Default by Limited Partners. (a) Each of the General Partner and each Limited Partner agrees that time is of the essence as to the payment of its required Capital Contributions, that any Default by any Limited Partner would cause injury to the Partnership and to the General Partner and the Limited Partners and that the amount of damages caused by any such injury would be extremely difficult to calculate. Accordingly, the amount of such Default (the “Default Amount”) shall accrue interest commencing on the Drawdown Date at the Default Rate and ending on the date paid or contributed as a Default Contribution or loaned as a Total Drawdown Default Loan or Default Loan. Upon the occurrence of any Default, the General Partner shall promptly notify the Limited Partner who has committed such Default (the “Defaulting Limited Partner”) of the occurrence of such Default. Upon the occurrence of any Event of Default, the General Partner shall promptly notify all Limited Partners other than the Defaulting Limited Partner (the “Non-Defaulting Limited Partners”) of the occurrence of such Event of Default and of the course or courses of action it is electing to take as provided below. (b) Upon the occurrence of an Event of Default, the General Partner, in its sole discretion, may elect to exercise one or more of the following remedies: (i) cause the Defaulting Limited Partner to forfeit all or any portion of distributions from the Partnership made or to be made after such Event of Default that relate to any Partnership Investments in respect of which such Limited Partner made Capital Contributions prior to such Event of Default; (ii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (each, a “Total Drawdown Default Loan”) in the aggregate amount of the Drawdown required in the applicable Drawdown Notice (the “Total Drawdown Amount”), with interest at the Default Rate; provided that notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Total Drawdown Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Total Drawdown Default Loans have been paid in full by the Partnership; provided further, to the extent a Non-Defaulting Limited Partner has made a Capital Contribution prior to making a Total Drawdown Default Loan, such Capital Contribution shall be deemed to be its pro rata share of funding such Total Drawdown Default Loan. For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a loan to the Partnership; (iii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (the “Default Loan”) to fund the Default Amount, with interest at the Default Rate; provided that: (A) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ***********************(and any accrued and unpaid interest thereon) by the aggregate ********** ********* made by the Defaulting Limited Partner as of such date plus the *************; provided that in no instance shall the Defaulting Limited Partner be deemed to have sold more than all of its partnership interest. For illustrative purposes only, if a ************************************************************************ *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** ************************* ************************************************************************* ************************* ********** sale, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d); (C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan; (iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************************ ****************************************************************************************************** ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ********************************************************* ******************************; (v) cause distributions that would otherwise be made to the Defaulting Limited Partner to be credited against the Default Amount, as applicable (and any interest accruing thereon) pursuant to Section 6.05(c); (vi) cause the Defaulting Limited Partner to forfeit its right to participate in any Partnership Investments made after such Event of Default; (vii) in the event Non-Defaulting Limited Partners are not willing to make Default Contributions, Total Drawdown Default Loans or Default Loans in an aggregate amount equal to the Default Amount or Total Drawdown Default Amount (as applicable), with respect to any Defaulting Limited Partner, subject to the prior written unanimous consent of all the Partners (other than the Defaulting Limited Partner), cause a forced sale of the Defaulting Limited Partner’s interest in the Partnership to any Person, at such price as the General Partner, in its sole discretion, shall determine to be fair and reasonable under the circumstances; and (viii) institute proceedings to recover the Defaulting Limited Partner’s share of the Total Drawdown Default Amount or Default Amount, as applicable (and any interest accruing thereon). It is a condition to any Non-Defaulting Limited Partner making a Total Drawdown Default Loan, Default Loan or a Default Contribution that such loan or contribution be made under the Corresponding Provision in the same percentage of the Total Default Amount or Default Amount (as applicable), unless otherwise agreed by the Non-Defaulting Partners. A transfer of the Defaulting Limited Partner’s interest (including, for the avoidance of doubt, all rights and obligations of such Defaulting Limited Partner under this Agreement) pursuant to a forced sale shall be effectuated by way of assumption of contract (contractsoverneming) within the meaning of Section 6:159 of the Dutch Civil Code. The Defaulting Limited Partner hereby gives its cooperation in advance to such assumption of contract and agrees that its cooperation cannot be revoked. (c) The General Partner may take either or both of the following actions in respect of the Available Capital Commitment of any Defaulting Limited Partner: (i) seek commitments of capital from existing Limited Partners up to the amount of the Defaulting Limited Partner’s Available Capital Commitment and, if existing Limited Partners do not increase their Capital Commitments up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, from additional investors. If any such commitment is received from any existing Limited Partner, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Limited Partner’s Capital Commitment and Available Capital Commitment shall be increased accordingly. If any such commitment is received from an investor that is not an existing Limited Partner, such investor shall, after executing such instruments and delivering such opinions and other documents as are in form and substance satisfactory to the General Partner and subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), be admitted to the Partnership as a Substituted Limited Partner and shown as such on the books and records of the Partnership and shall be deemed to have a Capital Commitment and an Available Capital Commitment equal to the commitment for which such investor has subscribed. After the appropriate adjustment of the Capital Commitment and the Available Capital Commitment of the Limited Partner or admission of the Substituted Limited Partner, the Capital Commitment and Available Capital Commitment of the Defaulting Limited Partner shall be decreased accordingly; and (ii) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), reduce or cancel the Available Capital Commitment of the Defaulting Limited Partner on such terms as the General Partner determines in its discretion (which may include leaving such Defaulting Limited Partner obligated to make Capital Contributions with respect to Partnership Expenses). (d) If the aggregate amount of the Total Drawdown Default Loan, Default Loan or Default Contribution, as the case may be (and any accrued interest thereon), committed by the Non-Defaulting Limited Partners pursuant to the Default notice is: (i) equal to or less than one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon), then each such Non-Defaulting Limited Partners shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount committed to in its Default Election Notice, or (ii) in excess of one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable, then, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), each such Non-Defaulting Limited Partner shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount equal to the sum of (A) the lesser of (y) the amount committed in the Default Election Notice or (z) the product of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) and the Commitment Percentage of each electing Non-Defaulting Limited Partner, plus (B) the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) not lent or contributed under clause (A) above multiplied by a fraction, the numerator of which is the amount requested in the Default Election Notice by each Non-Defaulting Limited Partner that such Limited Partner did not loan or contributed under clause (A) above, and the denominator of which is the aggregate amounts requested in the Default Election Notices by all Non-Defaulting Limited Partners that such Limited Partners did not loan or contribute under clause (A) above. The amount of any Default Contribution shall reduce the Commitment of a Defaulting Limited Partner and shall not reduce the Commitment of the contributing Non Defaulting Limited Partners. In no event shall a Total Drawdown Default Loan, Default Loan or Default Contribution release the Defaulting Limited Partner from its obligations to fund the remainder of its Commitment. (e) The rights and remedies referred to in this Section 5.03 shall be in addition to, and not in limitation of, any other rights available to the General Partner or the Partnership under this Agreement or at law or in equity. An Event of Default by any Limited Partner in respect of any Capital Contribution shall not relieve any other Limited Partner of its obligation to make Capital Contributions under this Agreement. In addition, unless the Available Capital Commitment of any Defaulting Limited Partner is decreased to zero pursuant to Section 5.03(c), an Event of Default by such Defaulting Limited Partner shall not relieve such Limited Partner of its obligation to make Capital Contributions subsequent to such Event of Default. (f) Any Non-Defaulting Limited Partner who has or is deemed to have acquired any or all of the partnership interest of a Defaulting Partner pursuant to this Section 5.03 shall be deemed a Substituted Limited Partner with respect to such acquired interest.
Appears in 2 contracts
Samples: Agreement of Limited Partnership (Host Hotels & Resorts L.P.), Agreement of Limited Partnership (Host Hotels & Resorts, Inc.)
Default by Limited Partners. (a) Each of In the event any Limited Partner fails for any reason to make a Capital Contribution when due pursuant to Section 3.3 hereof, and fails to make such contribution within ten (10) days after receiving written notice from the General Partner and each that such payment (a "Delinquent Payment") is overdue (a "Defaulting Limited Partner agrees that time is of the essence as to the payment of its required Capital Contributions, that any Default by any Limited Partner would cause injury to the Partnership and to the General Partner and the Limited Partners and that the amount of damages caused by any such injury would be extremely difficult to calculate. Accordingly, the amount of such Default (the “Default Amount”) shall accrue interest commencing on the Drawdown Date at the Default Rate and ending on the date paid or contributed as a Default Contribution or loaned as a Total Drawdown Default Loan or Default Loan. Upon the occurrence of any DefaultPartner"), the General Partner shall promptly notify may give written notice of the default (the "Default Notice") to each Limited Partner who has committed not defaulted in such Default Capital Contribution (the “Defaulting a "Nondefaulting Limited Partner”"), and any Nondefaulting Limited Partner shall have the right, within ten (10) days from the expiration of such 10-day period, to fund all or part of the amount of the Delinquent Payment. Each Nondefaulting Limited Partner shall have the right to fund its pro rata share (based on the proportion of its Capital Commitment to the aggregate of all Capital Commitments of all Nondefaulting Limited Partners) of the occurrence Delinquent Payment (each, a "Contributing Partner"). If less than all of such Default. Upon the occurrence of any Event of DefaultDelinquent Payment is funded by the Contributing Partners on a pro rata basis, then the General Partner shall promptly notify all Limited Partners other than may offer to and select any Person (which may be the Defaulting Limited General Partner (or an Affiliate thereof) to contribute the “Non-Defaulting Limited Partners”) balance of the occurrence of such Event of Default and Delinquent Payment. Each Contributing Partner or other Person contributing a portion of the course or courses Delinquent Payment agrees to assume the obligations of action it is electing to take as provided below.
(b) Upon the occurrence of an Event of Default, the General Partner, in its sole discretion, may elect to exercise one or more of the following remedies:
(i) cause the Defaulting Limited Partner to forfeit all or any portion of distributions from the Partnership made or to be made after such Event of Default that relate to any Partnership Investments in respect of which such Limited Partner made Capital Contributions prior to such Event of Default;
(ii) request the Non-Defaulting Limited Partners to provide a loan contribute to the Partnership (each, a “Total Drawdown Default Loan”) in the aggregate amount of the Drawdown required in the applicable Drawdown Notice (the “Total Drawdown Amount”), with interest at the Default Rate; provided that notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Total Drawdown Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Total Drawdown Default Loans have been paid in full by the Partnership; provided further, to the extent a Non-Defaulting Limited Partner has made a Capital Contribution prior to making a Total Drawdown Default Loan, such Capital Contribution shall be deemed to be its pro rata share of funding such Total Drawdown Default Loan. For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a loan to the Partnership;
(iii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (the “Default Loan”) to fund the Default Amount, with interest at the Default Rate; provided that:
(A) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage remaining portion of the Defaulting Limited Partner’s partnership interest equal 's Capital Commitment as and when due pursuant to the percentage derived by dividing an amount equal to ***********************(and any accrued and unpaid interest thereon) by the aggregate ********** ********* made by the Defaulting Limited Partner as of such date plus the *************; provided that in no instance shall the Defaulting Limited Partner be deemed to have sold more than Section 3.3 hereof. If all of its partnership interest. For illustrative purposes only, if a ************************************************************************ *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** ************************* ************************************************************************* ************************* ********** sale, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner)Delinquent Payment is funded, the Defaulting Limited Partner shall no longer be deemed required to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal make any contributions to the percentage derived by dividing an amount equal to ************************************ ****************************************************************************************************** ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ********************************************************* ******************************;
(v) cause distributions that would otherwise be made to the Defaulting Limited Partner to be credited against the Default Amount, as applicable (and any interest accruing thereon) pursuant to Section 6.05(c);
(vi) cause the Defaulting Limited Partner to forfeit Partnership on account of its right to participate in any Partnership Investments made after such Event of Default;
(vii) in the event Non-Defaulting Limited Partners are not willing to make Default Contributions, Total Drawdown Default Loans or Default Loans in an aggregate amount equal to the Default Amount or Total Drawdown Default Amount (as applicable), with respect to any Defaulting Limited Partner, subject to the prior written unanimous consent of all the Partners (other than the Defaulting Limited Partner), cause a forced sale of the Defaulting Limited Partner’s interest in the Partnership to any Person, at such price as the General Partner, in its sole discretion, shall determine to be fair and reasonable under the circumstances; and
(viii) institute proceedings to recover the Defaulting Limited Partner’s share of the Total Drawdown Default Amount or Default Amount, as applicable (and any interest accruing thereon). It is a condition to any Non-Defaulting Limited Partner making a Total Drawdown Default Loan, Default Loan or a Default Contribution that such loan or contribution be made under the Corresponding Provision in the same percentage of the Total Default Amount or Default Amount (as applicable), unless otherwise agreed by the Non-Defaulting Partners. A transfer of the Defaulting Limited Partner’s interest (including, for the avoidance of doubt, all rights and obligations of such Defaulting Limited Partner under this Agreement) pursuant to a forced sale shall be effectuated by way of assumption of contract (contractsoverneming) within the meaning of Section 6:159 of the Dutch Civil Code. The Defaulting Limited Partner hereby gives its cooperation in advance to such assumption of contract and agrees that its cooperation cannot be revokedCapital Commitment.
(cb) The General In the event and each time that a Partner may take either or both of the following actions in respect of the Available Capital Commitment of any Defaulting Limited Partner:
(i) seek commitments of capital from existing Limited Partners up to the amount of the Defaulting Limited Partner’s Available Capital Commitment and, if existing Limited Partners do not increase their Capital Commitments up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, from additional investors. If any such commitment is received from any existing Limited Partner, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Limited Partner’s Capital Commitment and Available Capital Commitment shall be increased accordingly. If any such commitment is received from an investor that is not an existing Limited Partner, such investor shall, after executing such instruments and delivering such opinions and other documents as are in form and substance satisfactory to the General Partner and subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), be admitted to the Partnership as a Substituted Limited Partner and shown as such on the books and records of the Partnership and shall be deemed to have a Capital Commitment and an Available Capital Commitment equal to the commitment for which such investor has subscribed. After the appropriate adjustment of the Capital Commitment and the Available Capital Commitment of the Limited Partner or admission of the Substituted Limited Partner, the Capital Commitment and Available Capital Commitment of the Defaulting Limited Partner shall be decreased accordingly; and
(ii) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), reduce or cancel the Available Capital Commitment of the Defaulting Limited Partner on such terms as the General Partner determines in its discretion (which may include leaving such Defaulting Limited Partner obligated to make Capital Contributions with respect to Partnership Expenses).
(d) If the aggregate amount of the Total Drawdown Default Loan, Default Loan or Default Contribution, as the case may be (and any accrued interest thereon), committed by the Non-Defaulting Limited Partners pursuant to the Default notice is: (i) equal to or less than one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon), then each such Non-Defaulting Limited Partners shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount committed to in its Default Election Notice, or (ii) in excess of one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable, then, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), each such Non-Defaulting Limited Partner shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount equal to the sum of (A) the lesser of (y) the amount committed in the Default Election Notice or (z) the product of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) and the Commitment Percentage of each electing Non-Defaulting Limited Partner, plus (B) the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) not lent or contributed under clause (A) above multiplied by a fraction, the numerator of which is the amount requested in the Default Election Notice by each Non-Defaulting Limited Partner that such Limited Partner did not loan or contributed under clause (A) above, and the denominator of which is the aggregate amounts requested in the Default Election Notices by all Non-Defaulting Limited Partners that such Limited Partners did not loan or contribute under clause (A) above. The amount of any Default Contribution shall reduce the Commitment of becomes a Defaulting Limited Partner and shall not reduce the Commitment of the contributing Non one or more Contributing Partners elect to make a Defaulting Limited Partners. In no event shall a Total Drawdown Default Loan, Default Loan or Default Contribution release the Defaulting Limited Partner from its obligations to fund the remainder of its Commitment.
(e) The rights and remedies referred to in this Section 5.03 shall be in addition to, and not in limitation of, any other rights available to the General Partner or the Partnership under this Agreement or at law or in equity. An Event of Default by any Limited Partner in respect of any 's Capital Contribution shall not relieve any other Limited Partner of its obligation to make Capital Contributions under this Agreement. In addition, unless the Available Capital Commitment of any Defaulting Limited Partner that is decreased to zero otherwise due and constitutes a Delinquent Payment pursuant to Section 5.03(c), an Event of Default by such Defaulting Limited Partner shall not relieve such Limited Partner of its obligation to make Capital Contributions subsequent to such Event of Default.
(f) Any Non-Defaulting Limited Partner who has or is deemed to have acquired any or all of the partnership interest of a Defaulting Partner pursuant to this Section 5.03 shall be deemed a Substituted Limited Partner with respect to such acquired interest.to
Appears in 2 contracts
Samples: Limited Partnership Agreement (Divine Interventures Inc), Limited Partnership Agreement (Divine Interventures Inc)
Default by Limited Partners. (a) Each of the General Partner and each Limited Partner agrees that time is of the essence as to the payment of its required Capital Contributions, that any Default by any Limited Partner would cause injury to the Partnership and to the General Partner and the Limited Partners and that the amount of damages caused by any such injury would be extremely difficult to calculate. Accordingly, the amount of such Default (the “Default Amount”) shall accrue interest commencing on the Drawdown Date at the Default Rate and ending on the date paid or contributed as a Default Contribution or loaned as a Total Drawdown Default Loan or Default Loan. Upon the occurrence of any Default, the General Partner shall promptly notify the Limited Partner who has committed such Default (the “Defaulting Limited Partner”) of the occurrence of such Default. Upon the occurrence of any Event of Default, the General Partner shall promptly notify all Limited Partners other than the Defaulting Limited Partner (the “Non-Defaulting Limited Partners”) of the occurrence of such Event of Default and of the course or courses of action it is electing to take as provided below.
(b) Upon the occurrence of an Event of Default, the General Partner, in its sole discretion, may elect to exercise one or more of the following remedies:
(i) cause the Defaulting Limited Partner to forfeit all or any portion of distributions from the Partnership made or to be made after such Event of Default that relate to any Partnership Investments in respect of which such Limited Partner made Capital Contributions prior to such Event of Default;
(ii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (each, a “Total Drawdown Default Loan”) in the aggregate amount of the Drawdown required in the applicable Drawdown Notice (the “Total Drawdown Amount”), with and which shall bear interest from the date the sum is paid into the Partnership until the date it is repaid at the Default RateRate (or such lower rate as is the maximum rate permitted by law); provided that notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Total Drawdown Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Total Drawdown Default Loans have been paid in full by the Partnership; provided further, to the extent a Non-Defaulting Limited Partner has made a Capital Contribution prior to making a Total Drawdown Default Loan, subject to such Non-Defaulting Limited Partner’s consent, such Capital Contribution shall be deemed to be its pro rata share of funding such Total Drawdown Default Loan. For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a loan to the Partnership;
(iii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership in the amount of the Default Amount (the “Default Loan”) to fund and which shall bear interest from the Default Amount, with interest date the sum is paid into the Partnership until the date it is repaid at the Default RateRate (or such lower rate as is the maximum rate permitted by law); provided that:
(A) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************ (and any accrued and unpaid interest thereonthereon accrued to the date of such deemed purchase) by the aggregate ********** ************** made by the Defaulting Limited Partner as of such date plus the *************; provided that in no instance shall the Defaulting Limited Partner be deemed to have sold more than all of its partnership interest. For illustrative purposes only, if a ******************************** ***************************************************** ************************************************************************************************************************************************************************************************************************************************* ********************************************************************************************************************************************************************************************************************************************************** ********************************************************************************************************************************************************************************************************************************************************** ************************************************* sale, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ********************************** ****************************************************************************************************** ************************************************************************************************* *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** ************************* ************************************************************************* ************************* ********** sale, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************************ ****************************************************************************************************** ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ********************************************************* ******************************;
(v) cause distributions that would otherwise be made to the Defaulting Limited Partner to be credited against the Default Amount, as applicable (and any interest accruing thereon) pursuant to Section 6.05(c);
(vi) cause the Defaulting Limited Partner to forfeit its right to participate in any Partnership Investments made after such Event of Default;
(vii) in the event Non-Defaulting Limited Partners are not willing to make Default Contributions, Total Drawdown Default Loans or Default Loans in an aggregate amount equal to the Default Amount or Total Drawdown Default Amount (as applicable), with respect to any Defaulting Limited Partner, subject to the prior written unanimous consent of all the Partners (other than the Defaulting Limited Partner), cause a forced sale of the Defaulting Limited Partner’s interest in the Partnership to any Person, at such price as the General Partner, in its sole discretion, shall determine to be fair and reasonable under the circumstances; and
(viii) institute proceedings to recover the Defaulting Limited Partner’s share of the Total Drawdown Default Amount or Default Amount, as applicable (and any interest accruing thereon). It is a condition to any Non-Defaulting Limited Partner making a Total Drawdown Default Loan, Default Loan or a Default Contribution that such loan or contribution be made under the Corresponding Provision in the same percentage of the Total Default Drawdown Amount or Default Amount (as applicable), unless otherwise agreed by the Non-Defaulting Partners. A transfer of the Defaulting Limited Partner’s interest (including, for the avoidance of doubt, all rights and obligations of such Defaulting Limited Partner under this Agreement) pursuant to a forced sale shall be effectuated by way of assumption of contract (contractsoverneming) within the meaning of Section 6:159 of the Dutch Civil Code. The Defaulting Limited Partner hereby gives its cooperation in advance to such assumption of contract and agrees that its cooperation cannot be revoked.
(c) The General Partner may take either or both of the following actions in respect of the Available Capital Commitment of any Defaulting Limited Partner:
(i) seek commitments of capital from existing Limited Partners up to the amount of the Defaulting Limited Partner’s Available Capital Commitment and, if existing Limited Partners do not increase their Capital Commitments up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, from additional investors. If any such commitment is received from any existing Limited Partner, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Limited Partner’s Capital Commitment and Available Capital Commitment shall be increased accordingly. If any such commitment is received from an investor that is not an existing Limited Partner, such investor shall, after executing such instruments and delivering such opinions and other documents as are in form and substance satisfactory to the General Partner and subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), be admitted to the Partnership as a Substituted Limited Partner and shown as such on the books and records of the Partnership and shall be deemed to have a Capital Commitment and an Available Capital Commitment equal to the commitment for which such investor has subscribed. After the appropriate adjustment of the Capital Commitment and the Available Capital Commitment of the Limited Partner or admission of the Substituted Limited Partner, the Capital Commitment and Available Capital Commitment of the Defaulting Limited Partner shall be decreased accordingly; and
(ii) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), reduce or cancel the Available Capital Commitment of the Defaulting Limited Partner on such terms as the General Partner determines in its discretion (which may include leaving such Defaulting Limited Partner obligated to make Capital Contributions with respect to Partnership Expenses).
(d) If the aggregate amount of the Total Drawdown Default Loan, Default Loan or Default Contribution, as the case may be (and any accrued interest thereon), committed by the Non-Defaulting Limited Partners pursuant to the Default notice is: (i) equal to or less than one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon), then each such Non-Defaulting Limited Partners shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount committed to in its Default Election Notice, or (ii) in excess of one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable, then, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), each such Non-Defaulting Limited Partner shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount equal to the sum of (A) the lesser of (y) the amount committed in the Default Election Notice or (z) the product of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) and the Commitment Percentage of each electing Non-Defaulting Limited Partner, plus (B) the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) not lent or contributed under clause (A) above multiplied by a fraction, the numerator of which is the amount requested in the Default Election Notice by each Non-Defaulting Limited Partner that such Limited Partner did not loan or contributed under clause (A) above, and the denominator of which is the aggregate amounts requested in the Default Election Notices by all Non-Defaulting Limited Partners that such Limited Partners did not loan or contribute under clause (A) above. The amount of any Default Contribution shall reduce the Commitment of a Defaulting Limited Partner and shall not reduce the Commitment of the contributing Non Defaulting Limited Partners. In no event shall a Total Drawdown Default Loan, Default Loan or Default Contribution release the Defaulting Limited Partner from its obligations to fund the remainder of its Commitment.
(e) The rights and remedies referred to in this Section 5.03 shall be in addition to, and not in limitation of, any other rights available to the General Partner or the Partnership under this Agreement or at law or in equity. An Event of Default by any Limited Partner in respect of any Capital Contribution shall not relieve any other Limited Partner of its obligation to make Capital Contributions under this Agreement. In addition, unless the Available Capital Commitment of any Defaulting Limited Partner is decreased to zero pursuant to Section 5.03(c), an Event of Default by such Defaulting Limited Partner shall not relieve such Limited Partner of its obligation to make Capital Contributions subsequent to such Event of Default.
(f) Any Non-Defaulting Limited Partner who has or is deemed to have acquired any or all of the partnership interest of a Defaulting Partner pursuant to this Section 5.03 shall be deemed a Substituted Limited Partner with respect to such acquired interest.
Appears in 2 contracts
Samples: Limited Partnership Agreement (Host Hotels & Resorts, Inc.), Limited Partnership Agreement (Host Hotels & Resorts L.P.)
Default by Limited Partners. (a) Each of the General Partner and each Limited Partner agrees that time is of the essence as to the payment of its required Capital Contributions, that any Default by any Limited Partner in respect of a certain Fund (the “Affected Fund”) would cause injury to the Partnership and to the General Partner and the Limited Partners having an interest in the Affected Fund and that the amount of damages caused by any such injury would be extremely difficult to calculate. Accordingly, the amount of such Default (the “Default Amount”) shall accrue interest commencing on the Drawdown Date at the Default Rate and ending on the date paid or contributed as a Default Contribution or loaned as a Total Drawdown Default Loan or Default Loan. Upon the occurrence of any Default, the General Partner shall promptly notify the Limited Partner who has committed such Default (the “Defaulting Limited Partner”) of the occurrence of such DefaultDefault with respect to the Affected Fund. Upon the occurrence of any Event of Default, the General Partner shall promptly notify all Limited Partners having an interest in the Affected Fund other than the Defaulting Limited Partner (the “Non-Defaulting Limited Partners”) of the occurrence of such Event of Default and of the course or courses of action it is electing to take as provided below.
(b) Upon the occurrence of an Event of Default, the General Partner, in its sole discretion, may elect to exercise one or more of the following remedies:
(i) with respect to the Affected Fund, cause the Defaulting Limited Partner to forfeit all or any portion of distributions from the Partnership made or to be made after such Event of Default that relate to any Partnership Investments Investments, allocable to the Affected Fund, in respect of which such Limited Partner made Capital Contributions prior to such Event of Default;
(ii) with respect to the Affected Fund, request the Non-Defaulting Limited Partners having an interest in the Affected Fund to provide a loan to the Partnership (each, a “Total Drawdown Default Loan”) in the aggregate amount of the Drawdown required in the applicable Drawdown Notice (the “Total Drawdown Amount”), with and which shall bear interest from the date the sum is paid into the Partnership until the date it is repaid at the Default RateRate (or such lower rate as is the maximum rate permitted by law); provided that notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Total Drawdown Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners having an interest in the Affected Fund pursuant to Article 6 until the principal of and interest on all outstanding Total Drawdown Default Loans Loans, allocable to the Affected Fund, have been paid in full by the Partnership; provided further, to the extent a Non-Defaulting Limited Partner has made a Capital Contribution prior to making a Total Drawdown Default Loan, subject to such Non-Defaulting Limited Partner’s consent, such Capital Contribution shall be deemed to be its pro rata share of funding such Total Drawdown Default Loan. For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a loan to the Partnership;
(iii) with respect to the Affected Fund, request the Non-Defaulting Limited Partners having an interest in the Affected Fund to provide a loan to the Partnership in the amount of the Default Amount (the “Default Loan”) to fund and which shall bear interest from the Default Amount, with interest date the sum is paid into the Partnership until the date it is repaid at the Default RateRate (or such lower rate as is the maximum rate permitted by law); provided that:
(A) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest applicable to the Affected Fund equal to the percentage derived by dividing an amount equal to ************************ (and any accrued and unpaid interest thereonthereon accrued to the date of such deemed purchase) by the aggregate ********** ********* made by the Defaulting Limited Partner in respect of the applicable Affected Fund as of such date plus the **************; provided that in no instance shall the Defaulting Limited Partner be deemed to have sold more than all of its partnership interest. For illustrative purposes only, if a ******** ************************************************************************************************ ************************************************************************************************ ************************************************************************************************ ************************************************************************************************ ************************************************************************************************ ************************************************************************************************ ************************************************************************************************ ************************************************************************************************ ************************************************************************************************ ************************************************************** provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners having interests in the Affected Fund or Funds in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds with respect to an Affected Fund shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners having an interest in the Affected Fund pursuant to Article 6 until the principal of and interest on all outstanding Default Loans relating to such Affected Fund have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan and a Default Loan shall always be limited to an individual Fund;
(iv) with respect to an Affected Fund, request additional contributions of capital not exceeding their Available Capital Commitment from the Non-Defaulting Limited Partner having interests in such Affected Fund (pro rata based on their respective Commitment Percentages applicable to such Affected Fund) in an amount equal to the ****** (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest applicable to such Affected Fund equal to the percentage derived by dividing an amount equal to ***************************************************************************** ****************************************************************************************** *********************************************************************************************** ************************************************************************************************* ************************************************************************************************* *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** ************************* ************************************************************************* ************************* ********** sale, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************************ ****************************************************************************************************** ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ********************************************************* ******************************;
(v) with respect to an Affected Fund, cause distributions that would otherwise be made to the Defaulting Limited Partner to be credited against the Default Amount, as applicable (and any interest accruing thereon) pursuant to Section 6.05(c);
(vi) with respect to an Affected Fund, cause the Defaulting Limited Partner to forfeit its right to participate in any Partnership Investments belonging to the Affected Fund made after such Event of Default;
(vii) in the event Non-Defaulting Limited Partners are not willing to make Default Contributions, Total Drawdown Default Loans or Default Loans in an aggregate amount equal to the Default Amount or Total Drawdown Default Amount (as applicable), with respect to any Defaulting Limited Partner, subject to the prior written unanimous consent of all the Partners (other than the Defaulting Limited Partner), cause a forced sale of the Defaulting Limited Partner’s interest in the Partnership with respect to such Affected Fund to any Person, at such price as the General Partner, in its sole discretion, shall determine to be fair and reasonable under the circumstances; and
(viii) with respect to an Affected Fund, institute proceedings to recover the Defaulting Limited Partner’s share of the Total Drawdown Default Amount or Default Amount, as applicable (and any interest accruing thereon). It is a condition to any Non-Defaulting Limited Partner making a Total Drawdown Default Loan, Default Loan or a Default Contribution that such loan or contribution be made under the Corresponding Provision in the same percentage of the Total Default Amount or Default Amount (as applicable), unless otherwise agreed by the Non-Defaulting Partners. A transfer of the Defaulting Limited Partner’s interest (including, for the avoidance of doubt, all rights and obligations of such Defaulting Limited Partner under this Agreement) pursuant to a forced sale shall be effectuated by way of assumption of contract (contractsoverneming) within the meaning of Section 6:159 of the Dutch Civil Code. The Defaulting Limited Partner hereby gives its cooperation in advance to such assumption of contract and agrees that its cooperation cannot be revoked.
(c) The General Partner may take either or both of the following actions in respect of the Available Capital Commitment of any Defaulting Limited Partner:
(i) with respect to an Affected Fund, seek commitments of capital (A) first, from existing Limited Partners having an interest in the Affected Fund up to the amount of the Defaulting Limited Partner’s Available Capital Commitment andCommitment, (B) if existing Limited Partners having an interest in the Affected Fund do not increase their Capital Commitments up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, second, from existing Limited Partners having an interest in Funds other than in the Affected Fund, and (C) if such other existing Limited Partners do not increase their Capital Commitment up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, third, from additional investorsinvestors subject to the prior written unanimous consent of all Non-Defaulting Limited Partners. If any such commitment is received from any existing Limited Partner, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Limited Partner shall be granted a corresponding interest in the Affected Fund and such Limited Partner’s Capital Commitment and Available Capital Commitment Commitment, in respect of such Affected Fund, shall be increased accordingly. If any such commitment is received from an investor that is not an existing Limited Partneradditional investor, such investor shall, after executing such instruments and delivering such opinions and other documents as are in form and substance satisfactory to the General Partner and subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), be admitted to the Partnership as a Substituted Limited Partner Partner, be granted an interest in the Affected Fund and shown as such on the books and records of the Partnership and shall be deemed to have a Capital Commitment and an Available Capital Commitment equal to the commitment for which such investor has subscribed, allocable to such Affected Fund. After the appropriate adjustment of the Capital Commitment and the Available Capital Commitment of the Limited Partner or admission of the Substituted Limited Partner, the Capital Commitment and Available Capital Commitment of the Defaulting Limited Partner shall be decreased accordingly; and
(ii) with respect to an Affected Fund, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), reduce or cancel the Available Capital Commitment of the Defaulting Limited Partner in respect of the Affect Fund on such terms as the General Partner determines in its discretion (which may include leaving such Defaulting Limited Partner obligated to make Capital Contributions with respect to Partnership Expenses).
(d) If With respect to an Affected Fund, if the aggregate amount of the Total Drawdown Default Loan, Default Loan or Default Contribution, as the case may be (and any accrued interest thereon), committed by the Non-Defaulting Limited Partners pursuant to the Default notice is: (i) equal to or less than one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon), then each such Non-Defaulting Limited Partners Partners, having an interest in such Affected Fund, shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount committed to in its Default Election Notice, or (ii) in excess of one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable, then, subject to the prior written unanimous consent of the Partners Partners, (other than the Defaulting Limited Partner), each such Non-Defaulting Limited Partner shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount equal to the sum of (A) the lesser of (y) the amount committed in the Default Election Notice or (z) the product of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) and the Commitment Percentage of each electing Non-Defaulting Limited Partner, plus (B) the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) not lent or contributed under clause (A) above multiplied by a fraction, the numerator of which is the amount requested in the Default Election Notice by each Non-Defaulting Limited Partner that such Limited Partner did not loan or contributed under clause (A) above, and the denominator of which is the aggregate amounts requested in the Default Election Notices by all Non-Defaulting Limited Partners that such Limited Partners did not loan or contribute under clause (A) above. The amount of any Default Contribution shall reduce the Commitment of a Defaulting Limited Partner and shall not reduce the Commitment of the contributing Non Defaulting Limited Partners. In no event shall a Total Drawdown Default Loan, Default Loan or Default Contribution release the Defaulting Limited Partner from its obligations to fund the remainder of its Commitment.
(e) The rights and remedies referred to in this Section 5.03 shall be in addition to, and not in limitation of, any other rights available to the General Partner or the Partnership under this Agreement or at law or in equity. An Event of Default by any Limited Partner in respect of any Capital Contribution shall not relieve any other Limited Partner of its obligation to make Capital Contributions under this Agreement. In addition, unless the Available Capital Commitment of any Defaulting Limited Partner is decreased to zero pursuant to Section 5.03(c), an Event of Default by such Defaulting Limited Partner shall not relieve such Limited Partner of its obligation to make Capital Contributions subsequent to such Event of Default.
(f) Any Non-Defaulting Limited Partner who has or is deemed to have acquired any or all of the partnership interest of a Defaulting Partner pursuant to this Section 5.03 shall be deemed a Substituted Limited Partner with respect to such acquired interest.
Appears in 1 contract
Samples: Limited Partnership Agreement (Host Hotels & Resorts, Inc.)
Default by Limited Partners. (a) Each of the General Partner and each Limited Partner agrees that time is of the essence Failure to make a Capital Contribution as required pursuant to the payment of its required Capital Contributions, that any Default by any Limited Partner Section 6.3 would cause injury to the Partnership and to the General Partner other Limited Partners, and the Limited Partners and that the amount of damages caused by any such injury would be extremely difficult to calculate. Accordingly, each Limited Partner agrees that upon any Event of Default: (i) each Defaulting Partner’s Capital Account will be debited by an amount equal to 50% of its Capital Account on the date of such Default, and the amount of such Default (reduction will be credited to the “Default Amount”) shall accrue interest commencing on the Drawdown Date at the Default Rate and ending on the date paid or contributed as a Default Contribution or loaned as a Total Drawdown Default Loan or Default Loan. Upon the occurrence of any Default, the General Partner shall promptly notify the Limited Partner who has committed such Default (the “Defaulting Limited Partner”) Capital Accounts of the occurrence of such Default. Upon the occurrence of any Event of Default, the General Partner shall promptly notify all other Limited Partners other than the Defaulting Limited Partner either (the “Non-Defaulting Limited Partners”x) of the occurrence of such Event of Default and of the course or courses of action it is electing to take as provided below.
(b) Upon the occurrence of an Event of Default, the General Partner, in its sole discretion, may elect to exercise one or more of the following remedies:
(i) cause the Defaulting Limited Partner to forfeit all or any portion of distributions from the Partnership made or to be made after such Event of Default that relate to any Partnership Investments in respect of which such Limited Partner made Capital Contributions prior to such Event of Default;
(ii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (each, a “Total Drawdown Default Loan”) pro rata in the aggregate amount of the Drawdown required in the applicable Drawdown Notice (the “Total Drawdown Amount”), with interest at the Default Rate; provided same manner that notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Total Drawdown Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Total Drawdown Default Loans have been paid in full by the Partnership; provided further, to the extent a Non-Defaulting Limited Partner has made a Capital Contribution prior to making a Total Drawdown Default Loan, such Capital Contribution shall be deemed to be its pro rata share of funding such Total Drawdown Default Loan. For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a loan to the Partnership;
(iii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (the “Default Loan”) to fund the Default Amount, with interest at the Default Rate; provided that:
(A) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ***********************(and any accrued and unpaid interest thereon) by the aggregate ********** ********* made by the Defaulting Limited Partner as of such date plus the *************; provided that in no instance shall the Defaulting Limited Partner be deemed to have sold more than all of its partnership interest. For illustrative purposes only, if a ************************************************************************ *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** ************************* ************************************************************************* ************************* ********** sale, provided that in the event that there Net Profits are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such other Limited Partners who are not in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************************ ****************************************************************************************************** ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ********************************************************* ******************************;
(v) cause distributions that would otherwise be made to the Defaulting Limited Partner to be credited against the Default Amount, as applicable (and any interest accruing thereon) pursuant to Section 6.05(c);
(vi) cause the Defaulting Limited Partner to forfeit its right to participate in any Partnership Investments made after such Event of Default;
(vii) default in the event Non-Defaulting Limited Partners are not willing to make Default Contributions, Total Drawdown Default Loans or Default Loans in an aggregate amount equal to the Default Amount or Total Drawdown Default Amount (as applicable), with respect to any Defaulting Limited Partner, subject to the prior written unanimous consent payment of all the Partners (other than the Defaulting Limited Partner), cause a forced sale of the Defaulting Limited Partner’s interest in the Partnership to any Person, at such price as the General Partner, in its sole discretion, shall determine to be fair and reasonable under the circumstances; and
(viii) institute proceedings to recover the Defaulting Limited Partner’s share of the Total Drawdown Default Amount or Default Amount, as applicable (and any interest accruing thereon). It is a condition to any Non-Defaulting Limited Partner making a Total Drawdown Default Loan, Default Loan or a Default Contribution that such loan or contribution be made under the Corresponding Provision in the same percentage of the Total Default Amount or Default Amount (as applicable), unless otherwise agreed by the Non-Defaulting Partners. A transfer of the Defaulting Limited Partner’s interest (including, for the avoidance of doubt, all rights and obligations of such Defaulting Limited Partner under this Agreement) pursuant to a forced sale shall be effectuated by way of assumption of contract (contractsoverneming) within the meaning of Section 6:159 of the Dutch Civil Code. The Defaulting Limited Partner hereby gives its cooperation in advance to such assumption of contract and agrees that its cooperation cannot be revoked.
(c) The General Partner may take either or both of the following actions in respect of the Available Capital Commitment of any Defaulting Limited Partner:
(i) seek commitments of capital from existing Limited Partners up to the amount of the Defaulting Limited Partner’s Available Capital Commitment and, if existing Limited Partners do not increase their Capital Commitments up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, from additional investors. If Contributions or (y) on any such commitment is received from any existing Limited Partner, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Limited Partner’s Capital Commitment and Available Capital Commitment shall be increased accordingly. If any such commitment is received from an investor equitable basis that is not an existing Limited Partner, such investor shall, after executing such instruments and delivering such opinions and other documents as are in form and substance satisfactory to the General Partner and subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), be admitted to the Partnership as a Substituted Limited Partner and shown as such on the books and records of the Partnership and shall be deemed to have a Capital Commitment and an Available Capital Commitment equal to the commitment for which such investor has subscribed. After the appropriate adjustment of the Capital Commitment and the Available Capital Commitment of the Limited Partner or admission of the Substituted Limited Partner, the Capital Commitment and Available Capital Commitment of the Defaulting Limited Partner shall be decreased accordingly; and
(ii) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), reduce or cancel the Available Capital Commitment of the Defaulting Limited Partner on such terms as the General Partner determines in its reasonable discretion (which may include leaving such Defaulting Limited Partner obligated to make Capital Contributions with respect to Partnership Expenses).
(d) If the aggregate amount of the Total Drawdown Default Loan, Default Loan or Default Contribution, as the case may be (and any accrued interest thereon), committed by the Non-Defaulting Limited Partners pursuant to the Default notice is: (i) equal to or less than one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon), then each such Non-Defaulting Limited Partners shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount committed to in its Default Election Notice, or (ii) in excess the entire Interest of such Defaulting Partner may be sold to any one hundred percent (100%) of or more other Limited Partners at the Total Drawdown Default Amount or Default Amount, as applicable, then, subject to the prior written unanimous consent of the Partners (highest price offered by such other than the Defaulting Limited PartnerPartner(s), each such Non-Defaulting Limited Partner shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount equal to the sum of (A) the lesser of (y) the amount committed in the Default Election Notice any third party or (z) the product of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) and the Commitment Percentage of each electing Non-Defaulting Limited Partner, plus (B) the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) not lent or contributed under clause (A) above multiplied by a fraction, the numerator of which is the amount requested in the Default Election Notice by each Non-Defaulting Limited Partner that such Limited Partner did not loan or contributed under clause (A) above, and the denominator of which is the aggregate amounts requested in the Default Election Notices by all Non-Defaulting Limited Partners that such Limited Partners did not loan or contribute under clause (A) above. The amount of any Default Contribution shall reduce the Commitment of a Defaulting Limited Partner and shall not reduce the Commitment of the contributing Non Defaulting Limited Partners. In no event shall a Total Drawdown Default Loan, Default Loan or Default Contribution release the Defaulting Limited Partner from its obligations to fund the remainder of its Commitment.
(e) The rights and remedies referred to in this Section 5.03 shall be in addition to, and not in limitation of, any other rights available parties acceptable to the General Partner who will offer a higher price and who otherwise qualify for admission as a Limited Partner in the Partnership. The proceeds of any such sale will be applied first to reimburse the Partnership for any costs incurred on behalf of the Partnership in connection with such sale; then to pay interest to the Partnership at the Prime Rate plus 5% on any late payment from the date the payment was due through the date of the sale; then to pay to the Defaulting Partner two-thirds of the amounts standing to the credit of such Defaulting Partner’s Capital Account as of the date of such sale. Any remaining proceeds after payment of the amounts referred to in the preceding sentence will be retained by the Partnership, and the Defaulting Partner will have no further rights thereto. The transferee will be treated as a Substituted Limited Partner as of the effective date of transfer, and will be obligated to assume the entire remaining amount of the Defaulting Partner’s Capital Commitment (including payment in full in immediately available funds on the date of such sale of the portion of such Capital Commitment then due and payable) and the Defaulting Partner will cease to be a Limited Partner and have no further rights in or against the other Limited Partners or the Partnership under this Agreement or at law or in equity. An Event of Default by any Limited Partner in respect of any Capital Contribution shall not relieve any other Limited Partner of its obligation to make Capital Contributions under this Agreement. In addition, unless The General Partner will not be obligated to exercise the Available Capital Commitment of any Defaulting Limited Partner is decreased to zero pursuant to Section 5.03(c), an Event of remedy for Default by such Defaulting Limited Partner shall not relieve such Limited Partner of its obligation to make Capital Contributions subsequent to such Event of Default.
(f) Any Non-Defaulting Limited Partner who has or is deemed to have acquired any or all of the partnership interest of a Defaulting Partner afforded pursuant to this Section 5.03 shall be deemed a Substituted Limited 6.4 and, at its sole and absolute discretion, the General Partner with respect may pursue any other available legal remedies (instead of or in addition to the remedy provided in this Section 6.4) or none at all, including, without limitation, requiring such acquired interestDefaulting Partner to pay interest on the amount of Default at the Default Rate to the Partnership for the benefit of the non-Defaulting Partners.
Appears in 1 contract
Samples: Limited Partnership Agreement
Default by Limited Partners. (a) Each of Any Limited Partner that does not make a Capital Contribution within five (5) Business Days following the date that the General Partner and each Limited Partner agrees that time is of the essence as provides written notice to the payment of its required Capital Contributions, that any Default by any Limited Partner would cause injury to the Partnership and to the General Partner and the Limited Partners and that the amount of damages caused by any such injury would be extremely difficult to calculate. Accordingly, the amount of such Default (the “Default Amount”) shall accrue interest commencing on the Drawdown Date at the Default Rate and ending on the date paid or contributed as a Default Contribution or loaned as a Total Drawdown Default Loan or Default Loan. Upon the occurrence of any Default, the General Partner shall promptly notify the Limited Partner who has committed that such Default Capital Contribution is due under Section 3.2 and unpaid shall (the “Defaulting Limited Partner”) of the occurrence of such Default. Upon the occurrence of any Event of Default, the General Partner shall promptly notify all Limited Partners other than the Defaulting Limited Partner (the “Non-Defaulting Limited Partners”) of the occurrence of such Event of Default and of the course or courses of action it is electing to take as provided below.
(b) Upon the occurrence of an Event of Default, unless waived by the General Partner, in its sole discretion) pay interest on such Capital Contribution and on Collection Costs (as defined below) with respect thereto (“Default Interest”) from the dates due or incurred, as appropriate, until contributed or reimbursed to the Partnership at a rate equal to the lesser of (x) the Prime Rate at the beginning of such period plus 4% and (y) the maximum interest that may elect be charged by the Partnership on such amounts under applicable usury or other law. Any distributions which a Defaulting Partner would otherwise receive during any period in which such Partner is a Defaulting Partner shall be applied by the Partnership against such Defaulting Partner’s required Capital Contributions, Default Interest and Collection Costs in such order as the General Partner may determine. During any period in which a Defaulting Partner shall have failed to make Capital Contributions required of it, the General Partner or its Affiliates may, in addition to any of the actions provided in Sections 3.5(b) and 3.5(c) below, in the General Partner’s sole discretion, lend funds to the Defaulting Partner in an amount up to the sum of such Defaulting Partner’s defaulted Capital Contributions, Default Interest thereon and Collection Costs in respect thereof; such loans (herein “Default Loans”), together with interest thereon at the rate described above with respect to Default Interest, shall be repaid by the Defaulting Partner to the General Partner out of distributions from the Partnership prior to any distributions to such Defaulting Partner pursuant to Section 5.1. If, at any time during which a Default Loan remains outstanding, the Partnership receives from the Defaulting Partner all or any portion of such unpaid Capital Contributions, the Partnership shall promptly pay the General Partner such amounts in respect of the Default Loans.
(b) Upon the failure of a Partner to make a Capital Contribution within five (5) Business Days following the date that the General Partner provides written notice to the Limited Partner that such Capital Contribution is due in accordance with Section 3.2 and unpaid, the General Partner shall be entitled to exercise one on behalf of the Partnership all of the rights afforded to a secured party under the Uniform Commercial Code, and may, upon such notice as may be required by the Uniform Commercial Code (but in no event less than 15 Business Days’ notice), cause the Defaulting Partner’s Interest in the Partnership to be sold at private or more public sale in accordance with the Uniform Commercial Code or any other applicable law; provided, however, that the Defaulting Partner’s Interest in the Partnership shall not be sold unless the purchaser of such Interest agrees to assume the obligations of the Defaulting Partner to contribute to the Partnership the Defaulting Partner’s required Capital Contribution together with Default Interest thereon and Collection Costs in respect thereof then due and to pay to the Partnership any subsequent Capital Contributions when called for by the General Partner in accordance with Section 3.2. Any proceeds of the sale shall be applied (i) first, to the reasonable expenses, including without limitation attorneys’ fees, accounting fees and placement fees, if any, incurred by the Partnership and the General Partner in connection with the sale or other exercise of remedies pursuant to this Section 3.5(b) (collectively, “Collection Costs”); (ii) second, against any accrued and unpaid Default Interest in respect of such Defaulting Partner’s required Capital Contributions or said Collection Costs; (iii) third, against the Defaulting Partner’s required Capital Contributions; and (iv) fourth, any remaining proceeds shall be paid to the Defaulting Partner.
(c) Upon the failure of a Partner to make a Capital Contribution within five (5) Business Days following the date that the General Partner provides written notice to the Limited Partner that such Capital Contribution is due in accordance with Section 3.2 and unpaid, the General Partner, in its absolute discretion, may, in lieu of or in addition to acting pursuant to Section 3.5(a) or 3.5(b), take any or all of the following remediesactions on behalf of the Partnership:
(i) cause purchase the entire Interest in the Partnership of the Defaulting Limited Partner for an amount equal to forfeit all or any portion 50% of distributions from the lesser of (A) such Defaulting Partner’s Capital Account balance and (B) the amount that such Defaulting Partner would be entitled to be distributed if the Partnership made or sold all of its assets for their Carrying Value as of the date of the default, paid all of its liabilities and distributed any remaining proceeds in accordance with Section 5.1. The Partnership may pay for the Defaulting Partner’s reduced interest with a 10-year promissory note, bearing interest at an annual rate equal to be made after the applicable federal rate within the meaning of Code section 1274(d) for debt with a maturity of over 9 years as in effect on the date of such Event of Default that relate to any Partnership Investments in respect of which such Limited Partner made Capital Contributions prior to such Event of Default;default.
(ii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (each, a “Total Drawdown Default Loan”) in the aggregate amount of the Drawdown required in the applicable Drawdown Notice (the “Total Drawdown Amount”), with interest at the Default Rate; provided that notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Total Drawdown Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Total Drawdown Default Loans have been paid in full by the Partnership; provided further, to the extent a Non-Defaulting Limited Partner has made a Capital Contribution prior to making a Total Drawdown Default Loan, such Capital Contribution shall be deemed to be its pro rata share of funding such Total Drawdown Default Loan. For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a loan to the Partnership;
(iii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (the “Default Loan”) to fund the Default Amount, with interest at the Default Rate; provided that:
(A) subject to the prior written unanimous consent of the Partners (other than reduce the Defaulting Limited Partner), such Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal Capital Account balance to the percentage derived by dividing an amount equal to ***********************(and any accrued and unpaid interest thereon) by the aggregate ********** ********* made by the 50% of such Defaulting Limited Partner Partner’s Capital Account balance as of the date of the default, and upon such date plus the *************; provided that in no instance shall the Defaulting Limited Partner be deemed to have sold more than all of its partnership interest. For illustrative purposes only, if a ************************************************************************ *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** ************************* ************************************************************************* ************************* ********** sale, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner)reduction, the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage transferred 50% of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************************ ****************************************************************************************************** ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ********************************************************* ******************************;
(v) cause distributions that would otherwise be made to the Defaulting Limited Partner to be credited against the Default Amount, as applicable (and any interest accruing thereon) pursuant to Section 6.05(c);
(vi) cause the Defaulting Limited Partner to forfeit its right to participate in any Partnership Investments made after such Event of Default;
(vii) in the event Non-Defaulting Limited Partners are not willing to make Default Contributions, Total Drawdown Default Loans or Default Loans in an aggregate amount equal to the Default Amount or Total Drawdown Default Amount (as applicable), with respect to any Defaulting Limited Partner, subject to the prior written unanimous consent of all the Partners (other than the Defaulting Limited Partner), cause a forced sale of the Defaulting Limited Partner’s interest Interest in the Partnership to any Person, at such price as the General Partner, in its sole discretion, shall determine to be fair and reasonable under the circumstances; and
(viii) institute proceedings to recover the Defaulting Limited Partner’s share of the Total Drawdown Default Amount or Default Amount, as applicable (and any interest accruing thereon). It is a condition to any Non-Defaulting Limited Partner making a Total Drawdown Default Loan, Default Loan or a Default Contribution that such loan or contribution be made under the Corresponding Provision in the same percentage of the Total Default Amount or Default Amount (as applicable), unless otherwise agreed by the Non-Defaulting Partners. A transfer of Partners in proportion to their respective Capital Commitments; provided, that the Defaulting Limited Partner’s interest (including, for the avoidance Partner shall remain obligated to make 100% of doubt, all rights and obligations its share of such Defaulting Limited Partner under this Agreement) any subsequent Capital Contributions pursuant to a forced sale shall be effectuated by way of assumption of contract (contractsoverneming) within the meaning of Section 6:159 of the Dutch Civil Code. The Defaulting Limited Partner hereby gives 3.2 based on its cooperation in advance to such assumption of contract and agrees that its cooperation cannot be revoked.
(c) The General Partner may take either or both of the following actions in respect of the Available Capital Commitment of any Defaulting Limited Partner:
(i) seek commitments of capital from existing Limited Partners up to the amount of the Defaulting Limited Partner’s Available Capital Commitment and, if existing Limited Partners do not increase their Capital Commitments up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, from additional investors. If any such commitment is received from any existing Limited Partner, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Limited Partner’s Capital Commitment and Available Capital Commitment shall be increased accordingly. If any such commitment is received from an investor that is not an existing Limited Partner, such investor shall, after executing such instruments and delivering such opinions and other documents as are in form and substance satisfactory to the General Partner and subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), be admitted to the Partnership as a Substituted Limited Partner and shown as such on the books and records of the Partnership and shall be deemed to have a Capital Commitment and an Available Capital Commitment equal to the commitment for which such investor has subscribed. After the appropriate adjustment of the original Capital Commitment and the Available Capital Commitment Non-Defaulting Partners shall not be deemed to assume any of the Limited Partner Defaulting Partner’s obligation to make subsequent Capital Contributions pursuant to Section 3.2;
(iii) reduce or admission of terminate the Substituted Limited Partner, the Capital Commitment and remaining Available Capital Commitment of the Defaulting Limited Partner shall be decreased accordingly; andPartner;
(iiiv) subject to the prior written unanimous consent of the Partners (other than commence legal proceedings against the Defaulting Limited Partner), reduce or cancel Partner to collect the Available due and unpaid payment of Capital Commitment of the Defaulting Limited Partner on such terms as Contributions plus Default Interest and Collection Costs; or
(v) exercise any other remedy available under applicable law that the General Partner determines to be in its discretion (which may include leaving such Defaulting Limited Partner obligated to make Capital Contributions with respect to Partnership Expenses)the best interests of the Partnership.
(d) If Each Limited Partner hereby pledges and assigns its Interest in the aggregate amount Partnership to the Partnership as security for the performance of its obligation to pay its Capital Commitment when called for by the General Partner in accordance with Section 3.2 and does hereby grant to the Partnership all rights available to a secured party under the Uniform Commercial Code of the Total Drawdown Default LoanState of Delaware (the “Uniform Commercial Code”) and agrees, Default Loan or Default Contributionupon request, as to deliver to the case may be (General Partner a duly executed financing statement and any accrued interest thereonother document which the General Partner may reasonably request with respect thereto. Each Partner hereby irrevocably constitutes and appoints the General Partner as its attorney-in-fact to execute any document necessary to carry out the terms of this Section 3.5(d). Each Partner hereby acknowledges that such power-of-attorney is coupled with an interest, committed by the Non-Defaulting Limited Partners pursuant is irrevocable and is transferable to the Default notice is: (i) equal to or less than one hundred percent (100%) any successor of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon), then each such Non-Defaulting Limited Partners shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount committed to in its Default Election Notice, or (ii) in excess of one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable, then, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited General Partner), each such Non-Defaulting Limited Partner shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount equal to the sum of (A) the lesser of (y) the amount committed in the Default Election Notice or (z) the product of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) and the Commitment Percentage of each electing Non-Defaulting Limited Partner, plus (B) the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) not lent or contributed under clause (A) above multiplied by a fraction, the numerator of which is the amount requested in the Default Election Notice by each Non-Defaulting Limited Partner that such Limited Partner did not loan or contributed under clause (A) above, and the denominator of which is the aggregate amounts requested in the Default Election Notices by all Non-Defaulting Limited Partners that such Limited Partners did not loan or contribute under clause (A) above. The amount of any Default Contribution shall reduce the Commitment of a Defaulting Limited Partner and shall not reduce the Commitment of the contributing Non Defaulting Limited Partners. In no event shall a Total Drawdown Default Loan, Default Loan or Default Contribution release the Defaulting Limited Partner from its obligations to fund the remainder of its Commitment.
(e) The repurchase and other rights and remedies referred pursuant to in this Section 5.03 3.5 are not exclusive and shall not be in addition to, and not in limitation of, deemed to waive any other rights available to the General Partner right or remedy of the Partnership or any Partner under this Agreement or Agreement, at law or in equity, against any Defaulting Partner or its permitted Transferee, as the case may be, for failure to make the Capital Contribution set forth in Section 3.2(a). An Event The Limited Partners hereby agree not to seek to prevent the exercise of Default the repurchase rights hereunder by any Limited Partner action, suit or proceeding at law or in respect of any Capital Contribution shall not relieve any other Limited Partner of its obligation to make Capital Contributions under this Agreement. In addition, unless the Available Capital Commitment of any Defaulting Limited Partner is decreased to zero pursuant to Section 5.03(c), an Event of Default by such Defaulting Limited Partner shall not relieve such Limited Partner of its obligation to make Capital Contributions subsequent to such Event of Defaultequity.
(f) Any Non-Defaulting Limited Partner who has or is deemed to have acquired any or all of the partnership interest of a Defaulting Partner pursuant to this Section 5.03 shall be deemed a Substituted Limited Partner with respect to such acquired interest.
Appears in 1 contract
Samples: Limited Partnership Agreement
Default by Limited Partners. (a) Each of the General Partner and each Limited Partner agrees that time is of the essence as to the payment of its required Capital Contributions, that any Default by any Limited Partner in respect of a certain Fund (the “Affected Fund”) would cause injury to the Partnership and to the General Partner and the Limited Partners having an interest in the Affected Fund and that the amount of damages caused by any such injury would be extremely difficult to calculate. Accordingly, the amount of such Default (the “Default Amount”) shall accrue interest commencing on the Drawdown Date at the Default Rate and ending on the date paid or contributed as a Default Contribution or loaned as a Total Drawdown Default Loan or Default Loan. Upon the occurrence of any Default, the General Partner shall promptly notify the Limited Partner who has committed such Default (the “Defaulting Limited Partner”) of the occurrence of such DefaultDefault with respect to the Affected Fund. Upon the occurrence of any Event of Default, the General Partner shall promptly notify all Limited Partners having an interest in the Affected Fund other than the Defaulting Limited Partner (the “Non-Defaulting Limited Partners”) of the occurrence of such Event of Default and of the course or courses of action it is electing to take as provided below.
(b) Upon the occurrence of an Event of Default, the General Partner, in its sole discretion, may elect to exercise one or more of the following remedies:
(i) with respect to the Affected Fund, cause the Defaulting Limited Partner to forfeit all or any portion of distributions from the Partnership made or to be made after such Event of Default that relate to any Partnership Investments Investments, allocable to the Affected Fund, in respect of which such Limited Partner made Capital Contributions prior to such Event of Default;
(ii) with respect to the Affected Fund, request the Non-Defaulting Limited Partners having an interest in the Affected Fund to provide a loan to the Partnership (each, a “Total Drawdown Default Loan”) in the aggregate amount of the Drawdown required in the applicable Drawdown Notice (the “Total Drawdown Amount”), with and which shall bear interest from the date the sum is paid into the Partnership until the date it is repaid at the Default RateRate (or such lower rate as is the maximum rate permitted by law); provided that notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Total Drawdown Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners having an interest in the Affected Fund pursuant to Article 6 until the principal of and interest on all outstanding Total Drawdown Default Loans Loans, allocable to the Affected Fund, have been paid in full by the Partnership; provided further, to the extent a Non-Non- Defaulting Limited Partner has made a Capital Contribution prior to making a Total Drawdown Default Loan, subject to such Non-Defaulting Limited Partner’s consent, such Capital Contribution shall be deemed to be its pro rata share of funding such Total Drawdown Default Loan. For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a loan to the Partnership;
(iii) with respect to the Affected Fund, request the Non-Defaulting Limited Partners having an interest in the Affected Fund to provide a loan to the Partnership in the amount of the Default Amount (the “Default Loan”) to fund and which shall bear interest from the Default Amount, with interest date the sum is paid into the Partnership until the date it is repaid at the Default RateRate (or such lower rate as is the maximum rate permitted by law); provided that:
(A) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest applicable to the Affected Fund equal to the percentage derived by dividing an amount equal to ************************* (and any accrued and unpaid interest thereonthereon accrued to the date of such deemed purchase) by the aggregate ********** ********** made by the Defaulting Limited Partner in respect of the applicable Affected Fund as of such date plus the *************; provided that in no instance shall the Defaulting Limited Partner be deemed to have sold more than all of its partnership interest. For illustrative purposes only, if a ************************************************************************ ***************************************************************************************** ***************************************************************************************** ***************************************************************************************** ******************************************************************************************** ******************************************************************* ************************************************************************************************** ************************************************************************************************** ************************************************************************************************** ************************************************************************************************** **********************************************, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners having interests in the Affected Fund or Funds in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds with respect to an Affected Fund shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners having an interest in the Affected Fund pursuant to Article 6 until the principal of and interest on all outstanding Default Loans relating to such Affected Fund have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan and a Default Loan shall always be limited to an individual Fund;
(iv) with respect to an Affected Fund, request additional contributions of capital not exceeding their Available Capital Commitment from the Non-Defaulting Limited Partner having interests in such Affected Fund (pro rata based on their respective Commitment Percentages applicable to such Affected Fund) in an amount equal to the ***************(the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest applicable to such Affected Fund equal to the percentage derived by dividing an amount equal to ******************************************************************** ***************************************************************************************** ***************************************** ****************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** ************************* ************************************************************************* ************************* ********** sale, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************************ ****************************************************************************************************** ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ********************************************************* ******************************;
(v) with respect to an Affected Fund, cause distributions that would otherwise be made to the Defaulting Limited Partner to be credited against the Default Amount, as applicable (and any interest accruing thereon) pursuant to Section 6.05(c);
(vi) with respect to an Affected Fund, cause the Defaulting Limited Partner to forfeit its right to participate in any Partnership Investments belonging to the Affected Fund made after such Event of Default;
(vii) in the event Non-Defaulting Limited Partners are not willing to make Default Contributions, Total Drawdown Default Loans or Default Loans in an aggregate amount equal to the Default Amount or Total Drawdown Default Amount (as applicable), with respect to any Defaulting Limited Partner, subject to the prior written unanimous consent of all the Partners (other than the Defaulting Limited Partner), cause a forced sale of the Defaulting Limited Partner’s interest in the Partnership with respect to such Affected Fund to any Person, at such price as the General Partner, in its sole discretion, shall determine to be fair and reasonable under the circumstances; and
(viii) with respect to an Affected Fund, institute proceedings to recover the Defaulting Limited Partner’s share of the Total Drawdown Default Amount or Default Amount, as applicable (and any interest accruing thereon). It is a condition to any Non-Defaulting Limited Partner making a Total Drawdown Default Loan, Default Loan or a Default Contribution that such loan or contribution be made under the Corresponding Provision in the same percentage of the Total Default Amount or Default Amount (as applicable), unless otherwise agreed by the Non-Defaulting Partners. A transfer of the Defaulting Limited Partner’s interest (including, for the avoidance of doubt, all rights and obligations of such Defaulting Limited Partner under this Agreement) pursuant to a forced sale shall be effectuated by way of assumption of contract (contractsoverneming) within the meaning of Section 6:159 of the Dutch Civil Code. The Defaulting Limited Partner hereby gives its cooperation in advance to such assumption of contract and agrees that its cooperation cannot be revoked.
(c) The General Partner may take either or both of the following actions in respect of the Available Capital Commitment of any Defaulting Limited Partner:
(i) with respect to an Affected Fund, seek commitments of capital (A) first, from existing Limited Partners having an interest in the Affected Fund up to the amount of the Defaulting Limited Partner’s Available Capital Commitment andCommitment, (B) if existing Limited Partners having an interest in the Affected Fund do not increase their Capital Commitments up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, second, from existing Limited Partners having an interest in Funds other than in the Affected Fund, and (C) if such other existing Limited Partners do not increase their Capital Commitment up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, third, from additional investorsinvestors subject to the prior written unanimous consent of all Non-Defaulting Limited Partners. If any such commitment is received from any existing Limited Partner, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Limited Partner shall be granted a corresponding interest in the Affected Fund and such Limited Partner’s Capital Commitment and Available Capital Commitment Commitment, in respect of such Affected Fund, shall be increased accordingly. If any such commitment is received from an investor that is not an existing Limited Partneradditional investor, such investor shall, after executing such instruments and delivering such opinions and other documents as are in form and substance satisfactory to the General Partner and subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), be admitted to the Partnership as a Substituted Limited Partner Partner, be granted an interest in the Affected Fund and shown as such on the books and records of the Partnership and shall be deemed to have a Capital Commitment and an Available Capital Commitment equal to the commitment for which such investor has subscribed, allocable to such Affected Fund. After the appropriate adjustment of the Capital Commitment and the Available Capital Commitment of the Limited Partner or admission of the Substituted Limited Partner, the Capital Commitment and Available Capital Commitment of the Defaulting Limited Partner shall be decreased accordingly; and
(ii) with respect to an Affected Fund, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), reduce or cancel the Available Capital Commitment of the Defaulting Limited Partner in respect of the Affect Fund on such terms as the General Partner determines in its discretion (which may include leaving such Defaulting Limited Partner obligated to make Capital Contributions with respect to Partnership Expenses).
(d) If With respect to an Affected Fund, if the aggregate amount of the Total Drawdown Default Loan, Default Loan or Default Contribution, as the case may be (and any accrued interest thereon), committed by the Non-Defaulting Limited Partners pursuant to the Default notice is: (i) equal to or less than one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon), then each such Non-Defaulting Limited Partners Partners, having an interest in such Affected Fund, shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount committed to in its Default Election Notice, or (ii) in excess of one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable, then, subject to the prior written unanimous consent of the Partners Partners, (other than the Defaulting Limited Partner), each such Non-Defaulting Limited Partner shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount equal to the sum of (A) the lesser of (y) the amount committed in the Default Election Notice or (z) the product of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) and the Commitment Percentage of each electing Non-Defaulting Limited Partner, plus (B) the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) not lent or contributed under clause (A) above multiplied by a fraction, the numerator of which is the amount requested in the Default Election Notice by each Non-Defaulting Limited Partner that such Limited Partner did not loan or contributed under clause (A) above, and the denominator of which is the aggregate amounts requested in the Default Election Notices by all Non-Defaulting Limited Partners that such Limited Partners did not loan or contribute under clause (A) above. The amount of any Default Contribution shall reduce the Commitment of a Defaulting Limited Partner and shall not reduce the Commitment of the contributing Non Defaulting Limited Partners. In no event shall a Total Drawdown Default Loan, Default Loan or Default Contribution release the Defaulting Limited Partner from its obligations to fund the remainder of its Commitment.
(e) The rights and remedies referred to in this Section 5.03 shall be in addition to, and not in limitation of, any other rights available to the General Partner or the Partnership under this Agreement or at law or in equity. An Event of Default by any Limited Partner in respect of any Capital Contribution shall not relieve any other Limited Partner of its obligation to make Capital Contributions under this Agreement. In addition, unless the Available Capital Commitment of any Defaulting Limited Partner is decreased to zero pursuant to Section 5.03(c), an Event of Default by such Defaulting Limited Partner shall not relieve such Limited Partner of its obligation to make Capital Contributions subsequent to such Event of Default.
(f) Any Non-Defaulting Limited Partner who has or is deemed to have acquired any or all of the partnership interest of a Defaulting Partner pursuant to this Section 5.03 shall be deemed a Substituted Limited Partner with respect to such acquired interest.
Appears in 1 contract
Samples: Limited Partnership Agreement (Host Hotels & Resorts, Inc.)
Default by Limited Partners. (a) Each of In the event any Limited Partner fails for any reason to make a Capital Contribution when due pursuant to Section 3.3 hereof, and fails to make such contribution within ten (10) days after receiving written notice from the General Partner and each that such payment (a "Delinquent Payment") is overdue (a "Defaulting Limited Partner agrees that time is of the essence as to the payment of its required Capital Contributions, that any Default by any Limited Partner would cause injury to the Partnership and to the General Partner and the Limited Partners and that the amount of damages caused by any such injury would be extremely difficult to calculate. Accordingly, the amount of such Default (the “Default Amount”) shall accrue interest commencing on the Drawdown Date at the Default Rate and ending on the date paid or contributed as a Default Contribution or loaned as a Total Drawdown Default Loan or Default Loan. Upon the occurrence of any DefaultPartner"), the General Partner shall promptly notify may give written notice of the default (the "Default Notice") to each Limited Partner who has committed not defaulted in such Default Capital Contribution (the “Defaulting a "Nondefaulting Limited Partner”"), and any Nondefaulting Limited Partner shall have the right, within ten (10) days from the expiration of such 10-day period, to fund all or part of the amount of the Delinquent Payment. Each Nondefaulting Limited Partner shall have the right to fund its pro rata share (based on the proportion of its Capital Commitment to the aggregate of all Capital Commitments of all Nondefaulting Limited Partners) of the occurrence Delinquent Payment (each, a "Contributing Partner"). If less than all of such Default. Upon the occurrence of any Event of DefaultDelinquent Payment is funded by the Contributing Partners on a pro rata basis, then the General Partner shall promptly notify all Limited Partners other than may offer to and select any Person (which may be the Defaulting Limited General Partner (or an Affiliate thereof) to contribute the “Non-Defaulting Limited Partners”) balance of the occurrence of such Event of Default and Delinquent Payment. Each Contributing Partner or other Person contributing a portion of the course or courses Delinquent Payment agrees to assume the obligations of action it is electing to take as provided below.
(b) Upon the occurrence of an Event of Default, the General Partner, in its sole discretion, may elect to exercise one or more of the following remedies:
(i) cause the Defaulting Limited Partner to forfeit all or any portion of distributions from the Partnership made or to be made after such Event of Default that relate to any Partnership Investments in respect of which such Limited Partner made Capital Contributions prior to such Event of Default;
(ii) request the Non-Defaulting Limited Partners to provide a loan contribute to the Partnership (each, a “Total Drawdown Default Loan”) in the aggregate amount of the Drawdown required in the applicable Drawdown Notice (the “Total Drawdown Amount”), with interest at the Default Rate; provided that notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Total Drawdown Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Total Drawdown Default Loans have been paid in full by the Partnership; provided further, to the extent a Non-Defaulting Limited Partner has made a Capital Contribution prior to making a Total Drawdown Default Loan, such Capital Contribution shall be deemed to be its pro rata share of funding such Total Drawdown Default Loan. For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a loan to the Partnership;
(iii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (the “Default Loan”) to fund the Default Amount, with interest at the Default Rate; provided that:
(A) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage remaining portion of the Defaulting Limited Partner’s partnership interest equal 's Capital Commitment as and when due pursuant to the percentage derived by dividing an amount equal to ***********************(and any accrued and unpaid interest thereon) by the aggregate ********** ********* made by the Defaulting Limited Partner as of such date plus the *************; provided that in no instance shall the Defaulting Limited Partner be deemed to have sold more than Section 3.3 hereof. If all of its partnership interest. For illustrative purposes only, if a ************************************************************************ *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** ************************* ************************************************************************* ************************* ********** sale, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner)Delinquent Payment is funded, the Defaulting Limited Partner shall no longer be deemed required to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal make any contributions to the percentage derived by dividing an amount equal to ************************************ ****************************************************************************************************** ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ********************************************************* ******************************;Partnership on account of its Capital Commitment.
(vb) cause distributions In the event and each time that would otherwise be made to the a Partner becomes a Defaulting Limited Partner and one or more Contributing Partners elect to be credited against the Default Amount, as applicable (make a Defaulting Limited Partners's Capital Contribution that is otherwise due and any interest accruing thereon) constitutes a Delinquent Payment pursuant to Section 6.05(c);
(vi) cause the Defaulting Limited Partner to forfeit its right to participate in any Partnership Investments made after such Event of Default;
(vii) in the event Non-Defaulting Limited Partners are not willing to make Default Contributions, Total Drawdown Default Loans or Default Loans in an aggregate amount equal to the Default Amount or Total Drawdown Default Amount (as applicable3.6(a), with respect to any Defaulting Limited Partner, subject to the prior written unanimous consent Participation Percentages of all the Partners (other than the Defaulting Limited Partner), cause a forced sale each of the Defaulting Limited Partner’s interest in the Partnership to any Person, at such price as the General Partner, in its sole discretion, shall determine to be fair and reasonable under the circumstances; and
(viii) institute proceedings to recover the Defaulting Limited Partner’s share of the Total Drawdown Default Amount or Default Amount, as applicable (Contributing Partners and any interest accruing thereon). It is a condition to any Non-Defaulting Limited Partner making a Total Drawdown Default Loan, Default Loan or a Default Contribution that such loan or contribution be made under the Corresponding Provision in the same percentage of the Total Default Amount or Default Amount (as applicable), unless otherwise agreed by the Non-Defaulting Partners. A transfer of the Defaulting Limited Partner’s interest (including, for the avoidance of doubt, all rights and obligations of such Defaulting Limited Partner under this Agreement) pursuant to a forced sale shall be effectuated by way of assumption of contract (contractsoverneming) within the meaning of Section 6:159 of the Dutch Civil Code. The Defaulting Limited Partner hereby gives its cooperation in advance to such assumption of contract and agrees that its cooperation cannot be revoked.
(c) The General Partner may take either or both of the following actions in respect of the Available Capital Commitment of any Defaulting Limited Partner:
(i) seek commitments of capital from existing Limited Partners up to the amount of the Defaulting Limited Partner’s Available Capital Commitment and, if existing Limited Partners do not increase their Capital Commitments up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, from additional investors. If any such commitment is received from any existing Limited Partner, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Limited Partner’s Capital Commitment and Available Capital Commitment shall be increased accordingly. If any such commitment is received from an investor that is not an existing Limited Partner, such investor shall, after executing such instruments and delivering such opinions and other documents as are in form and substance satisfactory to the General Partner and subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), be admitted to the Partnership as a Substituted Limited Partner and shown as such on the books and records of the Partnership and shall be deemed to have a Capital Commitment and an Available Capital Commitment equal to the commitment for which such investor has subscribed. After the appropriate adjustment of the Capital Commitment and the Available Capital Commitment of the Limited Partner or admission of the Substituted Limited Partner, the Capital Commitment and Available Capital Commitment of the Defaulting Limited Partner shall be decreased accordingly; and
(ii) subject recalculated in accordance with the Capital Contributions made by the Contributing Partners or any Person on account of a Delinquent Payment. In addition, Schedule 1 hereto will be revised to the prior written unanimous consent of the Partners (other than reflect any reduction in the Defaulting Limited Partner), reduce or cancel 's Capital Commitment and any increase in the Available Capital Commitment of the Contributing Partners on account of their pro rata assumption of the Defaulting Partner's Capital Commitment.
(c) In addition, and without limitation upon any other rights or remedies of the Partnership, the General Partner may offer to the Nondefaulting Limited Partners, by delivery of a Default Notice, the opportunity to purchase the Defaulting Partner's Interest in the Partnership; provided, that no sale shall be consummated pursuant to this Section 3.6 if it would result in a non- exempt prohibited transaction under ERISA or the Code. Within ten (10) days of receipt of such notice (the "Election Period"), any Nondefaulting Partner may, by delivery of written notice to the Defaulting Partner and the General Partner, elect to purchase all, but not less than all, of the Defaulting Partner's Interest in the Partnership at a price (the "Purchase Price") equal to the Adjusted Capital Contributions of the Defaulting Partner as of the date of the Default Notice. If more than one Partner desires to purchase the Defaulting Partner's Interest, each such Partner (a "purchaser") shall have the right to purchase its pro-rata portion of such Interest, based upon the purchasers' relative Participation Percentages immediately prior to such purchase. The closing of the purchase and sale of the Defaulting Partner's Interest shall take place on a date designated by the purchasers not later than thirty (30) days following the date of the Default Notice. At the closing, the Defaulting Partner shall execute and deliver to the purchasers assignments of interest, bills of sale, instruments of conveyance, and such other instruments as such purchasers may reasonably require to convey title to all of the Defaulting Partner's right, title and interest in and to the Partnership, free and clear of liens, claims and encumbrances. In the event the Defaulting Partner refuses or fails to execute and deliver any of the foregoing, the purchasers (or their respective designees) are hereby irrevocably appointed attorneys-in-fact to execute and deliver on behalf of the Defaulting Partner any such documents or instruments. At any closing under this paragraph, the Purchase Price for the Defaulting Partner's Interest shall be paid entirely in cash at the closing, by delivery of a cashier's or certified check or by wire transfer. In addition, to the extent that any monies are owed from a Defaulting Partner to the Partnership, such amounts may be offset against the Purchase Price payable to the Defaulting Partner hereunder, provided that the purchasers of the Defaulting Partner's Interest shall agree to assume the obligations of the Defaulting Partner to contribute to the Partnership any portion of the Defaulting Partner's required Capital Contribution together with Default Interest (as defined in Section 3.3(d)) thereon and to pay to the Partnership any Capital Contributions when called for by the General Partner in accordance with Sections 3.3 or 5.4.
(d) In addition and without limitation upon any other rights or remedies of the Partnership, the General Partner may commence legal proceedings against the Defaulting Limited Partner to collect the unpaid balance of the Delinquent Payment plus interest accrued at a rate equal to four (4) percentage points per annum over the Prime Rate ("Default Interest"), from time to time (but not in excess of the highest rate per annum permitted by law), from the date the Delinquent Payment was due, plus expenses of collection, including attorneys' fees.
(e) During any period in which the Delinquent Payment remains outstanding, the Defaulting Limited Partner shall have no right to receive distributions from the Partnership, and such distributions shall be applied towards satisfaction of such Delinquent Payment. Allocations of Net Income or Net Losses to a Defaulting Limited Partner shall be made in accordance with Section 4.2 hereof. Notwithstanding the provisions of this Section 3.6, the General Partner may, but shall not be obligated to, permit a default to be cured by a Defaulting Limited Partner on such terms and conditions as the General Partner determines it deems appropriate in its discretion (which may include leaving such Defaulting Limited Partner obligated to make Capital Contributions with respect to Partnership Expenses)sole discretion.
(d) If the aggregate amount of the Total Drawdown Default Loan, Default Loan or Default Contribution, as the case may be (and any accrued interest thereon), committed by the Non-Defaulting Limited Partners pursuant to the Default notice is: (i) equal to or less than one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon), then each such Non-Defaulting Limited Partners shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount committed to in its Default Election Notice, or (ii) in excess of one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable, then, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), each such Non-Defaulting Limited Partner shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount equal to the sum of (A) the lesser of (y) the amount committed in the Default Election Notice or (z) the product of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) and the Commitment Percentage of each electing Non-Defaulting Limited Partner, plus (B) the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) not lent or contributed under clause (A) above multiplied by a fraction, the numerator of which is the amount requested in the Default Election Notice by each Non-Defaulting Limited Partner that such Limited Partner did not loan or contributed under clause (A) above, and the denominator of which is the aggregate amounts requested in the Default Election Notices by all Non-Defaulting Limited Partners that such Limited Partners did not loan or contribute under clause (A) above. The amount of any Default Contribution shall reduce the Commitment of a Defaulting Limited Partner and shall not reduce the Commitment of the contributing Non Defaulting Limited Partners. In no event shall a Total Drawdown Default Loan, Default Loan or Default Contribution release the Defaulting Limited Partner from its obligations to fund the remainder of its Commitment.
(e) The rights and remedies referred to in this Section 5.03 shall be in addition to, and not in limitation of, any other rights available to the General Partner or the Partnership under this Agreement or at law or in equity. An Event of Default by any Limited Partner in respect of any Capital Contribution shall not relieve any other Limited Partner of its obligation to make Capital Contributions under this Agreement. In addition, unless the Available Capital Commitment of any Defaulting Limited Partner is decreased to zero pursuant to Section 5.03(c), an Event of Default by such Defaulting Limited Partner shall not relieve such Limited Partner of its obligation to make Capital Contributions subsequent to such Event of Default.
(f) Any Non-Defaulting Limited Partner who has or is deemed to have acquired any or all of the partnership interest of a Defaulting Partner pursuant to this Section 5.03 shall be deemed a Substituted Limited Partner with respect to such acquired interest.
Appears in 1 contract
Samples: Limited Partnership Agreement (Divine Interventures Inc)
Default by Limited Partners. (a) Each of the General Partner and each Limited Partner agrees that time is of the essence as to the payment of its required Capital Contributions, that any Default by any Limited Partner would cause injury to the Partnership and to the General Partner and the Limited Partners and that the amount of damages caused by any such injury would be extremely difficult to calculate. Accordingly, the amount of such Default (the “Default Amount”) shall accrue interest commencing on the Drawdown Date at the Default Rate and ending on the date paid or contributed as a Default Contribution or loaned as a Total Drawdown Default Loan or Default Loan. Upon the occurrence of any Default, the General Partner shall promptly notify the Limited Partner who has committed such Default (the “Defaulting Limited Partner”) of the occurrence of such Default. Upon the occurrence of any Event of Default, the General Partner shall promptly notify all Limited Partners other than the Defaulting Limited Partner (the “Non-Defaulting Limited Partners”) of the occurrence of such Event of Default and of the course or courses of action it is electing to take as provided below.
(b) Upon the occurrence of an Event of Default, the General Partner, in its sole discretion, may elect to exercise one or more of the following remedies:
(i) cause the Defaulting Limited Partner to forfeit all or any portion of distributions from the Partnership made or to be made after such Event of Default that relate to any Partnership Investments in respect of which such Limited Partner made Capital Contributions prior to such Event of Default;
(ii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership (each, a “Total Drawdown Default Loan”) in the aggregate amount of the Drawdown required in the applicable Drawdown Notice (the “Total Drawdown Amount”), with and which shall bear interest from the date the sum is paid into the Partnership until the date it is repaid at the Default RateRate (or such lower rate as is the maximum rate permitted by law); provided that notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Total Drawdown Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Total Drawdown Default Loans have been paid in full by the Partnership; provided further, to the extent a Non-Defaulting Limited Partner has made a Capital Contribution prior to making a Total Drawdown Default Loan, subject to such Non-Defaulting Limited Partner’s consent, such Capital Contribution shall be deemed to be its pro rata share of funding such Total Drawdown Default Loan. For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a loan to the Partnership;
(iii) request the Non-Defaulting Limited Partners to provide a loan to the Partnership in the amount of the Default Amount (the “Default Loan”) to fund and which shall bear interest from the Default Amount, with interest date the sum is paid into the Partnership until the date it is repaid at the Default RateRate (or such lower rate as is the maximum rate permitted by law); provided that:
(A) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************** (and any accrued and unpaid interest thereonthereon accrued to the date of such deemed purchase) by the aggregate ********** ************ made by the Defaulting Limited Partner as of such date plus the **************; provided that in no instance shall the Defaulting Limited Partner be deemed to have sold more than all of its partnership interest. For illustrative purposes only, if a ************************************** ************************************************************************************** ************************************************************************************** ************************************************************************************** ************************************************************************************** ************************************************************************************** ************************************************************************************** ************************************************************************************** ************************************************************************************** ************************************************************************************** ************************************************************************************** ************************************************************************************** *************, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************** (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************* ******************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** *************************************************************************************************** ************************* ************************************************************************* ************************* ********** sale, provided that in the event that there are more than one Non-Defaulting Limited Partners making Default Loans, the purchased Commitment Percentage shall be allocated among such Limited Partners in proportion to loans made by such Limited Partners as further described below in Section 5.03(d);
(C) notwithstanding Article 6, Proceeds shall be utilized first to pay any outstanding Default Loans (and any accrued interest thereon) and there shall be no distributions to the Partners pursuant to Article 6 until the principal of and interest on all outstanding Default Loans have been paid in full by the Partnership; For the avoidance of doubt, the Partners agree that a Limited Partner shall never be required to make a Default Loan;
(iv) request additional contributions of capital from the Non-Defaulting Limited Partners (pro rata based on their respective Commitment Percentages) in an amount equal to the ************* (the “Default Contribution”), in which event, subject to Section 10.02 and the prior written unanimous consent of all Partners (other than the Defaulting Limited Partner), the Defaulting Limited Partner shall be deemed to have sold, and the contributing Non-Defaulting Limited Partners shall be deemed to have purchased for their respective accounts (as provided in Section 5.03(d)), a percentage of the Defaulting Limited Partner’s partnership interest equal to the percentage derived by dividing an amount equal to ************************************ ****************************************************************************************************** ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ******************************************************************************************************* ********************************************************* ******************************;
(v) cause distributions that would otherwise be made to the Defaulting Limited Partner to be credited against the Default Amount, as applicable (and any interest accruing thereon) pursuant to Section 6.05(c);
(vi) cause the Defaulting Limited Partner to forfeit its right to participate in any Partnership Investments made after such Event of Default;
(vii) in the event Non-Defaulting Limited Partners are not willing to make Default Contributions, Total Drawdown Default Loans or Default Loans in an aggregate amount equal to the Default Amount or Total Drawdown Default Amount (as applicable), with respect to any Defaulting Limited Partner, subject to the prior written unanimous consent of all the Partners (other than the Defaulting Limited Partner), cause a forced sale of the Defaulting Limited Partner’s interest in the Partnership to any Person, at such price as the General Partner, in its sole discretion, shall determine to be fair and reasonable under the circumstances; and
(viii) institute proceedings to recover the Defaulting Limited Partner’s share of the Total Drawdown Default Amount or Default Amount, as applicable (and any interest accruing thereon). It is a condition to any Non-Defaulting Limited Partner making a Total Drawdown Default Loan, Default Loan or a Default Contribution that such loan or contribution be made under the Corresponding Provision in the same percentage of the Total Default Amount or Default Amount (as applicable), unless otherwise agreed by the Non-Defaulting Partners. A transfer of the Defaulting Limited Partner’s interest (including, for the avoidance of doubt, all rights and obligations of such Defaulting Limited Partner under this Agreement) pursuant to a forced sale shall be effectuated by way of assumption of contract (contractsoverneming) within the meaning of Section 6:159 of the Dutch Civil Code. The Defaulting Limited Partner hereby gives its cooperation in advance to such assumption of contract and agrees that its cooperation cannot be revoked.
(c) The General Partner may take either or both of the following actions in respect of the Available Capital Commitment of any Defaulting Limited Partner:
(i) seek commitments of capital from existing Limited Partners up to the amount of the Defaulting Limited Partner’s Available Capital Commitment and, if existing Limited Partners do not increase their Capital Commitments up to the full amount of the Defaulting Limited Partner’s Available Capital Commitment, from additional investors. If any such commitment is received from any existing Limited Partner, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), such Limited Partner’s Capital Commitment and Available Capital Commitment shall be increased accordingly. If any such commitment is received from an investor that is not an existing Limited Partner, such investor shall, after executing such instruments and delivering such opinions and other documents as are in form and substance satisfactory to the General Partner and subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), be admitted to the Partnership as a Substituted Limited Partner and shown as such on the books and records of the Partnership and shall be deemed to have a Capital Commitment and an Available Capital Commitment equal to the commitment for which such investor has subscribed. After the appropriate adjustment of the Capital Commitment and the Available Capital Commitment of the Limited Partner or admission of the Substituted Limited Partner, the Capital Commitment and Available Capital Commitment of the Defaulting Limited Partner shall be decreased accordingly; and
(ii) subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), reduce or cancel the Available Capital Commitment of the Defaulting Limited Partner on such terms as the General Partner determines in its discretion (which may include leaving such Defaulting Limited Partner obligated to make Capital Contributions with respect to Partnership Expenses).
(d) If the aggregate amount of the Total Drawdown Default Loan, Default Loan or Default Contribution, as the case may be (and any accrued interest thereon), committed by the Non-Defaulting Limited Partners pursuant to the Default notice is: (i) equal to or less than one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon), then each such Non-Defaulting Limited Partners shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount committed to in its Default Election Notice, or (ii) in excess of one hundred percent (100%) of the Total Drawdown Default Amount or Default Amount, as applicable, then, subject to the prior written unanimous consent of the Partners (other than the Defaulting Limited Partner), each such Non-Defaulting Limited Partner shall make a Total Drawdown Default Loan, Default Loan or Default Contribution (as the case may be) in an amount equal to the sum of (A) the lesser of (y) the amount committed in the Default Election Notice or (z) the product of the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) and the Commitment Percentage of each electing Non-Defaulting Limited Partner, plus (B) the Total Drawdown Default Amount or Default Amount, as applicable (and any accrued interest thereon) not lent or contributed under clause (A) above multiplied by a fraction, the numerator of which is the amount requested in the Default Election Notice by each Non-Defaulting Limited Partner that such Limited Partner did not loan or contributed under clause (A) above, and the denominator of which is the aggregate amounts requested in the Default Election Notices by all Non-Defaulting Limited Partners that such Limited Partners did not loan or contribute under clause (A) above. The amount of any Default Contribution shall reduce the Commitment of a Defaulting Limited Partner and shall not reduce the Commitment of the contributing Non Defaulting Limited Partners. In no event shall a Total Drawdown Default Loan, Default Loan or Default Contribution release the Defaulting Limited Partner from its obligations to fund the remainder of its Commitment.
(e) The rights and remedies referred to in this Section 5.03 shall be in addition to, and not in limitation of, any other rights available to the General Partner or the Partnership under this Agreement or at law or in equity. An Event of Default by any Limited Partner in respect of any Capital Contribution shall not relieve any other Limited Partner of its obligation to make Capital Contributions under this Agreement. In addition, unless the Available Capital Commitment of any Defaulting Limited Partner is decreased to zero pursuant to Section 5.03(c), an Event of Default by such Defaulting Limited Partner shall not relieve such Limited Partner of its obligation to make Capital Contributions subsequent to such Event of Default.
(f) Any Non-Defaulting Limited Partner who has or is deemed to have acquired any or all of the partnership interest of a Defaulting Partner pursuant to this Section 5.03 shall be deemed a Substituted Limited Partner with respect to such acquired interest.
Appears in 1 contract
Samples: Limited Partnership Agreement (Host Hotels & Resorts, Inc.)
