AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PIMCO ADVISORS L.P.
TABLE OF CONTENTS
ARTICLE I Definitions....................................................... 1
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 the Partners............................... 15
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, Destroyed or Mutilated Certificates................. 20
Section 5.3 Registered Owner.................................................. 20
ARTICLE VI Transfer of Units................................................. 21
Section 6.1 Transfer.......................................................... 21
Section 6.2 Transfer of GP Units.............................................. 21
Section 6.3 Transfer of LP Units.............................................. 21
Section 6.4 Regulation of Block Transfers..................................... 21
Section 6.5 Semiannual Transfers.............................................. 22
Section 6.6 Additional Restrictions on Transfers.............................. 23
Section 6.7 Covenant and Agreement of the Partners............................ 24
Section 6.8 Remedies and Penalties for Noncompliance.......................... 24
ARTICLE VII Capital Accounts.................................................. 24
Section 7.1 Capital Accounts.................................................. 24
Section 7.2 Adjustments Affecting Net Income or Net Loss...................... 24
ARTICLE VIII Distributions and Allocations..................................... 26
Section 8.1 Cash Distributions................................................ 26
Section 8.2 General Rules with Respect to Distributions....................... 27
Section 8.3 Allocations of Net Income and Net Loss............................ 27
Section 8.4 Special Provisions Governing Capital Account Allocations.......... 29
Section 8.5 Special Provisions Governing Tax Allocations...................... 30
Section 8.6 Allocations Upon Dissolution...................................... 31
Section 8.7 Changes in Allocation Methods..................................... 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 Other Tax Matters................................................. 33
Section 9.7 Withholding....................................................... 33
Section 9.8 Tax Controversies................................................. 33
Section 9.9 Tax Opinions...................................................... 34
ARTICLE X Concerning the General Partners................................... 34
Section 10.1 Management of Partnership Business................................ 34
Section 10.2 Delegation........................................................ 35
Section 10.3 Reimbursement of the General Partners............................. 36
Section 10.4 Outside Activities................................................ 36
Section 10.5 Certain Transactions.............................................. 36
Section 10.6 Conflicts of Interest............................................. 37
Section 10.7 Notice of Event of Withdrawal..................................... 37
Section 10.8 Operating 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
Section 11.4 Authority of General Partners to Effect Exchanges and Redemptions. 39
ARTICLE XII Admission of Partners............................................. 40
Section 12.1 Admission of General Partners..................................... 40
iii
Section 12.2 Admission of Limited Partners..................................... 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 May Be Carried On After Event of Withdrawal.............. 43
Section 13.4 No Withdrawal of Limited Partners................................. 43
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......... 45
Section 14.6 Quorum and Required Vote.......................................... 45
Section 14.7 Conduct of Meeting................................................ 46
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 Consent to Actions Taken in Connection with Restructuring......... 55
ARTICLE XVII Dissolution and Liquidation....................................... 55
Section 17.1 Dissolution....................................................... 55
Section 17.2 Reconstitution.................................................... 56
Section 17.3 Liquidator; Liquidation and Distribution.......................... 56
Section 17.4 Reports Following Termination..................................... 57
iv
ARTICLE XVIII General Provisions................................................ 58
Section 18.1 Addresses and Notices............................................. 58
Section 18.2 Titles and Captions............................................... 58
Section 18.3 Pronouns and Plurals.............................................. 58
Section 18.4 Further Action.................................................... 58
Section 18.5 Binding Effect.................................................... 58
Section 18.6 Integration....................................................... 58
Section 18.7 Creditors......................................................... 59
Section 18.8 Waiver............................................................ 59
Section 18.9 Counterparts...................................................... 59
Section 18.10 Applicable Law.................................................... 59
Section 18.11 Invalidity of Provisions.......................................... 59
Section 18.12 Merger............................................................ 59
v
TABLE OF EXHIBITS
Exhibit A Certificate for Class A LP Units
Exhibit B Admission Application
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 June 30, 1999 (the "Effective Time"), is
by and among PIMCO Partners, G.P., a California general partnership, PIMCO
Advisors Holdings, L.P., a Delaware limited partnership, all Persons which are
Limited Partners as of the Effective Time, and all Persons which become Limited
Partners after the Effective Time. 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
December 31, 1997.
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 7.4.
Admission Application shall mean a written application executed and
delivered to the Partnership by a Person which (i) proposes to make a
Contribution to the Partnership and receive LP Units in exchange for such
Contribution, or (ii) proposes to acquire LP Units by Transfer from a
Unitholder, by which such Person requests admission as a Limited Partner,
requests that the books and 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.
Adverse Partnership Event shall mean (i) an Adverse Partnership Tax
Event or (ii) the Partnership being required to register any class of LP Units
pursuant to Section 12(g) of the Exchange Act.
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
1
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.
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 person 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.
Block Transfer shall mean a Transfer described in Section 1.7704-
1(e)(2) of the Treasury Regulations, by a Partner and any related Persons
(within the meaning of Section 267(b) or Section 707(b)(1) of the Code), to one
or more Qualified Persons in one or more transactions during any 30 calendar day
period, of Units representing in the aggregate more than 2% of the outstanding
Units, as determined under the rules adopted pursuant to Section 6.4(a).
Book-Tax Disparities shall mean the differences between a Partner's
Capital Account balance, as maintained pursuant to Article VII, 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
2
Property, as adjusted from time to time, and the adjusted basis thereof for
federal income tax purposes).
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.
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 taken into account in
determining Net Income or Net Loss 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 7.4 and 7.5, 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 Unit shall mean (i) a GP Unit, or (ii) 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 Class A Units outstanding prior to
the Effective Time, all GP Units issued after the Effective Time, and all LP
Units issued after the Effective Time which are designated as Class A Units
pursuant to Section 4.3.
Class C Carryover Amount shall mean, with respect to each Class C Unit
and with respect to each fiscal quarter or Short Period ending after March 31,
1998, the positive amount, if any, by which (i) the Class C Quarterly Priority
Amount for the immediately
3
preceding fiscal quarter exceeded (ii) the amount distributed with respect to
each Class C Unit for such immediately preceding fiscal quarter.
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,
1998, 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, 1997, 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 ending after December 31,
1997, 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 $0.0082 (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 Quarterly Priority Amount shall mean, with respect to each
Class C Unit and with respect to each fiscal quarter ending after December 31,
1997, the sum of (i) $0.6875 (subject to adjustment in the case of a
Recapitalization), plus (ii) any Class C Carryover Amount applicable to such
Class C Unit with respect to such fiscal quarter. In the case of any Short
Period ending after December 31, 1997, the Class C Quarterly Priority Amount
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 $0.0075 (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 Amount 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 the Class C Units outstanding prior to the Effective Time and
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.
Compliant Block Transfer shall mean a Block Transfer which qualifies
as a Semiannual Transfer.
4
Compliant Redemption Transfer shall mean a Redemption Transfer as to
which the Partnership has received a Tax Opinion.
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.
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.
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.
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 Time is defined in the preamble to this Agreement.
Eligible Person shall mean (i) any member of the Management Board,
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 person is a controlling shareholder, general partner,
manager or trustee, or (ii) any Person designated as an Eligible Person in a
Written Consent, which in each case has qualified for admission as a Limited
Partner pursuant to Section 12.2(c).
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
5
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 shall mean an exchange of outstanding LP Units for Equity
Securities of one or more Public General Partners, under the circumstances
described in Section 11.4.
Exchange Act shall mean the Securities Exchange Act of 1934, as
amended, and any successor to such statute.
Exchange Transfer shall mean a Transfer of LP Units to a Public
General Partner in connection with an Exchange.
Exempt Transfer shall mean (i) a Transfer described in Section 1.7704-
1(e)(1)(iv) of the Treasury Regulations, involving the issuance of Partnership
Interests by or on behalf of the Partnership to a Qualified Person in exchange
for cash, property or services; (ii) a Transfer described in Section 1.7704-
1(e)(1)(ii) of the Treasury Regulations, by an individual Unitholder at his
death, or by his estate or testamentary trust, of Units to a Partner, (iii) a
Transfer described in Section 1.7704-(e)(1)(vii) of the Treasury Regulations,
pursuant to a right under a redemption or repurchase agreement (as defined in
Section 1.7704-1(e)(3) of the Treasury Regulations) that is exercisable only
upon the death, disability or mental incompetence of an individual Unitholder or
upon the retirement or termination of the performance of services of an
individual Unitholder who actively participated in the management of, or
performed services on a full-time basis for, the Partnership, (iv) a Foreclosure
Block Transfer, (v) a Compliant Block Transfer, or (vi) a Noncompliant Block
Transfer, but only to the extent of two Noncompliant Block Transfers in any
calendar year, or (vii) a Permitted Lien Transfer, or (viii) a Compliant
Redemption Transfer effected pursuant to Section 11.4(a), but only to the extent
of one group of simultaneous Compliant Redemption Transfers in any calendar
year, or (ix) a Compliant Redemption Transfer effected pursuant to Section
11.4(b), but only to the extent of two groups of simultaneous Compliant
Redemption Transfers in any calendar year.
Expenses is defined in Section 15.1.
Foreclosure Block Transfer shall mean a Block Transfer in connection
with the foreclosure of a Permitted Lien.
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 Partners GP or Holdings LP in its
capacity as a general partner of the Partnership, or (ii) any other Person which
has been admitted as a successor or additional general 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. 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.
6
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
Partners GP and Holdings LP 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.
Holdings LP shall mean PIMCO Advisors Holdings L.P., a Delaware
limited partnership, or its Successor.
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; (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
7
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.
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, 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
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.
Management Board shall mean the Management Board of the Partnership or
any successor board established by the General Partners.
Minimum Gain shall have the meaning set forth in Treasury Regulations
Section 1.704-2(b) and (d).
National Securities Exchange shall mean (i) an exchange registered
with the Commission under Section 6(a) of the Exchange Act, or (ii) the National
Association of Securities Dealers Automated Quotations System.
Net Income or Net Loss for a fiscal year shall mean an amount equal to
the Partnership's taxable income or taxable loss for such fiscal year 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), as
adjusted as provided in Section 7.2, and as further adjusted to reflect any
adjustments resulting from amended returns, claims for refund and tax audits.
8
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.
Nominee shall mean a Partner which holds Units of record which are
owned beneficially by another Person.
Noncompliant Block Transfer shall mean a Block Transfer which does not
qualify as a Semiannual Transfer.
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, whether directly or indirectly through
a Public General Partner.
(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.
Participating Public General Partner is defined in Section 6.5(b).
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.
9
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, such Partner'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, the quotient of
(i) the Partnership Interest of such Partner divided by (ii) the total
Partnership Interests of all Partners
Permitted Lien shall mean (i) the pledge by PIMCO Partners GP of
21,875,000 LP Units to secure that certain 9.01% Note in the amount of
$130,000,000 due December 31, 2001, or (ii) any hypothecation or pledge of, or
other creation of a lien, encumbrance or security interest in or upon Units to
further secure such Note or to secure any refunding or refinancing of such Note.
Permitted Lien Transfer shall mean a Transfer of Units by PIMCO
Partners GP which creates a Permitted Lien.
Person shall mean a natural person, general or limited partnership,
limited liability company, trust, estate, association, corporation, custodian,
nominee or any other person or entity in its own or any representative capacity.
Proceedings is defined in Section 15.1.
Public Company shall mean a Business Entity which has at least one
class of Equity Security outstanding which is registered under Section 12 of the
Exchange Act and listed or admitted to trading on a National Securities
Exchange.
Public General Partner shall mean a General Partner which is a Public
Company and which, if it were not a General Partner, would be required to
register as an investment company under the Investment Company Act of 1940, as
amended. References in this Agreement to the "Public General Partners" shall be
deemed to be references to the "Public General Partner" if there is only one
Public General Partner.
Qualified Person shall mean (i) the Partnership, (ii) any Partner or
(iii) any Eligible Person.
Recapitalization is defined in Section 4.5.
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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.
Redemption shall mean a redemption by the Partnership of outstanding
LP Units for an amount in cash per redeemed LP Unit equal to the Unit Price as
of the close of business on the Business Day next preceding the date of
redemption, under the circumstances described in Section 11.4.
Redemption Transfer shall mean a Transfer of LP Units to the
Partnership in connection with a Redemption.
Restructuring shall mean any action, event, transaction or series of
actions, events or transactions that the General Partners determine in good
faith is reasonable likely to prevent or avoid the occurrence of an Adverse
Partnership Tax Event or a Tax Realization Event or both.
Securities Act shall mean the Securities Act of 1933, as amended, and
any successor to such statute.
Semiannual Exchange Period is defined in Section 6.5(a).
Semiannual Transfer shall mean a Transfer of Units, including an
Exempt Transfer, to a Qualified Person, which complies with the provisions of
Section 6.5.
Semiannual Transfer Period shall mean a period beginning at the
beginning of a Semiannual Exchange Period and ending ten Business Days after the
end of such Semiannual Exchange Period.
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.
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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.
10% Limit is defined in Section 6.5(f).
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
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.
Tracking Unit shall mean an LP Unit representing a specified
percentage interest in the OPAD of an Investment Management Company, and having
those special rights and obligations specified in the Written Consent creating
the series of Tracking Units of which such LP Unit is a part, and shall include
all LP Units issued after the Effective Time which are designated as Tracking
Units pursuant to a Written Consent.
Transfer (and related words) with respect to Units shall mean or refer
to a transaction by which a Unitholder transfers one or more Units or an
interest in one or more Units
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to another Person, including a Nominee, and shall include a sale, assignment,
transfer, gift (outright or in trust), exchange, redemption, hypothecation or
pledge of, or other creation of a lien, encumbrance or security interest in or
upon, or other disposition of, Units or any interest in Units, whether
voluntarily, involuntarily, by operation of law or otherwise, but shall not
include any change in the ownership of such Unitholder.
Transfer Agent, with respect to any class or series of Units, shall
mean the Person (which 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. The books and records of a Transfer Agent pertaining to
Unitholders shall be deemed to be books and records of the Partnership.
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.
Unit shall mean a portion or all of the Partnership Interest of a
Partner representing such fractional part of the Partnership Interests of all of
the Partners as shall be determined by the General Partners in connection with
the issuance of Units; provided, however, that each Unit of a particular class
or series shall represent the same fractional part of the Partnership Interests
represented by all of the outstanding Units of such class or series as is
represented by each other Unit of such class or series. 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 a General Partner or a Limited Partner. 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 in any case in which
such Nominee has furnished the identity of such owner to the Partnership
pursuant to Section 6031(c) of the Code.
Unit Price of a Unit of a given class or series as of any date of
determination shall mean the fair market value of such Unit as of such date of
determination as determined in good faith 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 7.4 or 7.5 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 7.4 or 7.5 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 7.4 or 7.5
as of such date) over the fair market value
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of such Partnership Asset (as determined under Section 7.4 or 7.5 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
written consent of General Partners holding a majority of the GP Units, or (ii)
if a Delegate has the rights and powers to take such action, a written action of
such Delegate.
Written Consent shall mean 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 Partners.
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 the Partners.
The General Partners of the Partnership are PIMCO Partners GP and
Holdings LP, and the address of the General Partners is 000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000. The names and last known business,
residence or mailing addresses of the Limited Partners are set forth 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.
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(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.
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 are divided into GP
Units and LP Units, and the LP Units are further divided into Class A Units,
Class C Units and such series of Tracking Units as shall be created from time to
time by the General Partners in accordance with Section 4.2.
(b) A General Partner, other than a Public 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 Class A
LP Units. The rate at which Class A LP Units shall be delivered upon conversion
of GP Units shall initially be one Class A LP Unit for each GP Unit, and shall
be adjusted to reflect any Recapitalization occurring after the Effective Time.
Class A LP Units issued on conversion of GP Units shall be deemed to have been
issued, and
15
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) If a General Partner ceases for any reason to be a Public General
Partner, 99% of the GP Units held by such General Partner shall be converted
into and exchanged for Class A LP Units, without any action on the part of such
General Partner. The rate at which Class A LP Units shall be delivered upon such
conversion of GP Units shall initially be one Class A LP Unit for each GP Unit,
and shall be adjusted to reflect any Recapitalization occurring after the
Effective Time. Class A LP Units issued on such 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 such General Partner ceases to
be a Public General Partner.
(d) A General Partner, other than a General Partner which has ceased
for any reason to be a Public 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 held by such General Partner into GP Units. The rate at which GP Units
shall be delivered upon conversion of Class A LP Units shall initially be one GP
Unit for each Class A LP Unit, and shall be adjusted to reflect any
Recapitalization occurring after the Effective Time. GP Units issued on
conversion of Class A LP Units shall be deemed to have been issued, and such
Class A LP Units shall be deemed to be canceled and retired, as of the close of
business on the date Certificates evidencing such Class A LP Units are
surrendered to the Partnership for conversion.
(e) A Partner shall have the right, at such Partner's option, at any
time to convert a portion or all of the Class C LP Units held by such Partner
into Class A LP Units. The rate at which Class A LP Units shall be delivered
upon conversion of Class C LP Units shall initially be one Class A LP Unit for
each Class C LP Unit, and shall be adjusted to reflect any Recapitalization
occurring after the Effective Time. Class A LP Units issued on conversion of
Class C LP Units shall be deemed to have been issued, and such Class C LP Units
shall be deemed to be canceled and retired, as of the close of business on the
date Certificates evidencing such Class C LP Units are surrendered to the
Partnership for conversion.
Section 4.2 New Classes or Series of Units or Other Securities.
(a) 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.
(b) Any newly-created 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, 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
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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.
(c) The designations, preferences and relative participating,
optional or other special rights, powers and duties of any newly-created class
or series of Units or other securities shall be set forth in a Written Consent.
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.
(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 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
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.
(a) Upon the issuance of Units to any Partner or other Person, the
Partnership shall issue and deliver to such Partner, or if such other Person has
qualified for admission as a Partner pursuant to Article XII, to such other
Person, 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.
(b) 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, if (i) such Units were
Transferred to such Transferee in compliance with the provisions of Article VI
or Article XVI, as applicable, and (ii) such Transferee, if not a Partner, has
qualified for admission as a Partner pursuant to Article XII, issue and deliver
to such Transferee replacement Certificates in the name of such Transferee in
such denominations as such Transferee may request.
(c) 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, Destroyed or Mutilated Certificates.
(a) The Partnership shall issue a new Certificate in place of any
Certificate previously issued if the registered owner of the Units evidenced by
the Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the Partnership, that a previously issued Certificate has been
lost, stolen or destroyed;
(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, theft or destruction of the Certificate; and
18
(iv) satisfies any other reasonable requirements imposed by the
Partnership.
(b) When a Certificate has been lost, stolen or destroyed, 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 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 a mutilated Certificate is surrendered to the Partnership, 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, including a
Nominee, as the owner of the Units registered in such Unitholder's name on the
books and records of the Partnership 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, including any Person for whom such
Nominee is acting as Nominee, regardless of whether the Partnership shall have
actual or other notice thereof.
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 purported Transfer of Units not made in accordance with this Article VI or
Article XVI shall be null and void, and the purported Transferee shall not (i)
be admitted as a Partner, (ii) be deemed to be an assignee of the Units
purported to be Transferred within the meaning of Section 17-702 of the Delaware
Act, or (iii) have any rights to share in profits and losses, to receive any
distributions, or to receive any allocations of income, gain, loss, deduction,
or credit or similar item, with respect to the Units purported to be
Transferred.
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Section 6.2 Transfer of GP Units.
GP Units may be Transferred by a General Partner (i) to an Affiliate
of such General Partner which has been admitted as a successor or additional
General Partner pursuant to Section 12.1(a), or (ii) to a General Partner in an
Exempt Transfer or a Semiannual Transfer.
Section 6.3 Transfer of LP Units.
LP Units may be Transferred by a Partner in an Exempt Transfer or a
Semiannual Transfer.
Section 6.4 Regulation of Block Transfers.
(a) The General Partners may by Written Consent adopt such rules
consistent with Section 1.7704 of the Treasury Regulations with regard to Block
Transfers, including the calculation of the minimum number of Units qualifying
as a Block Transfer and the number of Units that should be counted against such
minimum number, as they shall determine in good faith are appropriate.
(b) If any Partner or group of related Partners (within the meaning
of Section 267(b) or Section 707(b)(1) of the Code) desires to effect a
Noncompliant Block Transfer, such Partner or group of Partners shall, as
promptly as practicable, give notice to the Partnership of such proposed
Noncompliant Block Transfer, including the names of the proposed Transferees and
the number of Units proposed to be Transferred to each such Transferee. If
several Partners or groups of related Partners give notices to the Partnership
that they desire to effect Noncompliant Block Transfers in the same calendar
year, and the number of such Noncompliant Block Transfers exceeds the number
which would qualify as Exempt Transfers in such calendar year, after taking into
account any prior Noncompliant Block Transfers during such calendar year, the
General Partners shall by Written Consent determine in good faith which of such
Partners or groups shall be permitted to effect Noncompliant Block Transfers in
such calendar year.
(c) The power and authority of the General Partners to determine
which Partners or groups of Partners may effect Noncompliant Block Transfers in
a calendar year may result in benefits to the Partners or groups permitted to
effect such Noncompliant Block Transfers (including certain General Partners or
their Affiliates) and disadvantages to the Partners or groups which are not
permitted to effect such Noncompliant Block Transfers (including other General
Partners or their Affiliates). No Partner shall have any cause of 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 any such determination or the disparate effects
thereof on any one or more Partners if the General Partners which consented to
the Written Consent made their determination in good faith.
Section 6.5 Semiannual Transfers.
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(a) There shall, if practicable, be two periods each year (each, a
"Semiannual Exchange Period"), each comprising twenty Business Days or such
greater number of Business Days as may be required under the Exchange Act,
during which (i) the Public General Partners shall make registered exchange
offers to the Partners pursuant to which the Partners may exchange their Units
for publicly traded shares of a corporate Public General Partner, if any, or
publicly traded units of limited partner interest of a partnership Public
General Partner, if any, or both, and (ii) the General Partners may effect
Exchanges. The first Semiannual Exchange Period in a year, if any, shall begin
no earlier than March 15 and end no later than July 31 of such year, and the
second Semiannual Exchange Period in a year, if any, shall begin no earlier than
August 15 and end no later than December 31 of such year.
(b) If one or more of the Public General Partners (each, a
"Participating Public General Partner") determines to make a registered exchange
offer in the period prescribed for a Semiannual Exchange Period, such Semiannual
Exchange Period shall begin on a date determined by the Participating Public
General Partners, which, if such Semiannual Exchange Period is in the first half
of the year, shall be as soon as practicable following the issuance of the last
to be issued of the Public General Partners' financial statements for the
immediately preceding year, or if such Semiannual Exchange Period is in the
second half of the year, shall be as soon as practicable following the issuance
of the last to be issued of the Public General Partners' financial statements
for the first six months of such year. If there is more than one Participating
Public General Partner, they shall cooperate in good faith to coordinate such
registered exchange offers.
(c) If there is no Public General Partner, or if the Public General
Partners determine not to make a registered exchange offer in the period
prescribed for a Semiannual Exchange Period, the General Partners shall
determine the date, if any, on which such Semiannual Exchange Period shall
begin.
(d) The General Partners shall endeavor in good faith to provide two
Semiannual Exchange Periods each year as provided in this Section 6.5; provided,
however, that no Partner shall have any cause of action against, or right to
receive any compensation from, any General Partner or its Affiliates as a result
of or in respect of a determination (i) by a Public General Partner to not make
a registered exchange offer in the period prescribed for a Semiannual Exchange
Period, or (ii) by the General Partners to provide less than two Semiannual
Exchange Periods in a year, if such Public General Partner or General Partners
made its or their determination in good faith.
(e) During a Semiannual Exchange Period, a Partner may Transfer Units
or the General Partners may effect Exchange Transfers, in each case to a Public
General Partner pursuant to its registered exchange offer, and during the last
five Business Days of a Semiannual Transfer Period, a Partner may Transfer Units
to any Qualified Person, or the General Partners may effect Redemptions. Any
such Transfer shall comply with the provisions of Sections 6.3 and 6.5(f).
21
(f) If a Partner proposes to Transfer Units, or the General Partners
propose to effect a Redemption, in a Semiannual Transfer to a Qualified Person
other than a Public General Partner pursuant to its registered exchange offer,
such Partner or the General Partners shall, at least five Business Days prior to
the end of the corresponding Semiannual Exchange Period, give notice to the
Partnership of such proposed Transfer, including the name of the proposed
Transferee and the number of Units proposed to be Transferred. If the total
number of Units either tendered pursuant to a registered exchange offer or
proposed to be Transferred in Semiannual Transfers during a Semiannual Transfer
Period, plus the total number of Units Transferred in Semiannual Transfers
during the preceding Semiannual Transfer Period, if any, in the same year,
exceeds 10% of the total number of outstanding Units (the "10% Limit"), the
number of Units tendered pursuant to registered exchange offers and proposed to
be Transferred in Semiannual Transfers during such Semiannual Transfer Period
shall be reduced pro rata such that the 10% Limit is not exceeded. The
Partnership shall immediately give notice of such reduction to the General
Partners, each Public General Partner and each Partner which gave notice to the
Partnership of a proposed Transfer. Exempt Transfers shall not be counted
against the 10% Limit.
(g) The General Partners may by Written Consent adopt such rules
consistent with Section 1.7704 of the Treasury Regulations with regard to the
calculation of the 10% Limit as they shall determine in good faith are
appropriate.
Section 6.6 Additional Restrictions on Transfers.
A Partner shall not Transfer any of its Units, and the General
Partners shall not effect an Exchange Transfer or Redemption Transfer, if such
Transfer would (i) violate 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) result
in an Adverse Partnership Event or an Assignment Event, or (iii) affect the
Partnership's existence or qualification as a limited partnership under the
Delaware Act.
Section 6.7 Covenant and Agreement of the Partners.
Each of the Partners covenants and agrees to comply in all respects
with the provisions of this Agreement regarding Transfers and proposed Transfers
of Units.
Section 6.8 Remedies and Penalties for Noncompliance.
In addition to any other remedies which may be available at law or in
equity for a breach or attempted breach by a Partner of the provisions of this
Article VI, (i) the Partnership shall be entitled to injunctive relief and to
specific performance of such provisions, and (ii) the General Partners may
impose penalties on such Partner(including forfeiture of all or part of its
Units) for such breach or attempted breach. Any Units forfeited pursuant to this
Section 6.8 shall be canceled and retired.
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ARTICLE VII
Capital Accounts
Section 7.1 Capital Accounts.
(a) The Partnership shall maintain for each Unitholder 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 Unitholder to the Partnership and (ii) Net Income
allocated to such Unitholder pursuant to Article VIII and decreased by (i) the
cash amount or Net Value of all actual and deemed distributions of Partnership
Assets made to such Unitholder and (ii) Net Loss allocated to such Unitholder
pursuant to Article VIII.
(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 a
General Partner, the Partnership or any of its Subsidiaries by such Associate,
the Person receiving such Units 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 Adjustments Affecting Net Income or Net Loss.
(a) In accordance with the requirements of Section 704(c) of the Code
and Treasury Regulations 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 7.4 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.
(b) Any income, gain or loss attributable to the 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.
(c) 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
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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.
Section 7.3 Adjustments for Transfers.
If a General Partner Transfers LP Units, and if immediately prior to
such Transfer such General Partner has a negative Capital Account balance, 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.
Section 7.4 Adjustments for Contributions or Redemptions.
In accordance with Treasury Regulations 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 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 the Carrying Values of all Partnership Assets shall be adjusted 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 pursuant to Article VIII. For purposes of
determining such Unrealized Gain or Unrealized Loss, the fair market value of
Partnership Assets shall be determined by the General Partners.
Section 7.5 Adjustments for Distributions in Kind.
In accordance with Treasury Regulations 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 the Carrying Values of such
Partnership Asset shall be adjusted 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 at such time pursuant to Article VIII. 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.
With respect to each fiscal quarter, commencing with the fiscal
quarter ending March 31, 1998, 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 as of the close of
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business on the last day of each such fiscal quarter, and shall be paid not more
than 30 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 any series of Tracking
Units, as provided in the Written Consents creating each such series;
(ii) Second, to such Unitholders holding Class C Units, pro
rata in accordance with their Class C Units, until the cash distributions made
pursuant to this clause (ii) with respect to each Class C Unit equal the Class C
Quarterly Priority Amount;
(iii) Third, to such Unitholders holding Class A Units, pro rata
in accordance with their Class A Units, until the cash distributions made
pursuant to this clause (iii) with respect to each Class A Unit equal the Class
A Quarterly Priority Amount;
(iv) Fourth, 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 the preceding clauses (ii) and (iii) and
this clause (iv) with respect to each Class A Unit and Class C Unit equal the
Class C Quarterly Cap;
(v) Fifth, to such Unitholders holding Class A Units, pro rata
in accordance with their Class A Units;
provided, however, that the Partnership may withhold distributions to the
holders of Class A Units to protect the distributions in respect of Tracking
Units and Class C Units in future fiscal quarters.
Section 8.2 General Rules with Respect to Distributions.
(a) The General Partners are 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 Section 8.1. 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 other than a quarterly 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 9.7, 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.
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(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 8.3 Allocations of Net Income and Net Loss.
(a) Net Income and Net Loss shall be determined for each fiscal year
and allocated annually. Except as otherwise provided in Section 8.4, Net Income
and Net Loss for a fiscal year shall be allocated as set forth in this Section
8.3.
(b) If the Partnership has Net Income for a fiscal year, one-twelfth
of such Net Income shall be treated as earned in each fiscal month of such
fiscal year. Net Income so treated as earned in a fiscal quarter of such fiscal
year shall first be allocated to each series of Tracking Units in the amount of
the distributions made to the holders of such series with respect to such fiscal
quarter, and shall then be allocated to the Class C Units in the amount of the
distributions made to the Class C Unitholders with respect to such fiscal
quarter; any remaining Net Income shall be allocated to the Class A Units in
proportion to the distributions made to the Class A Unitholders with respect to
such fiscal quarter. One-third of the Net Income for a fiscal quarter which is
allocated to a class or series of Units shall be further allocated to the
holders of such class or series as of the close of business on the last day of
each of the three fiscal months in such fiscal quarter, in proportion to the
number of Units of such class or series held by such Unitholders as of the close
of business on each such day.
(c) If the Partnership has a Net Loss for a fiscal year, one-twelfth
of such Net Loss shall be treated as incurred in each fiscal month of such
fiscal year. Net Loss so treated as incurred in a fiscal month shall first be
allocated 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; any 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
previously allocated pursuant to this Section 8.3(c), such Net Income shall
first be allocated to the General Partners in respect of their GP Units until
such allocated Net Income equals Net Loss previously allocated to the General
Partners pursuant to this Section 8.3(c); any remaining Net Income shall be
allocated to the Unitholders in the same proportions and amounts as Net Loss was
previously allocated pursuant to this Section 8.3(c). For purposes of this
Section 8.3(c), the determination of Capital Account balances shall be made
after giving effect to all distributions of cash made with respect to fiscal
quarters before the fiscal month in question pursuant to Section 8.1.
(d) If the Partnership has an item of extraordinary income during a
fiscal month which results in an extraordinary distribution to the Class A
Unitholders with respect to
26
the fiscal quarter which includes such fiscal month, such item of extraordinary
income shall be allocated to the Class A Unitholders as of the close of business
on the last day of such fiscal month, in proportion to the number of Class A
Units held by each such Unitholder as of the close of business on such day. The
General Partners shall determine whether an item of Partnership income is
extraordinary and results in an extraordinary distribution, and the amount of
such extraordinary distribution.
(e) Except as otherwise provided in Section 8.5, items of income,
gain, loss and deduction shall be allocated among the Unitholders in the same
proportion as items comprising Net Income or Net Loss, as the case may be, are
allocated among the Unitholders, and credits shall be allocated as provided in
Treasury Regulations Section 1.704-1(b)(4)(ii).
Section 8.4 Special Provisions Governing Capital Account Allocations.
(a) In the event that any Partner has a deficit Capital Account at
the end of any Partnership fiscal year which is in excess of such Partner'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 8.3(b) and (c), such Partner shall be allocated Net Income in
proportion to such remaining excess deficit amounts.
(b) If any Partner unexpectedly receives any adjustments, allocations
or distributions described in Treasury Regulations 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
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 Regulations Section 1.704-1(b)(2)(ii)(d)(3)) as quickly as possible.
This Section 8.4(b) is intended to constitute a "qualified income offset" within
the meaning of Treasury Regulations 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 8.4(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 Regulations Section 1.704-2(f). Any Partner's
share of Minimum Gain shall be determined in accordance with Treasury
Regulations Section 1.704-2(g). This Section 8.4(c) is intended to comply with
the minimum gain chargeback requirement of Treasury Regulations Section 1.704-2
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 8.4(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
27
equal to the net amounts that would have been allocated to each Partner if such
special allocations had not occurred.
(d) To the extent required by Treasury Regulations 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 Regulations Section 1.704-2(b)(4) shall be allocated in accordance
with the provisions of Treasury Regulations Section 1.704-2(i). This Section
8.4(d) is intended to satisfy the requirements of Treasury Regulations Section
1.704-2(i) (including the partner nonrecourse minimum gain chargeback
requirements) and shall be interpreted to comply with the requirements of such
regulation. Any special allocations pursuant to this Section 8.4(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 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. 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 is deemed to recognize
income as a result of any transaction between such Partner 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 Partnership shall be allocated to the Partner 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 8.4, 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.
Section 8.5 Special Provisions Governing Tax Allocations.
(a) 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
28
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.
(b) Items of income, gain, loss, depreciation and cost recovery
deductions attributable to Adjusted Property shall (i) first, be allocated among
the Partners 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 8.3(b) or 8.3(c) to
the extent such allocation reduces Book-Tax Disparities, and (ii) second, in the
event such property was originally Contributed Property, be allocated among the
Partners in a manner consistent with Section 8.5(a).
(c) To the extent permissible under applicable Treasury Regulations,
the amount of any gain from a disposition of property allocated to a Partner
pursuant to Section 8.5(a) or 8.5(b) shall be deemed to be Recapture Income to
the extent such Partner has been allocated or has claimed any deduction directly
or indirectly giving rise to the treatment of such gain as Recapture Income.
(d) All items of income, gain, loss, deduction and credit recognized
by the Partnership and allocated to the Partners in accordance with this Article
VIII 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 Regulations Section 1.704-1(b)(2)(iv)(m).
(e) Unless otherwise required by the Treasury Regulations under
Section 704(c) of the Code, with respect to property contributed to the
Partnership in 1994, 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 8.6 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 Loss (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 holders of each series of Tracking Units until the
Capital Account balance allocable to each Unit of such series is equal, (ii) the
same procedure shall be followed with respect to Class C Units until the Capital
Account balance allocable to each Class C Unit is equal, and (iii) the same
procedure shall be followed with respect to Class A Units
29
until the Capital Account balance allocable to each Class A Unit is equal.
Section 8.7 Changes in Allocation Methods.
The General Partners may revise, alter or otherwise modify the
allocation methods set forth in this Article VIII (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 a Unit 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 the Code or any
Treasury Regulations.
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,
30
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.
Section 9.6 Other Tax Matters.
(a) The General Partners shall make special allocations to the
Partners 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 under Article VIII to be respected for federal
income tax purposes.
(b) 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, (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 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 C
Units).
(c) If the General Partners determine 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 elect, Units may be separately identified as distinct
classes to reflect differences in tax consequences.
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Section 9.7 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 9.8 Tax Controversies.
PIMCO Partners 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 Partners GP and to do or to refrain from doing
any or all things reasonably required by the PIMCO Partners GP to conduct such
proceedings.
Section 9.9 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.
(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 action
connected with the business of the Partnership, other than those actions
specified in
32
Section 10.1(c), shall be decided by General Partners holding a majority of the
outstanding GP Units.
(c) The following actions may be taken only by Written Consent:
(i) any merger or consolidation of the Partnership with or
into any other Business Entity in which the Partnership is not the surviving
entity;
(ii) any sale or transfer of all or substantially all of the
Partnership Assets;
(iii) any incurrence of Indebtedness by the Partnership or any
of its Subsidiaries except in the ordinary course of business;
(iv) initiation, consent to or acquiescence in any Insolvency
Event with respect to the Partnership;
(v) any other action which would make it impossible for the
General Partners to carry on the ordinary business of the Partnership;
(vi) any determination or election pursuant to Section 17.1;
(vii) any determination, after the occurrence of an Event of
Withdrawal with respect to a General Partner, to carry on the business of the
Partnership;
(viii) any determination or action pursuant to Article XVI;
(ix) any action which would cause an Assignment Event, an
Adverse Partnership Event, a Tax Realization Event or a Termination Event;
(x) any determination or action pursuant to Section 11.4; or
(xi) any other action which, by reason of any provision of this
Agreement, requires Written Consent.
Section 10.2 Delegation.
(a) The General Partners shall have the power and authority by
Written Consent to constitute one or more boards or committees, 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 more of such boards or
committees (each, a "Delegate"), and to revise or revoke any such constitution
or delegation. Such delegation by the General Partners shall not cause any
General Partner to cease to be a general partner of the Partnership.
33
(b) The General Partners may not delegate their rights and powers
with respect to any of the following actions:
(i) admission of any successor or additional General Partner;
(ii) any amendment of this Agreement;
(iii) any action which would require the approval of Partners
other than the General Partners; or
(iv) any action which, by reason of any provision of this
Agreement, requires Written Consent.
(c) Except as otherwise provided in a Written Consent 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 persons 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 Consent, 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.
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 reasonable out-of-pocket
costs incurred by it in connection with the borrowing of funds obtained by such
General Partner or Affiliate and loaned to the Partnership.
34
(b) The Partnership may make a loan to a General Partner or its
Affiliate on terms that are fair to the Partnership. Such General Partner or
Affiliate shall reimburse the Partnership for any reasonable out-of-pocket costs
incurred by it in connection with the borrowing of funds obtained by the
Partnership and loaned to such General Partner or Affiliate.
(c) A General Partner or its Affiliate may render services to the
Partnership on terms that are fair to the Partnership.
(d) 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
(e) Before entering into any transaction described in this Section
10.5, such transaction shall be determined to be fair to the Partnership by (i)
a committee of members of the Management Board, appointed by the Management
Board, who are independent with respect to such transaction, or (ii) the General
Partners. A determination made by such a committee, or made in good faith by the
General Partners, shall be conclusive and binding on the Partners and the
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 (i) a committee of members of the Management Board, appointed by the
Management Board, who are independent with respect to such conflict of interest,
or (ii) the General Partners. A resolution determined by such a committee, or
determined in good faith by the General Partners, shall be conclusive and
binding on the Partners and the Partnership.
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.
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.
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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 a Public General Partner pursuant to the 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;
(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
36
(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 determine in good faith 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.
Section 11.4 Authority of General Partners to Effect Exchanges and
Redemptions.
(a) If at any time the General Partners determine that as a result of
the cumulative effect of admissions of additional Limited Partners or Transfers
of Units or for any other reason, there is a substantial risk of an Adverse
Partnership Event, the General Partners may, without the approval of any Limited
Partner, (i) automatically effect an Exchange of some or all outstanding LP
Units, or (ii) effect the Redemption of some or all outstanding LP Units.
(b) If a Limited Partner which was an Eligible Person as of December
31, 1997 or the date on which it was admitted as a Limited Partner, whichever is
later, ceases for any reason to be an Eligible Person, the General Partners may
effect an Exchange or Redemption of the LP Units held by such Limited Partner.
(c) Any Transfer in connection with an Exchange or Redemption shall
comply with the provisions of Article VI.
(d) The power and authority of the General Partners to effect (or not
to effect) Exchanges and Redemptions includes the power and authority to effect
one or more Exchanges or Redemptions 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 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 Exchange or Redemption or the disparate
effects thereof on any one or more Partners, (ii) the failure of the General
Partners to effect any one or more Exchanges or Redemptions, or (iii) the
General Partners' determination to effect an Exchange or Redemption of LP Units
held by one or more particular Unitholders instead of any other Unitholders,
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
37
deliberate intent to cause injury to the Partnership or was undertaken with
reckless disregard for the best interests of the Partnership.
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, 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.
(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 with respect to such admission, (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 which is not a Partner and which proposes to make a
Contribution to the Partnership and receive LP Units in exchange for such
Contribution shall apply to be admitted as a Limited Partner by executing and
delivering an Admission Application to the Partnership prior to such
Contribution.
(b) A Person which is not a Partner and which proposes to acquire one
or more LP Units by Transfer from a Unitholder shall apply to be admitted as a
Limited Partner by executing and delivering an Admission Application to the
Partnership prior to such Transfer.
(c) A Person shall be admitted as a Limited Partner only if (i) it is
an Eligible Person, (ii) it delivers a properly completed and executed Admission
Application to the Partnership, and (iii) its admission would not (A) violate
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, (B) result in an Assignment
Event or an Adverse Partnership Event or (C) affect the Partnership's existence
or qualification as a limited partnership under the Delaware Act.
38
(d) A Person which qualifies for admission as a Limited Partner
pursuant to Section 12.2(c) 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 on which Certificates evidencing the LP Units issued to such
Person in exchange for its Contribution or Transferred to such Person are issued
to such Person and registered in its name on the books and records of the
Transfer Agent.
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, 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)
such General Partner gives notice to the Partnership of its intent to withdraw
as a General Partner, (ii) the Partnership receives a Limited Liability Opinion,
a Tax Opinion and an Assignment Opinion with respect to such withdrawal, and
(iii) 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. The General Partners shall call and hold a
meeting of the Unitholders to consider the withdrawal of the General Partner no
sooner than 60 days after the date of such notice, or if there is only one
General Partner, no sooner than 180 days after the date of such notice. If there
is only one General Partner, 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 be a
General Partner and has agreed in writing to carry on the business of the
Partnership. If there is only one General Partner and its 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
39
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 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 May Be Carried On After Event of Withdrawal.
Upon the occurrence of an Event of Withdrawal, the business of the
Partnership may 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, or the Redemption of Units held by a Limited Partner, such Limited
Partner shall cease to be a Limited Partner with respect to such Units.
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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
a notice to the Partnership 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
such notice, 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, stating the specific purposes for
which the meeting is called. 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 a meeting which is opposed by the General
Partners or the Liquidator unless the Partnership has received a Limited
Liability Opinion, a Tax Opinion and an Assignment Opinion with respect to such
action.
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,
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
41
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 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
42
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 a person to serve as chairman of the meeting, and shall further
designate a person 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
43
requirement conflicts with any law, rule, regulation, guideline or requirement,
in which case such law, rule, regulation, guideline or requirement shall
govern).
(c) If any Person other than the General Partners 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, 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 withhold written approval
of such action or actions and (ii) if such action or actions were not submitted
to the Partners for written approval by the General Partners or the Liquidator,
the Partnership receives a Limited Liability Opinion, a Tax Opinion and an
Assignment 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 by a Nominee, such Nominee
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 which beneficially owns such Units,
and the Partnership shall be entitled to assume such Nominee 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.
44
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 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) 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
(vi) 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 Partners holding a majority of the
outstanding Units of such class or series, or a majority in interest of such
Partnership Interests, as the case
45
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.
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:
46
(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
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.
47
(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 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 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
48
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.
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 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 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 for breach of fiduciary duty (including breach of any duty of care or
any duty of loyalty) to the Partnership or any Partner 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 any other
Indemnitee for, and shall be protected in, acting or refraining from acting, in
reliance in good faith on the provisions of this Agreement, and the exercise in
good faith 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 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.
49
(e) In taking an action or 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 in the circumstances and shall have
no duty or obligation to take any other factors into account. If any such action
or determination is required to be taken or made in "good faith," or under
another express standard, the General Partners or their Delegates shall take
such action or make such determination under such express standard and shall not
be subject to any other or different standards. Any action or determination
required to be taken or made by the General Partners or their Delegates in "good
faith" shall be presumed to meet that standard unless it is proved by clear and
convincing evidence that such action or determination was taken or made in bad
faith.
(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 the cumulative effect of Transfers of
Units or admissions of additional Limited Partners), 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 Entities which hold, directly
or indirectly, Partnership Interests or interests in all or any part of
50
the business of the Partnership or the Partnership Assets, including without
limitation one or more Public General Partners.
(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 penalties (including forfeiture of Units) for
attempted or purported Transfers 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) The power and authority of the General Partners to effect (or
not to effect) one or more Restructurings 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 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.
51
Section 16.2 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;
(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
(vii) entry of a decree of dissolution under the Delaware
Act.
52
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 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 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
53
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 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.
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 the Partnership for all purposes, until changed by
notice to the Partners, is 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000.
The address of each Partner for all purposes shall be the address set forth on
the books and records of the Partnership. Any notice, demand, request or report
required or permitted to be given by or made to the Partnership or 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 Partnership or such Partner at such
address by first class mail or by other means of written communication.
54
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.
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.
55
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.
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.
56
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
GENERAL PARTNERS
PIMCO PARTNERS, G.P.
By: PIMCO PARTNERS LLC,
a California limited liability company,
General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Title: CEO
---------------------
By: PIMCO HOLDING LLC,
a Delaware limited liability company,
General Partner
By: PACIFIC ASSET MANAGEMENT LLC,
a Delaware limited liability company
Member
By: PACIFIC LIFE INSURANCE COMPANY,
a California life insurance company
Member
By: /s/ Xxxxx X. Xxxx
------------------
Title: CFO
----------------
By: /s/ Xxxxxx Milfs
-----------------
Title: Secretary
----------------
57
PIMCO ADVISORS HOLDINGS L.P.
By: PIMCO PARTNERS, G.P.,
a California general partnership,
General Partner
By: PIMCO PARTNERS LLC,
a California limited liability company,
General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Title: CEO
----------------------
By: PIMCO HOLDING LLC,
a Delaware limited liability company,
General Partner
By: PACIFIC ASSET MANAGEMENT LLC,
a Delaware limited liability company
Member
By: PACIFIC LIFE INSURANCE COMPANY,
a California life insurance company
Member
By: /s/ Xxxxx X. Xxxx
-------------------------------
Title: CFO
-----------------------------
By: /s/ Xxxxxx Milfs
------------------------------
Title: Secretary
-----------------------------
58
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 Partners
By: PIMCO PARTNERS, G.P.,
a California general partnership,
General Partner
By: PIMCO PARTNERS LLC,
a California limited liability company,
General Partner
By: /s/ XXXXXXX X. XXXXXXXX
------------------------
Title: CEO
----------------------
By: PIMCO HOLDING LLC,
a Delaware limited liability company,
General Partner
By: PACIFIC ASSET MANAGEMENT LLC,
a Delaware limited liability company
Member
By: PACIFIC LIFE INSURANCE COMPANY,
a California life insurance company
Member
By: /s/ Xxxxx X. Xxxx
-------------------------------
Title: CFO
-----------------------------
By: /s/ Xxxxxx Milfs
------------------------------
Title: Secretary
-----------------------------
59
By: PIMCO ADVISORS HOLDINGS L.P.,
a Delaware limited partnership,
General Partner
By: PIMCO PARTNERS, G.P.,
a California general partnership,
General Partner
By: PIMCO PARTNERS LLC,
a California limited liability company,
General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Title: CEO
-------------------------------
By: PIMCO HOLDING LLC,
a Delaware limited liability company,
General Partner
By: PACIFIC ASSET MANAGEMENT LLC,
a Delaware limited liability company
Member
By: PACIFIC LIFE INSURANCE COMPANY,
a California life insurance company
Member
By: /s/ Xxxxx X. Xxxx
-------------------------------
Title: CFO
-----------------------------
By: /s/ Xxxxxx Milfs
----------------
Title: Secretary
---------------
60
EXHIBIT A
CERTIFICATE FOR
CLASS A LP UNITS
IN
PIMCO ADVISORS LP
EXHIBIT B
ADMISSION APPLICATION
The undersigned hereby requests admission as a Limited Partner of PIMCO
Advisors L.P., a Delaware limited partnership (the "Partnership"), and requests
that the books and records of the Partnership reflect such admission.
The undersigned hereby agrees to comply with and be bound by the Amended
and Restated Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement"), as the same may be amended from time.
The undersigned hereby appoints and authorizes the General Partners from
time to time of the Partnership to act as its representatives for the purpose of
executing amendments or restatements of the Partnership Agreement and any
certificates required to be filed under the Delaware Revised Uniform Limited
Partnership Act.
Executed at _______________________________ on______________________.
(City and State) (Date)
__________________________________________________
(Signature)
__________________________________________________
(Printed Name)
__________________________________________________
(Address)
__________________________________________________
(Address)
__________________________________________________
(City State and Zip Code)
__________________________________________________
(Social Security No. or TIN)
