or any of its Affiliates may (but shall have no obligation
to) advance all or part of the needed funds to or on behalf of the Partnership or such Series,
which advance shall constitute a loan from the General Partner or such Affiliate to the Partnership
or such Series, shall bear interest at the General Interest Rate from the date of the advance until
the date of payment, and shall not be a Capital Contribution. Any such advance made by the General
Partner or such Affiliate shall be repaid by the Partnership or such Series, as applicable, prior
to any distributions under Section 5.02.
4.08 Capital Accounts. Solely for U.S. federal income tax purposes, the Partnership shall
establish and maintain for each Partner owning a Partnership Interest in a particular Series a
separate Capital Account (each, a “Capital Account”). Each Capital Contribution, if any, shall be
credited to the Capital Account of such Partner on the date such contribution of capital is paid to
the Partnership. In addition, each Partner’s Capital Account shall be (a) credited with (i) such
Partner’s allocable share of any Net Income of the Partnership related to a particular Series, and
(ii) the amount of any Partnership liabilities related to a particular Series that are assumed by
the Partner or secured by any Partnership property distributed to the Partner, (b) debited with (i)
distributions to such Partner related to a particular Series of cash or the fair market value of
other property, (ii) such Partner’s allocable share of Net Loss of the Partnership and expenditures
of the Partner described or treated under Section 704(b) of the Code as described in Section
705(a)(2)(B) of the Code, and (iii) the amount of any liabilities of the Partner assumed by the
Partnership related to a particular Series or which are secured by any property contributed by the
Partner to the Partnership and (c) otherwise maintained in accordance with the provisions of the
Code. Any other item which is required to be reflected in a Partner’s Capital Account under
Section 704(b) of the Code or otherwise under this Agreement shall be so reflected in a manner
determined appropriate by the General Partner in its sole and absolute discretion. Capital
Accounts shall be appropriately adjusted to reflect transfers of part (but not all) of a
Partner’s Partnership Interest. Interest shall not be payable on Capital Account balances.
Notwithstanding anything to the contrary contained in this Agreement, the General Partner shall
maintain the Capital Accounts of the Partners in accordance with the principles and requirements
set forth in Section 704(b) of the Code.
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4.09 Fund-Level Holdback. To the extent amounts held in escrow by the Fund Entities are used
to pay investors in the Fund Entity (rather than distributed to the Partnership), the Partnership
shall be deemed to have made a capital contribution to the Fund Entities, but such deemed capital
contribution by the Partnership shall not be accompanied by a deemed capital contribution by the
Partners to the Partnership (because amounts held in escrow by the Fund Entities and deemed
distributed to the Partnership are not deemed under this Agreement to be distributed to the
Partners).
ARTICLE V.
ALLOCATIONS AND DISTRIBUTIONS
ALLOCATIONS AND DISTRIBUTIONS
5.01 Allocations for Capital Account Purposes.
(a) Net Income (Loss) of the Partnership for any fiscal period of the Partnership shall be
allocated among the Capital Accounts of the Partners in a manner that as closely as possible gives
economic effect to the provisions of Sections 5.02 and 11.02 and other relevant provisions hereof.
(b) All items of income, gain, loss, deduction and credit of the Partnership shall be
allocated among the Partners for U.S. federal, state and local income tax purposes consistent with
the manner that the corresponding constituent items of Net Income (Loss) shall be allocated among
the Partners pursuant to this Agreement, except as may otherwise be provided herein or by the Code.
Notwithstanding the foregoing, the General Partner in its sole and absolute discretion shall make
such allocations for tax purposes as may be needed to ensure that allocations are in accordance
with the interests of the Partners in the Partnership, within the meaning of the Code and the
Treasury Regulations. The General Partner shall determine all matters concerning allocations for
U.S. tax purposes not expressly provided for herein in its sole and absolute discretion.
5.02 Distributions. (a) After satisfaction (whether by payment or reasonable provision for
payment) of all fees and expenses of the Partnership (including, without limitation, all debt
service payments, if any) in respect of a particular Series, the Partnership shall periodically
distribute cash or other property to the Partners of such Series in accordance with this Section
5.02, with the timing and amount of each such distribution to be determined by the General Partner.
Any distribution of property other than cash may be made subject to existing liabilities and
obligations of such Series to the extent approved by the General Partner and all distributions
(whether of cash or other property) to the Partners of any Series shall be subject to the
recontribution obligations specified in Sections 4.03 and 4.04. Distributions will be made to the
Partners in the same manner and kind as distributions are made to the Partnership by the Fund
Entity. Except as provided in Sections 5.03 and 11.02, all distributions by the Partnership with
respect to each Series shall be made as follows:
(i) Capital Investment Distributable Proceeds. Capital Investment Distributable Proceeds for
each Investment within a given Series received by the Partnership from a Fund Entity shall be
distributed to the Partners in proportion to their respective Capital Contributions made for the
Investment generating such Capital Investment Distributable Proceeds, and
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(ii) Profits Interest Distributable Proceeds. Profits Interest Distributable Proceeds for
each Investment within a given Series received by the Partnership from a Fund Entity shall be
distributed to the Partners (other than Class C Limited Partners) holding a Partnership Interest in
such Series as follows:
(A) Proportional Distributions. If the PIP Ratio for each Investment in such
Series equals the RIG Ratio for such Investment, Profits Interest Distributable Proceeds for
each Investment in such Series shall be distributed to the Partners in proportion to their
Sharing Ratios for such Investment (subject to Sections 5.02(c) and 5.03).
(B) Apportionment Among Investments. If the PIP Ratio for each Investment in
such Series does not equal the RIG Ratio for each such Investment then:
(I) Investment Tracking Account. A tracking account shall be established
pursuant to which the cumulative amount of all Profits Interest Distributable Proceeds for
all Investments in such Series shall be apportioned among all Investments in such Series in
proportion to the respective Investment Gains for each Investment in such Series. The
amount so apportioned to each Investment in such Series in such tracking account may be
greater than or less than the amount of Profits Interest Distributable Proceeds actually
generated from such Investment, but, following such apportionment, the PIP Ratio for each
Investment (computed using such re-apportioned amounts) shall equal the RIG Ratio for each
such Investment. For the avoidance of doubt, at such time as an Investment becomes a
Realized Investment, the amount of Investment Gains allocated to the tracking account in
respect of such Realized Investment shall not duplicate any Investment Gains previously
allocated to the tracking account in respect of such Investment.
(II) Allocation to Partners. The amounts apportioned to each Investment in
such Series pursuant to Section 5.02(a)(ii)(B)(I) shall be allocated to a tracking account
for each Partner (including, for the avoidance of doubt, each Feeder Fund Investor) holding
a Partnership Interest in such Series in proportion to such Partner’s Sharing Ratio for each
such Investment in such Series. A Partner’s tracking account for each Investment initially
will equal the amount of Profits Interest Distributable Proceeds (i.e., the cash and the
fair market value of other property) distributed (or deemed distributed) to such Partner with respect to that Investment.
Upon an apportionment pursuant to Section 5.02(a)(ii)(B)(I), the allocation to the tracking
account for a particular Investment that represents an increase or a decrease compared to
the amount of cash (or property) of Profits Interest Distributable Proceeds previously
distributed (or deemed distributed) with respect to such Investment will be allocated in
accordance with each Partner’s Sharing Ratio with respect to such Investment in effect on
the date of the transaction that the General Partner determines to be the primary reason for
the adjustment (e.g., the date of sale of another Investment).
(III) Actual Distribution. Profits Interest Distributable Proceeds for the
Investment in such Series which is the subject of the distribution shall then be distributed
to the Partners associated with such Series (subject to Sections 5.02(c) and 5.03) in the
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ratio necessary to cause the cumulative amount of Profits Interest Distributable Proceeds in
respect of such Series actually distributed (and deemed distributed) to each Partner since
the creation of such Series to equal as nearly as possible the total amount allocated to
each such Partner holding a Partnership Interest in such Series pursuant to Section
5.02(a)(ii)(B)(II).
(C) Notwithstanding any provision to the contrary contained in this Agreement, the
Partnership, and the General Partner on behalf of the Partnership, shall not make a
distribution to any Partner on account of its interest in the Partnership or in any Series
if such distribution would violate the Act or other applicable law.
(iii) Proceeds from Temporary Investments. Each distribution of proceeds from Temporary
Investments shall be divided among all Partners (including the General Partner) pro rata in
proportion to their respective proportionate interests in the Partnership property or funds that
produced such proceeds, as determined by the General Partner in its sole and absolute discretion.
(b) To the extent the General Partner reasonably determines that the Partnership is required
by law to withhold or to make tax payments on behalf of or with respect to any Partner (“Tax
Advances”), the General Partner may withhold such amounts and make such tax payments as so
required. All Tax Advances made on behalf of a Partner shall, at the option of the General
Partner, (i) be promptly paid to the Partnership by the Partner on whose behalf such Tax Advances
were made or (ii) be repaid by reducing the amount of the current or next succeeding distribution
or distributions which would otherwise have been made to such Partner or, if such distributions are
not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to
such Partner. Whenever the General Partner selects option (ii) pursuant to the preceding sentence
for repayment of a Tax Advance by a Partner, for all other purposes of this Agreement such Partner
shall be treated as having received all distributions (whether before or upon liquidation)
unreduced by the amount of such Tax Advance. To the fullest extent permitted by law, each Partner
hereby agrees to indemnify and hold harmless the Partnership and the other Partners from and
against any liability (including, without limitation, any liability for taxes, penalties, additions
to tax, interest or failure to withhold taxes) with respect to income attributable to or
distributions or other payments to such Partner.
(c) Holdbacks. Notwithstanding the foregoing, each Limited Partner hereby authorizes
the Partnership and the General Partner to withhold amounts otherwise payable to such Limited
Partner, to the extent the General Partner in its sole and absolute discretion determines that such
withholding is warranted to secure, fund, satisfy, defease or create reserves for any outstanding
obligation of such Limited Partner to the General Partner or its Affiliates. Any amount withheld
pursuant to this Section 5.02(c) shall immediately be paid to the General Partner or Affiliate to
which such obligation is owed. Any amount withheld pursuant to this Section 5.02(c) shall be
deemed distributed pursuant to all other provisions of this Agreement (and shall remain subject to
the clawback provisions of Section 4.03).
5.03 Class B Escrow Account. (a) The Partnership is authorized to establish an escrow
account for the Class B Limited Partners (the “Class B Escrow Account”) for each Series of
Partnership Interests:
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(i) The Partnership will establish a Class B Escrow Account with a sub-account for each Class
B Limited Partner of such Series (including, without limitation, each Feeder Fund Investor) with
respect to whom a Termination Date has occurred. Upon receipt of any Profits Interest Proceeds
from the Fund Entities relating to a particular Series with respect to a particular Investment in
such Series, the Partnership shall deposit into that Series’ Class B Escrow Account for each Class
B Limited Partner holding a Partnership Interest in such Series with respect to whom a Termination
Date has occurred an amount necessary to cause the cumulative amount deposited in the sub-account
of each such Class B Limited Partner in respect of such Series since the creation of such Series to
equal such Class B Limited Partner’s share of any potential Clawback Amount and/or True-Up
Contributions Amount (such amount to be determined by the General Partner in its sole and absolute
discretion) (the “Potential Clawback”).
(ii) The Partnership will establish a Class B Escrow Account for each Series of Partnership
Interests with a sub-account for each Class B Limited Partner of such Series (including, without
limitation, each Feeder Fund Investor) with respect to whom no Termination Date has occurred. Upon
receipt of any Profits Interest Proceeds with respect to a particular Investment, the Partnership
shall deposit into the Class B Escrow Account for each Class B Limited Partner holding a
Partnership Interest in such Series with respect to whom no Termination Date has occurred an amount
that the General Partner determines in its sole and absolute discretion is necessary or advisable
as a reserve against any Potential Clawback (which amount may be less than the amount placed in any
Class B Escrow Account for a Class B Limited Partner with respect to whom a Termination Date has
occurred) and/or True-Up Contribution Amount that may be required from such Class B Limited Partner
(for the avoidance of doubt, in determining such amount, the General Partner, in its sole and
absolute discretion, may take into account interests such Limited Partner owns in Affiliates of
Carlyle and other factors it determines relevant).
(b) Each Class B Limited Partner hereby authorizes the Partnership and the General Partner
(and its shareholders) to cause each of their Affiliates (including,
without limitation, Carlyle Investment Management L.L.C. and its Affiliates and The Carlyle Group Employee Co., L.L.C.) to withhold amounts from any
source payable to such Class B Limited Partner (including, without limitation,
coinvestment proceeds, bonuses and any other payment or distribution), to the extent the
General Partner in its sole and absolute discretion determines that such withholding is warranted
to secure, fund, satisfy or defease or create reserves for such Class B Limited Partner’s share of
the Potential Clawback, Clawback Amounts or True-Up Contributions Amounts for any Series.
(c) All amounts held in a Class B Escrow Account shall be invested in Temporary Investments.
(d) Subject to Section 5.03(e) and (f), amounts held in a Series’ Class B Escrow Account shall
remain in such Class B Escrow Account and may not be withdrawn by the Class B Limited Partners of
such Series; provided, however, that the General Partner in its sole and absolute
discretion may cause the Partnership at any time to distribute to such Class B Limited Partners, in
proportion to their respective interests in such Class B Escrow Account, all or any portion of the
investment earnings that have accrued on the amounts held in such Class B Escrow Account.
33
(e) The General Partner is authorized to release all or any portion of amounts in any Series’
Class B Escrow Account at any time to the extent it determines in its sole and absolute discretion
that such amounts will not be required to be (i) recontributed to the Fund Entities related to such
Series or (ii) used for to satisfy a True-Up Contribution Amount (for the avoidance of doubt, in
determining such amount, the General Partner, in its sole and absolute discretion, may take into
account interests such Limited Partner owns in Affiliates of Carlyle and other factors it
determines relevant); provided, however, that each Class B Limited Partner
receiving any such distribution shall be unconditionally obligated to repay to the Partnership
immediately upon request of the General Partner all amounts that have been released from the Class
B Escrow Accounts and distributed to such Class B Limited Partner to the extent provided in Section
4.03.
(f) The amount, if any, that a Class B Limited Partner of a particular Series is obligated to
contribute to the Partnership with respect to such Series pursuant to Section 4.03 shall be paid
first from such Partner’s sub-account in such Series’ Class B Escrow Account and, to that extent,
such Class B Limited Partner’s obligation under Section 4.03 shall be considered to have been
satisfied (however, such Limited Partner shall still be liable for amounts owing in excess of such
escrowed amount).
(g) Any amount remaining in a Series’ Class B Escrow Account after the recontribution of any
Clawback Amount by the Partnership in respect of such Series shall, subject to Section 4.04, be
promptly paid to the Class B Limited Partners of such Series (unless withheld by the General
Partner pursuant to Section 5.02(c)) in the ratio necessary to cause the cumulative amount of all
actual distributions in respect of such Series pursuant to Section 5.02 since the inception of the
Partnership plus all payments pursuant to this Section 5.03(g) to each Class B Limited Partner of
such Series to equal as nearly as possible the total amount allocated to such Class B Limited
Partner’s tracking account pursuant to Section 5.02(a)(ii)(B)(II).
(h) For purposes of calculating distributions and maintaining Capital Accounts, amounts placed
in a Series’ Class B Escrow Account in respect of a Class B Limited Partner of that Series will be
deemed distributed to such Class B Limited Partner, and amounts required to
be paid from such Class B Limited Partner’s sub-account in such Class B Escrow Account to the
Fund Entities shall be deemed a Capital Contribution by such Class B Limited Partner to the
Partnership. Accordingly, any investment earnings on funds held in the Class B Escrow Accounts
shall be deemed to be earned directly by the Class B Limited Partners of such Series in proportion
to the respective balances in their Class B Escrow Account sub-accounts relating to such Series (or
such investment earnings shall otherwise be allocated exclusively to such Class B Limited Partners
in such proportion).
ARTICLE VI.
MANAGEMENT AND OPERATIONS
OF THE PARTNERSHIP
MANAGEMENT AND OPERATIONS
OF THE PARTNERSHIP
6.01 Management Generally. (a) To the fullest extent permitted by law and except for
situations in which, or actions as to which, this Agreement specifically reserves to an individual
Partner of any Series or to the Partners of any Series the authority to act or to grant or withhold
their consent or approval of an action, the General Partner shall have full, complete,
34
and exclusive authority to manage and control the business, affairs, and properties of the Partnership
and of each Series, to make all decisions regarding the same and to perform any and all other acts
or activities customary or incident to the management of the Partnership’s and each Series’
business. The General Partner shall have the power and authority to appoint sub-managers or
custodians with respect to the Partnership’s and each Series’ business and assets upon such terms
and with such duties and responsibilities as the General Partner deems to be appropriate. Unless
expressly authorized to do so by the provisions hereof, no Partner may claim or exercise any
authority to act on behalf of the Partnership or any Series or to enter on behalf of the
Partnership or any Series into any contract or agreement.
(b) Subject to Section 6.01(c), the Limited Partners shall have no part in the management of,
or the conduct of the business of, the Partnership or any Series (unless expressly authorized to do
so by the provisions hereof) and shall have no authority or right to act on behalf of the
Partnership or any Series in connection with any matter or with any third party. Unless expressly
authorized to do so by the provisions hereof or by action of the General Partner, no Partner may
claim or exercise any authority to act on behalf of the Partnership or any Series or to enter on
behalf of the Partnership or any Series into any contract or agreement.
(c) Notwithstanding any other provision of this Agreement, the Special Limited Partner shall
be allowed to manage the affairs of the Partnership and each Series to the same extent that the
General Partner is authorized to manage the affairs of the Partnership, but only jointly with the
General Partner (notwithstanding the single authority given to the General Partner in the
succeeding proviso); provided that the General Partner shall have single authority to manage the
affairs of the Partnership and provided further that the Special Limited Partner shall have no
authority to bind the Partnership or any Series with respect to any third party and shall not hold
itself out to third parties as being able to bind the Partnership or any Series. For the avoidance
of doubt, as far as the authority to bind the Partnership and each Series is concerned, the Special
Limited Partner shall have no authority with respect to the exercise by the Partnership or any
Series, on behalf of itself or any other entity for which the Partnership serves
as a general partner, of any voting power with respect to voting stock or voting securities held,
directly or indirectly, by the Partnership or any Series or any other entity for which the
Partnership or any Series serves as a general partner. The Special Limited Partner shall act in
conformity with this Agreement and with the instructions and directions of the General Partner, and
in no event shall the Special Limited Partner be considered a general partner of the Partnership by
agreement, estoppel, as a result of the performance of its duties or otherwise.
6.02 Authority of the General Partner. The General Partner shall have the power, right and
authority on behalf and in the name of the Partnership and any Series to carry out any and all of
the objectives and purposes of the Partnership and to perform all acts which the General Partner,
in its sole and absolute discretion, may deem necessary or desirable, including, without
limitation, the power to:
(a) enter into, and take any action under or interpret and construe, any contract, agreement
or other instrument (including, without limitation, this Agreement) as the General Partner shall
determine to be necessary or desirable to further the purposes of the Partnership;
35
(b) open, maintain and close bank accounts and draw checks or other orders for the payment of
moneys;
(c) collect all sums due to the Partnership or any Series and contest and exercise the
Partnership’s right to collect all such sums;
(d) to the extent that funds of the Partnership or any Series are available therefor, pay as
they become due all debts, obligations and operating expenses of the Partnership or such Series;
(e) acquire, hold, manage, own, sell, transfer, convey, assign, exchange or otherwise dispose
of any assets of the Partnership or any Series for purposes of the Partnership or such Series only;
(f) borrow money or otherwise commit the credit of the Partnership or any Series, the making
of voluntary prepayments or extensions of debt and securing debt of the Partnership or any Series
with assets of the Partnership or such Series for purposes of the Partnership or such Series only;
provided that to the extent such borrowings relate to specific assets of the Partnership or
any Series and are made on a recourse basis or a security interest is granted in respect thereof,
such recourse or security may be granted only on the assets of the Partnership or any Series in
respect of which such borrowings were made;
(g) employ, compensate and dismiss from employment any and all employees, attorneys,
accountants, consultants, appraisers or custodians of the assets of the Partnership or any Series
or other agents, on such terms and for such compensation as the General Partner may determine;
(h) obtain insurance for the Partnership relating to the indemnification referred to in
Section 6.08 hereof;
(i) admit additional Partners as provided herein;
(j) determine distributions of cash and other property as provided in Section 5.02;
(k) dissolve and wind up the Partnership or terminate and wind up each Series as provided in
Article XI;
(l) bring and defend actions and proceedings at law or equity and before any governmental,
administrative or other regulatory agency, body or commission;
(m) make all elections, investigations, evaluations and decisions, binding the Partnership or
any Series thereby, that may in the sole judgment of the General Partner be necessary or desirable
for the acquisition, management or disposition of assets, including, without limitation, the
exercise of rights to elect to adjust the tax basis of Partnership or any Series assets;
36
(n) incur expenses and other obligations on behalf of the Partnership or any Series in
accordance with this Agreement, and, to the extent that funds of the Partnership or any Series are
available for such purpose, pay all such expenses and obligations;
(o) act for and on behalf of the Partnership and each Series in all matters incidental to the
foregoing, including, without limitation, the taking of all actions for which any power of attorney
is granted in Section 6.10; and
(p) consult with and seek the advice of one or more of the Limited Partners.
6.03 Transactions with Affiliates. To the extent permitted by applicable law, the General
Partner, whether acting for itself or on behalf of the Partnership or any Series, is hereby
authorized to purchase property from, sell property to, or otherwise deal with any Affiliate of the
General Partner, any Limited Partner, or any Affiliate of any such Persons; provided that
any such dealing (i) shall be made on a basis believed by the General Partner in good faith to be
arm’s length if made on behalf of the Partnership or any Series and (ii) shall otherwise not be in
violation of this Agreement. Neither the Partnership nor any Series nor any Partner shall have any
rights in or to any income or profits received by the General Partner or any of its Affiliates in
any transaction permitted under this Section 6.03.
6.04 Expenses. The Partnership with respect to each Series shall reimburse the General
Partner for all out-of-pocket expenses incurred by the General Partner in connection with the
preparation of this Agreement, any amendments hereto and the organization and operation of the
Partnership and any Series. The General Partner may allocate such expenses and any other Operating
Expenses among each Series in its sole and absolute discretion.
6.05 Advances by the General Partner. The General Partner (or its Affiliate) may, but shall not be obligated to, advance its own
funds to the Partnership or any Series in the circumstances where the Partnership may borrow
pursuant to Section 6.02(f). If the General Partner (or its Affiliate) advances funds to the
Partnership or any Series, the General Partner (or its Affiliate) shall be repaid, together with
interest at a rate per annum equal to the General Interest Rate, as promptly as practicable out of
funds of the Partnership or any Series determined by the General Partner, in its sole and absolute
discretion, to be available for such purpose.
6.06 Duty of Care; Other Activities.
(a) Notwithstanding any duty otherwise existing at law or equity or otherwise, and except as
otherwise provided in this Agreement, including where a matter is stated to be within the General
Partner’s sole discretion or sole and absolute discretion, the General Partner shall act in good
faith in activities relating to the conduct of the business of the Partnership and each Series and
in resolving conflicts of interest; provided, however, the General Partner, its
shareholders and their respective shareholders, members, partners, directors, officers, senior
advisors and employees shall have no liability to the Partnership or the applicable Series, any
Series or to any other Partner except for acts of fraud, gross negligence or willful misconduct.
In addition, they shall not be liable to the Partnership or to any other Partner for honest
mistakes of judgment, for actions taken in the good faith belief that the actions promoted the
interests of the Partnership, or for losses due to such mistakes or for the negligence (whether of
omission or
37
commission), dishonesty or bad faith of any employee, broker or other agent of the
Partnership or a Series (but only if such employee, broker or other agent is not affiliated with
the General Partner and is selected by the General Partner without gross negligence). The General
Partner and the owners, employees and agents of the General Partner shall be fully protected and
justified with respect to any action or omission taken or suffered by any of them if such action or
omission is taken or suffered in good faith reliance upon and in accordance with the opinion or
advice as to matters of law of legal counsel, or as to matters of accounting of accountants,
selected by any of them without gross negligence.
(b) The General Partner, any of its Affiliates and any officer or employee of any such Person
shall be required to devote only such time to the affairs of the Partnership and each Series as the
General Partner determines in its sole and absolute discretion may be necessary to manage and
operate the Partnership to promote the interests of the Partnership and each Series and the
Partners, and each such Person, to the extent not otherwise directed by the General Partner, shall
be free to serve any other Person or enterprise in any capacity that it may deem appropriate in its
sole and absolute discretion.
(c) To the extent that, at law or in equity or otherwise, the General Partner or other
Indemnified Party has duties (including fiduciary duties) and liabilities relating thereto to the
Partnership, each Series or to another Partner, and to the maximum extent permitted by law, the
General Partner or other Indemnified Party acting under this Agreement shall not be liable to the
Partnership, any Series or to any such other Partner for its good faith reliance on the provisions
of this Agreement. The provisions of this Agreement, to the extent that they restrict or eliminate
the duties and liabilities of the General Partner or other Indemnified Party otherwise existing at
law or in equity or otherwise, are agreed by the Partners to restrict or eliminate such other
duties and liabilities of the General Partner or other Indemnified Party.
6.07 Reliance by Third Parties. Persons dealing with the Partnership are entitled to rely
conclusively upon the power and authority of the General Partner as herein set forth.
6.08 Indemnification. (b) To the fullest extent permitted by law, the Partnership shall
indemnify the General Partner, its shareholders and their respective shareholders, members,
partners, directors, officers, senior advisors and employees (each, an “Indemnified Party”) and
hold them harmless from and against all losses, costs, liabilities, damages, settlements and
expenses (including amounts paid in satisfaction of judgments, in compromises and settlements, as
fines and penalties and legal or other costs and reasonable expenses of investigating or defending
against any claim or alleged claim) (together, “Losses") that are incurred by any Indemnified Party
and arise out of or in connection with the affairs of the Partnership or any Series or the Fund
Entities, including acting as a director or the equivalent of any entity in which an Investment is
made, or the performance by such Indemnified Party of any of the General Partner’s responsibilities
hereunder or otherwise in connection with the matters contemplated herein; provided that
such indemnity shall not apply to actions by an Indemnified Party constituting fraud, gross
negligence or willful misconduct.
(a) Expenses reasonably incurred by an Indemnified Party in defense or settlement of any claim
that may be subject to a right of indemnification hereunder shall be advanced by the Partnership
prior to the final disposition thereof upon receipt of an undertaking by or on behalf of
38
the Indemnified Party to repay such amount to the extent that it shall be determined ultimately that
such Indemnified Party is not entitled to be indemnified hereunder. No advances shall be made by
the Partnership under this Section 6.08(b) without the prior written approval of the General
Partner.
(b) The right of any Indemnified Party to the indemnification provided herein shall be
cumulative of, and in addition to, any and all rights to which such Indemnified Party may otherwise
be entitled by contract or as a matter of law or equity or otherwise and shall extend to such
Indemnified Party’s successors, assigns and legal representatives.
(c) The satisfaction of any indemnification and any saving harmless pursuant to this Section
6.08 shall be from and limited to Partnership assets; provided that to the extent that such
Losses are attributable to, or incurred in connection with, a particular Investment or Series of
Partnership Interests, such indemnity shall be provided by, and the costs and expenses thereof
shall be borne by, holders of Partnership Interests of the relevant Investment or Series, as
applicable, in proportion to their respective Capital Contributions for such Investment or Series
(if related to Capital Interest Distributable Proceeds) or as apportioned by the General Partner
(if related to Profits Interest Distributable Proceeds), as applicable; and provided,
further, that each Partner will be obligated to return any amounts distributed with respect
to a specified Series or Investment, as applicable, to it in order to fund any deficiency in the Partnership’s
indemnity obligations hereunder for such Series or Investment to the extent provided in Section
7.05.
6.09 Officers. The General Partner may, from time to time, designate one or more Persons to
be Officers of the Partnership with respect to any Series, with such titles as the General Partner
may assign to such Persons. Officers so designated shall have such authority and perform such
duties as the General Partner may, from time to time, delegate to them. Any number of offices may
be held by the same Person. The salaries or other compensation, if any, of the Officers and agents
of the Partnership with respect to any Series shall be fixed from time to time by the General
Partner. Any Officer may resign as such at any time. Such resignation shall be made in writing
and shall take effect at the time specified therein, or if no time be specified, at the time of its
receipt by the General Partner. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation. Any Officer may be removed as such,
either with or without cause, by the General Partner whenever in its judgment the best interests of
the Partnership with respect to any Series will be served thereby. Designation of an Officer shall
not of itself create any contractual rights. Any vacancy occurring in any office of the
Partnership may be filled by the General Partner.
6.10 Power of Attorney. Each Limited Partner hereby appoints the General Partner, with full
power of substitution, as its true and lawful attorney-in-fact for the purpose of executing,
swearing to, acknowledging and delivering all certificates, documents and other instruments
(including the Guarantee as provided in Section 4.03(h)) as may be necessary, appropriate or
advisable in the judgment of the General Partner, in furtherance of the business of the Partnership
or any Series, or complying with applicable law (including, without limitation, any regulatory
statutes and regulations). Such power shall be irrevocable and is coupled with an interest, and
shall survive and not be affected by the subsequent disability or incapacity of such Partner (or if
such Partner is a corporation, partnership, trust, association, limited liability company or other
legal entity, by the dissolution or termination thereof). Each Partner agrees
39
that it shall not revoke the above power of attorney. Upon request by the General Partner, each other Partner shall
confirm its grant of such power of attorney or any use thereof by the General Partner or shall
execute, swear to, acknowledge and deliver any such certificate, document or other instrument.
ARTICLE VII.
RIGHTS OF PARTNERS
RIGHTS OF PARTNERS
7.01 Access to Information. Each Limited Partner shall have access to all information to
which a Partner is entitled to have access pursuant to the Act; provided, however,
that a Class B Limited Partner’s and Class C Limited Partner’s right to information regarding
Investments in any Series shall be limited exclusively to information regarding Investments in any
Series for which such Class B Limited Partner or such Class C Limited Partner has a Sharing Ratio
or has made a Capital Contribution. Notwithstanding any other provision of this Agreement, the
General Partner may, to the maximum extent permitted by applicable law, keep confidential from each Class B Limited
Partner and Class C Limited Partner any information the disclosure of which the General Partner
believes in good faith is not in the best interest of the Partnership with respect to any Series or
is adverse to the interests of the Partnership with respect to any Series or which the Partnership
or the General Partner is required by law or by an agreement with any Person to keep confidential,
including without limitation, the Sharing Ratios and Capital Contributions of other Partners.
7.02 Confidentiality. (a) Unless the General Partner agrees otherwise, each Limited Partner
shall, to the fullest extent permitted by law, hold in strict confidence any information it
receives regarding the Partnership, any Series, the Fund Entities, any Investment, the General
Partner, any other Partner or their respective Affiliates, whether such information is received
from the Partnership, its Affiliates, the other Partners or their respective Affiliates or another
Person (collectively “Confidential Information”); provided, however, that such
restrictions shall not apply to (a) information that is or becomes available to the public
generally without breach of this Section 7.02; (b) disclosures required to be made by applicable
laws and regulations or stock exchange requirements or requirements of a self-regulatory
organization; (c) disclosures required to be made pursuant to an order, subpoena or legal process;
(d) disclosures to officers, directors or Affiliates of such Limited Partner (and the officers and
directors of such Affiliates), and to auditors, counsel and other professional advisors to such
Persons or the Partnership (generally or with respect to any Series) (provided,
however, that such Persons have been informed of the confidential nature of the
information, and, in any event, the Limited Partner disclosing such information shall be liable for
any failure by such Persons to abide by the provisions of this Section 7.02); or (e) disclosures in
connection with any litigation or dispute among the Partners and/or the Partnership;
provided, further, that any disclosure pursuant to clauses (b), (c), (d) or (e) of
this sentence shall be made only subject to such procedures as the Limited Partner making such
disclosure determines in good faith are reasonable and appropriate in the circumstances, taking
into account the need to maintain the confidentiality of such information and the availability, if
any, of procedures under laws, regulations, subpoenas or other legal process. Each Limited Partner
shall, to the fullest extent possible, notify the General Partner immediately upon becoming aware
of any order, subpoena or other legal process providing for the disclosure or production of
information subject to the provisions of the immediately preceding sentence and, to the extent not
prohibited by applicable law, immediately shall supply the General Partner
40
with a copy of any such order, subpoena or other legal process. In addition, each Limited Partner shall, to the fullest
extent possible, notify the General Partner prior to disclosing or producing any information
subject to the provisions of the two immediately preceding sentences and, to the extent not
prohibited by applicable law, shall permit the General Partner to seek a protective order
protecting the confidentiality of such information. The obligations of a Limited Partner pursuant
to this Section 7.02 shall continue following the time such Person ceases to be a Limited Partner.
Each Limited Partner acknowledges that disclosure of information in violation of the provisions of
this Section 7.02 may cause irreparable injury to the Partnership and the Partners for which
monetary damages are inadequate, difficult to compute, or both. Accordingly, each Limited Partner
agrees that its obligations under this Section 7.02 may be enforced by specific performance and
that breaches or prospective breaches of this Section 7.02 may be enjoined. Each Class B Limited
Partner further acknowledges that its Partnership Interest
shall be forfeited to the Partnership, in the event of a breach of this Section 7.02 by such
Class B Limited Partner.
(b) Notwithstanding the provisions of Section 7.02(a), the General Partner agrees that each
Feeder Fund may provide each Feeder Fund Investor thereof with any Confidential Information
received by such Feeder Fund; provided that each such Feeder Fund Investor has agreed
contractually to maintain the confidentiality of such information on substantively similar terms as
provided for in this Agreement.
7.03 Non-Disparagement. Each Partner agrees that, in communications with Persons other than
the Partners and the Partnership (and their respective Affiliates, employees, members and partners
or employees of Affiliates of Partners or the Partnership), it shall not disparage in any way, and
shall always speak well of, the Partnership, the Fund Entities and each other Partner (and their
respective Affiliates and their respective members, shareholders, directors, employees and
partners). Under no circumstances shall any Partner, in communications with Persons other than the
Partners and the Partnership (and their Affiliates, employees, members and partners), criticize or
disparage any business practice, policy, statement, valuation or report that is made, conducted or
published by the Partnership, the Fund Entities or any other Partner (and their respective
Affiliates and their respective members, shareholders, directors, employees and partners).
Notwithstanding the foregoing, this Section 7.03 shall not be construed to (a) prohibit or restrain
any criticism or other statements made in communications exclusively between or among any of the
Partners, the Partnership, their Affiliates, members, partners or their respective employees, to
the extent such communications or statements are made in the ordinary course of business of Carlyle
or (b) prohibit any Person from making truthful statements when required by order of a court or
other body having jurisdiction, or as otherwise may be required by law or legal process. The
obligations of each Partner under this Section 7.03 shall continue after the date such Person
ceases to be a Partner. Each Partner acknowledges that any violation of this Section 7.03 may
cause irreparable injury to the Partners and the Partnership for which monetary damages are
inadequate and difficult to compute. Accordingly, this Section 7.03 may be enforced by specific
performance, and prospective breaches of this Section 7.03 may be enjoined. Each Class B Limited
Partner further acknowledges that its Partnership Interest shall be forfeited to the Partnership in
the event of a breach of this Section 7.03 by such Class B Limited Partner.
41
7.04 Non-Solicitation/Non-Interference. Each Limited Partner agrees that, for a period of six
months after the last day on which such Limited Partner is employed by The Carlyle Group or any of
its Affiliates, such Limited Partner will not, directly or indirectly, without the prior written
consent of the General Partner: (i) participate in any capacity, including as an investor or an
advisor, in any transaction that, as of the date of termination of such employment, the Fund
Entities, the Partnership or any of their Affiliates was actively considering investing in or
offering to invest in and known to such Limited Partner; (ii) solicit, contact or identify
investors in the Fund Entities or any affiliated investment partnership or fund (to the extent the
Limited Partner knows that such Person is an investor, directly or indirectly, in such partnership
or fund) on behalf of any Person; or (iii) induce or seek to induce any current employee of any Fund Entity, Carlyle or its
Affiliates to become employed by such Limited Partner or any Person employing such Limited Partner.
The parties acknowledge and agree that the restrictions set forth in this Section 7.04 are
believed by the parties to be reasonable and necessitated by legitimate business needs. In the
event that any court or tribunal of competent jurisdiction shall determine this Section 7.04 to be
unenforceable or invalid for any reason, the parties agree that this Section 7.04 shall be
interpreted to extend only over the maximum period of time for which it may be enforceable, and/or
over the maximum geographical area as to which it may be enforceable, and/or to the maximum extent
in any and all respects as to which it may be enforceable, all as determined by such court or
tribunal. The parties further agree that the Partnership and each Limited Partner will be entitled
(without posting bond or security) to injunctive or other equitable relief, as deemed appropriate
by any such court or tribunal, to prevent a breach of a Limited Partner’s obligations set forth in
this Section 7.04. Each Class B Limited Partner further acknowledges that its Partnership Interest
shall be forfeited to the Partnership in the event of a breach of this Section 7.04 by such Class B
Limited Partner.
7.05 Liability to Third Parties. Subject to the Act, no Limited Partner shall have any
personal liability for any obligations or liabilities of the Partnership or any Series, whether
such obligations or liabilities arise in contract, tort or otherwise, except as provided for in
this Agreement and except to the extent that any such obligations or liabilities are expressly
assumed in writing by such Limited Partner; provided that, to the maximum extent permitted
by law and subject to limitations set forth below, each Partner (including any former Partner) in
respect of an Investment may be required to return distributions made to such Partner or former
Partner with respect to such Investment for the purpose of meeting such Partner’s share of the
Partnership’s indemnity obligations with respect to such Investment under Section 6.08 or indemnity
obligations with respect to such Investment owed by the Partnership pursuant to the Fund
Agreements, in an amount up to, but in no event in excess of, the aggregate amount of distributions
actually received by such Partner from the Partnership or any Alternative Investment Vehicle, in
all cases, with respect to the relevant Investment. To the extent such indemnity obligations are
attributable to, or incurred in connection with, a particular Investment, such indemnity shall be
provided by, and the costs and expenses thereof shall be borne by, holders of Partnership Interests
of the relevant Investments in proportion to their respective Capital Contributions for such
Investment (if the indemnity relates to Capital Interest Distributable Proceeds) or in a proportion
determined by the General Partner (if the indemnity relates to Profits Interest Distributable
Proceeds). The General Partner will adjust the amount of Investment Gains and Profits Interest
Distributable Proceeds to reflect return of distributions of Profits Interest Distributable
Proceeds made pursuant to this Section 7.05. However, if, notwithstanding the terms of this
Agreement, it is determined under applicable law that any
42
Partner has received a distribution that is required to be returned to or for the account of the Partnership or any other Partner or
creditors of the Partnership, then the obligation under applicable law of any Partner to return all
or any part of a distribution made to such Partner shall be the obligation of such Partner and not
of any other Partner. Nothing in this Section 7.05 (or any other provision of this Agreement)
shall be construed as an agreement by the Partnership to indemnify or hold harmless any Limited
Partner in its capacity as such.
ARTICLE VIII.
TAXES
TAXES
8.01 Federal Income Tax. The General Partner, in its sole and absolute discretion, may elect
to treat each Series of Partnership Interests as a separate partnership for United States federal
income tax purposes, and to the extent permitted by applicable law, (i) for state and local
franchise and income tax purposes and (ii) for all non-U.S. income tax purposes. In such event,
the provisions of this Agreement shall be deemed to apply separately to each Series and shall be
interpreted accordingly to the extent the General Partner determines is necessary or appropriate.
8.02 Tax Returns. The General Partner shall cause to be prepared and filed all necessary U.S.
federal and state income tax returns for each Series of Partnership Interests, including making the
elections described in Section 8.03. Each other Partner shall furnish to the General 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. The General Partner shall
use its commercially reasonable efforts to prepare all federal and state tax returns on a timely
basis taking into account all available extensions.
8.03 Tax Elections. The General Partner shall determine the appropriate treatment of each
item of income, gain, loss, deduction and credit of the Partnership and the accounting methods and
conventions under the tax laws of the United States and other relevant jurisdictions as to the
treatment of any such item or any other method or procedure related to the preparation of such tax
returns. In addition, the General Partner shall determine whether to make or refrain from making
the election provided for in Section 754 of the Code, and any and all other elections permitted by
the tax laws of the United States, the several states and other relevant jurisdictions, in its sole
and absolute discretion. The “tax matters partner” for purposes of Section 6231(a)(7) of the Code
shall be the General Partner. The General Partner shall have all of the rights, duties, powers and
obligations provided for in Sections 6221 through 6232 of the Code with respect to the Partnership.
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 and local franchise
and income tax purposes. Neither the Partnership nor any Partner shall make an election for the
Partnership or a Series to be treated as a corporation for U.S. federal income tax purposes.
ARTICLE IX.
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
9.01 Maintenance of Books. The books of account for the Partnership that are required by the
Act shall be maintained at the principal office of the Partnership or such other place as the
General Partner may deem appropriate, and shall be maintained on an accrual basis
43
in accordance with the terms of this Agreement, except that the capital accounts of the Partners shall be maintained in
accordance with Section 4.08. The calendar year shall be the accounting year of the Partnership.
Each Partner agrees that it will take no position on its individual tax returns inconsistent with
the positions taken on the Partnership’s tax returns. Each Partner hereby waives any rights it may
have pursuant to the Code or otherwise to participate in any tax matters or controversies with
respect to the Partnership or any Series.
9.02 Bank Accounts. The General Partner shall cause the Partnership to establish and maintain
one or more separate bank and investment accounts for the funds of each Series of Partnership
Interests in the Partnership’s name (with appropriate designations for each such Series) with such
financial institutions and firms as the General Partner may select and designate signatories
thereon.
ARTICLE X.
WITHDRAWAL, EXPULSION,
BANKRUPTCY, ETC.
WITHDRAWAL, EXPULSION,
BANKRUPTCY, ETC.
10.01 Withdrawal. No Partner shall resign or withdraw from the Partnership or any Series with
respect to a Series without the consent of the General Partner and otherwise shall have no right or
power to resign or withdraw from the Partnership or any Series.
10.02 Bankrupt Partners. This Section 10.02 shall apply if any Partner in a particular Series
(including any Feeder Fund Investor) becomes a Bankrupt Partner. In such event, the General
Partner and Class A Limited Partners of such Series that are not Bankrupt Partners (the “Purchasing
Partners"), acting unanimously and jointly as a group shall have the option (but not the
obligation), exercisable by notice to the Bankrupt Partner (or its representative) at any time
prior to the 90th day after receipt of notice or obtaining actual knowledge of the occurrence of
the event causing such Partner to become a Bankrupt Partner, to buy or cause their designee to buy,
and on the exercise of this option the Bankrupt Partner (or its representative) shall sell, its
Partnership Interest in such Series (and in the case of a Feeder Fund Investor the relevant Feeder
Fund shall sell such portion of its Partnership Interest as is allocable to the Feeder Fund
Investor). The purchase shall be made by the Purchasing Partners in proportion to their respective
Sharing Ratios in the corresponding Series at the relevant time or in such other ratio as they may
agree (taking into account such Bankrupt Partner’s Potential Clawback). The purchase price shall
be an amount equal to the fair market value of the Partnership Interest in such Series determined
by agreement by the Bankrupt Partner (or its representative) and the Purchasing Partners;
provided that if those Persons do not agree on the fair market value on or before the 30th
day following the exercise of the option, such fair market value shall be determined by an
independent appraiser mutually satisfactory to the Bankrupt Partner and the Purchasing Partners.
The Purchasing Partners shall pay the fair market value as so determined in four equal cash
installments, the first due on closing and the remainder (together with accumulated interest on
the amount unpaid at the General Interest Rate) due on each of the first three anniversaries
of the closing. The payment to be made to the Bankrupt Partner or its representative under this
Section 10.02 shall be in complete liquidation and satisfaction of all the rights and interest of
the Bankrupt Partner and its representative (and of all Persons claiming by, through, or under the
Bankrupt Partner and its representative) in and in respect of the Series of Partnership Interests
held by such Partner in the Partnership, including, without limitation, any rights in specific
44
property of such Series, and any rights against the Partnership or any Series and (insofar as the
affairs of the Partnership or any Series are concerned) against the Partners of such Series or any
other Series. The Purchasing Partners shall assume such Bankrupt Partner’s Potential Clawback.
10.03 Forfeiture of Class B Limited Partner Interests. (c) Reduction of Class B Limited
Partner Sharing Ratio. Except as provided in Section 10.03(b) or 10.03(d), if a Class B Limited
Partner (other than the Equity Pools and the Nominee) (or, in the case of a Class B Limited Partner
that is not a natural person, the natural person associated with such Class B Limited Partner) of a
particular Series ceases to be a service provider for the Partnership, any of its Affiliates or
Carlyle for any reason (including death or Disability) on any date (the “Termination Date"), as
determined by the General Partner in its sole and absolute discretion, such Class B Limited
Partner’s Sharing Ratio for each Investment of such Series acquired by such Fund Entities before
such Termination Date shall be reduced as of the Termination Date as follows:
(i) if the Termination Date occurs on or after the date (the “Seventh Anniversary Date”) that
is seven years after the Initial Vesting Date, the Sharing Ratio of such Class B Limited Partner
for such Investment shall equal 100% of the Sharing Ratio of such Class B Limited Partner for such
Investment immediately prior to the Termination Date;
(ii) If the Termination Date occurs on or after the date (the “Third Anniversary Date”) that
is three years after the Initial Vesting Date, but before the Seventh Anniversary Date, the Sharing
Ratio of such Class B Limited Partner for such Investment shall equal 80.0% of the Sharing Ratio of
such Class B Limited Partner for such Investment immediately prior to the Termination Date;
(iii) If the Termination Date occurs on or after the date (the “Second Anniversary Date”) that
is two years after the Initial Vesting Date, but before the Third Anniversary Date, the Sharing
Ratio of such Class B Limited Partner for such Investment shall equal 60.0% of the Sharing Ratio of
such Class B Limited Partner for such Investment immediately prior to the Termination Date;
(iv) If the Termination Date occurs on or after the date (the “First Anniversary Date”) that
is one year after the Initial Vesting Date, but before the Second Anniversary Date, the Sharing
Ratio of such Class B Limited Partner for such Investment shall equal 40.0% of the Sharing Ratio of
such Class B Limited Partner for such Investment immediately prior to the Termination Date;
(v) If the Termination Date occurs on or after the date (the “Initial Vesting Date”) that is
the last day of the calendar year in which the Partnership with respect to such
Series acquired the Investment (for the avoidance of doubt, the date an Investment was
“acquired” shall mean the date on which the Fund Entities closed on the Investment as determined by
the General Partner in its sole and absolute discretion), but before the First Anniversary Date,
the Sharing Ratio of such Class B Limited Partner for such Investment shall equal 20.0% of the
Sharing Ratio of such Class B Limited Partner for such Investment immediately prior to the
Termination Date; and
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(vi) If the Termination Date occurs before the Initial Vesting Date for an Investment of
such Series, the Sharing Ratio of such Class B Limited Partner for such Investment shall equal 0%.
(b) Prospective Application. Any reduction of a Sharing Ratio for any Investment of such
Series pursuant to this Section 10.03 shall apply only prospectively from the date of the
reduction, and no such reduction shall diminish a Class B Limited Partner’s entitlement to prior
distributions that have actually been made (or deemed to have been made by the Partnership) before
the Termination Date.
(c) No Interest in Subsequent Investments. A Class B Limited Partner’s Sharing Ratio shall be
0% with respect to Investments of such Series acquired by the related Fund Entities after a
Termination Date with respect to such Class B Limited Partner.
(d) Penalty for Cause. If the Class B Limited Partner (or, in the case of a Class B Limited
Partner that is not a natural person, the natural person associated with such Class B Limited
Partner) (i) ceases to be a service provider with respect to a particular Series by the Fund
Entities because such Class B Limited Partner (or such natural person) is relieved from such duties
for Cause by any Class A Limited Partner of that Series, the General Partner or their Affiliates or
Carlyle or (ii) the General Partner determines at any time (including a determination made
following the termination of such Class B Limited Partner’s services to Carlyle) that such Class B
Limited Partner committed any act or engaged in any conduct constituting Cause during the term of
such Class B Limited Partner’s services to Carlyle, such Class B Limited Partner’s Sharing Ratio
for all Investments in that Series shall be reduced to 0%. For purposes of this Section 10.03,
“Cause” shall exist if a Class B Limited Partner (or such natural person) has (A) engaged in gross
negligence or willful misconduct in the performance of his duties with respect to any Investment of
such Series (or the Partnership’s or the related Fund Entities’ interests therein) or any of the
activities of the Partnership or the related Fund Entities, (B) materially failed or refused to
perform those duties, (C) willfully engaged in conduct that he knows or, based on facts known to
him, should know is materially injurious to any Investment of such Series, the Partnership, the
Series, the Class A Limited Partners of that Series, the General Partner or their Affiliates or
Carlyle, (D) materially breached any material provision of this Agreement, (E) been convicted of,
or entered a plea bargain or settlement admitting guilt for, any felony or misdemeanor involving
moral turpitude or any other felony under the laws of the United States or of any state thereof; or
(F) been the subject of any order, judicial or administrative, obtained or issued by the Securities
and Exchange Commission (“SEC”), for any alleged securities violation, including, for example, any
such order consented to by such Class B Limited Partner (or such natural person) in which findings
of facts or any legal conclusions establishing liability are neither admitted nor denied or (G)
committed any act or engaged in any conduct constituting “Cause” under any Fund Agreement.
(e) Recomputation of Sharing Ratios. In the event of a reduction in the Sharing Ratio of a
Class B Limited Partner in a particular Series pursuant to Section 10.03(a), the Sharing Ratio of
the Class A Limited Partners (other than the Equity Pools and the Nominee) in that Series for each
applicable Investment of that Series shall be increased in proportion to their respective Sharing
Ratios to reflect the amount of any such reduction in the Sharing Ratio of such Class B Limited
Partner.
46
(f) For the avoidance of doubt, in the event a Feeder Fund Investor ceases to be a service
provider to the Partnership, any of its Affiliates or Carlyle for any reason (including death or
disability), the provisions of this Section 10.03 shall apply with respect to such Feeder Fund
Investor’s indirect interest in the Partnership.
10.04 Termination of Employment and Similar Arrangements. Each Class B Limited Partner and Class C
Limited Partner acknowledges and agrees that this Agreement, and the legal relationships created
hereby, shall not prevent the termination of any employment contract or similar arrangement between
such Class B Limited Partner or Class C Limited Partner and any Fund Entity, the General Partner,
any Affiliate thereof or Carlyle. Each Class B Limited Partner and Class C Limited Partner agrees
that the termination by any Fund Entity, the General Partner, or any Affiliate thereof of an
employment or independent contractor relationship with such Class B Limited Partner or Class C
Limited Partner for any reason at any time shall not be construed for any purpose to violate any
duty or obligation of the General Partner or the Class A Limited Partners under this Agreement or
any fiduciary duty of the General Partner.
ARTICLE XI.
DISSOLUTION, LIQUIDATION, AND TERMINATION
DISSOLUTION, LIQUIDATION, AND TERMINATION
11.01 Dissolution and Termination. (a) The termination of a Series shall not, in and of itself,
cause the dissolution of the Partnership or cause the termination of any other Series. The
termination of a Series shall not affect the limitation on liabilities of such Series or of any
other Series of the Partnership. A Series shall terminate and its affairs shall be wound up upon
the dissolution of the Partnership under Section 11.01(b) or the first to occur of any of the
following:
(i) the written consent of the General Partner and the Class A Limited Partners
associated with such Series;
(ii) the occurrence of an event of withdrawal (as defined in the Act) of the General
Partner associated with such Series; provided, such Series shall not be terminated and
required to be wound up in connection with any of the events specified in this clause (ii)
if (1) at the time of the occurrence of such event there is at least one remaining general
partner associated with such Series who is hereby authorized to and shall carry on the
business of such Series, or (2) if at such time there is no remaining General Partner
associated with such Series, within 120 days after such event of withdrawal, the Class A
Limited Partners associated with such Series agree in writing or vote to continue the
business of such Series and to appoint, effective as the day of such withdrawal, one or more
additional General Partners associated with such Series, or (3) the Series is otherwise
continued without termination in a manner permitted by the Act or this Agreement; or
(iii) the termination of such Series under Section 17-218(m) of the Act.
(b) Except as provided in Section 11.03, the Partnership shall dissolve and its affairs shall
be wound up upon the first to occur of any of the following:
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(i) the written consent of the General Partner and all of the Class A Limited Partners
following the dissolution, liquidation and winding up of all of the Fund Entities;
(ii) at any time that there are no limited partners of the Partnership, unless the
Partnership is continued without dissolution in accordance with the Act;
(iii) the occurrence of any other event requiring or resulting in dissolution of the
Partnership under the Act or applicable law; provided, however, that, the
Partnership shall not be dissolved or required to be wound up by the resignation, removal,
death, incompetence, bankruptcy (as defined in Sections 17-402(a)(4) and (5) of the Act),
insolvency, dissolution, liquidation, winding-up or receivership of the General Partner if a
Majority in Interest of the Limited Partners agree in writing to continue the business of
the Partnership within 90 days of the occurrence of any such event causing such dissolution,
and, if necessary, appointing a new general partner of the Partnership effective as of the
occurrence of such event; or
(iv) the entry of a decree of judicial dissolution under Section 17-802 of the Act.
11.02 Liquidation and Termination. On dissolution of the Partnership or termination of any Series,
the General Partner shall act as liquidator of the assets of the Partnership and each Series (in
the case of a dissolution of the Partnership and the termination of all Series) or the Series
terminated (in the case of the termination of a particular Series), or may appoint one or more
other Persons as liquidator(s); provided that a Majority in Interest of each Series (in the
case of a dissolution of the Partnership and the termination of all Series) or a Majority in
Interest of the applicable Series (in the case of the termination of such Series) shall select the
liquidator if the General Partner is a Bankrupt Partner, has become insolvent, or otherwise has
dissolved or withdrawn from the Partnership. The liquidator shall proceed diligently to wind up the
affairs of the Partnership (or the Series terminated) and make final distributions as provided
herein. The costs of the liquidation of each Series shall be borne as an Operating Expense
allocable to that Series. Until final distribution, the liquidator shall continue to operate the
properties of the Partnership and each Series with all of the power and authority of the General
Partner. The steps to be accomplished by the liquidator in liquidating the assets of the
Partnership or any Series are as follows:
(a) the liquidator shall pay from the funds of the Partnership or of such Series to be
liquidated all of the debts and liabilities of the Partnership or of such Series (including,
without limitation, all expenses incurred in liquidation and any advances described in Section
6.05) or otherwise make adequate provision therefor (including, without limitation, the
establishment of a reserve for contingent, conditional or unmatured liabilities in such amount and
for such term as the liquidator may reasonably determine); and
(b) all remaining assets of the Partnership or each Series to be liquidated shall be
distributed to the Partners of the Partnership or that Series as follows:
(i) the liquidator may sell any or all of the property of the Partnership or such Series,
including to Partners of the Partnership or of that Series, and any resulting gain or loss
48
from
each sale shall be computed and allocated to the Capital Accounts of the Partnership or that
Series;
(ii) with respect to all property of the Partnership or such Series that has not been sold,
the fair market value of that property shall be determined and the Capital Accounts of the Partners
the Partnership or of that Series shall be adjusted to reflect the manner in which the unrealized
income, gain, loss and deduction inherent in property that has not been reflected in the Capital
Accounts the Partnership or associated with such Series previously would be allocated among the
Partners of the Partnership or that Series if there were a taxable disposition of that property for
the fair market value of that property on the date of distribution; and
(iii) the remaining assets of the Partnership or such Series shall be distributed in
accordance with Section 5.02.
To the fullest extent permitted by law, all distributions of property to the Partners of the
Partnership generally or any Series shall be made subject to the liability of each distributee for
its allocable share of costs, expenses and liabilities related to such property theretofore
incurred or for which the Partnership, or the Partnership in respect of such Series, has committed
prior to the date of termination of such Series, and those costs, expenses and liabilities shall be
allocated to the distributee pursuant to this Section 11.02. The distribution of cash and/or
property to a Partner in a particular Series in accordance with the provisions of this Section
11.02 constitutes a complete return to such Partner of its Capital Contributions in respect of such
Series and a complete distribution to such Partner of its Partnership Interest in such Series and
all the Partnership’s property constituting such Series.
11.03 Withdrawal of a Limited Partner. The death, retirement, bankruptcy, insolvency, removal or
expulsion of any Limited Partner shall not cause, in and of itself, the Partnership dissolve or any
Series to terminate.
11.04 Cancellation of Filing. Upon dissolution of the Partnership and completion of the winding up
of the Partnership and each Series, the General Partner or the liquidator winding up the
Partnership and each Series shall file a certificate of cancellation of the certificate of limited
partnership of the Partnership with the Secretary of State of the State of Delaware. Upon the
filing of such certificate of cancellation in accordance with the Act, the Partnership and this
Agreement shall terminate.
ARTICLE XII.
GENERAL PROVISIONS
GENERAL PROVISIONS
12.01 Offset. Whenever the Partnership or any Series is to pay any sum to any Partner, any amounts
such Partner (or, in the case of a Partner that is a Feeder Fund, any Feeder Fund Investor therein)
owes the Partnership or such Series or any of its Affiliates and any amounts authorized to be held
back under Section 5.02(c) may be deducted from that sum before payment (and any amount so offset
in respect of an amount owed to any such Affiliate shall be paid over to such Affiliate and treated
as payment by such Limited Partner of such amount to such Affiliate).
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12.02 Notices. All notices, requests or consents provided for or permitted to be given under this
Agreement shall be in writing and shall be given either by depositing that writing in the mail,
addressed to the recipient, postage paid, and certified with return receipt requested, or by
depositing that writing with a reputable overnight courier for next day delivery, or by delivering
that writing to the recipient in person, by courier, by facsimile transmission or by delivering
that writing to the recipient via electronic mail or by posting such notice to Carlyle’s intranet
website and sending an electronic mail to the recipient notifying it of such posting. A notice,
request or consent given under this Agreement is effective on receipt by the Person to receive it.
All notices, requests and consents to be sent to a Partner must be sent to or made at or
transmitted via electronic mail to the addresses or electronic mail address given for that Partner
in the instrument described in Section 3.05(c) or such other address (including such other
electronic mail address) as that Partner may specify by notice to the other Partners. Any notice,
request or consent to the Partnership or any Series shall be given to the General Partner.
12.03 Entire Agreement; Supersedure. This Agreement and each Investment Sharing Ratio Letter
constitutes the entire agreement of the Partners relating to the Partnership and supersedes all
prior contracts or agreements with respect to the Partnership and each Series, whether oral or
written. The parties hereto acknowledge that, notwithstanding any other provision of this
Agreement, including Section 12.05, the Partnership or any Series or the General Partner (with
respect to the Partnership or any Series), without any further act, approval or vote of any
Partner, may enter into side letters and other writings with certain Partners, which have the
effect of establishing rights or obligations under, or altering or supplementing the terms of, this
Agreement solely as between or among the parties thereto.
12.04 Effect of Waiver or Consent. A waiver or consent, express or implied, 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 Series is not a consent or waiver to or of 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 Series. 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 or any Series, 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 limitations period has expired.
12.05 Amendment or Modification. (a) Except as may otherwise be expressly provided by this
Agreement, this Agreement may be amended, modified, waived or supplemented by the General Partner
only with the written consent of the General Partner and a Majority in Interest; provided
that, except as expressly provided in this Agreement, no amendment, modification, waiver or
supplement of this Agreement shall, without the consent of each Limited Partner whose rights or
obligations are adversely affected thereby in any material respect, (a) alter the provisions hereof
which govern such Partner’s entitlement to distributions and income allocations or (b) decrease the
interest in the Partnership of such Partner (including the provisions hereof providing for
allocation of debits and credits to such Partner’s Capital Account provided for in this Agreement).
Notwithstanding anything herein to the contrary, (i) the terms of the Guarantee set forth in
Exhibit A to this Agreement may be amended by the General Partner without the consent of any
Limited Partner to make changes to the Guarantee negotiated with limited partners or other
investors in any Fund Entity and (ii) subject to the
50
proviso to the preceding sentence, this
Agreement may be amended by the General Partner without the consent of any Limited Partner to give
effect to the provisions of Section 2.09.
(b) Notwithstanding any provision of this Agreement to the contrary, including Section
12.05(a), the General Partner shall have the right, on or before the effective date of final
regulations, to amend, as determined by the General Partner in good faith, this Agreement to
provide for (i) the election of a safe harbor under Treasury Regulations Section 1.83-3(l) (or any
similar provision) under which the fair market value of a Partnership Interest that is transferred
in connection with the performance of services is treated as being equal to the liquidation value
of that Partnership Interest, (ii) an agreement by the Partnership and all of its Partners to
comply with the requirements set forth in such regulations and Internal Revenue Service Notice
2005-43 (and any other guidance provided by the Internal Revenue Service with respect to such
election) with respect to all Partnership Interests transferred in connection with the performance
of services while the election remains effective, and (iii) any other amendments reasonably related
thereto or reasonably required in connection therewith.
12.06 Binding Effect. Subject to the restrictions on Dispositions of Partnership Interests set
forth in this Agreement, this Agreement is binding on and inures to the benefit of the Partners and
their legal representatives and estates. This Agreement is for the sole benefit of the Partners,
and no other Person shall have any rights, benefits or remedies by reason of this Agreement, nor
shall any Partner owe any duty or obligation whatsoever to any such Person (other than the
Partners) by virtue of this Agreement.
12.07 Governing Law; Submission to Jurisdiction; Severability. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF DELAWARE. IN PARTICULAR, THE PARTNERSHIP IS FORMED PURSUANT TO THE ACT, AND THE RIGHTS AND
LIABILITIES OF THE PARTNERS SHALL BE AS PROVIDED THEREIN, EXCEPT AS HEREIN OTHERWISE EXPRESSLY
PROVIDED. If any provision of this Agreement or its application to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of this Agreement and the application of
such provision to other Persons or circumstances is not affected and such provision shall be
enforced to the greatest extent permitted by law. Any action or proceeding against the parties
relating in any way to this Agreement may be brought and enforced in the courts of the State of New
York located in New York County or the United States District Court for the Southern District of
New York, to the extent subject matter jurisdiction exists therefor, and the parties irrevocably
submit to the exclusive jurisdiction of each of those courts in respect of any such action or
proceeding. The Limited Partners hereby waive as a defense that any such action, suit or
proceeding brought in such courts has been brought in an inconvenient forum or that the venue
thereof may not be appropriate and, furthermore, agree that venue in the State of New York for any
such action, suit or proceeding is appropriate.
12.08 Further Assurances. In connection with this Agreement and the transactions contemplated
thereby, 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 such transactions.
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12.09 Counsel to the Partnership. Counsel to the Partnership and each Series may also be counsel to
the General Partner. The General Partner may execute on behalf of the Partnership and each Series
and the Partners any consent to the representation of the Partnership and each Series that counsel
may request pursuant to the applicable rules of professional conduct in any jurisdiction (“Rules”).
The Partnership and each Series has initially selected
[ ] with respect
to U.S. law and Xxxxxxxx, Xxxxxx and Finger, P.A. with respect to Delaware law (together the
“Partnership Counsel”) as legal counsel to the Partnership and each Series. Each Limited Partner
acknowledges that the Partnership Counsel does not represent any Limited Partner in the absence of
a clear and explicit agreement to such effect between the Limited Partner and the Partnership
Counsel (and then only to the extent specifically set forth in that agreement), and that in the
absence of any such agreement the Partnership Counsel shall owe no duties directly to a Limited
Partner. In the event any dispute or controversy arises between any Limited Partner and the
Partnership or any Series, or between any Limited Partner or the Partnership or any Series, on the
one hand, and the General Partner (or an Affiliate thereof) that the Partnership Counsel
represents, on the other hand, then each Limited Partner agrees that the Partnership Counsel may
represent either the Partnership or such Series or the General Partner (or its Affiliate), or both,
in any such dispute or controversy to the extent permitted by the Rules, and each Limited Partner
hereby consents to such representation. Each Limited Partner further acknowledges that, whether or
not the Partnership Counsel has in the past represented such Limited Partner with respect to
other matters, the Partnership Counsel has not represented the interests of any Limited
Partner in the preparation and negotiation of this Agreement.
12.10 Representations and Warranties.
(a) Each Limited Partner which is not a natural person represents, warrants and covenants to
the other Partners that such Limited Partner is duly formed and validly existing under the laws of
the jurisdiction of its organization with full power and authority to perform its obligations
hereunder and that the execution, delivery and performance of this Agreement has been duly
authorized by such Limited Partner.
(b) Each Limited Partner who is a natural person represents, warrants and covenants to the
other Partners that such Limited Partner has the legal capacity to enter into this Agreement and
perform such Limited Partner’s obligations hereunder.
(c) Each Limited Partner represents, warrants and covenants to the other Partners that:
(i) this Agreement has been duly executed and delivered by such Limited Partner and
constitutes the valid and legally binding agreement of such Limited Partner enforceable in
accordance with its terms against such Limited Partner subject to the effect of bankruptcy,
insolvency, moratorium and other similar laws relating to creditors’ rights generally, by general
equitable principles and by an implied covenant of good faith and fair dealing;
(ii) the execution and delivery of this Agreement by such Limited Partner and the performance
of its duties and obligations hereunder do not result in a breach of any of the terms, conditions
or provisions of, or constitute a default under, any indenture, mortgage, deed of
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trust, credit
agreement, note or other evidence of indebtedness, or any lease or other agreement, or any license,
permit, franchise or certificate, to which such Limited Partner or any Affiliate is a party or by
which it or any Affiliate is bound or to which its or any Affiliate’s properties are subject, or
require any authorization or approval under or pursuant to any of the foregoing which has not been
obtained, or violate any statute, regulation, law, order, writ, injunction, judgment or decree to
which such Limited Partner or any Affiliate is subject;
(iii) such Limited Partner is not in default (nor has any event occurred which with notice,
lapse of time, or both, would constitute a default) in the performance of any obligation, agreement
or condition contained in any indenture, mortgage, deed of trust, credit agreement, note or other
evidence of indebtedness or any lease or other agreement, or any license, permit, franchise or
certificate, to which it is a party or by which it is bound or to which the properties of it are
subject, nor is it in violation of any statute, regulation, law, order, writ, injunction, judgment
or decree to which it is subject, which default or violation would materially adversely affect such
Limited Partner’s ability to carry out its obligations under this Agreement;
(iv) there is no litigation, investigation or other proceeding pending or, to the knowledge of
such Limited Partner, threatened against such Limited Partner or any of its Affiliates as to which
there is a reasonable possibility of an adverse determination and which, if
adversely determined, would materially adversely affect such Limited Partner’s ability to
carry out its obligations under this Agreement;
(v) no consent, approval or authorization of, or filing, registration or qualification with,
any court or governmental authority on the part of such Limited Partner is required for the
execution and delivery of this Agreement by such Limited Partner and the performance of its
obligations and duties hereunder;
(vi) such Limited Partner is acquiring its interest in the Partnership for such Limited
Partner’s own account and not with a view to resale or distribution;
(vii) such Limited Partner understands that such interests in the Partnership have not been
registered under the United States Securities Act of 1933, as amended (the “Securities Act”), the
securities laws of any state thereof or the securities laws of any other jurisdiction, nor is such
registration contemplated;
(viii) such Limited Partner understands and agrees further that, subject to the limited rights
set forth in this Agreement, its interest in the Partnership must be held indefinitely unless such
interest is subsequently registered under the Securities Act, the securities laws of any state
thereof and the securities laws of any other jurisdiction or an exemption from registration under
the Securities Act and these laws covering the sale of such interests is available; that even if
such an exemption is available, the assignability and transferability of its interests in the
Partnership will be governed by this Agreement, which imposes substantial restrictions on transfer;
that legends stating that its interests in the Partnership have not been registered under the
Securities Act and these laws and setting out or referring to the restrictions on the
transferability and resale of the Partnership Interests will be placed on all documents evidencing
such Partnership Interests;
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(ix) such Limited Partner is an “accredited investor” within the meaning of Rule 501 of
Regulation D under the Securities Act;
(x) either (A) such Limited Partner is a “qualified purchaser” within the meaning of Xxxxxxx
0(x)(00)(X) xx xxx 0000 Xxx, (X) such Limited Partner is an executive, officer, director, trustee,
general partner, advisory board member, or Person serving in a similar capacity, of a Fund Entity,
the Partnership, the General Partner or an Affiliate thereof, (C) such Limited Partner is an
employee of a Fund Entity, the Partnership, the General Partner or an Affiliate thereof (other than
an employee performing solely clerical, secretarial, or administrative functions with regard to
such company or its investments) who, in connection with his or her regular functions or duties,
participates in the investment activities of a Fund Entity or any other investment company, the
investment activities of which are managed by the Partnership, the General Partner or an Affiliate
thereof, and who has performed such duties on behalf of a Fund Entity, the Partnership, the General
Partner or an Affiliate thereof, or substantially similar functions or duties for or on behalf of
another company, for at least twelve (12) months, (D) such Limited Partner received its Partnership
Interest from a Limited Partner described in (A), (B) or (C) above in a donative transfer, or (E)
such Limited Partner is an estate planning vehicle for which a Limited Partner described in (B) or
(C) above is both responsible for the investment decisions and the source of the funds;
(xi) if such Limited Partner satisfies Section 12.10(c)(ix) above and clause (A) of Section
12.10(c)(x) above, then (i) such Limited Partner was not organized for the specific purpose of
acquiring securities of the Limited Partner or making indirect commitments to the Partnership, (ii)
shareholders, partners or other holders of equity or beneficial interests (“Participants”) in the
Limited Partner are unable to decide individually whether to participate, or the extent of their
participation, in such Limited Partner’s investment in the Partnership or indirect commitment to
the Fund Entities, and (iii) the amount of each Participant’s ownership interest in the Limited
Partner and indirect commitment to the Fund Entities does not exceed 40% of the total assets (on a
consolidated basis with its subsidiaries) of such Participant; provided that if any of the
foregoing is untrue, then such Limited Partner has notified the General Partner in writing and
provided such additional information satisfactory to the General Partner in order to determine that
such Limited Partner’s admission to the Partnership would not jeopardize the Partnership’s
exemption from registration under the 1940 Act;
(xii) such Limited Partner has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of acquisition of an interest in the
Partnership and understands the risks of, and other considerations relating to, an acquisition of
an interest in the Partnership;
(xiii) such Limited Partner’s anticipated Capital Contributions to the Partnership and other
investments which are not readily marketable are not disproportionate to such Limited Partner’s net
worth and such Limited Partner has no need for immediate liquidity in such Limited Partner’s
investment in its interests in the Partnership; and
(xiv) such Limited Partner has carefully read this Agreement and, to the full satisfaction of
such Limited Partner, such Limited Partner has been furnished any materials such Limited Partner
has requested relating to the Partnership and the Fund Entities and the
54
acquisition of an interest
in the Partnership, has consulted to the extent deemed appropriate by such Limited Partner with
such Limited Partner’s own advisors as to the financial, tax, legal and related matters concerning
an acquisition of an interest in the Partnership and such Limited Partner has been afforded the
opportunity to ask questions of representatives of the Partnership concerning the terms and
conditions of the acquisition of an interest in the Partnership and to obtain any additional
information necessary to verify the accuracy of any representations or information provided to such
Limited Partner and to make an informed decision with respect to an acquisition of an interest in
the Partnership.
(d) All of the representations, warranties and covenants made under this Section 12.10 shall
be deemed to be made on a continuing basis during the term of the Partnership and shall survive the
execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby.
12.11 Interpretation. To the fullest extent permitted by law and notwithstanding any other
provision of this Agreement or in any agreement contemplated herein or applicable provision of law
or equity or otherwise, whenever in this Agreement a Person is permitted or required to make a
decision (i) in its “sole discretion,” “sole and absolute discretion” or “discretion”, the Person
shall be entitled to consider only such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any consideration to any interest of or
factor affecting the Partnership, or any Series or any other Person, or (ii) in its “good faith” or
under another express standard, the Person shall act under such express standard and shall not be
subject to any other or different standards.
12.12 Counterparts. This Agreement (and any Exhibits hereto) may be executed in any number of
counterparts with the same effect as if all signatories had signed the same document. All
counterparts shall be construed together and constitute the same instrument.
[rest of page intentionally left blank]
55
Executed as a deed by the parties hereto on the date first set forth above.
GENERAL PARTNER:
[NAME OF GP] |
||||
By: | ||||
Name: | ||||
Title: | ||||
Witness: |
CLASS A LIMITED PARTNER: [_________________________] |
||||
By: | [_________________________] | |||
By: [_________________________] | ||||
By: | ||||
Name: | ||||
Title: | ||||
Witness: |
56
CLASS A LIMITED PARTNER:
THE CARLYLE GROUP EMPLOYEE CO., L.L.C. |
||||
By: | ||||
Name: | ||||
Title: | ||||
Witness: |
57
CLASS B LIMITED PARTNER:
[ ] |
||||
By: | ||||
Name: | ||||
Title: | ||||
Witness: |
58
CLASS C LIMITED PARTNERS:
[ ]
Witness: |
59
EXHIBIT A
Form of Guarantee
[__________________]
c/o The Carlyle Group
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxxx
Xxxxxxxxxx, X.X. 00000
[__________________]
c/o The Carlyle Group
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxxx
Xxxxxxxxxx, X.X. 00000
[______], 2012
Ladies and Gentlemen:
This Guarantee (the “Guarantee”) dated as of [______], 2012, is executed by each of the
undersigned, for the benefit of [PARTNERSHIP],a Delaware limited partnership (the
“Partnership”), and its limited partners (the “Limited Partners”), to guarantee
certain hereinafter defined obligations of [____________], a Delaware limited partnership (the
“General Partner”), under the Amended and Restated Limited Partnership Agreement of the
Partnership dated as of ___________, 2012 (as amended from time to time, the “Agreement”).
Capitalized terms used herein but not otherwise defined herein shall have the meanings set forth in
the Agreement.
1. | Guarantee of General Partner Giveback. |
(a) | The General Partner shall cause each Person (other than any Employee Award Vehicle) who ultimately receives Carried Interest proceeds from the General Partner in respect of the Partnership (each a “Guarantor”) to execute a counterpart of this Guarantee; provided that in lieu of a Guarantee from any such ultimate recipient of Carried Interest, the General Partner may cause the individual person that received an initial allocation of Carried Interest in respect of the Carried Interest payable to such ultimate recipient to execute a Guarantee in respect of the performance of the Giveback Obligation in respect of such ultimate recipient’s respective share of the Carried Interest. | ||
(b) | Each Guarantor, by executing a counterpart of this Guarantee, unconditionally and irrevocably, on a several but not joint basis, guarantees for the benefit of the Partnership and each Limited Partner the payment in cash and performance when due of the General Partner’s obligations to the Partnership as determined under Section 9.4 of the Agreement (the “Giveback Obligation”), such several obligation to be solely to the extent of the amount of such Guarantor’s Pro Rata Share (as hereinafter defined) of the Giveback Obligation, and to the extent that for any reason the General Partner shall fail fully and punctually to pay and perform the Giveback Obligation, each of the Guarantors shall pay to the |
60
Partnership such amount (net of any prior fundings to the General Partner from or on behalf of such Guarantor to pay such amount). None of the Guarantors shall have any obligation to pay the amounts owed under this paragraph 1(b) by any other Guarantor. | |||
(c) | A Guarantor’s “Pro Rata Share” of the Giveback Obligation shall equal the difference between (i) the product of (A) the Carried Interest Giveback Percentage (as defined below) of such Guarantor and (B) the amount of such Giveback Obligation, and (ii) the total amounts paid by the General Partner on behalf of such Guarantor in satisfaction of such Giveback Obligation. | ||
(d) | A Guarantor’s “Carried Interest Giveback Percentage” shall mean the percentage determined by dividing (i) the amount of Carried Interest received by such Guarantor (or deemed received by such Guarantor pursuant to the limited partnership agreement of the General Partner) and not recontributed by such Guarantor to the entity from which such Guarantor received such Carried Interest by (ii) the aggregate amount of Carried Interest distributed to the General Partner. | ||
(e) | The guarantees provided for in this paragraph 1 are absolute, unconditional, continuing guarantees of payment and performance and not of collectability, and are in no way conditioned or contingent upon any attempt to collect from the General Partner, enforce performance by the General Partner or on any other condition or contingency. The obligations and agreements of the Guarantors under this paragraph 1 shall be performed and observed without requiring any notice of non-payment, non-performance or non-observance by the General Partner or any proof thereof or demand therefor, all of which Guarantors expressly waive to the fullest extent they are legally permitted to do so. | ||
(f) | To the fullest extent permitted by law, the guarantees provided in this paragraph 1 shall be binding upon each of the Guarantors and shall remain in full force and effect irrespective of, and shall not be terminated by, the existence of any law, regulation or order now or hereafter in effect in any jurisdiction affecting the terms of such guarantee. To the fullest extent permitted by law, the liability of each of the Guarantors under the guarantees provided in this paragraph 1 shall be absolute, unconditional and irrevocable irrespective of: |
(i) | any change, whether or not agreed to by such Guarantor, in the time, manner or place of any payment or performance of the Giveback Obligation, or in any other term of, the Agreement or any other amendment, renewal, extension, acceleration, compromise or waiver of or any consent or departure from the terms or provisions of the Giveback Obligation or the Agreement; | ||
(ii) | the lack of power or authority of such Guarantor to execute and deliver this Guarantee or the General Partner to execute and deliver the Agreement; any defense which may at any time be available to, or asserted by, the General Partner against the Partnership under the Agreement (other |
61
than by reason of the full payment and performance of the Giveback Obligation); the existence or continuance of the General Partner as a legal entity; or the bankruptcy or insolvency of the General Partner, the admission in writing by the General Partner of its inability to pay its debts as they mature, or its making of a general assignment for the benefit of, or entering into a composition or arrangement with creditors; | |||
(iii) | any act, failure to act, delay or omission whatsoever on the part of the General Partner, any failure to give to the General Partner notice of default in the making of any payment due and payable under the Giveback Obligation or notice of any failure on the part of the General Partner to do any act or thing or to observe or perform any covenant, condition or agreement by it to be observed or performed under the Agreement; or | ||
(iv) | any other event or circumstance which might otherwise constitute a defense available to, or a discharge of the General Partner in respect of, the Giveback Obligation (other than an express discharge or release by the consent of at least [ ] in Interest of the Limited Partners), it being the purpose and intent of this Guarantee that the obligations of each Guarantor hereunder shall be absolute, unconditional and irrevocable and shall not be discharged or terminated except by full and complete payment and performance of the Giveback Obligation by the General Partner or by payment by such Guarantor of his or her obligations as set forth in paragraph 1(b) above. |
(g) | Each of the Guarantors, to the fullest extent he or it may legally do so, waives notice of acceptance of the guarantee provided for in this paragraph 1 and of the Giveback Obligation and also waives promptness, diligence, presentment, demand of payment, notice of default, dishonor, non-payment, non-performance or any other notice to or upon the General Partner or to such Guarantor. | ||
(h) | Each of the Guarantors, to the fullest extent he or it may legally do so, waives any right now or hereafter existing requiring the Partnership, or any Limited Partner, as a condition to proceeding against such Guarantor hereunder, to proceed against the General Partner or any other Person, or pursue any other remedy in the Partnership’s or such Limited Partner’s power. | ||
(i) | Each of the Guarantors, to the fullest extent he or it may legally do so, waives the benefit of any statute of limitations affecting the liability of such Guarantor hereunder or the enforcement hereof as amended or recodified from time to time, and agrees that any payment or performance of the Giveback Obligation or other act which tolls any statute of limitations applicable thereto shall similarly operate to toll such statute of limitations applicable to any liability of such Guarantor hereunder. | ||
(j) | Each of the Guarantors, to the fullest extent he or it may legally do so, waives all rights and benefits under any applicable law (to the extent applicable to such |
62
Guarantor hereunder) requiring the beneficiaries of the provisions of this paragraph 1 to pursue the General Partner or any other Person or remedy or exhaust any security before proceeding against such Guarantor. |
2. | Collection Expenses. If the Partnership or any Limited Partner is required to pursue any remedy against a Guarantor hereunder, such Guarantor shall pay to the Partnership or such Limited Partner, upon demand, all reasonable attorney’s fees and expenses and all other costs and expenses reasonably incurred by such party in enforcing this Guarantee against such Guarantor, subject to presentation of such evidence of incurrence of such expenses as such Guarantor may reasonably request. | |
3. | Miscellaneous. |
(a) This Guarantee shall not be amended, modified, released or discharged with respect to any
Guarantor except with a prior written consent of a Majority in Interest of the Limited Partners and
the prior written consent of such Guarantor; provided that if the right to receive
distributions of Carried Interest shall be assigned by any Guarantor
to [ ] or any of
its Affiliates approved by the Investor Advisory Committee (the “Carlyle Carried Interest
Assignee”), such Guarantor shall be released from this Guarantee with respect to the Carried
Interest so assigned upon the Carlyle Carried Interest Assignee becoming a party hereto and
agreeing to become bound hereby with respect to the Carried Interest so assigned to it; and
provided, further, that this guarantee may be amended by the General Partner (i)
without the consent of the Limited Partners to cure any ambiguity or correct or supplement any
provision hereof which is incomplete or inconsistent with any other provision hereof or correct any
printing, stenographic or clerical omissions unless such amendment adversely affects the interests
of any of the Limited Partners or (ii) on any other basis on which the General Partner may amend
the Agreement pursuant to Section 11.3 thereof.
(b) This Guarantee and the rights and obligations of each of the parties hereto and the
Limited Partners shall be governed by and construed in accordance with the laws of the State of New
York. Any action or proceeding against the parties relating in any way to this Agreement may be
brought and enforced in the courts of the State of New York located in New York County or the
United States District Court for the Southern District of New York, to the extent subject matter
jurisdiction exists therefor, and each Guarantor irrevocably submits to the non-exclusive
jurisdiction of each of those courts in respect of any such action or proceeding.
(c) This Guarantee may be executed through the use of separate signature pages and in any
number of counterparts, and each of such counterparts shall, for all purposes, constitute one
agreement binding on all the parties, notwithstanding that all the parties are not signatories to
the same counterpart.
(d) This Guarantee may be enforced by the Partnership or any Limited Partner as a third-party
beneficiary of this Guarantee and the obligations of each of the Guarantors hereunder.
(e) Each Guarantor shall provide to the General Partner such information in the possession of
such Guarantor as shall reasonably be required for the calculation of such Guarantor’s Pro Rata
Share of the Giveback Obligation.
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If the above correctly reflects our understanding with respect to the foregoing matters,
please so confirm by signing the enclosed copy of this letter.
Sincerely,
GENERAL PARTNER: [Insert name] |
||||
By: | ||||
Name: | ||||
Title: |
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GUARANTORS: | ||
To be signed by each Guarantor | ||
by counterpart signature page |