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EXHIBIT 10.15
CSI INVESTMENT PARTNERS II, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
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CSI INVESTMENT PARTNERS II, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated October 7,
1997, among Credentials II G.P. L.P., a Delaware limited partnership (the
"General Partner"), and LINCOLNSHIRE EQUITY FUND, L.P., a Delaware limited
partnership ("Fund") and the parties named in Schedule B annexed to this
Agreement.
W I T N E S S E T H:
WHEREAS, the undersigned are executing this Amended and Restated
Agreement of Limited Partnership, as reformed (the "Agreement") for the purpose
of amending the provisions of a certain limited partnership agreement, dated as
of November 6, 1996 (the "Original Agreement"), with respect to a Delaware
limited partnership formed under the name CSI Investment Partners II, L.P.,
pursuant to the Original Agreement and a Certificate of Limited Partnership
filed with the Delaware Secretary of State on November 4, 1996 (as amended,
supplemented or restated from time to time, the "Certificate"), in accordance
with the provisions of the Delaware Revised Uniform Limited Partnership Act; and
WHEREAS, the foregoing amendments include the addition of a new class of
limited partners denominated as Class B Limited Partners (as hereinafter
defined) and set forth relative rights of the Class A Partners and Class B
Partners with respect to the Partnership as hereinafter provided; and
WHEREAS, the original Agreement was amended and restated as
of May 9, 1997; and
WHEREAS, in June 1997, the parties to the Original Agreement executed
Amendment No. 1 to that agreement and the provisions of that amendment are now
restated as set forth herein; and
WHEREAS, the Amended and Restated Agreement of Limited Partnership,
dated May 9, 1997 (the "May 9 Writing") was intended to give effect to
agreements reached on or about October 18, 1996 between Credentials Services
International, Inc., a Delaware corporation (the "Company") and certain of its
executive officers and key employees who are the persons named as Class B
Limited Partners herein; and
WHEREAS, each of the parties to this Agreement agrees and confirms that
as a result of a mutual mistake made by each of the parties to the May 9
Writing, the provisions included in the May 9 Writing relating to the Preferred
Return set forth in Section 4.2 of the May 9 Writing did not correctly reflect
the mutual intention and agreement of the parties hereto; and
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WHEREAS, the parties to this Agreement agree and confirm that because
the above-mentioned provision in the May 9 Writing did not reflect their mutual
intentions and agreement that it is not, and never was, part of the contract
created among them; and
WHEREAS, the parties to this Agreement desire to reform this Agreement
to reflect their true intentions and agreement and desire that this Agreement,
as reformed and revised, is not, and shall not be interpreted or deemed to
constitute, a new contract or agreement or an amendment of the contract existing
prior to the date of this Agreement, but rather a reformation of the existing
agreement effected to express the true intentions and agreements of the parties
to this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein made, and intending to be legally bound, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
The defined terms used in this Agreement, unless the context otherwise
requires, shall have the meanings specified in this Article I and in the
Preambles to this Agreement.
"Accountants" shall mean such firm of independent public accountants as
the General Partner may appoint, from time to time, as provided in Section
5.1.1(f).
"Act" shall mean the Delaware Revised Uniform Limited Partnership Act,
as the same may be amended from time to time, and any successor to such Act.
"Affiliate" shall have the meaning ascribed thereto by Rule 12b-2 under
the Securities Exchange Act of 1934, as amended, as in effect on the date
hereof.
"Agreement" shall mean this Agreement of Limited Partnership, as
originally executed and as subsequently amended, modified, supplemented or
restated from time to time.
"Capital Account" when used in respect to any Partner shall mean any
Capital Contribution or Contributions actually made by such Partner to the
Partnership, increased by the amount of all income and gains credited to the
Capital Account of such Partner pursuant to Section 4.4. hereof and decreased by
the sum of (a) all amounts of cash and assets distributed by the Partnership to
such Partner pursuant to Sections 4.1 and 4.2 and (b) the amount of all losses
charged to the Capital Account of such Partner pursuant to Section 4.3. This
provision and the other provisions of this Agreement relating to the maintenance
of Capital Accounts are intended to comply with Treasury Regulation Section
1.704-1(b) and shall be interpreted and applied in a manner consistent with such
Regulations. Therefore,
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notwithstanding anything contained herein to the contrary and in further
defining the method in which the Capital Accounts of the Partners shall, in all
respects, be maintained in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv), and any optional charges, credits or adjustments to such
Capital Accounts by the Partners which are provided for in such Regulations, and
are otherwise proper under state law and this Agreement, and which are made by
the Partnership and shall be made with any and all correlative adjustments to
the Capital Accounts of the Partners required by Treasury Regulation Section
1.704-1(b)(2)(iv).
"Capital Contributions" shall mean the capital contributions made in
cash to the Partnership pursuant to Article III by the Partners or, as the
context requires, by the General Partner and the Class A Limited Partners or,
when such term is used in the singular, by any one Partner (or, in all cases, by
the predecessor holders of the Interests of such Partner or Partners), as set
forth in Schedule A hereto.
"Cash Flow" for a Fiscal Year shall mean the aggregate cash receipts of
the Partnership for such Fiscal Year from all sources (including sales of
assets, refinancing of debt and amounts released from reserves no longer deemed
necessary by the General Partner for the operation of the Partnership), other
than receipts in respect of Capital Contributions, reduced by (i) appropriations
for reserves which the General Partner may deem reasonably necessary for the
discharge of the liabilities and obligations of the Partnership and (ii)
repayment of the principal amount of Partnership debt.
"Certificate" shall mean the Certificate of Limited Partnership of the
Partnership, filed with the Delaware Secretary of State, as such Certificate may
be amended or restated from time to time.
"Class A Limited Partners" or "Class A Partners" shall mean the Limited
Partners whose name or names are set forth on Schedule A hereto.
"Class B Limited Partners" or "Class B Partners" shall be the Limited
Partners whose names are set forth on Schedule B hereto.
"Code" shall mean the Internal Revenue Code of 1986 and any amendments
or additions thereto, and any predecessor or successor statute.
"Company" shall mean Credentials Services International, Inc., a
Delaware corporation, and its successors and assigns.
"Company Stock" shall mean the issued and outstanding (i) common Stock,
$.01 par value per share, and (ii) series A cumulative preferred stock, $.10 par
value per share, of the Company.
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"Consent" shall mean the consent of a Person, given as provided in
Section 10.1 to do the act or thing for which the consent is solicited, or the
act of granting such consent, as the context may require. Reference to the
Consent or other action of a majority or specified percentage in Interest of the
Limited Partners shall mean, respectively, the Consent or other action of the
Class A Limited Partners whose aggregate Profit Percentages in the Partnership
as of the time such Consent is given or required represent more than fifty
percent (50%), or not less than the specified percentage, as the case may be, of
the aggregate Profit Percentages of all Class A Limited Partners.
"Contingent Profits Interest" shall mean the Interest which each of the
Class B Limited Partners and the collective Interests which all of the Class B
Limited Partners (as a class) shall have in the Partnership which are subject to
vesting and forfeiture provisions set forth in Section 3.5.3 hereof.
"Corporate Fund G.P." shall mean Credentials G.P., L.P., a separate
limited partnership organized under Delaware law which is the general partner of
CIS Acquisition Partners, L.P.
"Designated Class A Stock" shall mean the aggregate of 35,910 shares of
common stock of the Company evidenced by stock certificate number 3 which is
issued to the Partnership.
"Designated Class B Management Stock" shall mean the aggregate of 3,990
shares of common stock of the Company evidenced by stock certificates numbered
4, 5, 6, 7, 8, 9, 10, 11, 12, 13 and 14 which are issued to the Partnership and
are to be distributed to the Class B Limited Partners subject to and in
accordance with the terms and conditions of Section 4.2 of this Agreement.
"Employment Termination" shall mean the voluntary or involuntary
termination of employment by a Class B Partner with the Company with or without
cause or for any other reason whatsoever.
"Employment Termination For Cause" shall mean the termination of any
Class B Partner's employment with the Company for or by reason of any willful
misconduct or gross negligence in the performance of his duties for the Company,
the commission by any such Class B Limited Partner of any felony or any act of
moral turpitude or any violation or breach in any material respect by any such
Class B Limited Partner of any of the terms and conditions of his employment by
the Company.
"Fair Market Value" shall mean the value of Partnership assets,
including the Company Stock, as determined in good faith by the General Partner
after consultation with the Accountants.
"Fiscal Year" shall mean the fiscal year commencing on January 1 of each
year and ending on December 31 of the same year
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or, in the case of the first and last fiscal years, the fraction thereof which
commences on the date on which the Partnership is formed under the Act (in the
case of the first fiscal year) or which ends on the date on which the winding up
of the Partnership is completed (in the case of the last fiscal year).
"Fund" shall have the meaning given to such term in the preamble of this
Agreement.
"Fund G.P." shall mean Lincolnshire Equity Partners, L.P., a Delaware
limited partnership, the general partner of Fund.
"Gain From Sale" shall mean any income or gain of the Partnership for
federal income tax purposes resulting from the sale of Company Stock or any
other transaction the proceeds of which, in accordance with generally accepted
accounting principles, are considered capital in nature, except that if the
value of the Company Stock or other asset as carried on the books of the
Partnership differs from its adjusted basis for federal income tax purposes at
the time of such transaction, such income or gain will be calculated with
reference to such value. In the event the value of any asset of the Partnership
as carried on the books of the Partnership is adjusted (except in the case of an
adjustment pursuant to section 734(b) or section 743(b) of the Code) to Fair
Market Value, the amount of such adjustment shall be taken into account at the
time of such adjustment as gain or loss from the disposition of such asset for
purposes of computing Gains from Sale or Losses from Sale.
"General Partner" shall mean Credentials II G.P. L.P., a Delaware
limited partnership, its successors or any other Person that becomes the
successor General Partner of the Partnership as provided herein, in all cases in
such Person's capacity as the General Partner of the Partnership.
"Incapacity" or "Incapacitated" shall mean, as to any Person, the
adjudication of bankruptcy, incompetence or insanity, or the death, dissolution
or termination (other than by merger or consolidation), as the case may be, of
such Person.
"Interest" shall mean the entire interest of a Partner in the
Partnership at any particular time, including the right of such Partner to any
and all benefits to which such Partner may be entitled as provided in this
Agreement, together with the obligations of such Partner to comply with all of
the terms and provisions of this Agreement.
"Limited Partners" shall mean, collectively, the Class A Partners
(which, as of this date, consists solely of the Fund) and the Class B Partners
and any other Person admitted to the Partnership as a Limited Partner as
provided in this Agreement, and any Substituted Limited Partner, with respect to
each such Person, in such Person's capacity as a limited partner of the
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Partnership and provided such Person has not withdrawn or been removed as a
Limited Partner.
"Limited Partner" shall mean one of the Limited Partners.
"Liquidation Trustee" shall mean a Person selected by a majority in
Interest of the Limited Partners to act as a liquidating trustee as provided in
Section 7.5.1.
"LMI" shall mean Lincolnshire Management, Inc., a Delaware corporation,
and its successors and assigns.
"LMI Management Consulting Agreement" shall mean that certain Management
Agreement, dated September 30, 1994, as heretofore or hereafter amended, between
the Company and LMI.
"Losses From Sale" shall mean any net loss of the Partnership for
federal income tax purposes resulting from the sale of Company Stock or any
other transaction the proceeds of which, in accordance with generally accepted
accounting principles, are considered capital in nature, except that if the
value of the Company Stock or other asset as carried on the books of the
Partnership differs from its adjusted basis for federal income tax purposes at
the time of such transaction, such loss shall be calculated with reference to
such value. In the event the value of any asset of the Partnership as carried on
the books of the Partnership is adjusted (except in the case of an adjustment
pursuant to section 734(b) or section 743(b) of the Code) to Fair Market Value,
the amount of such adjustment shall be taken into account at the time of such
adjustment as gain or loss from the disposition of such asset for purposes of
computing Gains from Sale or Losses from Sale.
"Net Cash Flow" for any period shall be an amount equal to Cash Flow
reduced by Partnership Expenses.
"Net Gain From Sale" means, for each Fiscal Year or other period, the
excess of the sum of the Gains from Sale over the sum of the Losses from Sale
recognized by the Partnership during such period.
"Net Income or Net Loss" means for each fiscal year or other period, an
amount equal to the Partnership's taxable income or loss for such year or
period, determined in accordance with Section 703(a) of the Code with the
following adjustments: (i) any income of the Partnership that is exempt from
Federal income tax and is not otherwise taken into account in computing Net
Income or Net Loss pursuant to this definition shall be added to such taxable
income or loss; and (ii) any expenditures of the Partnership described in
Section 705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i) and
not otherwise taken into account in computing Net Income or Net Loss
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pursuant to this definition shall be subtracted from such taxable income or
loss.
"Net Loss From Sale" means, for each fiscal year or other period, the
excess of the sum of the Losses From Sale over the sum of the Gains From Sale
recognized by the Partnership during such period.
"Net Sales Proceeds" shall mean the net proceeds from the sale or other
disposition of Partnership assets by the Partnership, after deduction for (i)
any expenses incurred with respect to such sale or other disposition and (ii)
reserves which the General Partner may deem reasonably necessary for the
discharge of the liabilities and obligations of the Partnership.
"Partners" shall mean the General Partner and the Class A
and Class B Limited Partners, collectively, unless otherwise
indicated. "Partner" shall mean one of the Partners.
"Partnership" shall mean the limited partnership created by the Original
Agreement and the Certificate, as such limited Partnership may be constituted
from time to time hereafter.
"Partnership Expenses" shall mean the expenses of the
Partnership described in Section 5.6.
"Person" shall mean any individual, partnership, corporation,
unincorporated organization or association, trust or other entity.
"Regulations" shall mean the regulations issued by the United States
Internal Revenue Service under the Code.
"Sale of the Company" shall mean the sale, assignment or transfer of all
of the then outstanding capital stock of the Company, by way of merger,
consolidation or sale or exchange of shares of capital stock, or the sale or
exchange of all or substantially all of the assets and business of the Company,
for cash, securities or other property (or any combination thereof), to any one
or more parties who are not Affiliates of the Company or of the Partnership in
one or more series of related transactions.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Substituted Limited Partner" shall mean any Person admitted to the
Partnership as a Limited Partner pursuant to the provisions of Section 7.3.
"Transfer" shall mean any sale, exchange, transfer, pledge, mortgage,
hypothecation, grant of a security interest in, assignment or other disposition
by a Limited Partner of all or
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any fraction of its Interest in the Partnership as permitted pursuant to the
terms of Article VII.
"Unrecovered Capital" shall mean, with respect to each Class A Partner
and the General Partner, the excess of the Capital Contributions made with
respect to each such Partner's Interest over the aggregate distributions of Net
Cash Flow and Net Sales Proceeds pursuant to Sections 4.1(a) to such Partner on
account of such Partner's Interest.
"Vested Profits Interest" shall mean the Interest of each Class B
Partner and the collective Interests of all of the Class B Partners (as a class)
in the Partnership which has or have vested, in whole or in part, in accordance
with the provisions of Section 3.5.3 hereof but which is or are subject to, and
shall be determined by, the provisions of Section 4.2 hereof.
ARTICLE II
REFORMATION OF AGREEMENT; ORGANIZATION
2.1 Reformation of Agreement. The May 9 Writing was intended to give
effect to agreements reached on or about October 18, 1996 between the Company
and certain of its executive officers and key employees who are the persons
named as Class B Limited Partners herein. Each of the parties hereto hereby
agrees and confirms that as a result of a mutual mistake made by each of the
parties to the May 9 Writing, the provisions included in the May 9 Writing
relating to the Preferred Return set forth in Section 4.2 of the May 9 Writing
did not correctly reflect the mutual intention and agreement of the parties
hereto. The parties hereto hereby agree and confirm that because the
above-mentioned provision in the May 9 Writing did not reflect their mutual
intentions and agreement that it is not, and never was, part of the contract
created among them. The parties hereto hereby reform this Agreement to reflect
their true intentions and agreement and this Agreement, as reformed and revised,
is not, and shall not be interpreted or deemed to constitute, a new contract or
agreement or an amendment of the contract existing prior to the date hereof, but
rather a reformation of the existing agreement effected to express the true
intentions and agreements of the parties hereto.
2.2 Continuation. The Partnership was formed pursuant to the Original
Agreement and the Certificate filed under the Act and the Partners desire to
continue the Partnership pursuant to the provisions of the Act. The rights and
liabilities of the Partners shall be as provided in the Act, except as herein
otherwise expressly provided to the extent permitted by the Act.
2.3 Name. The name of the Partnership is and shall continue to be "CSI
Investment Partners II, L.P." or such other name as the General Partner shall
determine on notice to the Partners.
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2.4 Place of Business and Office; Registered Agent. The Partnership
shall maintain its principal place of business at c/o Lincolnshire Management,
Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as the
General Partner shall determine. The registered agent of the Partnership is
National Registered Agents, Inc. Notice of any change of such principal office
or registered agent shall be given to all Partners on or before the date of any
such change.
2.5 Purpose. The principal purpose of the Partnership is to acquire,
hold and dispose of Company Stock to purchase Company Stock and any other form
of security, investment or instrument of the Company or any of its subsidiaries
selected by the General Partner, and to do every over thing incidental or
related to such activities or intended to enhance the value of the Partnership's
assets as the General Partner may deem appropriate, subject to the provisions of
this Agreement.
2.6 Term. The term of the Partnership commenced on the filing of the
certificate with the Delaware Secretary of State in accordance with the Act and
shall continue in full force and effect until the earlier of (a) December 31,
2026, or (b) dissolution prior thereto pursuant to the provisions hereof.
2.7 Qualification in Other Jurisdictions. The General Partner shall
cause the Partnership to be qualified, formed, reformed or registered under
foreign limited partnership statutes or similar laws in any jurisdiction in
which the Partnership owns property or transacts business if such qualification,
formation, reformation or registration is required in order to protect the
limited liability of the Limited Partners or to permit the Partnership lawfully
to own property or transact business in such jurisdiction, and shall cause the
Partnership not to transact business in any such jurisdiction until it is so
qualified, formed, reformed or registered. The General Partner shall execute,
file and publish all such certificates, notices, statements or other instruments
necessary to permit the Partnership to conduct business as a limited partnership
in all jurisdictions where the Partnership elects to do business and to maintain
the limited liability of the Limited Partners.
ARTICLE III
PARTNERS AND CAPITAL
3.1 General Partner.
3.1.1 The General Partner is, and shall continue to be,
Credentials II G.P. L.P., a Delaware limited partnership, and/or any other
Person who becomes the successor General Partner as provided herein. The address
and Capital Contribution of the General Partner are set forth on Schedule A
hereto.
3.1.2 The General Partner shall not be required to
lend any funds or to make Capital Contributions to the
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Partnership in addition to that set forth on said Schedule A; provided, however,
that if the General Partner or any Affiliate of the General Partner lends funds
to the Partnership, the terms of such lending (i) must be as favorable to the
Partnership as the terms that could have been obtained at the time of such
lending from a Person that was not the General Partner or its Affiliate and (ii)
may provide for (a) the grant of a security interest in favor of the General
Partner or such Affiliate in any or all of the assets of the Partnership and (b)
the repayment of such loans to the General Partner or any such Affiliate prior
to the satisfaction of any of the Partnership's other obligations upon the
dissolution, liquidation or winding up of the Partnership.
3.2 Class A Limited Partners.
3.2.1 The names, addresses and Capital Contributions of the Class
A Limited Partners are set forth on Schedule A hereto and all such Class A
Limited Partners are admitted to the Partnership as limited partners. The
Capital Contributions of the Class A Limited Partners have been received by the
Partnership on or before the date of this Agreement.
3.2.2 Other than the Capital Contributions received by the
Partnership from the Class A Limited Partners on or before the date of this
Agreement, no Limited Partner shall be required to make any Capital
Contributions or lend any funds to the Partnership; provided, however, that if
any Class A Limited Partner or any Affiliate of any Class A Limited Partner
lends funds to the Partnership, the terms of such lending must be as favorable
to the Partnership as the terms that could have been obtained at the time of
such lending from a Person that was not such Class A Limited Partner or an
Affiliate of such Class A Limited Partner; provided, however, that any loan by
any Class A Limited Partner or Affiliate may be made on such terms and subject
to such security as are applicable to loans made by the General Partner under
Section 3.1.2 hereof.
3.3 Partnership Capital and Loans.
3.3.1 The General Partner's Contributions to the Partnership's
capital shall equal its Capital Contributions as set forth on Schedule A. Each
Class A Limited Partner has contributed to the Partnership in cash one hundred
percent (100%) of the Capital Contribution to the Partnership's capital required
to be made by such Limited Partner as set forth on Schedule A.
3.3.2 No Class A Partner shall be paid interest by the
Partnership or by the General Partner on, or in respect of, any Capital
Contribution to the Partnership or on such Class A Partner's Capital Account.
3.3.3 No Class A Partner shall have any right to demand the
return of its Capital Contribution other than upon
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dissolution of the Partnership pursuant to Article VIII. The General Partner
shall have no personal liability to the Class A Limited Partners for the return
of their Capital Contributions or repayment of any loans they may make to the
Partnership, and shall be under no obligation to distribute any amount to the
Class A Partners, unless, prior thereto, all liabilities of the Partnership to
Persons other than Partners shall have been paid or, in the good faith
determination of the General Partner, there shall remain in the Partnership,
following the distribution, property sufficient to pay such liabilities.
3.4 Liability of Partners. Except as specifically set forth herein, no
Limited Partner shall have any personal liability whatever in his or its
capacity as a Limited Partner, whether to the Partnership, to any of the
Partners or to the creditors of the Partnership, for the debts, liabilities,
contracts or any other obligations of the Partnership or for any losses of the
Partnership. Subject to the provisions of the Act, a Limited Partner shall be
liable only to make its Capital Contribution and shall not be required to lend
any other funds to the Partnership, or after its Capital Contribution shall have
been paid in full, to make any further Capital Contribution to the Partnership
or to repay to the Partnership, any Partner or any creditor of the Partnership
all or any fraction of any negative amount of such Limited Partner's Capital
Account.
3.5 Class B Limited Partners.
3.5.1 The names, addresses and Contingent Profits Interest of
each of the Class B Limited Partners are set forth on Schedule B hereto.
3.5.2 Capital Contributions. None of the Class B Limited Partners
has made any Capital Contributions to the Partnership and each Class B Limited
Partner's initial Capital Account in the Partnership shall be zero.
Notwithstanding the foregoing, the Class B Limited Partners are required on May
1, 2000 to make a capital contribution in an amount for each Class B Limited
Partner determined by multiplying six million six hundred thousand dollars
($6,600,000) by that partner's Contingent Profits Interest set forth in Schedule
B.
3.5.3 Vesting and Distribution of Management Shares.
(a) The sole Interest of each Class B Limited Partner in the
Partnership shall be his respective interest in the income, profits, proceeds
and distributions from and of the Designated Class B Management Stock which
shall vest and be subject to forfeiture in the following percentages in the
event of his Employment Termination during the following periods:
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Percentage of
Contingent Employment
Profits Interest Vested Termination Period
----------------------- ------------------
Zero Percent (0%) From date hereof
through April 30, 1998
Thirty-three and one- From May l, 1998
third percent (33 1/3%) through April 30, 1999
Sixty-six and From May 1, 1999
two-thirds percent through April 30, 2000
(66 2/3%)
One hundred percent From and after May 1,
(100%) 2000.
(b) Notwithstanding the schedule of vesting of the Contingent
Profits Interests of the Class B Limited Partners set forth in paragraph (a) of
this Section 3.5.3, the vesting of all or any then remaining percentages of the
Contingent Profits Interests held by any one or more Class B Limited Partners
shall be accelerated in their entirety (automatically and without further act of
the parties) and become Vested Profits Interests as of the close of business on
the day immediately preceding the date of consummation of the Sale of the
Company, provided, however, that, in the event that the Sale of the Company is
not consummated within thirty (30) days after the date of such accelerated
vesting, then such accelerated vesting shall be canceled and be of no further
force or effect and the schedule of vesting and forfeiture of the Contingent
Profits Interests held by such Class B Partners set forth in paragraph (a) of
this Section 3.5.3 shall be reinstated in its entirety.
3.5.4 Reallocations or Cancellations of Interests. In the event
of any Employment Termination by the Company of any Class B Limited Partner
during any of the foregoing periods which results in the forfeiture of all or
any percentage of the Contingent Profits Interest of any such Limited Partner,
such forfeited Contingent Profits Interest may be: (a) reallocated and issued by
the General Partner, in its sole and absolute discretion, to such other one or
more Class B Limited Partners or to any new Class B Limited Partner to be
admitted hereafter as a Partner of the Partnership and, in either such event,
such reallocated Contingent Profits Interest shall vest and be subject to
forfeiture in accordance with such schedule or conditions as the General Partner
deems, in its sole and absolute discretion, appropriate, or (b) cancelled in its
entirety, thereby reducing the total Contingent Profits Interest allocable to
the Class B Limited Partners (as a class) as the General Partner shall, in its
sole and absolute discretion, determine; and PROVIDED, HOWEVER, that, in the
event of the Employment Termination for Cause by the Company of any Class B
Limited Partner, any Contingent Profits Interest and/or Vested Profits Interest
in the
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Partnership then held by such Class B Limited Partner, shall thereupon, and
without further act of the Partnership or of such Class B Limited Partner, be
cancelled and forfeited in its entirety to the Partnership (which may be
reallocated or cancelled by the General Partner as hereinabove provided) and
shall thenceforth not constitute any Interest, whether Contingent Profits
Interest or Vested Profits Interest or otherwise, in the Partnership and such
Person shall not be entitled to any rights or benefits whatsoever deriving from
or with respect to his prior relationship as a Class B Limited Partner of the
Partnership and the Partnership shall not have any obligations whatsoever to
such Person.
3.5.5 Section 83(b) Election. As a condition of admission to the
Partnership, each Class B Limited Partner hereby further agrees to make an
election under Section 83(b) of the Code to report income, if any, relating to
or by reason of his receipt of a Contingent Profits Interest.
3.6 Status of Limited Partners.
3.6.1 The Limited Partners shall not participate or take part in
the control of the Partnership business and shall have no right or authority to
act for, or bind, the Partnership.
3.6.2 Unless named in this Agreement, or unless admitted to the
Partnership as the General Partner, a Limited Partner or a Substituted Limited
Partner, as provided in this Agreement, no Person shall be considered a Partner.
The Partnership and the General Partner need deal only with Persons so named or
admitted as Partners. Neither the General Partner nor the Partnership shall be
required to deal with any other Person merely because of an assignment or
transfer of a Partnership Interest to such Person as a result of an assignment
thereof or a transfer thereof by reason of the Incapacity of a Partner. Any
distribution by the Partnership to the Person shown on the Partnership's books
and records as a Partner or to its legal representatives, or the permitted
assignee of the right to receive Partnership distributions as provided herein,
shall acquit the Partnership and the General Partner of any liability to any
other Person who may be interested in such distribution by reason of any other
assignment by the Partner or by reason of his Incapacity, or for any other
reason.
3.6.3 The General Partner also may be a Limited Partner of the
Partnership, upon acquiring the Interest of a Limited Partner. The General
Partner shall, in its capacity as a Limited Partner, be entitled to participate
in any Consent of the Limited Partners, and the Interest of the General Partner
as a Limited Partner shall be counted in any computations required in any such
Consent.
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ARTICLE IV
DISTRIBUTIONS; ALLOCATIONS
4.1 Distributions Prior to Termination and Dissolution of the
Partnership.
(a) Net Cash Flow and Net Sales Proceeds shall be distributed to
the Partners, 99% to the Class A Limited Partners and 1% to the General Partner.
(b) All distributions of Net Cash Flow and Net Sales Proceeds
made within any Fiscal Year shall be subject to adjustment by reference to the
Partnership's financial statements for such Fiscal Year. If any additional
amount is to be distributed or paid by reason of such financial statements, such
additional amount shall be deemed distributed for such Fiscal Year; and if any
excess amount was distributed for such Fiscal Year as reflected by such
financial statements, the excess amount shall be taken into account in
determining subsequent distributions or payments.
4.2 Distributions to Class B Partners.
4.2.1 Designated Class B Management Stock shall be distributed to
the Class B Limited Partners in accordance with Section 4.2.2 as the Class B
Limited Partners' Contingent Profits Interests become Vested Profits Interests.
To facilitate these distributions, Designated Class B Management Stock
(consisting of 3,990 shares of Company Stock ) will be evidenced by share
certificate nos. 4-14, which will be held by and in the name of the Partnership
until such time as Designated Class B Management Stock is to be distributed to
the Class B Limited Partners. The remaining Company Stock held by the
Partnership, the Designated Class A Stock (consisting of 35,910 shares of
Company Stock), will be evidenced by share certificate no. 3. None of the Class
B Limited Partners shall have any direct, indirect, vested or contingent right
to receive any Gain From Sale or any other dividends or other income from, or
any distribution of, any of the Designated Class A Stock or any proceeds or
other consideration received by the Partnership in connection with the sale,
exchange or other disposition of the Designated Class A Stock. No Partners other
than the Class B Partners shall have any right to receive any distribution of
Designated Class B Management Stock or any proceeds or other consideration
received by the Partnership in connection with the sale, exchange or other
disposition of the Designated Class B Management Stock, except to the extent
that the Class B Limited Partners cease to be Partners and do not have Vested
Profits Interests. The Partnership shall not sell, transfer, assign or exchange
any of the Designated Class B Management Stock, except to the extent required to
pay expenses in connection with liquidation of the Partnership which would be
allocable to the Class B Limited Partners' Interests.
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4.2.2 At such time as, and to the extent that, a Class B Limited
Partner's Contingent Profits Interest becomes a Vested Profits Interest, such
Class B Limited Partner shall be entitled , and only entitled to, distributions
in-kind of Designated Class B Management Stock with respect to his or her Vested
Profits Interest. Each such Class B Limited Partner shall receive such
percentage of the Designated Class B Management Stock as shall be determined by
a fraction, the numerator of which shall be each such Class B Limited Partner's
percentage of the Vested Profits Interests (of all Class B Limited Partners) and
the denominator of which shall be ten (10) or such lesser number as then equals
the total Vested Profits Interest percentage to which the Class B Limited
Partners (as a class) are then entitled after giving effect to the provisions of
Section 3.5.4 hereof.
4.3 Allocation of Net Income and Net Loss.
(a) Net Income and Net Gain From Sale. Net Income and Net Gain
From Sale for any Fiscal Year shall be allocated in such manner as equitably
reflects amounts of cash distributed (or, in the case of unrealized income,
amounts to be distributed) to the Class A Limited Partners and the General
Partner pursuant to Section 4.1(a).
(b) Net Loss and Net Loss From Sale. Net Loss and Net Loss From
Sale for any fiscal year shall be allocated, to the extent of prior allocations
of Net Income and/or Net Gain From Sale, in the reverse order and priority that
Net Income and/or Net Gain From Sale have been allocated pursuant to Section
4.3(a). Net Loss and Net Loss From Sale in excess of any Net Income and/or Net
Gain From Sale shall be allocated among the General Partner and Class A Limited
Partners pro rata in accordance with the positive balances in their Capital
Accounts.
(c) Deficits in Capital Accounts. The Net Loss and Net Loss From
Sale allocated pursuant to Section 4.3(b) hereof shall not exceed the maximum
amount of losses that can be so allocated without causing any Limited Partner to
have a deficit in his Capital Account at the end of any Fiscal Year. In the
event that some but not all of the Limited Partners would have a deficit in his
Capital Account as a consequence of an allocated Net Loss or Net Loss From Sale
pursuant to Section 4.3(b), the limitation set forth in this Section 4.3(c)
shall be applied on a Limited Partner by Limited Partner basis so as to allocate
the maximum permissible losses to each Limited Partner under Section
1.704-1(b)(2)(ii)(d) of the Regulations. All Net Loss and/or Net Loss From Sale
in excess of the limitation set forth in this Section 4.3(c), shall be allocated
among the Partners in accordance with their interests in the Partnership as
determined under the Regulations. Offsetting allocations of Net Income and Net
Gain From Sale shall be made in subsequent Fiscal Years so as to achieve as
nearly as possible the results that would have been
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achieved had this Section 4.3(c) not been included in this Agreement.
(d) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations, or distributions described
in Regulations Section 1.704- 1(b)(2)(ii)(d)(4) or Regulations Section
1.704-1(b)(2)(ii)(d)(6), or otherwise, which results in such Partner having a
Capital Account deficit, 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 Regulations, the Capital Account deficit of such
Partner as quickly as possible, provided that an allocation pursuant to this
Section 4.3(d) shall be made if and only to the extent that such Partner would
have an Adjusted Capital Account Deficit after all other allocations provided
for in this Article IV have been tentatively made as if this Section 4.3(d) were
not in the Agreement.
(e) Tax Allocations on Gross-Up. In accordance with Code Section
704(c) and the Treasury Regulations thereunder, income, gain, loss and deduction
with respect to any property (other than cash) contributed to the capital of the
Partnership shall be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial fair market value as determined by
the General Partner for entry on the books of the Partnership. In the event the
value of any Partnership asset on the books of the Partnership is adjusted
(except in the case of an adjustment pursuant to Section 734(b) or Section
743(b) of the Code) to its Fair Market Value, subsequent allocations of income,
gain, loss and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and such value in the same manner as under Section 704(c) of the Code
and the Treasury regulations thereunder. Any elections or other decisions
relating to such allocations shall be made by the General Partner in any manner
that reasonably reflects the purposes and intention of this Agreement.
Allocations pursuant to this Section 4.3(c) are solely for the purposes of
federal, state and local taxes and shall not affect, or in any way be taken into
account in computing, any Partner's Capital Account or share of Net Income, Net
Gain From Sale, Net Loss, Net Loss From Sale or other items, or distributions
pursuant to any provision of this Agreement.
In any event the value of any Partnership asset is adjusted
pursuant to Regulations Section 1.704-1(b)(2)(iv)(f), subsequent allocations of
income, gain, loss, and deduction with respect to such asset shall take account
of any variation between the adjusted basis of such asset for Federal income tax
purposes and its value in the same manner as under Code Section 704(c) and the
Regulations thereunder. It is understood that the admission of the Class B
Limited Partners is an event described in
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Regulation Section 1.704-1(b)(2)(iv)(f), and the assets of the Partnership as of
the date hereof shall be revalued and any income or loss resulting therefrom
shall be allocated among the Class A Limited Partners and the General Partner
pursuant to such Regulation.
4.4 Determination of Distributions and Allocations Among Limited
Partners. Unless the context requires otherwise, all Net Cash Flow, Net Sale
Proceeds, Net Income and Net Gain From Sale distributed or allocated to the
Limited Partners generally shall be distributed or allocated to each such
Limited Partner entitled to such distribution or allocation in proportion to the
Interests of each such Limited Partner as set forth on Schedule A and Schedule
B, respectively, provided, however, that no such distributions shall be made to
the Class B Limited Partners except with respect to distributions of Designated
Class B Management Company Stock in accordance with Section 4.2.2. Net Loss and
Net Loss From Sale allocable to the Partners or to the Class A Limited Partners
shall be allocated in proportion to the Capital Contributions made by such Class
A Limited Partners.
4.5 Distribution and Payments In-Kind. The General Partner, in its sole
discretion, may distribute Partnership assets in kind to the General Partner
and/or the Class A Limited Partners at such times and in such amounts as cash
could be distributed to such Partners, and the General Partner shall distribute
only Designated Class B Management Restricted Stock to the Class B Limited
Partners in accordance with Section 4.2.2. Any unrealized gain or unrealized
loss with respect to any asset distributed in kind shall be reflected in such
Partners' Capital Accounts as if such asset had been sold for its Fair Market
Value on the date of distribution, the proceeds derived therefrom had been
distributed to the Partner receiving the asset, and the amount of gain or loss
with respect thereto had been allocated to such Partners pursuant to Section
4.3. If any Class B Limited Partner would have a Capital Account deficit as a
result of the distribution of Designated Class B Management Stock to such Class
B Limited Partner, the special allocation provisions of Section 4.3(d) shall be
applied to eliminate the Capital Account deficit of such Class B Limited Partner
resulting from such distribution. This provision shall apply to any distribution
of Designated Class B Management Stock to a Class B Limited Partner, whether in
liquidation of such Class B Limited Partner's Interest or in liquidation of the
Partnership or a non-liquidating distribution to such Class B Limited Partner.
4.6 The Partnership shall not be responsible for, and shall not be
required to pay or to reimburse, any of the Class A Partners or any of the Class
B Partners for all or any portion of federal, state or other tax liabilities
arising out of their acquisition of Interests in the Partnership or by reason of
any Net Income allocations to, or distributions of, Net Cash Flow and/or Net
Gain From Sale to any of the Limited Partners.
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ARTICLE V
RIGHTS AND DUTIES OF THE GENERAL PARTNER
5.1 Management and Administration.
5.1.1 Except as overwise expressly provided herein or by law, the
General Partner is hereby vested with the full, exclusive and complete right,
power and discretion to operate, manage and control the affairs of the
Partnership and to make all decisions affecting Partnership affairs, as deemed
proper, necessary or advisable by the General Partner to carry on the business
of the Partnership as described in Section 2.5 and the General Partner shall
have all of the rights, powers and obligations of a general partner of a general
or limited partnership under the Act and otherwise as provided by law.
Without limiting the generality of the foregoing, all of the
Partners hereby specifically agree and consent that the General Partner may, on
behalf of the Partnership, at any time, from time to time and without further
notice to or Consent from any other Partner, do the following, directly or
indirectly through a subsidiary:
(a) purchase of Company Stock or any other
class of capital stock of the Company now or hereafter authorized or debt
instruments issued by the Company or options, warrants or other rights to
purchase any of the foregoing for the Partnership as contemplated by Section 2.5
hereof;
(b) sell all or any part of the
Partnership's assets (including all or part of the Company Stock) whether for
cash or securities and on such reasonable terms as the General Partner shall
determine to be appropriate;
(c) pledge, hypothecate and/or grant or
assign a security interest in all or any portion of the Company Stock owned of
record and/or beneficially by the Partnership to any one or more Persons as a
condition or in consideration of, in connection with or in order to secure or
collateralize any loans or advances made by any of such Persons to the Company
and/or the Partnership;
(d) vote the Company Stock owned by the
Partnership, enter into, and perform under, any stockholders agreement, voting
trust, proxy or other agreement governing the Company Stock and act as a
stockholder of the Company with whatever power the Partnership has by virtue of
its percentage ownership of the Company Stock, by contract or otherwise;
(e) incur all expenditures permitted by this
Agreement, and, to the extent that funds of the Partnership are
available, pay all expenses, debts and obligations of the
Partnership;
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(f) engage, compensate and discharge any
agent, attorney, employee, accountant, consultant or other person, including
anyone who, in addition to acting in such capacity, may also be a General
Partner, Affiliate, or Limited Partner hereunder (or officer, director or equity
owner thereof), at such compensation and upon such terms and conditions as the
General Partner may deem appropriate;
(g) maintain such bank accounts on behalf of
the Partnership and make such signature arrangements with respect
thereto, as the General Partner shall determine to be
appropriate;
(h) enter into agreements with any and all
persons, entities and governmental agencies with respect to the financing and
operating of the Partnership business upon such terms as the General Partner
deems appropriate;
(i) compromise, submit to arbitration, ▇▇▇
on or defend all claims in favor of or against the Partnership;
(j) do all acts it deems necessary or
appropriate to further the Partnership business or for the
protection and preservation of the Partnership assets;
(k) determine the appropriate accounting
method or methods to be used by the Partnership;
(l) amend this Agreement to reflect the
substitution or addition of a Limited Partner or a General Partner or the
reduction of Capital Accounts upon the return of capital to the Class A
Partners;
(m) cause the Partnership to enter into
transactions in which the General Partner or Affiliates have an interest
including, but not limited to, transactions which involve the purchase or sale
of any property or securities to or from the Partnership, and transactions in
which (i) services will be rendered for or by the Partnership, or (ii) fees or
commissions will be received by the General Partner or Affiliates from the
Partnership (or officer, director or equity owner thereof);
(n) enter into, execute, amend, supplement,
acknowledge and deliver any and all contracts, agreements or other instruments
as the General Partner shall determine to be appropriate in furtherance of the
purposes of the Partnership;
(o) pending cash distributions to the
Partners, invest in short-term investments;
(p) admit an assignee of all or any fraction
of a Limited Partner's Interest or the General Partner's Interest
to be a Substituted Limited Partner or a substituted General
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Partner in the Partnership pursuant to and subject to the terms of Section 7.3
or 6.1, respectively;
(q) be responsible for providing those
administrative services to the Partnership deemed necessary by the General
Partner, including, without limitation, making any filings necessary on behalf
of the Partnership in Delaware and such other jurisdictions in which the
Partnership owns property or transacts business;
(r) act as "tax matters partner" of the
Partnership for tax purposes;
(s) cause the Partnership and/or the Company
or its subsidiaries to borrow money for Partnership or Company purposes,
respectively, from such lenders, in such amounts, at such times and on such
terms as the General Partner determines appropriate to repay, refinance and/or
renegotiate such borrowings, and to grant security for such borrowings to the
lender or lenders thereof, including pledging the Company Stock.
5.1.2 Third parties dealing with the Partnership may rely
conclusively upon any certificate of the General Partner to the effect that it
is acting on behalf of the Partnership. The signature of the General Partner
shall be sufficient to bind the Partnership, in every manner, to any agreement
or on any document including, but nor limited to, documents drawn or agreements
made in connection with the acquisition or disposition of any assets or
properties in furtherance of the purposes of the Partnership.
5.2 Restrictions on the Authority of the General Partner. Without
the Consent of more than fifty percent (50%) in Interest of the Class A Limited
Partners, the General Partner shall not have the authority (i) to admit a Person
as a Partner, except as provided in this Agreement or (ii) to elect to dissolve
the Partnership, except that no Consent of the Class A Limited Partners shall be
required and the General Partner shall have the authority to elect to dissolve
the Partnership as provided in Section 8.1. Without the Consent of more than
fifty percent (50%) in Interest of the Class A Limited Partners, the General
Partner shall not have the authority to offer and sell limited partnership
Interests in the Partnership and admit such persons as additional Class A
Limited Partners, except as provided in Section 3.5.3 hereof concerning the
admission of any new Class B Limited Partners with respect to which the General
Partner shall have authority to admit any such new Class B Partners in its sole
and absolute discretion.
5.3 Duties and Obligations of the General Partner.
5.3.1 The General Partner shall take all action which may be
necessary or appropriate for the continuation of the Partnership's valid
existence as a limited partnership under the laws of Delaware and of each other
jurisdiction in which such
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existence is necessary to protect the limited liability of the Limited Partners
or to enable the Partnership to conduct the business in which it is engaged.
5.3.2 The General Partner shall at all times conduct its affairs
and the affairs of the Partnership in such a manner that no Limited Partner, in
its capacity as a limited partner, shall have any personal liability with
respect to any Partnership liability or obligation, except as expressly assumed
by any Limited Partner.
5.3.3 The General Partner shall prepare or cause to be prepared,
and shall file on or before the due date (or any extension thereof), any tax
returns required to be filed by the Partnership. The General Partner shall cause
the Partnership to pay any taxes payable by the Partnership (it being understood
that the expenses of preparation and filing of such tax returns, and the amounts
of such taxes, are expenses of the Partnership and not of the General Partner);
provided, however, that the General Partner shall not be required to cause the
Partnership to pay any tax so long as either the General Partner or the
Partnership is in good faith and by appropriate legal proceedings, contesting
the validity, applicability or amount thereof, and such contest does not
materially endanger any right or interest of the Partnership.
5.4 Other Business of Partners.
5.4.1 The General Partner shall devote to the Partnership such
time and effort as the General Partner determines shall be necessary to conduct
the Partnership's business and affairs in an appropriate manner. Subject to the
foregoing, any Partner and any Affiliate of any Partner may engage in or possess
any interest in other business ventures of any kind, nature or description,
independently or with another, whether such ventures are competitive with the
Partnership, or otherwise.
5.4.2 Except as otherwise provided in this Section 5.4, neither
the Partnership nor any Partner shall have any rights or obligations by virtue
of this Agreement or the Partnership relation created hereby in or to any such
independent ventures or in or to the income or profits or losses derived
therefrom.
5.4.3 The Limited Partners recognize and Consent that the General
Partner or Affiliates of the General Partner (including LMI and its respective
officers, directors, shareholders, partners and other Affiliates) may engage in
other activities and may receive other fees and/or annual retainers from the
Company and the Company's subsidiaries, including, but not limited to, the LMI
Management Consulting Agreement and, except as specifically provided herein,
neither the Partnership
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nor any Partner shall have any interest therein by virtue of this Agreement or
the Partnership relation created hereby.
5.4.4 Subject to the provisions of Section 5.2, the Limited
Partners hereby further Consent that the General Partner may offer to any
Limited Partner or Affiliate thereof or any other Person or Persons, in any
capacity, the opportunity to invest in, or to make loans to, the Partnership,
the Company or the Company's subsidiaries and no other Partner shall have any
right to participate or any interest therein by virtue of this Agreement or the
partnership relation created hereby.
5.5 Compensation of General Partner.
5.5.1 The General Partner shall not receive any salary, fees,
profits, distributions or compensation from the Partnership, except as provided
in Article IV and this Article V.
5.6 Allocation of Expenses.
5.6.1 The Partnership shall bear or pay from its own resources
all expenses incurred in connection with the General Partner's rent and general
office overhead, including clerical, bookkeeping and administrative costs,
salaries of personnel, payroll taxes and employee costs related to such
salaries, telephone charges, office supplies and office equipment expenses and
other like expenses related to the Partnership. All Partnership Expenses (as
defined below) shall be paid out of Cash Flow arising from short term
investments, to the extent funds arising therefrom are available, and thereafter
from other amounts of Cash Flow or, in the event of any insufficiency of Cash
Flow in any Fiscal Year, shall be paid out of any other cash funds of the
Partnership. To the extent the General Partner incurs any Partnership Expenses
on behalf of the Partnership, the Partnership shall promptly reimburse the
General Partner for such Partnership Expenses. Partnership Expenses shall
include the following:
(a) all filing fees or other similar fees payable from time to
time in respect of this Agreement or the Partnership;
(b) all taxes or governmental charges, all brokerage fees,
commissions, bank charges, transfer fees, filing fees, lawyers' and accountants'
costs, agents', consultants', experts, and other professional fees and any other
duties, charges or fees, whether in connection with the constitution of, or
increase in, Partnership assets or, the sale or purchase of, or proposed sale or
purchase of, Partnership assets and which may have become or may be payable in
respect of, or prior to, or upon the occasion of, the transaction or dealing, or
attempted or proposed transaction or dealing;
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(c) all expenses incurred in relation to the registration of
Partnership assets in the name of the General Partner or its nominee, or the
custody of the documents of title thereto;
(d) all taxes payable in respect of the acquisition of, holding
of, or dealing with investments or other assets of the Partnership;
(e) the remuneration and expenses of the Accountants and other
costs incurred in connection with the preparation of the financial statements
referred to in Section 12.2 hereof;
(f) the costs of maintaining records and books of account in
relation to the business of the Partnership referred to in Section 12.1;
(g) any interest on, and other costs and expenses with respect
to, borrowings effected pursuant to Article IX hereof;
(h) all costs and expenses incurred in relation to convening and
holding meetings of the Limited Partners pursuant to Article IX hereof;
(i) all costs and expenses of, or incidental to, the preparation
of amendments to this Agreement as referred to in Article VIII;
(j) all costs and expenses of and incidental to the preparation
and dispatch to Partners of all checks, warrants, reports, circulars, forms and
notices and any other documents necessary or desirable in connection with the
business and administration of the Partnership;
(k) all costs and expenses incurred as a result of the
termination of the Partnership and the realization of the Partnership assets;
(l) the remuneration and expenses of legal counsel to the
Partnership and any costs and expenses of any litigation involving the
Partnership and the amount of any judgment or settlement paid in connection
therewith, excluding, however the costs and expenses of any litigation, judgment
or settlement in which the conduct of the General Partner is found to have
violated the standard of conduct set forth in Section 5.7;
(m) any other costs in connection with the organization or
administration of the Partnership or otherwise that may be authorized by this
Agreement or approved by the Consent of more than fifty percent (50%) in
Interest of the Class A Limited Partners; and
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(n) all expenses incurred in the collection of Cash Flow.
5.7 Exculpation; Indemnification of the General Partner by the
Partnership. Neither the General Partner nor any of its Affiliates (including,
but not limited to, LMI) nor its or their officers, directors, shareholders,
partners, members, employees or agents (individually, an "Indemnitee" and
collectively, "Indemnitees") shall be liable, responsible or accountable in
damages or otherwise to the Partnership or any Limited Partner for any loss,
damage or tax liability incurred by reason of any act or omission performed or
omitted by the Indemnitee on behalf of the Partnership, or in furtherance of the
interests of the Partnership, provided that the Indemnitee committed no act of
gross negligence or willful misconduct with respect to such acts or omissions.
The Partnership, out of its assets and not out of the separate assets of the
General Partner or any Limited Partner, shall indemnify and hold harmless, to
the fullest extent permitted by law, the Indemnitee who was or is a party to or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
(including any action by or in the right of the Partnership), by reason of any
acts or omissions or alleged acts or omissions arising out of such Person's
activities as General Partner, Affiliate, officer, director, shareholder,
partner, member, employee or agent thereof, if such activities were performed
either on behalf of the Partnership or in furtherance of the interests of the
Partnership, against losses, damages and expenses for which such Person has not
otherwise been reimbursed (including attorneys' fees and charges, judgments,
fines and amounts paid in settlement) actually incurred by such Person in
connection with such action, suit or proceeding, so long as such Person
committed no act of gross negligence or willful misconduct with respect to such
acts or omissions and, with respect to any criminal action or proceeding, had no
reasonable cause to believe and did not believe his conduct was unlawful, and
provided that the satisfaction of any indemnification and any holding harmless
shall be from and limited to Partnership Assets and no Limited Partner shall
have any personal liability on account thereof. The indemnification for
attorneys' fees and charges contained herein shall include the legal costs
incurred by a party to enforce its rights under this Agreement. The General
Partner and LMI may consult with the Accountants and counsel to the Partnership
in respect of Partnership affairs and shall be fully protected and justified in
any action or inaction which is taken or omitted in good faith, in reliance upon
and in accordance with the opinion or advice of such counsel or Accountants. In
determining whether an Indemnitee acted with the requisite degree of care, the
Indemnitee shall be entitled to rely on reports and written statements of the
directors, officers and employees of the Company unless the Indemnitee to be
exculpated hereby had reason to believe that such reports or statements were not
true and complete. For the purposes of this Section 5.7, the directors,
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officers and employees of the Company and its subsidiary corporations, if any,
solely by reason of such positions, shall not be deemed to be Affiliates of the
General Partner.
ARTICLE VI
TRANSFERABILITY OF THE GENERAL PARTNER'S INTEREST
6.1 Assignment of the General Partner's Interest. Without the prior
Consent of more than fifty percent (50%) in Interest of the Class A Limited
Partners, the General Partner shall not after the date hereof enter into any
agreement as a result of which any Person (other than Fund G.P., LMI, Corporate
Fund G.P., a Person which is a partnership of which the General Partner, Fund
G.P., Corporate Fund G.P., LMI or the general partner of the General Partner is
the general partner, or which succeeds to the business, substantially as an
entirety of the General Partner, Fund G.P., Corporate Fund G.P., LMI or the
general partner of the General Partner or which is wholly-owned, directly or
indirectly, by the General Partner, Fund G.P., Corporate Fund G.P., LMI or the
general partner of the General Partner or which is another Affiliate of the
General Partner, Fund or LMI) shall have all or any part of the general
partnership interest in the Partnership. In connection with any assignment of
all or any part of the General Partner's general partnership interest in the
Partnership, an appropriate amendment to the Certificate shall be timely filed
in accordance with the Act and the Partnership shall not be dissolved. The
Limited Partners consent to the continuation of the business of the Partnership
following any assignment of the General Partner's Interest to a person described
in the parenthetical clause of the first sentence of this Section 6.1 and to the
appointment of such Person as a substitute General Partner of the Partnership.
6.2 Resignation or Withdrawal of the General Partner. Except in
connection with an assignment permitted by Section 6.1, without the prior
Consent of more than fifty percent (50%) in Interest of the Class A Limited
Partners, the General Partner may not resign or withdraw from the Partnership.
Except as required by the Act no event shall be deemed to be an "event of
withdrawal" pursuant to Section 17-402 of the Act that is not expressly referred
to in this Article VI.
6.3 Removal of the General Partner. The General Partner may be removed
only for Cause on not less than nine (9) months' notice from the Class A Limited
Partners, or their representative duly appointed for the purpose of giving such
notice, with the Consent of at least ninety percent (90%) in Interest of the
Class A Limited Partners. "Cause" means the General Partner committed an act of
gross negligence or willful misconduct.
6.4 Incapacity of the General Partner. In the event of the Incapacity of
the General Partner, the Partnership shall be dissolved, subject to the
provisions of Section 6 5.
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6.5 Continuation of the Partnership.
6.5.1 In the event of the Incapacity, removal, withdrawal or
resignation of the General Partner, the Partnership shall be dissolved, unless
the Class A Limited Partners shall, within ninety (90) days after the occurrence
of any such event, elect, by the Consent of all the Class A Limited Partners, to
continue the Partnership upon the same terms and conditions as are set forth in
this Agreement, except as required by the last sentence of this Section 6.5.1.
In the event the election described in the first sentence of this Section 6.5.1
is made, the Class A Limited Partners unanimously shall elect a new General
Partner to serve as the General Partner of the Partnership, and such election
shall be deemed to have occurred immediately prior to the occurrence of an event
described in the first sentence of this Section 6.5.1. The newly appointed
General Partner, if it so desires to serve, shall be required to purchase the
interest of the prior General Partner for an amount equal to the greater of the
Fair Market Value, or the liquidation value, thereof, determined by the
Accountants.
6.5.2 Upon the General Partner ceasing to be the General Partner
of the Partnership as provided in this Agreement, other than in connection with
an assignment permitted by Section 6.1 above, its liability as the General
Partner shall cease as provided in Section 6.6, and the Partnership shall
promptly file an amendment to the Partnership's Certificate and otherwise take
all steps reasonably necessary under the Act to cause such cessation of
liability.
6.5.3 Upon the General Partner ceasing to be the General Partner
of the Partnership as provided in this Agreement other than in connection with
an assignment permitted by Section 6.1 above, the designees of the General
Partner and its Affiliates shall tender their resignations from all
directorships and officerships held by them in the Company and its subsidiaries,
if any.
6.6 Liability of a Withdrawn or Removed General Partner. Subject to the
provisions concerning exculpation and indemnification contained in Section 5.7,
a General Partner which shall become Incapacitated, withdraw, be removed or
resign from the Partnership, shall remain liable for obligations and liabilities
incurred by it as General Partner prior to the time such Incapacity, withdrawal,
removal or resignation shall have become effective, but it shall be free of any
obligation or liability incurred on account of the activities of the Partnership
from and after the time such Incapacity, withdrawal, removal or resignation
shall have become effective.
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ARTICLE VII
TRANSFERABILITY OF A LIMITED PARTNER'S INTEREST
7.1 Restrictions on Transfer of Interests.
7.1.1 Notwithstanding any other provisions of this Section 7.1,
no Transfer of all or any fraction of a Class A Limited Partner's Interest may
be made without (a) the prior written Consent of the General Partner, which
Consent may be withheld for any reason in the General Partner's sole and
absolute discretion, and (b) the receipt by the General Partner not less than
ten (10) days prior to the date of any proposed transfer of a written opinion of
responsible counsel (who may be counsel for the Partnership), satisfactory in
form and substance to the General Partner to the effect that such Transfer would
not result in any adverse legal or regulatory consequences to the Partnership or
any Partner thereof, including but not limited to:
(i) a violation of the Securities Act of
1933, as amended, or any "Blue Sky" laws or other securities or other laws or
regulations of the United States or any state of the United States or any over
jurisdiction applicable to the Partnership or the Interest to be transferred;
(ii) the loss by the Partnership of its
status as a partnership for tax purposes; or
(iii) the termination of the Partnership
pursuant to Section 708(b)(1)(B) of the Code; provided, however, that: clause
(i) of the foregoing provisions of this Section 7.1.1 shall not apply to a
Transfer by a Limited Partner to a Person which succeeds to its business
substantially as an entirety, or which, directly or indirectly, owns all the
outstanding equity securities of such Limited Partner or is a wholly-owned
subsidiary of such Limited Partner (or of the Person of which such Limited
Partner, directly or indirectly, is a wholly-owned subsidiary); provided
further, however, that the General Partner may not consent to the transfer of
Interests of a Limited Partner who has a relationship with the General Partner
as described in Section 3.03(9) of Revenue Procedure 89-12 as modified,
supplemented or superseded in relevant part (a "Related Limited Partner") so as
to reduce the aggregate Interest of such Related Limited Partner (after taking
into account the proposed transfer) to less than 66% the original Interests of
such Related Limited Partner. The General Partner agrees to cooperate with any
Limited Partner making a Transfer by providing promptly such records and other
factual information as may be reasonably requested with respect to any proposed
Transfer. Each Limited Partner hereby severally agrees that it will not transfer
all or any fraction of its Interest in the Partnership except as permitted by
this Agreement.
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7.1.2 In no event shall all or any part of an Interest be
transferred to a minor or an incompetent except in trust or by will or intestate
succession.
7.1.3 The transferring Class A Limited Partner agrees that it
will pay all reasonable expenses, including attorneys' fees, incurred by the
Partnership in connection with such Transfer.
7.1.4 Any Person which acquires all or any fraction of the
Interest of a Class A Limited Partner shall be obligated to pay to the
Partnership the appropriate portion of any amounts thereafter becoming due in
respect of the unpaid Capital Contributions committed to be made by its
predecessor in interest and shall succeed to the appropriate part of the Capital
Account of its predecessor in interest. Each Class A Limited Partner agrees
that, notwithstanding the Transfer of all or any fraction of its Interest, as
between it and the Partnership, it will remain liable for the unpaid Capital
Contributions as required to be made with respect to its interest prior to the
time, if any, when the purchaser, assignee or transferee of such Interest, or
fraction thereof, is admitted as a Substituted Limited Partner.
7.1.5 Notwithstanding anything herein to the contrary, in no
event may an Interest of a Class A Limited Partner be transferred, unless such
Interest represents either original aggregate Capital Contributions to the
Partnership of at least $10,000 or such Limited Partner's entire Interest.
7.2 Assignees.
7.2.1 The Partnership shall not recognize for any purpose any
purported Transfer of all or any fraction of the Interest of a Limited Partner,
unless the provisions of Section 7.1 shall have been complied with and there
shall have been filed with the Partnership a dated notice of such Transfer, in
form satisfactory to the General Partner, executed and acknowledged by both the
seller, assignor or transferor and the purchaser, assignee or transferee, and
such notice (i) contains the agreement of the purchaser, assignee or transferee,
satisfactory to the General Partner, to be bound by all the applicable terms and
provision of this Agreement and (ii) represents that such Transfer was made in
accordance with all applicable laws and regulations.
7.2.2 Unless and until an assignee of an Interest becomes a
Substituted Limited Partner, such assignee shall not be entitled to give
Consents with respect to such Interest.
7.2.3 Subject to Section 7.1.4 any Limited Partner which shall
transfer all of its Interest shall cease to be a Limited Partner, except that,
unless and until a Substituted Limited Partner is admitted in its stead, such
assigning Limited
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Partner shall retain the statutory rights of the assignor of a limited partner's
interest under the Act.
7.2.4 Anything herein to the contrary notwithstanding, both the
Partnership and the General Partner shall be entitled to treat the assignor of
an Interest as the absolute owner thereof in all respects, and shall incur no
liability for distributions made in good faith to it, until such time as a
written assignment that conforms to the requirements of this Article VII has
been received by the Partnership and accepted by the General Partner.
7.2.5 A Person who is the assignee of all or any fraction of the
Interest of a Limited Partner as permitted hereby but does not become a
Substituted Limited Partner and who desires to make a further Transfer of such
Interest, shall be bound by all of the provisions of this Article VII to the
same extent and in the same manner as any Limited Partner desiring to make a
Transfer of its Interest.
7.3 Substituted Limited Partners.
7.3.1 No Limited Partner shall have the right to substitute a
purchaser, assignee, transferee, donee, heir, legatee, distributee or other
recipient of all or any fraction of such Limited Partner's Interest as a Limited
Partner in its place. Any such purchaser, assignee, transferee, donee, heir,
legatee, distributee or other recipient of an Interest (whether pursuant to a
voluntary or involuntary Transfer) shall be admitted to the Partnership as a
Substituted Limited Partner only (i) with the written Consent of the General
Partner which Consent may be withheld for any reason in the General Partner's
sole discretion, (ii) by satisfying the requirements of Sections 7.1 and 7.2,
(iii) upon the receipt of all necessary governmental consents, and (iv) upon an
amendment to this Agreement and the Certificate, if required, and the recording
of all amendments and other documents required to be recorded in the proper
records of each jurisdiction in which such recordation is necessary to qualify
the Partnership to conduct business or to preserve the limited liability of the
Limited Partners.
7.3.2 Each Substituted Limited Partner, as a condition to its
admission as a Limited Partner, shall execute and acknowledge such other
instruments, in form and substance satisfactory to the General Partner, as the
General Partner reasonably deems necessary or desirable to effectuate such
admission and to confirm the agreement of the Substituted Limited Partner to be
bound by all the terms and provisions of this Agreement with respect to the
Interest acquired. All reasonable expenses, including attorneys' fees, incurred
by the Partnership in this connection shall be borne by such Substituted Limited
Partner.
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7.3.3 Until an assignee shall have been admitted to the
Partnership as a Substituted Limited Partner pursuant to Section 7.3.1, such
assignee shall be entitled to all of the rights of an assignee of a limited
partnership interest under the Act.
7.4 Incapacity of a Limited Partner. In the event of the Incapacity of a
Limited Partner, the Partnership shall not terminate, and the Limited Partner's
trustee in bankruptcy or other legal representative shall have only the rights
of a transferee of the right to receive Partnership distributions applicable to
the Interest of such Incapacitated Limited Partner as provided herein. Any
Transfer from such trustee in bankruptcy or legal representative shall be
subject to the provisions of this Agreement.
7.5 Transfers During a Fiscal Year. In the event of the Transfer of a
Partner's Interest at any time other than the end of a Fiscal Year, the
distributive share of the various items of Partnership profit, income, gain,
deduction, loss, credit and allowance computed for tax purposes shall be
allocated between the transferor and the transferee in the ratio of the number
of days in the Fiscal Year before and after the Transfer or in such other manner
as the General Partner determines to be fair under the circumstances, including,
without limitation, a closing of the books of the Partnership.
7.6 Restrictions Upon Transfer of Class B Partners' Interests.
Notwithstanding any other provisions of the Article VII and subject to the
provisions of Section 3.5.3 hereof, in no event shall the Contingent Profits
Interest or Vested Profits Interest of any Class B Limited Partner (or the
resulting Designated Class B Management Stock distributed pursuant to Section
4.2) be transferable by such Class B Limited Partner, in whole or in part,
without the prior written consent of the General Partner, which consent may be
withheld for any reason whatsoever in the General Partner's sole and absolute
discretion.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP
8.1 Dissolution. The Partnership shall be dissolved, upon the happening
of any of the following events:
(i) the expiration of its term;
(ii) the failure of the Limited Partners to elect to continue the
Partnership as provided, and upon the occurrence of an event specified
in Section 6.5.1;
(iii) at least three (3) months prior written notice to the
Limited Partners of the election to dissolve the
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Partnership by the General Partner if at any time the Fair Market Value
of the Partnership assets, less the face amount of the liabilities of
the Partnership, shall be less than ten percent (10%) of the original
Capital Contributions;
(iv) the sale of or other disposition by the Partnership of all
or substantially all of the Company Stock, and any other assets of the
Partnership, unless the General Partner determines that the continued
existence of the Partnership is necessary or desirable;
(v) termination required by operation of law; or
(vi) the Consent of the General Partner and fifty percent (50%)
in Interest of the Class A Limited Partners.
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 Certificate has been canceled and the assets of the Partnership have
been distributed as provided in Section 8.2.
8.2 Liquidation.
8.2.1 Upon dissolution of the Partnership, the General Partner
or, if there is none, a Person selected by a majority in interest of the Limited
Partners to act as a liquidating trustee (the "Liquidating Trustee") shall wind
up the affairs of the Partnership and proceed within a reasonable period of time
to sell or otherwise liquidate the assets of the Partnership (subject to Section
4.2.2 with respect to Designated Class B Management Shares) and, after paying or
making due provision by the setting up of reserves for all liabilities to
creditors of the Partnership, to distribute the assets among the Partners in
accordance with the provisions for the making of distributions set forth in
Section 8.2.2 of this Agreement. Notwithstanding the foregoing, in the event
that the General Partner or the Liquidating Trustee shall, in its absolute
discretion, determine that a sale or other disposition of part or all of the
Partnership's investments would cause undue loss to the Partners or otherwise be
impractical or imprudent, and taking into consideration the Partnership's
obligation to distribute Designated Class B Management Stock to Class B Limited
Partners pursuant to Section 4.2 hereof, the General Partner or the Liquidating
Trustee may either defer liquidation of, and withhold from distribution for a
reasonable time, any investments or distribute part or all of such investments
to the Partners, or to a liquidating trust for their benefit, in kind as
provided in Sections 8.2.2 and 4.6 hereof.
8.2.2 If the Fair Market Value of Partnership assets to be
distributed in kind exceeds ("unrealized gain") or is less than ("unrealized
loss") the Partnership basis in such assets, to the extent not otherwise
recognized to the Partnership, such
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unrealized gain or unrealized loss shall be taken into account in computing
income, losses and gains for such Fiscal Year for all purposes of crediting or
charging the Capital Accounts of the Partners pursuant to Section 4.3 and this
Section as if such assets had been sold for their Fair Market Value on the date
of distribution. Thereupon, all of the assets of the Partnership, or the
proceeds therefrom, shall be distributed or used as follows and in the following
order of priority:
(i) for the payment of the debts and liabilities of the
Partnership, including, without limitation, any amounts due to the
General Partner pursuant to Section 5.6, and the expenses of
liquidation;
(ii) to the setting up of any reserves which the General Partner
or the Liquidating Trustee may deem reasonably necessary for any
contingent or unforeseen liabilities or obligations of the Partnership;
and
(iii) to the Class A Limited Partners and the General Partner in
an amount equal to the positive balances in their respective Capital
Accounts as determined after taking into account all Capital Account
adjustments for all of the Partnership's taxable years including the
Partnership's taxable year during which such liquidation occurs; to the
Class B Limited Partners, Designated Class B Management Stock shall be
distributed in accordance with Section 4.2.2. The amount of such
distribution in kind for such purposes of this Section 8.2.2(iii) shall
be equal to the Fair Market Value of the assets so distributed;
provided, however, that in no event shall the Class B Limited Partners
be entitled to receive distributions of more shares of Designated Class
B Management Stock than are distributable under Section 4.2.2, subject
to Section 3.5.4.
8.2.3 When the General Partner or the Liquidating Trustee has
complied with the foregoing liquidation plan, the Partners shall execute,
acknowledge and cause to be filed, in accordance with the Act and the laws of
such jurisdictions in which the Partnership is qualified to transact business,
an instrument or instruments evidencing the cancellation of the Certificate and
termination of the Partnership.
ARTICLE IX
AMENDMENTS
9.1 Adoption of Amendments; Limitations Thereon.
9.1.1 By their execution of this Agreement, the Class A Limited
Partners have thereby signified their approval of all Amendments to the Original
Agreement set forth in this Agreement.
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9.1.2 This Agreement is subject to amendment only with the
written Consent of the General Partner and more than fifty percent (50%) in
Interest of the Class A Limited Partners; provided, however, that no amendment
to this Agreement may:
(a) increase the Capital Contributions required to be made by any
Class A Partner or require any Partner to make a loan to the
Partnership; convert a Limited Partner's Interest into a General
Partner's Interest; modify the limited liability of a Limited Partner;
or increase the liabilities or responsibilities of, or diminish the
protections of, any Partner under this Agreement; in each case, without
the Consent of each such affected Partner; and provided, further, that
no amendment which would increase the Capital Contributions required to
be made by any Partner may be adopted unless all of the Partners are
offered the opportunity to increase their Capital Contributions on a pro
rata basis;
(b) alter the Interest of any Partner in income, gains, losses or
distributions of the Partnership or amend or modify any portion of
Article IV without the Consent of each Partner adversely affected by
such amendment or modification; provided, however, that (i) neither the
admission of additional Limited Partners and General Partners, nor (ii)
the reallocation of the Contingent Profits Interest of any Class B
Limited Partner nor the issuance of any such Contingent Profits Interest
to any new Class B Limited Partner, nor (iii) the cancellation of any
such Contingent Profits Interest of any Class B Limited Partner, by the
General Partner, in its sole and absolute discretion in accordance with
the provisions of this Agreement shall constitute such an alteration,
amendment or modification;
(c) amend or modify any provision of Article VII in a manner that
would further restrict the transferability of a Class A Limited
Partner's Interest without the Consent of all of the Limited Partners;
(d) amend any provisions hereof which require the Consent, action
or approval of a specified percentage in Interest of the Class A Limited
Partners without the Consent of such specified percentage in Interest of
the Class A Limited Partners;
(e) cause the Partnership to lose its status as a partnership
for federal income tax purposes; or
(f) amend this Section 9.1.1 without the Consent of all of the
Class A Limited Partners.
9.1.3 Notwithstanding any provision hereof and in addition to
any amendments otherwise authorized hereby, this
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Agreement may be amended from time to time by the General Partner (i) to add to
the representations, duties or obligations of the General Partner or surrender
any right or power granted to the General Partner herein; (ii) to cure any
ambiguity or correct or supplement any provision hereof which may be
inconsistent with any other provision hereof, or correct any printing,
stenographic or clerical errors or omissions; (iii) to withdraw one or more
Limited Partners, in accordance with the terms of this Agreement; (iv) to amend
Schedule A or Schedule B hereto to provide any necessary information regarding
any Partner; and (v) to reflect any change in the amount of the Capital
Contribution of any Partner in accordance with the terms of this Agreement;
provided, however, that no amendment shall be adopted pursuant to this Section
9.1.2 if (a) such amendment would alter the Interest of a Partner in income,
gains or losses or distributions or is adverse to the Interests of the Limited
Partners, or (b) such amendment would, in the opinion of counsel for the
Partnership, alter or result in the alteration of the limited liability of the
Limited Partners or the status of the Partnership as a partnership for federal
income tax purposes. The General Partner shall send each Limited Partner a copy
of any amendment adopted pursuant to this Section 9.1.2.
9.1.4 Upon the adoption of any amendment to this Agreement, the
amendment shall be executed by the General Partner and all of the Limited
Partners and shall be duly filed in the proper records of each jurisdiction in
which filing is necessary for the Partnership to conduct business or to preserve
the limited liability of the Limited Partners. Any such amendment may be
executed by the General Partner on behalf of the Limited Partners pursuant to
the power of attorney granted in Article X.
9.2 Amendment of Certificate. In the event this Agreement shall be
amended pursuant to this Article IX, the General Partner shall amend the
Certificate to reflect such change if the General Partner deems such amendment
to be necessary and shall make any other filings or publications required or
desirable to reflect such amendment, including any required filing for
recordation of the Certificate or other similar document.
ARTICLE X
CONSENTS, VOTING AND MEETINGS
10.1 Method of Giving Consent. Any Consent required by this Agreement
may be given as follows:
(a) by a written Consent given by the consenting Partner at or
prior to the doing of the act or thing for which the Consent is
solicited, provided that such Consent shall not have been nullified by
either (i) notice to the General Partner by the Consenting Partner at or
prior to the time of, or the negative vote by such Consenting Partner
at, any meeting held to consider the doing of such act or thing, or (ii)
notice to the General Partner by the Consenting
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Partner prior to the doing of any act or thing, the doing of which has
not been made the subject of an approval at such a meeting; or
(b) by the affirmative vote by the Consenting Partner to the
doing of the act or thing for which the Consent is solicited at any
meeting called and held to consider the doing of such act or thing.
10.2 Meetings. Any matter (regardless of whether such matter requires
the Consent of all or any of the Limited Partners pursuant to this Agreement)
may be considered at a meeting of the Limited Partners held not less than
twenty-eight (28) days after notice thereof shall have been given by the General
Partner to all Limited Partners. Such notice (i) may be given by the General
Partner, in its discretion, at any time, and (ii) shall be given by the General
Partner within thirty (30) days after receipt by the General Partner of a
request for such a meeting made by at least fifty percent (50%) in Interest of
the Limited Partners. Any such notice shall state briefly the purposes, time and
place of the meeting. All such meetings shall be held at the principal office of
the Partnership or at such other reasonable place as the General Partner shall
designate and during normal business hours.
10.3 Record Dates. The General Partner may set in advance a date for
determining the Limited Partners entitled to notice of and to vote at any
meeting. No record date shall be more than sixty (60) days nor less than ten
(10) days prior to the date of the meeting to which such record date relates.
10.4 Submissions to Limited Partners. The General Partner shall give all
of the Limited Partners entitled to vote thereon notice of any proposal or other
matter required by any provision of this Agreement or by law to be submitted for
the consideration and approval of the Limited Partners or any class thereof.
Such notice shall include any information required by the relevant provisions of
this Agreement or by law. Neither the General Partner nor the Partnership shall
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Certificate or any
Consent by the Limited Partners unless each Limited Partner entitled to vote
thereon shall be informed thereof by the General Partner or the Partnership, as
the case may be, and shall be afforded the opportunity of considering the same
and shall be supplied with sufficient information to enable such Limited Partner
to make an informed decision with respect thereto. Neither the General Partner
nor the Partnership shall, directly or indirectly, pay or cause to be paid any
remuneration, fee or other consideration to any Limited Partner for or as an
inducement to the entering into by such Limited Partner of any waiver or
amendment of any of the terms and provisions of this Agreement or the
Certificate or the giving of any Consent, unless such remuneration is
concurrently paid on the same terms, in
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proportion to their respective Limited Partner Interests, to all the then
Limited Partners entitled to vote thereon.
10.5 Class B Limited Partners. Notwithstanding any other provisions of
this Article X, the Consent, vote or approval of any of the Class B Limited
Partners shall not be required for any action taken, or proposed to be taken, by
the General Partner under this Agreement, including without limitation, adoption
of amendments to this Agreement in accordance with Article IX hereof, nor shall
the Partnership be required to forward notice of any such proposed actions,
amendments or meetings to any Class B Limited Partners, except in either case
with respect to any such actions or amendments or proposed actions or amendments
which would adversely affect the Vested Profits Interest in the Partnership of
any such Class B Partner.
ARTICLE XI
POWER OF ATTORNEY
Each Partner, by its execution hereof, hereby irrevocably makes,
constitutes and appoints the General Partner as its true and lawful agent and
attorney-in-fact, with full power of substitution and full power and authority
in its name, place and stead, to make, execute, sign, acknowledge, swear to,
record, publish and file in such Partner's or such Partner's assignee's name,
place and stead: (i) any and all counterparts of this Agreement and any and all
amendments hereto to which such Partner is a signatory; (ii) the original
certificate of limited partnership of the Partnership and all amendments thereto
required or permitted by law or the provisions of this Agreement; (iii) all
certificates and other instruments deemed advisable by the General Partner to
carry out the provisions of this Agreement and any applicable law or to permit
the Partnership to become or to continue as a limited partnership or partnership
wherein the limited partners have limited liability in each jurisdiction where
the Partnership may be doing business; (iv) all instruments that the General
Partner deems appropriate to reflect a change or modification of this Agreement
including, without limitation, the admission of additional Limited Partners, the
substitution of any assignee as a Substituted Limited Partner or substituted
General Partner, and the forfeiture by Limited Partners of their interests,
pursuant to the provisions of this Agreement; (v) all conveyances and other
instruments or documents deemed advisable by the General Partner, including
without limitation, those to effect the dissolution and termination of the
Partnership; (vi) all fictitious or assumed name certificates required or
permitted to be filed on behalf of the Partnership; (vii) any changes in this
Agreement as are required or are desirable in the judgment of the General
Partner in order to comply with the laws of Delaware or the Code; (viii) all
insertions and/or corrections to any documents executed by such Partner in
connection with such Partner's admission as a Limited Partner of the
Partnership, including, without limitation, filling in blank addresses, dollar
amounts, schedules of Capital Contributions and subscription
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agreements, if any, executed by such Partner; and (ix) all other instruments
which may be required or permitted by law to be filed, recorded or published on
behalf of the Partnership. Any person dealing with the Partnership may presume
conclusively and rely upon the fact that any instrument referred to above is
authorized, valid and binding, without further inquiry.
The foregoing power of attorney:
(a) is coupled with an interest, shall be irrevocable and shall
survive the Incapacity of the Partner in respect of which such power of
attorney may be exercised;
(b) may be exercised by the General Partner, or the officers and
directors of the general partner of the General Partner either by
signing separately as attorney-in-fact for each Partner or, after
listing all of the Partners executing an instrument, by a single
signature of the General Partner, any such officer or director acting as
attorney-in-fact for all of them; and
(c) shall survive the delivery of an assignment by a Partner of
the whole or any fraction of its Interest, except that, where the
assignee of the whole of such Partner's Interest has been approved by
the General Partner for admission to the Partnership as a Substituted
Limited Partner, the power of attorney of the assignor shall survive the
delivery of such assignment for the sole purpose of enabling the General
Partner or the officers and directors of the general partner of the
General Partner to execute, swear to, acknowledge and file any
instrument necessary or appropriate to effect such substitution.
Each Partner shall execute and deliver to the General Partner within
fifteen (15) days after receipt of the General Partner's request therefor such
further designations, powers-of-attorney and other instruments as the General
Partner reasonably deems necessary to carry out the terms of this Agreement.
ARTICLE XII
RECORDS AND ACCOUNTING; REPORTS; FISCAL AFFAIRS
12.1 Records and Accounting.
12.1.1 Proper and complete records and books of account of the
business of the Partnership, including a list of the names, addresses and
Interests of all Limited Partners, shall be maintained at the Partnership's
principal place of business. Any Partner, or its duly authorized representative,
shall be entitled to a copy of the list of names, addresses and Interests of the
Limited Partners, provided such information shall be used only for Partnership
purposes. Each Partner and its duly authorized representatives may visit and
inspect any of the properties of the Partnership or the offices of the General
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Partner, examine their books of account, records, reports and other papers (to
the extent the same pertain to the Partnership) which are not legally required
to be kept confidential or secret, make copies and extracts therefrom, and
discuss the affairs, finances and accounts of the Partnership with the General
Partner, all at such reasonable times and as often as may be reasonably
requested.
12.1.2 The books and records of the Partnership shall be kept in
accordance with the accrual basis method of accounting and in such a way as
shall permit the preparation of the financial statements referred to in Section
11.2.1. The accrual basis method of accounting shall be followed by the
Partnership for tax purposes, and the taxable year of the Partnership shall be
its Fiscal Year.
12.2 Annual Reports.
12.2.1 Within one hundred twenty (120) days after the end of each
Fiscal Year, the General Partner shall cause to be delivered to each Class A
Limited Partner and each Class B Limited Partner holding a Vested Profits
Interest at any time during the Fiscal Year, an annual report containing the
following:
(a) financial statements of the Partnership, including, without
limitation, a balance sheet as of the end of the Fiscal Year and
statements of income, Partners' equity and cash flows for such Fiscal
Year; and
(b) a statement, in reasonable detail, showing the Capital
Account of such Limited Partner and computing the distributions to such
Limited Partner during such Fiscal Year.
12.2.2 No value shall ever be attributed to the firm name of the
Partnership, or the right of its use, or to the goodwill appertaining to the
Partnership or its business, either during the continuation of the Partnership
or in the event of its dissolution or termination. Liabilities shall be
determined in accordance with the method of accounting employed by the
Partnership and may include reserves for estimated accrued expenses and reserves
for unknown or untaxed liabilities or contingencies.
12.3 Tax Information. Within ninety (90) days after the end of each
Fiscal Year, the General Partner will cause to be delivered to each Person who
was a Partner at any time during such Fiscal Year a Form K-l and such other
information, if any, with respect to the Partnership as may be necessary for the
preparation of such Partner's income tax returns, including a statement showing
such Partner's shares of income, gain or loss and credits for such Fiscal Year
for income tax purposes.
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12.4 Partnership Funds. The funds of the Partnership may be deposited in
the name of the Partnership in one or more bank accounts in one or more banks.
Withdrawals therefrom shall be made upon such signature(s) as the General
Partner may designate. No funds of the Partnership shall be kept in any account
other than a Partnership account; funds shall not be commingled with the funds
of any other Person; and the General Partner shall not employ, or permit any
other Person to employ, such funds in any manner except for the benefit of the
Partnership.
12.5 Elections. The determination of the General Partner with respect to
the treatment of any item or its allocation for federal, state or local tax
purposes shall be binding upon all of the Partners so long as such determination
shall not be inconsistent with any express term hereof and provided that the
Accountants shall not disagree therewith.
12.6 Other Information. With reasonable promptness, the General Partner
will deliver, to the extent it may lawfully be disclosed, such other information
available to the General Partner, including financial statements and
computations, relating to the Partnership as any Limited Partner may from time
to time reasonably request.
ARTICLE XIII
REPRESENTATIONS AND WARRANTIES OF THE LIMITED PARTNERS
Each Limited Partner is fully aware that the Partnership and the General
Partner are relying upon the truth and accuracy of the following representations
by each of the Limited Partners. Each of the Limited Partners hereby represents
and warrants that:
(a) Such Limited Partner (i) if an individual, has full power and
is legally competent to enter into the Agreement, (ii) if an entity is
duly organized, validly existing and in good standing under the laws of
its state or country of organization, has full power and authority to
enter into this Agreement, and (iii) the execution of this Agreement and
the consummation of the transactions contemplated hereby will not
constitute a violation of, or a default under, or conflict with, any
conduct, commitment, agreement, understanding, arrangement or
restriction of any kind to which such Limited Partner is a party or by
which such Limited Partner is bound.
(b) The Partnership has made available to such Limited Partner
its advisors and designated representatives, if any, for a reasonable
time prior to the execution hereof the opportunity to ask questions and
receive answers concerning the terms and conditions of an investment in
the Partnership and to obtain such information and documents which the
Partnership possesses or can acquire without unreasonable effort or
expense. Such Limited Partner, its advisors and designated
representatives, if any, have
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41
received all such additional information requested. Such Limited Partner
is not relying on the Partnership or the General Partner for guidance
with respect to tax and other applicable laws of any jurisdiction or any
other economic considerations.
(c) Such Limited Partner is acquiring its Interest for its own
account, for investment and not with a view to, or for resale in
connection with, the distribution thereof or with any present intention
of distributing or reselling any portion thereof.
(d) This Agreement is the valid and binding obligation of such
Limited Partner, enforceable against such Limited Partner in accordance
with its terms.
ARTICLE XIV
MISCELLANEOUS
14.1 Notices.
14.1.1 Any notice to any Limited Partner shall be given at the
address of such Partner set forth in Schedule A hereto or at such other mailing
address of which such Limited Partner shall advise the General Partner in
writing. Any notice to the Partnership or the General Partner shall be given at
the principal office of the Partnership as set forth in Section 2.4. The General
Partner may at any time change the location of such office. Notice of any such
change shall be given to the Partners on or before the date of any such change.
14.1.2 Unless otherwise provided herein, all notices required
under the terms and provisions hereof shall be in writing, either delivered by
hand, by first class mail, by overnight courier or by telex, telecopier or
telegram, including by facsimile transmission, and any such notice shall be
effective when actually given in person, if by hand, when transmitted, upon
receipt of a legible facsimile transmission, if given by telecopier, when
transmitted, upon receipt of a legible transmission, if given by telex or
telegram, on the first business day after delivery when delivered by overnight
courier, or on the third business day after the day when deposited with the
United States mail, postage prepaid.
14.2 Governing Law; Severability of Provisions. It is the intention of
the parties that the internal laws of Delaware and, in particular, the
provisions of the Act shall govern the validity of this Agreement, the
construction of its terms and interpretation of the rights and duties of the
Partners. If any portion of this Agreement shall be held to be invalid, the
remainder of this Agreement shall not be affected thereby.
14.3 Entire Agreement. This Agreement constitutes the
entire agreement among the Partners; it supersedes any prior
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42
agreement or understanding among them, oral or written other than each Limited
Partner's Subscription Agreement with respect to such Partner's Interest, which
is hereby incorporated herein by reference. There are no representations,
agreements, arrangements or understandings, oral or written between or among the
Partners relating solely to the subject matter of this Agreement which are not
fully expressed herein other than each Limited Partner's Subscription Agreement.
This Agreement may not be modified or amended other than pursuant to Article IX.
14.4 Headings, etc. The headings in this Agreement are inserted for
convenience of reference only and shall not affect the 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 gender shall include the
masculine, the feminine and the neuter.
14.5 Binding Provisions. The covenants and agreements contained herein
shall be binding upon and inure to the benefit of the heirs, executors,
administrators, personal or legal representatives, permitted successors and
assigns of the respective parties hereto.
14.6 No Waiver. The failure of any Partner to seek redress for
violation, or to insist on strict performance, of any covenant or condition of
this Agreement shall not prevent a subsequent act which would have constituted a
violation from having the effect of an original violation.
14.7 Confidentiality. Each Limited Partner will maintain the
confidentiality of non-public information regarding the Partnership, the
Company, the General Partner and any Affiliate of any of them received by such
Limited Partner pursuant to this Agreement in accordance with such procedure, as
it applies generally to information of this kind.
14.8 No Right to Partition. Except as otherwise expressly provided in
this Agreement, the Partners, on behalf of themselves and their shareholders,
partners, heirs, executors, administrators, personal or legal representatives,
successors and assigns, if any, hereby specifically renounce, waive and forfeit
all rights, whether arising under contract or statute or by operation of law, to
seek, bring or maintain any action in any court of law or equity for partition
of the Partnership or any asset of the Partnership, or any interest which is
considered to be Partnership property, regardless of the manner in which title
to any such property may be held.
14.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument, provided that each such counterpart
shall be executed by the General Partner.
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43
14.10 No Third Party Beneficiary. Nothing contained in this Agreement
shall be deemed to create any third party beneficiary status or grant any rights
to any Capital Contributions to any party who is not a Partner.
[INTENTIONALLY LEFT BLANK]
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44
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Agreement as of the date first above written.
GENERAL PARTNER:
CREDENTIALS II G.P. L.P.
By: Credentials II G.P., Inc.
Its General Partner
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
CLASS B LIMITED PARTNERS CLASS A LIMITED PARTNER:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ LINCOLNSHIRE EQUITY FUND, L.P.
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: Lincolnshire Equity
Partners, L.P.
Its General Partner
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: Lincolnshire Equity,
Inc.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Its General Partner
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
/s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- Title: Vice President
M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
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45
Schedule A
CAPITAL CONTRIBUTIONS AND PROFIT PERCENTAGES
OF
CSI INVESTMENT PARTNERS II, L.P.
Aggregate Capital Profit
Name and Address of Partner Contribution(s) Percentage
--------------------------- --------------- ----------
Credentials II G.P. L.P. 20,000.00 1%
c/o Lincolnshire Management, Inc. (11/07/96)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 10,000.00
(04/14/97)
Class A Limited Partner
-----------------------
Lincolnshire Equity Fund, L.P. 1,980,000.00 99%
c/o Lincolnshire Management, Inc. (11/07/96)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 990,000.00
(01/14/97)
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46
Schedule B
CLASS B LIMITED PARTNERS
Name Contingent Profits Interest
---- ---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 3.25
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 0.10
▇▇▇▇▇▇ ▇▇▇▇▇▇ 1.45
M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 1.50
▇▇▇▇▇ ▇. ▇▇▇▇▇ 0.95
▇▇▇▇▇▇ ▇. ▇▇▇▇ 1.15
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 0.75
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 0.10
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 0.25
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 0.25
▇▇▇▇ ▇. ▇▇▇▇▇ 0.25
-----
TOTAL 10.00%
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