EXHIBIT 2
LIMITED PARTNERSHIP AGREEMENT
of
BLUE RAVEN PARTNERS, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, NOR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS, OR UNLESS IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY SUCH QUALIFICATION AND REGISTRATION IS NOT
REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS AGREEMENT IS
FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH
HEREIN.
TABLE OF CONTENTS
-----------------
Page No.
--------
1. Formation; Name; Principal Place of Business............................................ 1
2. Term.................................................................................... 1
3. Purposes................................................................................ 2
3.1 General Purposes................................................................... 2
3.2 Specific Initial Purposes.......................................................... 2
3.3 General Partners' Authority to Fulfill Purposes.................................... 3
4. Partners................................................................................ 3
4.1 General Partners................................................................... 3
4.2 Limited Partners................................................................... 4
5. Capital Contributions................................................................... 4
5.1 No Withdrawals..................................................................... 4
5.2 Additional Capital Contributions................................................... 4
6. Partner's Capital Accounts.............................................................. 5
7. Net Income (Profits), Net Losses and Distributions...................................... 6
7.1 Accounting for Net Income (Profits) or Net Losses.................................. 6
7.2 Allocation of Net Income (Profits) or Net Losses and Income Tax
Credits............................................................................ 6
7.3 Distributions...................................................................... 7
7.4 Section 704(c) - Special Rule for Contributed Property............................. 8
7.5 Corrective Amendments for Tax Purposes............................................. 8
8. Liabilities............................................................................. 9
8.1 Limited Liability of a Limited Partner............................................. 9
8.2 Indemnification.................................................................... 9
9. Management.............................................................................. 10
9.1 General Partners as Manager........................................................ 10
9.2 Limitations on General Partners.................................................... 12
9.3 Obligation of the General Partners to Provide Time and Skill to Partnership........ 13
9.4 Limited Partner Has No Management Rights........................................... 13
9.5 Bank Deposits...................................................................... 13
9.6 Reports, Books and Records......................................................... 13
9.7 Agent for Service of Process....................................................... 15
10. Transfer of Partnership Interests....................................................... 16
10.1 By Limited Partner................................................................ 16
10.2 Transfers in Violation of Section 10.1............................................ 17
i
10.3 By General Partner................................................................ 18
10.4 Purchase of Units in the Event of Bankruptcy, Insolvency,
Divorce or Other Prohibited Transfer.............................................. 18
10.5 Substituted Partners.............................................................. 21
10.6 Investment Representation of Limited Partner...................................... 21
11. Termination............................................................................. 21
11.1 Terminating Events................................................................ 21
11.2 Election to Continue.............................................................. 22
11.3 Dissolution....................................................................... 23
11.4 Bankruptcy........................................................................ 24
12. Power of Attorney....................................................................... 25
12.1 General Partner Appointed as Attorneys-In-Fact.................................... 25
12.2 Power Coupled With An Interest.................................................... 25
12.3 Substituted Limited Partner....................................................... 26
13. Death, Incompetency or Dissolution of a Limited Partner................................. 26
14. Election Under Section 754 of the Code; Waiver of Right of Partition.................... 26
14.1 Election Under Section 754 of the Code............................................ 26
14.2 Waiver of Right of Partition...................................................... 27
15. Miscellaneous........................................................................... 27
15.1 Notices........................................................................... 27
15.2 Pronouns.......................................................................... 27
15.3 Capacity.......................................................................... 27
15.4 Binding Effect.................................................................... 28
15.5 Agreement in Counterparts......................................................... 28
15.6 Amendment of Agreement............................................................ 28
15.7 Governing Law; Consent to Binding Arbitration, Jurisdiction and Venue............. 28
15.8 Attorneys' Fees................................................................... 29
ii
LIMITED PARTNERSHIP AGREEMENT
-----------------------------
This Limited Partnership Agreement is made this ____ day of __________,
1999, and is intended to be effective as of December 31, 1998 (the "Effective
Date"), by and between Xxxxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and
Xxxxxx Xxxxxxxx, as general partners (the "General Partners"), and those parties
listed on Exhibit A, as limited partners (whenever used in this Agreement the
---------
term "Limited Partner", or, collectively, "Limited Partners," shall refer to the
Limited Partners indicated above and any successors or assigns thereto). The
General Partners and the Limited Partners are collectively referred to as the
"Partners".
In consideration of the mutual covenants herein contained, the Partners
agree as follows:
1. Formation; Name; Principal Place of Business.
--------------------------------------------
The Partners hereby form with each other a limited partnership (the
"Partnership"), pursuant to the provisions of the California Revised Limited
Partnership Act (California Corporations Code Sections 15611-15723). The name
of the Partnership shall be Blue Raven Partners, L.P., a California Limited
Partnership, and its principal place of business shall initially be at 0000
Xxxxx Xxxxx, Xx Xxxxxxx, Xxxxxxxxxx or at such other place as the General
Partners may from time to time hereafter designate.
2. Term.
----
The Partnership shall commence upon the General Partners' filing a
Certificate of Limited Partnership (the "Certificate") with the California
Secretary of State pursuant to Section 15621 of the California Corporations
Code. The Partnership shall continue until December 31, 2049, unless sooner
terminated pursuant to the provisions of this Agreement.
1
3. Purposes.
--------
3.1 General Purposes.
----------------
The Partnership is being formed for the primary and general purposes
of (i) providing consolidated management for certain assets owned by the
Partners which are currently held by several individuals, or may be divided in
the future by gift or testamentary disposition, and (ii) providing for the
efficient and skilled management of such assets in the future, and (iii)
protecting such assets from the creditors of individual Partners, from transfer
as a result of a failed marriage, from dilution by sale of partial interests in
such assets, and from transfers to parties who are not "Permitted Transferees"
(defined below), and (iv) providing a concentrated financial position to take
advantage of economies of scale, facilitate the use of investment advisors
requiring minimum investments and diversify family holdings; and (v) to promote
family harmony by providing for an orderly buy-sell arrangement among Permitted
Transferees, for private arbitration of any disputes, and for orderly succession
of management and control of family assets.
3.2 Specific Initial Purposes.
-------------------------
The specific purposes of the Partnership shall be to aggregate a
significant amount of Class B stock (the "Stock") in Bio-Rad Laboratories, Inc.
(the "Company") to be maintained as a unified position in order that the
Partnership shall be assured of a significant stake and voice in the affairs of
the Company, and (iii) to acquire on behalf of the Partnership such other
properties to hold for investment, and to operate and/or sell such other
property as the General Partners determine, in their sole discretion, to be in
the best interest of the Partnership, including, without limitation, assets or
investments that may require minimum levels of investment that are
2
more easily satisfied by the Partnership than by individual Partners, or
that may require sophisticated management skills.
3.3 General Partners' Authority to Fulfill Purposes.
-----------------------------------------------
The General Partners shall have and may exercise such powers as are
necessary and appropriate to fulfill the foregoing purposes, including, without
limitation, the retention and investment of excess cash of the Partnership as
operating or capital reserves, as reserves for future acquisitions or otherwise,
in any prudent and reasonable manner which the General Partners deem
appropriate, consistent with their fiduciary duties to the Partners, in order to
further the interests of the Partnership.
4. Partners.
--------
The Partnership shall have the Partners listed on Exhibit A.
---------
4.1 General Partners.
----------------
Xxxxx Xxxxxxxx and Xxxxx Xxxxxxxx as Co-Trustees of the Xxxxxxxx
Revocable Trust, Xxxxxx Xxxxxxxx, as his sole and separate property, and Xxxxxx
Xxxxxxxx, as his sole and separate property, shall be the General Partners.
Additional General Partners may only be admitted to the Partnership as
specifically provided in this Agreement. Any General Partner is authorized to
take such actions as are necessary to form the Partnership, and to carry out the
business of the Partnership, but only upon the consent of the requisite number
of General Partners as set forth in Article 9.
3
4.2 Limited Partners.
----------------
The persons and entities set forth on Exhibit A shall be the initial
---------
Limited Partners. No person or entity may be substituted or added as a Limited
Partner except as specifically provided in this Agreement.
5. Capital Contributions.
---------------------
Each General Partner and Limited Partner shall contribute undivided
interests in the Stock to the Partnership, and the Partnership shall issue Units
to each Partner in exchange therefor, as set forth on Exhibit A, which is
---------
incorporated herein by this reference. The parties intend that the allocation
of Units is proportionate based on the relative agreed fair market value of such
contributions, as set forth on Exhibit A, provided that such initial values
---------
shall be adjusted based upon a subsequent appraisal of such relative values
and/or any final determination of such values for federal tax purposes.
5.1 No Withdrawals.
--------------
A Partner shall not have the right to a return of all or any part of
its capital contribution except upon the termination and dissolution of the
Partnership as provided in this Agreement. No Partner shall receive interest on
such Partner's capital contribution to the Partnership.
5.2 Additional Capital Contributions.
--------------------------------
Each Partner shall make additional capital contributions to the
Partnership at such time and in such amounts as determined by the General
Partners, in the same proportion as the number of Units held by such Partner
bears to the total number of Units outstanding. The General Partners shall
notify each Partner in writing at least thirty (30) days prior to the required
4
additional capital contribution. If any Partner fails to make such additional
capital contributions, then the capital accounts of the Partners who do make
such additional capital contributions shall be increased by the amount of such
capital contributions, and each contributing Partner shall be issued additional
Units to reflect the Partners' respective aggregate capital contributions in
proportion to the total capital contributions of all Partners. There shall be
no other remedy for the failure of a Partner to make an additional contribution.
No Partner shall have the right to make voluntary capital contributions without
the consent of the General Partners. If any Partner makes a loan to the
Partnership, such loan shall not increase the lending Partner's capital account
nor entitle the lending Partner to any greater share of Partnership profits,
credits or distributions, nor subject the lending Partner to any greater
proportion of Partnership losses. The amount of the loan shall be a debt owed
by the Partnership to the lending Partner, and repayable on such commercially
reasonable terms and conditions as shall be agreed upon by the lending Partner
and the General Partners.
6. Partner's Capital Accounts.
--------------------------
The Partnership shall maintain a separate capital account for each Partner
(the "Capital Account") in accordance with Subchapter K of the Internal Revenue
Code of 1986, as amended (the "Code"), and the Treasury Regulations promulgated
thereunder (the "Regs"). The Capital Account of each Partner shall be increased
by the amount of money and the agreed fair market value of any property
contributed by the Partner to the Partnership (net of liabilities securing such
contributed property that the Partnership is considered to assume or take
subject to under Section 752 of the Code). All net income allocated to a
Partner under Section 7.2 below and additional capital contributions by a
Partner, if any, shall increase the Capital Account of such Partner. All net
losses allocated to a Partner and all distributions from the Partnership (other
than
5
distributions in repayment of any principal and interest on loans and
reimbursement of expenses) to a Partner, and the amount of any tax credits
allocated to a Partner, to the extent that the allowance of such tax credit
results in the reduction in basis of the related property, shall decrease such
Partner's Capital Account. Loans by any Partner shall not be considered
contributions to the capital of the Partnership.
7. Net Income (Profits), Net Losses and Distributions.
--------------------------------------------------
7.1 Accounting for Net Income (Profits) or Net Losses.
-------------------------------------------------
The net income (profits) or net losses of the Partnership for
financial accounting and federal income tax purposes shall be determined in
accordance with federal income tax principles, including the deductions for cost
recovery and/or amortization of all Partnership assets and expenditures, by
using the cash method consistently applied from year to year as determined by
the Partnership's accountants.
7.2 Allocation of Net Income (Profits) or Net Losses and Income Tax
---------------------------------------------------------------
Credits.
-------
(a) Net Income. For Partnership accounting and tax purposes, all net
----------
income (profits) or net losses of the Partnership and all income tax
credits shall be allocated to each Partner in the same proportion as
the number of Units held by such Partner bears to the aggregate number
of Units outstanding (the "Partner Percentages").
(b) Losses; Negative Capital Accounts. Notwithstanding the
---------------------------------
foregoing, no loss shall be allocated to any Partner which would
result in such Partner's Capital Account (as increased by that
Partner's share of "Minimum Gain" as defined below) to fall below zero
after taking into account all reasonably anticipated
6
distributions, and any such excess loss shall instead be allocated
among those Partners who are deemed to be entitled to such losses in
accordance with Sections 704 and 752 of the Code and corresponding
Regs, pro rata based on their respective Partner Percentages (defined
below). In the event that any Partner's Capital Account (as increased
by that Partner's share of "Minimum Gain" as defined below) is at any
time below zero, Partnership net income shall be first allocated among
the Partners with negative Capital Account balances proportionately
(based on their relative negative balances) until each of their
Capital Accounts have been restored to zero. In addition, the
"Qualified Income Offset" provisions set forth in the Regs promulgated
under Section 704(b) of the Code shall be applied.
(c) Minimum Gain. "Minimum Gain" shall mean the amount of gain that
------------
the Partnership would realize if, in a taxable transaction,
Partnership property was disposed of in full satisfaction of the
nonrecourse liabilities to which the property is subject, determined
by aggregating the amount of gain that the Partnership would realize
with respect to each nonrecourse liability of the Partnership and
otherwise in accordance with Regs Section 1.704-2(d) and -2(g).
7.3 Distributions.
-------------
Distributions of cash or other property shall be made to each Partner
in accordance with the Partner Percentages. Such distributions shall be made in
such amounts and at such times as the General Partners shall from time to time
determine to be in the best interests of the Partnership in their sole
discretion, with due regard for the maintenance of appropriate capital and
contingency reserves, and the purpose of the Partnership to accumulate capital
for
7
possible purchase of additional stock and for additional investment
opportunities. In the event of a permitted assignment of Partnership Units as
provided in Article 10 below, all allocations and distributions provided in this
Agreement which are attributable to the period during which such transfer of
ownership occurred shall be apportioned between the Partner and its assignee in
any manner that the General Partners shall determine to be permitted by relevant
federal and state partnership tax law.
7.4 Section 704(c) - Special Rule for Contributed Property.
------------------------------------------------------
If property contributed by any Partner to the Partnership has an
adjusted basis for federal and state income tax purposes which differs from the
fair market value of such property on the date of contribution, allocations of
depreciation, amortization, income, gain or loss with respect to such property
shall be allocated among the Partners so as to take into account any such
variation between the adjusted basis of such property and its fair market value
utilizing the "traditional method" described in Regs Section 1.704-3(b).
Allocations pursuant to this Section 7.4 are solely for purposes of federal,
state and local taxes and shall not affect any Partner's Capital Account or
share of distributions.
7.5 Corrective Amendments for Tax Purposes.
--------------------------------------
The tax allocations and distributions under this Agreement are
intended to comply with Section 704 of the Code and any other related provisions
of the Code and/or Regs and are to be interpreted accordingly. In the event
that the General Partners determine that it is necessary to amend this Agreement
in order to so comply, then the General Partners are hereby authorized to make
such an amendment without further action, provided that no such amendment shall
change the economic distributions otherwise provided under this Agreement.
8
8. Liabilities.
-----------
8.1 Limited Liability of a Limited Partner.
--------------------------------------
A Limited Partner shall not be bound by, liable for or subject to any
loss, liability, obligation or expense of the Partnership except to the extent
of its capital contribution to the Partnership and its share of undistributed
Partnership profits. Except as otherwise provided under Article 7, any losses
of the Partnership for which the Partnership is liable in excess of the amount
of the capital of the Partnership and/or other guaranties of Partnership
obligations, if any, shall be borne, proportionately by the General Partners.
Notwithstanding the foregoing, a Limited Partner shall be obligated to return to
the Partnership a part or all of any distribution if so required by applicable
law.
8.2 Indemnification.
---------------
The General Partners shall not be liable, responsible or accountable
in damages or otherwise to the Partnership or to the Limited Partners for any
acts or omissions performed or omitted in good faith and reasonably believed to
be within the scope of the authority conferred by this Agreement, or for
performance or omission to perform any acts on advice of the accountants or
legal counsel of the Partnership. Under no circumstances shall the General
Partners be liable for any indirect or consequential damages arising from any
other party's breach of this Agreement. The Partnership shall indemnify, defend
and hold harmless the General Partners, and each of them, from any and all
expenses, losses, damages and/or costs, including attorney's fees (collectively
"Damages"), incurred by the General Partners including Damages caused directly
or indirectly by reason of any acts or omissions to act by the General Partners
under this Agreement, except to the extent that Damages result from the gross
negligence or willful misconduct of a General Partner, in which case
indemnification shall be withheld from
9
that General Partner only. Any Damages to be paid under this Section 8.2 shall
be provided out of and to the extent of Partnership assets only and the Limited
Partners shall not be personally liable therefor.
9. Management.
----------
9.1 General Partners as Manager.
---------------------------
The General Partners shall have exclusive control over the business
and management of the Partnership and the determination of its business
policies, and shall have all the rights, powers, and duties usually vested in
the general partners of a partnership organized for the purposes set forth in
Section 3 hereof. The General Partners shall be responsible for the day-to-day
administration of the Partnership's business. If more than one person or entity
are serving as General Partner, then the General Partners shall act by majority
vote (based upon their relative Partner Percentages) except as otherwise
specifically provided in this Agreement. The General Partners shall be entitled
to reasonable compensation from the Partnership for any services rendered to the
Partnership at a rate comparable to other similarly situated providers. The
General Partners are authorized to delegate to any General Partner such
authority to act on behalf of the Partnership as the General Partners determine
appropriate from time to time. Subject to the provisions of Section 9.2 below,
the General Partners' powers shall include, without limitation, the following,
any or all of which may be delegated to any one General Partner as provided
above:
(a) Documents. To execute and deliver, in the name of the
---------
Partnership, agreements, documents, deeds of trust, mortgages,
promissory notes, security agreements, leases, including the leases of
the Partnership property and instruments relating to the purchase,
leasing, operation, sale, franchising,
10
licensing, financing and refinancing of Partnership property and any
personal property included therein, proxies, voting trust
certificates, and any other documents or instruments that are
customarily signed by owners of stock.
(b) Expenditure, Reserves. To expend or retain the capital and net
---------------------
income of the Partnership in the prudent exercise of any of the rights
and powers possessed by the General Partners hereunder, consistent
with the purposes of the Partnership.
(c) Operations. To purchase, finance, refinance, hold, lease,
----------
manage, operate and improve Partnership property.
(d) Insurance. To purchase from or through others and maintain at
---------
all times contracts of liability, casualty and other insurance which
the General Partners deem advisable, appropriate or convenient for the
protection of the Partnership's assets or affairs or for any purposes
beneficial to its assets.
(e) Investments. To invest Partnership funds in government
-----------
securities, bankers' acceptances, stocks, bonds, mutual funds or any
other investments which the General Partners deem prudent and
appropriate.
(f) Bank Accounts. To open, maintain and close bank accounts,
-------------
certificates of deposit and brokerage accounts (including margin
accounts) and to draw checks and other orders for the payment of
money.
(g) Tax Matters Partner. To act as the Tax Matters Partner pursuant
-------------------
to Section 6231(a)(7) of the Code for all purposes thereunder and to
otherwise make
11
all federal and state tax elections applicable to the Partnership in
the best interests of a majority in interest of the Partners.
(h) Professionals. To employ any professional management firm or any
-------------
other qualified entity or individual for such purposes as the General
Partners deem appropriate at the Partnership's sole expense,
specifically including the employment of itself or any Partner or any
party that is affiliated with or controlled by any Partner, provided
that in all circumstances the management fee shall be commercially
reasonable.
(i) Management. To control and perform all other activities incident
----------
to managing the operations and affairs of the Partnership, and to make
all decisions regarding the business of the Partnership unless
otherwise specifically limited in Section 9.2 below.
9.2 Limitations on General Partners.
-------------------------------
Without obtaining the prior unanimous written consent of all Partners,
the General Partners shall not do any of the following:
(a) Do any act which would make it impossible to carry out the
purposes of the Partnership;
(b) Confess a judgment against the Partnership;
(c) Execute or deliver any general assignment for the benefit of the
creditors of the Partnership; or
12
(d) Do any act in contravention of this Agreement or the Certificate.
9.3 Obligation of the General Partners to Provide Time and Skill to
---------------------------------------------------------------
Partnership.
-----------
The General Partners shall apply themselves diligently to the business
of the Partnership and devote as much time as is reasonably necessary to further
the business of the Partnership. It is acknowledged and agreed that the General
Partners shall not be required to devote all of their business time to the
affairs of the Partnership and that the General Partners may be engaged in other
business activities, some of which may be similar to or in competition with the
Partnership. No Partner shall have any duty to offer or present to the
Partnership any investment or future projects which it may locate. The
provisions of this Section 9.3 shall apply to the trustee(s) or beneficiaries of
any trust which is a Partner of the Partnership.
9.4 Limited Partner Has No Management Rights.
----------------------------------------
A Limited Partner shall not have any right or authority to be active
in the conduct of the Partnership's business nor have any power or authority to
bind the Partnership in any contract, agreement, compromise or undertaking and a
Limited Partner shall take no action inconsistent herewith.
9.5 Bank Deposits.
-------------
All funds contributed or advanced to the Partnership by the Partners
and all other funds received by the Partnership from whatever source shall be
deposited into a separate Partnership account or accounts in a bank or banks
selected by the General Partners.
9.6 Reports, Books and Records.
--------------------------
(a) Reports. The General Partners shall cause to be delivered to the
-------
Partners annual written statements of the Partnership's financial
condition and a report of
13
the Partnership's profits or losses and cash flows for each year
within a reasonable period after the end of the Partnership's fiscal
year. After the close of each such year, the General Partners shall
cause to be prepared the Partnership's federal and state income tax
returns and shall deliver K-1 statements to each Partner. The General
Partners may engage a certified public accountant or other
professional at the Partnership's expense to review the books and
records of the Partnership, to distribute to the Partners a report of
such review, including a statement of gross receipts and operating
expenses during such year, and to prepare appropriate tax returns and
related information.
(b) Books and Records. At all times during the term of the
-----------------
Partnership, and beyond that term if the General Partners deem it
necessary, the General Partners shall keep or cause to be kept books
of account in which each Partnership transaction shall be entered
fully and accurately. All Partnership books of account, along with the
following items, shall be maintained by the General Partners:
(1) A current list of the full name and last known business or
residence of each Partner set forth in alphabetical order
together with the contribution and the share in profits and
losses of each Partner;
(2) A copy of the Certificate and all certificates of amendment
thereto, together with executed copies of any powers of attorney
under which any certificate has been executed;
14
(3) Copies of the Partnership's federal, state, and local income
tax or information returns and reports, if any, for the six most
recent taxable years;
(4) Copies of the original Partnership Agreement and all
amendments thereto;
(5) Financial statements of the Partnership for the six most
recent calendar years ;
(6) The Partnership's books and records for at least the current
and past three calendar years.
Such documents shall be kept at the Partnership's principal office and
shall be available during normal business hours for inspection and copying by
the Partners or their representatives. Upon the reasonable request of a Partner,
the General Partners shall deliver to any Partner the information required to be
maintained under (1)-(6) above.
(c) Fiscal Year; Accounting Method. The fiscal year of the
------------------------------
Partnership for all purposes shall be a calendar year. The Partnership
shall utilize the cash method of accounting for tax and financial
reporting purposes.
9.7 Agent for Service of Process.
----------------------------
The Partnership hereby appoints Xxxxx Xxxxxxxx as its agent for
service of process.
15
10. Transfer of Partnership Interests.
---------------------------------
10.1 By Limited Partner.
------------------
(a) Upon Consent of Partners. Except with regard to Permitted
------------------------
Transfers as defined below, no Limited Partner, including any
representatives, successors or assigns of a Limited Partner, may sell,
exchange, assign, transfer, pledge, hypothecate, gift or otherwise
dispose of any Unit or any other interest in the Partnership,
(collectively a "Transfer") unless such Limited Partner, or its
representative or other successor-in-interest, obtains (i) the
unanimous prior written consent of the General Partners, (ii) the
prior written consent of Limited Partners owning a majority in
interest of the Limited Partners Units (in each case consent may be
withheld in each such Partner's sole discretion), and (iii) the
requisite consent, if any, required as a condition of any such
transfer for any underlying asset of the Partnership. A transfer for
purposes of this Section 10.1 shall include the transfer of beneficial
ownership of any Unit held by any trust which is a Partner hereof, or
the transfer of any Unit upon the termination of the trust to a person
or entity which is not a Permitted Transferee as defined below.
(b) Permitted Transfers/Permitted Transferees. No such prior written
-----------------------------------------
consent under Section 10.1(a) shall be required with respect to the
Transfer of any Limited Partner's Units: (i) to any other Partner;
(ii) to any of the issue of Xxxxx Xxxxxxxx or Xxxxx Xxxxxxxx; or (iii)
to a trust for the primary benefit of Xxxxx Xxxxxxxx, Xxxxx Xxxxxxxx,
the issue of either of them, and/or the spouse of any such issue,
provided, that one or more of the group consisting of Xxxxx Xxxxxxxx,
--------
Xxxxx Xxxxxxxx, any of the issue of Xxxxx Xxxxxxxx or Xxxxx Xxxxxxxx,
and/or any other
16
existing Partners serving as trustee(s) thereof with sufficient voting
authority with respect to the Unit to control any material matter
affecting such Unit and, provided further, that upon termination of
-------- -------
such primary beneficiary's interest in the trust, the trust's Units
pass to a Permitted Transferee as defined in this Section 10.1
(cumulatively, subparagraphs (i), (ii), and (iii) shall be referred to
as "Permitted Transfers" and the recipients thereunder as "Permitted
Transferees"). For purposes of this Section 10.1, the term "issue"
shall include any adopted child who was a minor at the time of
adoption.
10.2 By General Partner.
------------------
(a) As General Partner Units A General Partner may Transfer his or
------------------------
her Units as General Partner Units to any existing General Partner or to any
person who is the issue of Xxxxx Xxxxxxxx or Xxxxx Xxxxxxxx.
(b) As Limited Partner Units Subject to subsection 10.2 (c) below, a
------------------------
General Partner may Transfer his or her Units as Limited Partner Units to any
Permitted Transferee.
(c) Conversion of General Partner Units Under any circumstances
-----------------------------------
described in Section 10.2 (b), or Section 10.4 concerning a General Partner in
which the Units of the General Partner are not purchased (and an election is
made to continue the Partnership under Section 11.2 hereof, if applicable), or
upon a General Partner's resignation as a General Partner, then such General
Partner's interest in the Partnership shall be converted to an equivalent
interest as a Limited Partner and the remaining or substitute General Partner(s)
shall continue to serve as General Partner(s).
17
(d) Other Transfers Except as specifically provided in subsection
---------------
10.2 (a), (b), or (c), no General Partner may Transfer his or her Units (i) as
General Partner Units unless the Partners unanimously consent to such transfer,
or (ii) as Limited Partner Units unless the consent provisions of section
10.1(a) are satisfied.
10.3 Transfers in Violation of Section 10.1.
--------------------------------------
Any transfer of a Unit in violation of Section 10.1 or Section 10.2
shall be null and void and of no force and effect whatsoever. Should a Partner
attempt to make a testamentary transfer to a person or entity that is not a
Permitted Transferee (or upon the change in beneficial ownership of any trust
which is a Partner to a person or entity other than a Permitted Transferee),
then the Partnership shall have the right to purchase such Unit on the terms and
conditions set forth in Section 10.4 from the successor-in-interest of said
deceased Partner (or the trustee of a trust which is a Partner).
10.4 Purchase of Units in the Event of Bankruptcy, Insolvency, Divorce or
--------------------------------------------------------------------
Other Prohibited Transfer.
-------------------------
The provisions of this Section 10.4 shall apply in the event of (i)
the Bankruptcy of a Partner (as such term is defined in Section 11.4 below),
(ii) the placement of a charge against one or more Units held by a Partner under
any law, order or process of court, or the immediate threatened enforcement of
any lien against one or more Units held by a Partner herein and the failure to
vacate or rescind the same within thirty (30) days thereafter, (iii) the
attempted transfer of one or more Units, or the transfer of a beneficial
interest in a trust which is a Partner, to a person or entity which is not
permitted or allowed under Section 10.1, or (iv) a dissolution of marriage
resulting in a person who is not the issue of Xxxxx Xxxxxxxx or Xxxxx Xxxxxxxx
owning one or more Units in the Partnership (or beneficial interest in a trust
which is a Partner) as part of
18
the decree of or settlement of such marital dissolution. Subject to the
provisions of Section 11, in any of the foregoing events the Partnership may, at
its option (the "Purchase Option"), purchase the Units held by that Partner,
proposed transferee or successor-in-interest, as the case may be (each of whom
is referred to as the "Seller"), upon the terms and conditions herein provided.
Such Purchase Option shall be assignable by the Partnership to one or more
Permitted Transferee(s), upon a majority vote (based on relative Partnership
Units) of the unaffected Partners. If the Partnership does not agree to exercise
its Purchase Option, then the other Partners shall have the same Purchase Option
allocated in any manner in which they agree, or if they can not agree then
proportionally based upon the relative Partnership Units of those Partners who
wish to exercise the Purchase Option.
(a) Exercise of Purchase Option. The Partnership may exercise the
----------------------------
Purchase Option not later than ninety (90) days after the Price is
determined under Section 10.4(b), by delivering notice of exercise to
the Seller, with copies to all other Partners. If the Partnership (or
its permitted assignee of the Purchase Option) does not elect to
purchase all of the Units of the Seller, the other Partners who
succeed to the Purchase Option shall have the right for an additional
sixty (60) day period to purchase the remaining Units of the Seller,
which Units shall be allocated between or among them as they may
agree, or if they can not agree then in proportion to their respective
Partner Percentages. In the event that the Purchase Option is duly
exercised under this Section 10.4(a), then the purchasers shall be
required to collectively purchase all of the Seller's Units under this
Section 10.4.
19
(b) Price. The price of the Units to be purchased under this Section
-----
10.4 shall be the price that a willing buyer aware of all of the
terms, conditions and restrictions contained in this Partnership
Agreement, and specifically taking into account the illiquidity, lack
of marketability and lack of control attributable to such Units, and
all other relevant circumstances, would pay for such Units in an all
cash purchase, reduced by any loans and debts owed to the Partnership
by the Seller (and/or the Partner whose Units are being sold). If the
General Partners (or any one or more Partners as hereinbefore
provided) and the representatives of the Seller are unable to agree on
such price, then the Partnership's accountants shall determine such
price at the sole expense of the Seller, and they may employ any
appraiser or outside professional that they deem appropriate to assist
in such determination, which determination shall be binding on all
Partners and all other interested parties.
(c) Payment. The Partnership or other purchaser may elect to pay the
-------
purchase price in cash or by a note payable in not more than ten (10)
equal annual installments bearing interest at a rate equal to the
appropriate applicable federal rate under Section 1274(d) of the Code
in effect for the month of sale (but in no event higher than the
maximum rate allowed by law). The note shall be prepayable without
penalty and may be unsecured. The Partnership or other purchaser, as
the case may be, may apply as a credit against the purchase price of
the Seller's Units any payment made by the Partnership or such
purchaser of all or part of any such lien or of the indebtedness
reflecting any such charge on said Units, as applicable; provided,
--------
that in the event such payment is in excess of the purchase price, the
Seller shall be indebted to the Partnership or such purchaser, as the
case may be, for
20
the amount of such excess in a demand obligation bearing interest at
the Xxxxx Fargo Bank reference rate, adjusted annually on the
anniversary of the obligation
(d) Continuation of Partnership. The Partnership shall not terminate
---------------------------
by reason of a sale of any Units under this Section 10.4; provided
--------
that, in the case of a sale of the last General Partner's Units, the
election under Section 11.2 has been made.
10.5 Substituted Partners. No transferee of a Partner's Units who is not
--------------------
then a Partner shall become a substituted Partner unless (i) the relevant
provisions of Section 10.1 or 10.2 have been fully satisfied, and (ii) the
transferee has agreed in writing to all of the terms and conditions of this
Agreement, including any amendments hereto.
10.6 Investment Representation of Limited Partner.
--------------------------------------------
Notwithstanding any provisions of this Article 10 to the contrary,
each Limited Partner hereby represents and warrants to the Partnership that it
is accepting its Units in exchange for its capital contribution for investment
purposes for its own account and not with a view to distribution or sale thereof
to any party other than the existing Partners and their issue.
11. Termination.
-----------
11.1 Terminating Events.
------------------
Except as provided in Section 11.2 below, the Partnership shall
terminate and dissolve on the earlier of the date set forth in Section 2 above
or the happening of any of the following events:
(a) the withdrawal or demise of the last General Partner;
21
(b) the unanimous vote of the General Partners together with a
unanimous vote of the Limited Partners to terminate and dissolve the
Partnership;
(c) the Bankruptcy (as defined in Section 11.5 below) of the last
General Partner or a general assignment by the last General Partner
for the benefit of creditors, or the appointment of a receiver for the
last General Partner's property or affairs;
(d) the sale or other disposition (except an exchange for other real
property) of all or substantially all of the Partnership's assets;
(e) the dissolution of the Partnership by operation of law or judicial
decree; and/or
(f) the removal of the last General Partner as the General Partner of
the Partnership by the prior unanimous written consent of the Limited
Partners, or by the written consent of two-thirds (2/3) of the Partner
Percentages of the Limited Partners in the event of the last General
Partner's gross negligence or willful misconduct in the performance of
its duties hereunder including, without limitation, its
misappropriation of Partnership funds or its fraud committed upon the
Partnership or any of the Partners.
11.2 Election to Continue.
--------------------
Notwithstanding the provisions of Section 11.1 hereof, within sixty
(60) days following the occurrence of any of the events described in
subparagraphs (a), (c) or (f) of Section 11.1, the remaining Partners may elect
to continue the business of the Partnership by
22
appointing by unanimous vote a substitute General Partner which may be one of
the remaining Partners.
11.3 Dissolution.
-----------
If the Partners do not elect to continue the Partnership within the
sixty (60) day period specified in Section 11.2, the Partnership shall be
dissolved at the expiration of said period. If the election to continue the
Partnership under Section 11.2 is not applicable, then the Partnership shall be
dissolved forthwith. Upon termination and dissolution of the Partnership, the
books of the Partnership shall be closed and all net profits or net losses shall
be allocated to the Partners in accordance with this Agreement. The General
Partners or their successors-in-interest shall thereupon proceed to liquidate
the assets of the Partnership as soon as reasonably practicable, and the
Partnership shall engage in no further business thereafter other than that
necessary to liquidate and wind up the affairs of the Partnership and to
distribute Partnership assets. Any Partnership assets distributed-in-kind shall
be valued at their fair market value (net of any liabilities to which they are
subject to) and any unrealized gain or loss shall be allocated to the Partners
as if such asset had been sold by the Partnership at its fair market value. The
proceeds of liquidation of the Partnership assets shall be distributed in the
following order:
(a) In payment of third-party Partnership debts (other than debts
owing to Partners) in payment of expenses of dissolution and
liquidation;
(b) In the funding of any reserves which the General Partners deem
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership or of the Partners arising out of or in
connection with the Partnership;
23
provided, however, that upon satisfaction of the above contingencies
-------- -------
the balance of such reserves shall be distributed in the manner
provided below in this Section 11;
(c) In payment of debts owing to the Partners by the Partnership
including any unreimbursed expenses;
(d) To the Partners pro rata in accordance with and to the extent of
their positive Capital Accounts as adjusted for all of the
transactions and distributions occurring prior to such distribution;
(e) The balance, if any, to the Partners in the same proportion as the
number of Units held by each Partner bears to the aggregate number of
Units outstanding.
11.4 Bankruptcy.
----------
For the purposes of this Agreement, the term "Bankruptcy" with respect
to a Partner means: (i) the filing of a petition for relief as debtor or
bankrupt under the Bankruptcy Code of 1978, as amended, or any successor
statute; (ii) a general assignment for the benefit of creditors; (iii) the
filing of a petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation; (iv) the filing of an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against that Partner in a proceeding contemplated by clauses (i), (ii) or (iii)
or such Partner otherwise consenting to, acquiescing in or not contesting such
proceeding within thirty (30) days after such Partner has received notice
thereof; or (v) such Partner seeking, consenting to or acquiescing in the
appointment of a trustee, receiver or liquidator of all or substantially all of
its properties.
24
12. Power of Attorney.
-----------------
12.1 General Partner Appointed as Attorneys-In-Fact.
----------------------------------------------
Each Limited Partner irrevocably constitutes and appoints each of the
General Partners as its true and lawful attorney-in-fact, in its name, place and
stead, to make, execute, acknowledge, record and file: (i) any certificate or
other instrument which may be required by law to be recorded or filed by the
Partnership, or which the General Partners shall deem advisable to record or
file; (ii) any amendment to this Agreement actually approved by the Limited
Partners in accordance with Section 15.6 hereof, any amendment made for the
purpose of reflecting a transfer of Partnership Units made in accordance with
this Agreement, or any amendment made in accordance with Section 7.4; (iii) any
certificates, documents or instruments and any and all amendments, modifications
or cancellations as may from time to time be required or appropriate under the
laws of the State of California; and (iv) all other documents which may be
required to effectuate the dissolution and termination of the Partnership.
12.2 Power Coupled With An Interest.
------------------------------
The foregoing power-of-attorney shall be deemed to be coupled with an
interest and shall survive the delivery of an assignment by a Limited Partner of
the whole or any portion of its Units, except that where an assignee of such
Units has been approved by the General Partners as a substituted Limited
Partner, then the foregoing power-of-attorney of the assignor Limited Partner
shall survive the delivery of such assignment for the sole purpose of enabling
the General Partners to execute, acknowledge and file any and all instruments
necessary to effectuate such substitution.
25
12.3 Substituted Limited Partner.
---------------------------
By the execution of this Agreement by a substituted Limited Partner or
an agreement to be bound thereby, said substituted Limited Partner shall be
deemed to have given each of the General Partners a power-of-attorney coupled
with an interest which is identical to that which his or its assignor had given.
13. Death, Incompetency or Dissolution of a Limited Partner.
-------------------------------------------------------
The death of a Limited Partner (or of the primary beneficiary of a trust
which is a Limited Partner), legal incompetence of a Limited Partner (or such
primary beneficiary), or dissolution of a Limited Partner shall not dissolve or
terminate the Partnership. In such event, the legal representative or successor
of such Limited Partner shall have all of the rights of a Limited Partner in the
Partnership to the extent of the interest of the deceased or incompetent or
dissolved Limited Partner, subject to the terms and conditions of this
Agreement, and if the successor in interest (or beneficial owner) is not a
Permitted Transferee, then the provisions of Section 10.4 shall apply and, if
neither the Partnership nor the other unaffected Partners elect to purchase the
Units of such Limited Partner, the successor may become a Substitute Limited
Partner upon compliance with the provisions of Section 10.1(c).
14. Election Under Section 754 of the Code; Waiver of Right of Partition.
--------------------------------------------------------------------
14.1 Election Under Section 754 of the Code.
--------------------------------------
At the request of any Partner, the General Partners shall cause the
Partnership to timely make the election provided in, and in accordance with,
Section 754 of the Code and the Regs thereunder, and the General Partner may
charge any additional Partnership accounting or
26
legal expense incurred in connection with the election and continuing
implementation of such election to such requesting Partner.
14.2 Waiver of Right of Partition.
----------------------------
Having previously been advised that it may have a right to bring an
action for partition, each of the Partners does hereby irrevocably waive for the
duration of this Agreement any right or power any such Partner might have to
cause the Partnership or any of its assets to be partitioned or compel any sale
of all or any portion of the assets of the Partnership pursuant to any
applicable law or laws.
15. Miscellaneous.
-------------
15.1 Notices.
-------
All notices under this Agreement shall be in writing, and shall be
given to a party at the address set forth next to the party's signature below or
at such other address as it may submit to the General Partner and to the
Partnership at its principal office.
15.2 Pronouns.
--------
Personal pronouns used herein shall be construed as that of the gender
and number required by the context.
15.3 Capacity.
--------
Each of the Partners expressly desires and intends that corporations,
trusts, partnerships and any other form of legal entity, as well as natural
persons, may pursuant hereto become a partner of the Partnership, hold
Partnership Units and act through the individuals who from time to time are
representatives thereof (as officers, trustees, partners or otherwise).
27
15.4 Binding Effect.
--------------
This Agreement shall inure to the benefit of and bind the parties
hereto and their respective successors, assigns, representatives, estates, heirs
or legatees.
15.5 Agreement in Counterparts.
-------------------------
This Agreement may be executed in several counterparts, all of which
constitute one and the same agreement, binding on all the parties hereto,
notwithstanding that all the parties may not be signatories to the same
counterpart.
15.6 Amendment of Agreement.
----------------------
This Agreement may be amended only by a written instrument signed by
the General Partner and Limited Partners owning at least eighty percent (80%) of
all of the outstanding Limited Partner Units. Notwithstanding the foregoing,
any provision herein requiring the approval and consent of all of the Partners
or all of the Limited Partners may not be amended without the prior written
consent of all of the Partners or of all of the Limited Partners, as the case
may be.
15.7 Governing Law; Consent to Binding Arbitration; Jurisdiction and Venue.
---------------------------------------------------------------------
This Agreement shall be governed by and construed in accordance with
California law. Each party hereby expressly agrees that any dispute among the
Partners relating in any way to the Partnership or this Agreement shall be
resolved by binding arbitration to be conducted in any manner that they agree,
or if they can not agree, then such arbitration shall be conducted in Alameda or
Contra Costa County in accordance with the commercial rules of the American
Arbitration Association. If any arbitration award is required to be submitted
to court for enforcement, then each Party consents to the sole jurisdiction of
the California courts and agrees
28
that any action relating to or arising out of this Agreement shall be instituted
and prosecuted only in the Municipal or Superior Court of the City and County of
Alameda or Contra Costa, California, or the appropriate federal court located
therein. Each party waives any right to a change of venue and any and all
objections to the jurisdiction of the California courts.
15.8 Attorneys' Fees.
---------------
Should any litigation be commenced between or among the parties
concerning any provision of this Agreement or the rights and duties of any party
in relation thereto, the party prevailing in such litigation shall be entitled,
in addition to such other relief as may be granted, to a reasonable sum as and
for its attorneys' fees and for costs in accordance with Section 1717 of the
California Civil Code.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GENERAL PARTNERS: LIMITED PARTNERS:
Xxxxxxxx Revocable Trust Xxxxxxxx Revocable Trust
/s/ Xxxxx Xxxxxxxx /s/ Xxxxx Xxxxxxxx
--------------------------- -----------------------
Xxxxx Xxxxxxxx, Trustee Xxxxx Xxxxxxxx, Trustee
/s/ Xxxxx Xxxxxxxx /s/ Xxxxx Xxxxxxxx
--------------------------- -----------------------
Xxxxx Xxxxxxxx, Trustee Xxxxx Xxxxxxxx, Trustee
/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxxx
--------------------------- -----------------------
Xxxxxx Xxxxxxxx Xxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx /s/Xxxxxx Xxxxxxxx
--------------------------- -----------------------
Xxxxxx Xxxxxxxx Xxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
-----------------------------------------------
Xxxxxx Xxxxxxxx, custodian for Xxxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
-----------------------------------------------
Xxxxxx Xxxxxxxx, custodian for Xxxxx Xxxxxxxx
29
EXHIBIT A
---------
--------------------------------------------------------------------------------
GENERAL PARTNERS BIO-RAD CLASS B PARTNERSHIP
SHARES UNITS
CONTRIBUTED TO
PARTNERSHIP
--------------------------------------------------------------------------------
Xxxxxxxx, Revocable Trust 12,180 60
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 4,060 20
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 4,060 20
--------------------------------------------------------------------------------
LIMITED PARTNERS
--------------------------------------------------------------------------------
Xxxxxxxx Revocable Trust 1,661,921 8,187
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 143,751 708
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 140,601 693
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxx 31,727 156
--------------------------------------------------------------------------------
Xxxxx Xxxxxxxx 31,727 156
--------------------------------------------------------------------------------
Total 2,030,027 10,000
--------------------------------------------------------------------------------
30
