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RIC COINVESTMENT FUND LP
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AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
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Dated as of May 8, 2006
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THE PARTNERSHIP INTERESTS (THE "INTERESTS") OF RIC COINVESTMENT FUND LP
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), THE SECURITIES LAWS OF ANY STATE OR ANY OTHER
APPLICABLE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
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 THE SECURITIES ACT, ANY APPLICABLE STATE
SECURITIES LAWS AND ANY OTHER APPLICABLE SECURITIES LAWS AND THE TERMS
AND CONDITIONS OF THIS LIMITED PARTNERSHIP AGREEMENT. THEREFORE,
PURCHASERS OF INTERESTS WILL BE REQUIRED TO BEAR THE RISK OF THEIR
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
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TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS..........................................................1
SECTION 2 GENERAL PROVISIONS...................................................8
2.1 Continuation, Etc............................................8
2.2 Name.........................................................8
2.3 Organizational Certificates and other Filings................8
2.4 Principal Place of Business..................................9
2.5 Registered Office and Registered Agent.......................9
2.6 Investment Objective.........................................9
2.7 Term.........................................................9
2.8 Title to Partnership Property................................9
2.9 The Board....................................................9
2.10 Other Activities............................................10
SECTION 3 PARTNERS; CAPITAL STRUCTURE; AND PARTNERS MEETINGS..................10
3.1 Partners....................................................10
3.2 Capital Structure...........................................10
3.3 Issuance of Shares and Preferred Interests..................11
3.4 No Management Responsibility................................11
3.5 No Authority to Act.........................................11
3.6 No Preemptive Rights........................................11
3.7 Redemption or Repurchase Rights.............................11
3.8 Partner Meetings............................................12
3.9 Place of Meetings...........................................12
3.10 Notice of Partners' Meetings................................12
3.11 Waiver of Notice............................................12
3.12 Record Dates................................................13
3.13 Proxies, etc................................................13
3.14 Voting; Quorum of Partners; Vote Required...................13
3.15 Inspectors..................................................15
3.16 No Consent Required.........................................15
3.17 Informal Action by Partners.................................16
3.18 Voting by Ballot............................................16
3.19 No Cumulative Voting........................................16
SECTION 4 MANAGEMENT OF PARTNERSHIP...........................................16
4.1 Delegation to the Board of Directors........................16
4.2 Composition of Board of Directors...........................17
4.3 Resignation by a Director...................................17
4.4 Removal of a Director; Designation of a Successor
Director....................................................17
4.5 Incapacity of a Director....................................18
4.6 Continuation................................................18
4.7 Powers of the Board of Directors............................18
4.8 Certain Restrictions........................................21
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4.9 Meetings....................................................21
4.10 Quorum for Board of Directors Meetings......................21
4.11 Manner of Acting for Board of Directors.....................21
4.12 Written Consent by Board of Directors.......................21
4.13 Committees of Directors.....................................22
4.14 Director Presumption of Assent..............................22
4.15 Director Power to Bind Partnership..........................22
4.16 Liability of the Directors..................................22
4.17 Reliance by Third Parties...................................22
4.18 Appointment of Auditors.....................................22
4.19 Contracts with Affiliates...................................22
4.20 Obligations of the Directors................................23
4.21 Other Business of Directors.................................23
4.22 Limitations on the General Partner, Board of Directors
and Appropriate Officers....................................23
4.23 Investment Company Act......................................23
SECTION 5 OFFICERS............................................................23
5.1 Executive Officers..........................................23
5.2 Election of Officers........................................24
5.3 Voting Securities Owned by the Partnership..................24
5.4 Chairman of the Board of Directors..........................24
5.5 President...................................................24
5.6 Vice Presidents.............................................25
5.7 Secretary...................................................25
5.8 Treasurer...................................................25
5.9 Assistant Secretaries.......................................26
5.10 Assistant Treasurers........................................26
5.11 Other Officers..............................................26
SECTION 6 INVESTMENT ADVISOR..................................................26
6.1 Investment Advisor..........................................26
SECTION 7 CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND ALLOCATIONS.............27
7.1 Capital Contributions.......................................27
7.2 Capital Accounts............................................28
7.3 Allocation of Net Profits from Operations...................28
7.4 Allocation of Net Losses from Operations....................31
7.5 Defaulting Partner..........................................31
7.6 Tax Allocations.............................................31
7.7 Determinations by Board of Directors........................32
7.8 Net Asset Value.............................................32
SECTION 8 WITHDRAWALS AND DISTRIBUTIONS OF CAPITAL............................32
8.1 Withdrawals and Distributions in General....................32
8.2 Distributions...............................................32
8.3 Restrictions on Distributions...............................33
8.4 Deemed Sale of Assets.......................................33
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8.5 Withholding.................................................33
8.6 Indemnification.............................................34
SECTION 9 WITHDRAWAL OF PARTNERS; TRANSFER OF INTERESTS; ADMISSION OF
SUBSTITUTED PARTNERS; EFFECT OF DEATH, ETC...........................34
9.1 Withdrawal of Partners......................................34
9.2 General Provisions Relating to Transfers of Limited
Partner Interests...........................................35
9.3 Effect of Transfers.........................................36
9.4 Transfer Indemnity..........................................36
9.5 Substituted Partners........................................37
9.6 Effect of Death, Etc........................................37
9.7 Transfer of Interests of the General Partner................38
9.8 Termination of Status of the General Partner................38
SECTION 10 BOOKS AND RECORDS; REPORTS TO PARTNERS; TAX MATTERS................38
10.1 Books and Records.............................................
10.2 Accounting; Tax Year........................................39
10.3 Filing of Tax Returns.......................................39
10.4 Tax Matters Partner.........................................39
10.5 Tax Information for Current and Former Partners.............40
10.6 Meetings with the IRS.......................................40
SECTION 11 LIABILITY, EXCULPATION AND INDEMNIFICATION.........................40
11.1 Liability...................................................40
11.2 Exculpation.................................................40
11.3 Indemnification of General Partner, etc.....................41
SECTION 12 COMPENSATION AND REIMBURSEMENT.....................................44
12.1 Board of Directors..........................................44
12.2 Distributor, Administrator and Other Persons................44
12.3 Reimbursement for Partnership Expenses......................44
SECTION 13 DISSOLUTION AND TERMINATION........................................44
13.1 Dissolution.................................................44
13.2 Liquidation.................................................45
13.3 Termination.................................................45
SECTION 14 AMENDMENTS.........................................................46
14.1 Proposal of Amendments......................................46
14.2 Amendments to Be Adopted Solely by the Board of
Directors...................................................46
14.3 Amendments Not Allowable....................................46
SECTION 15 POWER OF ATTORNEY..................................................47
15.1 Power of Attorney...........................................47
15.2 Irrevocability..............................................47
15.3 Priority of Agreement.......................................47
15.4 Exercise of Power...........................................47
SECTION 16 MISCELLANEOUS......................................................48
16.1 Certificate of Limited Partnership..........................48
16.2 APPLICABLE LAW..............................................48
16.3 Counterparts................................................48
16.4 Binding upon Successors and Assigns.........................48
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16.5 Notices.....................................................48
16.6 Severability................................................48
16.7 Entire Agreement............................................48
16.8 Headings, Etc...............................................48
16.9 Legends.....................................................49
16.10 Waiver of Partition.........................................49
16.11 Non-Waiver..................................................49
16.12 Confidentiality.............................................49
16.13 Survival of Certain Provisions..............................49
16.14 Partnership Counsel.........................................49
16.15 Waiver of Partition.........................................50
16.16 Entire Agreement............................................50
SCHEDULE A: Partners and Capital Commitments
SCHEDULE B: Board of Directors
SCHEDULE C: Fundamental Investment Restrictions
APPENDIX A: Form of Certificate of Designation of Preferred Interests
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AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
RIC COINVESTMENT FUND LP
This AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (the
"Agreement") of RIC Coinvestment Fund LP, a Delaware limited partnership (the
"Partnership"), is made and effective as of the 8th day of May, 2006, by and
among the General Partner of the Partnership, the Initial Limited Partner and
the Persons listed as Limited Partners of the Partnership on Schedule A hereto
(as amended and supplemented from time to time). Capitalized terms used herein
without definition have the meanings specified in Section 1.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Partnership was formed under the Act pursuant to a
Certificate of Limited Partnership (the "Certificate of Limited Partnership")
filed with the Secretary of State of the State of Delaware on May 3, 2006 and
since its formation has been governed by the Limited Partnership Agreement (the
"Initial Agreement") dated as of May 3, 2006; and
WHEREAS, the Partnership changed its name from "RIC Co-Investment Fund
L.P." to "RIC Coinvestment Fund LP" pursuant to a Certificate of Amendment to
the Certificate of Limited Partnership dated as of May 5, 2006; and
WHEREAS, the General Partner, the Initial Limited Partner and the
Limited Partners to be admitted on May 10, 2006 wish to amend and restate the
Initial Agreement and wish for this Agreement to govern the Partnership;
NOW, THEREFORE, the General Partner, the Initial Limited Partner and
the Limited Partners agree as follows:
SECTION 1
DEFINITIONS
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As used herein, the following terms shall have the following meanings
and all such terms which relate to accounting matters shall be interpreted in
accordance with generally accepted accounting principles in effect from time to
time except as otherwise specifically provided herein:
"Act" means the Delaware Revised Uniform Limited Partnership Act, 6
Del. C. ss. 17-101 et seq., as amended, and any successor to such statute.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Fiscal Period, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which
such Partner is obligated to restore or is deemed to be obligated to
restore pursuant to Treasury Regulations Sections 1.704-2(g) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Treasury Regulations Sections 1.704-l(b)(2)(ii)(d)(4), (5)
and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulations Section 1.704-l(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"Agreement" means this Amended and Restated Limited Partnership
Agreement, including the Schedules and Appendices hereto, as originally executed
and as amended, modified, supplemented or restated from time to time.
"Applicable Rate" means a rate per annum equal, at the time of
determination, to the sum of (i) the highest "prime rate" then published in the
"Money Rates" section of The Wall Street Journal or in such successor
publication as shall be acceptable to the Board of Directors, and (ii) two
percent (2%), up to the highest rate permitted by law.
"Appropriate Officer" means an officer of the Partnership appointed in
accordance with Section 4.7(d), who has not resigned, been removed, or become
Incapacitated.
"Board of Directors" means those natural persons who at any given time
are serving as Directors of the Partnership in accordance with this Agreement.
"Brookdale" means Brookdale Senior Living, Inc., a Delaware
corporation, and any successor or assign to all or substantially all of its
business.
"Capital Accounts" has the meaning specified in Section 7.2.
"Capital Commitment" means, for any Partner, the amount set forth
opposite his, her or its name on Schedule A hereto, as amended from time to time
(i) to take account of additional Capital Contributions made by Partners, and
(ii) as otherwise provided in this Agreement; provided that Schedule A shall not
be amended with respect to any Partner without the consent of such Partner.
"Capital Contribution" means, with respect to any Partner, the amount
contributed by such Partner to the capital of the Partnership pursuant to this
Agreement.
"Capital Demand Date" has the meaning specified in Section 7.1(b).
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"Capital Demand Notice" has the meaning specified in Section 7.1(b).
"Capital Investment" means, with respect to any Partner, the Capital
Contribution of such Partner net of the return to such Partner, by the
Partnership of any portion thereof.
"Certificate of Designation" means the certificate of designations as
adopted by the Board of Directors from time to time setting forth the relative
rights, powers, preferences, duties, liabilities and obligations of the
Preferred Interests substantially in the form attached hereto as Appendix A and
incorporated into and made a part of this Agreement.
"Certificate of Limited Partnership" has the meaning set forth in the
recitals hereto.
"Claim" has the meaning specified in Section 11.3.
"Closing Date" has the meaning specified in Section 7.1(a).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time (or any corresponding provision of succeeding law).
"Covered Person" has the meaning specified in Section 11.2
"Damages" has the meaning specified in Section 11.3.
"Defaulting Partner" has the meaning specified in Section 7.5(a).
"Director" means a member of the Board of Directors of the Partnership.
"Disabling Conduct" means, with respect to any Person, fraud, willful
misfeasance, gross negligence, reckless disregard of such Person's duties to the
Partnership or the Partners or a material breach of this Agreement that, if
curable, is not cured within 30 days after written notice describing such breach
has been given to such Person.
"Failed Capital Commitment" has the meaning specified in Section
7.5(b).
"Fair Market Value" means the fair market value of the Partnership's
assets as determined by the Partnership's Valuation Policies.
"Fiscal Period" means the period commencing on the Closing Date, and
thereafter each period commencing on the day immediately following the last day
of the preceding Fiscal Period, and ending at the close of business on the first
to occur of the following dates:
(i) December 31 of such period; and
(ii) any other day as determined in the sole and absolute
discretion of the Board of Directors.
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"Fiscal Year" means the period commencing on the Closing Date and
ending on the first December 31st following the Closing Date, and thereafter
each period commencing on January 1st of each year and ending on December 31st
of each year (or on the date of a final distribution pursuant to Section 13.2),
unless the Board of Directors shall designate another fiscal year for the
Partnership.
"40 Act Majority of Partners" means the lesser of (a) the holders of
67% or more of the outstanding Shares and Preferred Interests, if any, present
at a meeting of Partners and entitled to vote at which the holders of more than
50% of the outstanding Shares and Preferred Interests entitled to vote are
present in person or by proxy or (b) more than 50% of the outstanding Shares and
Preferred Interests entitled to vote.
"General Partner" means RIC Coinvestment Fund GP LLC or such other
Person admitted to the Partnership as a general partner in accordance with this
Agreement.
"GP Transfer" has the meaning specified in Section 9.7.
"GP Substitute" has the meaning specified in Section 9.7.
"Incapacity" means as to any Person, the entry of an order for relief
in a bankruptcy proceeding ("bankruptcy"), entry of an order of incompetence or
insanity or the death, dissolution or termination (other than by merger or
consolidation), as the case may be, of such Person.
"Independent Director" means any member of the Board of Directors that
is not an "interested person" of the Partnership as such term is defined in the
Investment Company Act.
"Initial Agreement" has the meaning set forth in the recitals hereto.
"Initial Limited Partner" means Xxxxxx X. Xxxxxxx.
"Interest" means a Partner's rights and interest in the Partnership.
"Interested Director" means any member of the Board of Directors that
is an "interested person" of the Partnership as such term is defined in the
Investment Company Act.
"Investment Advisor" means initially FIG Advisors LLC and shall include
any person appointed by the Board of Directors pursuant to Section 6.1 that is
responsible for identifying, evaluating, structuring, monitoring and disposing
of the Partnership's investments and providing such other services for the
Partnership.
"Investment Advisory Agreement" means the Investment Advisory Agreement
by and between the Partnership and the Investment Advisor, as the same may be
amended or supplemented from time to time.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time.
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"Investment Proceeds" has the meaning specified in Section 8.2.
"IRS" has the meaning specified in Section 10.5
"Limited Partners" means the Persons listed as limited partners on
Schedule A hereto, which is incorporated in and made a part of this Agreement
(as such schedule is supplemented and amended from time to time), and shall
include their successors and permitted assigns to the extent admitted to the
Partnership as limited partners in accordance with the terms hereof, in their
capacities as limited partners of the Partnership, and shall exclude any Person
that ceases to be a Limited Partner in accordance with the terms hereof. For
purposes of the Act, the Limited Partners shall constitute a single class,
series and group of limited partners.
"Majority in Interest of the Partners" means Partners who in the
aggregate own more than 50% of the outstanding Shares and Preferred Interests,
if any, entitled to vote on a matter.
"NAV" has the meaning specified in Section 7.8.
"Net Loss" means the net loss of the Partnership with respect to a
Fiscal Period, as determined for federal income tax purposes, provided that such
loss shall be decreased by the amount of all income during such period that is
exempt from federal income tax and increased by the amount of all expenditures
made by the Partnership during such period that are not deductible for federal
income tax purposes and that do not constitute capital expenditures.
"Net Profit" means the net income of the Partnership with respect to a
Fiscal Period, as determined for federal income tax purposes, provided that such
income shall be increased by the amount of all income during such period that is
exempt from federal income tax and decreased by the amount of all expenditures
made by the Partnership during such period that are not deductible for federal
income tax purposes and that do not constitute capital expenditures.
"Nonrecourse Deductions" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(1).
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulations Section 1.752-l(a)(2).
"Partner" means any Person admitted to the Partnership as a partner
pursuant to the provisions of this Agreement and named as a partner in the books
and records of the Partnership, including any person admitted as a General
Partner, a Limited Partner or a Substituted Partner, in such Person's capacity
as a partner of the Partnership.
"Partners" means two or more Persons acting in their capacity as
partners of the Partnership.
"Partnership" has the meaning set forth in the preamble hereto.
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"Partnership Expenses" means any expenses incurred by the Partnership
during a Fiscal Period including, but not limited to, (i) all costs and expenses
if any, incurred in evaluating, developing, negotiating, structuring, acquiring,
owning, financing, disposing of or otherwise dealing with Portfolio Investments,
whether or not a transaction is consummated, including, without limitation,
accounting fees, consulting fees, due diligence expenses, conference expenses,
subscriptions to trade and other publications, brokerage commissions and fees
and other investment costs incurred by or on behalf of the Partnership, legal
fees, travel, transfer taxes, costs related to the registration or qualification
for sale of securities and other out-of-pocket expenses, in each case to the
extent not paid for by the issuer of such securities; (ii) without duplication,
expenses incurred in connection with out of pocket expenses related to
monitoring investments by the Partnership, including, without limitation, legal,
travel, insurance, accounting, custodial and safekeeping, consulting and
auditing expenses; (iii) administrative, legal, custodial, accounting, auditing,
banking, professional, consulting and appraisal expenses of the Partnership
including expenses associated with the preparation of the Partnership's reports,
financial statements, tax returns and Schedule K-1s; (iv) organizational
expenses of the Partnership not paid for by a Portfolio Company; (v) taxes and
other governmental charges, fees and duties payable by the Partnership to
federal, state, local and other governmental agencies; (vi) litigation-related
expenses and premiums for insurance protecting the Partnership and any Covered
Persons from liabilities to third Persons in connection with Partnership
affairs; (vii) costs and expenses that are classified as extraordinary expenses
under generally accepted accounting principles and Damages; and (viii) costs and
expenses incurred in connection with winding up and liquidating the Partnership.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2).
"Partnership Minimum Gain" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(2).
"Pass-Through Partner" has the meaning set forth in Section 10.4.
"Permitted Transfer" has the meaning specified in Section 9.2(a).
"Person" means any natural person, individual, corporation,
partnership, trust, estate, limited liability company, custodian, unincorporated
organization or association or any other entity.
"Portfolio Company" means Brookdale and any Persons formed by the
Partnership for the purpose of investing in Brookdale.
"Portfolio Investments" means investments in the Portfolio Company,
interests received as distributions on Brookdale common stock and Short-Term
Investments.
"Preferred Interests" means a preferred limited partner equity
interests in the Partnership with the relative rights, powers, preferences,
duties, liabilities and obligations set forth in the Certificate of Designations
and an aggregate liquidation preference not to exceed US$100,000. Holders of
Preferred Interests, if any, will have one vote per Preferred Interest on any
matter on which Preferred Interests are entitled to vote.
6
"Preferred Partner" means any Partner that holds a Preferred Interest.
"Principals" means Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxx X.
Xxxxxxx.
"Proceeding" has the meaning specified in Section 11.3.
"Qualified Income Offset" has the meaning set forth in Treasury
Regulations Section 1.704-1(b)(2).
"Real Estate-Related Assets" means any of the following, whether
denominated in dollars or in another currency, whether located in the United
States or a foreign jurisdiction and howsoever interests therein may be
acquired: (a) mortgage loans and non-mortgage receivables; (b) securities
secured by or evidencing interests in assets described in clause (a); (c) fee or
leasehold interests in real properties, whether improved or unimproved, whether
commercial, residential or multifamily; (d) debt interests (whether secured or
unsecured, recourse or non-recourse, senior or subordinated, convertible or
otherwise), equity interests (whether preferred or common) and derivative
interests in entities (whether in the form of partnerships, limited liability
companies, trusts, corporations or otherwise) the assets of which consist
primarily of assets described in clauses (a), (b) or (c) hereof, or in entities
that otherwise have substantial assets of the type described in clauses (a), (b)
or (c) hereof or in entities that provide services to or management in
connection with any other asset included in this definition; (e) options,
including without limitation, rights of first refusal, rights of first offer,
and puts or calls with respect to in any of the foregoing; and (f) xxxxxx
relating to any of the foregoing.
"Regulatory Allocations" has the meaning set forth in Section 7.3(e).
"Share" means a limited partner equity interest in the Partnership
(other than the Preferred Interests) and includes fractions of Shares as well as
whole Shares. Shares shall have an initial NAV of $1,000 per Share.
"Short-Term Investments" means (i) cash, (ii) obligations of, or fully
guaranteed as to timely payment of principal and interest by, the United States
of America or agencies thereof and with a maturity date not in excess of 18
months from the date of purchase by the Partnership, (iii) interest bearing
accounts and/or certificates of deposit of any U.S. bank with capital and
surplus in excess of $200 million and whose debt securities are rated at least A
by Xxxxx'x Investor Services, Inc. and A2 by Standard and Poor's Corporation,
and (iv) repurchase agreements of any U.S. bank with capital and surplus in
excess of $200 million and whose debt securities are rated at least A by Xxxxx'x
Investor Services, Inc. and A2 by Standard and Poor's Corporation.
"Subscription Agreement" means a contract for the purchase of Shares or
Preferred Interests.
"Substituted Partner" means any Person admitted to the Partnership as a
Limited Partner pursuant to the provisions of Section 9.5 and shown as a Limited
Partner in the books and records of the Partnership.
7
"Supermajority of Partners" means Partners who in the aggregate own
more than 67% of the outstanding Shares and Preferred Interests entitled to vote
on a matter.
"Tax Matters Partner" has the meaning set forth in Section 10.4.
"Term" has the meaning specified in Section 2.7.
"Transfer" has the meaning specified in Section 9.2(a).
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as the same may be amended
hereafter from time to time (including corresponding provisions of succeeding
income tax regulations).
"UBTI" means "unrelated business taxable income" as defined in Section
512 of the Code and the applicable Treasury Regulations.
"Unpaid Capital Obligation" means an amount equal to the Capital
Commitment of a Partner that has not at the time been contributed to the
Partnership.
"Valuation Policies" means the valuation policies adopted by the Board
of Directors at the Partnership's organizational meeting, as amended from time
to time.
SECTION 2
GENERAL PROVISIONS
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2.1 Continuation, Etc. The General Partner, the Initial Limited Partner
and the Limited Partners shall continue the Partnership under and pursuant to
the terms of the Act and the rights, duties and obligations of the Partners
shall be as provided in the Act, except as otherwise provided in this Agreement.
Immediately following the admission of the first Limited Partner on May 10,
2006, the Initial Limited Partner shall cease to be a limited partner of the
Partnership, shall have his original capital commitment terminated (and shall be
entitled to receive forthwith the return of his capital contribution without
interest or deduction) and shall have no further rights or claims against, or
obligations as a limited partner of, the Partnership.
2.2 Name. The name of the Partnership is "RIC Coinvestment Fund LP" The
name of the Partnership may be changed from time to time by the Board of
Directors, except that the name of the Partnership shall not be changed to
include the name of any Partner without that Partner's prior written consent.
Upon the termination of the Partnership, all of the Partnership's right, title
and interest in and to the use of the name "RIC Coinvestment Fund LP" and any
variation thereof, including any name to which the name of the Partnership is
changed, shall become the property of the General Partner, and the Limited
Partners shall have no right and no interest in and to the use of any such name.
2.3 Organizational Certificates and other Filings. If requested by the
Directors, the Partners shall promptly execute all certificates and other
documents, and any amend-
8
ments or renewals of such certificates and other documents as thereafter
reasonably required, consistent with the terms of this Agreement, necessary for
the Board of Directors to accomplish all filing, recording, publishing and other
acts as may be appropriate to comply with all requirements for (i) the
formation, continuation and operation of the Partnership as a limited
partnership under the laws of the State of Delaware and as a closed-end
investment company under the Investment Company Act, (ii) if the Board of
Directors deems it advisable, the operation of the Partnership as a limited
partnership, in all jurisdictions where the Partnership proposes to operate and
(iii) all other filings required under any applicable law, rule or regulation to
be made by the Partnership. Each Partner hereby grants to the Board of Directors
a power of attorney, in the event such Partner fails to comply with the
foregoing provisions of this Section 2.3, to execute all such certificates and
other documents, and amendments or renewals of such certificates and other
documents provided for in this Section 2.3, in the name and on behalf of such
Partner as the Board of Directors deems appropriate, the foregoing power of
attorney being irrevocable and coupled with an interest.
2.4 Principal Place of Business. The Partnership shall maintain its
office and principal place of business at, and its business shall be conducted
from, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such place or
places inside the United States as the Board of Directors may determine.
2.5 Registered Office and Registered Agent. The address of the
Partnership's registered office and registered agent for service of process in
the State of Delaware is The Corporation Trust Company, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. The address of the Partnership's
registered office and the registered agent for service of process in the State
of Delaware of the Partnership may be changed from time to time by the General
Partner.
2.6 Investment Objective. The Partnership has been organized for the
purpose of seeking capital appreciation and income by: (i) directly or
indirectly acquiring, owning, holding and selling or otherwise transferring
interests in Brookdale and other Portfolio Investments; and (ii) engaging in all
activities and transactions as the Board of Directors may deem reasonably
necessary, advisable or incidental in connection therewith.
2.7 Term. Unless terminated earlier in accordance with the Act, the
Partnership shall terminate on the eighth anniversary of the date of this
Agreement; provided that the term may be extended by the Investment Adviser by
up to two (2) additional one year periods (the "Term").
2.8 Title to Partnership Property. All property owned by the
Partnership, whether real or personal, tangible or intangible, shall be owned by
the Partnership as an entity, and no Partner or Director, individually, shall
have title to or any interest in such property.
2.9 The Board. The Initial Limited Partner and the Limited Partners
hereby approve the General Partner's delegation to the Directors, pursuant to
Section 4.1 hereof, of the General Partner's rights and powers under this
Agreement and pursuant to applicable law, and designate those person(s) listed
on Schedule B as the initial member(s) of the Board of Directors.
9
The Directors shall agree to be bound by the terms of this Agreement when
serving in such capacity. A Director is not required to contribute capital to
nor hold Interests of the Partnership as a Partner. The names and mailing
addresses of the Directors shall be set forth in the books and records of the
Partnership.
2.10 Other Activities. Nothing herein shall prevent any Partner (or any
director, officer, employee or other affiliate thereof), any Director or
Appropriate Officer or any person controlling, controlled by or under common
control with such Persons from acting in any such capacity, as an investment
advisor or in any similar or related capacity for any other Person or from
engaging in any other lawful activity and shall not in any way restrict such
persons from buying, selling or trading any securities or other assets for their
own accounts or for the accounts of others for whom it or they may be
acting.
SECTION 3
PARTNERS; CAPITAL STRUCTURE; AND PARTNERS MEETINGS
--------------------------------------------------
3.1 Partners. The name, address and Capital Commitment of each Partner
shall be set forth on Schedule A hereto. From time to time, the books and
records of the Partnership shall, and Schedule A hereto shall, be amended to
reflect the name, address and Capital Commitment of each Partner (including, as
permitted by this Agreement, adding the name, address and Capital Contribution
of each additional Partner who is admitted or becomes a Substituted Partner
pursuant to the transfer of Interests and deleting the name, address and Capital
Commitment of Persons ceasing to be Partners). The Partners shall have the
management and voting rights set forth in this Agreement and provided under the
Act and the Investment Company Act and shall have all rights to any allocations
and to any distributions as may be authorized and set forth under this Agreement
and under the Act.
3.2 Capital Structure.
(a) Subject to the terms of this Agreement, the Partnership is
authorized to issue partner interests in the Partnership designated as "Shares,"
which shall constitute an unlimited number of partner interests under the Act.
The relative rights, powers, preferences, duties, liabilities and obligations of
holders of the Shares shall be as set forth herein. Other than as set forth in
this Agreement, each Share shall be identical in all respects with each other
Share. Subject to the terms of this Agreement, the Partnership is authorized to
issue partner interests in the Partnership designated as "Preferred Interests"
with an aggregate liquidation preference not to exceed $100,000, which shall
have the relative rights, powers, preferences, duties, liabilities and
obligations set forth in the Certificate of Designation. The capital structure
of the Partnership shall consist of just the Shares and the Preferred Interests.
(b) The Partnership is authorized to issue Shares to any
Person at NAV in exchange for cash Capital Contributions.
(c) The number of Shares and Preferred Interests, if any,
issued to Partners shall be listed in the partnership records of the
Partnership, which shall be amended from time to time by the Partnership as
required to reflect issuances of Shares and Preferred Interests to new Partners,
changes in the number of Shares and Preferred Interests held by Partners
10
and to reflect the addition or cessation of Partners. The number of Shares and
Preferred Interests held by each Partner shall not be affected by any (i)
issuance by the Partnership of Shares or Preferred Interests to other Partners
or (ii) change in the Capital Account of such Partner (other than such changes
to reflect additional Capital Contributions from such Partner in exchange for
new Shares or Preferred Interests).
(d) In the sole discretion of the Board of Directors, the
issued and outstanding Shares and Preferred Interests may be represented by
certificates.
(e) The Partnership shall not borrow money or otherwise incur
indebtedness, other than as necessary to pay Partnership Expenses and only to
the extent permitted by the Investment Company Act.
3.3 Issuance of Shares and Preferred Interests. The Board of Directors
in its discretion may cause the Partnership to issue Shares to Persons from whom
the Partnership has accepted, on or prior to May 10, 2006, binding agreements to
subscribe therefor, as the case may be, at such time as they make a Capital
Contribution to the Partnership. No additional Shares may be issued without the
consent of a Majority in Interest of the Partners. The Board of Directors in its
discretion may cause the Partnership to issue and redeem Preferred Shares from
time to time in accordance with this Agreement. All issuances of Shares and
Preferred Interests shall be in accordance with the terms of the relevant forms
of subscription agreements. The maximum aggregate dollar amount of Shares for
which subscription agreements may be accepted is $1.3 billion. The maximum
aggregate liquidation preference of Preferred Interests that may at any one time
be outstanding is $100,000.
3.4 No Management Responsibility. No Partner, other than the General
Partner, shall participate in the management or control of the business of or
transact any business for the Partnership, but may exercise the voting rights
and powers of a Partner set forth in this Agreement. The Partners hereby consent
to the taking of any action by the Board of Directors, the Appropriate Officers
and the General Partner contemplated under this Agreement or otherwise permitted
under the Act.
3.5 No Authority to Act. No Partner, other than the General Partner,
shall have the power to represent, act for, sign for, or to bind the
Partnership. All authority to act on behalf of the Partnership is vested in the
Board of Directors, Appropriate Officers and the General Partner. The Partners
consent to the exercise by the Board of Directors, Appropriate Officers and the
General Partner of the powers conferred on them under this Agreement or
otherwise permitted under the Act.
3.6 No Preemptive Rights. Holders of Shares will have no preemptive
rights with respect to the issuance of any equity interest in the Partnership or
any other securities of the Partnership convertible into, or carrying rights or
options to purchase any such partnership or other equity interest.
3.7 Redemption or Repurchase Rights. Except as otherwise provided in
this Agreement, the Partnership shall not redeem or repurchase any Partner's
Shares and no Partner
11
shall have the right to withdraw from the Partnership, except as provided in
Section 9, or to receive any return of any Capital Commitment, except upon
dissolution of the Partnership pursuant to Section 13.
3.8 Partner Meetings. Unless required by the Act or other applicable
law, the Partnership shall not be required to hold an annual meeting of Partners
or any other regular, periodic meetings of Partners. Special meetings of the
Partners may be called to consider any matter requiring the consent of all or
any of the Partners pursuant to this Agreement. Special meetings of the Partners
may be called by the Board of Directors or by the General Partner.
3.9 Place of Meetings. The Board of Directors or the General Partner
may designate any place within or without the State of Delaware as the place of
meeting for any annual meeting or for any special meeting called by the
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive offices of the
Partnership. Partners may participate in a meeting in person, by proxy or by
means of a telephone conference call or similar communications equipment by
which all persons participating in the meeting can hear and speak to each other
at the same time, and any such participation in a meeting shall constitute the
presence in person of such Partner at such meeting.
3.10 Notice of Partners' Meetings.
(a) Written notice stating the place, day, and hour of the
meeting and, in case of a special meeting, the purpose for which the meeting is
called shall be delivered not less than two (2) days nor more than ninety (90)
days before the date of the meeting, either personally, by facsimile, electronic
mail or by overnight mail or courier, by or at the direction of the Board of
Directors or the General Partner to each Partner of record entitled to vote at
such meeting.
(b) Notice to Partners, if mailed by overnight mail or
courier, shall be deemed delivered as to any Partner when deposited with the
delivery service, addressed to the Partner, with postage prepaid, but, if two
successive deliveries to the last-known address of any Partner are returned as
undeliverable, no further notices to such Partner shall be necessary until
another address for such Partner is made known to the Partnership. Notice to
Partners, if by facsimile or by electronic mail, shall be deemed delivered upon
receipt of a confirmation of transmission.
(c) At an adjourned meeting, the Partnership may transact any business which
might have been transacted at the original meeting without additional notice.
3.11 Waiver of Notice.
(a) When any notice is required to be given to any Partner of
the Partnership under the provisions of this Agreement, a waiver thereof in
writing signed by the Person entitled to such notice, whether before, at, or
after the time stated therein, shall be equivalent to the giving of such notice.
12
(b) By attending a meeting, a Partner:
(i) Waives objection to lack of notice or defective
notice of such meeting unless the Partner, at the beginning of the
meeting, objects to the holding of the meeting or the transacting of
business at the meeting; and
(ii) Waives objection to consideration at such
meeting of a particular matter not within the purpose or purposes
described in the meeting notice unless the Partner objects to
considering the matter when it is presented.
3.12 Record Dates. For the purpose of determining the Partners who are
entitled to vote or act at any meeting or any adjournment thereof, or who are
entitled to participate in any dividend or distribution, or for the purpose of
any other action, the Directors may fix a date and time at least two (2) days
and not more than ninety (90) days prior to the date of any meeting of Partners
or other action as the date and time of record for the determination of Partners
entitled to vote at such meeting or any adjournment thereof or to be treated as
Partners of record for purposes of such other action, and any Partner who was a
Partner at the date and time so fixed shall be entitled to vote at such meeting
or any adjournment thereof or to be treated as a Partner of record for purposes
of such other action, even though the person has since that date and time
disposed of its Shares or Preferred Interests, and no Partner becoming such
after that date and time shall be so entitled to vote at such meeting or any
adjournment thereof or to be treated as a Partner of record for purposes of such
other action.
3.13 Proxies, etc. At any meeting of Partners, any holder of Shares or
Preferred Interests entitled to vote thereat may vote by properly executed
proxy, provided that no proxy shall be voted at any meeting unless it shall have
been placed on file with a Secretary, or with such other officer of the
Partnership as a Secretary may direct, for verification prior to or
simultaneously with the time at which such vote shall be taken. Pursuant to a
resolution of a majority of the Directors, proxies may be solicited in the name
of one or more Directors or one or more of the officers of the Partnership. Only
Partners of record shall be entitled to vote. When any Share or Preferred
Interest is held jointly by several persons, any one of them may vote at any
meeting in person or by proxy in respect of such Share or Preferred Interest,
but if more than one of them shall be present at such meeting in person or by
proxy, and such joint owners or their proxies so present disagree as to any vote
to be cast, such vote shall not be received in respect of such Share or
Preferred Interest, as the case may be. A proxy purporting to be executed by or
on behalf of a Partner shall be deemed valid unless challenged at or prior to
its exercise, and the burden of proving invalidity shall rest on the challenger.
If the holder of any such Share or Preferred Interest is a minor or a person of
unsound mind, and subject to guardianship or to the legal control of any other
person as regards the charge or management of such Share or Preferred Interest,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy.
3.14 Voting; Quorum of Partners; Vote Required. (a) Except as otherwise
set forth herein, each Partner shall be entitled to one vote per full Share (the
holder of a fraction of a Share shall be entitled to an equal fraction of a
vote) or Preferred Interest upon
13
all matters upon which such Partner shall have the right to vote based upon the
partnership records of the Partnership, provided, however, that prior to the
date Limited Partners make their Capital Contributions, Limited Partners will be
entitled to one vote for each $1,000 of their Capital Commitment. The presence,
in person or by proxy, of Partners holding more than 50% of the Shares and
Preferred Interests entitled to vote at the time of the action taken constitutes
a quorum at any meeting of holders of Partners. If a quorum is present, the
affirmative vote, in person or by proxy, of the owners of more than 50% of the
Shares and Preferred Interests then outstanding and represented in person or by
proxy at the meeting and entitled to vote on the subject matter shall be the act
of the Partners, unless the vote of a greater proportion or number or voting by
classes is required by the Act, the Investment Company Act or this Agreement. If
a quorum is not represented at any meeting of the Partners, such meeting may be
adjourned.
(b) If the Preferred Interests are required to vote as a
separate class under the Investment Company Act, the presence, in person or by
proxy, of Partners holding more than 50% of the Preferred Interests entitled to
vote at the time of the action taken constitutes a quorum at any meeting of
holders of Preferred Interests. If a quorum is present, the affirmative vote, in
person or by proxy, of the owners of more than 50% of the Preferred Interests
then outstanding and represented in person or by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the holders of
Preferred Interests, unless the vote of a greater proportion or number is
required by the Act, the Investment Company Act or this Agreement. If a quorum
is not represented at any meeting of the Partners, such meeting may be
adjourned.
The Partners shall have the following voting rights:
(a) to the extent required by the Investment Company Act or as
otherwise provided for herein, the right to elect Directors by the affirmative
vote of a plurality of votes cast;
(b) as provided herein, the right to remove Directors for
cause by the affirmative vote of a Supermajority of Partners at a meeting of
Partners duly called for such purpose;
(c) to the extent required by the Investment Company Act, the
right to approve any proposed investment advisory agreement or to disapprove and
terminate any such existing agreement by the affirmative vote of a 40 Act
Majority of Partners; provided, however, in the case of approval that such
agreement is also approved by a majority of Directors who are not parties to
such contract or "interested persons" of any such party as such term is defined
in the Investment Company Act, as the same may be amended from time to time;
(d) to the extent required by the Investment Company Act, the
right to ratify the appointment of the independent accountants of the
Partnership by the affirmative vote of more than 50% of the Shares and/or
Preferred Interests then outstanding and represented in person or by proxy at
the meeting and entitled to vote; provided, however, that such appointment is
approved by a majority of the Disinterested Directors;
14
(e) to the extent required by the Investment Company Act, the
right to terminate the Partnership's independent accountants by the affirmative
vote of a 40 Act Majority of Partners;
(f) to the extent required by Section 13.2, the selection of a
liquidator by the affirmative vote of a Majority of Interests of the Partners;
(g) to the extent required by Section 14.1 or 14.3, the right
to approve certain amendments to this Agreement by the affirmative vote of a
Majority of Interests of the Partners;
(h) so long as the Partnership is subject to the provisions of
the Investment Company Act, the right to approve any other matters that the
Investment Company Act requires to be approved by the Partners by the
affirmative vote of Partners as specified in the Investment Company Act; and
(i) to approve by the affirmative vote of a Majority of
Interests of the Partners, any merger, consolidation, other business
combination, voluntary bankruptcy, liquidation or other dissolution of the
Partnership, or the entering into of any agreement contemplating any of the
foregoing.
3.15 Inspectors. The Board of Directors may, in advance of any meeting
of shareholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspector shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any Partner entitled to vote thereat shall, appoint inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath to execute faithfully the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of Shares and Preferred Interests outstanding and the
voting powers of each, the number of Shares and Preferred Interests represented
at the meeting, the existence of a quorum, the validity and effect of proxies,
and shall receive votes, ballots or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots or consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all shareholders. On
request of the chairman of the meeting or any shareholder entitled to vote
thereat, the inspectors shall make a report in writing of any challenge, request
or matter determined by them and shall execute a certificate of any fact found
by them. No Director or candidate for the office of Director shall act as
inspector of an election of managers. Inspectors need not be shareholders.
3.16 No Consent Required. Notwithstanding the foregoing, no vote,
approvals, or other consent shall be required of the Partners to amend this
Agreement in any of the following respects: (i) to reflect any change in the
amount of the Capital Contribution of any Partner provided that the affected
Partner agrees in writing to the change; (ii) to admit a Substituted Partner or
withdraw a Partner in accordance with the terms of this Agreement; (iii) to
correct any false or erroneous statement, or to make a change in any statement
in order that such statement shall accurately represent the agreement among the
Partners in this Agreement provided that if a
15
Partner is adversely affected by such a change, that Partner has consented to
the change; (iv) a change that is necessary to qualify the Partnership as a
limited partnership under the laws of any state or that is necessary or
advisable in the opinion of the Board of Directors to assure that the
Partnership will not be treated as a publicly traded partnership or otherwise
treated as a corporation for federal income tax purposes; (v) to reflect any
change in the name or principal place of business of the Partnership in
accordance with the terms of this Agreement; provided that such change or
Amendment has been approved by a majority of the Board of Directors and a
majority of the Independent Directors.
3.17 Informal Action by Partners. Any action that may be taken by
Partners at a meeting of Partners may be taken without a meeting without prior
notice and without a vote if consent in writing setting forth the action to be
taken is signed by the Partners holding not less than the minimum percentage of
Shares and/or Preferred Interests that would be necessary to authorize or take
such action at a meeting at which all the Partners were present and voted
provided that all Partners receive at least two (2) days notice of any action
proposed to be taken by written consent. Partners may waive this notice
requirement. Written consent by the Partners has the same force and effect as a
vote of such Partners held at a duly held meeting of the Partners and may be
stated as such in any document.
3.18 Voting by Ballot. Voting on any question or in any election may be
by voice vote, unless the presiding Director or Officer shall order or any
Partner shall demand that voting be by ballot.
3.19 No Cumulative Voting. No Partners shall be entitled to cumulative
voting in any circumstance.
SECTION 4
MANAGEMENT OF PARTNERSHIP
-------------------------
4.1 Delegation to the Board of Directors.
(a) The General Partner hereby irrevocably delegates to the
members of the Board of Directors, except (i) for rights and powers expressly
provided to the General Partner by this Agreement, (ii) for the right to execute
documents on behalf of the Partnership and to bind the Partnership and (iii) to
the extent any such delegation is not permitted under the Act, its rights and
powers to manage and control the business and affairs of the Partnership,
including the complete authority to oversee and to establish policies regarding
the management, conduct, and operation of the Partnership's business, and to do
all things necessary and proper to carry out the investment objective and
business of the Partnership, including, without limitation, the power to engage
the Investment Advisor to provide investment advisory services to the
Partnership pursuant to an Investment Advisory Agreement and such other rights
and powers expressly given to the Directors under this Agreement. During any
period in which the Partnership shall have no Directors, the Appropriate
Officers shall manage and control the Partnership. The General Partner retains
only those rights, powers and duties that have not been delegated here-
16
under and which may not be delegated under the Act. Notwithstanding the
foregoing delegation, the General Partner shall continue to be the general
partner of the Partnership and shall remain liable as such. In no event shall a
Director or an Appropriate Officer of the Partnership be considered a general
partner of the Partnership by agreement, estoppel, or otherwise as a result of
the performance of his or her duties hereunder or otherwise.
(b) The Board may delegate to any person any right, power and
authority vested by this Agreement in the Board to the extent permissible under
applicable law. The Board may designate from time to time agents and employees
of the Partnership who shall have the same powers and duties on behalf of the
Partnership (including the power to bind the Partnership) as are customarily
vested in officers of a Delaware corporation, and designate them as officers of
the Partnership.
4.2 Composition of Board of Directors. Prior to the issuance of any
Shares, the number of Directors shall be one (1) or such other number of
Directors as shall be fixed from time to time by a written instrument signed by
a majority of the Directors, of whom, following the issuance of any Shares, at
least 40% shall be Independent Directors; provided, however, that the number of
Directors shall in no event following the issuance of any Shares be less than
three (3). The Directors shall hold office until their successors are approved
and elected, unless they are sooner removed pursuant to Section 4.4 or sooner
resign pursuant to Section 4.3 or sooner are Incapacitated pursuant to Section
4.5, as the case may be. Directors may succeed themselves in office. No
reduction in the number of Directors shall have the effect of removing any
Director from office, unless specially removed pursuant to Section 4.4 at the
time of such decrease. Subject to the requirements of the Investment Company
Act, the Board of Directors may designate successors to fill vacancies created
by an authorized increase in the number of Directors, the resignation of a
Director pursuant to Section 4.3, the removal of a member of the Board of
Directors pursuant to Section 4.4 or the Incapacity of a Director pursuant to
Section 4.5. In the event that no Directors remain, the Appropriate Officers
shall continue the business of the Partnership and shall perform all duties of
the Directors under this Agreement and the General Partner shall as soon as
practicable call a special meeting of Partners for the purpose of approving and
electing Directors. When Directors are subject to election by Partners,
Directors are elected by a plurality of the Shares voting at the meeting.
Directors may, but need not, be admitted to the Partnership as Partners to act
in their capacity as Directors.
4.3 Resignation by a Director. A Director may voluntarily resign from
the Board of Directors upon the giving of notice thereof to the Partnership,
such resignation to take effect upon receipt of such notice by the Partnership
or such later date as set forth in such notice.
4.4 Removal of a Director; Designation of a Successor Director.
(a) Any Director may be removed: (i) for cause by the action
of at least two-thirds of the remaining Directors, including in the case of an
Independent Director, 50% or more of the remaining Independent Directors; (ii)
by failure to be re-elected by the Partners; or (iii) with or without cause by
the affirmative vote of a Supermajority of Partners. The removal of a Director
shall in no way derogate from any rights or powers of such Director, or the
17
exercise thereof, or the validity of any actions taken pursuant thereto, prior
to the date of such removal.
(b) The remaining Directors shall designate a successor
Director to fill any vacancy existing in the number of Directors fixed pursuant
to Section 4.2 resulting from removal of a Director. Any such successor Director
shall hold office until his or her successor has been approved and elected. The
designation of a Disinterested Director shall be made by the remaining
Disinterested Director(s).
(c) Any removal of a Director shall not affect any rights or
liabilities of the removed Director that matured prior to such removal.
4.5 Incapacity of a Director.
(a) In the event of the Incapacity of a Director, the business
of the Partnership shall be continued with the Partnership property by the
remaining Directors. The remaining Directors shall, within 90 days, call a
meeting of the Board of Directors for the purpose of designating a successor
Director. Any such successor Director shall hold such office until his or her
successor has been approved and elected. The Directors shall make such
amendments to the Certificate of Limited Partnership and execute and file for
recordation such amendments or other documents or instruments if required by the
Act or this Agreement to reflect the fact that such Incapacitated Director has
ceased to be a Director, and the appointment of such successor Director.
(b) Upon the Incapacity of a Director, the Director shall
immediately cease to be a Director. In the event of the Incapacity of all
Directors, the General Partner shall as promptly as practicable convene a
meeting of Partners for the purpose of electing new Interested Directors
nominated by the General Partner and shall solicit the Limited Partners for
nominees for new Independent Directors.
(c) Any such termination of a Director shall not affect any
rights or liabilities of the Incapacitated Director that matured prior to such
Incapacity.
4.6 Continuation. In the event of the withdrawal, removal, or
retirement of a Director, the Partnership shall not be dissolved and the
business of the Partnership shall be continued by the remaining Directors.
4.7 Powers of the Board of Directors. Subject to the terms hereof, the
Directors shall have full and complete discretion in the management and control
of the affairs of the Partnership, shall make all decisions affecting
Partnership affairs and shall have all of the rights, powers, protections and
obligations with respect to the Partnership as the directors of a corporation
have with respect to a corporation under the Delaware General Corporations Law.
The Board of Directors shall provide overall guidance and supervision with
respect to the operations of the Partnership, shall perform all duties imposed
on the directors of registered investment companies by the Investment Company
Act, and shall monitor the activities of the Appropriate Officers, the
Investment Advisor and any administrator to the Partnership. Except as otherwise
18
expressly provided in this Agreement, the Board of Directors is hereby granted
the right, power and authority to do on behalf of the Partnership all things
which, in its sole judgment, are necessary or appropriate to manage the
Partnership's affairs and fulfill the purposes of the Partnership. Any
determination as to what is in the interests of the Partnership made by the
Directors in good faith shall be conclusive. In construing the provisions of the
Agreement, the presumption shall be in the favor of a grant of power to the
Directors. The powers of the Directors include, by way of illustration and not
by way of limitation, the power and authority from time to time to do the
following:
(a) invest the assets of the Partnership or cause the assets
of the Partnership to be invested by an investment advisor only in such
investments as are consistent with the Partnership's investment objective as set
forth in Section 2.6 hereof;
(b) incur all expenses permitted by this Agreement;
(c) to the extent that funds are available, cause to be paid
all expenses, debts, and obligations of the Partnership;
(d) appoint and dismiss such Persons to serve as officers of
the Partnership ("Appropriate Officers") with such powers and authority as may
be provided to such Persons by the Board of Directors or by this Agreement;
(e) employ and dismiss from employment such agents, employees,
investment advisors, accountants, attorneys, consultants, registrars, transfer
agents, custodians, paying agents, administrations and other Persons necessary
or appropriate to carry out the business and affairs of the Partnership, whether
or not any such Persons so employed are affiliated persons of any Partner or
Director, and to pay such compensation to such Persons as is competitive with
the compensation paid to unaffiliated Persons in the area for similar services;
(f) subject to the indemnification provisions in this
Agreement, pay, extend, renew, modify, adjust, submit to arbitration, prosecute,
defend, or settle, upon such terms it deems sufficient, any obligation, suit,
liability, cause of action, or claim (including, in consultation with the Tax
Matters Partner in accordance with Section 10.4, tax audits), either in favor of
or against the Partnership;
(g) sell Shares pursuant to the Subscription Agreements;
(h) sell Preferred Interests such that the aggregate principal
outstanding at any one time does not exceed US$100,000;
(i) borrow money pursuant to Section 3.2(e) and issue
Preferred Interests to the extent permitted by the Investment Company Act and
this Agreement and repay, in whole or in part, any such borrowing or
indebtedness and repurchase or retire, in whole or in part, any such Preferred
Interests senior to the Shares; and in connection with such loans or senior
instruments to mortgage, pledge, assign, or otherwise encumber any or all
properties or assets
19
owned by the Partnership, including any income therefrom, to secure such
borrowing or provide repayment thereof;
(j) establish valuation principles and periodically apply such
principles to the Partnership's investment portfolio;
(k) to the extent permitted by the Investment Company Act,
designate and appoint one or more agents for the Partnership who shall have such
authority as may be conferred upon them by the Board of Directors and who may
perform any of the duties of, and exercise any of the powers and authority
conferred upon, the Board of Directors hereunder including, but not limited to,
designation of one or more agents as authorized signatories on any bank accounts
maintained by the Partnership;
(l) subject to the other provisions of this Agreement, to
enter into, make, and perform such contracts, agreements, and other
undertakings, and to do such other acts, as it may deem necessary or advisable
for, or as may be incidental to, the conduct of the business contemplated by
this Agreement, including, without in any manner limiting the generality of the
foregoing, contracts, agreements, undertakings, and transactions with any
Partner, Director, Appropriate Officer or Investment Advisor or with any other
person, firm, or corporation having any business, financial, or other
relationship with any Partner, Director, Appropriate Officer or Investment
Advisor; provided, however, such transactions with such Persons and entities (i)
shall only be entered into to the extent permitted under the Investment Company
Act and (ii) shall be on terms no less favorable to the Partnership than are
generally afforded to unrelated third parties in comparable transactions;
(m) purchase, rent, or lease equipment for Partnership
purposes;
(n) purchase and maintain, at the Partnership's expense,
liability and other insurance to protect the Partnership's assets from third
party claims; and cause the Partnership to purchase or bear the cost of any
insurance covering any potential liabilities of the Partners, Directors,
Appropriate Officers, General Partner or agents of the Partnership, or officers,
employees, directors, members or partners of the Investment Advisor or any agent
of the Partnership as well as the potential liabilities of any Person serving at
the request of the Investment Advisor as a director of or advisor to the
Portfolio Company;
(o) cause to be paid any and all taxes, charges, and
assessments that may be levied, assessed or imposed upon any of the assets of
the Partnership;
(p) make or caused to be made any election on behalf of the
Partnership under the Code and other tax laws and supervise the preparation and
filing of all tax and information returns that the Partnership may be required
to file provided that such election is consistent with this Agreement;
(q) take any action that may be necessary or appropriate for
the continuation of the Partnership's valid existence as a limited partnership
under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the
20
limited liability of the Limited Partners to the fullest extent permitted under
Delaware law to enable the Partnership to conduct the business in which it is
engaged;
(r) admit Partners to the Partnership in accordance with
Sections 3.3 and 7.1; admit an assignee of a Limited Partner's Interest to be a
Substituted Partner in the Partnership, pursuant to and subject to the terms of
Section 9.5, without the consent of any Partner;
(s) delegate all or any portion of its rights, powers and
authority to any committee or subset of the Board of Directors, or to
Appropriate Officers or agents of the Partnership, subject to the control and
supervision of the Directors; and
(t) perform all normal business functions, and otherwise
operate and manage the business and affairs of the Partnership, in accordance
with and as limited by this Agreement.
4.8 Certain Restrictions. Except upon approval by a Majority in
Interest of Partners and a majority of Directors, the Partnership will not
engage in any of the investment practices set forth in Schedule C hereto, except
to the extent described in such Schedule C.
4.9 Meetings. Meetings of the Directors shall be held from time to time
upon the call of a Chairman, if any, President, Secretary or Director. Regular
meetings of the Directors may be held at a time and place fixed by the
resolutions of the Directors. Notice of any meetings of the Board or any
committee thereof shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
two (2) days before such meeting. Notices shall contain a brief statement of the
time, place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of a Director at a meeting shall constitute a waiver of
notice of such meeting except where a Director attends a meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Agreement or as required by the Investment Company Act, any action of the
Directors may be taken at a meeting by vote of a majority of the Directors
present (whether in person or by telephone) and eligible to vote with respect to
such matter, provided that a quorum is present, or without a meeting by the
unanimous written consent of the Directors.
4.10 Quorum for Board of Directors Meetings. A majority of the number
of Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, but if less than such majority is present at
a meeting, a majority of the Directors present may adjourn the meeting from time
to time without further notice.
4.11 Manner of Acting for Board of Directors. Except as otherwise
required by the Act, the Investment Company Act or this Agreement, the act of
the majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors. Each Director shall be entitled to
one vote upon all matters submitted to the Board of Directors.
4.12 Written Consent by Board of Directors. Unless otherwise required
by the Investment Company Act, any action required or permitted to be taken at
any meeting of the
21
Board of Directors or by a committee thereof may be taken without a meeting
without prior notice and without a vote if approved in writing by that number of
Directors that would be necessary to approve the action at a meeting at which
all of the Directors were present and voting, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or such
committee.
4.13 Committees of Directors. By resolution adopted by the Board of
Directors, the Board of Directors may designate two or more Directors to
constitute a committee, any of which shall have such authority in the management
of the Partnership as the Board of Directors shall designate.
4.14 Director Presumption of Assent. A Director of the Partnership who
is present at a meeting of the Board of Directors at which action on any matter
taken shall be presumed to have assented to the action taken, unless a dissent
shall be entered in the minutes of the meeting or unless the Director files a
written dissent to such action with the person acting as the secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Partnership immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
4.15 Director Power to Bind Partnership. Unless the Board of Directors
consists of one Director, no Director (acting in his capacity as such) shall
have any authority to bind the Partnership to any third party with respect to
any matter except pursuant to a resolution expressly authorizing such action
which resolution is duly adopted by the Board of Directors by the affirmative
vote required for such matter pursuant to the terms of this Agreement.
4.16 Liability of the Directors. No Director shall be: (i) personally
liable for the debts, obligations or liabilities of the Partnership, including
any such debts, obligations or liabilities arising under a judgment decree or
order of a court; (ii) obligated to cure any deficit in any Capital Account;
(iii) required to return all or any portion of any Capital Contribution; or (iv)
required to lend any funds to the Partnership.
4.17 Reliance by Third Parties. Persons dealing with the Partnership
are entitled to rely conclusively upon the power and authority of the Board of
Directors, Appropriate Officers and the General Partner of the Partnership
herein set forth.
4.18 Appointment of Auditors. Subject to the approval or ratification
of the Partners and the Disinterested Directors, if and to the extent required
under the Investment Company Act, the Board of Directors, in the name and on
behalf of the Partnership, is authorized to appoint independent certified public
accountants for the Partnership.
4.19 Contracts with Affiliates. The Board of Directors may, on behalf
of the Partnership, subject to approval by a majority of the Directors who do
not have an interest in the contract and a majority of the Independent Directors
and to compliance with the Investment Company Act, enter into contracts for
goods or services with any affiliate of a Director, Partner, Appropriate Officer
or the Investment Advisor, provided that the charges for such goods or ser-
22
vices do not exceed, in the good faith judgment of the Directors approving the
contract, those charged by unaffiliated Persons in the area for similar goods
and services.
4.20 Obligations of the Directors. The Directors shall devote such time
and effort to the Partnership business as, in their judgment, may be necessary
or appropriate to oversee the affairs of the Partnership.
4.21 Other Business of Directors. Any Director and any affiliate of any
Director may engage in or possess any interest in other business ventures of any
kind, nature or description, independently or with others, whether such ventures
are competitive with the Partnership or otherwise. Neither the Partnership nor
any Director shall have any rights or obligations by virtue of this Agreement or
the relationship created hereby in or to such independent ventures or the income
or profits or losses derived therefrom, and the pursuit of such ventures, even
if competitive with the business of the Partnership, shall not be deemed
wrongful or improper. Neither the Directors nor any affiliate of the Directors
shall be obligated to present any investment opportunity to the Partnership.
4.22 Limitations on the General Partner, Board of Directors and
Appropriate Officers. Notwithstanding anything expressed or implied to the
contrary in this Agreement, the General Partner, the Board of Directors and the
Appropriate Officers shall not (i) participate in the establishment of a
secondary market (or the substantial equivalent thereof) with respect to the
Interests for purposes of Treasury Regulation ss. 1.7704-1(d)(1) or (ii) take
any action that would have the effect of causing the Partnership (x) to be
treated as a publicly traded partnership for purposes of Section 7704(b) of the
Code or (y) otherwise to be treated as a corporation for federal income tax
purposes (unless it also qualifies as a regulated investment company under the
Code).
4.23 Investment Company Act. For so long as the Partnership intends to
be an investment company registered under the Investment Company Act, (i) the
General Partner will use its best efforts to cause the Partnership not to be a
company described in Sections 3(c)(1) or 3(c)(7) of the Investment Company Act,
and (ii) the Board of Directors will use its best efforts to cause the
Partnership not to be a company described in Sections 3(c)(5) or 3(c)(6) of the
Investment Company Act.
SECTION 5
OFFICERS
--------
5.1 Executive Officers. The Appropriate Officers of the Partnership
shall be chosen by the Board of Directors and shall be a Chief Executive
Officer, a President, a Secretary and a Treasurer. The Board of Directors may
also choose a Chairman of the Board of Directors (who must be a Director), Vice
Chairman of the Board, one or more Vice Presidents, a Chief Operating Officer, a
Chief Financial Officer, a Chief Compliance Officer, one or more Assistant
Secretaries and one or more Assistant Treasurers. In addition, the Board of
Directors may elect or appoint such other officers with such powers and duties
as they shall deem necessary or
23
proper. Any number of offices may be held by the same person, unless otherwise
prohibited by law. The officers of the Partnership need not be Partners of the
Partnership nor, except in the case of the Chairman of the Board, need such
officers be Directors of the Partnership.
5.2 Election of Officers. The officers of the Partnership shall hold
their offices for such terms and shall exercise such powers and perform such
duties as set forth below or as shall be determined from time to time by the
Board of Directors; and all officers of the Partnership shall hold office until
their successors are chosen and qualified, or until their earlier death,
resignation or removal. Any officer elected by the Board of Directors may be
removed at any time, with or without cause, by the affirmative vote of the Board
of Directors or upon the Incapacity of such officer. Any vacancy occurring in
any office of the Partnership shall be filled by the Board of Directors. The
officers of the Partnership shall not be compensated.
5.3 Voting Securities Owned by the Partnership. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Partnership may be executed in the name of and on
behalf of the Partnership by the Investment Advisor or, at the direction of the
Investment Advisor, by the President or any Vice President or any other officer
authorized to do so by the Board of Directors and the Investment Advisor and any
such officer may, in the name of and on behalf of the Partnership, take all such
action as they may deem advisable to vote in person or by proxy at any meeting
of security holders of any entity in which the Partnership may own securities
and at any such meeting shall possess and may exercise any and all rights and
power incident to the ownership of such securities and which, as the owner
thereof, the Partnership might have exercised and possessed if present. The
Board of Directors may, by resolution, from time to time confer like powers upon
any other person or persons.
5.4 Chairman of the Board of Directors. The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the Partners and of
the Board of Directors. The Chairman of the Board of Directors shall be selected
from time to time by the Board of Directors. The Chairman of the Board of
Directors shall possess the same power as the President to sign all contracts,
certificates and other instruments of the Partnership which may be authorized by
the Board of Directors. During the absence or disability of the President, the
Chairman of the Board of Directors shall exercise all the powers and discharge
all the duties of the President. The Chairman of the Board of Directors shall
also perform such other duties and may exercise such other powers as may from
time to time be assigned by this Agreement or by the Board of Directors.
5.5 President. The President shall, subject to the control of the Board
of Directors and, if there be one, the Chairman of the Board of Directors, have
general supervision of the business of the Partnership and shall see that all
orders and resolutions of the Board of Directors are carried into effect. The
President or, when authorized by this Agreement, the Board of Directors or the
President, the other officers of the Partnership shall execute all bonds,
mortgages, contracts, documents and other instruments of the Partnership. In the
absence or disability of the Chairman of the Board of Directors, or if there be
none, the President, shall preside at all meetings of the Partners and the Board
of Directors. Unless the Board of Directors shall otherwise
24
designate, the President shall be the Chief Executive Officer of the
Partnership. The President shall also perform such other duties and may exercise
such other powers as may from time to time be assigned to such officer by this
Agreement or by the Board of Directors.
5.6 Vice Presidents. At the request of the President or in the
President's absence or in the event of the President's inability or refusal to
act (and if there be no Chairman of the Board of Directors), the Vice President,
or the Vice Presidents if there is more than one (in the order designated by the
Board of Directors), shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If there
be no Chairman of the Board of Directors and no Vice President, the Board of
Directors shall designate the officer of the Partnership who, in the absence of
the President or in the event of the inability or refusal of the President to
act, shall perform the duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President.
5.7 Secretary. The Secretary shall attend all meetings of the Board of
Directors and all meetings of Partners and record or cause to be recorded all
the proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given, notice
of all meetings of the Partners and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors, the Chairman of the Board of Directors or the President, under whose
supervision the Secretary shall act. If the Secretary shall be unable or shall
refuse to cause to be given notice of all meetings of the Partners and special
meetings of the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors or the President may choose another officer to
cause such notice to be given. The Secretary shall have custody of the seal of
the Partnership, if any, and the Secretary or any Assistant Secretary, if there
be one, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by the signature of the Secretary or by
the signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Partnership and
to attest to the affixing by such officer's signature. The Secretary shall see
that all books, reports, statements, certificates and other documents and
records required by law to be kept or filed are properly kept or filed, as the
case may be.
5.8 Treasurer. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Partnership and shall deposit all moneys
and other valuable effects in the name and to the credit of the Partnership in
such depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Partnership as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all transactions as Treasurer and
of the financial condition of the Partnership. If required by the Board of
Directors, the Treasurer shall give the Partnership a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
25
the faithful performance of the duties of the office of the Treasurer and for
the restoration to the Partnership, in case of the Treasurer's death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in the Treasurer's possession or under
the Treasurer's control belonging to the Partnership.
5.9 Assistant Secretaries. Assistant Secretaries, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Secretary, and in the absence of the Secretary or in the
event of the Secretary's disability or refusal to act, shall perform the duties
of the Secretary, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.
5.10 Assistant Treasurers. Assistant Treasurers, if there be any, shall
perform such duties and have such powers as from time to time may be assigned to
them by the Board of Directors, the President, any Vice President, if there be
one, or the Treasurer, and in the absence of the Treasurer or in the event of
the Treasurer's disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Partnership a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of the office of Assistant Treasurer and
for the restoration to the Partnership, in case of the Assistant Treasurer's
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant Treasurer's
possession or under the Assistant Treasurer's control belonging to the
Partnership.
5.11 Other Officers. Such other officers as the Board of Directors may
choose shall perform such duties and have such powers as from time to time may
be assigned to them by the Board of Directors, the Chairman of the Board of
Directors or the President. The Board of Directors may delegate to any other
officer of the Partnership the power to choose such other officers and to
prescribe their respective duties and powers.
SECTION 6
INVESTMENT ADVISOR
------------------
6.1 Investment Advisor. (a) The Board of Directors shall appoint an
investment advisor for the Partnership. Subject to the direction and control of
the Directors, the Investment Advisor shall, consistent with the investment
objective set forth in Section 2.6, (i) act as investment advisor for and
supervise and manage the investment and reinvestment of the Partnership's assets
and in connection therewith have complete discretion, subject to the
Partnership's restrictions and limitations on investments as set forth herein,
in purchasing and selling securities and other assets for the Partnership and in
voting, exercising consents and exercising all other rights appertaining to such
securities and other assets on behalf of the Partnership; (ii) supervise
continuously the investment program of the Partnership and the composition of
its investment portfolio; (iii) supervise the operations and employees of the
Partnership's affiliates; (iv) arrange, subject to the provisions of this
Section 6.1, for the purchase and sale of securities and other assets held in
the investment portfolio of the Partnership; (v) arrange
26
for the administration of all other affairs of the Partnership and its
affiliates and, in this regard, provide supervision of third parties engaged in
such administration; (vi) maintain all of the Partnership's books and records
other than those maintained by a third party administrator, transfer agent,
custodian or accountant; and (vii) provide the Partnership with adequate office
space and all necessary office equipment and services.
(b) In the event of the dissolution, bankruptcy, insolvency or
resignation of the Investment Advisor, the Board of Directors may award
investment advisory responsibilities to another party with the consent of a
Majority in Interest of the Partners.
(c) Nothing shall prevent the Investment Advisor or any
director, officer, employee or other affiliate thereof from acting as investment
advisor for any other Person from engaging in any other lawful activity, and
shall not in any way limit or restrict the Partnership or any of its directors,
officers, employees or agents from buying, selling or trading any securities or
other assets for its or their own accounts or for the accounts of others for who
it or they may be acting. Other investment companies or accounts which the
Investment Advisor manages may also own the same investments as the Partnership.
SECTION 7
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND ALLOCATIONS
-------------------------------------------------------
7.1 Capital Contributions. (a) The Partners are as set forth on
Schedule A hereto. On or before February 10, 2007 (the "Closing Date") each
Partner shall make Capital Contributions in United States dollars by wire
transfer of federal funds to an account or accounts of the Partnership specified
in a written notice from the General Partner in an amount equal to such portion
of such Partner's Capital Commitment as will be specified in such notice on such
date as the General Partner shall specify, provided that the General Partner
shall provide each Limited Partner at least five (5) Business Days prior notice
of such date. No Partner shall be required to make additional Capital
Contributions on or after February 11, 2007.
(b) On each Capital Demand Date, each Partner making a Capital
Commitment shall further contribute to the Partnership an amount equal to all or
a portion of such Partner's Unpaid Capital Obligation as set forth in the
respective Capital Demand Notice. For purposes of this Agreement, (i) the
"Capital Demand Date" shall mean the date specified by an Appropriate Officer on
which Partners are required to contribute all or a portion of Unpaid Capital
Obligation to the Partnership, which shall be (A) specified by the Partnership
in a Capital Demand Notice sent by the Partnership to each of the Partners or
their representatives and (B) no less than seven (7) days from the date such
Capital Demand Notice is sent by the Partnership and (ii) a "Capital Demand
Notice" shall mean a written notice requiring the contribution of capital to the
Partnership, which notice shall (A) be by the Partnership to each Partner and
(B) call for contribution to the Partnership of the Unpaid Capital Obligation of
each Partner. All capital calls will be made on a pro rata basis in proportion
to each Partner's Unpaid Capital Obligation.
27
(c) Capital Contributions by the Partners shall be made in
dollars by wire transfer of federal funds to an account or accounts of the
Partnership as specified by the Partnership in the Capital Demand Notice or in
such other manner as the Partnership may direct. No Partner shall be entitled to
any interest or compensation by reason of his, her or its Capital Contributions
or by reason of being a Partner. No Partner shall be required to lend any funds
to the Partnership.
(d) On each Capital Demand Date, Schedule A hereto shall be
amended appropriately to reflect the Unpaid Capital Obligations of the Partners.
Further, the Appropriate Officers shall cause Schedule A hereto to be amended
from time to time to reflect the transfer of a Partner's Interests and the
admission and withdrawal of Partners which are accomplished in accordance with
the provisions hereof.
(e) Except as may be required by law, no Partner shall be
required to reimburse the Partnership for any negative balance in such Partner's
Capital Account; provided, however, that each Partner shall remain fully liable
to make contributions of capital to the extent of such Partner's Unpaid Capital
Obligation.
7.2 Capital Accounts. A capital account ("Capital Account") shall be
established and maintained on the Partnership's books with respect to each
Partner, in accordance with the provisions of Treasury Regulations Section
1.704-1(b).
7.3 Allocation of Net Profits from Operations. (a) The Net Profits of
the Partnership for each Fiscal Year shall be allocated as follows:
(i) First, to the holders of the Preferred Interests,
if any, in accordance with the Certificate of Designation;
(ii) Second, to the Partners, other than the holders
of the Preferred Interests, if any, who have negative balances in their
Capital Accounts, in proportion to the respective amounts of such
negative balances; and
(iii) Third, to the Partners, other than the holders
of the Preferred Interests, if any, pro rata in accordance with such
Partner's respective Capital Accounts.
(b) All provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with the Code and
Treasury Regulations thereunder and shall be interpreted and applied in a manner
consistent with such law. Upon notification to the Partners, the Directors shall
make any necessary modifications to this Section 7.3 in the event unanticipated
events occur that might otherwise cause this Agreement not to comply with such
law or any changes thereto.
(c) Additional Rule. In furtherance and not in limitation of
Section 7.6(a), (b) and (c), and except as otherwise provided in this Agreement,
the Board of Directors may, in its sole and absolute discretion, allocate Net
Profit (and items thereof) and Net Loss (and
28
items thereof) for any Fiscal Period in a manner that the Board of Directors
deems necessary or appropriate in order to effectuate the intended economic
sharing arrangement of the Partners as reflected in Section 8.
(d) Regulatory and Related Allocations. Notwithstanding
anything expressed or implied to the contrary in this Agreement, the following
special allocations shall be made in the following order:
(i) Minimum Gain Charge back. If there is a net
decrease in Partnership Minimum Gain during any Fiscal Period, each
Partner shall be specially allocated items of Partnership income and
gain for such Fiscal Period (and, if necessary, subsequent Fiscal
Periods) in an amount equal to the greater of (i) the portion of such
Partner's share of the net decrease in such Partnership Minimum Gain,
as determined in accordance with Treasury Regulations Section
1.704-2(d)(1), that is allocable to the disposition of Partnership
property, subject to Nonrecourse Liabilities or (ii) if such Partner
would otherwise have an Adjusted Capital Account Deficit attributable
solely to such Partner's Capital Account at the end of such Fiscal
Period, an amount sufficient to eliminate such Adjusted Capital Account
Deficit. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to the
Partners pursuant thereto. The items to be so allocated shall be
determined in accordance with Treasury Regulations Section 1.704-2.
This Section 7.3(d)(i) is intended to comply with the minimum gain
charge back requirement in such Treasury Regulations and shall be
interpreted consistently therewith. To the extent permitted by such
Treasury Regulations and for purposes of this Section 7.3(d)(i) only,
each Partner's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to this Section 7 with respect
to such Fiscal Period.
(ii) Partner Minimum Gain Chargeback. If there is a
net decrease in Partner Nonrecourse Debt Minimum Gain attributable to
partner nonrecourse debt (as defined in Treasury Regulations Section
1.704-2(b)(4)) during any Fiscal Period, each Partner shall be
specially allocated items of Partnership income and gain for such
Fiscal Period (and, if necessary, subsequent Fiscal Periods) in an
amount equal to the portion of such Partner's share of the net decrease
in Partner Nonrecourse Debt Minimum Gain attributable to such Partner's
nonrecourse debt, as determined in accordance with Treasury Regulations
Section 1.704-2(i). This Section 7.3(d)(ii) is intended to comply with
the minimum gain chargeback requirements in such Treasury Regulations
and shall be interpreted consistently therewith.
(iii) Qualified Income Offset. In the event any
Partner unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) with respect to such Partner's
Capital Account, items of Partnership income and gain shall be
specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Treasury
Regulations, the Adjusted Capital Account Deficit of such Partner as
quickly as possible; provided, however, that an allocation pursuant to
this Section
29
7.3(d)(iii) shall be made only if and to the extent that such Partner
would have an Adjusted Capital Account Deficit after all other
allocations provided for herein have been tentatively made as if this
Section 7.3(d)(iii) were not in this Agreement.
(iv) Nonrecourse Deductions. Any Nonrecourse
Deductions for any Fiscal Period shall be allocated to the Partners in
proportion to their respective Capital Contributions.
(v) Gross Income Allocation. In the event any Partner
has an Adjusted Capital Account Deficit, items of Partnership income
and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate such Partner's Adjusted Capital Account
Deficit as quickly as possible; provided, however, that an allocation
pursuant to this Section 7.3(d)(v) shall be made only if and to the
extent that such Partner would have an Adjusted Capital Account Deficit
after all other allocations provided for in this Section 7.3 (other
than Section 7.3(d)(iii)) have been tentatively made as if this Section
7.3(d)(v) were not in this Agreement.
(vi) Loss Allocation Limitation. No allocation of Net
Loss (or items thereof) shall be made to any Partner to the extent that
such allocation would create or increase an Adjusted Capital Account
Deficit with respect to such Partner.
(e) Curative Allocations. The allocations set forth in Section
7.3(d) (the "Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulations Section 1.704-l(b). Notwithstanding any
other provision of this Section 7 (other than the Regulatory Allocations), the
Regulatory Allocations shall be taken into account in allocating other
Partnership items of income, gain, loss, deduction and expense among the
Partners so that, to the extent possible, the net amount of such allocations of
other Partnership items and the Regulatory Allocations shall be equal to the net
amount that would have been allocated to the Partners pursuant to this Section
7.3 if the Regulatory Allocations had not occurred.
(f) Section 754 Adjustments. Pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m), to the extent an adjustment to the adjusted tax
basis of any Partnership asset under Section 734(b) or Section 743(b) of the
Code is required to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Treasury
Regulations.
(g) Transfer of or Change in Interests. The Board of Directors
is authorized to adopt any convention or combination of conventions that will be
upheld for federal income tax purposes regarding the allocation and/or special
allocation of items of Partnership income, gain, loss, deduction and expense
with respect to a newly issued Interest, a transferred Interest and a redeemed
Interest. Upon admission as a Substituted Partner, a transferee of an Interest
shall succeed to the Capital Account of the transferor Partner to the extent it
relates to the transferred Interest.
30
(h) Expenses. Syndication and organization expenses, as
defined in Section 709 of the Code, and other Partnership Expenses (and, to the
extent necessary as determined in the sole and absolute discretion of the Board
of Directors, any other items) shall be allocated to the Capital Accounts of the
Partners so that, as nearly as possible, the cumulative amount of such
syndication expenses, organization expenses, and other Partnership Expenses (and
other items, if relevant) allocated with respect to each dollar of Capital
Commitment for each Partner is the same amount.
(i) Allocation Periods and Unrealized Items. Subject to
applicable Treasury Regulations and other applicable law and notwithstanding
anything expressed or implied to the contrary in this Agreement, the Board of
Directors may, in its sole and absolute discretion, determine allocations to
Capital Accounts no less frequently than annually and/or on realized and upon
additional investment in the Partnership by a new or existing Partner, the
transfers of a Partner's Interest or the redemption of a Partner's Interest on
unrealized net increases or net decreases (as the case may be) in the Fair
Market Value of Partnership property.
7.4 Allocation of Net Losses from Operations. The Net Losses of the
Partnership for each Fiscal Year shall be allocated as follows:
(a) First, to the Partners, other than the holders of the
Preferred Interests, pro rata in accordance with such Partners' respective
Capital Accounts, until such Partners' Capital Accounts have a zero balance;
(b) Second, to the holders of the Preferred Interests until
their Capital Accounts have a zero balance; and
(c) Third, to the Partners, other than the holders of the
Preferred Interests.
7.5 Defaulting Partner. (a) If any Partner fails to contribute, in a
timely manner, any portion of the Capital Commitment required to be contributed
by such Partner pursuant to this Agreement and such failure continues for five
(5) Business Days after delivery by the Appropriate Officer to such Partner of
notice of such failure, then such Partner shall be deemed a "Defaulting
Partner," and this Section 7.5 shall apply. An Appropriate Officer shall deliver
to each non-Defaulting Partner written notice of such default as promptly as
practicable after its occurrence.
(b) The Partnership may exercise any remedy available to it at
law or equity against a Defaulting Partner. Not in limitation of any of the
Partnership's remedies, interest will accrue on the portion of the Defaulting
Partner's Capital Commitment that such Partner has failed to fund ("Failed
Capital Commitment"), at the Applicable Rate. The Partnership shall also be
entitled to reimbursement from a Defaulting Partner for any and all costs and
expenses in collecting any portion of a Failed Capital Commitment including,
without limitation, attorney's fees and disbursements (to the extent permitted
by applicable law).
7.6 Tax Allocations.
31
(a) Items of Partnership income, gain, loss, deduction and
expense shall be allocated, for federal, state and local income tax purposes,
among the Partners in the same manner as the Net Profit (and items thereof) and
Net Loss (and items thereof) of which such items are components were allocated
pursuant to Sections 7.3 and 7.4; provided, however, that tax allocations shall
be made in accordance with Section 704(c) of the Code and the Treasury
Regulations promulgated thereunder, to the extent so required thereby.
(b) Allocations pursuant to this Section 7.6 are solely for
federal, state and local income tax purposes and shall not affect, or in any way
be taken into account in computing, any Partner's Capital Account or share of
Net Profit (and items thereof) or Net Loss (and items thereof).
(c) The Partners are aware of the tax consequences of the
allocations made by this Section 7.6 and hereby agree to be bound by the
provisions of this Section 7.6 in reporting their shares of items of Partnership
income, gain, loss, deduction and expense.
7.7 Determinations by Board of Directors. All matters concerning the
computation of Capital Accounts, the allocation of Net Profit (and items
thereof) and Net Loss (and items thereof), the allocation of items of
Partnership income, gain, loss, deduction and expense for tax purposes and the
adoption of any accounting procedures not expressly provided for by the terms of
this Agreement shall be determined by the Board of Directors in accordance with
accounting principles generally accepted in the United States in its reasonable
discretion. Such determination shall be final and conclusive as to all the
Partners. Notwithstanding anything expressed or implied to the contrary in this
Agreement, in the event the Board of Directors shall determine, in its
reasonable discretion, that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto, are computed in order to
effectuate the intended economic sharing arrangement of the Partners as
reflected in Section 8, the Board of Directors may make such modification in its
reasonable discretion without the approval of Partners.
7.8 Net Asset Value. The net asset value (the "NAV") of the Partnership
will be calculated quarterly as of each March 31, June 30, September 30 and
December 31, in connection with each issuance of Shares or Preferred Interests
by the Partnership, and at such other times as determined by the Investment
Advisor or a majority of the Directors, in accordance with Valuation Policies
and guidelines approved from time to time by a majority of the Directors.
SECTION 8
WITHDRAWALS AND DISTRIBUTIONS OF CAPITAL
----------------------------------------
8.1 Withdrawals and Distributions in General. No Partner shall be
entitled to withdraw any amount from any Capital Account other than as provided
in this Agreement.
8.2 Distributions. After provision for Partnership Expenses and
establishment of working capital and other reserves as the Appropriate Officers
shall deem appropriate, the Di-
32
rectors may cause all cash and other property received by the Partnership in
respect of its investments in any Fiscal Period (collectively, "Investment
Proceeds") to be distributed:
(a) First, to the holders of Preferred Interests, if any, on
the record date set by the Directors with respect to such distribution as
required by the Certificate of Designations; and
(b) Second, to the holders of the Shares on the record date
set by the Directors with respect to such distribution, in proportion to such
Partners' respective Capital Investment.
8.3 Restrictions on Distributions. Notwithstanding anything expressed
or implied to the contrary in this Agreement, no distribution shall be made if,
as determined in the sole and absolute discretion of the Directors, (i) such
distribution would violate any contract or agreement to which the Partnership is
then a party or any law, rule, regulation, order or directive of any
governmental authority then applicable to the Partnership or (ii) the amount to
be distributed pursuant to this Section 8 is immaterial.
8.4 Deemed Sale of Assets. For all purposes of this Agreement, (i) any
property (other than United States dollars) that is distributed in-kind to one
or more Partners with respect to a Fiscal Period (including, without limitation,
any such in kind property that is distributed upon the dissolution and winding
up of the Partnership) shall be deemed to have been sold for cash equal to its
Fair Market Value, (ii) the unrealized gain or loss inherent in such property
shall be treated as recognized gain or loss for purposes of determining the Net
Profit and Net Loss, (iii) such gain or loss shall be allocated pursuant to
Sections 7.3 and 7.4 for such Fiscal Period and (iv) such in-kind distribution
shall be made after giving effect to such allocation.
8.5 Withholding. (a) Notwithstanding any other provision of this
Agreement, each Partner hereby authorizes the Partnership to withhold and to pay
over, or otherwise pay, any withholding or other similar taxes payable by the
Partnership or any of its affiliates (pursuant to the Code or any provision of
United States federal, state or local or non-U.S. tax law) with respect to such
Partner or as a result of such Partner's participation in the Partnership
(including as a result of a distribution in kind). If and to the extent that the
Partnership shall be required to withhold or pay any such withholding taxes or
other similar taxes attributable to a Partner, such Partner shall be deemed for
all purposes of this Agreement to have received a payment from the Partnership
as of the time that such withholding or other similar tax is required to be
paid, which payment shall be deemed to be a distribution of Investment Proceeds
pursuant to Section 8.2 with respect to such Partner's Interest to the extent
that such Partner (or any successor to such Partner's Interest) would have
received a cash distribution but for such withholding. To the extent that such
deemed payment exceeds the cash distribution that such Partner would have
received but for such withholding, the Board of Directors shall notify such
Partner as to the amount of such excess and such Partner shall make a prompt
payment to the Partnership of such amount by wire transfer. Such payment shall
not constitute a Capital Contribution or reduce such Partner's Unpaid Capital
Obligation, and any late payment or failure to pay shall not constitute a
default. Until the Partnership has received such payment, the Partnership may
hold back
33
from any distribution (and in the case of distributions in kind, property having
a Fair Market Value equal thereto) such excess. In the event that the
Partnership withholds any amounts from distributions to any Partner pursuant to
this Section 8.5, the Partnership shall indicate the amount so withheld to such
Partner.
(b) Any withholdings referred to in this Section 8.5 shall be
made at the maximum applicable statutory rate under the applicable tax law
unless the Board of Directors shall have received an opinion of counsel or other
evidence, satisfactory to the Board of Directors, to the effect that a lower
rate is applicable, or that no withholding is applicable.
(c) In the event that the Partnership receives a distribution
from or in respect of which tax has been withheld, the Partnership shall be
deemed to have received cash in an amount equal to the amount of such withheld
tax, and each Partner shall be deemed to have received as a distribution of
Investment Proceeds pursuant to Section 8.2 the portion of such amount that is
attributable to such Partner's Interest as equitably determined by the General
Partner in accordance with the Code.
8.6 Indemnification. Each Partner shall, to the fullest extent
permitted by applicable law, indemnify and hold harmless each Person who is or
who is deemed to be the responsible withholding agent for United States federal,
state or local or non-U.S. income tax purposes against all claims, liabilities
and expenses of whatever nature relating to such Person's obligation to withhold
and to pay over, or otherwise pay, any withholding taxes or other similar taxes
attributable to a Partner that are payable by the Partnership or such Person as
a result of such Partner's participation in the Partnership, provided that the
foregoing indemnity shall not apply to penalties associated with such Person's
failure to deduct or withhold taxes, unless such failure to deduct or withhold
(a) is in accordance with written instructions (including in any letter
agreement) provided by such Partner to the Partnership or the Board of Directors
in advance or (b) would not constitute Disabling Conduct. All indemnities and
reimbursement obligations set forth in Sections 8.5 and 8.6 shall survive
dissolution and liquidation of the Partnership until expiration of the longest
applicable statute of limitations (including extensions and waivers) with
respect to the matter for which a party would be entitled to be indemnified or
reimbursed, as the case may be.
SECTION 9
WITHDRAWAL OF PARTNERS; TRANSFER OF INTERESTS;
ADMISSION OF SUBSTITUTED PARTNERS; EFFECT OF DEATH, ETC.
--------------------------------------------------------
9.1 Withdrawal of Partners.
(a) Except as otherwise provided herein, no Partner shall have
the right to withdraw from the Partnership.
(b) The Board of Directors may (but shall not be required to)
terminate the Interest of any Partner and cause that Partner to withdraw from
the Partnership at any time
34
based on the advice of counsel and after a reasonable opportunity for
consultation with that Partner. Upon a determination by the Board of Directors
that the continued participation of that Partner in the Partnership might
adversely affect the Partnership by jeopardizing the treatment of the
Partnership as a partnership for federal income tax purposes, involve the
Partnership in any litigation arising out of or relating to the participation of
that Partner in the Partnership or subject the Partnership to restrictions or
other adverse consequences as a result of applicable laws or regulations. In the
event that the Board of Directors terminates a Partner's Interest, that Partner
shall immediately withdraw from the Partnership and cease to be a Partner of the
Partnership. Such withdrawal shall occur automatically upon termination without
the necessity of any further Partner or any other Person. The date of
termination shall be the effective date of withdrawal of the terminated Partner.
(c) The Partnership shall pay to the terminated Partner 90% of
the amount of the terminated Partner's Capital Account balance (determined in
accordance with the next sentence) within 90 days of termination or as soon
thereafter as the Partnership shall have sufficient funds available and shall
pay the remainder upon completion of that year's audit. Such amounts paid to a
terminated Partner shall not be entitled to interest for any period after the
date of termination.
(d) Upon the termination of the Investment Advisory Agreement,
the General Partner may, by written notice to the Board of Directors, tender to
the Partnership all or any portion of its Capital Account. Within 30 days after
the receipt of such notice, the Board of Directors shall cause the tendered
portion of such Capital Account to be repurchased by the Partnership for cash.
(e) From and after the effective date of withdrawal of a
Partner, such withdrawn Partner shall cease to be a Partner of the Partnership
for all purposes and the Interest of a withdrawn Partner shall not be included
in calculating the Interests of the Partners required to take any action under
this Agreement.
9.2 General Provisions Relating to Transfers of Limited Partner
Interests.
(a) A Limited Partner shall be entitled to transfer, assign,
sell, pledge, hypothecate or otherwise dispose of all or any portion of its
Interests (collectively, a "Transfer") upon the Board of Directors
determination, which determination the Board of Directors shall make in its
reasonable discretion, that the Transfer meets each of the following conditions
(a "Permitted Transfer"):
(i) such Transfer, itself or together with any other
Transfers, would not result in the Partnership being treated as a
publicly traded partnership within the meaning of Section 7704(b) of
the Code or otherwise being treated as a corporation for federal income
tax purposes;
(ii) such Transfer does not require the registration
or qualification of such Interests pursuant to any applicable federal
or state securities or "blue sky" laws;
35
(iii) such Transfer does not result in a violation of
other laws ordinarily applicably to such transactions;
(iv) the transferor and purported transferee each
shall have represented to the Board of Director in writing that such
Transfer was not effected through a broker-dealer or matching agent
that makes a market in Interests or that provides a readily available,
regular and ongoing opportunity to Partners to sell or exchange their
Interests;
(v) the transferor shall reaffirm, and the purported
transferee shall affirm, in writing his, her or its agreement to
indemnify as described in Section 9.4;
(vi) such Transfer would not result in employee
benefit plans (as defined in Section 3(3) of ERISA or Code Section
497(e)) and other benefit plan investors (as defined in Section
2510.3-101(f) of the Department of Labor Regulations under ERISA),
directly or indirectly owning, in the aggregate, 25% or more of the
Interests;
(vii) no facts are known to the Board of Directors
that cause the Board of Directors to conclude that such Transfer will
have a material adverse effect on the Partnership; and
(viii) the transferee has agreed in writing to become
a Limited Partner to and subject to all of the terms, obligations and
limitations of this Agreement.
(b) The Board of Directors may reasonably interpret, and are
hereby authorized to take such action as they deem necessary or desirable to
effect, the provisions of this Section 9.2. The Board of Directors may, in its
sole and absolute discretion, amend the provisions of this Section 9.2 in such
manner as may be necessary or desirable (or eliminate or amend such provisions
to the extent they are no longer necessary or desirable) to preserve the status
of the Partnership as a partnership for federal income tax purposes.
9.3 Effect of Transfers. Upon any Permitted Transfer, the transferee of
the transferred Interest shall be entitled to receive the distributions and
allocations to which the transferring Limited Partner would be entitled with
respect to such transferred Interest, but shall not be entitled to exercise any
of the other rights of a Limited Partner with respect to such transferred
Interest, unless and until such transferee is admitted to the Partnership as a
Substituted Partner pursuant to Section 9.5. If any transferee acquires an
Interest from a Limited Partner and does not satisfy the conditions of Section
9.2 or is not admitted to the Partnership as a Substituted Partner within three
months of the Transfer, the Partnership reserves the right to redeem the
Interest of such transferee.
9.4 Transfer Indemnity. Each Partner hereby agrees to indemnify and
hold harmless the Partnership, the Investment Advisor, each Director, each
Appropriate Officer and each Partner (and any successor or assign of any of the
foregoing) from and against all costs, claims, damages, liabilities, losses and
expenses (including losses, claims, damages, liabilities, costs and expenses of
any judgments, fines and amounts paid in settlement), joint or several, to
36
which those persons may become subject by reason of or arising from any Transfer
made in contravention of the provisions of this Agreement or any
misrepresentation made by such Partner in connection with any purported
Transfer.
9.5 Substituted Partners. No transferee of a transferred Limited
Partner Interest shall be admitted as a Limited Partner ("Substituted Partner")
until each of the following conditions has been satisfied:
(a) the Board of Directors approves of such action by written
consent, which may be withheld or granted in the sole and absolute discretion of
the Board of Directors;
(b) the execution and delivery to the Partnership of a
counterpart of this Agreement by the Substituted Partner or its agent or
attorney-in-fact;
(c) receipt by the Partnership of other written instruments
reasonably necessary to complete the transfer that are in form and substance
satisfactory to the Board of Directors (as determined in its sole and absolute
discretion);
(d) payment by the Substituted Partner to the Partnership of
an amount determined by the Board of Directors to be equal to the costs and
expenses incurred in connection with such assignment, including, without
limitation, costs incurred in preparing and filing such amendments to this
Agreement as may be required;
(e) the updating of the books and records of the Partnership
and Schedule A hereto as soon as reasonably practicable to reflect the Person's
admission as a Substituted Partner;
(f) if required by the Board of Directors in its sole and
absolute discretion, execution and affirmation to an instrument by the terms of
which such Person acknowledges that the relevant transfer of Interests have not
been registered under the Securities Act of 1933, as amended, or any applicable
state securities laws, and covenants, represents and warrants that such Person
acquired the relevant Interests for investment only and not with a view to the
resale or distribution thereof; and
(g) any other information or documentation similar to that
described in Section 9.5(f) as the Board of Directors may request;
9.6 Effect of Death, Etc. The death, retirement, withdrawal, expulsion,
disability, incapacity, incompetency, bankruptcy, insolvency or dissolution of a
Limited Partner, or the occurrence of any other event under the Act that
terminates the continued participation of a Limited Partner as a limited partner
of the Partnership, shall not cause the Partnership to be dissolved and its
affairs to be wound up so long as the Partnership has at least one Limited
Partner at all times. Upon the occurrence of any such event, the business of the
Partnership shall be continued without dissolution. The legal representatives,
if any, of a Limited Partner shall succeed as assignee to the Limited Partner's
Interest upon death, incapacity, incompetency, bankruptcy, insolvency or
dissolution of a Limited Partner, but shall not be admitted as a Substituted
Partner
37
except under the provisions of Section 9.5 of this Agreement and with the
written consent of the Board of Directors, which written consent the Board of
Directors may withhold in its sole and absolute discretion. Until such time, the
Shares or Preferred Interests held by such legal representative of a Limited
Partner shall not be included in calculating the Shares or Preferred Interests
of the Partners required to take any action under this Agreement.
9.7 Transfer of Interests of the General Partner. The General Partner
shall not sell, transfer, assign, convey, pledge, mortgage, encumber,
hypothecate or otherwise dispose of all or any part of its interest in the
Partnership (such disposition, a "GP Transfer"), except (i) a GP Transfer to a
Person that controls, is controlled by or under common control with, the General
Partner (such transferee, a "GP Substitute"), or (ii) the GP Transfer is
approved by the Board of Directors, including a majority of the Independent
Directors. In the event of a GP Transfer, all references herein to the
transferring general partner shall be deemed to apply to the GP Substitute, and
such GP Substitute shall succeed to all rights and obligations of the
transferring general partner hereunder. A Person shall be deemed admitted to the
Partnership as a GP Substitute at the time that the foregoing conditions are
satisfied and such Person agrees to all the terms of this Agreement applicable
to the transferring general partner.
9.8 Termination of Status of the General Partner. (a) The General
Partner shall cease to be the general partner of the Partnership if the General
Partner (i) dissolves or otherwise terminates its existence, (ii) voluntarily
withdraws as General Partner, (iii) transfers its entire Interest as General
Partner as permitted in Section 9.7 and the person to whom such Interest is
transferred is admitted as a substitute General Partner, or (iv) otherwise
ceases to be a general partner of the Partnership under Section 17-402(a) of the
Act.
(b) The General Partner may not withdraw voluntarily as
General Partner until the earliest to occur of the following: (i) one year from
the date on which the General Partner has given the Board of Directors written
notice of its intention to withdraw (or upon providing notice for a shorter
period if, in the opinion of counsel to the Partnership, such withdrawal is not
likely to cause the Partnership to lose its partnership tax classification);
(ii) the date on which the Investment Advisory Agreement is terminated; and
(iii) the date on which one or more persons have agreed to assume the
obligations of the General Partner with the approval of the Board of Directors.
SECTION 10
BOOKS AND RECORDS; REPORTS TO PARTNERS; TAX MATTERS
---------------------------------------------------
10.1 Books and Records. In compliance with Section 31 of the Investment
Company Act, the books and records of the Partnership, and a list of the names
and residence, business or mailing addresses and Interests of all Partners,
shall be maintained at the principal executive offices of the Partnership or
such other location as the Board of Directors may approve. The Partnership shall
not be required to provide any documentation or other information to Partners
except that which it is required to provide under the Investment Company Act,
the Act or other applicable law. Each Partner shall have the right to obtain
from the Partnership from time
38
to time upon reasonable demand for any proper purpose reasonably related to the
Partner's interest as a Partner of the Partnership, and upon paying the costs of
collection, duplication and mailing, the documents and other information which
the Partnership is required to provide under the Investment Company Act, the Act
or other applicable law. Any demand by a Partner pursuant to this section shall
be in writing. The Partnership may maintain such other books and records and may
provide such financial or other statements as the Board of Directors or the
Appropriate Officers in their discretion deem advisable.
10.2 Accounting; Tax Year.
(a) The books and records of the Partnership shall be kept on
the accrual basis. The Partnership shall report its operations for tax purposes
on the cash method or the accrual method, as determined by the Board of
Directors in its sole and absolute discretion, subject to applicable tax laws.
The taxable year of the Partnership shall be the calendar year, unless the Board
of Directors shall designate another taxable year for the Partnership that is a
permissible taxable year under the Code.
(b) The books and records of the Partnership shall be audited
by the Partnership's independent accountants as of the end of each Fiscal Year,
commencing with the first partial Fiscal Year, of the Partnership. The audit
required under this Section 10.2(b) shall be prepared by a "Big 4" accounting
firm selected by the Board of Directors.
10.3 Filing of Tax Returns. The Appropriate Officers shall prepare and
file, or cause the Partnership's accountants to prepare and file, a federal
information tax return and any required state and local income tax and
information returns for each taxable year of the Partnership. The Board of
Directors has sole and absolute discretion as to whether or not to prepare and
file (or cause the Partnership's accountants to prepare and file) composite,
group or similar state, local and foreign tax returns on behalf of the Partners
where and to the extent permissible under applicable law. Each Partner hereby
agrees to execute any relevant documents to furnish any relevant information and
otherwise to do anything necessary in order to facilitate, any such composite,
group or similar filing. Any taxes paid by the Partnership in connection with
any such composite, group or similar filing shall be treated as an advance to
the relevant Partners (with interest being charged thereon) and shall be
recouped by the Partnership out of any distributions subsequently made to such
relevant Partners. Such advances may be funded by Partnership borrowing. Both
the deduction for interest payable by the Partnership with respect to any such
borrowing, and the corresponding income from interest received by the
Partnership from the relevant Partners, shall be specifically allocated to such
Partners.
10.4 Tax Matters Partner. The General Partner shall be designated as
the tax matters partner of the Partnership (the "Tax Matters Partner") as
provided in Section 6231(a)(7) of the Code. Each Person (for purposes of this
provision, a "Pass-Through Partner") that holds or controls an Interest on
behalf of, or for the benefit of another Person or Persons, or which
Pass-Through Partner is beneficially owned (directly or indirectly) by another
Person or Persons shall, within 30 days following receipt from the Tax Matters
Partner of a notice or document, convey such notice or other document in writing
to all holders of beneficial interests in the Part-
39
nership holding such Interest through such Pass-Through Partner. In the event
the Partnership becomes the subject of an income tax audit by any federal, state
or local authority, to the extent the Partnership is treated as an entity for
purposes of such audit, including administrative settlement and judicial review,
the General Partner shall be authorized to act for, and its decision shall be
final and binding upon, the Partnership and each Partner. The Partnership shall
bear all expenses incurred in connection with any such audit, investigation,
settlement or review.
10.5 Tax Information for Current and Former Partners. Within 90 days
after the end of each taxable year of the Partnership or as soon thereafter as
practicable, the Partnership shall prepare and distribute to each Partner (and,
to the extent necessary, to each former Partner (or such Partner's legal
representatives)), at the expense of the Partnership, a report setting forth in
sufficient detail such information as shall enable such Partner or former
Partner (or such Partner's legal representatives) to prepare its respective
federal, state and local income tax returns in accordance with the laws, rules
and regulations then prevailing. The Partnership shall also provide Schedules
K-1 to Partners as soon as practicable after the end of each taxable year of the
Partnership and in any event within the time period required by the Internal
Revenue Service ("IRS") after the end of each taxable year of the Partnership.
10.6 Meetings with the IRS. Each Partner, prior to any hearing before
the IRS, shall receive prior written notice of such hearing. Partners shall have
the right to consult with representatives of the Partnership prior to the
hearing and to send representatives to observe the hearing. In the event of a
disagreement among the Partners with respect to any issue before the IRS, the
Investment Advisor, in its sole and absolute discretion, shall present the
Partnership's position before the IRS.
SECTION 11
LIABILITY, EXCULPATION AND INDEMNIFICATION
------------------------------------------
11.1 Liability. Except as provided in the Act, the General Partner has
the liabilities of a partner in a partnership without limited partners to
Persons other than the Partnership and the other Partners. Except as provided in
the Act and herein, the General Partner has the liabilities of a partner in a
partnership without limited partners to the Partnership and the other Partners.
Except as may otherwise be provided by law, the liability of each Limited
Partner is limited to its Capital Commitment and other obligations set forth in
this Agreement and the Subscription Agreements.
11.2 Exculpation. (a) To the extent permitted by applicable law, none
of the General Partner, any person controlling, controlled by or under common
control with the General Partner, any of their respective shareholders,
controlling Persons, officers, directors, partners, managers, members, employees
or agents or their respective affiliates, employees, agents or principals, or
any member of the Board of Directors or any officers, employees or agents of the
Partnership, or any Person who was, at the time of the act or omission in
question, such a Person (collectively, "Covered Persons") shall be liable to the
Partnership or any Partner for any act or omission taken or suffered by such
Covered Person, provided that such act or omission does not
40
constitute Disabling Conduct by the Covered Person and such act was taken or
suffered by such Covered Person in good faith and in the good faith belief that
such act or omission is in or is not contrary to the best interests of the
Partnership and is within the scope of authority granted to such Covered Person
by this Agreement. No Partner shall be liable to the Partnership or any Partner
for any action taken by any other Partner. No Limited Partner shall have any
fiduciary or any other duty to the Partnership or any other Partner other than
as required by applicable law or as expressly provided by this Agreement.
(b) A Covered Person shall incur no liability in acting upon
any signature or writing reasonably believed by it to be genuine, and may rely
on a certificate signed by an executive officer of any Person in order to
ascertain any fact with respect to such Person or within such Person's knowledge
and may rely on an opinion of counsel selected by such Covered Person with
respect to legal matters, except to the extent that such Covered Person engaged
in Disabling Conduct. Each Covered Person may act directly or through its agents
or attorneys. Each Covered Person may consult with counsel, appraisers,
engineers, accountants and other skilled Persons of its choosing, and shall not
be liable for anything done, suffered or omitted in good faith in reasonable
reliance upon the advice of any of such Persons, except to the extent that such
Covered Person engaged in Disabling Conduct. No Covered Person shall be liable
to the Partnership or any Partner for any error of judgment made in good faith
by a responsible officer or officers of the Covered Person, except to the extent
that such Covered Person engaged in Disabling Conduct. No Covered Person shall
be liable to the Partnership or any Partner for any mistake of fact or judgment
by the Covered Person in conducting the affairs of the Partnership or otherwise
acting in respect of and within the scope of this Agreement, except to the
extent that such Covered Person engaged in Disabling Conduct. No Covered Person
shall be liable for the return to any Limited Partner of all or any portion of
any Limited Partner's Capital Account or Capital Contributions, except to the
extent that such Covered Person engaged in Disabling Conduct or as expressly
required by this Agreement.
(c) To the extent that, at law or in equity, a Covered Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Partnership or to the Partners, any Covered Person acting under this Agreement
or otherwise shall not be liable to the Partnership or to any Partner for its
good faith reliance on the provisions of this Agreement. The provisions of this
Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of such Covered Person.
11.3 Indemnification of General Partner, etc. (a) The Partnership shall
and hereby does, to the fullest extent permitted by applicable law, indemnify,
hold harmless and release each Covered Person from and against all claims,
demands, liabilities, costs, expenses, damages, losses, suits, proceedings and
actions, whether judicial, administrative, investigative or otherwise, of
whatever nature, known or unknown, liquidated or unliquidated (a "Claim"), that
may accrue to or be incurred by any Covered Person, or in which any Covered
Person may become involved, as a party or otherwise, or with which any Covered
Person may be threatened, relating to or arising out of the business and affairs
of, or activities undertaken in connection with, the Partnership, or otherwise
relating to or arising out of this Agreement, including, but not
41
limited to, amounts paid in satisfaction of judgments, in compromise or as fines
or penalties, and counsel fees and expenses incurred in connection with the
preparation for or defense or disposition of any investigation, action, suit,
arbitration or other proceeding (a "Proceeding"), whether civil or criminal (all
of such Claims and amounts covered by this Section 11.3, and all expenses
referred to in Section 11.3(c), are referred to as "Damages"), except to the
extent that it shall have been determined ultimately that such Damages arose
from Disabling Conduct of such Covered Person or such Covered Person failed to
act in good faith and in the good faith belief that its actions or omissions
were in and not contrary to the best interests of the Partnership and within the
scope of authority granted to such Covered Person by this Agreement. The
termination of any Proceeding by settlement shall not, of itself, create a
presumption that any Damages relating to such settlement arose from a material
breach of this Agreement by, or Disabling Conduct of, any Covered Person. The
General Partner shall cause the Partnership to use its commercially reasonable
efforts to obtain the funds needed to satisfy its indemnification obligations
under this Section 11.3(a) from Persons other than Partners (for example, out of
Partnership assets or pursuant to insurance policies or indemnification
arrangements with third parties or out of borrowings) before causing the
Partnership to make payments pursuant to this Section 11.3. Notwithstanding the
foregoing, nothing in this Section 11.3(a) shall prohibit the General Partner
from causing the Partnership to make such payments if the General Partner
determines that the Partnership is not likely to obtain sufficient funds from
such other sources in a timely fashion, or that attempting to obtain such funds
would be futile or not in the best interests of the Partnership (for example,
nothing in this Section 11.3(a) shall require the General Partner to cause the
Partnership to sell any investment before such time as the General Partner shall
determine is advisable).
(b) At any time and from time to time, the General Partner may
require the Partners to return to the Partnership distributions received from
the Partnership to satisfy all or any portion of the indemnification obligations
of the Partnership pursuant to this Section 11.3, whether such obligations arise
before or after dissolution of the Partnership, provided that each Partner shall
return distributions in respect of its share of any such indemnification payment
in proportion to their respective Capital Commitments. Notwithstanding anything
in this Section 11.3(b) to the contrary, (i) no Partner shall be required to
make a return of distributions under this Section 11.3(b) with respect to an
indemnification obligation that arises in respect of a distribution after the
date that is the later of (x) the third anniversary of such distribution and (y)
the end of the Term; and (ii) no Partner shall be required to return a
distribution under this Section 11.3(b) with respect to an indemnification
obligation that arises in any instance not included in clause (i) of this
sentence after the end of the Term unless, in the case of clause (i) or (ii) of
this sentence, such Partner is notified in writing on or prior to such date of
the existence of any potential indemnification obligation with respect to which
a claim or demand has been made or which the General Partner has reasonably
concluded is expected to be made. Any distributions returned pursuant to this
Section 11.3(b) shall not be treated as Capital Contributions but shall be
treated as returns of distributions hereunder. Nothing in this Section 11.3(b),
express or implied, is intended or shall be construed to give any Person other
than the Partnership or the Partners any legal or equitable right, remedy or
claim under or in respect of this Section 11.3(b) or any provision contained in
this Agreement
42
(c) Expenses incurred by a Covered Person 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 the Covered Person to
repay such amount if it shall be determined ultimately that the Covered Person
is not entitled to be indemnified hereunder. The right of any Covered Person to
the indemnification provided herein shall be cumulative with, and in addition
to, any and all rights to which such Covered Person may otherwise be entitled by
contract or as a matter of law or equity and shall extend to such Covered
Person's successors, assigns and legal representatives. All judgments against
the Partnership and the General Partner, in respect of which the General Partner
is entitled to indemnification, shall first be satisfied from Partnership assets
(including Capital Contributions), before the General Partner is responsible
therefor.
(d) Promptly after receipt by a Covered Person of notice of
the commencement of any Proceeding, such Covered Person shall, if a claim for
indemnification in respect thereof is to be made against the Partnership, give
written notice to the Partnership of the commencement of such Proceeding,
provided that the failure of any Covered Person to give notice as provided
herein shall not relieve the Partnership of its obligations under this Section
11, except to the extent that the Partnership is actually prejudiced by such
failure to give notice. In case any such Proceeding is brought against a Covered
Person (other than a derivative suit in right of the Partnership), the
Partnership will be entitled to participate in and to assume the defense thereof
to the extent that the Partnership may wish, with counsel reasonably
satisfactory to such Covered Person. After notice from the Partnership to such
Covered Person of the Partnership's election to assume the defense of such
Proceeding, the Partnership will not be liable for fees and expenses of counsel
subsequently incurred by such Covered Person in connection with the defense
thereof. The Partnership will not consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Covered Person of a release from all
liability in respect of such Claim.
(e) The provisions of this Section 11.3 shall continue to
afford protection to each Covered Person regardless of whether such Covered
Person remains in the position or capacity pursuant to which such Covered Person
became entitled to indemnification under this Section 11.3 and regardless of any
subsequent amendment to this Agreement, and no amendment to this Agreement shall
reduce or restrict the extent to which these indemnification provisions apply to
actions taken or omissions prior to the date of such amendment.
(f) If the General Partner determines that it is appropriate
or necessary to do so, the General Partner may cause the Partnership to
establish reasonable reserves, escrow accounts or similar accounts to fund its
obligations under this Section 11.3.
(g) The right of any Covered Person to the indemnification
provided herein shall be cumulative with, and in addition to, any and all rights
to which such Covered Person may otherwise be entitled by contract or as a
matter of law or equity and shall extend to such Covered Person's successors,
assigns, heirs and legal representatives.
43
(h) Nothing contained in this Section 11 shall constitute a
waiver by any Partner of any right that it may have against any party under
United States federal or state securities laws.
(i) The Directors may cause the Partnership, at the
Partnership's expense, to purchase insurance to insure the Indemnified Persons
against liability hereunder (including liability arising in connection with the
operation of the Partnership), including, without limitation, for a breach or an
alleged breach of their responsibilities hereunder.
SECTION 12
COMPENSATION AND REIMBURSEMENT
------------------------------
12.1 Board of Directors. As compensation for services rendered to the
Partnership, the Partnership will pay each Director who is not an officer,
director or employee of the Investment Advisor or its affiliates (except if he
or she is an affiliate solely by virtue of serving as a director of one or more
other registered investment company advised by the Investment Advisor) such
amounts as may be determined from time to time by the Independent Directors.
12.2 Distributor, Administrator and Other Persons. As compensation for
services rendered to the Partnership or its Partners, the Partnership will pay
each administrator, transfer agent, custodian, accountant, attorney and other
agent or independent contractor duly engaged by or on behalf of the Partnership
to provide such services. The approval of any contract or agreement pursuant to
which a Person serves as a principal underwriter to the Partnership shall be
subject to the applicable requirements of the Investment Company Act.
12.3 Reimbursement for Partnership Expenses. The Partnership shall
reimburse the General Partner, the Investment Advisor and their affiliates for
Partnership Expenses incurred thereby in connection with the organization of the
Partnership, the Partnership's offer and sale of Shares and Preferred Interests,
if any, and the ongoing operations of the Partnership, to the extent such
expenses are not reimbursed by a Portfolio Company.
SECTION 13
DISSOLUTION AND TERMINATION
---------------------------
13.1 Dissolution. The Partnership shall be dissolved upon the
occurrence of any of the following:
(a) the end of the Term; and
(b) dissolution required by operation of law.
Dissolution of the Partnership shall be effective on the day on which the event
occurs giving rise to the dissolution, but the Partnership shall not terminate
until the assets of the Partnership have
44
been distributed as provided in Section 13.2 and the Certificate of Limited
Partnership of the Partnership has been canceled.
13.2 Liquidation. On dissolution of the Partnership, a liquidator (who
shall be selected by the Board of Directors, if still constituted, and otherwise
shall be a Person proposed and approved by a Majority in Interest of the
Partners) and who may be the Investment Advisor or any of its affiliates, shall
cause to be prepared a statement setting forth the assets and liabilities of the
Partnership as of the date of dissolution, and such statement shall be furnished
to all of the Partners. Then, those Partnership assets that the liquidator
determines should be liquidated shall be liquidated as promptly as possible, but
in an orderly and business-like manner to minimize loss. Assets that the
liquidator determines to distribute in kind shall be distributed in a manner
consistent with applicable law. If the liquidator determines that an immediate
sale at the time of liquidation of all or part of the Partnership assets would
cause undue loss to the Partners, the liquidator may, in order to avoid such
loss, either defer liquidation and retain the assets for a reasonable time, or
distribute the assets to the Partners in kind. The liquidator shall then wind up
the affairs of the Partnership and distribute the proceeds of the Partnership by
the end of the calendar year of the liquidation (or, if later, within 90 days
after the date of such liquidation) in the following order or priority:
(a) to the payment of the expenses of liquidation and to
creditors (including Partners who are creditors, to the extent permitted by law)
in satisfaction of liabilities of the Partnership other than liabilities for
distributions to Partners, in the order of priority as provided by law;
(b) to the setting up of any reserves that the liquidator may
deem necessary or appropriate for any anticipated obligations or contingencies
of the Partnership or of the liquidator arising out of or in connection with the
operation or business of the Partnership. Such reserves may be paid over by the
liquidator to an escrow agent or trustee proposed and approved by the liquidator
to be disbursed by such escrow agent or trustee in payment of any of the
aforementioned obligations or contingencies and, if any balance remains at the
expiration of such period as the liquidator shall deem advisable, to be
distributed by such escrow agent or trustee in the manner hereinafter provided;
and
(c) to the Partners or their legal representatives in
accordance with the positive balances in their respective Capital Accounts, as
determined after taking into account all adjustments to Capital Accounts for all
periods.
13.3 Termination. The liquidator shall comply with any requirements of
the Act or other applicable law pertaining to the winding up of a limited
partnership, at which time the Partnership shall stand terminated.
45
SECTION 14
AMENDMENTS
----------
14.1 Proposal of Amendments. Except as otherwise specified in this
Agreement, any amendment to this Agreement may be proposed by the General
Partner, by any Director or by Limited Partners who, in aggregate, own more than
50% of the Shares owned by all such Partners. The Person or Persons proposing
such amendment shall submit to the Board of Directors: (i) the text of such
amendment; (ii) a statement of the purpose of such amendment; and (iii) in the
case of an amendment so proposed by the Limited Partners, an opinion of counsel
reasonably acceptable to the Directors obtained by the Limited Partners
proposing such amendment to the effect that such amendment is permitted by the
Investment Company Act, the Act and the laws of any other jurisdiction where the
Partnership is qualified to do business, will not impair the limited liability
of the Directors or Limited Partners, and will not adversely affect the
classification of the Partnership as a partnership for federal and state income
tax purposes. To the extent required by the Investment Company Act, the Board of
Directors shall, within 40 days after receipt from Limited Partners of proposal
under clause (iii) of this Section 14.1 and the required opinion, give
notification to all Partners of such proposed amendment, of such statement of
purpose, and of such opinion of counsel, together with the views, if any, of the
Board of Directors and the General Partner with respect to such proposed
amendment. All amendments validly proposed by Limited Partners pursuant to
clause (iii) of this Section 14.1 or proposed by Directors or the General
Partner but requiring the approval of the Partners shall be submitted to the
Partners for a vote no less than ten (10) days nor more than ninety (90) days
after the date of mailing of such notice and will be adopted if approved by an
affirmative vote of a Majority in Interest of the Partners, subject to the
approval of any greater number of Partners as may be required by applicable law.
14.2 Amendments to Be Adopted Solely by the Board of Directors. Subject
to Section 14.3, the Board of Directors may, without the consent of any Partner
may: (i) amend any provision of this Agreement which requires any action to be
taken by or on behalf of the Board of Directors or the Partnership pursuant to
requirements of Delaware law if the provisions of Delaware law are amended,
modified or revoked so that the taking of such action is no longer required;
(ii) take such action in light of changing regulatory conditions or of the then
current ERISA regulations, as the case may be, as is necessary in order to
permit the Partnership to continue in existence or otherwise to comply with such
ERISA or other regulations; (iii) correct any clerical mistake or to correct or
supplement any immaterial provision herein or in the Certificate of Limited
Partnership which may be inconsistent with any other provision herein or
therein, or correct any printing, stenographic or clerical errors or omissions,
which shall not be inconsistent with the provisions of this Agreement or the
status of the Partnership as a partnership for federal income tax purposes; (iv)
change the name of the Partnership; and (v) take any action set forth in Section
3.16 hereof.
14.3 Amendments Not Allowable. Unless approved by the Partners affected
thereby, no amendment to this Agreement shall be permitted if the effect of such
amendment would be to:
46
(a) impair the limited liability of Partners provided for in
Section 11.1;
(b) adversely affect in any way the federal income tax status
of the Partnership as a partnership; or
(c) change the purpose, Term, capital contribution, allocation
or distribution provisions of this Agreement.
SECTION 15
POWER OF ATTORNEY
-----------------
15.1 Power of Attorney. Each Partner hereby irrevocably constitutes and
appoints each Director and each Appropriate Officer, and their respective
designees, as such Partner's true and lawful agents and attorneys-in-fact, with
full power and authority in such Partner's name, place, and stead, to make,
execute, acknowledge, deliver, file, and record the following documents and
instruments in accordance with the other provisions of this Agreement;
(a) this Agreement and a certificate of limited partnership, a
certificate of doing business under fictitious name and any other instrument
that may be required to be filed in connection with the formation and operation
of the Partnership under the laws of Delaware or any other state;
(b) any and all amendments, restatements, cancellations, or
modifications of the instruments described in Section 15.1(a);
(c) any and all instruments related to the admission, removal,
or withdrawal of any Partner; and
(d) all documents and instruments that may be necessary or
appropriate to effect the dissolution and termination of the Partnership,
pursuant to the terms hereof.
15.2 Irrevocability. The foregoing power of attorney is coupled with an
interest and such grant shall be irrevocable. Such power of attorney shall
survive the subsequent Incapacity of any such Partner or the transfer of any or
all of such Partner's Shares or Preferred Interests.
15.3 Priority of Agreement. In the event of any conflict between
provisions of this Agreement or any amendment hereto and any documents executed,
acknowledged, sworn to, or filed by any Director or Appropriate Officer under
this power of attorney, this Agreement and its amendments shall govern.
15.4 Exercise of Power. This power of attorney may be exercised by any
Director either by signing separately as attorney-in-fact for each such Director
or by a single signature of any Director or Appropriate Officer acting as
attorney-in-fact for all Directors.
47
SECTION 16
MISCELLANEOUS
-------------
16.1 Certificate of Limited Partnership. On each subsequent change in
the Partnership specified in the Act, the General Partner shall, to the extent
required by the Act, cause to be executed and acknowledged an amended
Certificate of Limited Partnership pursuant to the provisions of the Act, which
will be duly filed as prescribed by Delaware law.
16.2 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE INTERPRETED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED WHOLLY WITHIN THAT JURISDICTION.
16.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute a single agreement.
16.4 Binding upon Successors and Assigns. Subject to and unless
otherwise provided in this Agreement, each and all of the covenants, terms,
provisions, and agreements herein contained shall be binding upon and inure to
the benefit of the successors, successors-in-title, heirs and assigns of the
respective parties hereto.
16.5 Notices. Any notice, offer, consent, or demand permitted or
required to be made under this Agreement to any party hereto shall be given in
writing signed by the Person giving such notice either by (i) personal delivery
or (ii) by registered or certified mail, postage prepaid, addressed to that
party at the respective address shown on the Partnership's books and records, or
to such other address as that party shall indicate by proper notice to the Board
of Directors, in the same manner as provided above. All notices shall be deemed
effective upon receipt or five days after the date of mailing in accordance with
the above provisions.
16.6 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be effected thereby, but
shall be enforced to the maximum extent possible under applicable law.
16.7 Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
hereof and supersedes all prior agreements or understandings, written or oral,
between the parties with respect thereto.
16.8 Headings, Etc. The table of contents, headings and subheadings in
this Agreement are inserted for convenience of reference only and shall not
affect interpretation of this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine or the
neuter genders shall include the masculine, the feminine and the neuter.
48
16.9 Legends. If certificates are issued evidencing a Partner's Shares
or Preferred Interests, each such certificate shall bear such legends as may be
required by applicable federal and state laws, or as may be deemed necessary or
appropriate by the Board of Directors to reflect restrictions upon transfer
contemplated herein.
16.10 Waiver of Partition. Except as may otherwise be provided by law
in connection with the winding up, liquidation and dissolution of the
Partnership, each Partner hereby irrevocably waives any and all rights that it
may have to maintain an action for partition of any of the Partnership's
property.
16.11 Non-Waiver. No provision of this Agreement shall be deemed to
have been waived except if the giving of such waiver is contained in a written
notice given to the party claiming such waiver, and no such waiver shall be
deemed to be a waiver of any other or further obligation or liability of the
party or parties in whose favor the waiver was given.
16.12 Confidentiality. Each Limited Partner agrees that it shall not
disclose without the prior consent of the General Partner (other than to such
Limited Partner's employees, auditors or counsel) the contents of this Agreement
or any other information with respect to the Partnership or any investment that
is designated by the General Partner to such Limited Partner in writing as
confidential, provided that a Limited Partner may disclose any such information
(i) as has become generally available to the public through no act or omission
of such Limited Partner, (ii) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or national (including
foreign) regulatory body or securities exchange having jurisdiction over such
Limited Partner or its affiliates, or to the National Association of Insurance
Commissioners or similar organizations and their successors, (iii) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation and (iv) to the extent necessary in order to comply with any
law, order, regulation, ruling or other governmental request or requirements of
a securities exchange applicable to such Limited Partner or its Affiliates. In
order to prevent the public disclosure of confidential information by Limited
Partners that are, or may reasonably be expected to be, subject, directly or
indirectly, to freedom of information laws, the General Partner may elect not to
provide copies of confidential information to such Limited Partners, provided
that the General Partner shall be required to provide such Limited Partners with
reasonable access to such confidential information, including by permitting such
Limited Partner or its counsel or duly appointed agents to view such
confidential information at the offices of the General Partner during regular
business hours.
16.13 Survival of Certain Provisions. All indemnities and reimbursement
obligations made pursuant to this Agreement shall survive dissolution and
liquidation of the Partnership until the expiration of the longest applicable
statute of limitations (including extensions and waivers) with respect to the
matter for which a party would be entitled to be indemnified or reimbursed, as
the case may be.
16.14 Partnership Counsel. Each Limited Partner hereby acknowledges and
agrees that Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP (and its affiliated law
practice entities) and any other law firm retained by the General Partner in
connection with the organization of the
49
Partnership, the offering of interests in the Partnership, the management and
operation of the Partnership, or any dispute between the General Partner and any
Limited Partner, is acting as counsel to the General Partner and as such does
not represent or owe any duty to such Limited Partner or to the Limited Partners
as a group.
16.15 Waiver of Partition. Except as may otherwise be provided by law
in connection with the winding up, liquidation and dissolution of the
Partnership, each Partner hereby irrevocably waives any and all rights that it
may have to maintain an action for partition of any of the Partnership's
property. For the purposes of the Act and this Agreement, the Limited Partners
shall constitute a single class, series and group of Limited Partners.
16.16 Entire Agreement. This Agreement and the Subscription Agreements
constitute the entire agreement among the Partners and between the Partners and
the Initial Limited Partner with respect to the subject matter hereof, and
supersede any prior agreement or understanding among them with respect to such
subject matter. The representations and warranties of the General Partner and
the Limited Partners in, and the other provisions of, the Subscription
Agreements shall survive the execution and delivery of this Agreement. The
Partnership shall not enter into a side letter agreement with any Limited
Partner which changes such Limited Partner's rights or obligations hereunder or
otherwise provides to such Limited Partner preferential treatment in connection
with this Agreement.
50
IN WITNESS WHEREOF, the undersigned have executed this Amended
and Restated Limited Partnership Agreement as of May 8, 2006.
GENERAL PARTNER:
RIC COINVESTMENT FUND GP LLC
By:
------------------------------------
Name:
Title:
INITIAL LIMITED PARTNER:
-----------------------
----------------------------------------
Xxxxxx X. Xxxxxxx
51
SCHEDULE A
Limited Partners and Capital Commitments
----------------------------------------
Limited Partner Capital Commitment
52
SCHEDULE B
Board of Directors
------------------
Xxxxxx X. Xxxxx
Xxxxxx Xxxxxxxxxxx
Xxxx Sites
53
SCHEDULE C
Fundamental Investment Restrictions
-----------------------------------
The Partnership's investment objective as set forth in Section 2.6 hereof and
the following investment restrictions are fundamental and cannot be changed
without approval of a majority of the Directors and the approval of a 40 Act
Majority of Partners. If a percentage restriction on investment or use of assets
set forth below is adhered to at the time a transaction is effected, later
changes in percentage resulting from changing market values will not be
considered a deviation from policy. Subject to the foregoing, the Partnership
may not:
(1) borrow money or issue senior securities except in compliance with
the Limited Partnership Agreement and the Investment Company Act;
(2) make loans of money or property to any Person, except as may be
consistent with the Partnership's investment objectives and policies;
(3) underwrite the securities of other issuers, except to the extent
that in connection with the disposition of Portfolio Investments or the sale of
its own Shares or Preferred Interests or the sale of Portfolio Investments the
Partnership may be deemed to be an underwriter;
(4) purchase real estate or interests therein to the extent that, as a
result of such investments, the Partnership would not be an investment company
by virtue of Section 3(c)(5)(C) or 3(c)(6) of the Investment Company Act;
(5) purchase or sell commodities or commodity contracts for any
purposes except as, and to the extent, permitted by applicable law without the
Partnership becoming subject to registration with the Commodity Futures Trading
Commission as a commodity pool; or
(6) invest in excess of 25% of its capital in assets in any industry
other than assisted living, retirement home and related industries and real
estate and real estate financial products industry, including mortgage loans and
other Real Estate-Related Assets of the types described herein, except that the
Partnership may invest without limit in securities backed by the credit of the
United States of America or agencies or instrumentalities thereof and Short-Term
Investments.
54
APPENDIX A
Certificate of Designations
---------------------------
55
