Exhibit 10.4
[ CAPITAL L.P.]
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AGREEMENT OF LIMITED PARTNERSHIP, effective as of ,
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among the entity identified on Exhibit "A" hereto as General Partner "General
Partner"), and the persons and/or entities identified on Schedule "A" attached
hereto as Limited Partners, and such other persons as shall, from time to time,
become limited partners as provided herein (the "Limited Partners"). The General
Partner and the Limited Partners are sometimes referred to herein collectively
as the "Partners" or individually as a "Partner".
The parties, in consideration of their mutual covenants herein
contained, agree to become partners and to form a limited partnership (the
"Partnership") as follows:
ARTICLE I
Formation; Name and Office; Purpose;
Powers; Term and Dissolution
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Section 1.1. Formation. The Partners hereby form the Partnership
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pursuant to the provisions of the Act by executing this Agreement of Limited
Partnership and filing a Certificate of Limited Partnership in the office of the
Secretary of State of the State of Delaware.
Section 1.2. Name and Office. (a) The Partnership shall be conducted
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under the name [ ].
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(a) The General Partner shall have the power at any time to (i) change
the name of the Partnership and (ii) qualify the Partnership to do business
under any name when the Partnership's name is unavailable for use in a
particular jurisdiction. The General Partner shall use its best efforts to
qualify the Partnership to do business in each jurisdiction where the activities
of the Partnership make such qualification necessary. The General Partner shall
give prompt notice of any change of the Partnership's name to each partner.
(b) The registered office of this Partnership in the State of Delaware
is [ ], or such other place as may from time to time be
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designated by the General Partner. The General Partner shall give prompt notice
of any such change to each Partner
(c) The principal office of the Partnership shall be at [ ]
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or such other place as may from time to time be designated by the General
Partner. The General Partner shall give prompt notice of any such change to
each Partner.
Section 1.3. Purpose. The Partnership is being organized for the
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purpose of investing in Securities, to engage in such activities as may be
permitted hereby or are incidental hereto and for engaging in any and all lawful
business activities in which limited partnerships formed in the State of
Delaware under the Act may participate.
Section 1.4. Powers. In furtherance of the purpose of the Partnership
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as specified in Section 1.3, the Partnership shall have all powers available to
it as a limited partnership under the laws of the State of Delaware that are
reasonably necessary to enable it to perform its functions and conduct its
activities, including, without limitation, (i) the power to make and perform all
contracts and engage in all activities and transactions necessary or advisable
to carry out the purpose of the Partnership, (ii) the power to purchase, sell,
transfer, pledge and exercise all rights, privileges and incidents of ownership
or possession with respect to Securities and other Partnership Assets and (iii)
the power to form other lim
ited partnerships and to make capital contributions
to such partnerships.
Section 1.5. Term and Dissolution. The Partnership shall continue in
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full force and effect indefinitely until the Partnership is dissolved pursuant
to the provisions of Article VIII.
ARTICLE II
Limited Partners
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Section 2.1. Initial Limited Partners. The initial Limited Partners are
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listed on Exhibit I hereto. Additional Limited Partners may be admitted by the
General Partner from time to time pursuant to Section 2.2 below.
Section 2.2. Admission of Limited Partners. One or more additional
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Limited Partners shall be admitted to the Partnership and shall become a party
to this Agreement upon (i) each signing a counterpart of this Agreement and
deliv
ering such counterpart to the General Partner in such manner and at such
time as the General Partner shall determine and (ii) acceptance thereof by the
General Partner, at the discretion of the General Partner. Each additional
Limited Partner so admitted to this Partnership shall be bound by all the
provisions of this Agreement. Following an amendment pursuant to Article IX, the
General Partner is authorized to revise this Agreement as appropriate and, if
required by the Act, to file amendments to the Certificate of Limited
Partnership from time to time.
Section 2.3. Liability of Limited Partners. Except as otherwise
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provided under the Act, no Limited Partner, in his capacity as such, shall be
liable for any debts, liabilities, contracts or obligations of the Partnership.
No Limited Partner, in his capacity as such, shall be liable for any debts,
liabilities, contracts or obligations of any other Partner.
A
RTICLE III
Capital Contributions
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Section 3.1. Contribution of General Partner. The General Partner shall
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contribute in cash or Securities in respect of its interest in the Partnership
in the amount set forth opposite its name on Exhibit I attached hereto. The
General Partner may make additional Capital Contributions from time to time in
cash or Securities, and Exhibit I shall be accordingly amended, but the
inadvertent failure to amend such Exhibit I shall not affect the calculations of
Capital
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Contributions.
Section 3.2. Contributions of Limited Partners. Each Limited Partner
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shall contribute in cash in respect of its Limited Partnership Interest the
amount set forth opposite its name on Exhibit I attached hereto. No additional
Capital Contribution shall be required.
Section 3.3. Withdrawal of Capital. A Partner shall not be entitled to
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bring an action for partition against the Partnership, or to demand or receive
any distribution of or with respect to his Capital Contribution except as is
specifically provided in this Agreement.
ARTICLE IV
Rights, Power and Duti
es
of the General Partner
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Section 4.1. Management of Partnership. The General Partner shall have
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sole and exclusive right to manage, control and conduct the affairs of the
Partnership and to do any and all acts on behalf of the Partnership. All
decisions with respect to Securities including, without limitation, the
investment or reinvestment, holding, disposition, distribution to Partners or
any similar investment-related decisions will be made solely by the General
Partner. The General Partner may delegate responsibility over any right or
obligation to any of the General Partner's agents or representatives as the
General Partner in its sole discretion, deems appropriate. The General Partner
will possess all of the powers and rights of a general partner under the Act.
Section 4.2. Authorized Acts. The General Partner is authorized and
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empowered to carry out and implement the purpose of the Partnership, as provided
in Section 1.3, and to exercise the powers of the Partnership, as provided in
Section 1.4, for, in the name of, and on behalf of, the Partnership.
Section 4.3. Powers of the Limited Partners. The Limited Partners shall
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take no part in the control, management or conduct of the affairs of the
Partnership nor shall the Limited Partners have any authority to vote on
Partnership matters or to act for or on behalf of the Partnership except as
otherwise required by law.
Section 4.4. Liabilities of the General Partner. The General Partner
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shall not be liable, responsible or accountable, in damages or otherwise, to any
other Partner or to the Partnership for any act or omission taken by such
General Partner, except for its own gross negligence or willful misconduct, nor
shall the General P
artner be liable, responsible or accountable for the gross
negligence or willful misconduct (including dishonesty or bad faith) of any
employee, broker or other agent of the Partnership which the General Partner
shall have selected with reasonable care. The General Partner shall be entitled
to rely upon the advice of counsel and public accountants, and shall not be
liable, responsible, or accountable, in damages or otherwise, to any other
Partner or to the Partnership, for any act or omission which he shall take in
good faith in reliance on such advice.
Section 4.5. Indemnification.
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(a) The Partnership shall indemnify, to the fullest extent
permitted by law, the General Partner and its officers, directors, employees,
partners and agents ("Indemnified Parties") from and against all costs and
expenses, including attorneys' fees, judgments, fines, settlements and/or
liabilities incurred by or imposed upon any Indemnified Party in connection
with, or resulting from, investigating, preparing or defending any action, suit
or proceeding, whether civil, criminal, legislative or otherwise (or any appeal
thereof), to which any Indemnified Party may be made a party or become otherwise
involved or with which any Indemnified Party may be threatened, in each case by
reason of, or in connection with, the Indemnified Party being
or having been
associated with or otherwise acting for the Partnership, or having acted as a
director, officer, employee, partner or agent of any Entity in which the
Partnership had invested, or by reason of any action or alleged action, omission
or alleged omission by any Indemnified Party in any such capacity, provided that
the Indemnified Party is not ultimately adjudged to have engaged in gross
negligence or willful misconduct, and provided further that the Indemnified
Party acted in a manner that he reasonably believed to be in, or not opposed to,
the best interests of the Partnership.
(b) The Partnership shall pay the expenses incurred by an
Indemnified Party in investigating, preparing or defending any civil or criminal
action, suit or proceeding, in advance of the final disposition thereof, upon
receipt of (i) an undertaking by the Indemnified Party to repay such payment if
there is a final determination that he is not entitled to indemnification as
provided herein and (i
i) satisfactory evidence that the Indemnified Party has
sufficient financial resources to satisfy any such undertaking.
(c) The Partnership shall make all indemnification
provided for pursuant to this Section 4.4 solely out of Partnership Assets and
only to the extent of such Partnership Assets. Except as provided aforesaid, no
Limited Partner shall have any personal liability for any indemnification
required or permitted pursuant to this Section 4.4. None of the provisions of
this Section 4.4 shall be deemed to create or grant any rights in favor of
Indemnified Parties which cannot be discharged out of Partnership Assets, except
as provided aforesaid, or in favor of anyone other than Indemnified Parties;
this provision excludes, among others, any right of subrogation in favor of any
insurer or surety. The rights of indemnification granted hereunder shall survive
the termination, dissolution and winding up of the Partnership.
ARTICLE V
Capital Accounts; Allocations and Distributions
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Section 5.1. Capital Accounts.
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(a) There shall be established for each Partner a separate
Capital Account.
Section 5.2. Allocations.
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(a) After giving effect to the special allocations, if
any, set forth in Section 5.5, Net Income or Net Loss for any Accounting Period
shall be allocated among the
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Partners in accordance with the following provisions:
(i) Net Income derived from the Partnership's interest
in each Investment Position shall be allocated as follows:
(A) First, 100% to the Limited Partners, in
proportion to and to the extent of the excess, if
any, of (i) the cumulative distributions made to such
Limited Partners for all periods over (ii) the
cumulative amount of Net Profit allocated to such
Limited Partners pursuant to this Section
5.2(a)(i)(A) for all periods,
(B) Then,
100% to the General Partner.
(ii) Net Loss with respect to an Investment Position
shall first be allocated in a manner that reverses the allocated Net
Profits with respect to such Investment Provision in Section 5.2(a)(i)
above, reversing allocations first under subsection (B) and then
subsection (A) of Section 5.2(a)(i) above and then to the Partners in
accordance with Capital Percentages.
(b) Upon the admission of any additional Limited Partner
during 1999, the General Partner shall assign a Profit Percentage to such
additional Limited Partner, which shall dilute the Profit Percentages of the
Limited Partners as provided in Section 10.5 and Exhibit II-A shall be amended
to reflect such new Profit Percentages.
(c) The allocations agreed to be made pursuant to Section
5.2(a) hereto shall, for purposes of determining Capital Account balances, be
deemed allocated prior to a distributio
n in kind (giving effect to such
distribution in kind).
(d) For federal and state income tax purposes, income,
gain, loss, and deduction with respect to property contributed to the
Partnership by a Partner or revalued pursuant to Treasury Regulation
(S) 1.704-1(b)(2)(iv)(f) shall be allocated among the Partners in a manner that
takes into account the variation between the adjusted tax basis of such property
and its book value, as required by section 704(c) of the Code and Treasury
Regulation (S) 1.704-1(b)(4)(i), using any allocation method permitted by
Treasury Regulation (S) 1.704-3.
(e) If an interest in the Partnership is transferred
during a taxable year, Net Income or Net Loss (and any item of income, gain,
loss, deduction or credit) for such taxable year allocable to the transferred
interest shall be prorated between the transferor and the transferee based upon
that portion of such taxable year during which each was recognized as owning
such interest
, without regard to the results of Partnership operations during
particular portions of such taxable year and without regard to distributions
made to the transferor and the transferee during such taxable year; provided,
that such allocation must be in accordance with a method permissible under
section 706 of the Code and Treasury Regulations thereunder.
Section 5.3. Distributions.
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(a) Except as otherwise provided in this Section 5.3, from
time to time the General Partner shall cause the Partnership to distribute to
the Partners all or part of the Investment Assets, the proceeds from a
Disposition or Dispositions or other income and proceeds attributable to the
Partnership's interest in any of the Investment Positions. Any Investment Assets
distributed by the Partnership shall be valued at their Gross Asset Value and
treated for Capital Account purposes as if sold immediately prior to
distribution. Distributions of different types or classes of property or
securities need not be made pro rata to all Partners, so long as the Gross Asset
Value of all distributions is allocated in accordance with this Section 5.3.
(b) Distributions shall be made among the Partners in the
following manner:
(i) In the case of any distribution (exclusive of
distributions from the Reserve Account described in Section 5.3(c)
below) made after December 31, 2002:
(A) Each Limited Partner shall receive an
amount equal to such Limited Partner's Vested Profit
Percentage Interest in such distribution; and
(B) The General Partner shall receive the
balance;
(ii) In the case of any distribution made prior to
January 1, 2003:
(A) Each Limited Partner shall receive an
amount equal to 80% of the the Limited Partner's
Current Performance Share; and
(
B) The General Partner shall receive the
balance, less any amount set aside in the Reserve
Account pursuant to Section 5.3(c).
(c) In the event of a distribution prior to January 1,
2003, a portion of such distribution shall be set aside in a special account
(the "Reserve Account") maintained by the Partnership to be administered as
follows:
(i) The amount of the distribution allocated to such
Reserve Account shall be equal to the sum of (i) 20% of the Limited
Partners' Current Performance Shares and (ii) 100% of the the Limited
Partners' Future Performance Shares).
(ii) Following the end of each Future Measurement
Period (other than the Final Measurement Period), the Partnership shall
determine whether the Performance Requirement has been satisfied for
such Future Measurement Period. If the Performance Requirement has
been
satisfied, the
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Limited Partners shall receive a distribution from the Reserve Account
equal to 80% of the additional amount that the Limited Partners would
be entitled to receive by virtue of satisfying the Performance
Requirement for such Measurement Period. If the Performance Requirement
has not been satisfied, no distribution shall be made from the Reserve
Account.
(iii) Following the end of the Final Measurement
Period, the Partnership shall determine whether the Performance
Requirement has been satisfied for the Final Measurement Period. If the
Performance Requirement has been so satisfied, the balance of the
Reserve Account shall be distributed to t
he Limited Partners in
accordance with their Vested Percentage Interests. If the Performance
Requirement has not been so satisfied, the balance set aside in the
Reserve Account shall be distributed to the General Partner.
(iv) For purposes of this Agreement:
(A) "Current Performance Share" means an amount
equal to a Limited Partner's Vested Profit Percentage
of a distribution, assuming that the Performance
Requirement has been satisfied for the Measurement
Period.
(B) "Future Performance Share" means the excess
of (i) a Limited Partner's Vested Profit Percentage
of a distribution if the Performance Requirements had
been satisfied for each Future Measurement Period
over (ii) su
ch Limited Partner's Current Performance
Share.
(C) "Measurement Period" means each of the
periods ending on December 31, 1999, December 31,
2000, December 31, 2001 and December 31, 2002 for
which Performance Requirements are established
pursuant to Section 6.4;
(D) "Future Measurement Period" means each
Measurement Period that ends after the Current
Measurement Period;
(E) "Final Measurement Period" means the
Measurement Period ending on December 31, 2002; and
(F) "Current Measurement Period" means the
Measurement Period ending on December 31 of the years
in which a distribution occurs.
(d)
In the case of a distribution attributable to a
disposition (other than a distribution from the Reserve Account) of Securities
that occurred in a prior calendar year, the distribution shall be treated, for
purposes of this Section 5.3, as taking place in
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such prior calendar year.
(e) Notwithstanding the foregoing provisions of this
Section 5.3, in no event shall a distribution be made to a Limited Partner to
the extent that such distribution would cause such Limited Partner (after taking
into account any allocations of Net Income or Net Loss attributable to such
distribution) to have a deficit balance in such Limited Partner's Capital
Account. In the event that a distribution is restricted pursuant to this Section
5.3(d), the Partnership shall, as promptly as possible, make a special
distribution to such Limited Partner of an amount subject to restriction under
this Section 5.3(d) at such time, if any, as such distribution would not cause
such Limited Partners to have a deficit bala
nce in such Limited Partner's
Capital Account.
Section 5.4. Tax Withholdings. To the extent the Partnership is
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required by federal, state or local law or any tax treaty to withhold or to make
tax payments on behalf of or with respect to any Partner, the General Partner
shall withhold such amounts or make such tax payments as so required. The amount
of such payments shall constitute an advance by the Partnership to such Partner
bearing interest at the lowest applicable federal rate for such advance and, if
such Partner shall not have reimbursed the Partnership for such amount, such
amount, plus interest, if any, shall be repaid to the Partnership by reducing
the amount of the current or next succeeding distribution or distributions which
would otherwise have been made to such Partner or, if such distributions are not
sufficient for that purpose, by so reducing the proceeds of liquidation
otherwise payable to such Partner and if such proceeds are insufficien
t, such
Partner shall pay to the Partnership the amount of such insufficiency.
Section 5.5. Special Allocation - Qualified Income Offset. In the event
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that any Partner unexpectedly received any adjustments, allocations or
distributions described in Treasury Regulations Sections
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),
items of Partnership income and gain shall be specifically allocated to each
Partner in an amount and manner sufficient to eliminate, to the extent required
by the Treasury Regulations, the deficit Capital Account of such Partner as
quickly as possible, provided that an allocation pursuant to this Section 5.5
shall be made if and only to the extent that such Partner would have a deficit
Capital Account after all other allocations provided for in this Article V have
been tentatively made as if this Section 5.5 were not in this Agreement.
Section 5.6. Allocations for Tax
Purposes. (a) Items of Partnership
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taxable income, gain, loss, deduction, or credit shall be determined according
to Section (S) 703 of the Code, and except as otherwise required under Section
(S) 704 of the Code or the Treasury Regulations promulgated thereunder, the
Partners' distributive shares of each such item for purposes of Section (S) 702
of the Code shall be determined by allocating such item in the same manner as
its correlative item of "book" income, gain, loss, deduction or credit has been
allocated pursuant to this Agreement. Allocations pursuant to this Section 5.6
are solely for purposes of federal, state and local taxes and shall not affect,
or in any way be taken into account in computing, any Partner's Capital Account.
(b) Items of the Partnership's taxable income, gain and
deduction with respect to any property contributed to the capital of the
Partnership shall be
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allocated among the Partners in accordance with Code Section 704(c) so as to
take account of any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its Gross Asset Value using the
traditional method of Treas. Reg. (S) 1.704-2(b)(2).
(c) If the Gross Asset Value of a Partnership asset is
adjusted, subsequent allocations of items of taxable income, gain, loss, and
deduction with respect to such asset shall take account of the variation between
the adjusted basis of such asset for federal income tax purposes and its Gross
Asset Value in the same manner as under Code Section 704(c).
(d) Allocations pursuant to this Section 5.6 are solely
for purposes of xx
xxxxx, state and local taxes and shall not effect, or in any
way be taken into account in computing, a Partner's Capital Account of share of
income, gains, losses, deductions distributions or other Partnership items
pursuant to these provisions.
ARTICLE VI
Vesting Provisions
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Section 6.1. Vested Profit Percentage. For purposes of this
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Partnership, the term "Vested Profit Percentage" of a Limited Partner with
respect to an Investment Position shall be the product obtained by multiplying
the following four factors: (1) such Limited Partner's Profit Percentage, (2)
the Threshold Requirement applicable to such Investment Position, (3) the
Performance Requirement applicable to all Investments Positions of the
Partnership and (4) the Limited Partner's Service Vesting Percentage.
Section 6.2. Determining the Profit Percentage. For
purposes of
---------------------------------
determining a Limited Partner's Vested Profit Percentage, the term "Profit
Percentage" shall mean, with respect to any given Measurement Period, the
percentage set forth on Exhibit II, as may be increased pursuant to Section 8.6
and/or decreased pursuant to Section 10.5.
Section 6.3. Determining the Threshold Requirement. On the date of any
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distribution of an Investment Position, the "Threshold Requirement" shall equal
(a) zero percent (0%) if on or before such date of distribution, the Threshold
Amount with respect to such Investment Position had not been reached or (b) one
hundred percent (100%) if on or before such date of distribution, the Threshold
Amount with respect to such Investment Position had been reached.
Section 6.4. Determining the Performance Requirement.
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(a
) With respect to all Investment Positions of the
Partnership, the Performance Requirement shall be determined as follows:
(i) In the case of any distribution (exclusive of
distributions from the Reserve Account described in Section 5.3(c))
made after December 31, 2002:
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(A) If the Aggregate Return is less than
fifteen percent (15%) for the Final Measurement
Period, the Performance Requirement shall not be
considered satisfied and shall equal zero (0); and
(B) If the Aggregate Return equals or
exceeds fifteen percent (15%) for the Final
Measurement Period, the Performance Requirement shall
be considered satisfied and shall equal one (1).
(ii) In the case of any distribution (exclusive of
distributions from the Reserve Account described in Section 5.3(c))
made before January 1, 2003:
(A) The Performance Requirement shall be
considered satisfied for each Measurement Period in
which the Aggregate Return equals or exceeds fifteen
percent(15%);
(B) For each applicable Measurement Period
in which the Performance Requirement is satisfied,
the Performance Requirement shall be equal to the
following:
Measurement Period Ending Performance Requirement
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December 31, 1999 25%
December 31, 2000 50%
December 31, 2001 75%
December 31, 2002
100%
; and
(C) For each Measurement Period in which the
Performance Requirement is not satisfied, the
Performance Requirement shall equal zero (0).
(b) As of a given date, each Investment Position shall be
valued as follows: (1) if an Investment Position has been sold or otherwise
disposed of prior to such date, the value of the consideration received by the
Partnership as a result of such sale or disposition, (2) in the event that no
such sale or disposition has occurred, if an Investment Position has received
third-party financing within the twelve month period prior to such date, the
value of the Investment Position determined in connection with such financing,
or (3) in the event that no such sale, disposition or financing has occurred,
the value of an Investment Position shall be determined by an independent
appraiser chosen in good faith by the Gener
al Partner.
(c) In determining whether the Performance Requirement
has been met for any Measurement Period, the Aggregate Return shall mean the
weighted average percentage appreciation in the value of the Investment Assets
of the Partnership over such
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Measurement Period, taking into account the size of each investment and the
length of time held by the Partnership, expressed on an annualized basis,
without regard to compounding.
Section 6.5. Determining Service Vesting. On the date of any
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distribution of an Investment Position, a Limited Partner's "Service Vesting
Percentage" will equal that percentage identified in the chart contained in
Section 8.6(d).
ARTICLE VII
Expenses
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Section 7.1. Expenses. All expenses of the Partnership shall be
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allocated to all Partners in proportion to their resp
ective Limited Partnership
Interests.
ARTICLE VIII
Dissolution and Winding-Up of the Partnership;
Withdrawal and Removal of Partners
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Section 8.1. Events of Dissolution. The Partnership shall be dissolved,
---------------------
and its affairs wound up, upon the happening of any of the following events:
(a) the determination by the General Partner that the
Partnership should be dissolved and its affairs wound up;
(b) the dissolution of the General Partner or the entry of
an order amounting to a stay of proceedings against the General Partner under
the federal bankruptcy laws or rules; or
(c) The sale or distribution of all or substantially all
of the assets held by the Partnership; or
(d) any other event that would cause a dissolution of a
limi
xxx partnership under the Act.
Section 8.2. Winding Up. Upon the occurrence of (i) a Dissolution Event
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or (ii) the determination by a court of competent jurisdiction that the
Partnership has dissolved prior to the occurrence of a Dissolution Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners, and no Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs, provided that all covenants contained in
this Agreement shall continue to be fully binding upon the Partners until such
time as the assets of the Partnership have been fully distributed pursuant to
this Section 7.2 and the Certificate has been canceled pursuant to the Act. The
General Partner shall be responsible for overseeing the winding up and
dissolution of the Partnership a
nd the determining
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the time, manner and terms of sale or other disposition of the Partnership's
assets. The winding up and dissolution shall be completed within ninety (90)
days of the occurrence of the Dissolution Event. The General Partner shall take
full account of the Partnership's liabilities and property and shall cause the
property or the proceeds from the sale thereof, to the extent sufficient
therefor, to be applied and distributed, to the maximum extent permitted by law,
in the following order:
(a) First to creditors (including Partners who are creditors, to the
extent otherwise permitted by law) in satisfaction of all of the Partnership's
debts and other liabilities (whether by payment of the making of reasonable
provision for payment thereof);
(b) The balance, if any, to the Partners in accordance with the
positive balances in their Capital Accounts, after giving effect to all
contributions, distributions and allocations for all periods. Such distribution
shall, to the greatest extent possible, be made among the Partners in a manner
consistent with the manner in which distributions shall be made among the
Partners pursuant to Section 5.3.
Section 8.3. Deficit Capital Accounts. If any Limited Partner has a
------------------------
deficit balance in his Capital Account (after giving effect to all contribution,
distributions and allocations for all Fiscal Years, including the Fiscal Year in
which such liquidation occurs), such Limited Partner shall have no obligation to
make any contribution to the capital of the Partnership with respect to such
deficit, and such deficit shall not be considered a debt owed to the Partnership
or to any other person for any purpose whatsoever.
Section 8.4. Voluntary Remov
al of a Limited Partner. A Limited Partner
--------------------------------------
may, at such Partner's option exercised upon written notice to all the other
Partners, voluntarily remove himself or herself as a Limited Partner as of the
last day of a calendar month (a "Voluntary Removal") (the last business day
immediately preceding the effective date of a Voluntary Removal or an
Involuntary Removal pursuant to Section 7.3 shall be herein referred to as the
"Termination Date."), provided that a Limited Partner may do so only if,
immediately following such Voluntary Removal, there is at least one remaining
Partner, and the remaining Partner or Partners has or have a net worth
sufficient to satisfy, in the opinion of counsel to the Partnership any then
applicable requirements of the Internal Revenue Service relating to the
treatment of the Partnership as a partnership for tax purposes.
Section 8.5. Involuntary Removal of a Limited Partner. Effective upon
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written notice to a Limited Partner from the General Partner, the Limited
Partner named in such notice shall be involuntarily removed for any reason or
for no reason as a Limited Partner (an "Involuntary Removal"), provided that the
foregoing right may be exercised as to a Limited Partner only if, immediately
following such Involuntary Removal, there is at least one remaining Partner, and
the remaining Partner or Partners has or have a net worth sufficient to satisfy
any then applicable requirements, in the opinion of counsel to the Partnership,
of the Internal Revenue Service relating to the treatment of the Partnership as
a partnership for tax purposes. A Voluntary Removal under Section 7.4 or an
Involuntary Removal under this Section 7.5 shall not dissolve the Partnership,
the business of which shall be carried on by the remaining Partner(s). (A
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Limited Partner who is removed as a Partner pursuant to Section 7.4 or Section
7.5 may be referred to herein as a "Removed Partner".)
Section 8.6. Treatment of Interest of Withdrawn or Removed Partner.
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(a) Except as provided in Section 8.6(g), the Termination
Share of a Removed Partner shall be calculated and paid as follows: From and
after the Termination Date, such Removed Partner's Capital Account shall be
eliminated and all items of Net Income and Net Loss allocated to such Partner's
Capital Account shall be reallocated to a Special Capital Account which shall be
established for the benefit of such Removed Partner. A Removed Partner shall be
ful
ly Service Vested in all distributions made to him/her prior to his/her
Termination Date.
(b) Each time the Partnership shall realize Net Income or
Net Losses from an Investment Position in which such Removed Partner has an
interest, a portion of such Net Income or Net Loss equal to the portion of such
Net Income or Net Loss allocable to the Limited Partners multiplied by a
percentage equal to the Removed Partner's Profits Percentage in respect of such
Investment Position shall be allocated to the related Special Capital Account
for the remaining term of the Partnership; provided that, the result obtained by
-------- ----
the calculations above shall, be multiplied by the percentage for which such
Removed Partner was Service Vested in such Profit Percentage on his or her
Termination Date (such Service Vesting to be determined in accordance with
Section 8.6(d). Positive balances in such Special Capital Account shall be
distributed as nearly
as practicable in accordance with the terms of Section 5.3
and Article X of this Agreement as if such Special Capital Account were a
Capital Account. The Net Income or Net Loss or right to distributions with
respect to the Removed Partner's portion of any Investment Positions that is not
fully Service Vested at the Removed Partner's Termination Date in which such
Removed Partner shall have an interest on such Date shall be allocated among the
remaining Limited Partners in proportion to their Profit Percentages. From and
after the Termination Date, the Removed Partner shall not be deemed a Partner
for any purpose except for the purposes of Section 4.4 and Section 5.4, and any
interest that a Removed Partner would have had in Investment Positions acquired
subsequent to the Termination Date shall be allocated among the remaining
Limited Partners.
(c) The General Partner shall be 100% vested at all times.
(d) A Removed Partner, to the extent not 100% Service
Ves
xxx pursuant to Section 8.6(a) and except as provided in Section 8.6 (e) or
(g), shall be Service Vested in accordance with the following schedule:
If a Limited Partner has continuously performed services to and Then, such Limited Partner's
for the Partnership from the Effective Date hereof until the Percentage Service Vested shall
date identified below, equal:
------------------------------------------------------------------ ---------------------------------
December 31, 1999 25%
December 31, 2000 50%
December 31, 2001 75%
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December 31, 2002 100%
(e) The Service Vesting provisions of this Section 8.6 may
be accelerated with the consent of the General Partner, and the distribution
method may be modified with the consent of the Removed Partner affected thereby
and the General Partner. A Removed Partner shall be 100% vested as a result of
his death or permanent disability or as a result of his/her Involuntary Removal
within one year following a Change of Control.
(f) In each instance of a Removed Partner, the General
Partner may make the election under Section 754 of the Code, and adjust the
basis of the Partnership property pursuant to Sections 734 or 743 of the Code,
as may be app
licable.
(g) A Partner removed for Cause shall receive only the
balance of his Capital Account at the time of such removal. For purposes of
calculating such Partner's Termination Share pursuant to Section 8.6(d), such
Partner will not be considered vested at all in any Investment Position.
ARTICLE VIII
Amendments
----------
Section 9.1. This Agreement may be amended only by the General Partner;
provided, however, that prompt written notice thereof shall be delivered to the
other Partners and that any amendment to this Agreement which (a) increases the
liability of any Partner or (b) alters (i) any Partner's distributive share(s)
or allocation(s) of Net Income or Net Losses or (ii) any other provisions
(including vesting) which adversely affects any Partner, in either case, with
respect to any Investment Positions acquired by the Partnership prior to the
date of such ame
ndment, and any amendment to this Article VIII, shall require
the prior approval of a majority in interest of the Partners so affected.
ARTICLE IX
Limitations on Transfers of Interests;
Additional Partners; Adjustments to Distributive Shares
-------------------------------------------------------
Section 10.1. Transfer by General Partner. The General Partner may
---------------------------
assign, pledge, mortgage or otherwise hypothecate, sell or dispose of any part
or all of its Partnership Interest without the consent of the Limited Partners.
Section 10.2. Limitations on Transfers of Interests of Limited
------------------------------------------------
Partners. No Limited Partner shall assign, pledge, mortgage, or otherwise
--------
hypothecate, sell, or dispose of any part or all of his Partnership Interest
without the prior written consent of the Gene
ral Partner.
Section 10.3. Effect of Authorized and Unauthorized Transfers. Any
-----------------------------------------------
transferee of a Partnership Interest transferred in accordance with this
Agreement shall succeed to all the
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rights and liabilities of the transferor provided for under this Agreement, but
shall only become a Substituted Limited Partner if the permission required by
Section 9.4 is granted. Any attempted transfer of a Limited Partner's
Partnership Interest without compliance with the provisions of this Agreement
shall be void and ineffectual and shall not be binding upon the Partnership, and
the Partnership may refuse to recognize such attempted transfer for all
purposes.
Section 10.4. Substituted Limited Partners. The General Partner may, in
----------------------------
its sole discretion, permit an assignee or transferee of a Partnership Interest
to become a Substituted Limited Partner in the Partnership entitled to all the
righ
ts and benefits under this Agreement of the assignor or transferor. No such
assignee or transferee shall become a Substituted Limited Partner unless and
until the General Partner has given such permission. Each Limited Partner hereby
consents to such admission and authorizes the General Partner to amend Exhibit I
or II and, if required by the Act, the Certificate of Limited Partnership of the
Partnership to reflect such admission.
Section 10.5. Additional Limited Partners. The General Partner may from
---------------------------
time to time admit one or more Persons as additional Limited Partners. Upon
admission of such Person(s), the Profits Percentage of each Partner will be
adjusted as provided below. Subject to the last sentence of this Section 9.5,
the General Partner shall assign such additional Limited Partners Profit
Percentage, and any Profit Percentage assigned to such additional Limited
Partners will dilute the Profit Percentage of the existing Limited Partner
s in
proportion to their Profit Percentage, unless the General Partner elects to have
such assignment of Profit Percentage dilute the General Partner. No Limited
Partner shall participate in any Investment Asset acquired by the Partnership
prior to the time such Limited Partner became a Limited Partner, unless
expressly provided by the General Partner.
ARTICLE X
Fiscal Year; Records; Reports
-----------------------------
Section 11.1. Fiscal Year. "Fiscal Year", as used in this Agreement,
-----------
means the period beginning on January 1 and ending on December 31 of each year.
Section 11.2. Records. At all times the General Partner shall keep
-------
books of account of the Partnership. Such books of account, together with a copy
of this Agreement and the Certificate of Limited Partnership and any amendments
thereto and restatements thereof, shall at
all times be maintained at the
principal office of the Partnership, and shall be open to inspection at any
reasonable time by the Partners.
Section 11.3. Reports. As promptly as possible after the close of each
-------
Fiscal Year, but in any event within 90 days after the close of each Fiscal
Year, the General Partner shall distribute K-1 tax returns and a report on the
Investment Positions held by the Partnership to each Partner. Within 90 days
after the close of each Fiscal Year, the Partnership shall transmit to each
Partner a report indicating his share of the income or losses of the Partnership
for such Fiscal Year for federal income tax purposes. Such report shall contain
a separate accounting for such
-15-
tax purposes of each of the following four items: realized capital gains,
realized capital losses, ordinary income, and ordinary losses.
Section 11.4. Accounting Decisions. All decisions as to accounting
--------------------
treatment of any items of Partnership business, when made by the General Partner
in accordance with generally accepted accounting principles, shall have
conclusive effect upon the Partnership and the Partners.
Section 11.5. Tax Matters Partner. The General Partner shall be the tax
-------------------
matters partner for the Partnership for all federal income tax purposes set
forth in the Code, with the power and authority to take all actions and do such
things as require
d or as he shall deem appropriate under the Code or regulations
promulgated thereunder.
ARTICLE XI
Miscellaneous
-------------
Section 12.1. Counterparts. This Agreement may be executed by the
------------
Partners in counterparts, all of which taken together shall be deemed one
original.
Section 12.2. Further Assurances. The Partners will execute,
------------------
acknowledge, and deliver such further instruments and do such further acts and
things as may be required to carry out the intent and purpose of this Agreement.
Section 12.3. Captions. The descriptive headings contained in this
--------
Agreement are inserted only as a matter of convenience and shall not control or
affect the meaning or construction of any provision of this Agreement.
Section 12.4. Binding Effect. Except to the extent
required under the
--------------
Act and except for fees, rights to reimbursement and indemnity, and other
compensation, none of the provisions of this Agreement shall be for the benefit
of or enforceable by any creditor of the Partnership, as such. The provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
successors and permitted assigns, if any, of the respective Partners, except as
otherwise provided in this Agreement.
Section 12.5. Partial Invalidity. The invalidity or unenforceability of
------------------
a portion of this Agreement will not affect the validity or enforceability of
the remainder hereof.
Section 12.6. Integration. This Agreement and its Schedules and
-----------
Exhibits constitutes the entire understanding and agreement among the parties
pertaining to the subject matter of this Agreement and supersedes all prior
agreements and understandings of the parties i
n connection with this Agreement.
Section 12.7. Notices. All notices provided for or permitted hereunder
-------
shall be made in writing by hand-delivery, registered or certified first-class
mail, telex, telecopier or air courier guaranteeing overnight delivery and
directed if to a Partner, at its address set forth under its signature below,
and if to the Partnership, to the General Partner at its address set forth below
-16-
under its signature. All such notices shall be deemed to have been duly given:
when delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
Section 12.8. English Usage. Words of gender or neuter may be read as
-------------
masculine, feminine or neuter, as required by context, and the word "persons"
shall include individuals, trusts, Entities, and all other forms of association.
Section 12.9. References. Article and Section references in this
-------
---
Agreement are, unless otherwise indicated, references to the Articles or
Sections, as the case may be, of this Agreement which are so numbered, as such
may be amended. All references to numbered or lettered Exhibits are references
to the Exhibits so numbered or lettered which are appended to this Agreement, as
such Exhibits may be amended from time to time. Such references to Exhibits are
to be construed as incorporating by reference the contents of each Exhibit to
which such reference is made, as though such contents were set out in full at
the place in this Agreement where such reference is made.
Section 12.10. Action by General Partner. Any action, approval or
-------------------------
consent to be taken or given by the General Partner hereunder shall be valid
only if taken or given by an officer of the General Partner.
ARTICLE XII
Defined Terms
-------------
The following terms, when used in this Agreement, have the following
meanings, unless otherwise expressly indicated:
"Accounting Period" means a Fiscal Year or, if during a Fiscal Year
there shall be one or more interim closings of the Partnership's books pursuant
to Section 5.2(b), means the period from the beginning of such Fiscal Year to
the date of the first such closing, the period(s) between any such closings, and
the period from the last such closing to the end of such Fiscal Year.
"Act" means the Delaware Revised Uniform Limited Partnership Act and
any successor statute, as amended from time to time.
"Affiliate" means any member of a person's immediate family and any
entity controlled by, controlling or under common control with such person.
"Agreement" means this Agreement of Limited Partnership, with the
Exhibits which are appended to and referred to in this Agreement, as such
Agreement and Exhibits may be amended, modified or restated at any time
and from
time to time.
"Capital Account" means, for each Partner, the sum of (a) such
Partner's Capital Contribution(s), plus (b) the aggregate amount of Net Income
(including deemed gains only to the
-17-
extent arising pursuant to this Agreement) allocated to such Partner pursuant to
Article V, minus (c) the aggregate amount of cash distributed to such Partner
pursuant to Article V, minus (d) the aggregate amount of Net Losses (including
deemed losses only to the extent arising pursuant to this Agreement), minus (e)
the aggregate amount of expenses allocated to such Partner pursuant to Article
VI, minus (f) the value, as determined pursuant to Section 5.3, of such
Partner's allocable share of Partnership Assets distributed to such Partner in
kind and (g) otherwise in accordance with Treasury Regulations ss. 1.704-1. All
such allocations and distributions shall be credited or charged, as the case may
be, to the Capital Accounts of the Partners to whom they
apply, as of the time
as of which they are determined.
"Capital Contribution" means, for each Partner, the amount shown as the
Capital Contribution for such Partner, as from time to time increased pursuant
to Article III.
"Capital Percentages" mean as to each Partner the percentage its
Capital Contributions to the Partnership bears to all Capital Contributions to
the Partnership.
"Change of Control" shall be deemed to have occurred if:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) other than Safeguard Scientifics, Inc. or any of its
subsidiaries or affiliates becomes a "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
General Partner representing a majority of the voting power of the then
outstanding securities of the General Partner except where the acquisition is
approved by the Board; or
(ii) Any person has commenced a tender off
er or exchange offer
for a majority of the voting power of the then outstanding Shares of the General
Partner.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Cost Basis" means the amount paid, or deemed paid per Section 5.6, by
the Partnership for a Security or as set forth on Exhibit III.
"Debt Cost Basis" means the cost Basis of Securities other than equity
Securities.
"Disposition" means the sale of all or a portion of any of an
Investment Position; in the case of a partial Disposition, such Disposition
shall be treated as a Disposition of a separate asset to which shall be
attributed, for purposes of this Agreement, a pro rata portion of the Partner's
Capital Contributions made with respect to the entire Capital Contribution
attributable to such Investment Position.
"Dissolution Event" shall mean an event of dissolution specified in
Section 7.1.
"Entity" means any business corporation, partnership, uni
ncorporated
association, firm, organization, or any other business entity having one or more
leaders or managerial figures.
"Equity Cost Basis" means the Cost Basis of equity Securities or
Securities convertible
-18-
into or exercisable into equity Securities.
"Fair Market Value" means the market price of publicly traded
Securities, if publicly traded, or the fair market value determined by the
General Partner otherwise.
"Fiscal Year" has the meaning ascribed to it in Section 11.1.
"General Partner" means Internet Capital Group, Inc. or any person who
succeeds its interest as the general partner under this Agreement.
"Gross Asset Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the Fair Market Value of such asset;
(ii) The Gr
oss Asset Values of all Partnership assets shall be
adjusted to equal their respective Fair Market Values as of the following times:
(A) the acquisition of an additional interest in the Partnership by any new or
existing Partner in exchange for more than a de minimis Capital Contribution;
(B) the distribution by the Partnership to a Partner of more than a de minimis
amount of Partnership property as consideration for an interest in the
Partnership; and (C) the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), provided, however, that an adjustment
described in clauses (A) and (B) of this paragraph shall be made only if the
General Partner reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the Partners in the
Partnership;
(iii) The Gross Asset Value of any Partnership assets
distributed to any Partner shall be adjusted to equal the Fair Market Value of
such asset on the date of
distribution; and
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) clause (vi) of the
definition of "Net Income" and "Net Loss"; provided, however, that Gross Asset
Values shall not be adjusted pursuant to this subparagraph (iv) to the extent
that an adjustment pursuant to subparagraph (ii) is required in connection with
a transaction that would otherwise result in an adjustment pursuant to this
subparagraph (iv).
"Indebtedness" means all obligations, direct or contingent, for the
payment of cash or cash equivalents, including, without limitation, obligations
with respect to borrowed money, accounts payable, checks, drafts bills of
exchange, letters of credit, margin accoun
ts, short sales, reverse purchase
agreements, futures contracts, and other recognized commercial transactions,
instruments involving the extension of credit, and all obligations incurred as
surety or guarantor of the obligations of others.
"Indemnified Parties" has the meaning ascribed to it in Section 4.4.
-19-
"Investment Assets" means and include all Securities, rights and other
tangible and intangible property acquired by the Partnership for the purpose of
producing a profit in the ordinary course of business.
"Investment Position" means an Investment Asset and all Securities or
other property which may be exchanged for or distributed with respect to such
Investment Asset, whether by the issuer of the Investment Asset or related group
of Entities or any successor or successors thereto.
"Involuntary Removal" has the meaning ascribed to it in Section 7.3.
"Limited Partners" means all and only those persons who are so
designated in Exhibit I hereto, a copy of which shall be kept on file by the
General Partner and principal e
xecutive offices of the Partnership.
"Limited Partners Profit Percentage" means the aggregate Profit
Percentage of all of the Limited Partners.
"Net Income" and "Net Loss" mean, for each Accounting Period, an amount
equal to the Partnership's taxable income or loss for such Accounting Period,
with the following adjustments:
(i) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Income or Net
Loss shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Income or Net Loss shall be subtracted from such
taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to clauses (ii) or (ii
i) of the definition of Gross
Asset Value, the amount of such adjustment shall be taken into account as gain
or loss from the disposition of such asset for purposes of computing Net Income
or Net Loss;
(iv) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(v) To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain or loss from the disposi
tion
of such asset and shall be taken into account for purposes of computing Net
Income or Net Loss; and
-20-
(vi) Notwithstanding any other provision of this definition,
any items which are specially allocated pursuant to Section 2 of this Exhibit B
shall not be taken into account in computing Net Income or Net Loss.
-21-
"Partners" means the General Partner and Limited Partners individually
or collectively, as the context requires.
"Partnership" means [____________________].
"Partnership Assets" means all assets and property of the Partnership
of any and every kind.
"Partnership Interest" means any Partner's interest in the Partnership.
"Profit Percentage" means the percentage set forth on Exhibit II.
"Removed Partner" has the meaning ascribed to it in Section 7.3.
"Securities" means any of one or more of the following: (a) capital
stock (both common and preferred); partnership interests (both limited and
general); limited liability company interests; interests in any acquisition,
venture capital or other
investment funds; notes; bonds; debentures; other
obligations, instruments or evidences of indebtedness (whether convertible or
otherwise); and other securities and equity interests of whatever kind of any
Person, whether readily marketable or not; (b) any rights to acquire any of the
Securities described in clause (a) above (including, without limitation,
options, warrants, rights or other interests or other Securities convertible
into any such Securities); or (c) any Securities received by the Partnership
upon conversion of, in exchange for, as proceeds from the disposition of, as
interest on, or stock dividend or other distribution from, any of the Securities
described in clauses (a) or (b) above.
"Substituted Limited Partner" means any transferee or assignee of a
Limited Partner's Partnership Interest who is then admitted to the Partnership
as a Limited Partner pursuant to Section 9.3 hereof.
"Termination Share" means the payments a Removed Partner is entitled to
receive from the
Partnership from and after the date such Partner ceases to be a
Partner.
"Threshold Amount" means an amount equal to three hundred percent
(300%) of the Equity Cost Basis of an Investment Position, unless otherwise
provided Exhibit III.
"Treasury Regulation" means the income tax regulations promulgated
under the Code and effective as of the date hereof. Unless the General Partner
determines otherwise after consultation with the Limited Partner, such term
shall be deemed to include any amendments to such regulations and any
corresponding provisions of succeeding regulations.
"Voluntary Removal" has the meaning ascribed to it in Section 7.2.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Limited Partnership of the ____ day of ______________, 1999.
-22-
GENERAL PARTNER:
INTERNET CAPITAL GROUP, INC.
By:
-------------------------
Title:
----------------------
LIMITED PARTNERS:
[See counterpart signature pages]
-------------------------------
-23-
EXHIBIT I
to
Agreement of Limited Partnership
of
[____________________] L.P.
Partners Capital Contribution
-------- --------------------
General Partner: Securities described in Exhibit III as amended from time
--------------- to time or purchase price of such securities, but not less
than [$_] million in aggregate value.
Limited Partners: Schedule on file with the General Partner.
----------------
-24-
EXHIBIT II
to
Agreement of Limited Partnership
of
[____________________] L.P.
Partner's Profit Percentage
---------------------------
Partners Profit Percentage
-------- -----------------
General Partner:
---------------
Limited Partners: Schedule on file with the General Partner.
----------------
-25-
EXHIBIT III
Cost Basis and Threshold Amount
-------------------------------
Securities Equity Cost Basis Threshold Amount Debt Cost
---------- ----------------- ---------------- ---------
Basis
-----
-26-
