LIMITED PARTNERSHIP AGREEMENT FOR BRIDGE PRIVATE LENDING, L.P. A MARYLAND LIMITED PARTNERSHIP
Exhibit 3.1(ii)
TRANSFER
OR OTHER DISPOSITION OF THE LIMITED PARTNERSHIP INTERESTS IS RESTRICTED AS
PROVIDED IN THE LIMITED PARTNERSHIP AGREEMENT AND BY APPLICABLE MARYLAND
LAW. BASED UPON THE FOREGOING, EACH ACQUIRER OF AN INTEREST MUST BE
PREPARED TO BEAR THE ECONOMIC RISK OF INVESTMENT THEREIN FOR AN INDEFINITE
PERIOD OF TIME.
REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933 AS AMENDED (THE “SECURITIES ACT”) IS A
PROCEDURAL MATTER. NEITHER THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THE
SUBSTANTIVE TERMS OF THIS LIMITED PARTNERSHIP AGREEMENT OR OF THE LIMITED
PARTNERSHIP INTERESTS PROVIDED FOR HEREIN. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
AGREEMENT
OF LIMITED PARTNERSHIP
OF
BRIDGE
PRIVATE LENDING, L.P.
Effective
as of November 19, 2009
This
LIMITED PARTNERSHIP AGREEMENT of BRIDGE PRIVATE LENDING, L.P. (the “Partnership”), is
effective as of the 19th day of November 2009 (the “Effective Date”), by
and among Bridge GP, LLC, a Maryland limited liability company, as General
Partner (the “General
Partner”), the Initial Limited Partner, as the initial limited partner,
and the persons and/or entities listed from time to time in Part II of Schedule
A of this Agreement, as holders of Units (the “Limited
Partners”).
RECITALS
WHEREAS,
BRIDGE PRIVATE LENDING, LLC (“BPL Maryland”), a Maryland limited liability
company, was organized pursuant to Articles of Organization that were filed with
the Maryland State Department of Assessments and Taxation (“SDAT”) on April 13,
2006; and
WHEREAS,
BRIDGE PRIVATE LENDING, LLC (“BPL Florida”), a Florida limited liability
company, was organized on May 24, 2006, and registered with SDAT as a foreign
limited liability company on September 13, 2006; and
WHEREAS,
BPL Florida is the surviving entity of a September 1, 2006 merger with BPL
Maryland, the Florida articles of merger were filed with the Florida Department
of State Division of Corporations (“FDSDC”) on September 1, 2006, and the
Maryland articles of merger were filed with the SDAT on August 31, 2006;
and
WHEREAS,
the General Partner was organized pursuant to Articles of Organization that were
filed with the SDAT on November 17, 2009; and
WHEREAS,
the members of BPL Florida all contributed their membership interests in BPL
Florida to the General Partner immediately after the General Partner was
organized so that BPL became a wholly-owned subsidiary of the General Partner;
and
WHEREAS,
the Partnership was formed pursuant to a Certificate of Limited Partnership,
dated November 19, 2009, that were filed with the SDAT on November 19, 2009;
and
WHEREAS,
the Partnership is the surviving entity of a November 23, 2009 merger with BPL
Florida, the Maryland articles of merger were accepted by the SDAT on November
23, 2009, and the Florida articles of merger were filed with the FDSDC on
November 24, 2009; and
WHEREAS,
the General Partner and the Partnership are both Maryland entities in good
standing and the Initial Limited Partner is a resident of Maryland.
NOW,
THEREFORE, in consideration of the mutual promises and agreements herein made
and intending to be legally bound hereby, the parties agree to the Limited
Partnership Agreement of the Partnership in its entirety to read as
follows:
-2-
1. DEFINITIONS;
INTERPRETATION.
1.1 Definitions. As
used herein, the following terms shall have the following respective
meanings:
Advisers Act – the
Investment Advisers Act of 1940, as the same may be hereafter amended from time
to time.
Affiliate – with
reference to any Person, any other Person of which such Person is a member,
director, officer, manager, general partner or employee, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person and, in the case of an individual, a spouse or a
blood relative of such Person (or spouse) within the second degree.
Agreement – this
Limited Partnership Agreement, as amended from time to time as provided
herein.
Applicable Law – any
applicable law, regulation, ruling, order or directive, or license, permit or
other similar approval of any Governmental Authority, now or hereafter in
effect, to which a Partner (or any of its Affiliates) is or may be
subject.
Assignment – as
defined in Section
10.1.
Authorized
Representatives – as defined in Section
15.16.
Bankruptcy Code –
Title 11 of the United States Code entitled “Bankruptcy,” as the same may be
hereafter amended from time to time, and any successor statute or statutes
thereto.
BHC Partner – any
Limited Partner that is a “bank holding company” or a non-bank “subsidiary”
thereof as defined in § 225.2 of the regulations of the Federal Reserve System
or any successor regulations.
Book Value – with
respect to any Partnership asset, the asset’s adjusted basis for federal income
tax purposes, except that the Book Value of any Partnership asset distributed to
any Partner shall be adjusted immediately prior to such distribution to equal
its Fair Market Value.
Business Day – any
day excluding a Saturday and any other day on which banks are required or
authorized to close in Baltimore City, Maryland.
Capital Account – as
defined in Section
5.1.
Capital Contribution
– a contribution to the capital of the Partnership made pursuant to Section
4.
Class A Limited
Partner – A Limited Partner who executes a Subscription Agreement whereby
he, she, or it purchases one or more Class A Units.
Class A Non-Withdrawal
Period – Five (5) years from date of initial investment, and any
re-investment, including re-investment at the end of a previous Non-Withdrawal
Period.
Class A Unit – A
measure of ownership that entitles the holder to a return equal to nine percent
(9%) per annum on a principal amount of $500.
Class B Limited
Partner – A Limited Partner who executes a Subscription Agreement whereby
he, she, or it purchases one or more Class B Units.
Class B Non-Withdrawal
Period – Three (3) years from date of initial investment, and any
re-investment, including re-investment at the end of a previous Non-Withdrawal
Period.
-3-
Class B Unit – A
measure of ownership that entitles the holder to a return equal to seven percent
(7%) per annum on a principal amount of $500.
Class C Limited
Partner – A Limited Partner who executes a Subscription Agreement whereby
he, she, or it purchases one or more Class C Units.
Class C Non-Withdrawal
Period – Eighteen (18) months from date of initial investment, and any
re-investment, including re-investment at the end of a previous Non-Withdrawal
Period.
Class C Unit – A
measure of ownership that entitles the holder to a return equal to five percent
(5%) per annum on a principal amount of $500.
Code – the Internal
Revenue Code of 1986, as the same may be hereafter amended from time to time and
any successor statute or statues thereto.
Confidential Matter –
as defined in Section
15.16.
Damages – any and all
damages, disbursements, suits, claims, liabilities, obligations, judgments,
fines, penalties, charges, amounts paid in settlement, costs and expenses
(including, without limitation, attorneys’ fees and expenses) arising out of or
related to litigation and interest on any of the foregoing.
Disabling Event – as
defined in Section
13.2(a).
DOL – United States
Department of Labor.
Effective Date – as
defined in the introduction to this Agreement.
ERISA – the Employee
Retirement Income Security Act of 1974, as the same may be hereafter amended
from time to time and any successor statute or statutes thereto.
ERISA Partner – any
Limited Partner that is an “employee benefit plan” within the meaning of section
3(3) of ERISA and subject to Part 4 of Subtitle B of Title I of ERISA, a “plan”
within the meaning of §4975(e)(1) of the Code, an entity whose underlying assets
include “plan assets” by reason of a plan’s investment in such entity as
determined under Section 3(42) of ERISA, or any other “benefit plan investor”
within the meaning of §3(42) of ERISA or any successor provision or regulations
issued thereunder.
Event of Termination
– as defined in Section
12.1.
Exchange Act – the
Securities and Exchange Act of 1934, as the same may be hereafter amended from
time to time.
Fair Market Value –
(a) as to any Securities which are listed or admitted to trading on any national
securities exchange on any trading day, the amount equal to (i) the last sale
price of such Securities, regular way, on such date or, if no such sale takes
place on such date, the average of the closing bid and asked prices thereof on
such date, in each case as officially reported on the principal national
securities exchange on which such Securities are then listed or admitted to
trading, or (ii) if such Securities are not then listed or admitted to trading
on any national securities exchange but are reported through the automated
quotation system of a registered securities association, the last trading price
of such Securities on such date, or if there shall have been no trading on such
date, the average of the closing bid and asked prices of such Securities on such
date as shown by such automated quotation system, and (b) as to any other
property on any date, the fair market value of such property on such date as
determined in good faith by the General Partner, provided that if a
Majority in Interest so requests in writing, the fair market value of such
property shall be determined by an independent, nationally recognized investment
banking firm, accounting firm, or an appraisal firm selected by the General
Partner.
-4-
Fiscal Year – as
defined in Section
2.6.
Foundation Partner –
a Limited Partner that is (a) a “private foundation” within the meaning of § 509
of the Code and (b) so indicates on its Subscription Agreement or otherwise in
writing to the General Partner at which such Limited Partner is admitted to the
Partnership and is so identified in the books and records of the
Partnership.
GAAP – generally
accepted accounting principles in the United States of America as in effect from
time to time.
General Partner – the
person identified as the General Partner in the introduction to this Agreement
and its replacement or successor from time to time as permitted by this
Agreement.
Governmental
Authority – any nation or government, any state or other political
subdivision thereof and any other Person exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
Initial Limited
Partner – Xxxxx Xxxxxxxx.
Interest – the entire
limited partnership interest owned by a Limited Partner in the Partnership at
any particular time, including the right of such Limited Partner to any and all
benefits to which a Limited Partner may be entitled as provided in this
Agreement, together with the obligations of such Limited Partner to comply with
all the terms and provisions of this Agreement.
Internal Revenue
Service – the Internal Revenue Service or its successor.
Investment Company
Act – the Investment Company Act of 1940, as the same may be hereafter
amended from time to time.
Limited Partners – as
defined in the introduction to this Agreement.
Liquidation
Representative – as defined in Section
12.2.
Majority in Interest
– Limited Partners with more than one-half of the aggregate Voting Interests of
all Limited Partners.
Material Adverse
Effect – (a) a violation of a statute, rule or regulation of any
Governmental Authority that is reasonably likely to have a material adverse
effect on any Person in which the Partnership has a direct or indirect interest
in the Partnership, the General Partner, any other Partner or any of their
respective Affiliates or, with respect to an ERISA Partner, on the sponsor of
such ERISA Partner or any such sponsor’s Affiliates, (b) an occurrence that is
reasonably likely to subject any Person in which the Partnership has a direct or
indirect interest, the Partnership, the General Partner, any other Partner or
any of their respective Affiliates or, with respect to an ERISA Partner, on the
sponsor of such ERISA Partner or any such sponsor’s Affiliates to any material
regulatory requirement to which it would not otherwise be subject, or which is
reasonably likely to materially increase any such regulatory requirement beyond
what it would otherwise have been, (c) an occurrence that is reasonably likely
to subject any Partner to any tax under § 897 of the Code, (d) an occurrence
that is reasonably likely to cause the Partnership to be taxed as a corporation
for United States federal income tax purposes or (e) an occurrence that is
reasonably likely to result in any Securities or other assets owned by the
Partnership being deemed to be “plan assets” under ERISA or that is reasonably
likely to result in a “prohibited transaction” under ERISA.
-5-
Net Income and Net
Loss – for each fiscal year or other period, the taxable income or loss
of the Partnership, or particular items thereof, determined in accordance with
the accounting method used by the Partnership for federal income tax purposes
with the following adjustments: (a) all items of income, gain, loss,
deduction or expense specially allocated pursuant to this Agreement (including
Section 5.2)
shall not be taken into account in computing such taxable income or
loss; (b) any income of the Partnership that is exempt from federal
income taxation and not otherwise taken into account in computing Net Income and
Net Loss shall be added to such taxable income or loss; (c) if the Book Value of
any asset differs from its adjusted tax basis for federal income tax purposes,
any gain or loss resulting from a disposition of such asset shall be calculated
with reference to such Book Value; (d) upon an adjustment to the Book Value of
any asset pursuant to the definition of Book Value, the amount of the adjustment
shall be included as gain or loss in computing such taxable income or loss; (e)
if the Book Value of any asset differs from its adjusted tax basis for federal
income tax purposes, the amount of depreciation, amortization or cost recovery
deductions with respect to such asset for purposes of determining Net Income and
Net Loss shall be an amount which bears the same ratio to such Book Value as the
federal income tax depreciation, amortization or other cost recovery deductions
bears to such adjusted tax basis (provided that if the
federal income tax depreciation, amortization or other cost recovery deduction
is zero, the General Partner may use any reasonable method for purposes of
determining depreciation, amortization or other cost recovery deductions in
calculating Net Income and Net Loss); and (f) except for items in (a) above, any
expenditures of the Partnership not deductible in computing taxable income or
loss, not properly capitalizable and not otherwise taken into account in
computing Net Income and Net Loss pursuant to this definition, shall be treated
as deductible items.
Non-Plan Party – as
defined in Section
10.3(a)(ii).
Non-U.S. Person – any
individual or entity that is not a United States Person within the meaning of
Code § 7701(a)(30).
Organizational
Expenses – all costs and expenses of the Partnership related to the
organization of the Partnership and the offer and sale of Interest.
Partners – the
Limited Partners and the General Partner and such substituted or additional
Partners as shall be admitted to the Partnership pursuant to Section 10, or Section
13.
Partnership – as
defined in the introduction to this Agreement.
Partnership Act – the
Maryland Revised Uniform Limited Partnership Act (Md. Code, Corporations &
Associations, §§ 10-101 et seq.), as the same may be hereafter amended from time
to time.
Partnership Expenses – as
defined in Section
8.1.
Permitted Temporary
Investments – investments by the Partnership in (a) Securities that are
obligations of or guaranteed by the United States government or an agency or
instrumentality thereof; (b) domestic, corporate or governmental indebtedness
rated AA or Prime-1 (or the equivalent thereof) or better by Xxxxx’x Investors
Service Inc. or A-1 (or its equivalent) or better by Standard & Poor’s
Corporation; (c) certificates of deposit, money market accounts, savings
accounts, checking accounts or any combination thereof in banks which have total
assets of $100,000,000 or more (or in banks insured by the Federal Deposit
Insurance Corporation (the “FDIC”) which have
total assets of less than $100,000,000 if the amount of the Partnership’s funds
deposited in such bank is fully insured by the FDIC); or (d) any other
Securities that the General Partner determines are appropriate for short term
investments.
-6-
Person – an
individual, partnership, corporation, limited liability company, joint venture,
business trust or unincorporated organization, Governmental Authority or any
other entity.
Regulation Y –
Regulation Y of the Board of Governors of the Federal Reserve System (C.F.R.
Part 225) or any successor to such Regulation.
Related Person – as defined
in Section
3.2.
Schedule K-1 – Internal
Revenue Service Form Schedule K-1.
Securities – any (a)
privately or publicly issued capital stock, bonds, notes, debentures, commercial
paper, bank acceptances, trade acceptances, trust receipts and other
obligations, chooses in action, partnership or limited liability company
interests, instruments or evidences of indebtedness commonly referred to as
securities, warrants, options, including puts and calls or any combination
thereof and the writing of such options, and (b) claims or other causes of
action, matured or unmatured, contingent or otherwise, of creditors and/or
equity holders of any Person against such Person, including, without limitation,
“claims” and “interests,” in each case as defined under the Bankruptcy Code, and
all rights and options relating to the foregoing.
Securities Act – the
United States Securities Act of 1933, as the same may be hereafter amended from
time to time.
Subscription
Agreement – as to any Limited Partner, the subscription agreement between
such Partner and the Partnership in connection with its purchase of Interests,
and all related documents accompanying such Subscription Agreement.
Substitute Limited
Partner – a Limited Partner who is admitted as a Substitute Limited
Partner in conformity with the provisions of Section
10.1.
Successor General
Partner – any Person admitted to the Partnership as a successor general
partner pursuant to Section 10.2 or Section
13.2.
Tax Exempt Limited
Partner – any Limited Partner which is exempt from federal income
taxation, including a Limited Partner which is exempt under § 501 of the
Code.
Tax Matters Partner – as defined
in Section
7.5.
Treasury Regulations
– the Income Tax Regulations promulgated under the Code, as the same may be
hereafter amended from time to time or any successor or successors to such
regulations.
UBTI – items of gross
income taken into account for purposes of calculating unrelated business taxable
income as defined in §§ 512 and 514 of the Code.
Unit – A measure of
ownership that represents an investment in the principal amount of $500 and
entitles its holder to such rights as are more particularly described within
this Agreement.
U.S. Dollars and $ – lawful money
of the United States of America.
Voting Interests –
for the purpose of any vote or consent right hereunder, the respective interest
of each Limited Partner as determined by reference to the aggregate amount of
such Limited Partner’s Units held divided by the aggregate of all outstanding
Units held by Limited Partners who are entitled to vote.
-7-
1.2 Accounting Terms and
Determinations. All accounting terms used in this Agreement
and not otherwise defined shall have the meaning accorded to them in accordance
with GAAP and, except as expressly provided herein, all accounting
determinations shall be made in accordance with GAAP, consistently
applied. Notwithstanding the foregoing, the General Partner shall
have the right to diverge from GAAP provided such divergence is consistently
applied and done pursuant to expert independent accounting advice.
1.3 Interpretation.
(a) Schedules, Exhibits,
Sections. References to a “Schedule” or an “Exhibit” are,
unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement and references to a “Section” or a
“subsection” are, unless otherwise specified, to a section or a subsection of
this Agreement.
(b) Plural. 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
the masculine, the feminine or neuter gender shall include the masculine, the
feminine and the neuter.
(c) Captions. Captions
contained in this Agreement are inserted only as a matter of convenience and in
no way define, limit or extend or otherwise affect the scope or intent of this
Agreement or any provision hereof.
1.4 General Partner’s Standard of
Care. Whenever in this Agreement the General Partner is
permitted or required to make a decision (a) in its “discretion” or under a
grant of similar authority or latitude, the General Partner shall be entitled to
consider such interests and factors as it desires, including its own interests,
or (b) in its “good faith” or under another express standard, the General
Partner shall act under such express standard and shall not be subject to any
other or different standard imposed by this Agreement or other applicable
law.
2. ORGANIZATION.
2.1 Term. The
term of the Partnership commenced on the date the Certificate of Limited
Partnership of the Partnership was filed with the SDAT and shall continue until
terminated pursuant to Section
12.
2.2 Name. The
name of the Partnership shall be “BRIDGE PRIVATE LENDING, L.P.” or such other
name or names as the General Partner may, in its discretion, from time to time
select, and its business shall be carried on in such name with such variations
and changes as the General Partner deems necessary to comply with the
requirements of the jurisdictions in which the Partnership’s operations are
conducted. The General Partner shall give the Limited Partners prompt
written notice of any change in the name of the Partnership.
2.3 Purpose. The
Partnership is organized primarily for the object and purpose of (a) making
loans to Persons who are engaged in construction and/or rehabilitation of
buildings, and (b) engaging in such additional acts and activities and
conducting such other businesses related or incidental to the foregoing as the
General Partner shall in good xxxxx xxxx necessary or advisable. By
way of example and not limitation, the Partnership may (i) expend funds to
publicize and market its business, (ii) invest its assets in un-renovated homes
held for sale to its borrowers, and (iii) contribute its income to charities,
including a foundation affiliated with the Partnership, whose mission consists
in substantial part of the improvement of housing, education and social
conditions in urban areas.
2.4 Principal
Office. The Partnership shall have its principal office at the
place designated in its Certificate of Limited Partnership, or at such other
place or places as the General Partner may, in its discretion, from time to time
select. The Partnership may from time to time have such other place
or places of business in such other jurisdictions as the General Partner may in
its discretion deem advisable.
-8-
2.5 Resident
Agent. The resident agent of the Partnership shall be the
Person designated in its Certificate of Limited Partnership, or such other
Person as the General Partner may, in its discretion, from time to
time select. The Partnership may from time to time have agents for
service of process in such other jurisdictions as the General Partner may in its
discretion deem advisable.
2.6 Withdrawal of the Initial
Limited Partner. The Initial Limited Partner shall withdraw
from the Partnership and shall be paid One Dollar ($1.00) by the Partnership in
compensation for extinguishing his limited partnership interest upon the
Partnership issuing at least one Unit to a Limited Partner.
2.7 Fiscal
Year. The fiscal year of the Partnership (the “Fiscal Year”) shall
end on the 31st day of December in each year. The General Partner
shall have the authority to change the ending date of the Fiscal Year to any
other date required or allowed under the Code if the General Partner, in its
discretion, shall determine such change to be necessary or
appropriate. The General Partner shall promptly give notice of any
such change to the Limited Partners.
2.8 Powers. Subject
to the provisions of this Agreement and the Securities Act, the Partnership, and
the General Partner acting on behalf of the Partnership, shall be empowered to
do or cause to be done, or not to do, any and all acts deemed by the General
Partner in its discretion to be necessary or appropriate in furtherance of the
purposes of the Partnership including, without limitation, the power and
authority to:
(a)
borrow money from a non-Affiliate on such terms as are negotiated by General
Partner on behalf of the Partnership in the General Partner’s sole
discretion;
(b)
borrow money from an Affiliate on commercially reasonable terms;
(c)
borrow money from an Affiliate on any terms that are approved of by a Majority
in Interest;
(d)
invest in and dispose of investments as set forth in Section
7.2;
(e) open,
have, maintain and close bank and brokerage accounts, including the power to
draw checks or other orders for the payment of moneys;
(f) bring
and defend actions and proceedings at law or in equity or before any
governmental, administrative or other regulatory agency, body or commission in
any jurisdiction, domestic or foreign;
(g) hire
consultants, custodians, attorneys, accountants and such other agents and
employees of the Partnership as it may deem necessary or advisable, and to
authorize each such agent and employee to act for and on behalf of the
Partnership;
(h) cause
the Partnership to enter into and carry out the terms of the Subscription
Agreements without any further act, approval or vote of any Partner (including
any agreements to induce any Person to purchase an Interest);
(i) make
all elections, investigations, evaluations and decisions, binding the
Partnership thereby, that may, in the good faith judgment of the General
Partner, be necessary or appropriate for the acquisition, holding or disposition
of Securities for the Partnership;
-9-
(j) enter
into, perform and carry out contracts and agreements of every kind necessary or
incidental in the good faith judgment of the General Partner to the offer and
sale of Interests or to the accomplishment of the Partnership’s purposes, and to
take or omit to take such other action in connection with such offer and sale or
with the business of the Partnership as may be necessary or desirable to further
the purposes of the Partnership;
(k)
pledge Partnership assets to secure its indebtedness;
(l) agree
to allow creditors to confess judgment against the Partnership; and
(m) carry
on any other activities in the good faith judgment of the General Partner
necessary to, in connection with, or incidental to any of the foregoing or the
Partnership’s business to the fullest extent allowed under applicable
law.
2.9 Certificates and Other
Filings.
(a) Authority. The
General Partner is hereby authorized to execute, acknowledge, file and cause to
be published, as appropriate, all instruments, certificates, notices and
documents, and to do or cause to be done all such filing, recording, publishing
and other acts as may be deemed by the General Partner in its discretion to be
necessary or appropriate from time to time to comply with all applicable
requirements for the operation or, when appropriate, termination of a limited
partnership in the State of Maryland and all other jurisdictions where the
Partnership does or shall desire to conduct its business.
(b) Further Assurances.
If requested by the General Partner, the Limited Partners shall immediately
execute all certificates and other documents consistent with the terms of this
Agreement necessary for the General Partner to accomplish all filing, recording,
publishing and other acts as may be appropriate to comply with all requirements
for: (i) the operation of a limited partnership under the laws of the State of
Maryland; (ii) if the General Partner deems it advisable, the operation of the
Partnership as a limited partnership, or a partnership in which the Limited
Partners have limited liability, in all jurisdictions where the Partnership
proposes to operate; and (iii) all other filings required to be made by the
Partnership.
3. PARTNERS.
3.1 General and Limited
Partners. The Partnership shall consist of the General
Partner, the Limited Partners listed as holders of Units from time to time in
Part II of Schedule A hereto, and such additional and substituted Partners as
may be admitted to the Partnership pursuant to Section 10 or Section
13. The General Partner shall cause Schedule A to be amended
from time to time to reflect the admission of any Partner, the removal or
withdrawal of any Partner for any reason or the receipt by the Partnership of
notice of any change of name of a Partner.
3.2 Liability of General
Partner.
(a) General. None of the
General Partner, any Affiliate of the General Partner, any officer, director,
stockholder, member, partner, employee, agent or assign of the General Partner,
or any of its Affiliates, who was, at the time of the act or omission in
question, such a Person (each a “Related Person” and
collectively, the “Related Persons”),
shall be liable, responsible or accountable, whether directly or indirectly, in
contract, tort or otherwise, to the Partnership, any other Person in which the
Partnership has a direct or indirect interest or any Partner (or any Affiliate
thereof) for any Damages asserted against, suffered or incurred by the
Partnership, any other Person in which the Partnership has a direct or indirect
interest or any Partner (or any of their respective Affiliates) arising out of,
relating to or in connection with any act or failure to act pursuant to this
Agreement or otherwise with respect to:
(i) the
management or conduct of the business and affairs of the Partnership, any other
Person in which the Partnership has a direct or indirect interest or any of
their respective Affiliates (including, without limitation, actions taken or not
taken by any Related Person as a director of any Person in which the Partnership
has a direct or indirect interest or any Affiliates of such
Person);
-10-
(ii) the
offer and sale of interests in the Partnership; and
(iii) the
management or conduct of the business and affairs of any Related Person insofar
as such business or affairs relate to the Partnership, any other Person in which
the Partnership has a direct or indirect interest or to any Partner in its
capacity as such, including, without limitation, all activities in the conduct
of other business engaged in by it (or them) which might involve a conflict of
interest vis-a-vis the Partnership, any other Person in which the Partnership
has a direct or indirect interest or any Partner (or any of their respective
Affiliates) or in which any Related Person realizes a profit or has an
interest.
Except, this
subsection (a) shall not apply to Damages that are finally found by a court of
competent jurisdiction to have resulted primarily from the bad faith, gross
negligence or intentional misconduct of, or material breach of this Agreement or
knowing violation of law by, such Related Person.
(b) Conflicts of
Interest. For purposes of this Agreement, no action or failure
to act on the part of any Related Person in connection with the management or
conduct of the business and affairs of such Related Person or any other Related
Person and other activities of such Related Person which involve a conflict of
interest with the Partnership, any other Person in which the Partnership has a
direct or indirect interest or any Partner (or any of their respective
Affiliates) has an interest shall constitute, per se, bad faith, gross
negligence, intentional misconduct, a material breach of this Agreement or a
knowing violation of law.
(c) Employees and
Agents. Notwithstanding the foregoing provisions of this Section 3.2, no
Related Person shall be liable to the Partnership, any other Person in which the
Partnership has a direct or indirect interest, or any Partner (or any Affiliate
thereof), for any action taken or omitted to be taken by any other Related
Person.
(d) Reliance on Third
Parties. Any Related Person may (in its own name or in the
name of the Partnership) consult with counsel, accountants and other
professional advisors in respect of the affairs of the Partnership, any other
Person in which the Partnership has a direct or indirect interest and each
Related Person shall be deemed not to have acted in bad faith or with gross
negligence or to have materially breached this Agreement or engaged in
intentional misconduct with respect to any action or failure to act and shall be
fully protected and justified in so acting or failing to act, if such action or
failure to act is in conformity with the advice or opinion of such counsel,
accountants or other professional advisors, except for actions or failures to
act by such Related Person which constitute a knowing violation of law, provided that such
advisors were selected with reasonable care.
(e) Reliance on This
Agreement. To the extent that, at law or in equity, the
General Partner has duties (including fiduciary duties) and liabilities relating
thereto to the Partnership, or to another Partner, the General Partner acting
under this Agreement shall not be liable to the Partnership, or to any such
other Partner for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they
expand or restrict the duties and liabilities of the General Partner otherwise
existing at law or in equity, are agreed by the Partners to modify to that
extent such other duties and liabilities of the General Partner.
3.3 Limited Liability of Limited
Partners. The liability of each Limited Partner is limited to
its obligation to make Capital Contributions to the Partnership in amounts from
time to time provided by this Agreement and to make the payments required by
this Agreement and its respective Subscription Agreement, all of which
obligations are intended to be enforceable only by the Partnership and the
General Partner but not by creditors of the Partnership, and nothing elsewhere
set forth in this Agreement or in any other document, and nothing arising from
any other transaction whatsoever between or among any or all of the Partners or
the Partnership, shall have the effect of removing, diminishing or otherwise
affecting such limitation.
-11-
3.4 Right to Hold Interest as a
Non-Voting Interest. Any BHC Partner may, at any time upon
written notice to the General Partner, elect to hold all or any portion of the
Units held by such BHC Partner that is determined, either (a) at the time of the
admission of such BHC Partner as a Limited Partner, an Additional Limited
Partner or a Substitute Limited Partner or (b) upon any recalculation of the
Voting Interests of the Partners pursuant to any provision of this Agreement
(other than any such recalculation as a result of a transfer by such BHC Partner
of its Interest), to be in excess of four and ninety-nine one-hundredths percent
(4.99%) of the aggregate Voting Interests of all Limited Partners, excluding,
for purposes of calculating this percentage, portions of any other Voting
Interests that are non-voting interests pursuant to this Section 3.4
(collectively, the “Non-Voting
Interests”), as a Non-Voting Interest. Such Units will be a Non-Voting
Interest whether or not subsequently transferred in whole or in part to any
other Person, except that each portion of such Non-Voting Interest that is
transferred in one (1) or more transactions to one (1) Person or related Persons
(none of whom may be an Affiliate of the transferring BHC Partner) and that
represents two percent (2%) or less of the aggregate Voting Interests of the
Partnership, will be a Voting Interest, effective upon such
transfer. Notwithstanding any contrary provision in this Section 3.4, such
Non-Voting Interest will be permitted to vote (i) on the amendment, alteration,
or repeal of any of the provisions of this Agreement (or any amendment or
supplement hereto) so as to adversely affect the rights, powers, privileges, or
preferences of the Non-Voting Interests, (ii) on any proposal to continue the
business of the Partnership pursuant to Section 13.2(b) but
not to appoint a successor general partner thereunder or (iii) where such voting
rights are otherwise specifically authorized by the Partnership Act (and
consistent with this Agreement) with regard to matters that would significantly
and adversely affect the rights, powers, privileges, or preferences of the
Non-Voting Interests. Except as otherwise provided in this Section 3.4, the
foregoing election shall be irrevocable and Non-Voting Interests will not be
counted for purposes of determining whether any vote or consent required
hereunder has been approved or given by the requisite percentage of the Limited
Partners. Notwithstanding any contrary provision in this Section 3.4, any BHC
Partner may elect, by providing written notice thereof to the General Partner,
not to be governed by this Section 3.4 if, due
to a change of law or regulation or the divestiture or termination of its U.S.
banking operations, such Partner ceases to be a BHC Partner as defined herein or
ceases to be subject to restrictions on the ownership of voting interests, in
which case no part of the Interest held by such electing BHC Partner will be a
Non-Voting Interest. Any such election made by a BHC Partner may be
rescinded at any time by the provision of further written notice thereof to the
General Partner, and any such rescission will be irrevocable for the entire term
of the Partnership. Except as provided in this Section 3.4, an
Interest which is held as a Non-Voting Interest will be identical in all regards
to all other Interests held by Limited Partners.
3.5 No Priority,
Etc. Except as provided in Articles 5 and 6, no Limited Partner
shall have priority over any other Partner either as to the return of the amount
of its Capital Contribution to the Partnership or as to any allocation of Net
Income and Net Loss.
3.6 Partnership Property;
Partnership Interest. No real or other property of the
Partnership shall be deemed to be owned by any Partner individually, but shall
be owned by and title shall be vested solely in the Partnership. The
Interests of the Partners shall constitute personal property.
3.7 Admission of New Limited
Partners. The General Partner may cause the Partnership to
issue Units and admit Limited Partners at times determined in its sole
discretion upon receipt of a completed and executed Subscription
Agreement. The minimum initial Capital Contribution to the Partnership is $500
and the Partnership shall issue a Unit for every $500 of Capital Contributions
made by a Limited Partner. Investments may be made in cash or, at the discretion
of the General Partner, in kind. The General Partner may change or waive the
minimum investment at any time. A new Limited Partner must agree to
be bound by the terms and provisions of this Agreement and shall be deemed to
have done so by virtue of the acceptance of its subscription and upon admission
the new Limited Partner shall have all the rights and duties of a Limited
Partner of this Partnership. Notwithstanding anything herein to
the contrary, the General Partner may refuse to admit any Person as a Limited
Partner who would be an ERISA Partner in order to ensure that the assets of the
Partnership would not constitute plan assets of any Partner, including, but not
limited to, ensuring that investments by any ERISA Partners, in the aggregate,
do not equal or exceed the twenty-fivc percent (25%) threshold in Section 3(42)
of ERISA and as such, are not considered to be “significant”, as determined in
accordance with ERISA and any regulations issued thereunder.
-12-
3.8 Participation in
Management. The Limited Partners (other than the General
Partner) shall have no part in the management of the Partnership, and shall have
no authority or right in their capacity as Partners to act on behalf of the
Partnership in connection with any matter.
3.9 Restrictions on Partnership
Interests. Except with the express written consent of the
General Partner, which may be withheld in its discretion, a Partner may not
assign, sell, transfer, pledge, hypothecate or otherwise dispose of any of the
attributes of its Interest in the Partnership in whole or in part to any Person,
except by last will and testament or by operation of law. The General Partner
may refuse to consent to any assignment, sale, transfer, pledge, hypothecation
or other disposition to any Person that, in the General Partner’s discretion,
may cause the Partnership’s assets to constitute plan assets of any Partner
under ERISA, as provided in Section 7.9. Any assignment, sale,
transfer, pledge, hypothecation or other disposition made in violation of this
Section 3.9
shall be void and of no effect. No transferee of a Partnership Interest shall
become a Partner except upon admission pursuant to Article 10 with the
consent of the General Partner.
3.10
Foundation
Partners.
(a) General. To
assure compliance with certain provisions of the Code affecting “private
foundations” as described in § 509 of the Code, the General Partner shall use
reasonable good faith efforts to meet the requirements set forth in this Section 3.10 as long
as such provisions of the Code (or substantially similar provisions) are in
effect. All terms in this Section 3.10 in
quotes have the respective meanings defined in § 4943 or § 4946 of the Code and
the regulations thereunder, unless otherwise indicated. The terms
“corporation” and “partnership” as used in this Section 3.10 refer to
the characterization of an organization for U.S. federal income tax
purposes. As used in this Section 3.10, (i) the
references to direct or indirect ownership are references to holdings treated as
owned under § 4943 of the Code, including, without limitation, holdings treated
as owned by reason of ownership by a nominee or ownership of an interest in
another entity, and (ii) the references to “knowledge” are references to actual
knowledge or belief of direct or indirect ownership by a Foundation Partner or
by “disqualified persons” with respect to such Foundation Partner, as the case
may be, without any investigation.
(b) Restrictions on Certain
Admissions and Assignments. No Partner shall consent to any
Person becoming a General Partner or Limited Partner, by Assignment of its
Interest in the Partnership or otherwise, to the extent that, to the knowledge
of such Partner, such Person is a “disqualified person” or more than five
percent (5%) of the interests in such Person are owned by “disqualified persons”
with respect to a Foundation Partner, without the prior written consent of such
Foundation Partner.
(c) Lists of Disqualified
Persons. Each Foundation Partner shall provide the General
Partner with a list designating the “disqualified persons” and the Designated
Investments with respect to such Foundation Partner. Such Foundation
Partner shall promptly notify the General Partner in writing of any changes in
such list. The General Partner may rely on the completeness of such
list.
-13-
(d) Assignment, Withdrawal Under
Certain Circumstances. Notwithstanding any provision of this
Agreement to the contrary, any Foundation Partner may elect to use all
commercially reasonable efforts to effect an Assignment of its Interest in the
Partnership to another Person in a transaction that complies with Section 10.1 or, if
such Assignment is not practicable, may withdraw from the Partnership, if such
Foundation Partner shall deliver to the General Partner an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to the General
Partner, to the effect that such Assignment or withdrawal is necessary for such
Foundation Partner to avoid (i) excise taxes imposed by subchapter A of chapter
42 of the Code (other than §§ 4940 and 4942 thereof), or (ii) a material breach
of the fiduciary duties of such Foundation Partner’s trustees under any U.S.
federal or state law applicable to such trustees or any rule or regulation
adopted thereunder by any agency, commission or authority having
jurisdiction. In the event of the delivery of the opinion of counsel
referred to in the preceding sentence, any Assignment of a Foundation Partner’s
Interest in the Partnership and/or any withdrawal of such Foundation Partner
contemplated by this Section 3.10(d) shall
be effected pursuant to the procedures outlined in Section
10.4.
4. CAPITAL CONTRIBUTIONS, NO
CAPITAL CALLS.
4.1 Capital
Contributions.
(a) Capital Contribution by
General Partner. The General Partner caused its wholly-owned
subsidiary, BPL Florida, to merge into the Partnership causing the Partnership
to own all of BPL Florida’s assets and be liable for all of its
obligations. All parties to this Agreement agree that the net value
of this Capital Contribution shall be no less than $3,000,000.00 at the time it
is made. The General Partner shall not make any other Capital
Contributions.
(b) Limited Partners’
Contributions. The Partnership may issue one Unit per $500 of
Capital Contributions made to the Partnership by a Limited Partner in conformity
with the terms of a Subscription Agreement executed by such Limited Partner and
the General Partner on behalf of the Partnership. Capital
Contributions made by a Limited Partner shall be made to the Partnership in
cash, check, or by wire transfer of other immediately available funds, in each
case in U.S. Dollars.
4.2 Capital
Calls. The Partnership shall not make any capital calls on the
Limited Partners.
5. CAPITAL ACCOUNTS,
ALLOCATIONS.
5.1 Capital
Accounts. A capital account (a “Capital Account”)
shall be established and maintained for each Partner to which shall be credited
the Capital Contributions made by such Partner and such Partner’s allocable
share of Net Income (and items thereof), and from which shall be deducted
distributions to such Partner of cash or other property and such Partner’s
allocable share of Net Loss (and items thereof). To the extent not
provided for in the preceding sentence, the Capital Accounts of the Partners
shall be adjusted and maintained in conformity with Treasury Regulations §
1.704-1(b)(2)(iv).
5.2 Allocations to Capital
Accounts.
(a) Net Income – General
Rule. Except as provided in Section 5.2(c) or
elsewhere in this Agreement, Net Income (and items thereof) for any Fiscal Year
shall be allocated among the Partners as follows:
(i) Distributions to Limited
Partners during Fiscal Year. First, to the Limited Partners,
in proportion to their respective Distributions received pursuant to Section 6.2(a) during
the Fiscal Year, until each Limited Partner has been allocated Net Income
sufficient to fully offset all distributions he, she, or it received regarding
such Fiscal Year;
-14-
(ii)
Distributions to
Limited Partners during Previous Fiscal Years. Second, to the
Limited Partners, in proportion to their respective shortfalls in allocations
during previous Fiscal Years, until all Distributions made pursuant to Section 6.2(a) have
been offset once pursuant to Section 5.2(a)(i) or
this Section
5.2(a)(ii);
(iii)
Residue. All remaining
Net Income (and items thereof) shall be allocated to the General
Partner.
(b) Net Loss – General
Rule. Except as provided in Section 5.2(c) or
elsewhere in this Agreement, Net Loss (and items thereof) for any Fiscal Year
shall be allocated to the General Partner.
(c) Allocations in Special
Circumstances. The following special allocations shall be made
in the following order:
(i) Minimum Gain
Chargeback. Notwithstanding any other provision in this Section 5, if there
is a net decrease in partnership minimum gain (as defined in Treasury
Regulations §§ 1.704-2(b)(2) and (d)) during any Fiscal Year, the Partners shall
be specially allocated items of Partnership income and gain for such Fiscal Year
(and, if necessary, subsequent Fiscal Years) in an amount equal to the portion
of such Partner’s share of the net decrease in partnership minimum gain,
determined in accordance with Treasury Regulations §§ 1.704-2(f) and
(g). This Section 5.2(c)(i) is
intended to comply with the minimum gain chargeback requirement in such section
of the Treasury Regulations and shall be interpreted consistently
therewith.
(ii)
Partner Minimum Gain
Chargeback. Notwithstanding any other provision of this Section 5, if there
is a net decrease in Partner nonrecourse debt minimum gain attributable to a
Partner nonrecourse debt (as defined in Treasury Regulations § 1.704-2(i))
during any Fiscal Year, each Partner shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to the portion of such Partner’s share of the
net decrease in Partner nonrecourse debt minimum gain attributable to such
Partner’s nonrecourse debt, determined in accordance with Treasury Regulations §
1.704-2(i). This Section 5.2(c)(ii) is
intended to comply with the minimum gain chargeback requirement in such section
of the Treasury Regulations and shall be interpreted consistently
therewith.
(iii)
Qualified Income
Offset. In the event any Partner unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulations §§
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall
be specially allocated to each such Partner in an amount and manner sufficient
to eliminate, to the extent required by the Treasury Regulations, the deficit,
if any, in such Partner’s Capital Account (as determined under Treasury
Regulations § 1.704-1) as quickly as possible, provided that an allocation
pursuant to this Section 5.2(c)(iii)
shall be made only if and to the extent that such Partner would have such
Capital Account deficit after all other allocations provided for in Section 5.2 have been
tentatively made as if this Section 5.2(c)(iii)
were not in this Agreement. This Section 5.2(c)(iii)
is intended to comply with the qualified income offset provisions in Treasury
Regulations § 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
(iv)
Gross Income
Allocation. In the event any Limited Partner has a deficit
balance in such Limited Partner’s Capital Account (as determined after crediting
such Capital Account for any amounts that such Limited Partner is obligated to
restore or is deemed obligated to restore pursuant to Treasury Regulations §
1.704-2), items of Partnership income and gain shall be specially allocated to
such Limited Partner in an amount and manner sufficient to eliminate such
deficit (as so determined) of such Limited Partner’s Capital Account as quickly
as possible; provided that an
allocation pursuant to this Section 5.2(c)(iv)
shall be made only if and to the extent that such Limited Partner would have
such Capital Account deficit (as so determined) after all other allocations
provided for in Section 5.2 (other
than Section
5.2(c)(iii)) have been tentatively made as if this Section 5.2(c)(iv)
were not in this Agreement.
-15-
(v) Loss Allocation
Limitation. No allocation of Net Loss (or items thereof) shall
be made to any Partner to the extent that such allocation would create or
increase a deficit in such Partner’s Capital Account (as determined after
debiting such Capital Account for the items described in Treasury Regulations §§
1.704-1(b)(2)(ii)(d)(4), (5) and (6) and crediting such Capital Account for any
amounts that such Partner is obligated to restore or is deemed obligated to
restore pursuant to Treasury Regulations § 1.704-2).
(vi)
Compensatory Offset of
Regulatory Allocations. To the extent it is able to, the
Partnership shall make offsetting allocations of Net Income and Net Loss to the
Partners in Fiscal Years after allocations are made pursuant to Section 5.2(c)(i)
through (iv) or
an allocation of Net Loss is disallowed pursuant to Section 5.2(c)(v) so
that the Partners’ respective Capital Account balances are equal to the amounts
they would have been at if no such allocations or limitation on allocations had
occurred.
(d) Allocation
Periods. In each Fiscal Year of the Partnership, Net Income
(and items thereof) and Net Loss (and items thereof) shall be
allocated:
(i) at
the time of any distribution pursuant to Section 6.2, for the
period commencing on the later of (A) the first day of such Fiscal Year and (B)
the date of the most recent prior distribution in such Fiscal Year, and ending
on the date immediately preceding such distribution; and
(ii) as
of the last day of each Fiscal Year, for the period commencing on the later of
(A) the first day of such Fiscal Year and (B) the date of the most recent prior
distribution in such Fiscal Year, and ending on such last day.
(e) Transfer of or Change in
Interests. The General Partner is authorized to adopt any
convention or combination of conventions likely to be upheld for federal income
tax purposes regarding the allocation and/or special allocation of items of
Partnership income, gain, loss, deduction and expense with respect to a newly
issued Interest, a transferred Interest and a redeemed Interest. A
transferee of an Interest in the Partnership shall succeed to the Capital
Account of the transferor Partner to the extent it relates to the transferred
Interest.
5.3 Tax
Allocations.
(a) General
Rules. Except as otherwise provided in Section 5.3(b), for
each fiscal period, items of Partnership income, gain, loss, deduction and
expense shall be allocated, for federal, state and local income tax purposes,
among the Partners in the same manner as the Net Income (and items thereof) or
Net Loss (and items thereof) of which such items are components were allocated
pursuant to Section
5.2.
(b) Section 704(c) of the
Code. Income, gains, losses and deductions (and items thereof)
with respect to any property (other than cash) contributed or deemed contributed
to the capital of the Partnership shall, solely for income tax purposes, 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 Fair Market Value at the time of the contribution or deemed
contribution in accordance with § 704(c) of the Code and the Treasury
Regulations promulgated thereunder. Such allocations shall be made in
such manner and utilizing such permissible tax elections as determined in the
discretion of the General Partner.
If there
is a revaluation of Partnership property pursuant to the definition of Book
Value, subsequent allocations of income, gains, losses or deductions with
respect to such property shall be allocated among the Partners so as to take
account of any variation between the adjusted tax basis of such property to the
Partnership for federal income tax purposes and its Fair Market Value in
accordance with § 704(c) of the Code and the Treasury Regulations promulgated
thereunder. Such allocations shall be made in such manner and
utilizing such permissible tax elections as determined in the discretion of the
General Partner.
-16-
(c) Capital Accounts Not
Affected. Allocations pursuant to this Section 5.3 are
solely for federal, state and local tax purposes and shall not affect, or in any
way be taken into account in computing, any Partner’s Capital Account or
allocable share of Net Income (or items thereof) or Net Loss (or items
thereof).
(d) Tax Allocations
Binding. The Partners acknowledge that they are aware of the
tax consequences of the allocations made by this Section 5.3 and
hereby agree to be bound by the provisions of this Section 5.3 in
reporting their respective shares of items of Partnership income, gain, loss,
deduction and expense.
5.4 Determinations by General
Partner. All matters concerning the computation of Capital
Accounts, the allocation of items of Partnership income, gain, loss, deduction
and expense for all purposes of this Agreement and the adoption of any
accounting procedures not expressly provided for by the terms of this Agreement
shall be determined by the General Partner in its discretion. Such
determinations shall be final and conclusive as to all the
Partners. Without in any way limiting the scope of the foregoing, if
and to the extent that, for income tax purposes, any item of income, gain, loss,
deduction or expense of any Partner or the Partnership is constructively
attributed to, respectively, the Partnership or any Partner, or any contribution
to or distribution by the Partnership or any payment by any Partner or the
Partnership is re-characterized, the General Partner may, in its discretion and
without limitation, specially allocate items of Partnership income, gain, loss,
deduction and expense and/or make correlative adjustments to the Capital
Accounts of the Partners in a manner so that the net amount of income, gain,
loss, deduction and expense realized by each relevant party (after taking into
account such special allocations) and the net Capital Account balances of the
Partners (after taking into account such special allocations and adjustments)
shall, as nearly as possible, be equal, respectively, to the amount of income,
gain, loss, deduction and expense that would have been realized by each relevant
party and the Capital Account balances of the Partners that would have existed
if such attribution and/or recharacterization and the application of this
sentence of this Section 5.4 had not
occurred. Notwithstanding anything expressed or implied to the
contrary in this Agreement, in the event the General Partner shall determine, in
its discretion, that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto, are computed in order to effectuate
the intended economic sharing arrangement of the Partners, the General Partner
may make such modification.
6. NON-LIQUIDATING
DISTRIBUTIONS.
6.1 No Right to
Withdraw. No Partner shall have the right to withdraw capital
or demand or receive distributions or other returns of any amount in its Capital
Account, except as expressly provided in this Section 6 or as
provided in Section
10.1.
6.2 Non-Liquidating
Distributions. Subject to the provisions of Section 6.5, the
General Partner may cause the Partnership to make distributions to the Limited
Partners in the following order and amounts:
(a) Limited
Partners. First, to all of the Limited Partners, in proportion
to their respective accrued distributions, until (i) every Class C Limited
Partner has received distributions equal to a five percent (5%) per annum return
on his, her, or its Class C Units, (ii) every Class B Limited Partner has
received distributions equal to a seven percent (7%) per annum return on his,
her, or its Class B Units, and (iii) every Class A Limited Partner has received
distributions equal to a nine percent (9%) per annum return on his, her, or its
Class A Units.
-17-
(b) General
Partner. Second, to the General Partner until its Capital
Account balance is less than or equal to zero.
(c) Limited Partners – Capital
Contributions. Third, to the Limited Partners, in proportion
to their respective Units held until at least one Limited Partner’s Capital
Account balance is equal to zero.
(d) Limited Partners – Positive
Capital Account Balances. Fourth, to the
Limited Partners, in proportion to their respective positive Capital Account
balances, until every Limited Partner’s Capital Account balance is equal to
zero.
(e) General Partner –
Residue. Thereafter, to the General Partner.
6.3 Distributions in Redemption
of a Limited Partner’s Interest. Upon a Limited Partner’s
withdrawal in conformity with Section 10.1(a), the
Partnership shall distribute, within the time period set forth in Section 10.1(a), an
amount equal to such Limited Partner’s positive Capital Account balance
determined as of the date of such distribution.
6.4 Distributions in
Kind.
(a) General
Rule. Subject to the provisions of Section 6.5, if at
any time the General Partner, in its discretion, decides to make a distribution
of property other than cash, such property shall be deemed to be sold as of the
Business Day immediately preceding the date of distribution, for its Fair Market
Value (net of any liabilities secured by such distributed property that the
recipient Partners are considered to assume or take subject to under § 752 of
the Code), and any gain or loss associated with such deemed sale shall be
included in determining Net Income or Net Loss for purposes of the allocations
specified in Section
5.2. Any such distributions shall be made after giving effect
to the allocations required by Section 5.2,
adjustments to Capital Accounts in respect of distributions of such property
shall reflect such Fair Market Value and all such distributions shall be made in
the same respective proportions as distributions of cash would at the time be
made pursuant to Section 6.2 or Section 12.2, as the
case may be.
(b) Legends on
Certificates. The General Partner may cause certificates
evidencing any Securities to be distributed to be imprinted with legends as to
such restrictions on transfer that it may in its discretion deem necessary or
appropriate, including legends as to applicable federal or state securities laws
or other legal or contractual restrictions, and may require any Partner to which
Securities are to be distributed to agree in writing (i) that such Securities
will not be transferred except in compliance with such restrictions and (ii) to
such other matters as the General Partner may deem necessary or
appropriate.
(c) Allocations as Between Cash
and Non-Cash. Except as otherwise provided in this Section 6.3,
distributions consisting of both cash and other property (including marketable
securities) shall be made, to the extent practicable, in equal proportions of
cash and such other property to each Partner receiving such
distributions.
(d) Receipt of Distributions in
Kind. The General Partner may, in its discretion, elect to
receive any distribution to it in kind, provided that the
Fair Market Value of any such distribution shall not exceed the amount which the
General Partner would have been entitled to receive if the property so
distributed had been sold for cash at such Fair Market Value in accordance with
and following the principles of Section
6.4(a).
(e) Violation of
Law. If a Limited Partner shall, upon the advice of counsel,
determine that there is a reasonable likelihood that any distribution in kind of
an asset would cause such Limited Partner to be in violation of any law,
regulation or order, such Limited Partner and the General Partner shall each use
their reasonable best efforts to make alternative arrangements for the sale or
transfer into an escrow account of any such distribution on mutually agreeable
terms.
-18-
6.5 Restrictions on
Distributions. The foregoing provisions of this Section 6 to the
contrary notwithstanding, no distribution shall be made:
(a) to
any Partner if such distribution would violate any contract or agreement to
which the Partnership is then a party or any law, rule, regulation, order or
directive of any Governmental Authority then applicable to the
Partnership;
(b) to
any Partner to the extent that the General Partner, in its discretion,
determines that any amount otherwise distributable should be retained by the
Partnership to pay, or to establish a reserve for the payment of, any liability
or obligation of the Partnership, whether liquidated, fixed, contingent or
otherwise;
(c) to
any Partner to the extent that the General Partner, in its discretion,
determines that the cash available to the Partnership is insufficient to permit
such distribution; or
(d) to
the General Partner to the extent that a non-liquidating distribution causes the
Partnership’s net worth as shown on its books to be less than three million
Dollars ($3,000,000.00).
6.6 Withholding. Notwithstanding
any other provision of this Agreement, the General Partner is authorized to take
any action that it determines in its discretion to be necessary or appropriate
to cause the Partnership to comply with any foreign or United States federal,
state or local withholding or deduction requirement with respect to any
allocation, payment or distribution by the Partnership to any Partner or other
Person. All amounts so withheld, and, in the manner determined by the
General Partner in its discretion, amounts withheld with respect to any
allocation, payment or distribution by any Person to the Partnership, shall be
treated as distributions to the applicable Partners under the applicable
provisions of this Agreement. If any such withholding requirement
with respect to any Partner exceeds the amount distributable to such Partner
under the applicable provision of this Agreement, or if any such withholding
requirement was not satisfied with respect to any amount previously allocated or
distributed to such Partner, such Partner and any successor or assignee with
respect to such Partner’s Interest hereby indemnifies and agrees to hold
harmless the General Partner and the Partnership for such excess amount or such
withholding requirement, as the case may be.
6.7 Record
Holders. Any distribution of Partnership assets, whether
pursuant to this Section 6 or
otherwise, shall be made only to Persons who, according to the books and records
of the Partnership, were the holders of record of Interests on the date
determined by the General Partner as of which the Partners are entitled to any
such distribution.
6.8 Final
Distribution. The final distributions following dissolution of
the Partnership shall be made in conformity with the provisions of Section
12.2(d).
7. MANAGEMENT.
7.1 Management by General
Partner. The Partnership shall be managed exclusively by the
General Partner and the General Partner shall devote such time to the business
and affairs of the Partnership as it deems reasonably necessary
therefor. No Limited Partner shall take part, or have the right or
power to take part, in the control of the business of the Partnership, nor shall
any Limited Partner have any right or authority to act for or bind the
Partnership.
-19-
7.2 Investment Powers of the
General Partner.
(a) Investments. The
Partnership and the General Partner, acting on behalf of the Partnership, shall
have the power and authority to acquire, hold, manage, own, sell, transfer,
convey, assign, exchange, pledge or otherwise dispose of the Partnership’s
investments made or other property held by the Partnership.
(b) Permitted Temporary
Investments. To the extent practicable in the discretion of
the General Partner, the General Partner shall invest Capital Contributions in
Permitted Temporary Investments and shall invest distributable cash in Permitted
Temporary Investments pending the distribution thereof.
7.3 Limitations on the General
Partner. The General Partner shall not:
(i) do
any act in contravention of any applicable law or regulation or any provision of
this Agreement; and
(ii)
possess Partnership property for other than a Partnership purpose.
7.4 Third Party
Reliance. Third parties dealing with the Partnership are
entitled to rely conclusively upon the authority of the General Partner as set
forth in this Agreement.
7.5 Designation of Tax Matters
Partner. The General Partner is hereby designated as the
“Tax Matters
Partner” in conformity with § 6231(a)(7) of the Code, to manage
administrative tax proceedings conducted at the Partnership level by the
Internal Revenue Service with respect to Partnership matters. Each
Partner expressly consents to such designation and agrees that, upon the request
of the General Partner, it will execute, acknowledge, deliver, file and record
at the appropriate public offices such documents as may be necessary or
appropriate to evidence such consent. The General Partner is
specifically directed and authorized to take whatever steps the General Partner
in its discretion deems necessary or desirable to perfect such designation,
including, without limitation, filing any forms or documents with the Internal
Revenue Service and taking such other action as the General Partner in its
discretion determines may from time to time be required or advisable under the
Treasury Regulations. Expenses of administrative proceedings relating
to the determination of Partnership items at the Partnership level undertaken by
the Tax Matters Partner shall be Partnership Expenses. Without
limiting the generality of the foregoing, the Tax Matters Partner shall have the
sole and absolute authority to make any elections on behalf of the Partnership
permitted to be made pursuant to § 754 or any other section of the Code or the
Treasury Regulations promulgated thereunder.
7.6 Other Activities of the
General Partner and Related Persons.
(a) Ability to Engage in Other
Activities. Each Limited Partner expressly agrees that the
General Partner and any other Related Person, subject to the limitations of
paragraph (c) of this Section 7.6, may
engage independently or with others, for its or their own accounts and for the
accounts of others, in other business ventures and activities of every nature
and description whether such ventures are competitive with the business of the
Partnership. Neither the Partnership nor any Limited Partner shall
have any rights or obligations by virtue of this Agreement in and to such
independent ventures and activities or the income or profits derived
therefrom.
(b) Engagement of Other
Persons. The General Partner may, from time to time, employ
any Person or engage third parties to render services to the Partnership on such
terms and for such compensation as the General Partner may determine in its
discretion, including, without limitation, attorneys, investment consultants,
brokers or finders, independent auditors and printers. Such employees
and third parties may be Affiliates of any Related Person or of one (1) or more
of the Limited Partners. Persons retained, engaged or employed by the
Partnership may also be engaged, retained or employed by and act on behalf of
any Related Person, one (1) or more Limited Partners, or any of their respective
Affiliates.
-20-
(c) Contract
Restrictions. The General Partner may cause the Partnership to
enter into contracts and transactions with the General Partner and any Related
Person or Affiliate thereof, provided that the
terms of any such contract or transaction are fair and reasonable to the
Partnership and are not less favorable than could be obtained in arm’s-length
negotiations with unrelated third parties for similar services.
7.7 Referral of
Opportunities. Neither the General Partner nor any other
Related Person shall be obligated to disclose or refer to the Partnership any
particular investment opportunity, whether or not any such opportunity is of a
character which could be taken by the Partnership.
7.8 Conflicts of
Interest. While the General Partner intends to avoid
situations involving conflicts of interest, each Limited Partner acknowledges
that there may be situations in which the interests of the Partnership may
conflict with the interests of the General Partner or any other Related
Person. Each Limited Partner agrees that the activities of the
General Partner and any other Related Person specifically authorized by or
described in this Agreement may be engaged in by the General Partner or any such
Related Person and will not, in any case or in the aggregate, be deemed a breach
of this Agreement or any duty owed by any such Related Person to the Partnership
or to any Partner.
7.9 ERISA
Covenants. The General Partner shall at all times conduct the
affairs of the Partnership such that the Partnership’s assets would not
constitute plan assets of any Partner for purposes of the fiduciary
responsibility or prohibited transaction provisions of Title I of ERISA or
Section 4975 of the Code. This shall include, but not be
limited to, ensuring that the ERISA Partners shall, in the aggregate, hold less
than twenty-five percent (25%) of the total value of each class of equity
interest in the Partnership, as determined in accordance with ERISA and any
regulations issued thereunder.
8. EXPENSES AND FEES.
8.1 Partnership
Expenses. Organizational Expenses for the Partnership shall be
payable directly by the Partnership. The Partnership will be
responsible for, and pay, all other expenses (“Partnership
Expenses”), without limitation:
(a) all
expenses incurred in connection with Partnership operations;
(b) all
costs incurred in connection with the preparation of or relating to reports made
to the Partners;
(c) all
costs related to litigation involving the Partnership, directly or indirectly,
including, without limitation, attorneys’ fees incurred in connection
therewith;
(d) all
costs related to the Partnership’s indemnification or contribution obligations
set forth in Section
11;
(e) the
costs of any litigation, director and officer liability or other insurance and
indemnification or extraordinary expense or liability relating to the affairs of
the Partnership;
(f) all
unreimbursed out-of-pocket expenses relating to transactions that are not
consummated including legal, accounting and consulting fees and all
extraordinary professional fees incurred in connection with the business or
management of the Partnership;
(g) all
expenses of liquidating the Partnership; and
-21-
(h) any
taxes, fees or other governmental charges levied against the Partnership and all
expenses incurred in connection with any tax audit, investigation, settlement or
review of the Partnership.
8.2 Limited Partner’s
Expenses. Each Limited Partner shall be solely responsible for
its own expenses and out-of-pocket costs incurred in connection with the
organization of, its admission to, and the maintenance of its Interest in, the
Partnership.
9. BOOKS OF ACCOUNT, RECORDS
AND BANKING.
9.1 Maintenance of Books and
Records, Etc.
(a) Maintenance of Books and
Records. The Partnership shall maintain books and records in
such manner as is utilized in preparing the Partnership’s United States federal
information tax return in compliance with § 6031 of the Code, and such other
records as may be required in connection with the preparation and filing of the
Partnership’s required United States federal, state and local income tax returns
or other tax returns or reports of foreign jurisdictions, including, without
limitation, the records reflecting the Capital Accounts and adjustments thereto
specified in Section
5.
(b) Access. All
such books and records shall at all times be made available at the principal
office of the Partnership and shall be open to the reasonable inspection and
examination of the Partners or their duly authorized representatives during
normal business hours upon five (5) Business Days’ prior written
notice.
(c) Banking. All
funds of the Partnership may be deposited in such bank, brokerage or money
market accounts as shall be established by the General
Partner. Withdrawals from and checks drawn on any such account shall
be made upon such signature or signatures as the General Partner may in its
discretion from time to time designate.
9.2 Tax
Information. Subject to the General Partner receiving all
necessary information from third parties, within ninety (90) days after the end
of each Fiscal Year of the Partnership, the General Partner shall send each
Person who was a Partner at any time during the Fiscal Year then ended
(including any permitted assignee of a Partner who so requests in writing,
whether or not a Substitute Limited Partner) a Schedule K-1 and such Partnership
tax information as the General Partner reasonably believes shall be necessary
for the preparation by such Person of its United States federal, state and local
tax returns in accordance with any applicable laws, rules and regulations then
prevailing. Such information shall include a statement showing such
Person’s share of distributions, income, gain, loss, deductions and expenses and
other relevant fiscal items of the Partnership for such Fiscal
Year. Promptly upon the request of any Partner, the General Partner
will furnish to such Partner:
(a) all
United States federal, state and local income tax returns or information
returns, if any, which the Partnership is required to file; and
(b) such
other information as such Partner may reasonably request for the purpose of
applying for refunds of withholding taxes, including to the extent not already
set forth on the Schedule K-1, such Person’s share of the Partnership’s UBTI
reported to the Internal Revenue Service.
9.3 Financial Statements and
Other Reports.
(a) Annual Audited Financial
Information. Subject to the General Partner receiving all
necessary information from third parties, within one-hundred-and-eighty (180)
days after the end of each Fiscal Year of the Partnership, the General Partner
shall send to each Person who was a Partner in the Partnership at any time
during the Fiscal Year then ended, and who files a written request with the
General Partner, an audited statement of assets, liabilities and Partners’
capital as of the end of such Fiscal Year and related audited statements of
income or loss and changes in assets, liabilities and Partners’ capital, all
prepared on the same basis used for the computation of adjustments to Capital
Accounts.
-22-
10. TRANSFER OF PARTNERSHIP
INTERESTS; SUBSTITUTE LIMITED PARTNERS.
10.1
Assignments and
Withdrawals by Limited Partners.
(a) Withdrawal from
Partnership. Except as otherwise provided in this Section 10.1, no
Limited Partner may withdraw from the Partnership or make a demand for or
receive paid-in capital. Limited Partners will be sent notice
advising them of the expiration of the applicable Non-Withdrawal
Period.
(i) Class C Limited
Partners. A Class C Limited Partner may withdraw from the
Partnership and receive a distribution in redemption of the Partner’s entire
Class C Limited Partnership Interest pursuant to Section 6.3 upon
giving written notice to the General Partner during the thirty (30) day period
immediately following the expiration of the Class C Non-Withdrawal
Period. If a Class C Limited Partner elects to withdraw, the
Partnership may, at its option, either repurchase the Unit or Units of such
Class C Limited Partner or identify a purchaser for such Unit or
Units. If the Partnership elects to identify another purchaser, the
time for repurchase will automatically be extended for an additional sixty (60)
day period. If a Class C Limited Partner elects to
continue its investment, it may continue to be a Limited Partner in the same
Class, or elect to transfer to another Class. If no election is made within the
thirty (30) day withdrawal period, the Class C Limited Partner will be deemed to
have elected to continue its investment in the Partnership and remain a Limited
Partner in the same Class and for the same Non-Withdrawal Period applicable to
such Class.
(ii)
Class B Limited
Partners. A Class B Limited Partner may withdraw from the
Partnership and receive a distribution in redemption of the Partner’s entire
Class B Limited Partnership Interest pursuant to Section 6.3 upon
giving written notice to the General Partner during the thirty (30) day period
immediately following the expiration of the Class B Non-Withdrawal
Period. If a Class B Limited Partner elects to withdraw, the
Partnership may, at its option, either repurchase the Unit or Units of such
Class B Limited Partner or identify a purchaser for such Unit or
Units. If the Partnership elects to identify another purchaser, the
time for repurchase will automatically be extended for an additional sixty (60)
day period. If a Class B Limited Partner elects to
continue its investment, it may continue to be a Limited Partner in the same
Class, or elect to transfer to another Class. If no election is made within the
thirty (30) day withdrawal period, the Class B Limited Partner will be deemed to
have elected to continue its investment in the Partnership and remain a Limited
Partner in the same Class and for the same Non-Withdrawal Period applicable to
such Class.
(iii)
Class A Limited
Partners. A Class A Limited Partner may withdraw from the
Partnership and receive a distribution in redemption of the Partner’s entire
Class A Limited Partnership Interest pursuant to Section 6.3 upon
giving written notice to the General Partner during the thirty (30) day period
immediately following the expiration of the Class A Non-Withdrawal
Period. If a Class A Limited Partner elects to withdraw, the
Partnership may, at its option, either repurchase the Unit or Units of such
Class A Limited Partner or identify a purchaser for such Unit or
Units. If the Partnership elects to identify another purchaser, the
time for repurchase will automatically be extended for an additional sixty (60)
day period. If a Class A Limited Partner elects to
continue its investment, it may continue to be a Limited Partner in the same
Class, or elect to transfer to another Class. If no election is made within the
thirty (30) day withdrawal period, the Class A0 Limited Partner will be deemed
to have elected to continue its investment in the Partnership and remain a
Limited Partner in the same Class and for the same Non-Withdrawal Period
applicable to such Class.
(b) Limited Right of
Assignment. No Limited Partner may directly or indirectly
sell, transfer, assign, hypothecate, pledge or otherwise dispose of or encumber
all or any part of such Partner’s Interest (including, without limitation, any
right to receive distributions or allocations in respect of such Interest and
whether voluntarily, involuntarily or by operation of law) (each, an “Assignment”) without
the prior written consent of the General Partner, the granting or denial of
which shall be in the General Partner’s discretion. Each Limited
Partner and each assignee thereof hereby agrees that it will not effect any
Assignment of all or any part of its Interest (whether voluntarily,
involuntarily or by operation of law) in any manner contrary to the terms of
this Agreement or that violates or causes the Partnership or the General Partner
to violate the Securities Act, the Exchange Act, the Investment Company Act,
ERISA, or the laws, rules, regulations, orders and other directives of any
Governmental Authority.
-23-
(c) Conditions Precedent to
Assignment. Any purported Assignment by a Limited Partner
pursuant to the terms of this Section 10.1 shall,
in addition to requiring the prior written consent referred to in Section 10.1(b), be
subject to the satisfaction of the following conditions:
(i) the
General Partner shall have been given at least twenty (20) Business Days’ prior
written notice of such desired Assignment specifying the name and address of the
proposed assignee and the terms and conditions of the proposed
Assignment;
(ii) the
assigning Limited Partner or assignee shall undertake to pay all expenses
incurred by the Partnership or the General Partner on behalf of the Partnership
in connection therewith;
(iii) the
Partnership shall receive from the assignee (A) such documents, instruments and
certificates as may be requested by the General Partner, pursuant to which such
assignee shall agree to be bound by this Agreement, (B) a certificate duly
executed by the assignee to the effect that each of the representations,
warranties and acknowledgments set forth in the Subscription Agreement are
(except as otherwise disclosed to the General Partner) true and correct with
respect to such Person as of the date of such Assignment and that the assignee
agrees to be bound by each of the agreements, covenants and acknowledgments in
the Subscription Agreement as if it were a party thereto, (C) a completed
suitability statement in the form contained in the Subscription Agreement, as
relevant to the proposed assignee, (D) such other documents, opinions,
instruments and certificates as the General Partner shall request, and (E) a
counterpart of this Agreement executed by or on behalf of such
Person;
(iv) such
assigning Limited Partner or assignee shall, prior to making any such
Assignment, deliver to the Partnership the opinion of counsel described in Section 10.1(d);
and
(v) such
Assignment would not pose a material risk that the Partnership will be treated
as a “publicly traded partnership” within the meaning of § 7704 of the Code and
the regulations promulgated thereunder or make the Partnership ineligible for
“safe harbor” treatment under § 7704 of the Code and the regulations promulgated
thereunder.
The
General Partner may waive any or all of the conditions set forth in this Section 10.1(c) other
than clause (iii)(B) thereof if, in its discretion, it deems it in the best
interests of the Partnership to do so.
(d) Requisite Opinion of
Counsel. The opinion of counsel referred to in Section 10.1(c)(iv)
shall be in form and substance satisfactory to the General Partner, shall be
from counsel satisfactory to the General Partner (which, in the case of an
assignee that is an institutional investor, may be staff counsel regularly
employed by such institutional investor) and shall be substantially to the
effect that (unless otherwise agreed by the General Partner) the consummation of
the Assignment contemplated by the opinion will not:
(i)
violate any provisions of the Securities Act or applicable state securities
laws;
-24-
(ii)
require the General Partner or the Partnership to register as an investment
company under the Investment Company Act and (whether or not such Assignment is
of the assigning Limited Partner’s entire Interest), that the assignee is a
Person that counts as one beneficial owner for purposes of § 3(c)(1) of the
Investment Company Act;
(iii)
require the General Partner or any Affiliate of the General Partner that is not
registered under the Advisers Act to register as an investment adviser under the
Advisers Act;
(iv)
cause the Partnership to be taxable as a corporation or association under the
Code;
(v)
violate the laws of any state or the rules and regulations of any Governmental
Authority applicable to such Assignment;
(vi) pose
a material risk that the Partnership will he treated as a “publicly traded
partnership” within the meaning of § 7704 of the Code and the regulations
promulgated thereunder and would not make the Partnership ineligible for “safe
harbor” treatment under § 7704 of the Code and the regulations promulgated
thereunder; and
(vii)
cause all or any portion of the assets of the Partnership to constitute “plan
assets” under ERISA or the Code or to be subject to the provisions of ERISA to
substantially the same extent as if owned directly by any ERISA
Partner.
In giving
such opinion, counsel may, with the consent of the General Partner, rely as to
factual matters on certificates of the assigning Limited Partner, the assignee
and the General Partner.
(e) Admission of Assignees as
Substitute Limited Partners. No assignee of all or any part of
an Interest of a Limited Partner shall be admitted to the Partnership as a
Substitute Limited Partner unless and until the General Partner has consented to
such substitution in its discretion. Unless and until an assignee of
an Interest becomes a Substitute Limited Partner, such assignee shall not be
entitled to exercise any vote, consent or any other right or entitlement with
respect to such Interest. In the event of the admission of an
assignee as a Substitute Limited Partner, all references herein to the assigning
Limited Partner shall be deemed to apply to such Substitute Limited Partner, and
such Substitute Limited Partner shall succeed to all rights and obligations of
the assigning Limited Partner hereunder. A Person shall be deemed
admitted to the Partnership as a Substitute Limited Partner at the time that the
foregoing provisions are satisfied. The General Partner shall revise
Schedule A attached hereto to reflect such admission. No attempted
Assignment and no substitution shall be recognized by the Partnership unless
effected in conformity with and as permitted by this Agreement.
10.2
Assignments and
Withdrawal by the General Partner. Without the consent of
Limited Partners with at least sixty-six and two-thirds percent (66-2/3%) of the
aggregate Voting Interests of all Limited Partners, the General Partner shall
not have the right to assign, pledge or otherwise transfer its interest as the
general partner of the Partnership and the General Partner shall not have the
right to withdraw from the Partnership; provided that,
without the consent of the Limited Partners, the General Partner may, at the
General Partner’s expense, be reconstituted as or converted into a corporation
or other form of entity (any such reconstituted or converted entity being deemed
to be the General Partner for all purposes hereof) by merger, consolidation or
otherwise so long as such reconstitution or conversion does not have adverse tax
or legal consequences for the Limited Partners.
In the
event of an assignment or other transfer of all of its interest as a general
partner of the Partnership in conformity with this Section 10.2, the
General Partner’s assignee or transferee shall be substituted in its place as
general partner of the Partnership and the General Partner shall withdraw as a
general partner of the Partnership.
-25-
10.3
ERISA Partners and BHC
Partners.
(a) Action by a Limited
Partner. If an ERISA Partner shall notify the General Partner
that, as a result of (x) the adoption of or amendment to any statute or
regulation or a development in the case law or the DOL’s interpretation of the
definition of “plan assets” for purposes of ERISA or (y) the failure of the
Partnership to comply with an exception set forth in ERISA or any regulations
issued thereunder, there is a reasonable likelihood that all or any part of the
Partnership’s assets would be deemed to be “plan assets” and the General Partner
does not deliver to such ERISA Partner, within thirty (30) days of the receipt
of such notice, an opinion of counsel, in form and substance reasonably
satisfactory to such ERISA Partner, that such likelihood does not exist, or if
the General Partner determines (after consulting with its counsel) that there is
a reasonable likelihood that all or any part of the Partnership’s assets would
be deemed to be “plan assets,” any such Limited Partner may:
(i)
request the Partnership to make or, if the Partnership fails to do so, itself
make an appropriate application for exemptive relief to the DOL; or
(ii)
assign all or any portion of its Interest to a third party whose acquisition of
such Interest would result in a reduction in the percentage of the Partnership’s
assets that are (or might be) treated as though assets of an ERISA Partner (a
“Non-Plan
Party”), in a transaction that complies with Section
10.1.
If the
General Partner determines in good faith that there is a reasonable likelihood
that any or all of the assets of the Partnership would be deemed to be “plan
assets” for purposes of ERISA (and appropriate relief, as determined in its
discretion by the General Partner, has not been obtained from the DOL or
otherwise), each ERISA Partner will, at the request of the General Partner, use
its best efforts to dispose of its entire Interest (or such portion of its
Interest as, in the discretion of the General Partner, is sufficient to prevent
the Partnership’s assets from being deemed “plan assets” for purposes of ERISA)
to a Non-Plan Party at a price reasonably acceptable to such ERISA Partner in a
transaction that complies with Section
10.1.
(b) Action by the General
Partner. If an ERISA Partner has not disposed of its entire
Interest (or such portion of its Interest as, in the discretion of the General
Partner, is sufficient to prevent the Partnership’s assets from being deemed
“plan assets” for purposes of ERISA) within thirty (30) days of the General
Partner having notified such ERISA Partner of the determination set forth in
Section
10.3(a), then, notwithstanding anything to the contrary herein, the
General Partner shall have the right, but not the obligation, upon fifteen (15)
days’ prior written notice, to do, in its discretion, any or all of the
following to reduce or alleviate any restrictions, prohibitions or other
material complications resulting from the Partnership’s assets being deemed
“plan assets” for the purposes of ERISA:
(i) offer
to any Non-Plan Party the opportunity to purchase, or purchase itself, at the
Fair Market Value thereof, all or any portion of the ERISA Partner’s Interest
that remains after operation of paragraph (ii) of this Section 10.3(b);
or
(ii)
dissolve and terminate the Partnership and distribute the Partnership assets in
conformity with Section
12.
In
determining the appropriate action to take under this Section 10.3(b), the
General Partner shall take into consideration the effect of such action on all
of the Limited Partners, including those Limited Partners that have not caused
the General Partner to consider any of the foregoing actions.
Unless
such action results from the failure of the Partnership to comply with an
exception set forth in ERISA, or any regulations issued thereunder, because the
General Partner contravenes any provision of this Agreement, all costs and
expenses in connection with Section 10.3(a) and
this Section
10.3(b) in respect of any Limited Partner shall be paid by such Limited
Partner.
-26-
(c) BHC
Partners. If a BHC Partner shall deliver to the General
Partner an opinion, in form and substance reasonably satisfactory to the General
Partner, from counsel reasonably satisfactory to the General Partner (which may
be staff counsel regularly employed by such BHC Partner), that, as a result of
Regulation Y, the partial withdrawal of such BHC Partner from the Partnership is
necessary so that the Interest of such BHC Partner in the Partnership does not
exceed twenty-four and ninety-nine one-hundredths percent (24.99%) of the
aggregate Interests of all the Partners, any such BHC Partner may assign that
portion of its Interest to a third party that would result in a reduction in
such BHC Partner’s Interest to below twenty-four and ninety-nine one-hundredths
percent (24.99%) in a transaction that complies with Section
10.1.
If a BHC
Partner has not disposed of the portion of its Interest that is sufficient to
prevent a violation of Regulation Y, then, notwithstanding anything to the
contrary herein, the General Partner shall have the right, but not the
obligation, upon fifteen (15) days’ prior written notice, to:
(1) offer
to any other Person the opportunity to purchase, at the Fair Market Value
thereof, all or any portion of the BHC Partner’s Interest that remains after
operation of paragraph (ii) of this Section 10.3(c);
or
(2)
liquidate all or any portion of the BHC Partner’s Interest or make a special
distribution in respect of such Interest to such Limited Partner, in which case
such BHC Partner’s right to receive future distributions pursuant to Section 6.2 and Section 12.2 shall be
appropriately adjusted in good faith by the General Partner, and the General
Partner may, in its sole discretion, choose to distribute cash, cash equivalents
and Securities or any combination of the foregoing, in an amount (or having a
Fair Market Value) equal to the Fair Market Value of such Interest, provided
that the applicable provisions of Section 6.3 shall
apply to any distribution in kind in connection with such
liquidation.
All costs
and expenses in connection with this Section 10.3(c) shall
be paid by such BHC Partner.
(d) Documentation,
etc. The details and documentation relating to any transaction
or transactions effected pursuant to this Section 10.3 or Section 10.4 shall be
as determined by the General Partner in the good faith exercise of its
judgment. Upon the closing of any transaction or transactions
effected pursuant to this Section 10.3 or Section 10.4, the
General Partner (i) may, in its discretion, admit each purchaser (which is not
already a Partner or Substitute Limited Partner) on such terms and upon the
delivery of such documents as the General Partner, in its discretion, shall deem
to be appropriate, and (ii) shall make such additional adjustments to the
Capital Accounts, and Capital Contributions of the ERISA Partner or BHC Partner
and of all Partners and Substitute Limited Partners who have purchased Interests
pursuant to this Section 10.3 or Section 10.4 as it
shall deem, in its reasonable judgment, to be equitable to all Limited
Partners. The General Partner shall make such revisions to Schedule A
attached hereto as may be necessary or appropriate to reflect the admission of
each purchaser (which is not already a Partner or Substitute Limited Partner
immediately prior to the time of such purchase) being admitted to the
Partnership as a Substitute Limited Partner.
10.4
Sale of Interest:
Applicable Law Withdrawal.
(a) Sale of
Interest. In addition to the circumstances described in Section 10.3, if, at
any time, the General Partner determines, after consultation with the affected
Limited Partner and counsel to the General Partner, that there is a reasonable
likelihood that the continuing participation in the Partnership by any Limited
Partner might:
(i) cause
the Partnership or any Partner to be subject to a requirement to register as an
investment company under the Investment Company Act, or
-27-
(ii) have
a Material Adverse Effect,
such
Limited Partner will, upon the written request of the General Partner, use its
best efforts to dispose of its entire Interest (or such portion of its Interest
that, in the good faith judgment of the General Partner, is sufficient to
prevent or remedy the circumstance described above) to any Person at a price
acceptable to such Limited Partner, in a transaction that complies with Section
10.1.
(b) Applicable Law
Withdrawal. On the advice of counsel to the Partnership that a
Limited Partner may not own an interest in the Partnership, the General Partner
shall use its good faith efforts, and the Limited Partner shall use his, her, or
its best efforts to sell all of such Limited Partner’s Units to another
person. These steps may include, depending on the provisions of such
Applicable Law, (i) arranging for the sale of the Limited Partner’s Interest to
a third party upon terms reasonably satisfactory to the Limited Partner in a
transaction that complies with Section 10.1, (ii)
making any appropriate applications to the relevant Governmental Authority,
(iii) excusing such Limited Partner from further Capital Contributions, and
converting its Interest into a special interest with no voting or similar rights
but with only an economic right (identical to its prior rights as a Limited
Partner) with respect to which such Limited Partner has made Capital
Contributions as set forth in Section 3.4, or (iv)
permitting the Limited Partner to withdraw from the Partnership for a “payment”
to such Limited Partner equal to the value of its Interest at the time of
withdrawal, such value to be determined taking into account the Limited
Partner’s rights to distributions pursuant to Section
6.2. The aforesaid “payment” shall be made in cash unless the
General Partner determines in its discretion that the payment in cash would be
economically detrimental to the Partnership, in which case such payment may be
made in kind, subject to Applicable Law, or by unsecured promissory note,
payable with 5% annual interest in 60 equal monthly payments of principal and
interest. The timing of any such withdrawal must be mutually
agreeable to the Limited Partner and the General Partner taking proper account
of the effective date of the Applicable Law that is the basis for the withdrawal
or other remedy provided herein and the need of the General Partner for a
reasonable period of time to find a solution to the illegality or requirement
for divestiture. Such illegality must be established by (i) an
opinion of counsel (which counsel shall be reasonably satisfactory to the
General Partner and
which, in the case of a Limited Partner that is an institutional investor, may
be staff counsel regularly employed by such institutional investor)
substantially to the effect that the ownership of the Interest more likely than
not will result in such illegality or requirement for divestiture or (ii) upon a
ruling or order from a Governmental Authority.
10.5
Involuntary
Redemption. The Partnership may redeem some or all of the
Units owned by a Limited Partner or an assignee in the sole discretion of the
General Partner at any time after giving such Limited Partner seven (7) days
notice of redemption in conformity with Section 15.10. The
Partnership shall pay the completely redeemed Limited Partner an amount equal to
his, her, or its positive Capital Account balance at the time of redemption in
full cancellation of all Units owned by such redeemed Limited
Partner. The Partnership shall pay the partially redeemed Limited
Partner an amount equal to such Partner’s positive Capital Account balance
multiplied by a fraction with the number of such Partner’s Units redeemed as the
numerator, and the total number of Units owned by such Partner immediately
before the redemption as the denominator.
11. INDEMNIFICATION OF GENERAL
PARTNER.
11.1
Indemnification. The
Partnership shall, to the maximum extent permitted by applicable law, indemnify
and hold harmless all Related Persons, and the Partnership and each Limited
Partner shall release each Related Person, to the fullest extent permitted by
applicable law, from and against any and all Damages, including, without
limitation, Damages incurred in investigating, preparing or defending any action
(including any action to enforce this Section 11.1), claim,
suit, inquiry, proceeding, investigation or appeal taken from any of the
foregoing by or before any court or other Governmental Authority, whether
pending or threatened, whether or not a Related Person is or may be a party
thereto, which, in the good faith judgment of the General Partner, arise out of,
relate to or are in connection with this Agreement or the management or conduct
of the business or affairs of the General Partner, or the matters set forth in
Section 3.2(a)(i) –
(iii) inclusive, except for any such Damages that are finally found by a
court of competent jurisdiction to have resulted primarily from the bad faith,
gross negligence or intentional misconduct of, or material breach of this
Agreement or knowing violation of law by, the Person seeking
indemnification. If any Related Person is entitled to indemnification
from any source other than the Partnership, including, without limitations, any
insurance policy by which such Person is covered, then the General Partner shall
use its reasonable best efforts to cause such Related Person to seek
indemnification from such other source simultaneously with seeking
indemnification from the Partnership, and the amount recovered by such Related
Person from such other source shall reduce the amount of the Partnership’s
indemnification hereunder. Such attorneys’ fees and expenses shall in
the discretion of the General Partner be paid by the Partnership as they are
incurred upon receipt, in each case, of an undertaking by or on behalf of the
Related Person on whose behalf such expenses are incurred to repay such amounts
if it is finally adjudicated by a court of competent jurisdiction that
indemnification is not permitted by law or this Agreement.
-28-
The
termination of any proceeding by settlement shall be deemed not to create a
presumption that the Related Person involved in such settlement acted in a
manner which constituted bad faith, gross negligence, intentional misconduct,
material breach of this Agreement or a knowing violation of law. The
indemnification provisions of this Section 11.1 may be
asserted and enforced by, and shall be for the benefit of, each Related Person,
and each Related Person is hereby specifically empowered to assert and enforce
such right, provided that any
Related Person who fails to take such actions as the General Partner may
reasonably request in defending any claim or who enters into a settlement of any
proceeding without the prior approval of the General Partner (which shall not be
unreasonably withheld) shall not be entitled to indemnification provided in this
Section
11.1. The right of any Related Person to the indemnification
provided herein shall be cumulative of, and in addition to, any and all rights
to which such Related Person may otherwise be entitled by contract or as a
matter of law or equity and shall extend to his or its heirs, successors,
assigns and legal representatives.
11.2
Contribution. If
for any reason the indemnity provided for in Section 11.1 and to
which a Related Person is otherwise entitled is unavailable to such Related
Person (other than for reason of such Related Person acting in a manner which
constituted bad faith, gross negligence, intentional misconduct, material breach
of this Agreement or a knowing violation of law) in respect of any Damages, then
the Partnership, in lieu of indemnifying such Related Person, shall contribute
to the amount paid or payable by such Related Person as a result of such Damages
in the proportion the total capital of the Partnership (exclusive of the balance
in the Related Person’s Capital Account (which, for purposes of this Section 11.2 in the
case of a Related Person which is not a Partner, shall mean the General
Partner’s Capital Account if the Related Person is an Affiliate thereof)) bears
to the total capital of the Partnership (including the balance in the Related
Person’s Capital Account), which contribution shall be treated as an expense of
the Partnership.
11.3
Not Liable for Return
of Capital. Neither the General Partner nor any other Related
Person shall be personally liable for the return of the Capital Contributions of
any Limited Partner or any portion thereof or interest thereon, and such return
shall be made solely from available Partnership assets, if any.
12. DURATION AND TERMINATION OF
THE PARTNERSHIP.
12.1
Event of
Termination. The existence of the Partnership commenced on the
date of the filing of the Certificate of Limited Partnership pursuant to the
Partnership Act and shall continue until the first to occur of the following
events (an “Event of
Termination”):
(a) the
failure to continue the business of the Partnership as provided in Section 13.2
following a Disabling Event in respect of the General Partner or following any
other event that causes the General Partner to cease to be a general partner of
the Partnership under the Partnership Act unless a Majority in Interest complies
with the requirements of Section 13.2(b);
-29-
(b) a
determination by the General Partner to terminate the Partnership made in its
sole discretion;
(c) a
determination by the Limited Partners with at least eighty percent (80%) of the
aggregate Voting Interests of all Limited Partners consenting
thereto;
(d) a
decision, made by the General Partner in its sole discretion, to dissolve the
Partnership; or
(e) the
entry of a decree of judicial dissolution pursuant to Section 802 of the
Partnership Act.
12.2
Winding-Up. Upon
the occurrence of an Event of Termination, the Partnership shall be dissolved
and the business and affairs of the Partnership shall be wound-up. In
connection with the dissolution and winding-up of the Partnership, the General
Partner or, if there is no General Partner, a liquidator or other representative
(the “Liquidation
Representative”) appointed by a Majority in Interest shall proceed with
the sale or liquidation of all of the assets of the Partnership (including the
conversion to cash or cash equivalents of its notes or accounts receivable) and
shall apply and distribute the proceeds of such sale or liquidation in the
following order of priority, unless otherwise required by mandatory provisions
of applicable law:
(a) first, to pay (or to
make provision for payment) in satisfaction of all obligations of the
Partnership for all expenses of such liquidation;
(b) second, to pay (or to
make provision for the payment of) all creditors of the Partnership (including
Partners who are creditors of the Partnership) in the order of priority provided
by law or otherwise, in satisfaction of all debts, liabilities or obligations of
the Partnership due such creditors;
(c) third, to the
establishment of any reserve which the General Partner or the Liquidation
Representative, as the case may be, may deem reasonably necessary for any
contingent or unforeseen liabilities or obligations of the Partnership (such
reserve may be paid over by the General Partner or the Liquidation
Representative to an escrow agent acceptable to the General Partner or the
Liquidation Representative, to be held for disbursement in payment of any of the
aforementioned liabilities and, at the expiration of such period as shall be
deemed advisable in their discretion by the General Partner or the Liquidation
Representative for distribution of the balance in the manner hereinafter
provided in this Section
12.2);
(d) fourth, after the
payment (or the provision for payment) of all debts, liabilities and obligations
of the Partnership in conformity with each of the clauses above, to the Limited
Partners or their legal representatives in proportion to the positive balances
in their respective Capital Accounts, after taking into account all adjustments
to Capital Accounts for all periods, until every Limited Partner has a Capital
Account balance that is less than or equal to zero; and
(e) Thereafter, the
Partnership shall distribute any remaining net assets to the General
Partner.
12.3
Distributions in Cash
or in Kind or a Winding Up. Upon dissolution, the General
Partner or the Liquidation Representative, as the case may be, may in its
discretion (a) liquidate all or a portion of the Partnership assets and apply
the proceeds of such liquidation in the manner set forth in Section 12.2 and/or
(b) hire independent appraisers to appraise the value of Partnership assets not
sold or otherwise disposed of (the cost of such appraisal to be considered a
Partnership Expense) or determine the Fair Market Value of such assets, and
allocate any unrealized gain or loss determined by such appraisal to the
Partners’ respective Capital Accounts as though the properties in question had
been sold on the date of distribution and, after giving effect to any such
adjustment, distribute said assets in the manner set forth in Section 12.2, provided that the
General Partner or the Liquidation Representative shall in good faith attempt to
liquidate sufficient Partnership assets to satisfy in cash the debts and
liabilities described in Section
12.2.
-30-
If a
Limited Partner shall, upon the advice of counsel, determine that there is a
reasonable likelihood that any distribution in kind of an asset would cause such
Limited Partner to be in violation of any law, regulation or order, such Limited
Partner and the General Partner shall each use its good faith efforts to make
alternative arrangements for the sale or transfer into an escrow account of any
such distribution on mutually agreeable terms.
12.4
Time for
Liquidation. A reasonable amount of time shall be allowed for
the orderly liquidation of the assets of the Partnership and the discharge of
liabilities to creditors so as to enable the General Partner or the Liquidation
Representative to minimize the losses attendant upon such
liquidation.
12.5
Termination. Upon
compliance with the foregoing distribution plan, the Partnership shall cease to
be such, and the General Partner or the Liquidation Representative, as the case
may be, shall execute, acknowledge and cause to be filed with the Secretary of
State of the State of Maryland a certificate of cancellation of the Partnership
pursuant to the power of attorney contained in Section
15.11. The provisions of this Agreement shall remain in full
force and effect during the period of winding up and until the filing of such
certificate of cancellation of the Partnership with the Secretary of State of
the State of Maryland.
13. DISSOLUTION, ETC. OF
PARTNERS.
13.1
Effect of Retirement,
Withdrawal, Bankruptcy, Dissolution, Death, Etc. of Limited
Partner. The occurrence of a Disabling Event in respect of a
Limited Partner shall not dissolve the Partnership, and the Partnership shall
continue in a reconstituted form, if necessary, without any action on the part
of the remaining Partners. The trustee, executor, administrator,
committee or guardian of the Limited Partner or of the Limited Partner’s estate,
as the case may be, shall have all the rights of the Limited Partner for the
purpose of settling or managing the estate and such power as such Limited
Partner possessed to assign all or part of such Limited Partner’s Interest,
provided that
any such trustee, executor, administrator, committee or guardian shall become a
Substitute Limited Partner only upon compliance with the provisions of Section
10.1.
13.2
Effect of Bankruptcy,
Etc. of the General Partner.
(a) Not the Last General
Partner. In the event of the death, incapacity, adjudication
of incompetency, bankruptcy, dissolution, liquidation, retirement, resignation,
withdrawal or removal of a General Partner (a “Disabling Event”) who
is not the last remaining General Partner (the “Withdrawing General
Partner”), the Partnership may be continued with the consent of the
remaining General Partners or General Partner pursuant to the terms and
conditions of this Agreement.
(b) Last General Partner:
Continuation of Partnership. Notwithstanding anything express
or implied in this Agreement to the contrary, upon the occurrence of a Disabling
Event in respect of the last remaining General Partner, the Partnership shall be
dissolved and wound up as provided in Section 12.2, unless
within one hundred and eighty (180) days of such Disabling Event, a Majority in
Interest consent in writing to the reconstitution and continuation of the
operations of the Partnership and their election, effective as of the date of
the Disabling Event, of one (1) or more successor General Partners.
-31-
14. AMENDMENTS.
14.1
Amendments Requiring
Consents. Sections 2.1, 3.2, 3.3, 4, 5.1, 5.2, 5.3, 6.2, 6.3, 6.8, 7.1, 7.6, 8.1, 11
, 12.1, 12.2, 12.3, 12.4, 13.2, 14, 15.11, and 15.17 of this
Agreement (and all defined terms as used therein) may be modified or amended
only with the written consent of the General Partner and Limited Partners with
at least sixty-six and two thirds percent (66-2/3%) of the aggregate Voting
Interests of all Limited Partners entitled to vote. Except as
otherwise provided in Section 14.2 below,
the other sections of this Agreement (and all defined terms as used therein) may
be modified or amended only with the written consent of the General Partner and
a Majority in Interest.
14.2
Amendments by General
Partner. Notwithstanding the provisions of Section 14.1 and this
Section 14.2,
the General Partner shall have the authority to amend or modify this Agreement
without any vote or other action by the other Partners, as expressly permitted
by Section
15.11 or to satisfy any requirements, conditions, guidelines, directives,
orders, rulings or regulations of any Governmental Authority, or as otherwise
required by applicable law. Subject to the provisions of Section 14.1, the
General Partner shall have the authority to amend or modify this Agreement
without any vote or other action by the other Partners: (a) to reflect the
admission of substitute, additional or successor Partners and transfers of
Interests pursuant to this Agreement; (b) to qualify or continue the Partnership
as a limited partnership (or a partnership in which the Limited Partners have
limited liability) in all jurisdictions in which the Partnership conducts or
plans to conduct business; (c) to change the name of the Partnership; (d) to
cure any ambiguity or correct or supplement any provisions herein contained
which may be incomplete or inconsistent with any other provision herein
contained; or (e) to correct any typographical errors contained
herein.
Notwithstanding
any other provision of this Agreement, no modification or amendment of this
Agreement that would adversely affect the interests of either the ERISA Partners
or the BHC Partners shall take effect without the written consent of the ERISA
Partners with more than one-half (1/2) of the aggregate Voting Interests of the
ERISA Partners or the written consent of the BHC Partners with more than
one-half (1/2) of the aggregate Voting Interests of the BHC
Partners.
15. MISCELLANEOUS.
15.1
Waiver of
Partition. Each of the Partners hereby irrevocably waives any
and all rights that such Partner may have to maintain any action for partition
of any of the Partnership’s property.
15.2
Entire
Agreement. This Agreement and the Subscription Agreements,
each as amended or supplemented from time to time, constitute the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersede all prior agreements and understandings pertaining
thereto. Notwithstanding the foregoing or any other provision of this
Agreement, in addition to this Agreement and the Subscription Agreements, the
General Partner, in its own name or on behalf of the Partnership, may enter into
one (1) or more side letters or other written agreements to or with any Limited
Partner without the consent of any other Person, including any other Limited
Partner, executed substantially contemporaneously with the admission of such
Limited Partner to the Partnership, that affect the terms hereof and of such
Limited Partner’s Subscription Agreement, to meet certain requirements of such
Limited Partner, and the terms of any such side letter or other agreement to or
with a Limited Partner shall govern with respect to such Limited Partner
notwithstanding the provisions of this Agreement or the Subscription
Agreements. The General Partner hereby confirms that it has not
entered into any such side letter or other agreement prior to the date hereof.
15.3
Choice of
Law. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY AND INTERPRETED IN CONFORMITY WITH THE LAWS OF THE STATE OF
MARYLAND (WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF)
AND, WITHOUT LIMITATION THEREOF, THE PARTNERSHIP ACT AS NOW ADOPTED OR AS MAY BE
HEREAFTER AMENDED SHALL, EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, GOVERN
THE PARTNERSHIP ASPECTS OF THE AGREEMENT.
-32-
15.4
Successors and
Assigns. Except as otherwise specifically provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties and
their legal representatives, heirs, administrators, executors, successors and
assigns.
15.5
Severability. Each
provision of this Agreement shall be considered severable and if, for any
reason, any provision of this Agreement, or the application of such provision to
any Person or circumstance, shall be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions of this Agreement, or
the application of such provision in jurisdictions or to Persons or
circumstances other than those to which it is held invalid, illegal or
unenforceable shall not be affected thereby.
15.6
Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original but all of which shall constitute one (1) and the same
instrument. It shall not be necessary for all Partners to execute the
same counterpart hereof. Further, facsimile copies of a counterpart
shall have the same effect as an original, provided the Partnership is in
possession of the funds representing the Limited Partner’s Capital
Contribution.
15.7
Additional
Documents. Subject to the provisions of this Agreement, each
party hereto agrees to execute, with acknowledgment or affidavit, if required,
any and all documents and writings which may be necessary or expedient in
connection with the Partnership and the achievement of its purposes,
specifically including (a) any amendments to this Agreement and such
certificates and other documents as the General Partner deems necessary or
appropriate to form, qualify or continue the Partnership as a limited
partnership (or a partnership in which the Limited Partners have limited
liability) in all jurisdictions in which the Partnership conducts or plans to
conduct business and (b) all such agreements, certificates, tax statements, tax
returns and other documents as may be required of the Partnership or its
Partners by the laws of the United States of America or any jurisdiction in
which the Partnership conducts or plans to conduct business, or any political
subdivision or agency thereof.
15.8
Non-Waiver. No
provision of this Agreement shall be deemed to have been waived unless such
waiver is contained in a written notice given to the party claiming such waiver
has occurred, provided that no such
waiver shall be deemed to be a waiver of any other or further obligation or
liability of the party or parties in whose favor the waiver was
given.
15.9
Manner of
Consent. Any consent or approval required by this Agreement
may be given as follows: (a) by a written consent given by the consenting
Partner at or prior to the taking of the action for which the consent is
solicited, provided that such
consent shall not have been nullified by either (i) notification 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 taking of
such action or (ii) notification to the General Partner by the consenting
Partner prior to the taking of any action which is not subject to approval at
such meetings; or (b) by the affirmative vote of the consenting Partner to the
taking of the action for which the consent is solicited at any meeting duly
called and held to consider the taking of such action.
15.10
Notices. To
be effective, unless otherwise specified in this Agreement, all notices and
demands, consents and other communications under this Agreement must be in
writing and must be given: (a) by depositing the same in the United States mail,
postage prepaid, certified or registered, return receipt requested; (b) by
delivering the same in person and receiving a signed receipt therefor; (c) by
sending the same by an internationally recognized overnight delivery service; or
(d) by telecopy. The address of the General Partner shall be as set
forth on Schedule A attached to this Agreement and the address of the
Partnership shall be as set forth in Section
2.3.
-33-
Notices,
demands, consents and other communications mailed in accordance with the
foregoing clause (a) shall be deemed to have been given and made three (3)
Business Days following the date so mailed, provided that any
notice to the General Partner shall be effective only if and when received by
the General Partner. Notices, demands, consents and other
communications given in accordance with the foregoing clauses (b) through (d)
shall be deemed to have been given when received. Notices, demands,
consents and other communications to the Limited Partners are effective when
delivered in accordance with the foregoing to each Limited Partner or its
representative.
Any
Limited Partner or its representative, the Partnership or the General Partner or
its assignee may designate a different address to which notices or demands shall
thereafter be directed and such designation shall be made by written notice
given in the manner hereinabove required and, in the case of any representative,
directed to the Partnership at its offices as hereinabove set
forth.
15.11
Grant of Power of
Attorney. Each Limited Partner hereby irrevocably constitutes
and appoints the General Partner and each member of the General Partner as its
true and lawful attorney and agent, in its name, place and stead to make,
execute, acknowledge and, if necessary, to file and record:
(a) Any
certificates or other instruments or amendments thereof which the Partnership
may be required to file under the Partnership Act or pursuant to the
requirements of any Governmental Authority having jurisdiction over the
Partnership or which the General Partner shall deem it advisable to file,
including, without limitation, this Agreement, any amended agreement and a
certificate of cancellation as provided in Section
12.5;
(b) Any
certificates or other instruments (including counterparts of this Agreement with
such changes as may be required by the law of other jurisdictions) and all
amendments thereto which the General Partner deems appropriate or necessary to
qualify, or continue the qualification of, the Partnership as a limited
partnership (or a partnership in which the Limited Partners have limited
liability) and to preserve the limited liability status of the Partnership in
the jurisdictions in which the Partnership may acquire investments;
(c) Any
certificates or other instruments which may be required in order to effectuate
any change in the membership of the Partnership or to effectuate the dissolution
and termination of the Partnership pursuant to Section 12;
and
(d) Any
amendments to any certificate or to this Agreement necessary to reflect any
other changes made pursuant to the exercise of the powers of attorney contained
in this Section
15.11 or pursuant to this Agreement.
15.12
Irrevocable and
Coupled with an Interest; Copies to Be Transmitted. The powers
of attorney granted under Section 15.11 shall
be deemed irrevocable and to be coupled with an interest. A copy of
each document executed by the General Partner pursuant to the powers of attorney
granted in Section
15.11 shall be transmitted to each Limited Partner promptly after the
date of the execution of any such document.
15.13
Survival of Power of
Attorney. The powers of attorney granted in Section 15.11 shall
survive delivery of an Assignment by any Limited Partner of the whole or any
part of such Partner’s Interest, provided that if such
Assignment was of all of such Limited Partner’s Interest and the substitution of
the assignee as a Limited Partner has been consented to by the General Partner,
the foregoing powers of attorney shall survive the delivery of such Assignment
only for the purpose of enabling the General Partner to execute, acknowledge and
file any and all certificates and other instruments necessary to effectuate the
substitution of the assignee as a Substitute Limited Partner. Such
powers of attorney shall survive any Disabling Event in respect of a Limited
Partner and shall extend to such Limited Partner’s successors and
assigns.
-34-
15.14
Limitation of Power of
Attorney. Except as expressly set forth in Section 14, the
powers of attorney granted under Section 15.11 cannot
be utilized by the General Partner for the purpose of increasing or extending
any financial obligation or liability of a Limited Partner or altering the
method of division of profits and losses or the method of distributions in
connection with the investment of a Limited Partner without the written consent
of such Limited Partner.
15.15
Meetings. The
Partnership shall not hold annual meetings. The General Partner or
Limited Partners holding twenty percent (20%) of the outstanding Units may call
a meeting to occur within the State of Maryland on any Business Day designated
by the General Partner or the Limited Partners who called the
meeting. The sole purpose of such meeting shall be to take a vote
expressly authorized by this Agreement. Partners shall be notified in
writing at least ten (10) Business Days prior to each annual
meeting. Such notice shall contain the time and place of the upcoming
meeting.
15.16
Confidentiality. Each
Limited Partner agrees, as set forth below, with respect to any information
pertaining to the Partnership or their respective investments or Affiliates that
is provided to such Limited Partner pursuant to this Agreement or otherwise
(collectively, “Confidential
Matter”), to treat as confidential all such information, together with
any analyses, studies or other documents or records prepared by such Partner,
its Affiliates, or any representative or other Person acting on behalf of such
Limited Partner (collectively, its “Authorized
Representatives”), which contain or otherwise reflect or are generated
from Confidential Matters, and will not, and will not permit any of its
Authorized Representatives to, disclose any Confidential Matter, provided that any
Limited Partner (or its Authorized Representative) may disclose any such
information: (a) as has become generally available to the public; (b) as may be
required or appropriate in any report, statement or testimony submitted to any
Governmental Authority having or claiming to have jurisdiction over such Limited
Partner (or its Authorized Representative) but only that portion of the data and
information which, in the written opinion of counsel for such Limited Partner or
Authorized Representative is required or would be required to be furnished to
avoid liability for contempt or the imposition of any other material judicial or
governmental penalty or censure; (c) as may be required or appropriate in
response to any summons or subpoena or in connection with any litigation; or (d)
as to which the General Partner has consented in writing.
15.17
Payment in U.S.
Dollars. Unless otherwise requested by the General Partner,
all payments required to be made pursuant to this Agreement (other than
distributions by the Partnership) shall be payable only in U.S. Dollars and
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any currency other than U.S. Dollars, or
any other realization in such other currency, whether as proceeds of set-off,
distributions or otherwise, except to the extent that such tender, recovery or
realization shall result in the effective receipt by the Person to whom such
payment was owed of the full amount of U.S. Dollars due and payable
hereunder.
15.18
Submission to Personal
Jurisdiction and Consent to Venue. Each Limited Partner
irrevocably consents and agrees that any legal action or proceeding with respect
to this Agreement and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of Maryland or the United
States federal courts for the District of Maryland, and, by execution and
delivery of this Agreement, each Limited Partner hereby submits to and accepts
for itself and in respect of its property, generally and unconditionally, the
non-exclusive personal jurisdiction of the aforesaid courts and appellate courts
from any appeal thereof. Each Limited Partner further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof in the manner set
forth in Section
15.10. Each Limited Partner hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such action
or proceeding brought in any such court has been brought in an inconvenient
forum. Nothing herein shall affect the right of the General Partner
or the Partnership to serve process in any other manner permitted by law or to
commence legal actions or proceedings or otherwise proceed against any other
Partner hereunder in any other jurisdiction. Nothing in this Section 15.18 shall
be deemed to constitute a submission to jurisdiction, consent or waiver with
respect to any matter not specifically referred to herein.
-35-
15.19
Entity
Classification. It is the intention of the Partners that the
Partnership be treated as a partnership for income tax purposes. The
Tax Matters Partner is authorized to make a protective election to be treated as
a partnership for federal income tax purposes on IRS Form 8832, Entity
Classification Election, in the manner described under § 301.7701-3(c) of the
Treasury Regulations. By executing this Agreement, each of the
Partners hereby consents to any election made by the Tax Matters Partner for the
Partnership to be treated as a partnership for United States federal income tax
purposes.
15.20
Survival. Except
as otherwise expressly provided herein, all indemnities and reimbursement
obligations made pursuant to this Agreement shall survive dissolution and
liquidation of the Partnership until expiration of the longest applicable
statute of limitations (including extensions and waivers) with respect to the
matter for which a party would be entitled to be indemnified or reimbursed, as
the case may be.
15.21
Waiver of Trial by
Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY MATTER ARISING HEREUNDER.
15.22
Partnership
Counsel. Each Limited Partner hereby acknowledges and agrees
that Xxxxxx, Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLC and any other
law firm retained by the General Partner in connection with the organization of
the Partnership, the offering of Interests, the management and operation of the
Partnership, or any dispute between the General Partner and any Limited Partner,
is acting as counsel to the General Partner, and as such does not represent or
owe any duty to such Limited Partner or to the Limited Partners as a
group.
15.23
Ownership and Use of
Name. Upon termination of the Partnership, the entire right,
title and interest in and to the name “Bridge Private Lending” and the goodwill
attached thereto shall, without requiring any compensation to the Partnership or
to any Limited Partner, be assigned to the General Partner or to such other
Person as shall be designated by the General Partner.
(Signatures
on following page)
-36-
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement in multiple
counterparts as of the day and in the year first above written, and each of such
counterparts, when taken together, shall constitute one (1) and the same
instrument.
| GENERAL PARTNER: | |||
| Bridge GP, LLC | |||
| By: | BPL Manger, LLC | ||
| Managing Member | |||
|
December
3rd, 2009
|
By:
|
/s/ Xxxxx Xxxxxxxx (SEAL) | |
| Xxxxx Xxxxxxxx, Sole Member | |||
| INITIAL LIMITED PARTNER: | |||
| December 3rd, 2009 | /s/ Xxxxx Xxxxxxxx (SEAL) | ||
| Xxxxx Xxxxxxxx | |||
-37-
INDIVIDUALS
EXECUTION
PAGE FOR LIMITED PARTNERSHIP AGREEMENT
OF BRIDGE PRIVATE LENDING,
L.P.
Individuals
interested in purchasing Limited Partnership Units must complete and return this
Execution Page along with their wire transfer, check, or money order payable to
Bridge Private Lending, LP to:
0000
Xxxxx Xxxx
Xxxxxxxxx,
Xxxxxxxx 00000
If
accepted by Bridge Private Lending, LP (the “Partnership”), this Execution Page
shall constitute a subscription for the number and Class of Units of the Company
designated below and a Execution Page to the Limited Partnership Agreement of
the Partnership. Acceptance of this Execution Page will be in the form of an
Acknowledgment which will be mailed to you. If this Execution Page is not
accepted by the Partnership, your investment funds will be returned to you
within twenty (20) days with no interest earned thereon.
Insert
the number of each Class of Limited Partnership Units subscribed for and the
investment amount:
| Class A Units (9% Return – 5 Years Non-Withdrawal Period): | ||||
| Class B Units (7% Return – 3 Years Non-Withdrawal Period): | ||||
| Class C Units (5% Return – 18 Months Non-Withdrawal Period): |
|
Total
Units:
|
||||
|
Total Investment
Amount (Total Units X $500):
|
The
undersigned hereby irrevocably tenders a subscription for the purchase of the
number of Units in the Class/es inserted above with the payment of Total
Investment Amount and the undersigned hereby executes the Limited Partnership
Agreement of the Partnership.
|
Form
of Ownership (Check One):
|
(SEAL)
Signature
of Investor
|
|
|
____ Individual
____ Tenants-in-common
(each must
sign)
____ Joint
tenants with right of survivorship
(each
must sign)
|
Typed
or Printed Name of Investor
|
|
|
____ Tenants
by the entireties (each must
sign)
____ Fiduciary
capacity (please
indicate the
capacity on the signature
line)
|
(SEAL)
Signature
of Co-Investor (if any)
|
|
|
|
Typed
or Printed Name of Co-Investor (if any)
|
|
|
Residence or Business Address |
||
|
City State Zip |
||
|
(
)
Telephone
Number
|
||
|
Social
Security Number
|
ACCEPTED
THIS ____ DAY OF ________, _____
By:
Name:
Title:
ENTITIES
EXECUTION
PAGE FOR LIMITED PARTNERSHIP AGREEMENT
OF BRIDGE PRIVATE LENDING,
L.P.
Entities
interested in purchasing Limited Partnership Units must complete and return this
Execution Page along with their wire transfer, check, or money order payable to
Bridge Private Lending, LP to:
0000
Xxxxx Xxxx
Xxxxxxxxx,
Xxxxxxxx 00000
If
accepted by Bridge Private Lending, LP (the “Partnership”), this Execution Page
shall constitute a subscription for the number and Class of Units of the Company
designated below and a Execution Page to the Limited Partnership Agreement of
the Partnership. Acceptance of this Execution Page will be in the form of an
Acknowledgment which will be mailed to you. If this Execution Page is not
accepted by the Partnership, your investment funds will be returned to you
within twenty (20) days with no interest earned thereon.
Insert
the number of each Class of Limited Partnership Units subscribed for and the
investment amount:
| Class A Units (9% Return – 5 Years Non-Withdrawal Period): | ||||
| Class B Units (7% Return – 3 Years Non-Withdrawal Period): | ||||
| Class C Units (5% Return – 18 Months Non-Withdrawal Period): |
|
Total
Units:
|
||||
|
Total Investment
Amount (Total Units X $500):
|
The
undersigned entity hereby irrevocably tenders a subscription for the purchase of
the number of Units in the Class/es inserted above with the payment of Total
Investment Amount and the undersigned entity hereby executes the Limited
Partnership Agreement of the Partnership.
|
Entity
Form (Check One):
|
Typed
or Printed Name of Entity
|
|
|
____ Corporation
____ Partnership
____ Limited
liability company
|
(SEAL)
By:
Name:
Title:
|
|
|
|
Principle
Business Address of Entity
|
|
|
City State Zip |
||
|
(
)
Telephone
Number
|
||
|
Taxpayer
Identification Number
|
ACCEPTED
THIS ____ DAY OF ________, ______
By:
Name:
Title:
TRUST,
XXX OR EMPLOYEE BENEFIT PLAN
EXECUTION
PAGE FOR LIMITED
PARTNERSHIP AGREEMENT
OF BRIDGE PRIVATE LENDING,
L.P.
Trusts, IRAs or Employee
Benefit Plans interested in purchasing Limited Partnership Units must
complete and return this Execution Page along with their wire transfer, check,
or money order payable to Bridge Private Lending, LP to:
0000
Xxxxx Xxxx
Xxxxxxxxx,
Xxxxxxxx 00000
If
accepted by Bridge Private Lending, LP (the “Partnership”), this Execution Page
shall constitute a subscription for the number and Class of Units of the Company
designated below and a Execution Page to the Limited Partnership Agreement of
the Partnership. Acceptance of this Execution Page will be in the form of an
Acknowledgment which will be mailed to you. If this Execution Page is not
accepted by the Partnership, your investment funds will be returned to you
within twenty (20) days with no interest earned thereon.
Insert
the number of each Class of Limited Partnership Units subscribed for and the
investment amount:
| Class A Units (9% Return – 5 Years Non-Withdrawal Period): | ||||
| Class B Units (7% Return – 3 Years Non-Withdrawal Period): | ||||
| Class C Units (5% Return – 18 Months Non-Withdrawal Period): | ||||
|
Total
Units:
|
||||
|
Total Investment
Amount (Total Units X $500):
|
The
undersigned hereby irrevocably tenders a subscription for the purchase of the
number of Units in the Class/es inserted above with the payment of Total
Investment Amount and the undersigned hereby executes the Limited Partnership
Agreement of the Partnership.
|
Form
of Ownership (Check One):
____ TRUST ____
XXX (owner and custodian
sign) ____ EMPLOYEE BENEFIT PLAN ____ OTHER
(specify
______________)
|
||
|
(SEAL)
Signature
of Trustee / Custodian
|
(SEAL)
Signature
of Beneficiary / Owner (if applicable)
|
|
|
Printed
Name of Trustee / Custodian
|
Name
of Beneficiary / Owner (if applicable)
|
|
|
Printed
Name of Plan (if applicable)
|
Residence
or Business Address of Beneficiary / Owner (if
applicable)
|
|
|
Residence
or Business Address of Trustee / Custodian / Plan
|
City State Zip |
|
|
City State Zip
|
(
)
Telephone
Number
|
|
|
(
)
Telephone
Number
|
Social Security Number of
Beneficiary / Owner (if applicable)
|
|
|
Taxpayer
Identification Number of Trustee / Custodian /
Plan
|
||
ACCEPTED
THIS ____ DAY OF ________, _____
BRIDGE
PRIVATE LENDING, LP
By:
Name:
Title:
REPRESENTATIONS
BY EMPLOYEE BENEFIT PLANS
The
undersigned, on behalf of the subscribing employee benefit plan, represents that
all of the obligations and requirements of the Employee Retirement Income
Security Act of 1974 (“ERISA”), including prudence and diversification, with
respect to the investment of trust assets in Bridge Private Lending, LP, a
Maryland limited partnership (the “Partnership”), have been considered prior to
subscribing for the limited partnership units of the Partnership (the
“Units”). The person with investment discretion on behalf of the plan
has consulted his attorney or other tax advisor with regard to whether the
purchase of Shares might generate “unrelated business taxable income” under
Section 512 of the Internal Revenue Code of 1986. By signing this
representation letter, the trustee or custodian subscribing for the Units
assumes full responsibility for evaluating the appropriateness of the investment
and represents that he has performed his duties with respect to the plan solely
in the interest of the participants of the plan with the care, skill and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of a
similar enterprise.
The Units
may not be purchased with the assets of an employee benefit plan if the
Partnership or any affiliate of the Partnership either: (a) has investment
discretion with respect to the investment of such plan assets; (b) has authority
or responsibility to regularly give investment advice with respect to such plan
assets, for a fee, and pursuant to an agreement or understanding that such
advice will serve as a primary basis for investment decisions with respect to
such plan assets and that such advice will be based on the particular investment
needs of the plan; (c) has discretionary authority or discretionary
responsibility for administration of a plan; or (d) are employers maintaining or
contributing to such plan;. Additionally,
the Units may not be purchased by an employee benefit plan that is not excluded
by the foregoing unless, such plan is eligible for the exemption relief
available under U.S. Department of Labor Prohibited Transaction Class Exemption
96-23,95-60,91-38,90-1 OR 84-14 or another applicable exemption or its purchase
and holding of the Units are not prohibited by Section 406 of ERISA or Section
4975 of the Internal Revenue Code. These restrictions are intended to
prevent potential violations of certain provisions of ERISA. Each
fiduciary who authorizes a purchase of the Units by a plan must determine for
itself whether such purchase would constitute a prohibited
transaction.
ACCEPTANCE
OF SUBSCRIPTIONS ON BEHALF OF AN EMPLOYEE BENEFIT PLAN IS IN NO RESPECT A
REPRESENTATION BY THE PARTNERSHIP THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL
REQUIREMENTS WITH RESPECT TO INVESTMENTS BY ANY PARTICULAR PLAN. THE PARTNERSHIP
RESERVES THE RIGHT TO REJECT THE SUBSCRIPTIONS OF ANY EMPLOYEE BENEFIT PLAN, IN
ITS SOLE DISCRETION, IF IT BELIEVES THAT THE ACCEPTANCE OF ADDITIONAL EMPLOYEE
BENEFIT PLAN SUBSCRIPTIONS MAY JEOPARDIZE THE STANDING OF THE PARTNERSHIP UNDER
APPLICABLE LAW AS A PERMISSIBLE INVESTMENT BY EMPLOYEE BENEFIT
PLANS.
|
Name
of Plan:
|
By: |
|
||
|
|
(Trustee)
|
|||
REPRESENTATIONS
BY IRAS
Each XXX
investor must determine for itself whether a purchase of the Units would
constitute a prohibited transaction and a violation of Section 4975 of the
Internal Revenue Code.
ACCEPTANCE
OF SUBSCRIPTIONS ON BEHALF OF AN XXX IS IN NO RESPECT A REPRESENTATION BY THE
PARTNERSHIP THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL REQUIREMENTS WITH
RESPECT TO INVESTMENTS BY ANY PARTICULAR XXX. THE PARTNERSHIP RESERVES THE RIGHT
TO REJECT THE SUBSCRIPTIONS OF ANY XXX, IN ITS SOLE DISCRETION, IF IT BELIEVES
THAT THE ACCEPTANCE OF ADDITIONAL XXX MAY JEOPARDIZE THE STANDING OF THE
PARTNERSHIP UNDER APPLICABLE LAW AS A PERMISSIBLE INVESTMENT BY EMPLOYEE BENEFIT
PLANS.
|
(SEAL)
Signature
of Custodian (if applicable)
|
(SEAL)
Signature
of Owner
|
|
|
Printed
Name of Custodian (is applicable)
|
Name
of Owner
|
SCHEDULE
A
LIMITED
PARTNERSHIP AGREEMENT OF
BRIDGE
PRIVATE LENDING, LP
List of
Partners as of__________, _____
| Part I: General Partner | |||
| General Partner: | |||
| $[ ] | |||
| Part II: Limited Partners | |||
| Limited Partners: | |||
|
Limited Partner
Commitments:
|
$[ ] | ||
| Total Commitments: | $[ ] |
