1
EXHIBIT 10.18
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PIMCO ADVISORS L.P.
2
TABLE OF CONTENTS
ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Admission Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Adverse Partnership Tax Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Approved by the Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Assignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Assignment Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Assignment Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Book-Tax Disparities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Cadence Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Carrying Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certificate of Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Class A Carryover Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Class A Quarterly Priority Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class A Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class B Carryover Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class B Quarterly Priority Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class B Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class C Carryover Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class C Quarterly Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class C Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Contributed Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Contributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Delaware Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Defense Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Delegate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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Departing General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Designated Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Disinterested Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Distributable Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Equity Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Event of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Former General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GP Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Heldover Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Incorporation Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Incorporation Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Interim Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Investment Management Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Limited Liability Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Liquidator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
LP Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Minimum Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Nasdaq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
NFJ Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
National Securities Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Net Income or Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Net Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Nonpublic Unitholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Operating Profit Available for Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Parametric Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Partnership Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Partnership Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Partnership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PFAMCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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PIMCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PIMCO GP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PIMCO Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Public Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Public General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Public Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Public Unitholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Recapture Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Reconstituted Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Restructuring Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Securities Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Short Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Successor Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Tax Realization Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Taxable Income or Taxable Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Termination Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Thomson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Total Contributed Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Treasury Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Unaffiliated Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Unitholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Unit Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Unrealized Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Unrealized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Written Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II The Partnership and the Partners . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.1 Continuation of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.3 Names and Addresses of Partners . . . . . . . . . . . . . . . . . . . . . . . . 15
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Section 2.4 Principal Office, Registered Agent and Registered Office . . . . . . . . . . . 15
Section 2.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III Purpose and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV Units and Other Partnership Securities . . . . . . . . . . . . . . . . . . . . 16
Section 4.1 Classification and Conversion of Units . . . . . . . . . . . . . . . . . . . . 16
Section 4.2 New Classes or Series of Units or Other Securities . . . . . . . . . . . . . . 17
Section 4.3 Issuance of Units and Other Securities . . . . . . . . . . . . . . . . . . . . 18
Section 4.4 No Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.5 Recapitalizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V Certificates for Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.1 Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.2 Lost, Stolen, Mutilated or Destroyed Certificates . . . . . . . . . . . . . . . 19
Section 5.3 Registered Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI Transfer of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.2 Transfer of GP Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.3 Transfer of LP Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.4 Restrictions on Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.1 Capital Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.2 Capital Account Calculations and Adjustments. . . . . . . . . . . . . . . . . . 22
ARTICLE VIII Distributions and Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.1 Cash Distributions During the Interim Period . . . . . . . . . . . . . . . . . 24
Section 8.2 Cash Distributions After the Interim Period . . . . . . . . . . . . . . . . . . 25
Section 8.3 Special Cash Distributions Prior to Restructuring . . . . . . . . . . . . . . . 25
Section 8.4 General Rules with Respect to Distributions . . . . . . . . . . . . . . . . . . 26
Section 8.5 Allocations of Income and Loss . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.6 Special Provisions Governing Capital Account Allocations . . . . . . . . . . . 27
Section 8.7 Allocations for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . 29
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Section 8.8 Monthly Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX Accounting and Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.3 Taxable Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.4 Preparation of Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.5 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.6 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.7 Tax Controversies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.8 Tax Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE X Concerning the General Partners . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.1 Management of Partnership Business . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.2 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.3 Reimbursement of the General Partners . . . . . . . . . . . . . . . . . . . . . 35
Section 10.4 Outside Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 10.5 Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.6 Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.7 Notice of Event of Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.8 Operating Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.9 Equity Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XI Concerning the Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.1 Participation in Control of Partnership Business. . . . . . . . . . . . . . . . 38
Section 11.2 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.3 Access and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XII Admission of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 12.1 Admission of General Partners . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 12.2 Admission of Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 12.3 Admission of Underwriters and Their Transferees . . . . . . . . . . . . . . . . 41
ARTICLE XIII Withdrawal or Removal of Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 13.1 Withdrawal or Removal of General Partners . . . . . . . . . . . . . . . . . . . 41
Section 13.2 Interest of Departing General Partner . . . . . . . . . . . . . . . . . . . . . 42
Section 13.3 Business to Be Carried On After Event of Withdrawal . . . . . . . . . . . . . . 43
Section 13.4 No Withdrawal of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . 43
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ARTICLE XIV Partnership Meetings; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 14.1 Partnership Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 14.2 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 14.3 Notice of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 14.4 Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 14.5 Waiver of Notice; Consent to Meeting; Approval of Minutes . . . . . . . . . . . 44
Section 14.6 Quorum and Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 14.7 Conduct of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 14.8 Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 14.9 Voting and Approval Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 14.10 Amendments to Be Adopted Solely by the General Partners . . . . . . . . . . . . 47
Section 14.11 Amendment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XV Indemnification and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 15.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 15.2 Indemnification Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 15.3 Indemnification Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 15.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 15.5 Source of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 15.6 Scope of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 15.7 Effect of Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 15.8 Limitations on Liability of Indemnitees . . . . . . . . . . . . . . . . . . . . 52
ARTICLE XVI Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 16.1 Power of General Partners to Effect a Restructuring . . . . . . . . . . . . . . 53
Section 16.2 Incorporation Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 16.3 Consent to Actions Taken in Connection with Restructuring . . . . . . . . . . . 57
ARTICLE XVII Dissolution and Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 17.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 17.2 Reconstitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 17.3 Liquidator; Liquidation and Distribution . . . . . . . . . . . . . . . . . . . 58
Section 17.4 Reports Following Termination . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XVIII General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 18.1 Addresses and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 18.2 Titles and Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
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Section 18.3 Pronouns and Plurals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 18.4 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 18.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 18.6 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 18.7 Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 18.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 18.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 18.10 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 18.11 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 18.12 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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TABLE OF EXHIBITS
Exhibit A Certificate for Class A LP Units
Exhibit B Admission Application
10
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PIMCO ADVISORS L.P.
This Amended and Restated Agreement of Limited Partnership of PIMCO
Advisors L.P. (this "Agreement"), which is dated and shall be effective as of
12:00 midnight Pacific Standard Time on October 31, 1997 (the "Effective
Time"), is by and among PIMCO Partners, G.P., a California general partnership,
all other Persons who have been admitted to the Partnership as Limited Partners
as of the date of this Agreement, and all Persons who become Limited Partners
after the date of this Agreement. Capitalized terms used in this Agreement
shall have the meanings ascribed to such terms in this Agreement.
This Agreement amends and completely restates that certain Amended and
Restated Agreement of Limited Partnership of PIMCO Advisors L.P. dated as of
October 31, 1994, as the same was previously amended by that certain First
Amendment to Amended and Restated Agreement of Limited Partnership of PIMCO
Advisors L.P. dated as of April 25, 1995 and effective as of January 1, 1995.
In consideration of the covenants, conditions and agreements contained
herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall, for the purposes of this
Agreement, have the meanings set forth herein.
Adjusted Property shall mean a Partnership Asset the Carrying Value of
which has been adjusted pursuant to Section 7.2.
Admission Application shall mean a written application executed and
delivered to the Partnership by a Person which (i) proposes to make a
Contribution in accordance with this Agreement or (ii) acquires one or more
Certificates by transfer from a Unitholder, by which such Person requests
admission as a Limited Partner, requests that the records of the Partnership
reflect such admission, and agrees to comply with and be bound by this
Agreement. Except as otherwise determined by the General Partners, such
Admission Application shall be in substantially the form of Exhibit B attached
to this Agreement.
11
Adverse Partnership Tax Event shall mean (i) the Partnership (A) being
treated as an association taxable as a corporation, (B) being reconstituted as
a corporation, or (C) otherwise becoming subject to federal taxation on its
income, or (ii) the occurrence of an event which would have caused one of the
foregoing to occur but for the occurrence of a Restructuring.
Affiliate of a Person shall mean any Person directly or indirectly
controlling, controlled by or under common control with such Person. As used
in this definition of Affiliate, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Agreement shall mean this Amended and Restated Agreement of Limited
Partnership of the Partnership, as it may be amended, supplemented or restated
from time to time.
Approved by the Unitholders shall mean, with respect to a meeting of
Unitholders, approved by Unitholders holding a majority of the outstanding
Units present at such meeting in person or by proxy and entitled to vote,
voting as a single class, and with respect to an action of Unitholders without
a meeting, approved by Unitholders holding a majority of the outstanding Units
entitled to vote, voting as a single class.
Assignee shall mean a Person who is a transferee of a Certificate and
who has executed and delivered an Admission Application, but who has not been
admitted to the Partnership as a Limited Partner.
Assignment Event shall mean an event which would cause the assignment
(within the meaning of the Investment Advisers Act of 1940, as amended, or the
Investment Company Act of 1940, as amended) of advisory contracts representing
more than 15% of the assets under management by the Partnership and its
Subsidiaries.
Assignment Opinion shall mean an Opinion of Counsel to the effect that
a specified event is not an Assignment Event, or that based upon the consents
which have been obtained from clients, such event would not result in the
termination of advisory contracts representing more than 15% of the assets
under management by the Partnership and its Subsidiaries.
Associate of a Person shall mean any individual who is a stockholder,
partner, member, director, manager, trustee, member of any Delegate or other
board or committee, officer, employee, agent or fiduciary of such Person.
Book-Tax Disparities shall mean the differences between a Partner's
Capital Account balance, as maintained pursuant to Section 7.1, and such
balance had the Capital Account been maintained strictly in accordance with tax
accounting principles (such disparities reflecting the differences between the
Carrying Value of either Contributed Property or Adjusted Property, as adjusted
from time to time, and the adjusted basis thereof for federal income tax
purposes).
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12
Business Day shall mean any day other than a Saturday, Sunday or legal
holiday recognized or declared as such by the Government of the United States
or the State of New York.
Business Entity shall mean a corporation, a business trust or
association, a real estate investment trust, a common-law trust, a limited
liability company or an unincorporated business, including a general or limited
partnership or registered limited liability partnership.
CCI shall mean Columbus Circle Investors, a Delaware general
partnership, or its Successor.
Cadence Partners shall mean Cadence Partners L.P., a California limited
partnership, or its Successor.
Capital Account shall mean a capital account established and maintained
pursuant to Article VII.
Carrying Value shall mean (i) with respect to Contributed Property, the
fair market value of such Contributed Property at the time of contribution as
determined by the General Partners, reduced (but not below zero) by all
amortization, depreciation and cost recovery deductions charged to the Partners'
and Assignees' Capital Accounts pursuant to Section 7.2 with respect to such
Contributed Property, and (ii) with respect to any other Partnership Asset, the
adjusted basis of such Partnership Asset for federal income tax purposes, as of
the time of determination. The Carrying Value of any Partnership Asset may be
adjusted from time to time in accordance with Sections 7.2(b), (c) and (d), and
to reflect changes, additions or other adjustments to the Carrying Value for
dispositions, acquisitions or improvements of Partnership Assets, in a manner
consistent with federal income tax principles.
Certificate shall mean a certificate of Partnership Interest issued by
the Partnership, evidencing ownership of one or more Units, such certificate to
be in such form or forms as may be adopted by the General Partners, and which,
in the case of Class A LP Units, shall initially be in substantially the form of
Exhibit A attached to this Agreement.
Certificate of Cancellation shall mean a certificate of cancellation
within the meaning of Section 17-203 of the Delaware Act.
Certificate of Limited Partnership shall mean the Certificate of
Limited Partnership of the Partnership, and any and all amendments thereto and
restatements thereof, filed as required under the Delaware Act.
Class A Carryover Amount shall mean, with respect to each Class A Unit
and Class C Unit and with respect to each fiscal quarter or Short Period ending
after March 31, 1995, the positive amount, if any, by which (i) the Class A
Quarterly Priority Amount for the immediately
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preceding fiscal quarter exceeded (ii) the amount distributed with respect to
each Class A Unit and Class C Unit for such immediately preceding fiscal
quarter.
Class A Quarterly Priority Amount shall mean, with respect to each
Class A Unit and Class C Unit and with respect to each fiscal quarter ending
after December 31, 1994, the sum of (i) $0.47 (subject to adjustment in the
case of a Recapitalization), plus (ii) any Class A Carryover Amount applicable
to such Class A Unit or Class C Unit with respect to such fiscal quarter. In
the case of any Short Period, the Class A Quarterly Priority Amount shall mean,
with respect to each Class A Unit and Class C Unit and with respect to such
Short Period, the sum of (i) an amount equal to the product of $0.0052 (subject
to adjustment in the case of a Recapitalization) multiplied by the number of
days in such Short Period, plus (ii) any Class A Carryover Amount applicable to
such Class A Unit or Class C Unit with respect to such Short Period.
Class A Unit shall mean a GP Unit or an LP Unit having those special
rights and obligations specified in this Agreement as being appurtenant to a
"Class A Unit" and shall include the GP Units and Class A LP Units outstanding
prior to the Effective Time and all GP Units and LP Units issued after the
Effective Time which are designated as Class A Units pursuant to Section 4.3.
Class B Carryover Amount shall mean, with respect to each Class B Unit
and with respect to each fiscal quarter or Short Period ending after March 31,
1995, the positive amount, if any, by which (i) the Class B Quarterly Priority
Amount for the immediately preceding fiscal quarter exceeded (ii) the amount
distributed with respect to each Class B Unit for such immediately preceding
fiscal quarter; provided, however, that with respect to the first fiscal
quarter, or Short Period within the first fiscal quarter, of any fiscal year,
the Class B Carryover Amount shall be zero.
Class B Quarterly Priority Amount shall mean, with respect to each
Class B Unit and with respect to each fiscal quarter ending after December 31,
1994, the sum of (i) $0.47 (subject to adjustment in the case of a
Recapitalization), plus (ii) any Class B Carryover Amount applicable to such
Class B Unit with respect to such fiscal quarter. In the case of any Short
Period, the Class B Quarterly Priority Amount shall mean, with respect to each
Class B Unit and with respect to such Short Period, the sum of (i) an amount
equal to the product of $0.0052 (subject to adjustment in the case of a
Recapitalization) multiplied by the number of days in such Short Period, plus
(ii) any Class B Carryover Amount applicable to such Class B Unit with respect
to such Short Period.
Class B Unit shall mean a GP Unit or an LP Unit having those special
rights and obligations specified in this Agreement as being appurtenant to a
"Class B Unit" and shall include the Class B LP Units outstanding prior to the
Effective Time and all GP Units and LP Units issued after the Effective Time
which are designated as Class B Units pursuant to Section 4.3.
4
14
Class C Carryover Cap shall mean, with respect to each Class C Unit
and with respect to each fiscal quarter or Short Period ending after March 31,
1995, the positive amount by which (i) the Class C Quarterly Cap for the
immediately preceding fiscal quarter exceeded (ii) the amount distributed with
respect to each Class C Unit for such immediately preceding fiscal quarter;
provided, however, that with respect to the first fiscal quarter, or Short
Period within the first fiscal quarter, of any fiscal year, the Class C
Carryover Cap shall be zero.
Class C Quarterly Cap shall mean, with respect to each Class C Unit
and with respect to each fiscal quarter ending after December 31, 1994, the sum
of (i) $0.75 (subject to adjustment in the case of a Recapitalization), plus
(ii) any Class C Carryover Cap applicable to such Class C Unit with respect to
such fiscal quarter. In the case of any Short Period, the Class C Quarterly
Cap shall mean, with respect to each Class C Unit and with respect to such
Short Period, the sum of (i) an amount equal to the product of $0.0083 (subject
to adjustment in the case of a Recapitalization) multiplied by the number of
days in such Short Period, plus (ii) any Class C Carryover Cap applicable to
such Class C Unit with respect to such Short Period.
Class C Unit shall mean an LP Unit having those special rights and
obligations specified in this Agreement as being appurtenant to a "Class C
Unit" and shall include all LP Units issued after the Effective Time which are
designated as Class C Units pursuant to Section 4.3.
Code shall mean the Internal Revenue Code of 1986, as in effect from
time to time, and applicable rules and regulations thereunder. Any reference
herein to a specific section or sections of the Code shall be deemed to include
a reference to any corresponding provision of future law.
Commission shall mean the Securities and Exchange Commission.
Consolidation Date means November 15, 1994.
Contributed Property shall mean any Contribution other than cash.
Contribution shall mean any cash, property, services rendered or a
promissory note or other obligation to contribute cash or property or to
perform services, which a Partner contributes to the Partnership in its
capacity as a Partner.
Contributor is defined in Section 12.2.
Delaware Act shall mean the Delaware Revised Uniform Limited
Partnership Act, as it may be amended from time to time, and any successor to
such Act.
Defense Notice is defined in Section 15.3.
Delegate is defined in Section 10.2.
5
15
Departing General Partner shall mean the Person which, as of the
effective date of any withdrawal or removal of a General Partner pursuant to
Section 13.1, has as of such date so withdrawn or been removed as a General
Partner.
Designated Member is defined in Section 10.8.
Disinterested Director shall mean an individual who is not and has
not, within the prior five years, been an officer or employee of the
Partnership or an officer, employee or partner of a General Partner or an
Affiliate of the Partnership or a more than 5% Unitholder, partner or
stockholder of the Partnership, a General Partner or any of their Affiliates.
Distributable Cash for a fiscal quarter shall mean cash equal to the
Partnership's Operating Profit Available for Distribution for such fiscal
quarter less the amount, if any, required for expenses, for capital
expenditures, for future payments on Partnership indebtedness, as reserves, or
otherwise in the business of the Partnership, as determined by the General
Partners.
Effective Date is defined in Section 16.2.
Effective Time is defined in the preamble to this Agreement.
Equity Security shall mean a share of capital stock, a partnership or
limited liability company interest, or other equity interest, or any security
convertible or exchangeable, with or without consideration, into any such
security or interest, or carrying any warrant, option or right to subscribe to
or purchase any such security or interest or any such convertible or
exchangeable security, or any such warrant, option or right.
Event of Withdrawal with respect to a General Partner shall mean (i)
its withdrawal as a General Partner pursuant to Section 13.1; (ii) its
withdrawal as a General Partner in violation of this Agreement; (iii) its
removal as a General Partner pursuant to Section 13.1; (iv) an Insolvency Event
with respect to such General Partner; or (v) a Termination Event with respect
to such General Partner.
Exchange Shares is defined in Section 16.2.
Expenses is defined in Section 15.1.
Former General Partner shall mean (i) Thomson or (ii) any other Person
which has withdrawn or been removed as, or otherwise ceased to be, a General
Partner.
General Partner shall mean (i) PIMCO GP in its capacity as general
partner of the Partnership, or (ii) any other Person which has been admitted as
a successor or additional general
6
16
partner of the Partnership pursuant to this Agreement, in each case so long as
such Person has not withdrawn or been removed as, or otherwise ceased to be, a
general partner of the Partnership.
GP Unit shall mean a Unit representing a portion or all of a General
Partner's Partnership Interest, and shall include all GP Units held by PIMCO GP
immediately prior to the Effective Time, and Units acquired by a General
Partner after the Effective Time, whether by contribution, conversion or
transfer, which are designated as GP Units.
Heldover Certificate is defined in Section 16.2.
Incorporation Notice is defined in Section 16.2.
Incorporation Restructuring is defined in Section 16.2.
Indebtedness shall mean with respect to any Person, (i) any liability,
contingent or otherwise, of such Person (A) for borrowed money (whether or not
recourse of the lender is to the whole of the assets of such Person or only to
a portion thereof), (B) evidenced by a note, debenture or similar instrument
(including a purchase money obligation) given in connection with the
acquisition of any property or assets, (C) for any letter of credit or
performance bond in favor of such Person, or (D) for the payment of money
relating to a capitalized lease obligation; (ii) any liability of any other
Person of the kind described in the preceding clause (i), which such Person has
guaranteed or which is otherwise its legal liability, contingent or otherwise;
(iii) any obligation secured by a lien to which the property or assets of such
Person are subject, whether or not the obligations secured thereby shall have
been assumed by or shall otherwise be such Person's legal liability; (iv) all
other items, which in accordance with generally accepted accounting principles,
would be included as a liability on the balance sheet of such Person on the
date of determination; and (v) any and all deferrals, renewals, extensions or
refinancing of, or amendments, modifications or supplements to, any liability
of the kind described in any of the preceding clauses (i), (ii), (iii) or (iv).
Indemnitee shall mean any General Partner, any Former General Partner,
any Person which is or was an Affiliate of any General Partner or any Former
General Partner, any Person which is or was an Associate of any General Partner
or any Former General Partner or any such Affiliate, any Person which is or was
serving at the request of the Partnership or any of its Subsidiaries, any
General Partner or any Former General Partner as an Associate of another
Person, or any Person which is or was an Associate of the Partnership or any of
its Subsidiaries. A Person shall be deemed to be serving as a fiduciary of an
employee benefit plan at the request of the Partnership whenever the
performance by such Person of his duties to the Partnership or any Subsidiary
of the Partnership also imposes duties on him or otherwise involves services by
him to such plan or the participants or beneficiaries of such plan.
Insolvency Event with respect to a Person shall be deemed to have
occurred (i) when it (A) makes an assignment for the benefit of creditors; (B)
files a voluntary petition in bankruptcy;
7
17
(C) is adjudged a bankrupt or insolvent, or has entered against it an order for
relief in any bankruptcy or insolvency proceeding; (D) files a petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation; (E) files an answer or other pleading admitting or failing to
contest the material allegations of a petition failed against it in any
proceeding of this nature; or (F) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of such Person or of all or
any substantial part of its properties; or (ii) (A) 120 days after the
commencement of any proceeding against such Person seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, if the proceeding is not
dismissed, or (B) 90 days after the appointment without such Person's consent
or acquiescence of a trustee, receiver or liquidator of such Person or of all
or any substantial part of its properties, if the appointment is not vacated or
stayed, or 90 days after the expiration of any such stay, if the appointment is
not vacated.
Interim Period shall mean the period between November 15, 1994 and the
earlier of (i) December 31, 1997 or (ii) the occurrence of an Adverse
Partnership Tax Event.
Investment Management Company shall mean any division or Subsidiary of
the Partnership which is principally engaged in the investment advisory
business.
Limited Liability Opinion shall mean an Opinion of Counsel to the
effect that a specified event would not cause the Limited Partners to lose
their limited liability under the Delaware Act.
Limited Partner shall mean any Person which is a Limited Partner at
the Effective Time, or is admitted as a Limited Partner pursuant to Section
12.2 or 12.3, and which has not ceased to be a Limited Partner.
Liquidator shall mean the Person serving as Liquidator pursuant to
Section 17.3(a).
LP Unit shall mean a Unit representing a portion or all of a Partner's
or Assignee's Partnership Interest, and shall include all LP Units held by any
Partner immediately prior to the Effective Time, Units acquired by a General
Partner after the Effective Time, whether by contribution, conversion or
transfer, which are designated as LP Units, and all Units held by any Person
other than a General Partner at any time.
Minimum Gain shall have the meaning set forth in Treasury Regulation
Section 1.704-2(b) and (d).
Nasdaq shall mean the Nasdaq National Stock Market.
NFJ Partners shall mean NFJ Partners L.P., a California limited
partnership, or its Successor.
8
18
National Securities Exchange shall mean (i) an exchange registered
with the Commission under Section 6(a) of the Securities Exchange Act, or (ii)
Nasdaq.
Net Income or Net Loss shall mean an amount equal to the Partnership's
taxable income or taxable loss for a relevant period. Net Income and Net Loss
shall be determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), and adjusted as provided in Sections 7.2, and further
adjusted to reflect any adjustments resulting from amended returns, claims for
refund and tax audits.
Net Value shall mean (i) in the case of any Contribution, the fair
market value of such Contribution reduced by the outstanding balance of any
indebtedness either assumed by the Partnership upon such Contribution or to
which such Contribution is subject when contributed; and (ii) in the case of a
distribution of Partnership Assets to a Partner, the fair market value of such
Partnership Assets reduced by the outstanding balance of any indebtedness
either assumed by such Partner upon such distribution or to which such
Partnership Assets are subject when distributed. In each case, fair market
value shall be determined by the General Partners.
Nonpublic Unitholder shall mean (i) any General Partner or Former
General Partner, (ii) Cadence Partners, Parametric Partners, PIMCO Partners or
NFJ Partners, (iii) any Subsidiary of Pacific Mutual Holding Company, a
California mutual corporation, (iv) any executive officer of the Partnership or
managing director of an Investment Management Company or any corporation,
partnership, limited liability company or trust in which such individual is a
controlling shareholder, general partner, manager or trustee, or (vi) any
Person designated as a Nonpublic Unitholder in a Written Action.
Operating Profit Available for Distribution shall mean, for any
period, the net income of the Partnership (determined in accordance with
generally accepted accounting principles); provided, that Operating Profit
Available for Distribution for any period as so determined shall be adjusted in
accordance with the following special rules and/or clarifications:
(i) Operating Profit Available for Distribution shall be
determined without regard to losses of any Subsidiary of the Partnership which
is not treated as a partnership, branch or division for federal income tax
purposes.
(ii) Operating Profit Available for Distribution shall be
determined without regard to accrued revenues from performance fees unless such
fees are not subject to forfeiture.
(iii) Operating Profit Available for Distribution shall be
determined without regard to any income or deductions attributable to the
grant, amendment, vesting or exercise of any option or other right to purchase
or receive Units or other Equity Securities.
9
19
(iv) Operating Profit Available for Distribution shall be
determined without regard to any amortization of goodwill and other intangible
assets.
Opinion of Counsel shall mean a written opinion of counsel selected by
the General Partners, who may be regular counsel to the Partnership, a General
Partner, a Limited Partner or any of their Affiliates, but may not be in-house
counsel to any of such Persons.
Parametric Partners shall mean Parametric Partners L.P., a California
limited partnership, or its Successor.
Partner shall mean any General Partner or Limited Partner.
Partnership shall mean the limited partnership heretofore formed and
continued pursuant to this Agreement and the Delaware Act.
Partnership Accountants shall mean such nationally recognized firm of
independent public accountants as is selected from time to time by the General
Partners to act as the Partnership's independent public accountants.
Partnership Assets shall mean all assets and property, whether
tangible or intangible and whether real, personal or mixed, at any time owned
by the Partnership or its Subsidiaries.
Partnership Interest shall mean, as to any Partner or Assignee, such
Partner's or Assignee's share of the profits and losses of the Partnership and
the right to receive distributions of Partnership Assets.
Percentage Interest shall mean, as to each Partner or Assignee, the
quotient of (i) the Partnership Interest of such Partner or Assignee divided by
(ii) the total Partnership Interests of all Partners and Assignees
. Person shall mean a natural person, general or limited partnership,
limited liability company, trust, estate, association, corporation, custodian,
nominee or any other individual or entity in its own or any representative
capacity.
PFAMCO shall mean Pacific Financial Asset Management Corporation, a
California corporation, or its Successor.
PIMCO shall mean Pacific Investment Management Company, a California
general partnership, or its Successor.
PIMCO GP shall mean PIMCO Partners, a California general partnership,
or its Successor.
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PIMCO Partners shall mean PIMCO Partners, LLC, a California limited
liability company and the managing general partner of PIMCO GP, or its
Successor.
Proceedings is defined in Section 15.1.
Public Company shall mean a Business Entity which has at least one
Public Security outstanding.
Public General Partner shall mean a General Partner which is a Public
Company and which, together with its Subsidiaries, holds Units and other
Partnership Interests representing more than 95% of the fair value of its
consolidated assets other than cash and cash equivalents.
Public Security shall mean a class or series of Equity Security which
is registered under Section 12 of the Exchange Act.
Public Unitholder shall mean any Unitholder which is not a Nonpublic
Unitholder.
Recapitalization is defined in Section 4.5.
Recapture Income shall mean any gain recognized by the Partnership
(but computed without regard to any adjustment required by Section 734 or 743
of the Code) upon the disposition of any Partnership Asset that does not
constitute capital gain for federal income tax purposes because such gain
represents the recapture of deductions or reductions in basis for tax credits
previously taken with respect to such Partnership Asset.
Reconstituted Partnership shall mean a new limited partnership formed
in the manner described in Section 17.2.
Record Date shall mean the date as of which the identity of, and Units
held by, the Unitholders will be determined for purposes of (i) receiving
notice of and voting at any meeting of Unitholders, (ii) receiving notice of
any proposed action by written approval and giving or withholding approval,
(iii) exercising any other rights with respect to any action or proposed action
of Unitholders, or (iv) receiving any distribution or report.
Restructuring shall mean any action, event, transaction or series of
actions, events or transactions that the General Partners believe is reasonable
likely tol prevent or avoid the occurrence of an Adverse Partnership Tax Event
or a Tax Realization Event or both.
Restructuring Corporation is defined in Section 16.2.
Securities Act shall mean the Securities Act of 1933, as amended, and
any successor to such statute.
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Securities Exchange Act shall mean the Securities Exchange Act of
1934, as amended, and any successor to such statute.
Short Period means any period which is less than a fiscal quarter.
Subsidiary of a Person shall mean a subsidiary of such Person within
the meaning of Regulation S-X under the Securities Act.
Successor of a Person shall mean the Business Entity, if any, which
succeeds to the ownership of all or substantially all of its assets.
Successor Entity shall mean a Business Entity described in clause (ii)
or (iii) of Section 16.1(a).
Tax Opinion shall mean an Opinion of Counsel to the effect that a
specified event would not cause an Adverse Partnership Tax Event.
Tax Realization Event shall mean any one or more events, conditions or
circumstances in which, or as a result of which, any Partner or any of its
Affiliates realizes or is reasonably likely to be treated as realizing, either
directly or through allocations of Partnership income, income for federal
income tax purposes (including without limitation capital gain income), with
respect to all or any part of the difference between (i) the value of any
property contributed (or deemed contributed under applicable law) by such
Partner or Affiliate to the Partnership, determined either as of the time of
such contribution (or deemed contribution) or the time of such realization, and
(ii) such Partner's or Affiliate's or the Partnership's basis, for federal
income tax purposes, in such property, other than as a result of a sale of such
property by the Partnership exclusively for cash.
Taxable Income or Taxable Loss, when referring to allocations made to
a particular class of Units or to a particular Partner or Assignee, shall mean
the gross income less applicable deductions, computed for federal income tax
purposes, allocated to such class of Units or Partner or Assignee.
Termination Event with respect to a General Partner shall mean, (i) if
such General Partner is an individual, his death or the entry by a court of
competent jurisdiction of an order adjudicating him incompetent to manage his
person or his property; (ii) if such General Partner is acting as a General
Partner by virtue of being a trustee of a trust, the termination of the trust
(but not merely the substitution of a new trustee); (iii) if such General
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Partner is a partnership, the dissolution and commencement of winding up of the
partnership; (iv) if such General Partner is a corporation, the filing of a
certificate of dissolution or its equivalent for the corporation or the
revocation of its charter and the expiration of 90 days after the date of
notice to the corporation of revocation without a reinstatement of its charter;
(v) if such General Partner is an estate, the distribution by the fiduciary of
the estate's entire Partnership Interest; or (vi) if such General Partner is
not an individual, partnership, corporation, trust or estate, the termination
of the General Partner.
Thomson shall mean Thomson Advisory Group Inc., a Delaware
corporation.
Total Contributed Income of an Investment Management Company shall
mean the aggregate net income of such Investment Management Company (calculated
in accordance with generally accepted accounting principles applied
consistently for all Investment Management Companies and excluding
extraordinary items) for the then most recent three complete fiscal years of
the Partnership (or, for three years following the Consolidation Date, the
number of complete Partnership fiscal years which have elapsed since the
Consolidation Date). Total Contributed Income for each Investment Management
Company shall be recalculated annually based on, and upon receipt of, the
Partnership's annual audited consolidated financial statements.
Transfer (and related words) with respect to Units shall mean or refer
to a transaction by which a Unitholder transfers one or more Units to another
Person, and shall include a sale, assignment, gift, exchange or any other
disposition of Units, but shall not include any change in the ownership of such
Unitholder.
Transfer Agent shall mean (i) with respect to the Class A LP Units,
The First Chicago Trust Company of New York or any other bank, trust company or
other Person appointed by the General Partners to act as transfer agent or
registrar for the Class A Units, and (ii) with respect to any other class or
series of Units, the Person (who may be a General Partner or an Affiliate of a
General Partner) appointed to act as transfer agent or registrar for such class
or series of Units.
Treasury Regulations shall mean the federal income tax and procedure
and administration regulations as promulgated by the U.S. Treasury Department,
as such regulations may be in effect from time to time. All references in this
Agreement to provisions of the Treasury Regulations shall be deemed to refer to
successor regulatory provisions to the extent appropriate in light of the
context in which such Treasury Regulations references are used.
Unaffiliated Holders of any class or series of Units or other
Partnership Interests shall mean all holders of such class or series of Units
or other Partnership Interests other than (i) any General Partner or Former
General Partner or any of their respective Affiliates, (ii) Cadence Partners,
Parametric Partners, PIMCO Partners or NFJ Partners or any of their respective
Affiliates, (iii) any officer or employee of the Partnership or any of its
Subsidiaries, or (iv) any officer, employee, general partner or holder of more
than 5% of the outstanding Equity Securities of the General Partner or any of
its Affiliates other than the Partnership.
Underwriter is defined in Section 12.3.
Unit shall mean a portion or all of the Partnership Interest of a
Partner or Assignee representing such fractional part of the Partnership
Interests of all of the Partners and Assignees
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as shall be determined by the General Partners in connection with the issuance
of Units; provided, however, that each Unit shall represent the same fractional
part of the Partnership Interests represented by all of the outstanding Units
as is represented by each other Unit. The relative rights, powers and duties
appurtenant to a Unit of any class and series and those appurtenant to the
Partnership Interest represented by such Unit shall be identical, and such
terms are used interchangeably in this Agreement.
Unitholder shall mean (i) a General Partner, or (ii) a Limited Partner
or, for purposes of Articles VII and VIII and Sections 17.3(c) and (d), in the
case of a Limited Partner who has Transferred his Partnership Interest and
whose Transferee is an Assignee, such Assignee. For purposes of Articles VII
and VIII only, the term "Unitholder" shall also mean the beneficial owner of
one or more Units held by a nominee Limited Partner in any case in which such
nominee Limited Partner has furnished the identity of such owner to the
Partnership pursuant to Section 6031(c) of the Code.
Unit Price shall mean an amount per Unit of a given class or series as
of any date of determination equal to: (i) if the Units of such class or series
are listed or admitted to trading on one or more National Securities Exchanges,
the average of the last reported sales prices per Unit of such class or series
or, in case no such reported sale takes place on any such day, the average of
the last reported bid and asked prices per Unit of such class or series, in
either case on the principal National Securities Exchange on which the Units of
such class or series are listed or admitted to trading, for the five trading
days immediately preceding the date of determination; or (ii) if the Units of
such class or series are not listed or admitted to trading on a National
Securities Exchange, an amount equal to the fair market value of a Unit of such
class or series as of such date of determination, as determined by an
independent appraiser selected and retained by the General Partners on behalf
of and for the account of the Partnership; provided, however, that in the case
of Units of a class or series not listed or admitted to trading on a National
Securities Exchange and to be issued pursuant to an employee benefit plan, the
Unit Price shall be determined by the General Partners.
Unrealized Gain, as of any date of determination, shall mean the
excess, if any, of the fair market value of a Partnership Asset (as determined
under Section 7.2(c) or (d) as of such date of determination) over the Carrying
Value of such Partnership Asset as of such date of determination (prior to any
adjustment to be made pursuant to Section 7.2(c) or(d) as of such date).
Unrealized Loss, as of any date of determination, shall mean the
excess, if any, of the Carrying Value of a Partnership Asset as of such date of
determination (prior to any adjustment to be made pursuant to Section 7.2(c)
or(d) as of such date) over the fair market value of such Partnership Asset (as
determined under Section 7.2(c) or (d) as of such date of determination).
Written Action shall mean (i) an action by written consent of the
General Partner, or if there is more than one General Partner, an action by
unanimous written consent of the General
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Partners if such action is specified in Section 10.1(c), or by written consent
of General Partners holding a majority of the GP Units if such action is not
specified in Section 10.1(c) or (ii) if a Delegate has the rights and powers to
take such action, a written action of such Delegate.
ARTICLE II
THE PARTNERSHIP AND THE PARTNERS
Section 2.1 Continuation of the Partnership.
The General Partners and the Limited Partners hereby continue the
Partnership as a limited partnership pursuant to the provisions of the Delaware
Act.
Section 2.2 Name.
The name of the Partnership shall be "PIMCO Advisors L.P." The
business of the Partnership shall be carried on under such name or under such
other name as the General Partners may from time to time determine. "Limited
Partnership," "Ltd" or "L.P." (or similar words or letters) shall be included in
the Partnership's name where necessary or appropriate to maintain the limited
liability of the Limited Partners or otherwise for the purpose of complying with
the laws of any jurisdiction.
Section 2.3 Names and Addresses of Partners.
The General Partner of the Partnership is PIMCO GP, and the
address of the General Partner is 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000. The names and business, residence or mailing addresses of the
Limited Partners and the date upon which each such Person became a Limited
Partner are as set forth from time to time in the books and records of the
Partnership.
Section 2.4 Principal Office, Registered Agent and Registered Office.
(a) The principal office of the Partnership is located at
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000. The General Partners
may change the location of the Partnership's principal office within or without
the State of Delaware and may establish such additional offices of the
Partnership within or without the State of Delaware as they may from time to
time determine.
(b) The name of the registered agent for service of
process on the Partnership in the State of Delaware is The Corporation Trust
Company. The address of the registered agent and the address of the registered
office of the Partnership in the State of Delaware is Corporation Trust Center,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
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Section 2.5 Term.
The Partnership commenced upon the filing of the Certificate of
Limited Partnership in accordance with the Delaware Act and shall continue in
existence until December 31, 2086, unless earlier terminated in accordance with
the Delaware Act or this Agreement.
ARTICLE III
PURPOSE AND POWERS
Section 3.1 Purpose.
The purpose of the Partnership is (i) to carry on an investment
management and investment advisory business and (ii) to carry on any other
business which limited partnerships may carry on under the Delaware Act.
Section 3.2 Powers.
The Partnership shall have and may exercise any and all powers
and authority conferred by the laws of Delaware upon limited partnerships formed
under the Delaware Act, including any and all powers and authority that may be
exercised by the General Partners pursuant to the Delaware Act or this
Agreement.
ARTICLE IV
UNITS AND OTHER PARTNERSHIP SECURITIES
Section 4.1 Classification and Conversion of Units.
(a) The Partnership Interests of the Partners and
Assignees are divided into GP Units and LP Units, the GP Units are further
divided into Class A Units and Class B Units, and the LP Units are further
divided into Class A Units, Class B Units and Class C Units.
(b) A General Partner shall have the right, at such
General Partner's option, at any time to convert a portion, but not all, of the
GP Units held by such General Partner into LP Units of the same class. The rate
at which LP Units shall be delivered upon conversion of GP Units shall initially
be one LP Unit for each GP Unit, and shall be adjusted to reflect any
Recapitalization occurring after the Effective Time. Unless the LP Units
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issuable on conversion are to be issued in the name of the General Partner, the
General Partner shall provide funds to the Partnership sufficient to pay any
transfer or similar tax with respect to the issuance. LP Units issued on
conversion of GP Units shall be deemed to have been issued, and such GP Units
shall be deemed to be canceled and retired, as of the close of business on the
date Certificates evidencing such GP Units are surrendered to the Partnership
for conversion.
(c) A General Partner shall have the right, at such
General Partner's option, at any time to convert a portion or all of the Class
A LP Units or Class B LP Units held by such General Partner into GP Units of
the same class. The rate at which GP Units shall be delivered upon conversion
of LP Units shall initially be one GP Unit for each LP Unit, and shall be
adjusted to reflect any Recapitalization occurring after the Effective Time. GP
Units issued on conversion of LP Units shall be deemed to have been issued, and
such LP Units shall be deemed to be canceled and retired, as of the close of
business on the date Certificates evidencing such LP Units are surrendered to
the Partnership for conversion.
(d) As of the close of business on March 1, 1998, each
Class B GP Unit shall be converted into and exchanged for one Class A GP Unit,
and each Class B LP Unit shall be converted into and exchanged for one Class A
LP Unit, adjusted in each case to reflect any Recapitalization occurring after
the Effective Time.
Section 4.2 New Classes or Series of Units or Other Securities.
The General Partners may create a class or series of Units, other
Equity Securities or other Partnership securities that was not previously
outstanding, without the approval of the Limited Partners. Any such class or
series of Units or other securities shall have such designations, preferences
and relative participating, optional or other special rights, powers and duties,
including preferences, rights and powers senior to existing classes or series of
Units or other securities, as shall be determined by the General Partners,
subject to any required approval of Unitholders, including without limitation:
(i) the rights of such class or series of Units or other securities to share in
profits and losses of the Partnership and the allocation, for federal income and
other tax purposes, to such class or series of Units or other securities of
items of Partnership income, gain, loss, deduction and credit; (ii) the rights
of such class or series of Units or other securities to share in distributions
of Partnership Assets; (iii) the rights of such class or series of Units or
other securities upon dissolution and liquidation of the Partnership; (iv)
whether such class or series of Units or other securities is redeemable by the
Partnership and, if so, the price at which, and the terms and conditions on
which, such class or series of Units or other securities may be redeemed by the
Partnership; (v) whether such class or series of Units or other securities is
issued with the right of conversion into or exchange for any other class or
series of Units or other securities and, if so, the rate at and the terms and
conditions upon which such class or series of Units or other securities may be
converted into or exchanged for such other class or series of Units or other
securities; and (vi) the rights of such class or series of Units or other
securities to vote on matters relating to the Partnership and this Agreement.
The designations, preferences and relative participating, optional or other
special rights, powers and duties of any such class or series of Units or other
securities shall be set forth in an amendment to this Agreement.
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Section 4.3 Issuance of Units and Other Securities.
(a) The Partnership may issue Units of any class or
series, other Equity Securities, or other Partnership securities, in amounts,
for consideration and on terms and conditions determined by the General Partners
without the approval of the Limited Partners; provided, however, that except as
provided in Article XVI, (i) the Partnership may not issue Units which are
senior to the Class A Units, without the approval of Unaffiliated Unitholders
holding a majority of the outstanding Class A Units held by Unaffiliated
Unitholders; and (ii) the Partnership may not issue any Units or other Equity
Securities unless the Partnership receives a Tax Opinion with respect to such
issuance.
(b) The Partnership shall not issue fractional Units;
instead, each fractional Unit shall be rounded to the nearest whole Unit or an
amount equal to the product of such fraction and the Unit Price on the date of
issuance shall be paid in cash by the Partnership, as may be determined by the
General Partners.
Section 4.4 No Preemptive Rights.
No Partner, Assignee or other Person shall have any
preemptive, preferential or other similar rights with respect to any additional
Contributions or any offer, issuance or sale of Units, other Equity Securities
or other Partnership securities.
Section 4.5 Recapitalizations.
(a) The Partnership may make a distribution of Units with
respect to outstanding Units, effect a subdivision or combination of outstanding
Units, or take a like action (each, a"Recapitalization"). The Partnership shall
not effect a Recapitalization unless the respective Percentage Interests of the
Partners and Assignees immediately after the Recapitalization are the same as
their respective Percentage Interests immediately before the Recapitalization.
(b) The General Partners shall select a Record Date as of
which a Recapitalization shall be effective and shall notify each Unitholder of
the Recapitalization. The Partnership may issue to the Unitholders as of the
Record Date new Certificates representing the additional Units issued in the
Recapitalization, and may implement such other procedures to reflect the
Recapitalization as may be determined by the General Partners.
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ARTICLE V
CERTIFICATES FOR UNITS
Section 5.1 Issuance of Certificates.
Upon the issuance of Units to any Partner or other Person, the
Partnership shall issue and deliver to such Partner, or to such other Person
upon such other Person being admitted as a Partner, one or more Certificates in
the name of such Partner or other Person evidencing such Units, in such
denominations as such Partner or other Person may request. Upon the written
request of any Transferee of Units accompanied by one or more Certificates
properly endorsed and cash in the amount of any applicable transfer tax, the
Partnership shall issue and deliver to such Transferee, upon such Transferee
being admitted as a Partner, replacement Certificates in the name of such
Transferee in such denominations as such Transferee may request. Upon the
written request of any Unitholder accompanied by one or more Certificates
properly endorsed, the Partnership shall issue and deliver to such Unitholder
replacement Certificates in the name of such Unitholder in such denominations as
such Unitholder may request, in accordance with such procedures as the
Partnership may reasonably establish.
Section 5.2 Lost, Stolen, Mutilated or Destroyed Certificates.
(a) The Partnership shall issue a new Certificate in place
of any Certificate previously issued if the registered owner of the Certificate:
(i) makes proof by affidavit, in form and
substance satisfactory to the Partnership, that a previously issued Certificate
has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate
before the Partnership has notice that the Certificate is subject to an adverse
claim by another Person or has been acquired by a purchaser for value in good
faith and without notice of an adverse claim;
(iii) if requested by the Partnership, delivers to
the Partnership a bond, in form and substance satisfactory to the Partnership,
with such surety or sureties and with fixed or open penalty as the Partnership
may direct, to indemnify the Partnership against any claim that may be made on
account of the alleged loss, destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements
imposed by the Partnership.
(b) When a Certificate has been lost, destroyed or
stolen, and the owner fails to notify the Partnership within a reasonable time
after he has notice of it, and a Transfer of the Units represented by the
Certificate is registered before the Partnership receives such
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notification, the owner shall be precluded from making any claim against the
Partnership or any Transfer Agent for such Transfer or for a new Certificate.
(c) If any mutilated Certificate is surrendered to the
Transfer Agent, the Partnership shall execute and deliver in exchange therefor
a new Certificate evidencing the same number of Units as did the Certificate so
surrendered.
(d) As a condition to the issuance of any new Certificate
under this Section 5.2, the Partnership may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Transfer Agent) connected therewith.
Section 5.3 Registered Owner.
The Partnership shall be entitled to treat a Unitholder as the owner of
the Units registered in such Unitholder's name on the books and records of the
Transfer Agent for all purposes, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such Units on the part
of any other Person, regardless of whether it shall have actual or other notice
thereof, except as otherwise provided by law or any applicable rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units
are listed or admitted for trading. When a Person is acting as a nominee, agent
or in some other representative capacity for another Person in acquiring or
holding Units, as between the Partnership on the one hand and such Persons on
the other hand, such nominee (i) must execute and deliver an Admission
Application, (ii) shall be the Limited Partner or Assignee (as the case may be)
of record and beneficially, and (iii) shall be bound by this Agreement.
ARTICLE VI
TRANSFER OF UNITS
Section 6.1 Transfer.
Except as provided in Article XVI, no Units shall be Transferred
except in accordance with the terms and conditions set forth in this Article
VI. Any Transfer or purported Transfer of any Units not made in accordance with
this Article VI or Article XVI shall be null and void.
Section 6.2 Transfer of GP Units.
(a) A General Partner may Transfer any or all of its GP
Units to an Affiliate of such General Partner which has been admitted as a
successor or additional General Partner pursuant to Section 12.1(a).
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(b) A General Partner may mortgage, pledge, hypothecate,
grant a security interest in or otherwise encumber any or all of its GP Units,
and Transfer any or all of its GP Units to any Person in a forced sale pursuant
to the foreclosure of, or other realization upon, any such encumbrance;
provided, however, that if the Transferee is not a General Partner, such GP
Units shall be converted into LP Units as provided in Section 4.1(b).
(c) A General Partner may Transfer any or all of its GP
Units to any Person in connection with the withdrawal of such General Partner
pursuant to Section 13.1(b); provided, however, that if the Transferee is not a
General Partner, such GP Units shall be converted into LP Units as provided in
Section 4.1(b).
Section 6.3 Transfer of LP Units.
A Partner may Transfer any or all of its LP Units to any Person;
provided, however, that except upon the death of a Unitholder or by operation of
law, the Partnership shall not recognize a Transfer of LP Units unless the
Transferee, if not a Partner or the Transferee of an Underwriter, has executed
and delivered an Admission Application to the Partnership or, if delivered to
the Transfer Agent, the Transfer Agent has delivered such Admission Application
to the Partnership.
Section 6.4 Restrictions on Transfer.
No Transfer of Units shall be made if such Transfer (i) would violate
the then applicable federal and state securities laws or rules and regulations
of the Commission, any state securities commission or any other governmental
authorities with jurisdiction over such Transfer, (ii) would result in an
Assignment Event or an Adverse Partnership Tax Event or (iii) would affect the
Partnership's existence or qualification as a limited partnership under the
Delaware Act.
ARTICLE VII
CAPITAL ACCOUNTS
Section 7.1 Capital Accounts.
(a) The Partnership shall maintain for each Partner and
Assignee (which terms for purposes of this Section 7.1, Section 7.2 and Article
VI shall refer to the beneficial owner of an interest held by a nominee in any
case in which the nominee has furnished the identity of such owner to the
Partnership pursuant to Section 6031(c) of the Code) a separate Capital Account
in accordance with Section 704 of the Code. Such Capital Account shall be
INCREASED BY (i) the cash amount or Net Value of all actual and deemed
Contributions made by such Partner or Assignee to the Partnership and (ii) all
items of Net Income computed in accordance with Section 7.2(a) and allocated to
such Partner or Assignee pursuant to Sections 8.5 and 8.6 and DECREASED BY (i)
the cash amount or Net Value of all actual and deemed distributions of
Partnership Assets
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made to such Partner or Assignee and (ii) all items of Net Loss computed in
accordance with Section 7.2(a) and allocated to such Partner or Assignee
pursuant to Sections 8.5 and 8.6.
(b) Upon the issuance of any Units to or for the benefit
of any Associate of the Partnership or any of its Subsidiaries, or any
successor to such Associate, as compensation for services rendered or to be
rendered to the Partnership or any of its Subsidiaries by such Associate, such
Associate or his or her successor shall be deemed to have made a Contribution
to the Partnership in an amount equal to the product of (i) the number of Units
so issued, and (ii) the Unit Price on the date of such issuance.
Section 7.2 Capital Account Calculations and Adjustments.
(a) For purposes of computing the amount of any item of
income, gain, deduction or loss to be reflected in the Partners' and Assignees'
Capital Accounts, the determination, recognition and classification of any such
item shall be the same as its determination, recognition and classification for
federal income tax purposes (including any method of depreciation, cost
recovery or amortization used for this purpose), provided, that:
(i) In accordance with the requirements of
Section 704(c) of the Code and Treasury Regulation Section
1.704-1(b)(2)(iv)(d), any deductions for depreciation, cost recovery or
amortization attributable to Contributed Property shall be determined as if the
adjusted basis of such Contributed Property on the date it was acquired by the
Partnership was equal to the Carrying Value of such Contributed Property. Upon
an adjustment pursuant to Section 7.2(c) to the Carrying Value of any
Partnership Asset subject to depreciation, cost recovery or amortization, any
further deductions for such depreciation, cost recovery or amortization
attributable to such Partnership Asset shall be determined as if the adjusted
basis of such Partnership Asset was equal to the Carrying Value of such
Partnership Asset immediately following such adjustment.
(ii) Any income, gain or loss attributable to the
taxable disposition of any Partnership Asset shall be determined by the
Partnership as if the adjusted basis of such Partnership Asset as of such date
of disposition was equal in amount to the Partnership's Carrying Value with
respect to such Partnership Asset as of such date.
(iii) Subject to the provisions of Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), the amounts of any adjustments to the
bases (or Carrying Values) of Partnership Assets made pursuant to Section 743
of the Code shall not be reflected in Capital Accounts, but the amounts of any
adjustments to the bases (or Carrying Values) of Partnership Assets made
pursuant to Section 734 of the Code as a result of the distribution of
Partnership Assets by the Partnership to a Partner or Assignee shall (A) be
reflected in the Capital Account of the Partner or Assignee receiving such
distribution in the case of a distribution in liquidation of such Partner's or
Assignee's Partnership Interest and (B) otherwise be reflected in Capital
Accounts in the manner in which the unrealized income and gain that is
displaced by such
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adjustments would have been shared had the Partnership Assets been sold at
their Carrying Values immediately prior to such adjustments.
(iv) The computation of all items of income, gain,
loss and deduction shall be made, as to those items described in Section
705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the fact that such
items are not includable in gross income or are neither currently deductible
nor capitalizable for federal income tax purposes. For this purpose, amounts
paid or incurred to organize the Partnership or to promote the sale of
Partnership Interests that are neither deductible nor amortizable under Section
709 of the Code, and deductions for any losses incurred in connection with the
sale or exchange of Partnership Assets disallowed pursuant to Section 267(a)(1)
or 707(b) of the Code, shall be treated as expenditures described in Section
705(a)(2)(B) of the Code.
(b) Generally, a Transferee of a Partnership Interest
will succeed to the Capital Account relating to the Partnership Interest
Transferred. However:
(i) If the Transfer causes a termination of the
Partnership under Section 708(b)(1)(B) of the Code, the Partnership shall be
deemed to have contributed all Partnership Assets and Partnership liabilities
to a new reconstituted partnership in exchange for one hundred percent of the
interests in such reconstituted partnership, and immediately thereafter, the
Partnership shall be deemed to have dissolved and distributed all interests in
the reconstituted partnership to the Partners and Assignees, followed by the
continuation of the business of the Partnership by the reconstituted
partnership. In such event, the Carrying Values of the Partnership Assets shall
be adjusted immediately prior to such deemed distribution pursuant to Section
7.2(d) (and such adjusted Carrying Values shall constitute the fair market
values of such Partnership Assets upon their deemed contribution to the
reconstituted Partnership). The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the principles of Section
7.1 and this Section 7.2
(ii) If the Transfer is of LP Units held by a
General Partner, and if immediately prior to such Transfer such General Partner
has a negative Capital Account balance, then the Transferee shall be credited
with a zero balance in its Capital Account relating to such LP Units, and such
General Partner shall retain its negative Capital Account balance.
(c) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), in connection with either (i) a Contribution (other than
a de minimis amount) by a new or existing Partner or Assignee in consideration
for a Partnership Interest or (ii) a distribution of Partnership Assets (other
than a de minimis amount) in consideration for a Partnership Interest, the
Capital Accounts of all Partners and Assignees and the Carrying Values of all
Partnership Assets may be adjusted (consistent with the provisions hereof)
upwards or downwards to reflect any Unrealized Gain or Unrealized Loss
attributable to each Partnership Asset, as if such Unrealized Gain or
Unrealized Loss had been recognized upon an actual sale of such Partnership
Asset at such time and had been allocated to the Partners and Assignees
pursuant to Sections 8.5 and 8.6. For
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purposes of determining such Unrealized Gain or Unrealized Loss, the fair
market value of Partnership Assets shall be determined by the General Partners.
(d) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(e), immediately prior to the actual or deemed distribution of
any Partnership Asset in kind, the Capital Accounts of all Partners and
Assignees and the Carrying Values of such Partnership Asset shall be adjusted
(consistent with the provisions hereof) upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership Asset as if
such Unrealized Gain or Unrealized Loss had been recognized upon an actual sale
of such Partnership Asset immediately prior to such distribution and had been
allocated to the Partners and Assignees, at such time, pursuant to Sections 8.5
and 8.6. For purposes of determining such Unrealized Gain or Unrealized Loss,
the fair market value of Partnership Assets shall be determined by the General
Partners.
ARTICLE VIII
DISTRIBUTIONS AND ALLOCATIONS
Section 8.1 Cash Distributions During the Interim Period.
With respect to each fiscal quarter ending on or prior to the end of
the Interim Period, commencing with the fiscal quarter ending December 31, 1994,
the Partnership shall distribute an amount in cash equal to the Distributable
Cash for such quarter. Such distributions shall be made to Unitholders of record
30 days after the last day of each such fiscal quarter, and shall be paid on
Class A Units and Class C Units not more than 45 days, and on Class B Units not
more than 60 days, after the last day of each such fiscal quarter. Such
distributions shall be made in accordance with the following priorities:
(i) First, to such Unitholders holding Class A
Units or Class C Units, pro rata in accordance with their Class A Units and
Class C Units, without regard to whether such Units are Class A Units or Class
C Units, until the cash distributions made pursuant to this clause (i) with
respect to each Class A Unit and Class C Unit equal the Class A Quarterly
Priority Amount;
(ii) Second, to such Unitholders holding Class B
Units, pro rata in accordance with their Class B Units until the cash
distributions made pursuant to this clause (ii) with respect to each Class B
Unit equal the Class B Quarterly Priority Amount; and
(iii) Third, to such Unitholders holding Class A
Units, Class B Units or Class C Units, pro rata in accordance with their Class
A Units, Class B Units and Class C Units, without regard to whether such Units
are Class A Units, Class B Units or Class C Units, until the
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cash distributions made pursuant to the preceding clauses (i) and (ii) and this
clause (iii) with respect to each Class A Unit, Class B Unit and Class C Unit
equal the Class C Quarterly Cap;
(iv) Fourth, to such Unitholders holding Class A
Units or Class B Units, pro rata in accordance with their Class A Units and
Class B Units, without regard to whether such Units are Class A Units or Class
B Units; provided, however, that the Partnership may withhold distributions to
the holders of Class B Units to protect the distributions in respect of the
Class A Units and Class C Units in future fiscal quarters.
Section 8.2 Cash Distributions After the Interim Period.
With respect to each fiscal quarter ending after the end of the Interim
Period, the Partnership shall distribute an amount in cash equal to the
Distributable Cash for such fiscal quarter. Such distributions shall be made to
Unitholders of record 30 days after the last day of each such fiscal quarter,
and shall be paid not more than 60 days after the last day of each such fiscal
quarter. Such distributions shall be made in accordance with the following
priorities:
(i) First, to such Unitholders holding Class A
Units, Class B Units or Class C Units, pro rata in accordance with their Class
A Units, Class B Units and Class C Units, without regard to whether such Units
are Class A Units, Class B Units or Class C Units, until the cash distributions
made pursuant to this clause (i) with respect to each Class A Unit, Class B
Unit and Class C Unit equal the Class C Quarterly Cap;
(ii) Second, to such Unitholders holding Class A
Units or Class B Units, pro rata in accordance with their Class A Units and
Class B Units, without regard to whether such Units are Class A Units or Class
B Units.
Section 8.3 Special Cash Distributions Prior to Restructuring.
(a) Immediately prior to the effectiveness of the first
Restructuring, the Partnership shall, if the regular quarterly distribution for
the fiscal quarter ending before the effectiveness of the Restructuring has not
been paid, pay such distribution as provided in Section 8.1 if such fiscal
quarter ended on or prior to the end of the Interim Period, and otherwise as
provided in Section 8.2.
(b) Immediately prior to the effectiveness of the first
Restructuring, but after the distribution, if any, required by Section 8.3(a),
the Partnership shall distribute an amount equal to cash on hand of the
Partnership, less cash required for expenses, for capital expenditures, as
reserves or otherwise in the business of the Partnership or any successor to
the business of the Partnership after the Restructuring, as determined by the
General Partners. Such distribution shall be made as provided in Section 8.1 if
such distribution is made during a fiscal
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quarter ending on or prior to the end of the Interim Period, and otherwise as
provided in Section 8.2.
Section 8.4 General Rules with Respect to Distributions.
(a) The General Partners are also authorized to
distribute Partnership Assets in kind. Any Partnership Asset distributed in
kind shall be valued at its fair market value on the date of distribution and
shall be distributed in accordance with Sections 8.1and 8.2. Capital Accounts
and Carrying Values shall be adjusted in accordance with Section 7.2(e).
(b) The General Partners shall specify a Record Date for
any distribution, and any Partnership Assets distributed shall be distributed
to the Unitholders of the relevant class or series as of the Record Date.
(c) Any amount of taxes withheld pursuant to Section
10.4, and any amount of taxes, interest or penalties paid by the Partnership to
any governmental entity, with respect to amounts allocated or distributable to
a Unitholder shall be deemed to be a distribution or payment to such Unitholder
and shall reduce the amount otherwise distributable to such Unitholder pursuant
to this Article VIII.
(d) Distributions made to Unitholders shall be made to
"Unitholders"as defined in Article I without regard to the last sentence of the
definition of "Unitholder".
(e) The Partnership shall not make a distribution to any
Partner on account of its Partnership Interest if such distribution would
violate Section 17-607 of the Delaware Act or other applicable law.
Section 8.5 Allocations of Income and Loss.
(a) For Capital Account purposes, except as otherwise
provided in Section 8.6, Net Income and Net Loss of the Partnership shall be
determined and allocated as set forth in this Section 8.5, and allocations of
Net Income and Net Loss shall be deemed to be allocations of proportionate
shares of the items of income, gain, loss and deduction from which Net Income
and Net Loss are calculated.
(b) Net Income and Net Loss of the Partnership shall be
determined with respect to each fiscal month of the Partnership's existence,
and allocations of such Net Income and Net Loss with respect to each such month
shall be made annually.
(c) If the Partnership has Net Income for a taxable year,
Net Income for such taxable year shall be treated as earned in those months in
which the Partnership earned Net Income, in proportion to the Net Income earned
by the Partnership in each of such months. Net Income thus treated as earned in
particular months shall be allocated among the Unitholders in
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the same proportions as any distributions would have been made with respect to
the fiscal quarter in which the relevant month falls if all of the Net Income
treated as earned in such fiscal quarter were distributed to the Unitholders as
provided in Sections 8.1 or 8.2, as the case may be. Although Sections 8.1 and
8.2 require distributions of cash to classes of Unitholders to be determined
with reference to prior distributions of cash, for purposes of making
allocations pursuant to the previous sentence, references in such Sections to
prior distributions of cash should be read to refer to prior allocations of Net
Income pursuant to this Section 8.5(c) with respect to prior fiscal quarters.
(d) If the Partnership has a Net Loss for a taxable year,
such Net Loss shall be treated as incurred in those fiscal months in which the
Partnership incurred a Net Loss, in proportion to the Net Loss incurred by the
Partnership in each of such months. The Net Loss treated as incurred in each
such month shall be allocated (i) first, to the Unitholders having positive
Capital Account balances so as to cause their respective Capital Account
balances to be in (or, if not possible, closer to) the same proportion to each
other as their respective Percentage Interests and then in accordance with
their respective Percentage Interests until all such positive balances have
been eliminated; and (ii) thereafter, any additional Remaining Net Loss shall
be allocated to the General Partners in respect of their GP Units. To the
extent subsequent Net Income of the Partnership does not exceed Net Loss
allocated pursuant to this Section 8.5(d), such Net Income shall be allocated
to the General Partners in respect of their GP Units until such allocated Net
Income equals Net Loss allocated to the General Partners pursuant to Section
8.5(d)(ii), thereafter to the Unitholders in the same proportions and amounts
as Net Loss was allocated pursuant to Section 8.5(c)(i). For purposes of this
Section 8.5(d), the determination of Capital Account balances shall be made
after giving effect to all distributions of cash made with respect to fiscal
quarters or years before the month in question pursuant to Sections 8.1, 8.2
and 8.3.
Section 8.6 Special Provisions Governing Capital Account Allocations.
(a) In the event that any Partner or Assignee has a
deficit Capital Account at the end of any Partnership fiscal year which is in
excess of such Partner's or Assignee's obligation (including any deemed
obligation under Treasury Regulations or Temporary Treasury Regulations), if
any, to restore an amount to the Partnership, and such excess deficit exists
following the allocations referred to in Sections 8.5(d) and (e), such Partner
or Assignee shall be allocated Net Income in proportion to such remaining
excess deficit amounts.
(b) If any Partner or Assignee unexpectedly receives any
adjustments, allocations or distributions described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), Net Income or items of income and gain shall be
specially allocated to such Partner or Assignee in an amount and manner
sufficient to eliminate, to the extent required by the Treasury Regulations, a
deficit in its Capital Account (computed as provided in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(3)) as quickly as possible. This Section 8.6(b) is
intended to constitute a "qualified income offset" within the
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meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3) and shall be
interpreted to comply with the requirements of such regulation. Any special
allocations of items of income or gain pursuant to this Section 8.6(b) shall be
taken into account in computing subsequent allocations of Net Income or Net
Loss so that the net amounts of any items subsequently so allocated shall, to
the extent possible, be equal to the net amounts that would have been allocated
to each Partner if such special allocations had not occurred.
(c) In the event there is a net decrease in Minimum Gain
during a Partnership taxable year, the Partners shall be allocated items of
income and gain in accordance with Treasury Regulation Section 1.704-2(f). Any
Partner's share of Minimum Gain shall be determined in accordance with Treasury
Regulation Section 1.704-2(g). This Section 8.6(c) is intended to comply with
the minimum gain chargeback requirement of Treasury Regulation Section 1.704-2
and shall be interpreted and applied in a manner consistent therewith. Any
special allocations of items of income or gain pursuant to this Section 8.6(c)
shall be taken into account in computing subsequent allocations of Net Income
or Net Loss so that the net amounts of any items subsequently so allocated and
the special allocations shall, to the extent possible, be equal to the net
amounts that would have been allocated to each Partner or Assignee if such
special allocations had not occurred.
(d) To the extent required by Treasury Regulation Section
1.704-2(i), any tax items of the Partnership that are attributable to a
non-recourse debt of the Partnership that constitutes "partner non-recourse
debt" as defined in Treasury Regulation Section 1.704-2(b)(4) shall be
allocated in accordance with the provisions of Treasury Regulation Section
1.704-2(i). This Section 8.6(d) is intended to satisfy the requirements of
Treasury Regulation Section 1.704-2(i) (including the partner nonrecourse
minimum gain chargeback requirements) and shall be interpreted and applied in a
manner consistent therewith. Any special allocations pursuant to this Section
8.6(d) shall be taken into account in computing subsequent allocations of Net
Income or Net Loss so that the net amounts of any items subsequently so
allocated and the special allocations shall, to the extent possible, be equal
to the net amounts that would have been allocated to each Partner or Assignee
if such special allocations had not occurred.
(e) The General Partners shall make special allocations
of Net Income or Net Loss or items of income, gain, loss or deduction to GP
Units as may be necessary to permit conversion of such Units to LP Units in
accordance with Section 4.1(b). For purposes of allocating income, gain, loss
or deduction to LP Units that were converted from GP Units for periods
following such conversion, the Units shall be deemed as of the effective date
of such conversion to have been allocated the same amount of income, gain, loss
and deductions and to have received the same distributions as the LP Units
outstanding prior to such conversion.
(f) If and to the extent that any Partner or Assignee is
deemed to recognize income as a result of any transaction between such Partner
or Assignee and the Partnership pursuant to Section 482, Section 483, Sections
1272-1274 or Section 7872 of the Code, or any similar provision now or
hereafter in effect, any corresponding loss or deduction of the
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Partnership shall be allocated to the Partner or Assignee who was charged with
such income. In addition, if all or part of the deductions claimed by the
Partnership for compensation to its employees is disallowed, the income
attributable to such disallowed deductions will be specially allocated to the
General Partners, and any subsequent deductions related to such compensation
will be specially allocated to the General Partners.
(g) In addition to the other special allocations that the
General Partners may make under this Section 8.6, to preserve uniformity of
Units (subject to the priority distribution rights of certain classes of Units)
the General Partners may make special allocations of Net Income or Net Loss or
items of income, gain, loss or deduction, but only if such allocations would
not have a material adverse effect on the Unitholders (other than the General
Partners) and if they are consistent with the principles of Section 704 of the
Code.
(h) To the extent necessary that the Partnership will not
be treated as a corporation or as an association taxable as a corporation for
federal or state income tax purposes, the interests of the General Partners in
each material item of Partnership income, gain, loss, deduction or credit shall
be equal to at least 1% of each such item at all times during the existence of
the Partnership. If any General Partner receives an allocation under this
Section 8.6(h) that such General Partner would not otherwise have received,
subsequent allocations of Net Income or Net Loss shall, to the extent possible
(and subject to this Section 8.6(h)), be made so that the net amounts of Net
Income or Net Loss allocated to the Partners are the same as they would have
been had allocations not been made pursuant to this Section 8.6(h).
Section 8.7 Allocations for Tax Purposes.
(a) Except as otherwise provided in this Section 8.7, for
federal income tax purposes each item of income, gain, loss and deduction of
the Partnership shall be allocated among the Partners and Assignees in the same
proportion as items comprising Net Income or Net Loss, as the case may be, are
allocated among the Partners. Credits shall be allocated as provided in
Treasury Regulation Section 1.704-1(b)(4)(ii).
(b) In the case of Contributed Property, items of income,
gain, loss, depreciation, amortization and cost recovery deductions
attributable to such property shall be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code that takes into
account the variation between the Net Value of such property and its adjusted
basis, at the time of contribution, to the extent such allocation reduces
Book-Tax Disparities.
(c) In the case of Adjusted Property, items of income,
gain, loss, depreciation and cost recovery deductions attributable thereto
shall (i) first, be allocated among the Partners and Assignees in a manner
consistent with the principles of Section 704(c) of the Code to take into
account the Unrealized Gain or Unrealized Loss attributable to such property
and the allocation thereof pursuant to Section 8.5(d) or (e) to the extent such
allocation reduces
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Book-Tax Disparities, and (ii) second, in the event such property was
originally Contributed Property, be allocated among the Partners and Assignees
in a manner consistent with Section 8.7(b).
(d) To the extent permissible under applicable Treasury
Regulations, the amount of any gain from a taxable disposition of property
allocated to (or recognized by) a Partner or Assignee (or its successor in
interest), for federal income tax purposes pursuant to the above provisions
shall be deemed to be Recapture Income to the extent such Partner or Assignee
has been allocated or has claimed any deduction directly or indirectly giving
rise to the treatment of such gain as Recapture Income.
(e) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and allocated to
the Partners or Assignees in accordance with the provisions hereof shall be
determined without regard to any adjustment made pursuant to Section 743 of the
Code; provided, however, that such allocations, once made, shall, if an
election under Section 754 of the Code is in effect, be adjusted as necessary
or appropriate to take into account those adjustments permitted by Section 743
of the Code, and any adjustments made pursuant to Section 734 of the Code shall
be allocated to the extent permitted under and in accordance with the rule of
Treasury Regulation Section 1.704-1(b)(2)(iv)(m).
(f) The General Partners shall make special allocations
of Net Income or Net Loss or items of income, gain, loss, deduction or credit
that are consistent with the principles of Section 704(c) of the Code and shall
amend the provisions of this Agreement as appropriate to reflect the proposal
or promulgation of Treasury Regulations under Subchapter K of the Code or
otherwise to cause allocations hereunder to be respected for federal income tax
purposes. The General Partners may adopt and employ such methods and procedures
for (i) the maintenance of book and tax capital accounts, (ii) the
determination and allocation of adjustments under Sections 704(c), 734 and 743
of the Code, (iii) the determination and allocation of Net Income, Net Loss,
taxable income, taxable loss and items thereof under this Agreement and
pursuant to the Code, (iv) the determination of the identities and tax
classification of Unitholders, (v) the provision of tax information and reports
to Partners and Assignees, (vi) the adoption of reasonable conventions and
methods for the valuation of assets and the determination of tax basis, (vii)
the allocation of asset values and tax basis, (viii) conventions for the
determination of cost recovery, depreciation and amortization deductions and
the maintenance of inventories, (ix) the recognition of the Transfer of Units,
and (x) compliance with other tax-related requirements, including without
limitation the use of computer software and filing and reporting procedures
similar to those employed by other publicly-traded partnerships, as they
determine are necessary and appropriate to execute the provisions of this
Agreement, to comply with federal and state tax laws, and to achieve uniformity
and fungibility of Units (subject to the priority distribution rights of Class
A Units. If the General Partners determine, based upon advice of counsel, that
no reasonable allowable convention or other method is available to preserve the
uniformity of Units (subject to the priority distribution rights of certain
classes of Units) or the General Partners so
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elect, Units may be separately identified as distinct classes to reflect
differences in tax consequences.
(g) Unless otherwise required by the Treasury Regulations
under Section 704(c) of the Code, with respect to property owned by or
contributed to the Partnership, the General Partners shall apply the principles
of Section 704(c) of the Code in accordance with the "traditional method" under
Treasury Regulations Section 1.704-3.
Section 8.8 Monthly Allocations.
(a) Subject to applicable Treasury Regulations, the
Partnership will treat Unitholders of record at the opening of business on the
first day of a fiscal month as being the only Unitholders with respect to such
Units during such month. If any Unit is Transferred during any month, such
items attributable, under the conventions of Section 8.5, to each Unit for such
month shall be allocated to the holder of such Unit on the first day of such
month. Distributions shall be made to the Unitholders as of the applicable
Record Date as provided in Sections 8.1 and 8.2.
(b) The General Partners may revise, alter or otherwise
modify such methods of allocation (i) to the extent that they determine that
the application of such methods would result in a substantial mismatching of
the allocation of Net Income or Net Loss attributable to a period and the
distribution of cash attributable to the same period as between the Transferor
and Transferee of the Partnership Interest and/or Unit Transferred that could
be minimized by the application of an alternative tax allocation method, or
(ii) to the extent necessary to conform the Partnership's tax allocations to
the requirements of any regulations issued by the Treasury Department or
rulings of the Internal Revenue Service.
Section 8.9 Allocations Upon Dissolution.
If upon dissolution of the Partnership pursuant to Article XVII, and
after taking into account all allocations of Net Income and Net Losses (and
other tax items) under this Article VIII, distributions, if they were to be made
to Unitholders in accordance with their respective Capital Accounts, would
result in unequal distributions on their Units, then (i) gross items of income
and gain (and other tax items) for the taxable year of final distribution, and,
to the extent permitted under Section 761(c) of the Code, gross items of income
and gain (and other tax items) for the immediately preceding taxable year, shall
be allocated first to the Class A Unitholders until the Capital Account balance
allocable to each Class A Unit is equal, (ii) the same procedure shall be
followed with respect to Class B Units until the Capital Account balance
allocable to each Class B Unit is equal, and (iii) the same procedure shall be
followed with respect to Class B Units until the Capital Account balance
allocable to each Class B Unit is equal.
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ARTICLE IX
ACCOUNTING AND TAX MATTERS
Section 9.1 Books and Records.
The Partnership shall maintain complete and accurate books and records
with respect to the Partnership's business, and such books and records shall at
all times be kept at the principal office of the Partnership. The Partnership
may maintain its books and records in other than written form, if such form is
capable of conversion into written form within a reasonable time. The
classification, realization and recognition of income, gains, losses,
deductions, credits and other items for financial reporting purposes shall be
on the accrual basis in accordance with generally accepted accounting
principles.
Section 9.2 Fiscal Year.
The fiscal year of the Partnership shall be the same as its taxable
year for federal income tax purposes.
Section 9.3 Taxable Year.
The taxable year of the Partnership shall be the calendar year. The
General Partners may change the taxable year of the Partnership to another year
permitted by the Code.
Section 9.4 Preparation of Tax Returns.
The Partnership shall prepare and timely file such returns relating to
Partnership income, gains, losses, deductions and credits, as may be required
for federal, state and local income tax purposes, and within 90 days after the
close of the taxable year, the Partnership shall mail to the Limited Partners
the tax information reasonably required for their federal, state and local
income tax reporting purposes. The classification, realization and recognition
of income, gains, losses, deductions, credits and other items for federal income
tax purposes shall be on the accrual basis.
Section 9.5 Tax Elections.
(a) The General Partners may make the election under
Section 754 of the Code in accordance with applicable regulations thereunder.
In the event the General Partners make such election, the General Partners
reserve the right to seek to revoke such election upon their determination that
such revocation is in the best interests of the Unitholders.
(b) The General Partners shall determine whether to make
any other elections available under the Code or under any state's tax laws on
behalf of the Partnership.
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Section 9.6 Withholding.
The General Partners are authorized to take any action that they
determine to be necessary and appropriate to cause the Partnership to comply
with any withholding and reporting obligations imposed by law, including
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
Section 9.7 Tax Controversies.
PIMCO GP is the Tax Matters Partner (as defined in Section 6231 of the
Code) and is authorized to represent the Partnership in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner
agrees to cooperate with PIMCO GP and to do or to refrain from doing any or all
things reasonably required by the PIMCO GP to conduct such proceedings.
Section 9.8 Tax Opinions.
The requirement, as a condition to any action proposed to be taken
under this Agreement, that the Partnership be furnished a Tax Opinion (i) shall
not be applicable if the Partnership is at such time treated in all material
respects as an association taxable as a corporation for federal income tax
purposes, and (ii) shall be deemed satisfied by an Opinion of Counsel containing
such conditions, limitations and qualifications as are acceptable to the General
Partners.
ARTICLE X
CONCERNING THE GENERAL PARTNERS
Section 10.1 Management of Partnership Business.
(a) The General Partners (i) shall have the exclusive
right and full power and authority to manage and control the business and
affairs of the Partnership and to take any action deemed necessary or desirable
by them in connection with the business of the Partnership, and (ii) except as
otherwise provided in this Agreement, may take any action, including without
limitation the amendment of this Agreement, without the approval of the Limited
Partners. References in this Agreement to the "General Partners" shall be
deemed to be references to the "General Partner" if there is only one General
Partner.
(b) If there is more than one General Partner, the
General Partners shall have equal rights, power and authority in the management
and control of the business and affairs of the Partnership, and each of them
shall have the rights, power and authority of the General Partners specified in
Section 10.1(a); provided, however, that any difference arising as to any
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action connected with the business of the Partnership, other than those actions
specified in Section 10.1(c), shall be decided by General Partners holding a
majority of the outstanding GP Units.
(c) If there is more than one General Partner, the
following actions shall require the consent of all of the General Partners:
(i) the constitution of any Delegate and the
delegation to such Delegate of any of the rights and powers of the General
Partners to manage and control the business and affairs of the Partnership, and
any revision or revocation of any such constitution or delegation;
(ii) any merger or consolidation of the
Partnership with or into any other Business Entity in which the Partnership is
not the surviving entity;
(iii) any sale or transfer of all or substantially
all of the Partnership Assets;
(iv) any incurrence of Indebtedness by the
Partnership or any of its Subsidiaries except in the ordinary course of
business;
(v) initiation, consent to or acquiescence in any
Insolvency Event with respect to the Partnership;
(vi) any other action which would make it
impossible for the General Partners to carry on the ordinary business of the
Partnership;
(vii) any determination or election pursuant to
Section 17.1;
(viii) any determination, after the occurrence of an
Event of Withdrawal with respect to a General Partner, to carry on the business
of the Partnership;
(ix) any action which would cause an Assignment
Event, a Tax Realization Event or a Termination Event, or which would, prior to
the Restructuring, cause an Adverse Partnership Tax Event; or
(x) any amendment of this Article X or Article
XV or XVI.
Section 10.2 Delegation.
(a) The General Partners have the power and authority by
Written Action to constitute one or more boards or committees, and to delegate
any or all of the General Partners' rights and powers to manage and control
the business and affairs of the Partnership to one or
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more of such boards or committees (each, a "Delegate"). Such delegation by the
General Partners shall not cause any General Partner to cease to be a general
partner of the Partnership.
(b) The General Partners may not delegate their rights
and powers with respect to any of the following actions:
(i) any determination or action pursuant to
Article XVI;
(ii) admission of any successor or additional
General Partner;
(iii) any amendment of this Agreement;
(iv) any action which would require the approval
of Partners other than the General Partners; or
(v) any action described in Section 10.1(c).
(c) Except as otherwise provided in a Written Action
constituting a Delegate and delegating rights and powers to such Delegate, such
Delegate has the power and authority to constitute and appoint one or more
committees or subcommittees of such Delegate and to provide for, prescribe the
duties of, and appoint one or more individuals as officers of the Partnership,
and to delegate to one or more of such committees or subcommittees or one or
more of such officers any or all of the rights and powers delegated to it by
the General Partners.
Section 10.3 Reimbursement of the General Partners.
(a) Each General Partner shall be reimbursed on a monthly
or such other basis as the General Partners shall determine (i) for all direct
expenses paid by it on behalf of the Partnership (including amounts paid by it
to any Person to perform services for the Partnership), (ii) for all expenses
(other than taxes) incurred by it in connection with the business and affairs
of the Partnership, and (iii) in the case of a Public General Partner, for all
expenses (other than taxes) incurred by it.
(b) The General Partners shall not receive any
compensation from the Partnership for services provided to the Partnership as
General Partners.
Section 10.4 Outside Activities.
Except as provided in a Written Action, no General Partner shall carry
on any business except in connection with or incidental to (i) the performance
of its duties as a General Partner under this Agreement, (ii) the direct or
indirect acquisition, ownership or disposition of Units and other Partnership
Interests, and (iii) its governance and existence.
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Section 10.5 Certain Transactions.
(a) A General Partner or its Affiliate may make a loan to
the Partnership on terms that are fair to the Partnership. The Partnership
shall reimburse such General Partner or Affiliate for any costs incurred by it
in connection with the borrowing of funds obtained by such General Partner or
Affiliate and loaned to the Partnership.
(b) A General Partner or its Affiliate may render
services to the Partnership on terms that are fair to the Partnership.
(c) A General Partner or its Affiliate may sell, transfer
or convey assets or property to, or purchase Partnership Assets from, the
Partnership, or use or lease Partnership Assets, on terms that are fair to the
Partnership.
(d) Before entering into any transaction described in
this Section 10.5, the General Partners or their Delegates shall determine that
the proposed terms of such transaction are fair to the Partnership. In the
absence of bad faith on the part of the General Partners or their Delegates in
making a determination, such determination shall be conclusive and binding on
the Partners and Partnership.
Section 10.6 Conflicts of Interest.
Any conflict of interest between a General Partner or any of its
Affiliates, on the one hand, and the Partnership or any other Partner, on the
other hand, other than a transaction described in Section 10.5, shall be
resolved by the General Partners. In the absence of bad faith on the part of
the General Partners in resolving a conflict of interest, such resolution shall
be conclusive and binding on the Partnership and the Partners.
Section 10.7 Notice of Event of Withdrawal.
A General Partner which suffers an event that is, or with the passage
of a period specified in the definition of "Insolvency Event" or "Termination
Event" in Article I would become, an Event of Withdrawal, shall immediately
notify each other General Partner, or if there is no other General Partner,
each Limited Partner, of the occurrence of the event.
Section 10.8 Operating Board.
(a) As soon as practicable on or after November 15, 1994,
the General Partners shall establish an Operating Board of the Partnership
which, prior to the date which is four (4) months after the earlier of January
1, 1998, or the first Restructuring, shall consist of twelve (12) members as
follows: (i) the Chief Executive Officer from time to time of PIMCO, who shall
serve as the Chairperson of the Operating Board, (ii) six (6) managing
directors of PIMCO designated by PIMCO from time to time, (iii) three (3)
managing directors of CCI
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designated by CCI from time to time, (iv) one (1) managing director of any
Investment Management Company other than PIMCO or CCI designated by a majority
in Total Contributed Income of all such Investment Management Companies, and
(v) the Chief Executive Officer from time to time of the Partnership. Members
of the Operating Board designated by the Investment Management Companies are
referred to as "Designated Members." Notwithstanding the provisions of Article
XIV, this subsection (a) may not be amended prior to the date which is four (4)
months after the earlier of January 1, 1998 or the first Restructuring.
(b) This Section 10.8 and the defined terms referred to
only in this Section 10.8 shall be deleted in their entirety on the date which
is four (4) months after the earlier of January 1, 1998, or the first
Restructuring, and this Agreement shall be restated to reflect such deletion.
Section 10.9 Equity Board.
(a) As soon as practicable on or after November 15, 1994,
the General Partners shall establish an Equity Board of the Partnership which,
prior to the reconstitution of the Equity Board pursuant to subsection (b)
below (which shall not occur prior to the earlier of January 1, 1998, or the
first Restructuring), shall consist of the Chairperson from time to time of the
Operating Board, the Chief Executive Officer from time to time of the
Partnership, and ten (10) persons appointed as follows: (i) two (2) persons
appointed by PIMCO Partners, (ii) three (3) persons appointed by PFAMCO, (iii)
two (2) persons appointed by a majority in interest of the Series B Preferred
shareholders of TAG Inc., and (iv) three (3) Disinterested Directors appointed
by the members of the Equity Board who are not Disinterested Directors. Prior
to the reconstitution of the Equity Board: (i) the initial terms of office of
the members of the Equity Board appointed pursuant to this subsection (a) other
than the Disinterested Directors, the Chairperson of the Operating Board and
the Chief Executive Officer of the Partnership, shall end on the last day of
the calendar year next following the date of their appointment; (ii) the
initial terms of office of the Disinterested Directors shall end on December
31, 1994, 1995 and 1996 respectively; (iii) the succeeding terms of office of
appointed members shall be one (1) year; (iv) not later than one (1) month
prior to the expiration of the terms of office of the appointed members of the
Equity Board, they shall be reappointed or their successors shall be appointed
in accordance with the preceding sentence, to take office as members of the
Equity Board upon the expiration of such terms; (v) an appointed member of the
Equity Board may be removed at any time by the party or parties which appointed
him or her; and (vi) upon the resignation, removal or death of an appointed
member of the Equity Board, his or her successor shall be appointed by the
party or parties which appointed him or her. Notwithstanding the provisions of
Article XIV , this subsection (a) may not be amended prior to the earlier of
January 1, 1998, or the first Restructuring.
(b) This Section 10.9 and the defined terms referred to
only in this Section 10.9 shall be deleted in their entirety on the earlier of
January 1, 1998, or the first Restructuring, and this Agreement shall be
restated to reflect such deletion.
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ARTICLE XI
CONCERNING THE LIMITED PARTNERS
Section 11.1 Participation in Control of Partnership Business.
A Limited Partner shall not participate in the control of the business
of the Partnership within the meaning of the Delaware Act.
Section 11.2 Reports.
(a) Not later than 90 days after the close of each fiscal
year, the Partnership shall mail to each Partner an annual report containing
financial statements of the Partnership for the fiscal year, including a
balance sheet and statements of operations, partners' equity and changes in
financial position, prepared in accordance with generally accepted accounting
principles and accompanied by the opinion of the Partnership Accountants, and
such other information as the General Partners may deem appropriate.
(b) Not later than 45 days after the close of each fiscal
quarter, except the last fiscal quarter of each fiscal year, the Partnership
shall mail to each Partner a quarterly report for the fiscal quarter containing
financial statements of the Partnership for the fiscal quarter prepared in
accordance with generally accepted accounting principles, and such other
information as the General Partners may deem appropriate.
(c) The Partnership may, in lieu of delivering an annual
or quarterly report, deliver to each Limited Partner a copy of the Form 10-K or
10-Q, as the case may be, filed by the Partnership pursuant to the Securities
Exchange Act.
Section 11.3 Access and Confidentiality.
(a) Each Partner has the right, subject to such
reasonable standards, including standards governing what information and
documents are to be furnished, at what time and location and at whose expense,
as may be established by the Partnership, to obtain from the Partnership from
time to time upon reasonable demand for any purpose reasonably related to the
Partner's interest as a Partner:
(i) True and full information regarding the
status of the business and financial condition of the Partnership;
(ii) Promptly after becoming available, a copy of
the Partnership's federal, state and local income tax returns for each year;
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(iii) A current list of the name and last known
business, residence or mailing address of each Partner;
(iv) A copy of this Agreement, the Certificate of
Limited Partnership and all amendments thereto, together with executed copies
of any written powers of attorney pursuant to which this Agreement, any
Certificate of Limited Partnership and all amendments thereto have been
executed;
(v) True and full information regarding the
amount of cash and a description and statement of the Net Value of any
Contribution made by each Partner and which each Partner has agreed to make in
the future, and the date on which each Partner became a Partner; and
(vi) Other information regarding the affairs of
the Partnership as is just and reasonable.
(b) The General Partners shall have the right to keep
confidential from the Limited Partners for such period of time as the General
Partners deem reasonable, any information which the General Partners reasonably
believe to be in the nature of trade secrets or other information the
disclosure of which the General Partners in good faith believe is not in the
best interest of the Partnership or could damage the Partnership or its
business or which the Partnership is required by law or by agreement with a
third party to keep confidential.
(c) Any demand under this Section 11.3 shall be in
writing and shall state the purpose of such demand.
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of General Partners.
(a) If a General Partner proposes to Transfer any or all
of its GP Units to an Affiliate of such General Partner pursuant to Section
6.2(a), such Affiliate shall be admitted as a General Partner without the
approval of any other Partner.
(b) Except as provided in Sections 12.1(a), 13.1(b),
13.1(c), 17.1 or 17.2, a Person shall be admitted as a General Partner only if
such admission is proposed by the General Partners and Approved by the
Unitholders.
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(c) A Person shall not be admitted as a General Partner
unless the Partnership receives (i) a Limited Liability Opinion, a Tax Opinion
and an Assignment Opinion, (ii) a copy of this Agreement amended to reflect the
admission of such Person as a General Partner, (iii) the written agreement of
such Person to carry on the business of the Partnership, and (iv) such other
documents or instruments as may be required under this Agreement and applicable
law in order to effect the admission of such Person as a General Partner.
Section 12.2 Admission of Limited Partners.
(a) A Person other than an Underwriter which is not a
Partner and which acquires one or more Certificates by Transfer from a
Unitholder other than an Underwriter shall apply to be admitted as a Limited
Partner by executing and delivering an Admission Application to the Partnership
at the time of such Transfer. Such Person shall be an Assignee and be bound by
this Agreement as an Assignee from the close of business on the Business Day on
or next following the date on which such Person delivers a properly completed
and executed Admission Application to the Partnership, to the close of business
on the Business Day on which such Person is admitted as a Limited Partner
pursuant to Section 12.2.(e).
(b) An Assignee shall have an interest in the Partnership
equivalent to that of a Limited Partner with respect to the profits and losses
of the Partnership and the right to receive distributions of Partnership
Assets. With respect to voting rights attributable to LP Units that are held by
an Assignee, the General Partners shall be deemed to be the Limited Partner
with respect thereto and shall, in exercising the voting rights in respect of
such Units on any matter, vote such Units at the written direction of such
Assignee. If no such written direction is received, such Units will not be
voted. An Assignee shall otherwise have none of the rights of a Limited
Partner.
(c) A Person other than an Underwriter which proposes to
make a Contribution in accordance with this Agreement (a "Contributor") shall
apply to be admitted as a Limited Partner by executing and delivering an
Admission Application to the Partnership.
(d) A Person which executes and delivers an Admission
Application to the Partnership pursuant to this Section 12.2 shall be admitted
as a Limited Partner only with the consent of the General Partners, which
consent may be granted or withheld in the sole and complete discretion of the
General Partners. Such consent shall be deemed to have been given, in the case
of an Assignee, at the close of business on the seventh Business Day of the
fiscal month immediately succeeding the fiscal month in which an Admission
Application properly completed and executed by such Person is received by the
Partnership, and in the case of a Contributor, at the close of business on the
Business Day immediately preceding the day on which the Contribution is to be
made, unless the General Partners have withheld their consent prior to such
time.
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(e) A Person which delivers to the Partnership a properly
completed and executed Admission Application pursuant to this Section 12.2
shall be admitted as a Limited Partner and shall become bound by this Agreement
as a Limited Partner at the close of business on the Business Day upon which
the General Partners consent to such admission.
Section 12.3 Admission of Underwriters and Their Transferees.
If the Partnership or any Partner sells any Units pursuant to an
underwritten public offering, then each underwriter ("Underwriter") shall
execute and deliver an Admission Application to the General Partners. An
Underwriter shall be admitted as a Limited Partner without the consent of the
General Partners and shall become bound by this Agreement as a Limited Partner
upon receipt of such Admission Application and payment of the consideration for
the Units being sold in such offering, and such payment shall constitute a
request by such Underwriter that the records of the Partnership reflect such
admission. Each initial Transferee of an Underwriter shall be admitted as a
Limited Partner without the consent of the General Partners and shall become
bound by this Agreement upon payment for the Units so Transferred, and such
payment shall constitute a request by such initial Transferee that the records
of the Partnership reflect its admission and the appointment and authorization
of the General Partners as its representatives for the purpose of executing
amendments or restatements of this Agreement and any certificates required to
be filed under the Delaware Law.
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
.
Section 13.1 Withdrawal or Removal of General Partners.
(a) A General Partner may withdraw from the Partnership
as a General Partner without the approval of any other Partner if it Transfers
all of its GP Units to an Affiliate of such General Partner as provided in
Section 6.2(a), and such Affiliate is admitted as a General Partner as provided
in Section 12.1.
(b) Except as provided in Section 13.1(a), a General
Partner shall not voluntarily withdraw from the Partnership as a General
Partner unless (i) the Partnership receives a Limited Liability Opinion, a Tax
Opinion and an Assignment Opinion and (ii) such withdrawal is approved by
Unitholders holding a majority of the outstanding Units, other than the Units
held by such General Partner and its Affiliates, voting as a single class. If
there is only one General Partner, the General Partner shall call and hold a
meeting of the Unitholders to consider the withdrawal of the General Partner.
Such meeting shall be held no sooner than 180 days after the date of such
notice, and any Unitholder may, by notice to the Partnership at least 120 days
prior to the date of the meeting, propose a successor General Partner. Any
proposed successor General Partner shall be a candidate for successor General
Partner at such meeting only if it is qualified to
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be a General Partner and has agreed in writing to carry on the business of the
Partnership. If the withdrawal is approved, but no successor General Partner is
Approved by the Unitholders on the first ballot of such meeting, a second
ballot shall be held as soon as practicable thereafter in order to consider the
approval of the candidate that received the most votes in the first ballot, and
if such candidate is not Approved by the Unitholders on the second ballot, the
General Partner shall be entitled to withdraw, and upon such withdrawal the
Partnership shall be dissolved and liquidated pursuant to Article XVII. If a
candidate is Approved by the Unitholders as successor General Partner, it shall
be admitted to the Partnership as the General Partner as provided in Section
12.1 immediately prior to the withdrawal of the Departing General Partner.
(c) A General Partner may be removed as a General Partner
by vote of Unitholders holding 80% or more of the outstanding Units, voting as
a single class. A General Partner may not be removed unless (i) the Partnership
receives a Limited Liability Opinion, a Tax Opinion and an Assignment Opinion
with respect to such removal, and (ii) if such General Partner is the sole
General Partner, a Person qualified to be General Partner, which has agreed in
writing to carry on the business of the Partnership, is Approved by the
Unitholders as successor General Partner. Such Person shall be admitted to the
Partnership as a General Partner as provided in Section 12.1 immediately prior
to the removal of the Departing General Partner.
Section 13.2 Interest of Departing General Partner.
(a) A Departing General Partner shall become a Limited
Partner, and its GP Units, if any, shall be converted into LP Units pursuant to
Section 4.1(b). At the time of such conversion, the Departing General Partner
shall pay to the Partnership an amount equal to any negative balance in its
Capital Account.
(b) If the Partnership is indebted to the Departing
General Partner at the effective date of its withdrawal or removal for funds
advanced, properties sold or services rendered to the Partnership by the
Departing General Partner, the Partnership shall, within 60 days after such
date, pay to the Departing General Partner the full amount of such
indebtedness; provided, however, that if the Departing General Partner has
withdrawn as a General Partner in violation of this Agreement, the Partnership
may offset against the amount of such indebtedness any damages resulting from
such breach.
(c) If the Departing General Partner has withdrawn or
been removed as a General Partner in accordance with Section 13.1 without
dissolution of the Partnership, the successor to the Departing General Partner,
or if there is no successor, the remaining General Partners, shall (i) assume
all outstanding obligations incurred by the Departing General Partner as a
General Partner of the Partnership, and (ii) take all such action as shall be
necessary to terminate any guarantees of the Departing General Partner and any
of its Affiliates of any obligations of the Partnership. If for whatever reason
the creditors of the Partnership will not consent to such termination of
guarantees, the successor to the Departing General Partner, or if there is no
successor, the remaining General Partners, shall indemnify the Departing
General
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Partner for any costs and expenses incurred by the Departing General Partner on
account of such guarantees pursuant to an agreement reasonably satisfactory in
form and substance to the Departing General Partner.
Section 13.3 Business to Be Carried On After Event of Withdrawal.
Upon the occurrence of an Event of Withdrawal, the business of the
Partnership shall be carried on by any remaining or newly-admitted General
Partners.
Section 13.4 No Withdrawal of Limited Partners.
A Limited Partner may not withdraw from the Partnership as a Limited
Partner; provided, however, that upon a Transfer of Units by a Limited Partner
in accordance with Section 6.3 and the admission of the Transferee as a Limited
Partner, the Transferor Limited Partner shall cease to be a Limited Partner
with respect to the Units so Transferred.
ARTICLE XIV
PARTNERSHIP MEETINGS; AMENDMENTS
Section 14.1 Partnership Meetings.
Meetings of Unitholders may be called by the General Partners or the
Liquidator or by Unitholders holding at least 10% of the outstanding Units. Any
Unitholder calling a meeting shall specify the number of Units as to which the
Unitholder is exercising the right to call a meeting, and only those Units shall
be counted for the purpose of determining whether the 10% standard of the
preceding sentence has been met. Unitholders shall call a meeting by delivering
to the Partnership one or more notices in writing stating that the signing
Unitholders wish to call a meeting and indicating the specific purposes for
which the meeting is to be called. Action at the meeting shall be limited to
those matters specified in the notice of the meeting, and no Unitholder may
propose, at such meeting, any other matter to be considered by the Unitholders.
Within 60 days after receipt of such a notice from Unitholders or within such
greater time as may be reasonably necessary for the Partnership to comply with
any statutes, rules, regulations, listing agreements or similar requirements
governing the holding of a meeting or the solicitation of proxies for use at
such a meeting, the Partnership shall send a notice of the meeting to the
Unitholders. A meeting shall be held at a reasonable time and convenient place
determined by the General Partners or the Liquidator, as the case may be, on a
date not more than 60 days after the mailing of notice of the meeting. No action
shall be taken at any meeting unless the Partnership has received a Limited
Liability Opinion, a Tax Opinion and an Assignment Opinion with respect to such
action.
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Section 14.2 Record Date.
The General Partners or the Liquidator, if any, shall set a Record Date
for the determination of the Unitholders entitled to notice of and to vote at a
meeting or adjourned meeting of Unitholders, which shall not be less than 10
days nor more than 60 days before the date of the meeting (unless such
requirement conflicts with any law, rule, regulation, guideline or requirement,
including any requirement of any National Securities Exchange on which the Units
are listed or admitted for trading or any other regulatory agency, in which case
such law, rule, regulation, guideline or requirement shall govern).
Section 14.3 Notice of Meeting.
Notice of a meeting called pursuant to Section 14.1 shall be given in
writing either personally or by mail or other means of written communication
addressed to each Unitholder of record as of the close of business on the Record
Date for the meeting at the address of such Unitholder appearing on the books of
the Transfer Agent. An affidavit or certificate of mailing of any notice in
accordance with the provisions of this Section 14.3 executed by an officer of
the Partnership, the Transfer Agent or a mailing organization shall be prima
facie evidence of the giving of notice. If any notice addressed to a Unitholder
at its address is returned to the Partnership by the United States Postal
Service marked to indicate that the United States Postal Service is unable to
deliver it, such notice and any subsequent notices shall be deemed to have been
duly given without further mailing if they are available for the Unitholder at
the principal executive office of the Partnership for a period of one year from
the date of the giving of the notice to all other Unitholders.
Section 14.4 Adjournment.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting and a new Record Date need not be fixed if the
time and place thereof are announced at the meeting at which the adjournment is
taken, unless such adjournment shall be for more than 60 days. At the adjourned
meeting, the Partnership may transact any business that might have been
transacted at the original meeting. If the adjournment is for more than 60 days
or if a new Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with Section 14.3.
Section 14.5 Waiver of Notice; Consent to Meeting; Approval of Minutes.
The transactions of any meeting of Unitholders, however called and
noticed, and wherever held, are as valid as though effected at a meeting duly
held after regular call and notice if a quorum is present either in person or by
proxy and if, either before or after the meeting, each of the Unitholders
entitled to vote who is not present in person or by proxy, signs a written
waiver of notice or a consent to the holding of the meeting or an approval of
the minutes thereof. All waivers, consents and approvals shall be filed with the
Partnership records or made a part of
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the minutes of the meeting. Attendance of a Unitholder at a meeting shall
constitute a waiver of notice of the meeting, except when the Unitholder
objects, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened; provided, that
attendance at a meeting shall not be deemed to constitute a waiver of any right
to object to the consideration of matters required to be included in the notice
of the meeting, but not so included, if the objection is expressly made at the
meeting.
Section 14.6 Quorum and Required Vote.
(a) The presence in person or by proxy of a majority of
the Units entitled to vote shall constitute a quorum at a meeting of
Unitholders; provided, that if a separate vote by certain Unitholders or by a
class or series of Units is required by this Agreement, the presence in person
or by proxy of a majority of Units held by such Unitholders or a majority of
the outstanding Units of such class or series, present in person or by proxy
and entitled to vote, shall constitute a quorum with respect to that vote.
(b) At any meeting of the Unitholders duly called and
held in accordance with this Agreement at which a quorum is present, the
affirmative vote of the majority of Units present in person or by proxy and
entitled to vote, or such different or higher percentage as may be required by
this Agreement, shall be the act of the Unitholders; provided, that if a
separate vote of certain Unitholders or by a class or series of Units is
required by this Agreement, the affirmative vote of the majority of Units held
by such Unitholders or a majority of the outstanding Units or such class or
series, present in person or by proxy and entitled to vote, or such different
or higher percentage as may be required by this Agreement, shall be the act of
such Unitholders or such class or series
(c) The Unitholders present at a duly called or held
meeting at which a quorum is present may continue to transact business until
adjournment, notwithstanding the withdrawal of enough Unitholders to leave less
than a quorum, if any action taken (other than adjournment) is approved by
Unitholders holding the requisite percentage of Units specified in this
Agreement. In the absence of a quorum, any meeting of Unitholders may be
adjourned from time to time by the General Partners or upon the affirmative
vote of Unitholders holding a majority of the Units represented either in
person or by proxy and entitled to vote, but no other business may be
transacted.
Section 14.7 Conduct of Meeting.
The General Partners or the Liquidator, if any, shall have the
exclusive right and full power and authority to conduct any meeting of
Unitholders, and shall determine the Persons entitled to vote, the existence of
a quorum, the satisfaction of the requirements of this Article XIV, the conduct
of voting, the validity and effect of any proxies, and the determination of any
controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partners or the Liquidator, as the case may be,
shall designate an individual to serve as
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chairman of the meeting, and shall further designate an individual to serve as
secretary and to take the minutes of the meeting, in either case including,
without limitation, a Partner, an employee or agent of a General Partner, or an
officer of the Partnership. All minutes shall be kept with the records of the
Partnership maintained by the General Partners. The General Partners or the
Liquidator, as the case may be, may make such other regulations consistent with
applicable law and this Agreement as they may deem advisable concerning the
conduct of any meeting of the Unitholders, including regulations in regard to
the appointment of proxies, the appointment and duties of inspectors of
election, and the submission and examination of proxies and other evidence of
the right to vote.
Section 14.8 Action Without a Meeting.
(a) Any action that may be taken at a meeting of the
Unitholders may be taken without a meeting if written approvals setting forth
the action so taken are given by Unitholders holding not less than the minimum
number of Units that would be necessary to take such action at a meeting at
which all the Unitholders were present and voted. Prompt notice of the taking
of an action without a meeting shall be given to the Unitholders who have not
approved such action.
(b) If the General Partners or the Liquidator, if any,
submit an action or actions to the Partners for written approval, the General
Partners or the Liquidator, as the case may be, shall set a Record Date for the
determination of the Unitholders entitled to give or withhold written approval
of such action or actions, which shall not precede the date on which the Record
Date is determined and shall not be more than ten days after such date (unless
such requirement conflicts with any law, rule, regulation, guideline or
requirement, including any requirement of any National Securities Exchange on
which the Units are listed or admitted for trading or any other regulatory
agency, in which case such law, rule, regulation, guideline or requirement
shall govern).
(c) If any Person other than a General Partner or the
Liquidator, if any, submits an action or actions to the Partners for written
approval, the Record Date for the determination of the Unitholders entitled to
give or withhold written approval of such action or actions shall be the date
on which the first duly executed written approval setting forth the action or
actions taken or proposed to be taken is delivered to the Partnership at its
principal office by hand or by registered or certified mail, return receipt
requested (unless such requirement conflicts with any law, rule, regulation,
guideline or requirement, including any requirement of any National Securities
Exchange on which the Units are listed or admitted for trading or any other
regulatory agency, in which case such law, rule, regulation, guideline or
requirement shall govern).
(d) No written approval shall be effective unless (i)
such written approval sets forth the action or actions taken or proposed to be
taken, and is delivered to the Partnership within 90 days after the Record Date
for the determination of the Unitholders entitled to give or
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withhold written approval of such action or actions and (ii) the Partnership
receives a Limited Liability Opinion and a Tax Opinion with respect to such
action or actions.
Section 14.9 Voting and Approval Rights.
(a) Unless otherwise specified in this Agreement,
Unitholders shall have one vote for each Unit held by them.
(b) Only Unitholders who are Unitholders on the Record
Date determined pursuant to Section 14.2 shall be entitled to notice of, or to
vote at, a meeting of Unitholders. Only Unitholders who are Unitholders on the
Record Date determined pursuant to Section 14.8 shall be entitled to notice of,
or to give or withhold written approval of, any action for which written
approvals are solicited.
(c) With respect to Units that are held for a Person's
account by another Person (such as a broker, dealer, bank, trust company or
clearing corporation, or an agent of any of the foregoing), in whose name such
Units are registered, such other Person shall, in exercising any voting or
approval rights in respect of such Units on any matter, vote such Units or give
or withhold written approval with respect to such Units at the direction of the
Person on whose behalf such other Person is holding such Units, and the
Partnership shall be entitled to assume it is so acting without further
inquiry.
(d) Each Unitholder entitled to vote at a meeting of
Unitholders or to give or withhold written approval of any action may authorize
another Person to act for such Unitholder by proxy. A duly executed proxy shall
be irrevocable if it states that it is irrevocable and if, and only so long as,
it is coupled with an interest sufficient in law to support an irrevocable
power. A proxy may be made irrevocable regardless of whether the interest with
which it is coupled is an interest in the Unit itself or an interest in the
Partnership generally.
Section 14.10 Amendments to Be Adopted Solely by the General Partners.
The General Partners, without the approval of any Limited
Partner, may amend any provision of this Agreement to reflect:
(i) a change in the name of the Partnership or
the location of the principal place of business of the Partnership;
(ii) the admission, substitution, withdrawal or
removal of Partners in accordance with this Agreement;
(iii) a change that the General Partners determine
is appropriate in order to qualify the Partnership as a limited partnership or
a partnership in which the Limited Partners have limited liability under the
laws of any state or to ensure that the Partnership will not be
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treated as a corporation or as an association taxable as a corporation for
federal income tax purposes;
(iv) a change that the General Partners determine:
(A) does not adversely affect the holders of any class or series of Units in
any material respect, (B) is appropriate in order to satisfy any requirement,
condition or guideline contained in any federal or state statute or any rule,
regulation, requirement, condition or guideline of any federal or state agency,
(C) is appropriate in order to facilitate the listing or trading of the Units
on or otherwise to comply with any rule, regulation, requirement, condition or
guideline of any National Securities Exchange, or (D) is necessary in order to
effect the purposes of this Agreement, or to cure or otherwise correct any
ambiguity, error or omission in any provision of this Agreement;
(v) the designations, preferences and relative
participating, optional or other special rights, powers and duties of any newly
created class or series of Units;
(vi) a change that the General Partners determine
is appropriate in connection with the creation or issuance of any class or
series of Units, other Equity Securities, or other Partnership securities; or
(vii) a change that the General Partners determine
is appropriate in connection with any action taken pursuant to Article XVI.
Section 14.11 Amendment Procedures.
(a) All amendments to this Agreement, except those
described in Section 14.10, shall be adopted as follows:
(i) Any such amendment shall be proposed by the
General Partners.
(ii) Any such amendment proposed by the General
Partners shall be effective upon its approval by Unitholders holding a majority
of the outstanding Units, voting as a single class; provided, however, that if
(A) the proposed amendment would materially and adversely affect the rights or
preferences of holders of any class or series of Units or other Partnership
Interests, it must also be approved by Unaffiliated Holders holding a majority
of the outstanding Units of such class or series, or a majority in interest of
such Partnership Interests, as the case may be; or (B) the proposed amendment
would change the percentage of Units or other Partnership Interests required to
take any action, it must also be approved by Partners holding at least the
percentage of Units or other Partnership Interests which would be changed by
the proposed amendment.
(b) The General Partners shall notify all Unitholders
upon final approval or disapproval of any amendment proposed by the General
Partners.
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ARTICLE XV
INDEMNIFICATION AND RELATED MATTERS
Section 15.1 Indemnification.
(a) The Partnership shall indemnify each Indemnitee and
hold it harmless from and against any and all losses, claims, damages,
liabilities, expenses (including legal fees and expenses), judgments, fines,
settlements and other amounts, whether joint or several (collectively
"Expenses"), arising from, based upon or incurred in connection with any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Indemnitee may be involved, or
threatened to be involved, as a party or otherwise, by reason of its status as
an Indemnitee (collectively "Proceedings"), if the Indemnitee acted or failed
to act in good faith and in a manner it reasonably believed to be in, or not
opposed to, the best interests of the Partnership and, with respect to any
criminal proceeding, had no reasonable cause to believe its conduct was
unlawful. The termination of any Proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not, of
itself, create a presumption that the Indemnitee acted in a manner contrary to
that specified in the preceding sentence; provided, however, that neither
Thomson nor any of its Affiliates shall be entitled to indemnification
hereunder to the extent that such Person shall be entitled to indemnity under
Section 11.2(a) of the Purchase and Option Agreement dated as of July 24, 1990
by and among Thomson, Thomson XxXxxxxx Inc., a Delaware corporation, Thomson
XxXxxxxx Holdings Inc., a Delaware corporation, Thomson XxXxxxxx Securities
Inc., a Delaware corporation, Thomson XxXxxxxx Asset Management Inc., a
Delaware corporation, Thomson XxXxxxxx Fund Distributors Inc., a Delaware
corporation, and the Partnership.
(b) Excise taxes assessed on an Indemnitee with respect
to an employee benefit plan are Expenses, and any action or failure to act by
such Indemnitee in a manner it reasonably believed to be in, or not opposed to,
the best interests of such plan shall be conclusively deemed to be in, or not
opposed to, the best interests of the Partnership.
Section 15.2 Indemnification Agreements.
The Partnership may enter into an indemnification agreement
with any Indemnitee, which agreement may include, without limitation, some or
all of the following provisions:
(i) that such Indemnitee shall be indemnified as
provided in Section 15.1;
(ii) that if such Person is successful, on the
merits or otherwise, in any Proceeding, it shall be indemnified against all
Expenses actually and reasonably incurred by it or on its behalf in connection
with any Proceeding; that if such Indemnitee is not wholly successful in such
Proceeding but is successful, on the merits or otherwise, as to one or more but
less than
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all claims, issues or matters in such Proceeding, the Partnership shall
indemnify such Person against all Expenses actually and reasonably incurred by
it or on its behalf in connection with each successfully resolved claim, issue
or matter; and that, for these purposes, and without limitation, the
termination of any claim, issue or matter in such Proceeding by dismissal with
or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter;
(iii) that the Partnership shall from time to time
advance all Expenses actually and reasonably incurred by or on behalf of such
Indemnitee in connection with any Proceeding, and that each such advance shall
be made within 20 days after the receipt by the Partnership of a statement
listing Expenses incurred by such Person since the date of the last statement;
(iv) that such Indemnitee shall be presumed to be
entitled to indemnification under such agreement if such Person has properly
submitted a request for indemnification and that the Partnership shall have the
burden of proof to overcome that presumption; and
(v) that if the Person empowered or selected to
determine whether such Indemnitee is entitled to indemnification shall not have
made such determination within a stated period, such Indemnitee shall be
entitled to such indemnification, with such exceptions as may be provided in
such agreement.
Section 15.3 Indemnification Procedures.
Except as otherwise provided in any agreement for indemnification
entered into pursuant to Section 15.2:
(i) If an Indemnitee receives notice of any
Proceeding with respect to which the Indemnitee may be entitled to
indemnification under Section 15.1 or such agreement, the Indemnitee shall
promptly give notice to the Partnership of such Proceeding. To the extent that
delay in giving such notice, or failure to give such notice, materially
prejudices the Partnership, the Indemnitee shall not be entitled to
indemnification.
(ii) The Partnership shall from time to time
advance all Expenses actually and reasonably incurred by or on behalf of an
Indemnitee in connection with any Proceeding, upon receipt by the Partnership
of an undertaking by or on behalf of the Indemnitee to repay such advances if
it shall be determined that the Indemnitee is not entitled to be indemnified
under Section 15.1 or such agreement.
(iii) The Partnership may assume the defense of any
Proceeding, with counsel reasonably acceptable to the Indemnitee, by giving
notice to the Indemnitee (a "Defense Notice") of the Partnership's election to
do so. In the event that the Partnership so elects to assume the defense of a
Proceeding, the Partnership will not be liable to the Indemnitee for any
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attorney's fees or expenses incurred by the Indemnitee with respect to the
defense of such Proceeding after the date of the Indemnitee's receipt of the
Defense Notice, provided that:
(A) The Indemnitee shall continue to
have the right to employ counsel in any such Proceeding at the Indemnitee's own
expense; and
(B) If (1) the employment of counsel by
the Indemnitee has previously been authorized in writing by the Partnership, or
(2) the Partnership shall have reasonably concluded, and shall have given
notice to the Indemnitee, that there may be a conflict of interest between the
Partnership and the Indemnitee in the conduct of such defense, or (3) the
Partnership shall not, in fact, have employed counsel to assume the defense of
such Proceeding, then the fees and expenses of the Indemnitee's counsel shall
be paid by the Partnership in accordance with Section 15.1 or such agreement.
(iv) The Partnership may, without the consent of
the Indemnitee, settle any claim in any Proceeding for which it is obligated to
provide indemnification under Section 15.1 or such agreement, and, as a
condition to the Indemnitee's receipt of such indemnification, the Indemnitee
shall take all such actions required to cooperate in effecting such settlement;
provided, however, that the Partnership shall not settle any claim in any
manner that would impose any penalty or limitation on the Indemnitee without
the Indemnitee's written consent (which may not be unreasonably withheld or
delayed).
Section 15.4 Insurance.
The Partnership may purchase and maintain insurance for the benefit of
one or more Indemnitees against any Expenses incurred by them, regardless of
whether the Partnership would have the power to indemnify such Indemnitees
against such Expenses under this Agreement.
Section 15.5 Source of Payment.
Any indemnification under this Article XV shall be paid solely out of
any insurance purchased pursuant to Section 15.4, or Partnership Assets; and the
General Partners, Limited Partners and Assignees, and their Affiliates, shall
have no liability for any such indemnification.
Section 15.6 Scope of Indemnification.
The indemnification provided by Section 15.1 (i) shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
pursuant to any vote of the Unitholders, as a matter of law or otherwise, (ii)
shall continue as to an Indemnitee which has ceased to serve in a capacity for
which the Indemnitee is entitled to indemnification, (iii) shall inure to the
benefit of the heirs, successors, assigns, administrators and personal
representatives of the Indemnitee, and (iv) shall not be deemed to create any
right to indemnification for the benefit of any other Persons.
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Section 15.7 Effect of Amendments.
No amendment of this Agreement shall limit or otherwise adversely
affect the right of any Indemnitee to indemnification for any act, or failure to
act, which occurred prior to the adoption and effectiveness of the amendment
Section 15.8 Limitations on Liability of Indemnitees.
(a) The General Partners shall not be liable to the
Partnership or any Partner or Assignee for any action or failure to act on the
part of any Delegate or any committee, subcommittee or officer appointed by
such Delegate, so long as the General Partners appointed such Delegate in good
faith and with reasonable care. Neither a Delegate nor its members, if any,
shall be liable to the Partnership or any Partner or Assignee for any action or
failure to act on the part of any committee, subcommittee or officer appointed
by such Delegate in good faith and with reasonable care.
(b) An Indemnitee shall not be liable to the Partnership
or any Partner or Assignee for breach of fiduciary duty (including breach of
any duty of care or any duty of loyalty) to the Partnership or any Partner or
Assignee unless it is proved by clear and convincing evidence that the
Indemnitee's action or failure to act was undertaken with deliberate intent to
cause injury to the Partnership or was undertaken with reckless disregard for
the best interests of the Partnership.
(c) An Indemnitee may rely upon and shall be protected
and shall incur no liability in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties. An Indemnitee shall not be liable to the Partnership, any Partner or
Assignee or any other Indemnitee for, and shall be protected in, acting or
refraining from acting, in good faith reliance on the provisions of this
Agreement, and the good faith exercise of any of the powers or rights granted
to an Indemnitee by this Agreement or pursuant to the delegation of power and
authority permitted by this Agreement, shall not constitute a breach of
fiduciary duty to the Partnership, any Partner or Assignee or any other
Indemnitee.
(d) An Indemnitee may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any opinion of any such Person as
to matters that such Indemnitee reasonably believes to be within such Person's
professional or expert competence shall be full and complete authorization and
protection in respect to any action taken or suffered or omitted in good faith
and in accordance with such opinion.
(e) In making a determination pursuant to this Agreement,
the General Partners or their Delegates shall take into account such factors as
they consider to be appropriate
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in the circumstances and shall have no duty or obligation to take any other
factors into account. If any such determination is to be made in "good faith,"
or under another express standard, the General Partners or their Delegates
shall act under such express standard and shall not be subject to any other or
different standards.
(f) If any transaction contemplated by this Agreement is
required to be "fair" to the Partnership, the fairness of such transaction
shall be determined in context with all similar or related transactions and
with all other transactions and relationships among the Persons involved and
their respective Affiliates.
ARTICLE XVI
RESTRUCTURING
Section 16.1 Power of General Partners to Effect a Restructuring.
(a) If at any time the General Partners determine that as
a result of (i) the enactment (or imminent enactment) of any legislation, (ii)
the publication of any temporary or final regulation by the United States
Department of the Treasury or any ruling by the Internal Revenue Service, (iii)
a judicial decision, or (iv) otherwise (including, without limitation, the
expiration of the period provided under Section 10211(c) of the Revenue Act of
1987, Pub. L. 100-203, as amended by Section 2004(f)(2) of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, during which certain
partnerships may be exempt from the treatment applicable to "publicly traded
partnerships" under Section 7704 of the Code, but not including the General
Partners' voluntary adoption of tax accounting methods or the use of special
allocations which are not required for federal income tax purposes), there is a
substantial risk of an Adverse Partnership Tax Event or a Tax Realization
Event, then the General Partners may take any and all actions that the General
Partners deem appropriate to accomplish one or more Restructurings. Such
actions authorized pursuant to this Section 16.1(a) include, but are not
limited to:
(i) The creation of one or more Business Entities
controlled by the General Partners, Affiliates of the General Partners or
Affiliates of the Partnership.
(ii) The transfer of all or any part of the
business of the Partnership or the Partnership Assets to one or more existing
or newly-created Business Entities in exchange for interests in such Business
Entities, which interests may be subject to substantial restrictions on
transfer.
(iii) The initiation of exchange or redemption
transactions which will permit and may automatically effect, without the
consent of any Limited Partner, the exchange of some or all outstanding LP
Units for interests in one or more existing or newly-created Business
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Entities which hold, directly or indirectly, interests in all or any part of
the business of the Partnership or the Partnership Assets.
(iv) The imposition of substantial restrictions on
the transferability of some or all of the LP Units (or interests in one or more
Successor Entities) for both limited and extended periods of time, which
restrictions may provide for damages (including forfeiture) for attempted
Transfer in violation of such restrictions.
(v) Causing the Partnership and any one or more
Successor Entities to enter into agreements governing their relationships
following the Restructuring, on terms and conditions determined by the General
Partners, including without limitation agreements providing for (A) the
issuance and sale by a Successor Entity of its securities and the contribution
of the proceeds of such issuance and sale to the Partnership, in exchange for
Units or other Partnership securities; (B) the acquisition by a Successor
Entity of businesses or assets and the contribution of such businesses or
assets to the Partnership in exchange for Units; (C) the adoption by a
Successor Entity of one or more employee benefit plans involving the issuance
of its securities, the assumption by such Successor Entity of the outstanding
employee benefit plans of the Partnership, and contribution of the proceeds of
issuance and sale of securities under any employee benefit plans of such
Successor Entity to the Partnership, in exchange for Units; and (D) the
exchange of outstanding Units for securities of a Successor Entity upon request
by the holders of such Units, the registration of such securities under federal
and state securities laws in connection with a public offering, and the
concomitant listing of such securities on a National Securities Exchange.
(b) Without limiting the power and authority of the
General Partners provided in this Section 16.1 to effect one or more
Restructurings at any future time, unless the General Partners determine that
an Adverse Tax Consequence would otherwise occur prior to January 1, 1998, no
Restructuring may be effected that will, prior to November 30, 1997, (i)
restrict the transferability of LP Units held by the Public Unitholders, (ii)
cause an Adverse Partnership Tax Event, or (iii) restrict the ability of
Nonpublic Unitholders to convert LP Units into interests in a Successor Entity.
In addition, the General Partners may not, in effecting a Restructuring,
subject any Limited Partner to liability to Partnership creditors without such
Limited Partner's consent.
(c) The power and authority of the General Partners to
effect (or not to effect) one or more Restructurings (including, without
limitation, an Incorporation Restructuring as provided in Section 16.2) was a
bargained-for and material condition of the willingness of the General Partners
and their Affiliates to enter into the Partnership Agreement. The power and
authority of the General Partners to effect (or not to effect) one or more
Restructurings includes the power and authority to effect one or more
Restructurings that result in benefits to one or more Partners or their
Affiliates (including without limitation the General Partners or their
Affiliates) that are not enjoyed by all Partners, and that may result in
disadvantageous consequences to one or more Partners that are not suffered by
all Partners or their Affiliates (including without limitation the General
Partners or their Affiliates). No Limited Partner shall have any cause of
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action against, or right to receive any compensation from, the Partnership, the
General Partners or their Affiliates or any other Limited Partner or its
Affiliates, as a result of or in respect of (i) any Restructuring or the
disparate effects thereof on any one or more Partners, (ii) the failure of the
General Partners to effect any one or more Restructurings, or (iii) the General
Partners' determination to effect a particular Restructuring or Restructurings
instead of any other Restructuring or Restructurings, unless it is proved by
clear and convincing evidence that the action or failure to act of the General
Partners involved an act or omission undertaken with deliberate intent to cause
injury to the Partnership or was undertaken with reckless disregard for the
best interests of the Partnership.
Section 16.2 Incorporation Restructuring.
Without in any manner limiting or otherwise restricting the power and
authority of the General Partners to effect one or more Restructurings as
provided in Section 16.1, the General Partners are authorized to effect a
Restructuring (the "Incorporation Restructuring") as follows:
(i) If the General Partners determine to effect
an Incorporation Restructuring, they shall deliver to the Transfer Agent
written notice (the"Incorporation Notice") of the election and shall cause the
Transfer Agent to mail a copy of the Incorporation Notice to all Unitholders at
least 30 days prior to the effective date of the proposed Incorporation
Restructuring (the"Effective Date"). The Incorporation Notice also shall be
published at least once in all editions of a daily newspaper of national
circulation printed in the English language. The Incorporation Notice shall
specify the Effective Date and the number of shares of common stock
(the"Exchange Shares") that shall be issued in exchange for each surrendered
Unit by the corporation (the"Restructuring Corporation") formed or otherwise
utilized by the General Partners to effect the Incorporation Restructuring. Any
such Incorporation Notice mailed to a Unitholder at its address as reflected in
the records of the Transfer Agent shall be conclusively presumed to have been
given regardless of whether the Unitholder receives such notice.
(ii) The General Partners shall cause the
Restructuring Corporation to be formed under the laws of the State of Delaware.
The Restructuring Corporation shall take all requisite actions and effect all
requisite filings and applications so that its common stock shall be listed on
or admitted to trading on the National Securities Exchange on which the Class A
LP Units are then listed or admitted to trading, or on another National
Securities Exchange as deemed appropriate by the General Partners.
(iii) Prior to the Effective Date, the Public
Unitholders shall surrender the Certificates for all of the Units held by them,
and any Nonpublic Unitholder may surrender the Certificates for any or all of
the Units held by it, at such office or offices of the Transfer Agent for the
Class A LP Units as such Transfer Agent may specify, or as may be required by
any National Security Exchange on which the Class A LP Units are listed or
admitted to trading.
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(iv) Prior to the Effective Date, the
Restructuring Corporation shall deposit with the Transfer Agent for the Class A
LP Units certificates evidencing sufficient Exchange Shares for issuance in
exchange for (A) all Units held by the Public Unitholders, and (B) all Units
surrendered for exchange by Nonpublic Unitholders.
(v) From and after the Effective Date, (A) all
rights of the Public Unitholders under this Agreement and the Delaware Act
shall cease and terminate, (B) all rights of the Nonpublic Unitholders under
this Agreement and the Delaware Act, to the extent of the Units surrendered by
them, shall cease and terminate, (C) all Units held by Public Unitholders and
all Units surrendered by Nonpublic Unitholders shall be deemed to have been
transferred to the Restructuring Corporation on the books and records of the
Partnership, and (D) the Restructuring Corporation shall be deemed to be the
holder of all such Units from and after the Effective Date for all purposes of
this Agreement.
(vi) As soon as practicable after the Effective
Date, the Transfer Agent for the Class A LP Units shall deliver to the
Unitholders which surrendered Certificates for Units certificates evidencing
the Exchange Shares to be issued to them in exchange for such Certificates
(vii) For a period of six years following the
Effective Date, the Transfer Agent for the Class A LP Units shall continue to
hold the Exchange Shares deposited with it pursuant to clause (iv) and not
delivered in exchange for Certificates, and shall receive, hold in trust and
invest and reinvest all dividends and distributions in respect of such Exchange
Shares. Such Transfer Agent shall, from such dividends and distributions and
the income, if any, therefrom, pay all taxes payable with respect to such
dividends, distributions and income, and all costs and expenses reasonably
incurred by such Transfer Agent with respect to the receipt, holding in trust
and investment and reinvestment of such dividends, distributions and income.
All such dividends, distributions, income, costs and expenses shall be
allocated pro rata to such Exchange Shares.
(viii) At any time during the six years following
the Effective Date, any Public Unitholder which failed to surrender one or more
Certificates pursuant to clause (iii) (each, a "Heldover Certificate"), may
surrender such Certificate to the Transfer Agent for the Class A LP Units, and
upon such surrender such Transfer Agent shall deliver to such Public Unitholder
a certificate evidencing the Exchange Shares deliverable in exchange for such
Certificate plus the amount of the dividends, distributions and income, less
the amount of the costs and expenses, allocated to such Exchange Shares
pursuant to clause (vii). At the close of business on the last day of such
six-year period, such Transfer Agent shall deliver to the Restructuring
Corporation the Exchange Shares, if any, then held by such Transfer Agent,
together with the amount of the dividends, distributions and income, less the
amount of the costs and expenses, allocated to such Exchange Shares pursuant to
clause (vii).
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(ix) In connection with and as an integral part of
the Incorporation Restructuring, the General Partners shall have the power and
authority to take such actions as they deem appropriate to cause the Units to
cease, effective as of the Effective Date, to be either (A) traded on an
established securities market or (B) readily tradable on a secondary market or
the substantial equivalent thereof, as such terms are interpreted and applied
for purposes of Section 7704(b) of the Code. The General Partners shall also
have the power and authority to take any other actions they deem appropriate to
avoid the classification of the Partnership, from and after the Effective Date,
as a publicly traded partnership for purposes of Section 7704 of the Code.
(x) The General Partners shall have the power and
authority to prescribe and effectuate such procedures and rules as they deem
appropriate to implement the Incorporation Restructuring.
Section 16.3 Consent to Actions Taken in Connection with Restructuring.
Each of the Limited Partners approves, ratifies and confirms the
execution, delivery and performance by the General Partners of all documents and
instruments, and the taking of all actions and the doing of all things, deemed
appropriate or necessary by the General Partners in connection with any
Restructuring pursuant to this Article XVI, and agrees that the General Partners
are authorized to execute, deliver and perform such documents and instruments,
and to take such actions and do such things, without the approval of the Limited
Partners.
ARTICLE XVII
DISSOLUTION AND LIQUIDATION
Section 17.1 Dissolution.
The Partnership shall be dissolved and its affairs shall be wound up
upon:
(i) the expiration of its term as provided in
Section 2.5;
(ii) the written determination by the General
Partners that projected future revenues of the Partnership will be insufficient
to enable payment of projected Partnership costs and expenses or, if
sufficient, will be such that continued operation of the Partnership is not in
the best interests of the Partners;
(iii) the written election of the General Partners
to dissolve the Partnership following the occurrence of an Adverse Partnership
Tax Event;
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(iv) the written election of the General Partners
to dissolve the Partnership, which is approved by Unitholders holding a
majority of the outstanding Units held by Persons other than the General
Partners and their Affiliates, voting as a single class;
(v) the sale of all or substantially all of the
Partnership Assets, other than in connection with a Restructuring;
(vi) the written consent of all of the Partners;
(vii) the occurrence of an Event of Withdrawal,
unless (A) the remaining General Partners carry on the business of the
Partnership, or (B) within 90 days after such Event of Withdrawal, not less
than a majority in interest of the remaining Partners agree in writing to
continue the business of the Partnership and to the appointment, effective as
of the date of such Event of Withdrawal, of one or more additional General
Partners if necessary or desired, and the Partnership receives a Limited
Liability Opinion, a Tax Opinion and an Assignment Opinion with respect to such
continuation: or
(viii) entry of a decree of dissolution under the
Delaware Act.
Section 17.2 Reconstitution.
Within 180 days following an Event of Withdrawal that results in the
dissolution of the Partnership, a majority in interest of the remaining Partners
may agree in writing to reconstitute and continue the business of the
Partnership by forming a Reconstituted Partnership on the same terms as are set
forth in this Agreement and to appoint one or more general partners of the
Reconstituted Partnership; provided, however, that no such agreement shall be
effective unless the Partnership has received a Limited Liability Opinion, a Tax
Opinion and an Assignment Opinion with respect to such reconstitution and
continuance. If such an agreement is duly and timely made, all of the Limited
Partners of the Partnership shall continue as limited partners of the
Reconstituted Partnership.
Section 17.3 Liquidator; Liquidation and Distribution.
(a) Upon dissolution of the Partnership, unless the
Partnership is reconstituted pursuant to Section 17.2, the remaining General
Partners, if any, or if there is no remaining General Partner, the Former
General Partner, if any, whose withdrawal as a General Partner pursuant to
Section 13.1(b) resulted in the dissolution, or if there is no such Former
General Partner, a liquidator or liquidating committee Approved by the
Unitholders, shall be the Liquidator. The Liquidator (if not a General Partner)
shall be entitled to receive such compensation for its services as may be
Approved by the Unitholders. The Liquidator shall agree not to resign at any
time without 15 days' prior written notice and (if not a General Partner or
Former General Partner) may be removed at any time, with or without cause, by
notice of removal Approved by the Unitholders. Upon resignation or removal of
the Liquidator, a
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successor Liquidator (who shall have and succeed to all rights, powers and
duties of the original Liquidator) shall within 30 days thereafter be Approved
by the Unitholders.
(b) Upon dissolution of the Partnership and until the
filing of a Certificate of Cancellation, the Liquidator may, in the name of and
for and on behalf of the Partnership, prosecute and defend suits, whether
civil, criminal or administrative, gradually settle and close the business of
the Partnership, dispose of and convey the Partnership Assets, discharge or
make reasonable provision for all Partnership liabilities, and distribute to
the Partners any remaining Partnership Assets, all without affecting the
liability of the Limited Partners and without imposing the liability of a
general partner on the Liquidator (if not a General Partner). A reasonable time
shall be allowed for the winding up of the Partnership so as to minimize any
losses otherwise attendant upon such winding up.
(c) Upon the winding up of the Partnership, the
Partnership Assets shall be distributed in the following order of priority,
unless otherwise provided by law:
(i) to creditors of the Partnership, including
Partners and Assignees who are creditors, to the extent otherwise permitted by
law, in satisfaction of Partnership liabilities (whether by payment or the
making of reasonable provision for payment) other than liabilities for which
reasonable provision for payment has been made and liabilities for
distributions to Partners and former Partners pursuant to Section 8.1 or 8.3
with respect to fiscal quarters ending before the dissolution of the
Partnership;
(ii) to the creation of a reserve of cash or other
Partnership Assets for contingent liabilities in an amount, if any, determined
by the Liquidator;
(iii) to Partners and former Partners in
satisfaction of liabilities for distributions pursuant to Section 8.1 or 8.2
with respect to fiscal quarters ending before the dissolution of the
Partnership; and
(iv) to the Unitholders in accordance with their
respective Capital Accounts.
(d) If upon dissolution of the Partnership the Liquidator
determines that immediate liquidation of any or all of the Partnership Assets
would be impracticable or would cause undue loss to the Partners, the
Liquidator may defer for a reasonable time the liquidation of any such
Partnership Assets except those necessary to satisfy the liabilities of the
Partnership to its creditors, and may distribute to the Unitholders, in lieu of
cash, as tenants in common and in accordance with the provisions of Section
17.3(c), undivided interests in such Partnership Assets. Any such distribution
in kind shall be subject to such conditions relating to the management and
disposition of the Partnership Assets so distributed as may be determined by
the Liquidator and to any agreements governing the operation of such
Partnership Assets. The Liquidator shall determine the fair market value of any
Partnership Assets distributed in kind.
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(e) After dissolution of the Partnership, upon demand by
the Liquidator, (i) each General Partner, if any, shall contribute to the
Partnership cash in an amount equal to any negative balance in its Capital
Account, and (ii) each Former General Partner, if any, shall pay to the
Partnership cash in an amount equal to any negative balance in its Capital
Account as of the date it became a Former General Partner, less the amount of
any cash paid to the Partnership by such Former General Partner after such date
with respect to any negative balance in its Capital Account.
Section 17.4 Reports Following Termination.
Within a reasonable time following the termination of the Partnership,
the Liquidator shall deliver to each of the Partners financial statements
setting forth the assets and liabilities of the Partnership as of the date of
liquidation, the amount retained as reserves pursuant to Section 17.3(c), and
each Partner's share of the distributions made pursuant to Section 17.3(c).
ARTICLE XVIII
GENERAL PROVISIONS
Section 18.1 Addresses and Notices.
The address of each Partner for all purposes shall be the address set
forth on the books and records of the Transfer Agent (or, if there is no
Transfer Agent for a particular class or series of Units, on the books and
records of the Partnership). Any notice, demand, request or report required or
permitted to be given or made to a Partner under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
to the Partner at such address by first class mail or by other means of written
communication.
Section 18.2 Titles and Captions.
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Section 18.3 Pronouns and Plurals.
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
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Section 18.4 Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking all actions as may be necessary or
appropriate to achieve the purpose of this Agreement.
Section 18.5 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 18.6 Integration.
This Agreement and the Exhibits hereto constitute the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
Section 18.7 Creditors.
Except for the provisions of Section 8.4(e) and Section 17.3(c), none
of the provisions of this Agreement shall be for the benefit of, or shall be
enforceable by, any creditor of the Partnership.
Section 18.8 Waiver.
No failure by any party hereto to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute a waiver of
any such breach or any other covenant, duty, agreement or condition.
Section 18.9 Counterparts.
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto. Each party
shall become bound by this Agreement immediately upon affixing its signature
hereto or agreeing to become bound hereby, independently of the signature or
agreement to be bound of any other party.
Section 18.10 Applicable Law.
The parties agree that all of the terms and provisions of this
Agreement shall be construed under and governed by the substantive laws of the
State of Delaware, without regard to the principles of conflict of laws.
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Section 18.11 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the remaining provisions of this Agreement shall
be construed and enforced so as to carry out the purpose of this Agreement.
Section 18.12 Merger.
The Partnership may merge with, or consolidate into, one or more
Delaware limited partnerships or other business entities (as defined in Section
17-211(a) of the Delaware Act), if such merger or consolidation is approved by
the General Partners and Approved by the Unitholders. In accordance with Section
17-211 of the Delaware Act (including Section 17-211(g)), an agreement of merger
or consolidation approved by the General Partners and Approved by the
Unitholders, may (i) effect any amendment to this Agreement, or (ii) effect the
adoption of a new partnership agreement for the Partnership if it is the
surviving or resulting limited partnership of the merger or consolidation. Any
amendment to this Agreement or adoption of a new partnership agreement made
pursuant to the foregoing sentence shall be effective at the effective time or
date of the merger or consolidation. The provisions of this Section 18.12 shall
not be construed to limit the accomplishment of a merger or of any of the
matters referred to herein by any other means otherwise permitted by law.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
GENERAL PARTNER
PIMCO PARTNERS
By: PIMCO PARTNERS LLC,
a California limited liability company,
General Partner
By:________________________________________
Title:_____________________________________
By: PACIFIC INVESTMENT MANAGEMENT COMPANY,
a California corporation,
General Partner
By:________________________________________
Title:_____________________________________
LIMITED PARTNERS
All Limited Partners that have been, or are
hereafter, admitted as limited partners of the
Partnership, pursuant to powers of attorney or other
authorizations recited in favor of or granted to the
General Partner
By PIMCO PARTNERS, General Partner
By: PIMCO PARTNERS LLC, a California limited
liability company, General Partner
By:________________________________________
Title:_____________________________________
By: PACIFIC INVESTMENT MANAGEMENT COMPANY, a
California corporation, General Partner
By:________________________________________
Title:_____________________________________
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