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EXHIBIT 10.52
ECM PARTNERS II, L.P.
(A Delaware Limited Partnership)
AGREEMENT OF LIMITED PARTNERSHIP
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Dated as of March 1, 2000
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ECM PARTNERS II, L.P.
AGREEMENT OF LIMITED PARTNERSHIP
This Agreement of Limited Partnership of ECM Partners II, L.P., a Delaware
limited partnership, is made effective as of the 1st day of March, 2000 by ECM
GP LLC, a Delaware limited liability company (the "General Partner"), together
with such other Persons that may hereafter become Partners as provided herein.
ARTICLE 1
DEFINITIONS
The capitalized terms used in this Agreement shall, unless the context otherwise
requires, have the meanings specified in this Article 1.
ACT: means the Delaware Revised Uniform Limited Partnership Act, 6 Del.
C. Section 17-101, et seq., as it may be amended from time to time.
AFFILIATE: means any Person directly or indirectly, through one or more
intermediaries, Controlling, Controlled by, or under common Control with a
Person. The term "CONTROL" as used in the immediately preceding sentence, means,
with respect to a corporation, the right to exercise, directly or indirectly,
more than 50% of the voting rights for the election of a majority of the board
of directors of the Controlled corporation and with respect to any other Person,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the Controlled Person.
AGREEMENT: means this Agreement of Limited Partnership, which shall constitute
the limited partnership agreement of the Partnership for purposes of the Act, as
the same may be amended, supplemented, or otherwise modified from time to time.
BUSINESS DAY: means any day other than a Saturday, Sunday and those legal public
holidays specified in 5 U.S.C. Section 6103(a), as it may be amended from time
to time.
CAPITAL ACCOUNT: means, with respect to any Partner, a separate account
established by the Partnership and maintained for each Partner in accordance
with Section 4.6 hereof.
CAPITAL CONTRIBUTION: means the total amount of cash or the agreed Fair Market
Value of property contributed to the Partnership by all the Partners or any one
Partner, as the case may be, as shown on Schedule I, as the same may be amended
from time to time.
CARRIED INTEREST: means "Carried Interest", as defined in the LLC2 Agreement.
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CERTIFICATE: means the certificate of limited partnership of the Partnership as
filed on March 3, 2000 with the Secretary of State of the State of Delaware, as
amended or restated from time to time in accordance with the Act.
CLIENTLOGIC: ClientLogic Corporation (formerly known as ClientLogic Holding
Corporation), a Delaware corporation and its successors.
CODE: means the United States Internal Revenue Code of 1986, as amended. All
reference herein to sections of the Code shall include any corresponding
provision or provisions of succeeding law.
ELIGIBLE PERSON: means a Person who has the right to inspect the Partnership's
records pursuant to Section 7.2(b) hereof.
FAIR MARKET VALUE: means with respect to any asset, an amount determined in good
faith by the General Partner representing the current market value of such
asset.
FLP: means ▇▇▇▇▇▇▇▇ Family, L.L.P, a Texas limited liability partnership.
GENERAL PARTNER: means ECM GP LLC, a Delaware limited liability company, and any
other Person which is admitted to the Partnership as a substituted or additional
General Partner.
GROSS ASSET VALUE: means, with respect to any asset, such asset's adjusted basis
for federal income tax purposes, except as follows:
(i) the initial Gross Asset Value of any asset contributed by a Partner
to the Partnership shall be the gross Fair Market Value of such asset (computed
without taking into account Section 7701(g) of the Code);
(ii) the Gross Asset Value of all Partnership assets shall be adjusted,
in accordance with Treas. Reg. Section 1.704-1(b)(2)(iv)(f) and (g), to equal
their respective gross Fair Market Values (without reduction for liabilities) as
of the following times: (a) the acquisition of an additional Interest by any new
or existing Partner in exchange for more than a de minimis Capital Contribution;
(b) the distribution by the Partnership to a Partner of more than a de minimis
amount of Partnership assets as consideration for an Interest; (c) a
determination by all of the Partners that the initial Gross Asset Value of any
asset contributed by a Partner to the Partnership was incorrectly determined at
the time such asset was so contributed; and (d) the liquidation of the
Partnership within the meaning of Treas. Reg. Section 1.704-1(b)(2)(ii)(g);
provided, however, that adjustments pursuant to clause (a) and clause (b) of
this sentence shall be made only if the Partnership reasonably determines that
such adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership; and
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(iii) the Gross Asset Value of any asset distributed to any Partner
shall be the gross Fair Market Value of such asset on the date of distribution
(computed without taking into account Section 7701(g) of the Code), without
reduction for liabilities.
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to paragraph (i) or paragraph (ii) above, such Gross Asset
Value shall thereafter be adjusted by the depreciation taken into account with
respect to such asset for purposes of computing Net Profits and Net Losses.
INTEREST: means all rights and interests of a Partner in the Partnership under
this Agreement and the Act, including (i) the right of a Partner, expressed as a
percentage on Schedule I, to receive distributions of revenues, allocations of
income and loss and distributions of liquidation proceeds under this Agreement,
(ii) the right to a distributive share of the assets of the Partnership; (iii)
the right, if a Limited Partner, to consent to certain actions of the General
Partner as set forth in Section 8.2 of this Agreement, and (iv) the right, if
the General Partner, to participate in the management of the affairs of the
Partnership, together with the obligations of such Partner to comply with all of
the terms and provisions of this Agreement and under the Act.
LIMITED PARTNER: means each Person whose name is set forth on Schedule I hereto
other than the General Partner, and any other Person which is admitted to the
Partnership as a substituted or additional Limited Partner.
LIQUIDATOR: means the Person who supervises the winding up of the Partnership in
accordance with Section 11.2 hereof.
LLC2: means ONEX CLIENTLOGIC HOLDINGS LLC, a Delaware limited liability company.
LLC2 AGREEMENT: means the Amended and Restated Limited Liability Company
Agreement of LLC2 dated as of January 28, 2000, as the same may be amended,
supplemented or otherwise modified from time to time.
MAJORITY-IN-INTEREST: means Limited Partners holding more than fifty percent
(50%) of the total Interests in the Partnership of all of the Limited Partners.
"NET PROFITS" and "NET LOSSES": means, for each fiscal year or portion thereof,
an amount equal to the Partnership's taxable income or loss for such fiscal year
or portion thereof, as determined for federal income tax purposes, and computed
in accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be separately stated pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss),
provided, however, for purposes of computing such taxable income or loss: (i)
any deductions for depreciation, cost recovery or amortization attributable to
any assets of the Partnership shall be determined in accordance with the Code,
except that if the Gross Asset Value of an asset differs from its adjusted tax
basis for federal income tax purposes at any time during such fiscal year, the
deductions for
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depreciation, cost recovery or amortization attributable to such asset from and
after the date during such fiscal year in which such difference first occurs
shall bear the same ratio to the Gross Asset Value as of such date as the
federal income tax depreciation, amortization or other cost recovery deduction
for such fiscal year from and after such date bears to the adjusted tax basis as
of such date; (ii) any gain or loss attributable to the taxable disposition of
any Partnership property shall be determined by the Partnership as if the
adjusted tax basis of such property as of the date of such disposition were such
Gross Asset Value reduced by all amortization, depreciation, and cost recovery
deductions (determined in accordance with clause (a) above) which are
attributable to the property; (iii) the computation of all items of income,
gain, loss, and deduction shall be made without regard to any basis adjustment
under Section 743 of the Code which may be made by the Partnership; (iv) any
receipts of the Partnership that are exempt from federal income tax and are not
otherwise included in taxable income or loss shall be added to such taxable
income or loss; and (v) any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as expenditures described in Section
705(a)(2)(B) of the Code pursuant to Treas. Reg. Section 1.704-1(b)(2)(iv)(i)
shall reduce such taxable income or increase such loss. An allocation of Net
Profit or Net Loss to a Partner shall be treated as an allocation to such
Partner of the same share of each item of income, gain, loss, deduction, and
item of tax-exempt income or Section 705(a)(2)(B) expenditure (or item treated
as such expenditure pursuant to Treas. Reg. Section 1.704-1(b)(2)(iv)(i)) that
is taken into account in computing Net Profit or Net Loss.
NOTIFICATION: means a writing containing any information required by this
Agreement to be communicated to any Person, which may be personally delivered,
sent by registered or certified mail, postage prepaid, or sent by facsimile
transmission promptly confirmed to such Person, at the last known address of
such Person on the Partnership records. Any such notification shall be deemed
given (i) when delivered, in the case of personal delivery, (ii) on the date on
which it is deposited in a regularly maintained receptacle for the deposit of
United States mail addressed and sent as aforesaid, in the case of mail, and
(iii) within the first business hour (being 9:00 a.m. to 5:00 p.m., local time
for the recipient, on any Business Day) after receipt by the addressee, in the
case of facsimile transmission. Any communication containing information sent to
any Person other than as required by the foregoing sentences, but which is
actually received by such Person, shall constitute Notification as of the date
of such receipt for all purposes of this Agreement.
PARTNER: means, at any time, the Persons who then own Interests in the
Partnership, both as General Partner and Limited Partners and have been admitted
as Partners of the Partnership pursuant to this Agreement. The initial Partners
are listed on Schedule I.
PARTNERSHIP: means the limited partnership formed pursuant to this Agreement.
PARTNERSHIP PROPERTY: means all interests, properties and rights of any type
owned by the Partnership, whether owned by the Partnership at the date of its
formation or thereafter acquired.
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PERCENTAGE INTEREST: of a Partner, means such Partner's aggregate Partnership
Interest in the Partnership as set forth on Schedule I hereto, as the same may
be limited pursuant to Section 4.2 hereof, or as modified from time to time as
provided herein.
PERSON: means any natural person, limited liability company, limited liability
partnership, general partnership, joint stock association, limited partnership,
corporation, joint venture, trust, business trust, estate, cooperative,
association or other entity and the heirs, executors, administrators, successors
and permitted assigns of any such Person where the context requires.
REGULATION: means any regulation, including temporary regulations, promulgated
by the United States Department of Treasury with respect to the Code, as such
regulations are amended from time to time, or corresponding provisions of future
regulations.
"SUBSTITUTED PARTNER": means a Transferee of a Partnership Interest who becomes
a Partner pursuant to the terms of Article 9 of this Agreement and succeeds, to
the extent Transferred, to the rights and powers and becomes subject to the
restrictions and liabilities of the Transferor Partner and to the terms of this
Agreement.
TAX ITEMS: means, with respect to any property, all items of profit and loss
(including tax depreciation) recognized by or allowable to the Partnership with
respect to such property, as computed for federal income tax purposes.
"TRANSFER" or "TRANSFERRED": means (a) when used as a verb, to give, sell,
exchange, assign, transfer, pledge, hypothecate, bequeath, devise or otherwise
dispose of or encumber, and (b) when used as a noun, the nouns corresponding to
such verbs, in either case voluntarily or involuntarily, by operation of law or
otherwise. When referring to an Interest, "Transfer" shall mean the Transfer of
such Interest whether of record, beneficially, by participation or otherwise.
VESTED PERCENTAGE: means, as to each Limited Partner other than FLP, the
percentage set forth below opposite the latest date on which such Limited
Partner is (or was) employed by ClientLogic or any Affiliate of ClientLogic,
unless such date is accelerated as provided for below:
DATE VESTED PERCENTAGE
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LIMITED PARTNERS ▇▇▇▇ ▇.
EXCEPT FLP OR ▇▇ ▇▇▇▇▇▇▇ ("GM")
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OCTOBER 1, 1999 APRIL 1, 1999 0%
OCTOBER 1, 2000 APRIL 1, 2000 25%
OCTOBER 1, 2001 APRIL 1, 2001 50%
OCTOBER 1, 2002 APRIL 1, 2002 75%
OCTOBER 1, 2003 APRIL 1, 2003 100%
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Notwithstanding the foregoing vesting schedule, in the event that (i) LLC2
redeems the Carried Interest for cash or (ii) the Partnership no longer owns any
stock, directly or indirectly in ClientLogic, then on the date either such event
occurs, all of the Limited Partners except FLP shall be deemed to have a vested
Percentage of 100% from that date forward.
ARTICLE 2
ORGANIZATION
2.1 FORMATION OF PARTNERSHIP. The Partners have formed a limited partnership
pursuant to and in accordance with the provisions of the Act. The General
Partner has filed or will file, on behalf of the Partnership, the Certificate.
2.2 NAME. The name of the Partnership is ECM Partners II, L.P. The General
Partner may, in its sole discretion, change the name of the Partnership from
time to time and shall give prompt written notice thereof to the Limited
Partners; provided, however, that such name may not contain any portion of the
name or ▇▇▇▇ of any Partner without such Partner's consent. In any such event,
the General Partner shall promptly file in the office of the Secretary of State
of the State of Delaware an amendment to the Partnership's Certificate
reflecting such change of name.
2.3 CHARACTER OF BUSINESS. The purpose of the Partnership shall be to engage in
any lawful business as may be conducted by a limited partnership organized under
the laws of the State of Delaware.
2.4 DATE OF DISSOLUTION. The term of the Partnership commenced on the filing of
the Certificate and shall continue in perpetuity or until earlier dissolution
under Article 11 hereof or under the provisions of the Act. The existence of the
Partnership as a separate legal entity shall continue until cancellation of the
Certificate in the manner required by the Act.
2.5 QUALIFICATION. The General Partner of the Partnership is hereby authorized
to qualify the Partnership to do business as a foreign limited partnership in
each state and the General Partner is hereby designated as an "authorized
person" within the meaning of the Act, to execute, deliver and file any
amendments or restatements of the Certificate and any other certificates and any
amendments or restatements thereof necessary for the Partnership to so qualify
to do business in any such state.
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2.6 REGISTERED OFFICE AND AGENT. The name and address of the Partnership's
initial registered agent are Corporation Trust Company, Corporation Trust
Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. The
Partnership's initial principal place of business shall be ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The General Partner may change such registered
agent, registered office, or principal place of business from time to time. The
General Partner shall give prompt written notice of any such change to each
Limited Partner. The Partnership may from time to time have such other place or
places of business within or without the State of Texas as may be determined by
the General Partner.
ARTICLE 3
PARTNERS
3.1 INITIAL PARTNERS. The names and addresses of the initial Partners of the
Partnership are as set forth on Schedule I of this Agreement. At the date
hereof, the sole General Partner of the Partnership is ECM GP LLC and no other
Person has any right to take part in the management of the Partnership.
3.2 ADMISSION OF ADDITIONAL PARTNERS. Subject to the requirements of Section
4.3, additional Partners of the Partnership may be admitted as follows:
(a) If the proposed additional Partner desires to purchase an Interest
from the Partnership, such purchase may be made and the admission of the
additional Partner shall become effective only if the identity of the proposed
additional Partner and the amount of the Capital Contribution to be made by such
proposed additional Partner in exchange for such proposed additional Partner's
Interest is first approved by the General Partner.
(b) If the proposed additional Partner desires to acquire an Interest
in a Transfer from an existing Partner, such Transfer may be made and the
admission of the additional Partner shall become effective only in accordance
with Article 9. All other attempted Transfers of any interest or right, or any
part thereof, in or in respect of the Partnership shall be null and void ab
initio.
3.3 WITHDRAWAL. Except as provided in the immediately following sentence, no
Partner shall have the right to withdraw from the Partnership or to demand a
return of all or any part of its Capital Contribution or such Partner's Capital
Account during the term of the Partnership, and any return of a Partner's
Capital Contribution or Capital Account shall be made solely from the assets of
the Partnership and only in accordance with the terms of this Agreement. If a
Partner makes a Transfer in accordance with Article 9 of all of such Partner's
Partnership Interest and if each of the Transferees of such entire Interest have
been admitted to the Partnership as Substituted Partners as provided in said
Article 9, such Transferring Partner may resign or withdraw from the Partnership
following such admission.
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3.4 REMOVAL OF GENERAL PARTNER.
(a) The General Partner may be removed by a vote of a
Majority-in-Interest of the Limited Partners (and the fact that FLP is an
Affiliate of the General Partner shall in no way impair FLP's right to vote on
any such removal or on the appointment of any successor General Partner) and
will thereafter cease to be the general partner of the Partnership only upon the
occurrence of any one or more of the following events, the General Partner:
(i) shall have all or substantially all of its assets
placed in the hands of a receiver or trustee;
(ii) makes an assignment for the benefit of creditors;
(iii) files a voluntary petition in bankruptcy;
(iv) is adjudicated a bankrupt or insolvent, or has
entered against him an order for relief in any
bankruptcy or insolvency proceeding;
(v) files a petition or answer seeking for itself any
reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation.
(vi) files an answer or other pleading admitting or
failing to contest the material allegations of a
petition filed against it in a proceeding of the type
described in subsection (b) of this Section 3.4;
(vii) seeks, consents to, or acquiesces in the appointment
of a trustee or receiver of it or of all or
substantially all of its assets;
(viii) dissolves and commences winding up its affairs;
(ix) resigns in violation of this Agreement;
(x) withdraws in violation of this Agreement;
(xi) is removed by an event that with the passage of the
specified period becomes an event of withdrawal under
Section 17-402(a)(4) or (5) of the Act (upon such
event the General Partner shall notify each Limited
Partner of the occurrence of the event within thirty
(30) days after the date of the occurrence of the
event of withdrawal); or
(xii) is removed by the vote of a Majority-in-Interest of
the Partnership Interests.
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(b) No removal in Section 3.4(a) shall become effective following the
occurrence of any of the events specified above until a Substituted Partner for
the General Partner has been appointed by a vote of a Majority-in-Interest of
the Limited Partners. Such removed General Partner and the Substituted Partner
for the General Partner shall execute an amendment to the Certificate to reflect
these changes.
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.1 CAPITAL CONTRIBUTIONS TO THE PARTNERSHIP. The Partners shall contribute
capital to the Partnership in the amounts respectively set forth opposite their
names on Schedule I to this Agreement. Such initial Capital Contribution shall
be in the form of cash, property, services rendered, or a promissory note or
other obligation to pay cash or transfer property to the Partnership, as
specified on Schedule I. Schedule I may not be amended without the approval of
the General Partner.
4.2 INTERESTS. Upon making (a) the Capital Contribution specified on Schedule I
with respect to the General Partner and FLP or (b) the election available
pursuant to Section 83(b) of the Code within 30 days from the effective date
hereof with respect to each Limited Partner other than FLP, each Partner shall
own a Percentage Interest equal to the amount set forth opposite such Partner's
name on Schedule I. The Percentage Interest of each Partner may not be reduced
without such Partner's consent except as described below. Likewise, the Vested
Percentage of each Limited Partner other than FLP may not be changed without
such Limited Partners consent unless such Limited Partner ceases to be employed
by ClientLogic or any Affiliate of ClientLogic prior to the time such Limited
Partner's Vested Percentage is 100%. In the event that a Limited Partner ceases
to be employed by ClientLogic or any Affiliate of ClientLogic prior to the time
such Limited Partner's Vested Percentage is 100%, such Limited Partner's
Percentage Interest shall be reduced to an amount equal to the product of (i)
the Percentage Interest set forth opposite such Limited Partner's name on
Schedule I multiplied by (ii) such Limited Partner's Vested Percentage. Any
reduction of a Limited Partner's Percentage Interest shall increase FLP's
Percentage Interest by a like amount (and any Capital Account attributable to
such reduced Percentage Interest shall inure to the benefit of FLP).
4.3 NO FURTHER CAPITAL CONTRIBUTIONS. No Partner shall be obligated to make any
Capital Contribution other than that set forth opposite such Partner's name on
Schedule I. Without the approval of all the Partners, the General Partner shall
not permit or accept any Capital Contributions by any Partner beyond those
specified on Schedule I; provided, further, however, that the General Partner
shall not permit or accept any further Capital Contributions unless FLP shall
have received an opinion from FLP's tax advisor, in form reasonably satisfactory
to FLP, that such further Capital Contribution will not cause FLP to recognize
gain by reason of Section 721(b) of the Code.
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4.4 LOAN.
(a) A Partner may loan funds to the Partnership, or provide guarantees
to or for the benefit of the Partnership, with the consent of, and on such terms
and conditions as may be approved by, the General Partner, and, subject to other
applicable law, have the same rights and obligations with respect thereto as a
Person who is not a Partner. The existence of such a relationship and acting in
such a capacity will not affect the limited liability of a Limited Partner.
(b) No Partner shall be required to guarantee a loan made to the
Partnership. If a Partner guarantees a loan made to the Partnership and is
required to make payment pursuant to such guarantee to the maker of the loan,
then the amounts so paid to the maker of the loan shall be treated as a loan by
such Partner to the Partnership and not as an additional Capital Contribution.
(c) No Partner shall be required to loan funds to the Partnership.
Loans by a Partner to the Partnership shall not be considered Capital
Contributions. The amount of any such loans shall be a debt of the Partnership
owed to such Partner in accordance with the terms and conditions upon which such
loans are made.
(d) If a Partner is a lender, in exercising such Partner's rights as a
lender, including making such Partner's decision whether to foreclose on
property of the Partnership, such lender will have no duty to consider (i) such
Partner's status as a Partner, (ii) the interests of the Partnership, or (iii)
any duty such Partner may have to any other Partner or the Partnership.
4.5 CAPITAL ACCOUNTS.
(a) A Capital Account shall be established and maintained for each
Partner. Each Partner's Capital Account (i) shall be increased by (A) the amount
of money contributed by that Partner to the Partnership, (B) the Gross Asset
Value of property contributed by that Partner to the Partnership (net of
liabilities secured by the contributed property that the Partnership is
considered to assume or take subject to under Section 752 of the Code), and (C)
allocations to that Partner of Partnership income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treas. Reg. Section 1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treas. Reg. Section 1.704-1(b)(4)(i), and (ii) shall be decreased
by (A) the amount of money distributed to that Partner by the Partnership, (B)
the Gross Asset Value of property distributed to that Partner by the Partnership
(net of liabilities secured by the distributed property that the Partner is
considered to assume or take subject to under Section 752 of the Code), (C)
allocations to that Partner of expenditures of the Partnership described in
Section 705(a)(2)(B) of the Code, and (D) allocations of Partnership loss and
deduction (or items thereof), including loss and deduction described in Treas.
Reg. Section 1.704-1(b)(2)(iv)(g), but excluding items described in clause
(ii)(C) above and loss or deduction described in Treas. Reg. Section
1.704-1(b)(4)(i) or Section 1.704-1(b)(4)(iii). The Partners' Capital Accounts
also shall be maintained and adjusted as permitted by the provisions of Treas.
Reg.
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Section 1.704l(b)(2)(iv)(f) and as required by the other provisions of Treas.
Reg. Sections 1.704-1(b)(2)(iv) and 1.7041(b)(4), including adjustments to
reflect the allocations to the Partners of depreciation, depletion,
amortization, and gain or loss as computed for book purposes rather than the
allocation of the corresponding item as computed for tax purposes, as required
by Treas. Reg. Section 1.704-1(b)(2)(iv)(g). A Partner that has more than one
Interest shall have a single Capital Account that reflects all its Interests,
regardless of the class of Interests owned by that Partner and regardless of the
time or manner in which those Interests were acquired.
(b) On the Transfer of all or part of an Interest, the Capital Account
of the Transferor that is attributable to the transferred Interest or part
thereof shall carry over to the Transferee Partner in accordance with the
provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(1).
(c) The manner in which Capital Accounts are to be maintained pursuant
to this Section 4.6 is intended to comply with the requirements of Code Section
704(b) and the Regulations and, to the greatest extent practicable, shall be
interpreted in a manner consistent with said Code section and Regulations.
4.6 NEGATIVE CAPITAL ACCOUNTS. At no time during the term of the Partnership or
upon dissolution and liquidation thereof shall a Partner with a negative or zero
balance in such Partner's Capital Account have any obligation to the Partnership
or to the other Partners to restore such negative balance, except as may be
required by law or in respect of any negative balance resulting from a
withdrawal of capital or distribution in contravention of this Agreement.
4.7 USE OF CAPITAL CONTRIBUTIONS. All Capital Contributions shall be held or
expended by the General Partner in furtherance of the purposes of the
Partnership.
ARTICLE 5
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations of Net Profits and Net Losses.
(a) The Net Profits and Net Losses shall be allocated to the Partners
as follows:
(i) Partnership Net Profit shall be allocated first, to
the Partners to reverse any Net Losses allocated to
the Partners under Section 5.01(a)(iii) hereof;
second, to GM to the least extent necessary to cause
his positive Capital Account balance to bear the same
ratio to FLP's positive Capital Account balance as
his Percentage Interest bears to FLP's Percentage
Interest; third to the Partners to the least extent
necessary to cause the positive Capital Account
balances of all Partners to be in proportion to their
respective
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Percentage Interests; and thereafter to the Partners
pro rata in accordance with their respective
Percentage Interests;
(ii) Partnership Net Loss shall be allocated to the
Partners pro rata in accordance with their respective
Percentage Interests.
(iii) Notwithstanding anything in Section 5.1(a)(ii) hereof
to the contrary, Net Loss shall not be allocated to
any Partner to the extent such allocation would
create or increase a deficit balance in such
Partner's Capital Account. Any such Net Loss shall be
reallocated among the remaining Partners with
positive balances in their Capital Accounts pro rata
in accordance such positive Capital Account balances.
(iv) In the event any Partner unexpectedly receives any
adjustments, allocations, or distributions described
in Treas. Reg. Section 1.704-l(b)(2)(ii)(d)(4), (5),
or (6), then items of Partnership income and gain
(consisting of a pro rata portion of each item of
Partnership income, including gross income, and gain
for such year and, if necessary, for subsequent
years) shall be specially allocated to the Capital
Account of such Partner in an amount and manner
sufficient to eliminate the deficit balance
referenced in Treas. Reg. Section 1.704-1(b)(2)(ii)(d)
as quickly as possible. It is the Partners' intent
that this Section 5.01(a)(iv) constitute a "qualified
income offset" within the meaning of Treas. Reg.
Section 1.704-1(b)(2)(ii)(d)(3).
(b) All Net Profit or Net Loss allocable to any Interest that may have
been transferred shall be allocated between the Transferor and the Transferee
based on the portion of the calendar year during which each was recognized as
owning that Interest, without regard to the results of Partnership operations
during any particular portion of that calendar year and without regard to
whether cash distributions were made to the Transferor or the Transferee during
that calendar year, provided, however, that this allocation must be made in
accordance with a method permissible under Section 706 of the Code and the
Regulations.
5.2 DETERMINATION OF INCOME AND LOSS. At the end of each fiscal year of the
Partnership, Net Profits and Net Losses shall be determined for the accounting
period then ending and shall be allocated to the Partners in accordance with
Section 5.1.
5.3 ALLOCATION OF TAX ITEMS. Subject to the provisions of Section 704(c) of the
Code and the Regulations thereunder (which the Partners agree shall be applied
using the "Traditional Method"), each Tax Item shall be allocated among the
Partners in the same manner as each correlative item of profit or loss, as
calculated for book purposes, is allocated to the Partners pursuant to Section
5.1 hereof.
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5.4 DISTRIBUTIONS. From time to time, the General Partner in its sole discretion
may cause Partnership Property to be distributed to the Partners, which
distributions must be made pro rata in accordance with each Partner's respective
Percentage Interest. Immediately prior to a distribution of Partnership Property
other than cash, the Capital Accounts of the Partners shall be adjusted as
provided in Treas. Reg. Section 1.704-1(b)(2)(iv)(e). In no event shall any
such distribution be made to any Partner to the extent that such distribution
would cause such Partner to have a negative balance in such Partner's Capital
Account.
5.5 PERSONS ENTITLED TO DISTRIBUTIONS. All distributions of Partnership Property
to the Partners under this Article 5 shall be made to the Persons shown on the
records of the Partnership to be entitled thereto as of the last day of the
fiscal period for which such distribution is to be made, unless the Transferor
and Transferee of any Interest otherwise agree in writing to a different
distribution and such distribution is consented to in writing by the General
Partner.
5.6 INTENT TO COMPLY WITH ALTERNATE TEST FOR ECONOMIC EFFECT. The Partners
intend for this Agreement to comply with the requirements of Treas. Reg. Section
1.704-1(b)(2)(ii)(d)(3) and, as a result, for the allocations under Section 5.1
hereof to be considered to have economic effect within the meaning of the
Regulations under Section 704 of the Code. This Agreement shall be interpreted
in a manner consistent with that intent and may be modified by the General
Partner to the least extent necessary to cause this Agreement to comply with
such requirements.
5.7 MINIMUM GAIN CHARGEBACK. Pursuant to section Treas. Reg. Section 1.704-2(f)
(relating to minimum gain chargebacks), if there is a net decrease in
partnership minimum gain (as such term is defined in Treas. Reg. Section
1.704-2(b)(2)) for such year (or if there was a net decrease in partnership
minimum gain for a prior fiscal year and the Partnership did not have sufficient
amounts of income (including gross income) and gain during prior years to
allocate among the Partners under this Section 5.7), then items of Partnership
income (including gross income) and gain shall be allocated, before any other
allocation is made pursuant to the preceding section of this Article 5 for such
year, to each Partner in an amount equal to such Partner's share of the net
decrease in such partnership minimum gain (as determined under Treas.
Reg. Section 1.704-2(g)(2)).
5.8 PARTNER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. Pursuant to section
1.704-2(i)(4) of the Regulations (relating to partner nonrecourse debt minimum
gain chargebacks), if there is a net decrease in partner nonrecourse debt
minimum gain (as such term is defined in section 1.704-2(i)(2) of the
Regulations) for such year (or if there was a net decrease in partner
nonrecourse debt minimum gain for a prior fiscal year and the Partnership did
not have sufficient amounts of income (including gross income) and gain during
prior years to allocate among the Partners under this Section 5.8), then items
of Partnership income (including gross income) and gain shall be allocated,
before any other allocation is made pursuant to the preceding sections of this
Article 5 for such year, to each Partner in an amount equal to such Partner's
share of the net decrease in such partner nonrecourse debt minimum gain (as
determined under Treas. Reg. Section 1.704-2(i)(5)).
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ARTICLE 6
OWNERSHIP OF PARTNERSHIP PROPERTY
6.1 TITLE; RECORDS. Partnership Property shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively, shall
have any ownership interest in such Partnership Property or any portion thereof.
Title to any or all Partnership Property may be held in the name of the
Partnership or one or more nominees, as the General Partner may determine. All
Partnership Property shall be recorded as the property of the Partnership on its
books and records, irrespective of the name in which legal title to such
Partnership Property is held.
ARTICLE 7
FISCAL MATTERS; BOOKS AND RECORDS
7.1 BANK ACCOUNTS; INVESTMENTS. Capital Contributions, revenues and any other
Partnership funds shall be deposited by the General Partner in a bank account
established in the name of the Partnership, or shall be invested by the General
Partner in furtherance of the purpose of the Partnership. The General Partner
may, in its sole discretion, deposit funds of the Partnership in a central
disbursing account maintained by or in the name of one of the Partners in which
funds of other Persons are also deposited, provided that at all times books of
account are maintained which show the amount of funds of the Partnership on
deposit in such account and interest accrued with respect to such funds is
credited to the Partnership. Funds deposited in the Partnership's bank accounts
may be withdrawn only to be invested in furtherance of the Partnership purpose,
to pay Partnership debts or obligations or to be distributed to the Partners
pursuant to this Agreement.
7.2 RECORDS REQUIRED BY ACT; RIGHT OF INSPECTION.
(a) RECORDS REQUIRED. During the term of the Partnership and for a
period of four (4) years thereafter, the General Partner, at the expense of the
Partnership, shall maintain, or cause to be maintained, in the Partnership's
principal office in the United States specified in Section 2.6 hereof all
records required to be kept pursuant to the Act, including, without limitation,
(i) a current list of the names, addresses and Interests held by each of the
Partners; (ii) copies of federal, state and local information or income tax
returns for each of the Partnership's six (6) most recent tax years; (iii)
copies of this Agreement and the Certificate, including all amendments or
restatements; (iv) if such information is not otherwise set forth in the
Certificate or this Agreement, a written statement of (A) the amount of the cash
Capital Contribution and a description and statement of the agreed Fair Market
Value of any other Capital Contribution made by
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each Partner, and the amount of the cash Capital Contribution and a description
and statement of the agreed Fair Market Value of any other Capital Contribution
that the Partner has agreed to make in the future as an additional Capital
Contribution; (B) the times at which any additional Capital Contributions are to
be made or events requiring Capital Contributions to be made; (C) events
requiring the Partnership to be dissolved and its affairs wound up; and (D) the
date on which each Partner became a Partner of the Partnership; and (v) correct
and complete books and records of account of the Partnership.
(b) RIGHT OF INSPECTION. On written request stating the purpose, a
Partner or an assignee of a Partner's Interest (an "Eligible Person") may
examine and copy in person or by the Eligible Person's representative, at any
reasonable time, for any proper purpose, and at the Eligible Person's expense,
records required to be maintained under the Act and such other information
regarding the business, affairs and financial condition of the Partnership as is
just and reasonable for the Eligible Person to examine and copy. Upon written
request by any Eligible Person made to the General Partner at the address of the
Partnership's principal office in the United States specified in Section 2.6
hereof, the Partnership shall provide to the Eligible Person without charge true
copies of (i) this Agreement and the Certificate and all amendments or
restatements, and (ii) any of the tax returns of the Partnership described
above.
7.3 BOOKS AND RECORDS OF ACCOUNT. The General Partner, at the expense of the
Partnership, shall maintain, or cause to be maintained, for the Partnership
adequate books and records of account that shall be maintained on the cash or
accrual method of accounting and on a basis consistent with appropriate
provisions of the Code, containing, among other entries, a Capital Account for
each Partner.
7.4 TAX RETURNS AND INFORMATION. The Partners intend for the Partnership to be
treated as a partnership for tax purposes. The General Partner shall prepare or
cause to be prepared all federal, state and local income and other tax returns
that the Partnership is required to file. Within the shorter of (a) such period
as may be required by applicable law or regulation, or (b) one hundred twenty
(120) days after the end of each calendar year, the General Partner shall send
or deliver to each Person who was a Partner at any time during such year such
tax information as shall be reasonably necessary for the preparation by such
Person of such Person's federal income tax return and state income and other tax
returns.
7.5 DELIVERY OF FINANCIAL STATEMENTS TO PARTNERS. As to each fiscal year of the
Partnership, the General Partner shall send to each Partner a copy of (a) a
balance sheet of the Partnership as of the end of the fiscal year, (b) an income
statement of the Partnership for such year, and (c) a statement showing the
revenues distributed by the Partnership to Partners in respect of such year.
Such financial statements shall be delivered by no later than one hundred twenty
(120) days following the end of the fiscal year to which the statements apply.
Unless a Partner requests in writing prior to the end of the fiscal year to
which the financial statements apply that the financial statements
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shall be audited (in which case Section 7.6 below shall apply), such statements
need not be audited.
7.6 AUDITS AT REQUEST OF PARTNER. Any Partner shall have the right to have an
audit conducted of the Partnership books, which audit may be requested with
respect to the annual financial statements under Section 7.5 above. The cost of
the audit shall be borne by the Partner or Partners requesting that the audit be
performed or, upon the approval of the General Partner, by the Partnership. The
audit shall be performed by an accounting firm acceptable to the General Partner
and the Partner requesting the audit. Not more than one (1) audit shall be
required by any or all of the Partners for any fiscal year.
7.7 FISCAL YEAR. The Partnership's fiscal year shall end on December 31 of each
calendar year.
7.8 TAX ELECTIONS. The Partnership shall make the following elections on the
appropriate tax returns:
(a) to adopt the calendar year as the Partnership's fiscal year;
(b) to keep the Partnership's books and records on the income-tax
method; and
(c) to elect to amortize the organizational expenses of the Partnership
ratably over a period of sixty (60) months as permitted by Section 709(b) of the
Code.
None of the Partnership, the General Partner or any other Partner may make an
election for the Partnership to be excluded from the application of the
provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar
provisions of applicable state law. If a distribution of Partnership Property as
described in Section 734 of the Code occurs or if a transfer of Interest as
described in Section 743 of the Code occurs, on written request of any Partner,
the Partnership may elect, pursuant to Section 754 of the Code, to adjust the
basis of Partnership Properties. The General Partner may also make any other
election it deems appropriate and in the best interests of the Partners.
7.9 "TAX MATTERS PARTNER". The General Partner shall be the "tax matters
partner" of the Partnership pursuant to Section 6231(a)(7) of the Code. Such
General Partner shall take such action as may be necessary to cause each other
Partner to become a "notice partner" within the meaning of Section 6223 of the
Code. Such General Partner shall inform each other Partner of all significant
matters that may come to its attention in its capacity as "tax matters partner"
by giving notice thereof. Such General Partner may exercise all rights
conferred, and perform all duties, imposed upon the "tax matters partner" under
Sections 6222 through 6232 of the Code and the Regulations.
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ARTICLE 8
MANAGEMENT OF THE PARTNERSHIP
8.1 MANAGEMENT.
(a) The powers of the Partnership shall be exercised by or under the
authority of, and the business and affairs of the Partnership shall be managed
under the direction of, the General Partner. Any Person dealing with the
Partnership, other than a Partner, may rely on the authority of the General
Partner and duly designated officers in taking any action in the name of the
Partnership without inquiry into the provisions or compliance herewith,
regardless of whether that action is actually taken in accordance with the
provisions of this Agreement.
(b) The General Partner may designate one or more individuals as
officers of the Partnership, who shall have such titles and exercise and perform
such powers and duties as shall be assigned to them from time to time by the
General Partner. Officers need not be Partners or the General Partner. Any
officer may be removed by the General Partner at any time, with or without
cause. Each officer shall hold office until his or her successor shall be duly
designated and take office or until the earlier of the officer's death,
resignation or removal. Any number of offices may be held by the same Person.
The salaries or other compensation, if any, of the officers and agents of the
Partnership shall be fixed by the General Partner.
8.2 POWERS OF GENERAL PARTNER. The General Partner shall have no power to cause
the Partnership to do any act outside the purpose of the Partnership as set
forth in Section 2.3 hereof. Subject to the foregoing limitation and all other
limitations in this Agreement, the Certificate or the Act, the General Partner
shall have full, complete and exclusive power to manage and control the
Partnership, and shall have the authority to take any action it deems to be
necessary, convenient or advisable in connection with the management of the
Partnership, including, but not limited to, the power and authority on behalf of
the Partnership:
(a) to expend the Partnership's Capital Contributions and revenues and
to execute and deliver all checks, drafts, endorsements and other orders for the
payment of Partnership funds;
(b) to employ agents, employees, accountants, lawyers, clerical help,
and such other assistance and services as may seem proper, and to pay therefor
such remuneration as the General Partner may deem reasonable and appropriate
from Partnership funds;
(c) to purchase, lease, rent, or otherwise acquire or obtain the use of
office equipment, materials, supplies, and all other lands and types of real or
personal property, and to incur expenses for travel, telephone, telegraph and
for such other things, services and facilities, as may be deemed necessary,
convenient or advisable for carrying on the business of the Partnership;
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(d) to carry, at the expense of the Partnership, insurance of the kinds
and in the amounts that the General Partner deems advisable or make other
arrangements for payment of losses or liabilities to protect the Partnership or
the Partners, General Partner, officers, agents and employees of the Partnership
against loss or liability;
(e) to borrow money from any Person for any Partnership purpose on
whatever terms and conditions the General Partner deems advisable, to enter into
any guarantees, to obligate the Partnership to repay the borrowed money, and in
connection therewith, to encumber or hypothecate Partnership Property as
security for such repayment by mortgage, deed of trust, pledge or otherwise;
(f) to sell, transfer, assign, dispose of trade, exchange, quitclaim,
surrender, release or abandon Partnership Property, or any interests therein, to
any Person, including the General Partner or its affiliates, and in connection
therewith to receive such consideration as it deems fair and in the best
interests of the Partnership;
(g) to ▇▇▇ and be sued, complain and defend in the name and on behalf
of the Partnership;
(h) to do all acts, take part in any proceedings, and exercise all
rights and privileges as could an absolute owner of Partnership Property,
subject to the limitations expressly stated in this Agreement and the faithful
performance of the General Partner's fiduciary obligations to the Partnership
and the Limited Partners;
(i) in the exercise of any of the foregoing powers, to negotiate,
execute and perform, on any terms deemed desirable in the General Partner's sole
discretion, such agreements, contracts, leases, instruments and other documents
as the General Partner shall from time to time approve in accordance with, and
subject to, the terms of this Agreement;
(j) in connection with certain tax matters described in that certain
letter agreement dated as of __________, 2000 from Onex ClientLogic LLC to FLP
(the "Tax Letter"), (i) to accept an assignment of FLP's rights under the Tax
Letter to the Partnership, including, without limitation, the right to receive
(A) certain nonrecourse loans from Onex ClientLogic LLC on the terms and
conditions described therein, in the event income is allocated with respect to
the Carried Interest without a corresponding distribution of cash and (B)
certain reimbursement rights for any penalties and interest incurred with
respect to ownership of the Carried Interest in the event income is allocated
with respect to the Carried Interest without a corresponding distribution of
cash and (ii) to extend the benefits of the Tax Letter to the Partners by making
pass-through nonrecourse loans to the Partners, in the event income is allocated
to the Partners without a corresponding distribution of cash on substantially
the same terms and conditions as those contained in the underlying loan(s) to
the Partnership in an amount sufficient to allow each Partner to pay such
Partner's actual tax liability; and
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(k) to take such other action and perform such other acts as the
General Partner deems necessary, convenient or advisable in carrying out the
business of the Partnership.
The enumeration of powers in this Agreement shall not limit
the general or implied powers of the General Partner or any additional powers
provided by law.
Notwithstanding the foregoing, the General Partner may not
cause the Partnership to do any of the following without the consent of a
Majority-in-Interest of the Limited Partners:
(a) Purchase any real property;
(b) Sell any real property owned by the Partnership;
(c) Merge with or into another Person, regardless of
whether the Partnership is the surviving entity of
such merger;
(d) Reorganize the Partnership;
(e) Take any action in contravention of this Agreement,
the Act or the Certificate;
(f) Make an assignment for the benefit of creditors of
the Partnership or file a voluntary petition under
the federal bankruptcy code or any state insolvency
law on behalf of the Partnership;
(g) Confess any judgment against the Partnership;
(h) Admit a Person as a substitute or additional General
Partner; or
(i) Do any act that would make it impossible to carry on
the normal and ordinary business of the Partnership.
8.3 IDENTITY OF GENERAL PARTNER. The identity of the General Partner of the
Partnership shall be as provided in this Agreement.
8.4 OTHER BUSINESS. The Partners (including the General Partner) may engage in
or possess an interest in other business ventures (unconnected with the
Partnership) of every kind and description, independently or with others,
including, without limitation, serving as general partner of other limited
partnerships and participating in businesses competitive with that of the
Partnership. Neither the Partnership nor the Partners shall have any rights in
or to such independent ventures or the income or profits therefrom.
8.5 POWER OF ATTORNEY. Each Partner hereby appoints the General Partner (and any
Liquidator) as that Partner's attorney-in-fact for the purpose of executing,
swearing to, acknowledging, and delivering all certificates, documents, and
other instruments as may be necessary, appropriate, or advisable in the judgment
of the General Partner (or the
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Liquidator) in furtherance of the business of the Partnership or complying with
applicable law. This power of attorney is irrevocable and is coupled with an
interest. On request by the General Partner (or the Liquidator), a Partner shall
confirm such Partner's grant of this power of attorney or any use thereof by the
General Partner (or the Liquidator) and shall execute, swear to, acknowledge,
and deliver any such certificate, document, or other instrument.
8.6 STATUS OF LIMITED PARTNER.
(a) The Limited Partners shall not be bound by, or personally liable
for, the expenses, liabilities or obligations of the Partnership, except as
provided in the Act. The Limited Partners shall not be required or obligated to
make contributions of any sort whatsoever to the capital of the Partnership in
excess of their initial Capital Contribution, if any; provided, however, that a
Limited Partner receiving a distribution shall be liable to the Partnership to
the extent provided by the Act.
(b) To the extent the Limited Partners exercise rights with respect to
material matters relating to the Partnership or its affairs, or otherwise
exercise rights in relation to the Partnership, such powers shall be exercised
under and in conformity with the provisions of the Act and this Agreement so as
not to constitute taking part in the control of the business of the Partnership.
8.7 EXPENSES. The General Partner shall cause the Partnership to pay all
expenses (including legal and administrative costs and expenses) of the
Partnership, including, without limitation, the reimbursement of any expenses
incurred by the General Partner in the performance of its duties hereunder.
ARTICLE 9
RIGHTS, POWERS, AND OBLIGATIONS OF PARTNERS
9.1 AUTHORITY, LIABILITY TO THIRD PARTIES. No Partner (other than the General
Partner or an officer) has the authority or power to act for or on behalf of the
Partnership, to do any act that would be binding on the Partnership, or to incur
any expenditures on behalf of the Partnership. No Partner (including the General
Partner) shall be liable in connection with this Agreement to the Partnership
for any consequential or indirect loss or damage, including loss of revenues,
cost of capital, loss of goodwill, loss of "benefit of the bargain" or any other
special or incidental damages. Neither shall any Partner (including the General
Partner) be liable for the debts, obligations or liabilities of the Partnership,
including a judgment decree or order of a court, except as set forth in the Act.
9.2 TRANSFERS OF INTERESTS. A Partner may make a Transfer of such Partner's
Interest, in whole or in part, only upon compliance with the following
procedure:
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(a) The Transferor Partner or the Transferee must file with the
Partnership a written and dated instrument of such Transfer, in form and
substance reasonably satisfactory to the General Partner, executed by both the
Transferor and the Transferee, which instrument shall (i) contain the acceptance
by the Transferee of all of the terms and provisions of this Agreement, to the
extent applicable to an assignee of an Interest; (ii) contain such
representations as the General Partner may deem necessary or advisable to assure
that such Transfer need not be registered under any applicable federal or state
securities laws; (iii) instruct the General Partner as to the Interest
transferred and to whom and at what address Partnership distributions and
Notifications in respect of such Interest should henceforth be sent; and (iv)
contain any information required under the Code that is requested by the General
Partner.
(b) Unless expressly waived by the General Partner, the Transferor or
Transferee shall deliver to the Partnership an opinion of counsel acceptable to
the General Partner that (i) such Transfer is exempt from the registration
requirements of the Securities Act of 1933, as amended, applicable state
securities laws, and any rules or regulations promulgated thereunder, and will
not otherwise cause the Partnership to be in violation of such laws and
regulations; (ii) the Transfer will not result in a termination of the
Partnership for purposes of Section 708 of the Code; (iii) the Transfer will not
result in the Partnership being taxed as an association taxable as a corporation
under Section 7701 of the Code; and (iv) the Transfer will not result in the
loss of the limited liability of a Limited Partner under the Act.
(c) The Transferor Partner and the Transferee shall have received a
written acknowledgment from the General Partner that the Transfer has been
approved by (i) the General Partner, if the Interest to be Transferred is owned
by a Limited Partner, or (ii) a Majority-in-Interest of the Limited Partners, if
the Interest to be Transferred is owned by the General Partner; provided,
however, that the Interest of any individual Partner shall be transferable
without such approval if both of the following factors apply: (x) such Transfer
occurs by reason of the death of the Partner and each Transferee is a member of
such Partner's immediate family (i.e., spouse, parent or child of such Partner),
or a trust, corporation or other entity controlled by or for the benefit of such
Partner or members of such Partner's immediate family, and (y) each Transferee
otherwise complies with the provisions of paragraphs (a) and (b) of this Section
9.2 (except that the instrument described in Section 9.2(a) need not be executed
by the Transferor Partner).
9.3 EFFECT OF TRANSFER OF INTEREST. A Transfer of an Interest pursuant to
Section 9.2 above does not entitle the Transferee to become, or to exercise
rights or powers of, a Substituted Partner. A Transfer only entitles the
Transferee to receive cash distributions and allocations of Partnership profits
and losses to the extent of the Interest to be Transferred; provided, however,
that any Transfer of an Interest that would result in the Partnership becoming a
publicly traded partnership taxable as a corporation will not be recognized by
the Partnership and the Transferee will not be entitled to any distributions
hereunder. Until the Transferee is admitted as a Substituted Partner pursuant to
Section 9.4 below, the Transferor Partner shall continue to be a Partner and to
be entitled to exercise any rights or powers of a Partner with respect to the
Interest Transferred.
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9.4 SUBSTITUTED PARTNER. No Transferee of a Partnership Interest shall become a
Substituted Partner within the meaning of the Act unless:
(a) The General Partner (or in the case of a Transfer by the General
Partner of its General Partner's Partnership Interest, a Majority-in-Interest of
the Limited Partners) gives prior express written consent; and
(b) The Transferee elects in writing to become a Substituted Partner
and executes and acknowledges such other instruments as the General Partner
deems necessary or advisable (or, in the case of a Transfer by the General
Partner of its General Partner Partnership Interest, such instruments as the
Majority-in-Interest of Limited Partners deem necessary or advisable) to effect
the admission of such Person as a Substituted Partner, including without
limitation, written acceptance and adoption by such Person of all of the
provisions of this Agreement.
9.5 Legal Counsel. Each Limited Partner hereby agrees and acknowledges that:
(a) the General Partner has retained Weil, Gotshal & ▇▇▇▇▇▇ LLP in
connection with the formation of the Partnership and may in the future retain
Weil, Gotshal & ▇▇▇▇▇▇ LLP in connection with the operation of the Partnership,
including making, holding and disposing of Interests.
(b) Weil, Gotshal & ▇▇▇▇▇▇ LLP have not represented and will not
represent the Limited Partners in connection with the formation of the
Partnership, the offering of Interests, the management and operation of the
Partnership, or any dispute which may arise between the Limited Partners on one
hand and the General Partner and/or the Partnership on the other hand (the
"Partnership Legal Matters"). Each Limited Partner will, if it wishes counsel on
a Partnership Legal Matter, retain such Limited Partner's own independent
counsel with respect thereto and will pay all fees and expenses of such
independent counsel.
(c) each Limited Partner hereby agrees that Weil, Gotshal & ▇▇▇▇▇▇ LLP
may represent the General Partner and the Partnership in connection with any and
all Partnership Legal Matters (including any dispute between the General Partner
and/or one or more Limited Partners) and waives any present or future conflict
of interest with Weil, Gotshal & ▇▇▇▇▇▇ LLP based solely on the representation
of the General Partner and the Partnership by Weil, Gotshal & ▇▇▇▇▇▇ LLP and
such Limited Partners' status as a Limited Partner of the Partnership.
ARTICLE 10
MEETINGS OF PARTNERS
10.1 ANNUAL MEETINGs. The General Partner shall hold a general informational
meeting for the Partners each year at such time and on such date, as it deems
appropriate. The General Partner shall provide all Partners with at least thirty
(30) days notice of each
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annual meeting. To the extent reasonably practicable, Partners may participate
in each annual meeting by telephone. At the meeting of the Partners, the General
Partner shall adopt such rules for the conduct of such meeting as it shall deem
appropriate. The expenses of any such meeting, including the cost of providing
Notification thereof, shall be borne by the Partnership.
10.2 PROXY. A Partner may authorize any Person or Persons to act for such
Partner by proxy in all matters in which a Partner is entitled to participate.
Every proxy must be signed by such Partner or such Partner's attorney-in-fact
(other than the General Partner). No proxy shall be valid after the expiration
of six (6) months from the date thereof. Every proxy shall be revocable by the
Partner executing it.
10.3 WRITTEN CONSENTS. Whenever Partners are required or permitted to take any
action by vote or at a meeting, such action may be taken without a meeting and
without a vote if a written consent setting forth the action so taken is signed
by the Partners owning not less than the minimum number of Interests that would
be necessary to authorize or take such action by vote or at a meeting.
Notification of any action to be so taken by written consent shall be given by
the General Partner to all Partners, promptly after the taking of such action.
ARTICLE 11
DISSOLUTION AND WINDING UP
11.1 EVENTS CAUSING DISSOLUTION. The Partnership shall be dissolved upon the
first of the following events to occur:
(a) the written consent of a Majority-in-Interest of the Partners at
any time to dissolve and wind up the affairs of the Partnership;
(b) the sale, Transfer or other disposition of substantially all of the
assets of the Partnership and the receipt and distribution of all the proceeds
therefrom;
(c) the withdrawal of the General Partner pursuant to Section 3.4
hereof prior to the appointment of a Substituted Partner for the General Partner
in accordance with Article 9 or Section 3.4(b) hereof; and
(d) the occurrence of any other event that causes the dissolution of a
limited partnership under the Act.
11.2 WINDING UP. If the Partnership is dissolved pursuant to Section 11.1, the
Partnership's affairs shall be wound up as soon as reasonably practicable in the
manner set forth below.
(a) The winding up of the Partnership's affairs shall be supervised by
a Liquidator. The Liquidator shall be the General Partner or, if the Partners
prefer, a
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liquidator selected by a Majority-in-Interest of the Limited Partners (each, a
"Liquidator").
(b) In winding up the affairs of the Partnership, the Liquidator shall
have full right and unlimited discretion, for and on behalf of the Partnership:
(i) to prosecute and defend civil, criminal or
administrative suits;
(ii) to collect Partnership assets, including obligations
owed to the Partnership;
(iii) to settle and close the Partnership's business;
(iv) to dispose of and convey all Partnership Property for
cash, and in connection therewith to determine the
time, manner and terms of any sale or sales of
Partnership Property, having due regard for the
activity and condition of the relevant market and
general financial and economic conditions;
(v) to pay all reasonable selling costs and other
expenses incurred in connection with the winding up
out of the proceeds of the disposition of Partnership
Property;
(vi) to discharge the Partnership's known liabilities and,
if necessary, to set up, for a period not to exceed
five (5) years after the date of dissolution, such
cash reserves as the Liquidator may deem reasonably
necessary for any contingent or unforeseen
liabilities or obligations of the Partnership;
(vii) to distribute any remaining proceeds from the sale of
Partnership Property to the Partners;
(viii) to prepare, execute, acknowledge and file a
certificate of cancellation under Section 17-203 of
the Act and any other certificates, tax returns or
instruments necessary or advisable under any
applicable law to effect the winding up and
termination of the Partnership; and
(ix) to exercise, without further authorization or consent
of any of the Partners or their legal representatives
or successors in interest, all of the powers
conferred upon the General Partner under the terms of
this Agreement to the extent necessary or desirable
in the good faith judgment of the Liquidator to
perform the Liquidator's duties and functions. The
Liquidator (if not the General Partner) shall not be
liable as a General Partner to the Partners and
shall, while acting in such capacity on behalf of the
Partnership, be entitled to the indemnification
rights set forth in the Certificate and in Article 12
hereof.
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26
11.3 COMPENSATION OF LIQUIDATOR. The Liquidator appointed as provided herein
shall be entitled to receive such reasonable compensation for the Liquidator's
services as shall be agreed upon by the Liquidator and a Majority-in-Interest of
the Limited Partners.
11.4 DISTRIBUTION OF PARTNERSHIP PROPERTY AND PROCEEDS OF SALE THEREOF.
(a) Upon completion of all desired sales of Partnership Property, and
after payment of all selling costs and expenses, the Liquidator shall distribute
the proceeds of such sales, and any Partnership Property that is to be
distributed in kind, to the following groups in the following order of priority:
(i) to the extent permitted by law, to satisfy
Partnership liabilities to creditors, including
Partners who are creditors (other than for past due
Partnership distributions), of the Partnership,
whether by payment or establishment of reserves; and
(ii) to the Partners, in accordance with the positive
balances in their respective Capital Accounts.
(b) The claims of each priority group specified above shall be
satisfied in full before satisfying any claims of a lower priority group. If the
assets available for disposition are insufficient to dispose of all of the
claims of a priority group, the available assets shall be distributed in
proportion to the amounts owed to each creditor or the respective Capital
Account balances or Percentage Interests of each Partner in such group.
11.5 FINAL AUDIT. Within a reasonable time following the completion of the
liquidation, the Liquidator shall supply to each of the Partners a statement
which shall set forth the assets and the liabilities of the Partnership as of
the date of complete liquidation and each Partner's pro rata portion of
distributions pursuant to Section 11.4.
11.6 DEFICIT CAPITAL ACCOUNTS. Notwithstanding anything to the contrary
contained in this Agreement, and notwithstanding any custom or rule of law to
the contrary, to the extent that the deficit, if any, in the Capital Account of
any Partner results from or is attributable to deductions and losses of the
Partnership (including non-cash items such as depreciation), or distributions of
money pursuant to this Agreement to all Partners in proportion to their
respective Percentage Interests, upon dissolution of the Partnership such
deficit shall not be an asset of the Partnership and such Partner shall not be
obligated to contribute such amount to the Partnership to bring the balance of
such Partner's Capital Account to zero.
11.7 NO ACTION FOR DISSOLUTION. The Partners acknowledge that irreparable damage
would be done to the goodwill and reputation of the Partnership if any Partner
should
26
27
bring an action in court to dissolve the Partnership under circumstances where
dissolution is not required by Section 11.1. Accordingly, except where the
Liquidator has failed to liquidate the Partnership as required by this Article
11 and except as specifically provided in Section 17-802 and Section 17-803(a)
of the Act, each Partner hereby to the fullest extent permitted by law waives
and renounces such Partner's right to initiate legal action to seek dissolution
of the Partnership or to seek appointment of a receiver or trustee to wind up
the affairs of the Partnership, except in cases of fraud, violation of law, bad
faith, gross negligence, willful misconduct or willful violation of this
Agreement.
ARTICLE 12
INDEMNIFICATION AND INSURANCE
12.1 EXCULPATION. Neither the General Partner nor any affiliate of the General
Partner, nor any officer, director, employee, agent, stockholder, partner,
manager or member of the General Partner or any of its affiliates, shall be
liable, responsible, or accountable in damages or otherwise to the Partnership
or any Partner by reason of, or arising from, the operations, business, or
affairs of, or any action taken or failure to act on behalf of, the Partnership,
except to the extent that any of the foregoing is determined, by a final,
nonappealable order of a court of competent jurisdiction, to have been primarily
caused by the gross negligence or willful misconduct of the Person claiming
exculpation.
12.2 INDEMNIFICATION AND ADVANCE OF EXPENSES. The Partnership shall indemnify
the General Partner, each affiliate of the General Partner, and each officer,
director, stockholder, manager, member, partner, employee, or agent of the
General Partner or any of its affiliates, against any claim, loss, damage,
liability, or expense (including reasonable attorneys' fees, court costs, and
costs of investigation and appeal) suffered or incurred by any such indemnitee
by reason of, or arising from, the operations, business, or affairs of, or any
action taken of failure to act on behalf of, the Partnership, except to the
extent any of the foregoing (a) is determined by final, nonappealable order of a
court of competent jurisdiction to have been primarily caused by the gross
negligence or willful misconduct of the Person claiming indemnification or (b)
is suffered or incurred as a result of any claim (other than a claim for
indemnification under this Agreement) asserted by the indemnitee as plaintiff
against the Partnership. Unless a determination has been made (by final,
nonappealable order of a court of competent jurisdiction) that indemnification
is not required, the Partnership shall, upon the request of any indemnitee,
advance or promptly reimburse such indemnitee's reasonable costs of
investigation, litigation, or appeal, including reasonable attorneys' fees;
provided, however, that the affected indemnitee shall, as a condition of such
indemnitee's right to receive such advances and reimbursements, undertake in
writing to repay promptly the Partnership for all such advancements or
reimbursements if a court of competent jurisdiction determines that such
indemnitee is not then entitled to indemnification under this Section 12.2. No
Partner shall be required to contribute capital in respect of any
indemnification claim under this Section 12.2 unless otherwise provided in any
other written agreement to which such Partner is a party.
27
28
12.3 INSURANCE. The Partnership may purchase and maintain insurance on behalf of
any Person who is or was a Partner, officer, employee or agent of the
Partnership, or is or was serving at the request of the Partnership as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against such
Person and incurred by such Person in any such capacity, or arising out of such
Person's status as such, whether or not the Partnership would have the power to
indemnify such Person against such liability under the provisions of Section
12.2 or otherwise.
12.4 LIMIT ON LIABILITY OF PARTNERS. The indemnification set forth in and
insurance allowed under this Article 12 shall in no event cause the Partners to
incur any personal liability beyond their total Capital Contributions, nor shall
it result in any liability of the Partners to any third party.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 ENTIRE AGREEMENT. This Agreement and the Certificate constitutes the entire
agreement among the Partners relating to the subject matter hereof and all prior
agreements relative hereto which are not contained herein are terminated.
13.2 LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the local, internal laws of the State of Delaware. In
particular, this Agreement is intended to comply with the requirements of the
Act and the Certificate. In the event of a direct conflict between the
provisions of this Agreement and the mandatory provisions of the Act or any
provision of the Certificate, the Act and the Certificate, in that order of
priority, will control.
13.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the Partners and their respective heirs, legal
representatives, successors and permitted assigns.
13.4 SEVERABILITY. This Agreement is intended to be performed in accordance
with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations. If any provision of this Agreement or the application
thereof to any Person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, but the extent of such invalidity or
unenforceability does not destroy the basis of the bargain among the Partners as
expressed herein, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.
13.5 AMENDMENT. Except as expressly provided herein, this Agreement may be
amended by action of the General Partner.
28
29
13.6 HEADINGS. The Article and Section headings appearing in this Agreement are
for convenience only and are not intended, to any extent or for any purpose, to
limit or define the text of any Article or Section.
13.7 CONSTRUCTION. Whenever required by the context, as used in this Agreement,
the singular number shall include the plural, and vice versa, and the gender of
all words used shall include the masculine, feminine and the neuter. Unless
expressly stated herein, all references to Articles and Sections refer to
articles and sections of this Agreement, and all references to Schedules are to
schedules attached hereto, each of which is made a part hereof for all purposes.
13.8 OFFSET. Whenever the Partnership is to pay any sum to any Partner, any
amounts that Partner owes the Partnership may be deducted from that sum before
payment.
13.9 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express or implied, to or
of any breach or default by any Person in the performance by that Person of that
Person's obligations with respect to the Partnership is not a consent or waiver
to or of any other breach or default in the performance by that Person of the
same or any other obligations of that Person with respect to the Partnership.
Failure on the part of a Person to complain of any act of any Person or to
declare any Person in default with respect to the Partnership, irrespective of
how long that failure continues, does not constitute a waiver by that Person of
that Person's rights with respect to that default until the applicable
statute-of-limitations period has run.
13.10 FURTHER ASSURANCES. In connection with this Agreement and the transactions
contemplated hereby, each Partner shall execute and deliver any additional
documents and instruments and perform any additional acts that may be necessary
or appropriate to effectuate and perform the provisions of this Agreement and
those transactions.
13.11 WAIVER OF CERTAIN RIGHTS. Each Partner irrevocably waives any right such
Partner may have to maintain any action for partition of the Partnership
Property.
13.12 COUNTERPARTS AND BINDING EFFECT. This Agreement may be executed in one or
more counterparts, each of which shall be an original, but all of which taken
together shall constitute a single document. This Agreement shall be binding
upon each Partner upon adoption by the initial General Partner as evidenced by
their signatures below, regardless of whether any Partner has executed the same
or any counterpart thereof.
13.13 NO THIRD PARTY RIGHTS. Except as otherwise provided in this Agreement,
none of the provisions contained in this Agreement shall be for the benefit of
or enforceable by any third parties, including creditors of the Partnership.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
29
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IN WITNESS WHEREOF, the undersigned have executed this
instrument effective as of March 1, 2000.
GENERAL PARTNER:
ECM GP LLC, a Delaware limited liability company
By: ▇▇▇▇▇▇▇▇ Family, L.L.P.,
a Texas limited liability partnership, its sole
Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee under the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Living Trust, its
general partner
LIMITED PARTNERS:
▇▇▇▇▇▇▇▇ FAMILY, L.L.P., a Texas limited
liability partnership
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee under the
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Living Trust, its
general partner
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
30
31
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
31
32
SCHEDULE I
Agreement of Limited Partnership
of
ECM PARTNERS II, L.P.
INITIAL CAPITAL
PARTNER AND ADDRESS CONTRIBUTIONS PERCENTAGE INTERESTS
------------------------------------------------ ------------------------- ----------------------
(in U.S. dollars)
GENERAL PARTNER 1% of Carried Interest 1.00%
ECM GP LLC with a Fair Market
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ Value of $729,479
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
LIMITED PARTNERS:
▇▇▇▇▇▇▇▇ Family, L.L.P. 99% of Carried 64.00%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Interest with a Fair
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Market Value of
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee under the $72,218,421
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Living Trust, its
general partner
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $-0- 7.50%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ $-0- 1.00%
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ $-0- 1.00%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $-0- 1.00%
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
i
33
TABLE OF CONTENTS
(CONTINUED)
PAGE
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $-0- 1.00%
------------------
-------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $-0- 1.00%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇ $-0- 0.50%
▇▇▇ ▇▇▇▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $-0- 0.50%
▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $-0- 1.00%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ $-0- 20.50%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL ALL PARTNERS $72,947,900 100.00%
ii
