AMENDED AND RESTATED PARALLEL INVESTMENT AGREEMENT
EDGESTONE CAPITAL EQUITY FUND II GP, L.P.
EDGESTONE AFFILIATE 2002 EQUITY FUND II, L.P.
EDGESTONE AFFILIATE NON-CANADIAN 2002 EQUITY FUND II, L.P.,
EDGESTONE CAPITAL EQUITY FUND II-A GP, L.P.,
EDGESTONE CAPITAL EQUITY FUND II-A, L.P.,
EDGESTONE CAPITAL EQUITY FUND II-B GP, INC.,
AND EDGESTONE CAPITAL EQUITY FUND II-B, L.P.,
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NATIONAL BANK FINANCIAL & CO. INC.
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NBF CAPITAL INC.
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EDGESTONE CAPITAL EQUITY FUND II-US GP, L.P.
EDGESTONE CAPITAL EQUITY FUND II-US, L.P.
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EDGESTONE CAPITAL EQUITY FUND II-US-INST. GP, L.P.
EDGESTONE CAPITAL EQUITY FUND II-US-INST., L.P.
DATED: APRIL 28, 2003
TABLE OF CONTENTS
PAGE
ARTICLE 1 - DEFINITIONS AND INTERPRETATIONS................................... 3
1.1 Definitions........................................................... 3
1.2 Interpretation and Determinations..................................... 3
1.3 Amendment and Restatement............................................. 4
ARTICLE 2 - PARALLEL INVESTMENTS.............................................. 5
2.1 Agreement to Invest in Parallel....................................... 5
2.2 Commitments........................................................... 5
2.3 Right to Co-Invest.................................................... 6
2.4 Excluded Parallel Investor............................................ 6
2.5 Excused Parallel Investor............................................. 6
2.6 Right to Recall Commitments........................................... 6
2.7 Obligations of Parallel Investors which are not Excused or Excluded... 7
2.8 Investment Decisions and Administration............................... 7
2.9 Covenants of Main Fund GP............................................. 8
ARTICLE 3 - EXPENSES.......................................................... 8
3.1 Parallel Investor Expenses............................................ 8
3.2 Adjustments to Allocations of Parallel Investor Expenses.............. 8
3.3 Organizational Expenses............................................... 9
ARTICLE 4 - NBF'S BACKSTOP COMMITMENT......................................... 9
4.1 Affiliate Funds' Shortfall re Acquisition Costs....................... 9
4.2 Affiliate Funds Shortfall re Expenses................................. 9
4.3 NBF's Backstop Commitment in Addition to NBF's Commitment............. 10
4.4 Mandatory Transfer of Excess Portfolio Securities to Offering
Affiliate Fund ....................................................... 10
4.5 Transfers of Excess Portfolio Securities to Successor Affiliate Fund.. 10
4.6 NBF's Right to Designate Affiliates to Invest......................... 10
4.7 NBF's Funding of Main Fund GP's Obligations........................... 11
ARTICLE 5 - INVESTMENT AND EXPENSE NOTICES.................................... 11
5.1 Investment Notices.................................................... 11
5.2 Expense Notices....................................................... 11
5.3 Notice to NBF re NBF's Backstop Commitment............................ 12
5.4 Payments by Parallel Investors........................................ 12
ARTICLE 6 - SALES OF PORTFOLIO SECURITIES..................................... 12
6.1 Restrictions on Transfers, Mortgages etc.............................. 12
6.2 Permitted Transfers................................................... 12
6.3 Disposition of Investments............................................ 12
6.4 Distributions of Distributable Lock-up Securities..................... 13
6.5 Distributions in Kind Securities by the Fund.......................... 13
ARTICLE 7 - TRANSFER OF COMMITMENTS TO MAIN FUND AND QLP FUND................. 13
7.1 Right to Transfer Parallel Investor Commitments to Main Fund and QLP
Fund ................................................................. 13
7.2 QLP Fund's and Main Fund's Option to Obtain QLP Fund Commitments and
Main Fund Commitments from NBF........................................ 14
7.3 General Provisions relating to Transfer of Commitments................ 16
7.4 Changes to Accommodate New Limited Partnerships....................... 16
ARTICLE 8 - INCREASED COMMITMENTS............................................. 17
8.1 New Parallel Investors and Increased Commitments by Parallel Investors 17
8.2 Exception Respecting Parallel Investors Reduced Commitments........... 19
8.3 Allocation of Payment Among the Affiliate Funds....................... 19
8.4 Sunset Re New Parallel Investors and Increased Commitment by Parallel
Investors ............................................................ 19
ARTICLE 9 - AMENDMENT TO PARALLEL INVESTOR AGREEMENTS......................... 20
9.1 GPs' Consents to Amendments of Parallel Investor Agreements........... 20
ARTICLE 10 - PORTFOLIO COMPANY FEES........................................... 20
10.1 QLP GP, Main Fund GP, US Fund GP and US-Inst Fund GP to Receive all
Portfolio Company Fees................................................ 20
10.2 QLP GP, Main Fund GP, the US Fund GP and US-Inst Fund GP to pay
Unreimbursed Costs and Expenses respecting Portfolio Company
Investments........................................................... 21
ARTICLE 11 - INDEMNIFICATION BY PARALLEL INVESTORS............................ 21
11.1 Indemnification by Parallel Investors (other than the Funds).......... 21
11.2 Satisfaction of Indemnity Obligations................................. 22
11.3 Indemnified Party to Seek Recovery From Third Parties................. 22
11.4 Protection by Portfolio Companies..................................... 23
11.5 QLP GP and Main Fund GP to Hold Benefits for Other Indemnified Parties 23
11.6 Survival of Indemnification Rights.................................... 23
11.7 Affiliate Fund Deemed to be Parallel Investor......................... 23
ARTICLE 12 - STRUCTURE OF INVESTMENTS......................................... 24
12.1 Investments in Portfolio Companies.................................... 24
ARTICLE 13 - MATTERS CONCERNING THE QLP AND THE MAIN FUND..................... 24
13.1 Opportunities between QLP and Main Fund............................... 24
ARTICLE 14 - SUCCESSOR AFFILIATE FUNDS........................................ 24
14.1 Formation of Successor Affiliate Fund................................. 24
14.2 No Obligation to Form Successor Affiliate Funds....................... 25
14.3 Notice of Offering of Interest by Successor Affiliate Fund............ 25
ARTICLE 15 - TERMINATION...................................................... 25
15.1 Termination of Agreement.............................................. 25
ARTICLE 16 - NO JOINT VENTURE OR MUTUAL AUTHORITY............................. 25
16.1 Disclaimer of Joint Venture or Association............................ 25
16.2 No Mutual Authority................................................... 26
16.3 Income Tax Liabilities................................................ 26
ARTICLE 17 - L.P. ADVISORY COMMITTEE AND DECISIONS OF PARALLEL INVESTORS...... 26
17.1 L.P. Advisory Committee............................................... 26
17.2 Committee Meetings.................................................... 27
17.3 Joint Meetings........................................................ 27
17.4 Termination of VPI Funds.............................................. 30
ARTICLE 18 - GENERAL CONTRACT PROVISIONS...................................... 31
18.1 Complete Agreement.................................................... 31
18.2 Amendments............................................................ 31
18.3 Successors............................................................ 31
18.4 Further Assurances.................................................... 31
18.5 Remedies.............................................................. 31
18.6 Language.............................................................. 31
18.7 Notices............................................................... 32
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18.8 Counterparts.......................................................... 33
SCHEDULE 1 - DEFINITIONS
SCHEDULE 2 - COMMITMENT OF PARALLEL INVESTORS
SCHEDULE 3 - CAPITAL CONTRIBUTION AGREEMENT
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AMENDED AND RESTATED PARALLEL INVESTMENT AGREEMENT
THIS AGREEMENT dated as of April 28, 2003.
AMONG:
EDGESTONE CAPITAL EQUITY FUND II GP, L.P., a limited partnership
formed under the laws of the Province of Ontario, in its own
capacity and in its capacity as general partner of, and on behalf
of, EDGESTONE AFFILIATE 2002 EQUITY FUND II, L.P. (the "INITIAL
CANADIAN AFFILIATE FUND"), a limited partnership formed under the
laws of the Province of Ontario, and EDGESTONE CAPITAL EQUITY FUND
II-US GP, INC., a corporation incorporated under the laws of Canada,
in its own capacity and in its capacity as general partner of, and
on behalf of, EDGESTONE AFFILIATE NON-CANADIAN 2002 EQUITY FUND II
L.P. (the "INITIAL NON-CANADIAN AFFILIATE FUND"), a limited
partnership formed under the laws of the Province of Ontario (the
Initial Canadian Affiliate Fund and the Initial Non-Canadian
Affiliate Fund hereinafter collectively called the "INITIAL
AFFILIATE FUND")
OF THE FIRST PART;
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EDGESTONE CAPITAL EQUITY FUND II-A GP, L.P., a limited partnership
formed under the laws of Ontario (by its general partner EdgeStone
Capital Equity II-A LP GP, Inc.), in its own capacity and in its
capacity as general partner of, and on behalf of, EDGESTONE CAPITAL
EQUITY FUND II-A, L.P. (the "QLP FUND"), a limited partnership
formed under the laws of the Province of Ontario
OF THE SECOND PART;
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EDGESTONE CAPITAL EQUITY FUND II-B GP, INC., a corporation
incorporated under the laws of Canada, in its own capacity and in
its capacity as general partner of, and on behalf of, EDGESTONE
CAPITAL EQUITY FUND II-B, L.P. (the "MAIN FUND"), a limited
partnership formed under the laws of the Province of Ontario,
OF THE THIRD PART;
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NATIONAL BANK FINANCIAL & CO. INC. ("NBF & CO."), a corporation
amalgamated under the laws of the Province of Quebec
OF THE FOURTH PART;
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NBF CAPITAL INC. ("NBFCI"), a corporation incorporated under the
laws of Canada
OF THE FIFTH PART;
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EDGESTONE CAPITAL EQUITY FUND II-US GP, L.P., a limited partnership
formed under the laws of Ontario (by its general partner, EdgeStone
Capital Equity Fund II-US Main GP, Inc.), in its own capacity and in
its capacity as general partner of, and on behalf of, EDGESTONE
CAPITAL EQUITY FUND II-US, L.P. ("US FUND")
OF THE SIXTH PART;
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EDGESTONE CAPITAL EQUITY FUND II-US-INST. GP, L.P., a limited
partnership formed under the laws of Ontario (by its general
partner, EdgeStone Capital Equity Fund II-US-Inst. GP, Inc.), in its
in its own capacity and in its capacity as general partner of, and
on behalf of, EDGESTONE CAPITAL EQUITY FUND II-US-INST., L.P.
("US-INST FUND")
OF THE SEVENTH PART.
WHEREAS the Main Fund Partnership Agreement, the QLP Fund Partnership
Agreement, the Initial Canadian Affiliate Fund Partnership Agreement, the
Initial Non-Canadian Affiliate Fund Partnership Agreement, the US Fund
Partnership Agreement and the US-Inst Fund Partnership Agreement contemplate,
among other things, that their respective investments in Portfolio Companies
will be carried out in parallel with certain Parallel Investors;
AND WHEREAS NBF & Co. and NBFCI (collectively, "NBF") have agreed to
invest in Portfolio Companies in parallel with the Funds on the terms set forth
herein;
AND WHEREAS Canada Pension Plan Investment Board ("CPP INVESTMENT BOARD")
had agreed to invest in Portfolio Companies in parallel with certain of the
Funds pursuant to the terms of the original parallel Investor agreement (the
"ORIGINAL PARALLEL INVESTOR AGREEMENT") dated January 9, 2002 among the Main
Fund, the Main Fund GP, the Initial Canadian Affiliate Fund, NBF, and CPP
Investment Board;
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AND WHEREAS on June 20, 2002, NBF transferred a portion of its Commitment
(being $43,096,581) to the Main Fund and the QLP Fund, such that its Commitment
is currently $54,093,000;
AND WHEREAS the Original Parallel Investor Agreement was amended and
restated by an agreement dated as of June 20, 2002 (the "JUNE PARALLEL INVESTOR
AGREEMENT") among the Main Fund, the Main Fund G.P., the Initial Canadian
Affiliate Fund, NBF and CPP Investment Board and after the execution thereof CPP
Investment Board's Commitment was reduced to nil and it was released as a party
to such agreement;
AND WHEREAS on December 20, 2002, the Main Fund GP accepted the US Fund as
a Parallel Investor and the US Fund agreed to make a Commitment of $7,035,000
and to invest in Portfolio Companies in parallel pursuant to the June Parallel
Investor Agreement;
AND WHEREAS on the date hereof, the US-Inst Fund has been accepted by the
Main Fund GP as a Parallel Investor and has agreed to make a Commitment of
$54,787,500 (based on its Limited Partners' Commitments totalling US$37,500,000
and using an exchange rate of Cdn$1.00: US$1.461) and in connection with such
investment, the parties hereto have agreed to amend and restate the June
Parallel Investor Agreement on the terms set forth herein;
AND WHEREAS it is contemplated that certain Successor Affiliate Funds may
be established from time to time as successors to the Initial Affiliate Fund in
order to continue investing in parallel with the Main Fund, the QLP Fund and
other Parallel Investors hereunder;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants contained herein, and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
covenant and agree, as co-investors and as prospective co-investors, as follows:
ARTICLE 1 - DEFINITIONS AND INTERPRETATIONS
1.1 DEFINITIONS
As used in this Agreement (including the schedules hereto), the words and
phrases listed in Schedule 1 shall have the meanings set out in Schedule 1.
1.2 INTERPRETATION AND DETERMINATIONS
(a) In this Agreement, unless the context otherwise requires, words
importing the singular include the plural and vice versa, and words
importing gender (including the neuter gender) include all genders.
(b) All payments of monies shall be made in cash or by certified cheque or
bank draft.
(c) The division of this Agreement into Articles and Sections and the
insertion of headings are for reference purposes only and shall not affect
the interpretation of this Agreement.
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(d) This Agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable
therein and shall be treated, in all respects, as an Ontario contract.
Each of the parties hereby attorns to the exclusive jurisdiction of the
Province of Ontario.
(e) If any date on which any action is required to be taken under this
Agreement is not a Business Day, that action shall be required to be taken
on the next following Business Day.
(f) If any provision of this Agreement (or portion thereof) is determined
by a court of competent jurisdiction to be unenforceable or invalid in any
respect, that unenforceability or invalidity shall not affect the
enforceability or validity of the remaining portions of this Agreement and
such provision (or portion thereof) shall be severable from the remainder
of this Agreement.
(g) Time shall be of the essence of this Agreement.
(h) All decisions, determinations, judgments, elections and actions
(including any exercise of any discretion) which may be made, and all
consents which may be given, by each of the Main Fund GP, the QLP GP, the
Initial Affiliate GP, the US-Inst Fund GP or the US Fund GP, as the case
may be, hereunder may be made or given by it in its sole and absolute
discretion, unless otherwise specifically provided herein.
(i) All references to currency herein are to Canadian dollars, unless
otherwise indicated.
(j) Any determination to be made hereunder based upon a specified portion
of votes cast by the Voting Parallel Investors shall disregard:
(i) any votes cast by or on behalf of EdgeStone Partners, Inc. or
its Affiliates; or
(ii) any votes cast by a Voting Parallel Investor, if and to the
extent that such Voting Parallel Investor is a general partner of a
Fund and is voting in respect of its interest as a limited partner
of such Fund or any votes cast by any Affiliate of such general
partner in respect of such Affiliate's interest as a limited partner
of such Fund.
Notwithstanding the foregoing, it is acknowledged and agreed that none of
NBF, CPP Investment Board and their respective subsidiaries shall be
treated for such purposes as an Affiliate of a general partner of any
Voting Parallel Investor or of EdgeStone Partners, Inc., and all of the
foregoing Persons shall be entitled to vote or direct the general partner
of any Voting Parallel Investor of which it is a limited partner to vote
on its behalf without any restrictions whatsoever.
1.3 AMENDMENT AND RESTATEMENT
It is acknowledged and agreed that this Agreement amends and restates the terms
of the June Parallel Investor Agreement.
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ARTICLE 2 - PARALLEL INVESTMENTS
2.1 AGREEMENT TO INVEST IN PARALLEL
Subject to the terms and conditions contained herein, the parties agree that, at
all times during which all or any of the Limited Partners of the Main Fund and
the QLP Fund are obligated, in accordance with the Main Fund Partnership
Agreement and the QLP Fund Partnership Agreement, respectively, to contribute
their respective Commitments:
(a) each Parallel Investor shall purchase its Pro Rata Share of all
Portfolio Securities designated in any Investment Notice; and
(b) no investment in a Portfolio Company may be made by any of the
Parallel Investors unless the investment is made by each Parallel Investor
at the same time and on substantially the same terms.
It is acknowledged and agreed that:
(c) the Commitment of each Limited Partner of the US-Inst Fund is
denominated in United States dollars;
(d) the Commitment of the US-Inst Fund hereunder has been made in the
Canadian dollar equivalent of the aggregate Commitments of the Limited
Partners of the US-Inst Fund, using an exchange rate of US $1.00: Cdn $-;
and
(e) notwithstanding that the Commitment of the US-Inst Fund hereunder is
in Canadian dollars, in the event that, prior to the US-Inst Fund having
contributed the full amount of its Commitment pursuant to Sections 2.1 and
2.2 (after taking into account any amounts which are subject to recall
pursuant to Section 2.6), the Limited Partners of the US-Inst Fund shall
have advanced 100% of their respective Commitments denominated in United
States dollars to the US-Inst Fund (after taking into account any amounts
which are subject to recall pursuant to Section 4.1 of the US-Inst Fund
Partnership Agreement), neither the US-Inst Fund nor any of the other
Parallel Investors shall be required to make any further payments under
Section 2.2, unless, and to the extent that, after such date Acquisition
Costs or other amounts are returned to Parallel Investors and such amounts
are included in the respective Commitments of such Parallel Investors, as
contemplated by Section 2.6.
2.2 COMMITMENTS
Each Parallel Investor agrees to pay up to the aggregate amount of its
Commitment to fulfil its obligations hereunder to pay Acquisition Costs,
Parallel Investor Expenses and Organizational Expenses, subject to Sections 3.1,
4.1 and 4.2. Each Parallel Investor agrees to provide, and shall be liable for,
its Pro Rata Share of all Portfolio Company Guarantees designated in any
Investment Notice. The amount payable by a Parallel Investor hereunder in
respect of its Commitment shall be reduced by the fees paid by it to the Manager
pursuant to the Management Services Agreement to which it is a party. The
provision of a Portfolio Company Guarantee by a Parallel Investor shall be
deemed for all applicable purposes hereof to be an investment in Portfolio
Securities equal to the amount of the guaranteed obligations as determined by
the Main Fund GP. It is acknowledged and
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agreed that the Commitment of NBF shall be reduced by the amount of any
Commitment made by it as a Limited Partner of any Successor Affiliate Fund which
becomes a party to this Agreement by executing and delivering an Assumption
Agreement on or after April 28, 2003.
2.3 RIGHT TO CO-INVEST
Notwithstanding Section 2.1, nothing contained in this Agreement shall prohibit,
or restrict, a Parallel Investor from investing as a co-investor, as well as a
Parallel Investor hereunder, in Portfolio Securities, to the extent authorized
by Main Fund GP or the QLP GP or as provided in the Main Fund Partnership
Agreement or the QLP Fund Partnership Agreement.
2.4 EXCLUDED PARALLEL INVESTOR
Notwithstanding Section 2.1, the Main Fund GP may exclude any Parallel Investor
from a particular Portfolio Transaction if the Main Fund GP determines in good
faith that a material delay, extraordinary expense or materially adverse effect,
directly or indirectly, on any of the Parallel Investors, any Portfolio Company
or any future Portfolio Transaction is likely to result from the participation
by such Parallel Investor in such Portfolio Transaction. The Main Fund GP shall
provide written notice to any Parallel Investor which it proposes to so exclude
from participation in any Portfolio Transaction at or as soon as reasonably
possible after the date on which an Investment Notice in respect of such
Portfolio Transaction is delivered to the other Parallel Investors. Any Parallel
Investor (including, but not limited to, the excluded Parallel Investor) shall
have the right to request that the Main Fund GP reconsider its determination to
exclude any Parallel Investor and to make submissions to the Main Fund GP in
respect thereof; provided that the decision of the Main Fund GP shall be final
and binding on all Parallel Investors and the Main Fund GP shall have no
liability to any Parallel Investor (including without limitation, the excluded
Parallel Investor), with respect to such decision.
2.5 EXCUSED PARALLEL INVESTOR
Notwithstanding Section 2.1, no Parallel Investor shall be obligated to
participate in a Portfolio Transaction if it has, within 2 Business Days
following receipt of the applicable Investment Notice, delivered to the Main
Fund GP a written opinion of counsel, acceptable to the Main Fund GP, in form
and substance acceptable to the Main Fund GP, in each case acting reasonably, to
the effect that such Parallel Investor's participation in such Portfolio
Transaction would cause a material violation of a law or regulation to which
such Parallel Investor is subject.
2.6 RIGHT TO RECALL COMMITMENTS
(a) If a Parallel Investor purchases Portfolio Securities and, within 12
months of the date upon which it advanced the funds to pay the applicable
Acquisition Cost pursuant to Section 5.4, such Parallel Investor receives
cash arising from the repayment, sale, disposal or refinancing of such
Portfolio Securities and such transaction did not result in a loss to the
Parallel Investor, the amount of the Acquisition Cost returned to it will
continue to be included in such Parallel Investor's Commitment as if such
funds had not been previously advanced. As well, any part of the
Commitment of a Parallel Investor which is advanced hereunder and is
subsequently returned to it:
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(i) because the funds were not used to pay Acquisition Costs within
30 days following the delivery of the applicable Investment Notice
or were not used to pay Parallel Investor Expenses or Organizational
Expenses within 12 months of the date upon which such funds were
advanced by such Parallel Investor; or
(ii) pursuant to Section 8.1(f),
will continue to be included in the Commitment of such Parallel Investor
as if such funds had not been previously advanced.
(b) The provisions of Section 2.6(a) shall apply to any amounts paid by
NBF pursuant to NBF's Backstop Commitment mutatis mutandis. If any such
amount is so returned to NBF in respect of NBF's Backstop Commitment,
NBF's Backstop Commitment Amount shall be increased by such amount.
2.7 OBLIGATIONS OF PARALLEL INVESTORS WHICH ARE NOT EXCUSED OR EXCLUDED
In the event that, pursuant to Section 2.4 or 2.5, any Parallel Investors are
excluded or excused from a particular Portfolio Transaction, the obligations of
the other Parallel Investors to participate therein, including to purchase their
respective Pro Rata Shares of the applicable Portfolio Securities, shall remain
unaffected and in full force and effect.
2.8 INVESTMENT DECISIONS AND ADMINISTRATION
Each Parallel Investor appoints irrevocably the Main Fund GP as its agent to:
(a) subject to the final paragraph of this Section 2.8, make all decisions
with respect to all investments in Portfolio Companies hereunder
(including, without limitation, any decision to proceed or not to proceed
with a Portfolio Transaction, any decision respecting the exercise of
voting rights attached to Portfolio Securities and other rights held by
the Parallel Investor with respect to any investment in any Portfolio
Company and, subject to the provisions of Section 6.3, any decision to
sell, transfer or otherwise dispose of all or any part of the interests of
each Parallel Investor in any Portfolio Securities); and
(b) negotiate, execute and deliver in the name of each Parallel Investor
any subscription, shareholder or other agreement relating to the
investment by the Parallel Investors in any Portfolio Company.
All such decisions shall be binding upon all of the Parallel Investors.
The Main Fund GP shall co-ordinate the participation of the Parallel Investors
in all Portfolio Transactions, including the acquisition, holding and
disposition of Portfolio Securities, and the payment of all Acquisition Costs,
Parallel Investor Expenses and Organizational Expenses by the Parallel Investors
and the other parties hereto.
After the Main Fund has identified a prospective Portfolio Transaction, it shall
provide details thereof to all of the VPI Funds and shall not proceed with such
Portfolio Transaction without the prior written consent of all of the VPI Funds.
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2.9 COVENANTS OF MAIN FUND GP
The Main Fund GP covenants and agrees that it shall:
(a) cause any Person to which it has offered a co-investment opportunity
to purchase Portfolio Securities, to purchase such Portfolio Securities
for the same consideration, determined on a per security basis, as the
Parallel Investors;
(b) act in good faith, when exercising its powers and fulfilling its
obligations hereunder; and
(c) in making and managing investments in Portfolio Securities hereunder,
exercise the standard of care that a prudent manager of capital managing
investments having the same risk profile as the Fund's investments would
exercise in similar circumstances.
ARTICLE 3- EXPENSES
3.1 PARALLEL INVESTOR EXPENSES
Subject to Section 3.2, the parties agree that Parallel Investor Expenses shall
be allocated and paid as follows:
(a) each Parallel Investor, other than an Affiliate Fund, shall pay its
Pro Rata Share of all Parallel Investor Expenses;
(b) subject to Sections 4.2 and 4.7, the Initial Affiliate Fund GP shall
pay the Affiliate Funds' Pro Rata Share of all Parallel Investor Expenses
(other than Indemnification Expenses);
(c) subject to Section 4.2, each Affiliate Fund shall pay its Pro Rata
Share of all Indemnification Expenses; and
(d) NBF shall pay NBF's Expense Backstop pursuant to Section 4.2.
To the extent that the Parallel Investor Expenses are not in fact incurred by
the parties on the basis set out above, each of the parties shall account to and
reimburse each other for any shortfall or surplus from time to time at the
request of the Main Fund GP.
3.2 ADJUSTMENTS TO ALLOCATIONS OF PARALLEL INVESTOR EXPENSES
Notwithstanding Section 3.1, the Main Fund GP may determine, acting reasonably
and in good faith, that the Parallel Investor Expenses will be allocated among
the parties in a manner that is different than that contemplated by Section 3.1
in circumstances where the Main Fund GP determines that it would be equitable to
do so having regard to the actual cumulative payments, and/or the investments in
Portfolio Companies, made by each of the Parallel Investors.
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3.3 ORGANIZATIONAL EXPENSES
The parties agree that Organizational Expenses, in an aggregate amount not to
exceed the lesser of $1.5 million and 0.5% of the Total Commitment, shall be
allocated among (and paid by) the parties in the same manner as Parallel
Investor Expenses are allocated and paid pursuant to Section 3.1. To the extent
that Organizational Expenses are not in fact incurred by the parties on the
basis set out in the preceding sentence, each of the parties shall account to
and reimburse each other for any shortfall or surplus from time to time at the
request of the Main Fund GP.
ARTICLE 4 - NBF'S BACKSTOP COMMITMENT
4.1 AFFILIATE FUNDS' SHORTFALL RE ACQUISITION COSTS
In the event that at any time the Affiliate Funds are unable to pay all or part
of the Affiliate Funds' Pro Rata Share of an Acquisition Cost as a result of:
(a) the Offering Affiliate Fund not having completed the offering of its
partnership interests; or
(b) the Affiliate Funds (other than the Offering Affiliate Fund):
(i) having advanced hereunder;
(ii) being obligated to advance hereunder;
(iii) having reserved for the purposes of paying Acquisition Costs
in respect of Portfolio Transactions that are then in process or are
then being actively considered; and/or
(iv) having reserved for the purposes of paying actual or
anticipated Indemnification Expenses
amounts which, in the aggregate, equal the aggregate Commitments of all of
their respective Limited Partners,
NBF shall pay an amount equal to the lesser of NBF's Backstop Commitment Amount
(calculated as at the date of delivery of the applicable Investment Notice) and
the amount which the Affiliate Funds are unable to pay for the foregoing
reasons, to purchase the Portfolio Securities which the Affiliate Funds would
otherwise be required to purchase hereunder pursuant to the applicable Portfolio
Transaction. In such event, the obligation of the Affiliate Funds to pay their
Pro Rata Share of the Acquisition Cost to purchase their Pro Rata Share of the
applicable Portfolio Securities shall be reduced by the portion of the
Acquisition Cost paid by NBF pursuant to this Section 4.1.
4.2 AFFILIATE FUNDS SHORTFALL RE EXPENSES
In the event that, on the date of delivery of an Expense Notice, the total
Commitment(s) of the Limited Partners of all Affiliate Funds (other than an
Offering Affiliate Fund) is less than the Affiliate Funds' Maximum Capital
Commitment, NBF shall pay an amount equal to the lesser of
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NBF's Backstop Commitment Amount (calculated as at such date) and NBF's Expense
Backstop in respect of the Affiliate Funds' Pro Rata Share of the Parallel
Investor Expenses and the Organizational Expenses referred to in such Expense
Notice.
4.3 NBF'S BACKSTOP COMMITMENT IN ADDITION TO NBF'S COMMITMENT
It is acknowledged and agreed that NBF's Backstop Commitment is in addition to,
and is not part of, NBF's Commitment hereunder and that NBF shall not be treated
as a Parallel Investor with respect to any amounts paid by it pursuant to NBF's
Backstop Commitment.
4.4 MANDATORY TRANSFER OF EXCESS PORTFOLIO SECURITIES TO OFFERING AFFILIATE
FUND
In the event that NBF purchases any Portfolio Securities pursuant to Section 4.1
after the formation of the applicable Offering Affiliate Fund in the
circumstances described in Section 4.1(a):
(a) NBF shall, upon such Offering Affiliate Fund's final A.F. Closing Date
(or sooner, if NBF and such Offering Affiliate Fund otherwise agree),
transfer to the Offering Affiliate Fund the maximum number of such
Portfolio Securities that can be purchased by the Offering Affiliate Fund
using all of the Commitments of its Limited Partners. Each of such
Portfolio Securities shall be transferred at a price equal to its fair
market value, as determined by NBF in good faith (which the parties agree
shall generally be its Acquisition Cost plus an amount calculated at an
annual rate equal to the Base Rate plus two percent (2%));
(b) the Offering Affiliate Fund shall purchase such Portfolio Securities
from NBF; and
(c) subject to Section 4.7, the Initial Affiliate Fund GP shall reimburse
NBF for all Parallel Investor Expenses (other than Indemnification
Expenses) previously paid by NBF pursuant to Section 4.2 which have not
been previously reimbursed.
4.5 TRANSFERS OF EXCESS PORTFOLIO SECURITIES TO SUCCESSOR AFFILIATE FUND
In the event that NBF purchases any Portfolio Securities pursuant to Section 4.1
in the circumstances described in Section 4.1(b), NBF may (but shall not be
obligated to) transfer to such Successor Affiliate Fund up to all of such
Portfolio Securities. NBF shall have the right to exercise such option by
delivering written notice to the Main Fund GP and such Successor Affiliate Fund
no later than twenty (20) Business Days prior to the commencement of the
offering of partnership interests of such Successor Affiliate Fund. If NBF
exercises such option, the number of Portfolio Securities to be transferred to
such Successor Affiliate Fund shall be the maximum number thereof that can be
purchased by using all of the Commitments of the Successor Affiliate Fund's
Limited Partners, determined as at the date of such Successor Affiliate Fund's
final A.F. Closing Date. If NBF exercises such option, the provisions of Section
4.4 shall apply mutatis mutandis.
4.6 NBF'S RIGHT TO DESIGNATE AFFILIATES TO INVEST
For the purposes of NBF's Commitment and NBF's Backstop Commitment, monies will
be provided either by NBF or, at NBF's option, by any of their Affiliates.
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4.7 NBF'S FUNDING OF MAIN FUND GP'S OBLIGATIONS
It is acknowledged and agreed that it is a condition to the Initial Affiliate
Fund GP's obligations under Sections 3.1(b), 3.3, 4.4(c) and 4.5 that NBF or any
of their Affiliates shall have loaned to the Initial Affiliate Fund GP, from
time to time, on a limited recourse basis, the whole amount required to fulfil
the Initial Affiliate Fund GP's obligations under such sections, pursuant to any
loan agreement between NBF or any of their Affiliates and the Initial Affiliate
Fund GP.
ARTICLE 5 - INVESTMENT AND EXPENSE NOTICES
5.1 INVESTMENT NOTICES
At least ten (10) Business Days prior to the scheduled date of completion of
each Portfolio Transaction, the Main Fund GP shall deliver a notice (an
"INVESTMENT Notice") to each Parallel Investor and to each general partner of a
Parallel Investor which is a Fund, which, in turn, shall notify each of the
Limited Partners of the relevant Fund at the same time (and so as to expire
concurrently). Each Investment Notice shall set out:
(a) the portion of the Acquisition Cost payable pursuant to the Portfolio
Transaction required to be paid by the Parallel Investor or Limited
Partner to whom it is addressed;
(b) the aggregate Acquisition Cost required to be paid by all of the
Parallel Investors; and
(c) a description of the Portfolio Transaction in sufficient detail
(including the name of the Portfolio Company) to enable each Parallel
Investor to reasonably determine whether the investment by it in such
Portfolio Company would be unlawful, as contemplated in Section 2.5.
In the event that funds advanced pursuant to an Investment Notice are not used
to pay the applicable Acquisition Costs within thirty (30) days of the date upon
which the Investment Notice was delivered to each Parallel Investor, the Main
Fund GP shall return the amount advanced by each Parallel Investor in respect
thereof to each Parallel Investor forthwith following the expiry of such thirty
(30) day period.
5.2 EXPENSE NOTICES
At least ten (10) Business Days prior to the date upon which the Main Fund GP
requires any Parallel Investor Expenses and/or Organizational Expenses to be
paid, the Main Fund GP shall deliver a notice (an "EXPENSE NOTICE") to each
Parallel Investor. Each Expense Notice shall set out:
(a) the amount required to be paid by the Parallel Investor to whom it is
addressed; and
(b) the aggregate amount required to be paid by all of the Parallel
Investors.
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5.3 NOTICE TO NBF RE NBF'S BACKSTOP COMMITMENT
In the event that the Main Fund GP determines that NBF will be required to
fulfil NBF's Backstop Commitment with respect to any Acquisition Costs, Parallel
Investor Expenses or Organizational Expenses, the Main Fund GP shall deliver to
NBF details of the additional amount required to be paid by NBF pursuant to
Section 4.1 or 4.2, contemporaneously with the delivery of the applicable
Investment Notice or Expense Notice.
5.4 PAYMENTS BY PARALLEL INVESTORS
Each Parallel Investor and NBF shall advance to the Main Fund GP all amounts
payable by it, as set out in the applicable notices delivered by the Main Fund
GP pursuant to Sections 5.1, 5.2 or 5.3, no later than the date stipulated in
each such notice.
ARTICLE 6- SALES OF PORTFOLIO SECURITIES
6.1 RESTRICTIONS ON TRANSFERS, MORTGAGES ETC.
No Parallel Investor shall sell, assign, transfer, pledge, mortgage or otherwise
dispose of any of the Portfolio Securities owned or otherwise held by it except
in accordance with this Article 6 or Article 8.
6.2 PERMITTED TRANSFERS
Notwithstanding Section 6.1, a Parallel Investor shall be entitled to transfer
all or part of its interest in all of the Portfolio Securities held by it
hereunder to:
(a) any of its Affiliates; provided that:
(i) such transferee executes and delivers an Assumption Agreement;
and
(ii) the transferor shall remain liable for its obligations
hereunder, notwithstanding such transfer; or
(b) the Main Fund or the QLP Fund (provided that in the case of a transfer
to the QLP Fund, such transfer is in accordance with the investment
restrictions set out in the QLP Fund Partnership Agreement) in accordance
with Article 7.
6.3 DISPOSITION OF INVESTMENTS
Subject to the provisions of the Main Fund Partnership Agreement, the QLP Fund
Partnership Agreement, the US Fund Partnership Agreement and the US-Inst Fund
Partnership Agreement, respectively, relating to the dissolution or winding up
of the Main Fund, the QLP Fund, the US Fund and the US-Inst Fund, respectively,
and the comparable provisions of other Parallel Investor Agreements, and except
to the extent reasonably necessary or advisable to address tax, regulatory or
other legal considerations, the parties agree that the respective interests of
each Parallel Investor in any and all Portfolio Securities shall be realized or
disposed of (which for the purposes of this Section 6.3 shall include
distributions in kind) contemporaneously and on substantially the same
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terms, at such time or times and on such terms as shall be determined by the
Main Fund GP. In the case of a disposition of less than 100% of the Portfolio
Securities of a particular Portfolio Company held by the Parallel Investors, the
Main Fund GP shall cause each Parallel Investor to dispose of, and each Parallel
Investor which is a party hereto shall dispose of, such Parallel Investor's
proportionate share of such Portfolio Securities being disposed of by the
Parallel Investors.
6.4 DISTRIBUTIONS OF DISTRIBUTABLE LOCK-UP SECURITIES
In the event that any of the Funds' GPs (other than the QLP Fund GP) wishes to
distribute securities which are subject to a Lock-up Agreement (other than with
respect to any distribution to be made in connection with the termination and
dissolution of the applicable VPI Fund), it may, by written notice to the Main
Fund GP, request the Main Fund GP to call a Joint Meeting for the purposes of
the Voting Parallel Investors considering passing an Extraordinary Resolution
permitting the distribution by each of the VPI Funds of the securities held by
the VPI Funds which are then subject to such Lock-up Agreement. Upon receipt of
such request, the Main Fund GP shall call such Joint Meeting to be held within
21 days following the receipt by the Main Fund GP of such last-mentioned notice.
In addition, it is acknowledged that the Main Fund GP may call such a Joint
Meeting, for such purpose, in its own discretion at any time. If such
Extraordinary Resolution is passed by the Voting Parallel Investors, the
securities which were the subject of such Extraordinary Resolution
("DISTRIBUTABLE LOCK-UP SECURITIES") shall be distributed to the Limited
Partners of the applicable VPI Funds immediately following the passage thereof.
6.5 DISTRIBUTIONS IN KIND SECURITIES BY THE FUND
Each of the Funds' GPs covenants and agrees that the Fund of which it is the
general partner shall not distribute Portfolio Securities in kind, unless all of
the other Funds which hold Portfolio Securities of the same Portfolio Company
are also distributing such securities in kind to their respective Limited
Partners and to themselves, if applicable (except with respect to any
distribution to be made in connection with the termination of the Fund of which
it is the general partner).
ARTICLE 7 - TRANSFER OF COMMITMENTS TO MAIN FUND AND QLP FUND
7.1 RIGHT TO TRANSFER PARALLEL INVESTOR COMMITMENTS TO MAIN FUND AND QLP FUND
Each Parallel Investor, with the prior approval of the Main Fund GP (which the
Main Fund GP may withhold) and who would otherwise qualify as a permitted
transferee of Units under the QLP Fund Partnership Agreement, may reduce all or
part of its Commitment hereunder by an amount (the "REDUCED COMMITMENT") by (i)
making a QLP Fund Commitment in an amount equal to the Reduced Commitment; and
(ii) making a Main Fund Commitment in an amount equal to 30% of the Reduced
Commitment, upon and subject to the terms and conditions of this Article 7 and
of Section 8.2 of the QLP Fund Partnership Agreement and Section 8.2 of the Main
Fund Partnership Agreement. A Parallel Investor shall be entitled to exercise
such right by:
(a) executing and delivering subscription agreements pursuant to which it
shall:
(i) make a QLP Fund Commitment (or increase its existing QLP Fund
Commitment) in an amount equal to its Reduced Commitment and make a
Main
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Fund Commitment (or increase its existing Main Fund Commitment) in
an amount equal to 30% of its Reduced Commitment;
(ii) subscribe for the applicable number of QLP Units and Main Fund
Units;
(iii) agree to assign and transfer to the QLP Fund the Proportion of
its interest in all of the Portfolio Securities then held by it
hereunder, which Portfolio Securities are securities of the same
Portfolio Companies as are the Portfolio Securities held by the QLP
Fund, which transfer shall be made as a Capital Contribution to the
QLP Fund in satisfaction of part of its QLP Fund Commitment,
(iv) agree to assign and transfer to the Main Fund the Proportion of
its interest in all of the Portfolio Securities then held by it
hereunder, which Portfolio Securities are securities of the same
Portfolio Companies as are the Portfolio Securities held by the Main
Fund, which transfer shall be made as a Capital Contribution to the
Main Fund in satisfaction of part of its Main Fund Commitment; and
(v) agree that the amount of the Capital Contribution and the
Capital Account per QLP Fund Unit and/or per Main Fund Unit issued
to it pursuant to Section 7.1(a)(ii) shall be considered to be equal
to the Capital Contribution and Capital Account per QLP Fund Unit or
Main Fund Unit, respectively, immediately prior to the transfer
contemplated in this Section; and
(b) executing and delivering all such other instruments and documents as
may be required pursuant to Section 8.2 of the QLP Fund Partnership
Agreement and Section 8.2 of the Main Fund Partnership Agreement.
Such subscription and QLP Fund Commitment and Main Fund Commitment made by such
Parallel Investor shall be subject to acceptance by the QLP GP and the Main Fund
GP, respectively. The date of acceptance of such subscriptions by the QLP GP and
the Main Fund GP, respectively, shall hereinafter be referred to as the
"TRANSFER ADMISSION DATE". For greater certainty, for purposes of the QLP Fund
Partnership Agreement and the Main Fund Partnership Agreement, upon acceptance
of such subscriptions for QLP Units and Main Fund Units as contemplated in this
Section 7.1, the Commitment, Capital Account and Capital Contribution per Unit
of the QLP Fund and per Class A Unit of the Main Fund, respectively, shall be
identical in respect of all Units of the QLP Fund and all Class A Units of the
Main Fund.
7.2 QLP FUND'S AND MAIN FUND'S OPTION TO OBTAIN QLP FUND COMMITMENTS AND MAIN
FUND COMMITMENTS FROM NBF
Notwithstanding Section 6.1, NBF (hereinafter for the purposes hereof, the
"OPTIONOR") irrevocably grants to the QLP Fund and the Main Fund the right
(each, a "FUND OPTION") to cause it to make an additional QLP Fund Commitment in
an amount up to its Commitment hereunder and an additional Main Fund Commitment
in an amount equal to 30% of its QLP Fund Commitment hereunder, in each case
upon and subject to the terms and conditions of this Article 7 and of Section
8.2 of the QLP Fund Partnership Agreement and Section 8.2 of the Main Fund
Partnership Agreement.
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All or part of a Fund Option shall be exercisable by written notice (each, an
"EXERCISE NOTICE") delivered to the Optionor by the QLP GP, on behalf of the QLP
Fund, and by the Main Fund GP, on behalf of the Main Fund, at any time and from
time to time until March 31, 2003 or until such later date as the QLP GP is
entitled to accept subscriptions for QLP Fund Units pursuant to the QLP Fund
Partnership Agreement and the Main Fund GP is entitled to accept subscriptions
for Main Fund Units pursuant to the Main Fund Partnership Agreement. Each
Exercise Notice shall designate the amount of the QLP Fund Commitment (the
"DESIGNATED AMOUNT") and the Main Fund Commitment (the Main Fund Commitment
being equal to 30% of the QLP Fund Commitment) to be made by the Optionor to
which it is delivered; provided that neither of the QLP Fund nor the Main Fund
shall exercise a Fund Option if the QLP Fund Commitment or the Main Fund
Commitment, as the case may be, to be made by the Optionor thereunder would
result in:
(a) its aggregate QLP Fund Commitment exceeding 24.9% of the aggregate QLP
Fund Commitments of all of the Limited Partners of the QLP Fund;
(b) its aggregate Main Fund Commitment exceeding 24.9% of the aggregate
Main Fund Commitments of all of the Class A Limited Partners of the Main
Fund; or
(c) the QLP Fund or the Main Fund, as the case may be, becoming a
"financial institution", as such term is defined in section 142.2(1) of
the Income Tax Act (Canada), as amended from to time, or any replacement
of such definition,
calculated, in each case, after giving effect to the QLP Fund Commitment and the
Main Fund Commitment designated in such Exercise Notice and all subscriptions
for QLP Fund Units and Main Fund Units accepted by the QLP GP and the Main Fund
GP, respectively, and completed on the Admission Date.
Effective upon the date of delivery of an Exercise Notice (the "ADMISSION
DATE"), the Optionor shall be deemed for the purposes hereof and of the Main
Fund Partnership Agreement and the QLP Fund Partnership Agreement to (i) have
subscribed for the number of QLP Fund Units and Main Fund Units, as applicable,
representing the QLP Fund Commitment and the Main Fund Commitment designated in
such notice, and (ii) been admitted as a Limited Partner of the Main Fund and
the QLP Fund in respect of such Main Fund Commitment and QLP Fund Commitment or
to have increased its Main Fund Commitment and its QLP Fund Commitment, as
applicable, and the provisions of Section 7.1 shall apply in the same manner as
if the Optionor had exercised its right to transfer part of its Commitment to
the QLP Fund and the Main Fund, and for such purpose, the Reduced Commitment
shall be equal to the Designated Amount. The Optionor's Commitment in its
capacity as a Parallel Investor shall be reduced by an amount equal to the
Designated Amount.
The Optionor covenants and agrees to execute and deliver subscription agreements
with respect to its subscription for QLP Fund Units and Main Fund Units
representing the QLP Fund Commitment and the Main Fund Commitment, as
applicable, designated in the applicable Exercise Notice, effective as of the
Admission Date, and all such other agreements, instruments and documents as may
be necessary or desirable in order to give effect to each exercise of the Fund
Option granted by it.
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Each of the QLP Fund and the Main Fund covenants and agrees to exercise the Fund
Option granted by the Optionor on each closing of the sale of any QLP Fund Units
and Main Fund Units.
7.3 GENERAL PROVISIONS RELATING TO TRANSFER OF COMMITMENTS
The following provisions shall apply to all transactions completed pursuant to
Section 7.1 or 7.2:
(a) the subscription agreement to be executed and delivered by the
Optionor or the Parallel Investor, as applicable, shall be in
substantially the same form and upon substantially the same terms and
conditions as the subscription agreement generally used by the QLP Fund
and the Main Fund, as applicable;
(b) if applicable, the Optionor or the Parallel Investor, as applicable,
and the QLP Fund and the Main Fund, as applicable, shall execute and
deliver a Capital Contribution Agreement in substantially the same form
and upon substantially the same terms and conditions as the agreement
attached hereto as Schedule 3;
(c) effective as of the Admission Date or the Transfer Admission Date, as
the case may be, the QLP Fund or the Main Fund, as applicable, shall
assume the Proportion of all outstanding Portfolio Company Guarantees then
provided by the Parallel Investor hereunder and such Parallel Investor
shall be released from its obligations hereunder with respect to such
Portfolio Company Guarantees;
(d) the QLP GP, on behalf of the QLP Fund, the Main Fund GP, on behalf of
the Main Fund, and each of the Parallel Investors acknowledge and agree
that the Optionor or the Parallel Investor, as applicable, shall assign
and transfer to the QLP Fund or the Main Fund, as applicable, the
Portfolio Securities to be transferred to the QLP Fund or the Main Fund,
as applicable, which transfer shall be made as a Capital Contribution to
the QLP Fund or the Main Fund, as applicable, in satisfaction of part of
the QLP Fund Commitment or the Main Fund Commitment, as applicable;
(e) each Parallel Investor shall be issued the applicable number of QLP
Fund Units and Main Fund Units as is equal to the amount of the QLP
Commitment or the Main Fund Commitment, as the case may be, made by it and
accepted by the QLP GP or the Main Fund GP in accordance with Section 7.1
or designated in the Exercise Notice delivered to it, as applicable,
divided by $1,000. Fractional QLP Fund Units or Main Fund Units may be
issued in connection with such transaction; and
(f) the Commitment of a Parallel Investor hereunder shall be reduced by
the amount of the QLP Fund Commitment made by it and accepted by the QLP
GP in accordance with Section 7.1 or designated in the Exercise Notice
delivered to it, as applicable.
7.4 CHANGES TO ACCOMMODATE NEW LIMITED PARTNERSHIPS
In the event that, during the period when a Fund Option may be exercised
pursuant to Section 7.2, a New Limited Partnership is formed:
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(a) each of the QLP GP and the Main Fund GP, as applicable, shall, in
accordance with the QLP Fund Partnership Agreement or the Main Fund
Partnership Agreement, cause the New Limited Partnership to become a party
hereto; and
(b) Sections 7.2 and 7.3 shall be automatically amended with all
appropriate changes to provide that, upon any subsequent exercise of a
Fund Option, each New Limited Partnership shall be entitled to, and shall,
exercise such option, together with the QLP Fund or the Main Fund, as
applicable, with the effect that the Optionor, the QLP Fund or the Main
Fund and each New Limited Partnership shall be in the same position as
each of them would have been in if, immediately prior to the formation of
such New Limited Partnership, the Optionor had been a Limited Partner of
the QLP Fund or the Main Fund, as applicable (and of each pre-existing New
Limited Partnership, if any) with a QLP Fund Commitment or a Main Fund
Commitment (together with a commitment to each such pre-existing New
Limited Partnership) equal to the aggregate commitment to be made by such
Optionor to the QLP Fund or the Main Fund, as applicable (and each such
pre-existing New Limited Partnership) after giving effect to such exercise
of the Fund Option.
ARTICLE 8 - INCREASED COMMITMENTS
8.1 NEW PARALLEL INVESTORS AND INCREASED COMMITMENTS BY PARALLEL INVESTORS
In the event that:
(a) a Person (other than a Successor Affiliate Fund) is approved by the
Main Fund GP as a Parallel Investor by executing and delivering an
Assumption Agreement; or
(b) there is an increase in the Commitment of a Parallel Investor
(including as a consequence of a new Limited Partner being accepted by the
Main Fund or the QLP Fund and committing to make capital contributions in
cash or any existing Limited Partner in the QLP Fund or the Main Fund
agreeing to increase the amount of its cash capital contributions, other
than by virtue of a transaction described in Article 7)
(such new Parallel Investor or Parallel Investor which has increased its
Commitment being referred to in this Section 8.1 as the "NEW PARALLEL
INVESTOR"), on the date of the closing of such transaction:
(c) all Portfolio Securities then held by the Parallel Investors hereunder
and held by NBF pursuant to NBF's Backstop Commitment shall be transferred
among the Parallel Investors, NBF and the New Parallel Investor such that,
after giving effect to such transfers, each of the Parallel Investors, NBF
and the New Parallel Investor shall hold that portion of such Portfolio
Securities that it would have held as at such date if all of the
Commitments of the Parallel Investors (including the New Parallel
Investor) had been made on the date hereof and NBF had purchased the
number of Portfolio Securities required to be purchased by it pursuant to
NBF's Backstop Commitment from time to time after the date hereof;
- 17 -
(d) the New Parallel Investor shall be treated as having been a Parallel
Investor and its Commitment or increased Commitment shall be treated as
having been made as of the date hereof for all purposes;
(e) the New Parallel Investor shall be responsible for its (additional)
Pro Rata Share of all Acquisition Costs, Parallel Investor Expenses and
Organizational Expenses paid hereunder and all Portfolio Company
Guarantees from and after the date hereof to and including such date of
the closing of such transaction;
(f) the New Parallel Investor shall pay:
(i) to each of the other Parallel Investors (other than the
Affiliate Funds) its Pro Rata Share of:
(A) the aggregate amount required to be paid pursuant to
Section 8.1(e); and
(B) an additional amount calculated at the Base Rate
(determined as of the date of the closing of such transaction)
plus 2% per annum on the amount required to be paid pursuant
to Section 8.1(e) (which shall not be treated as part of the
New Parallel Investor's Commitment); and
(ii) to the Main Fund GP, NBF and/or the Affiliate Funds, an amount
equal to the Affiliate Funds' Pro Rata Share of:
(A) the aggregate amount required to be paid pursuant to
Section 8.1(e); and
(B) an additional amount calculated at the Base Rate
(determined as of the date of the closing of such transaction)
plus 2% per annum on the amount required to be paid pursuant
to Section 8.1(e) (which shall not be treated as part of the
New Parallel Investor's Commitment);
as follows:
(C) the Main Fund GP shall be paid its proportionate share of
such amounts in respect of payments of the Affiliate Funds'
Pro Rata Share of Parallel Investor Expenses and
Organizational Expenses made by it hereunder (to the extent
that the Main Fund GP has not previously received
distributions from any Affiliate Fund in respect of such
payments);
(D) NBF shall be paid its proportionate share of such amounts
in respect of payments of Acquisition Costs, Parallel Investor
Expenses and Organizational Expenses made by it pursuant to
NBF's Backstop Commitment (to the extent that NBF has not
previously received reimbursements thereof pursuant to Section
4.4 or 4.5); and
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(E) the Affiliate Funds shall be paid the balance of such
amounts, if any; and
(g) the Parallel Investors (including the New Parallel Investor) shall
account to each other and pay to each other any other amounts to the
extent necessary in order to give effect to this Article 8.
For the purposes of Sections 8.1(f)(ii)(C) and (D), a party's proportionate
share of the amounts referred to therein shall be equal to a fraction (expressed
in percentage terms) determined by dividing:
(I) the amount paid by it pursuant to Sections 3.1(b), 3.3, 4.1, 4.2,
4.4 and 4.5, as applicable, in respect of Acquisition Costs,
Parallel Investor Expenses and Organizational Expenses from and
after the date hereof to and including such date of the closing of
the applicable transaction (other than Acquisition Costs, Parallel
Investor Expenses and Organizational Expenses in respect of which it
has previously received any distributions from any Affiliate Fund or
reimbursements pursuant to Section 4.4 or 4.5),
by
(II) the amounts referred to in clause (I) above paid by NBF and the
Initial Affiliate Fund GP, the QLP GP and/or the Main Fund GP,
without duplication.
8.2 EXCEPTION RESPECTING PARALLEL INVESTORS REDUCED COMMITMENTS
It is acknowledged and agreed that in the event that the Commitment of a
Parallel Investor is reduced pursuant to Section 7.3 in connection with a QLP
Fund Commitment and a Main Fund Commitment, made by it after the date hereof,
Sections 8.1(e) and (f) shall not apply with respect to that portion of the
increase in the QLP Fund's or the Main Fund's Pro Rata Share resulting from the
increase in the QLP Fund's Commitment or the Main Fund's Commitment, as
applicable, arising as a result of such Parallel Investor's QLP Fund Commitment
or Main Fund Commitment.
8.3 ALLOCATION OF PAYMENT AMONG THE AFFILIATE FUNDS
Any amounts payable to the Affiliate Funds pursuant to this Article 8 shall be
allocated among them on a proportionate basis, based upon the aggregate amount
of Acquisition Costs, Parallel Investor Expenses and Organizational Expenses
paid by each of the Affiliate Funds, (including amounts paid by it pursuant to
Section 4.4 or 4.5).
8.4 SUNSET RE NEW PARALLEL INVESTORS AND INCREASED COMMITMENT BY PARALLEL
INVESTORS
It is acknowledged and agreed that after June 30, 2003 the Main Fund GP shall
not approve any Person (other than a Successor Affiliate Fund) as a Parallel
Investor and no Parallel Investor shall be entitled to increase its Commitment
(other than in accordance with Article 7).
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ARTICLE 9- AMENDMENT TO PARALLEL INVESTOR AGREEMENTS
9.1 GPS' CONSENTS TO AMENDMENTS OF PARALLEL INVESTOR AGREEMENTS
None of the QLP GP, the Main Fund GP, the US Fund GP or the US-Inst Fund GP
shall consent to or enter into any amendment of any of the Partnership
Agreements or other Parallel Investor Agreement(s) to which it is a party, if
such amendment relates to matters that are also the subject of this Agreement
unless, if applicable, amendments are made to all of the Parallel Investor
Agreement(s) and this Agreement in order to give effect to the intent of this
Agreement that the investment activities of each of the Parallel Investors be
carried out in parallel on a pro rata basis in relation to each Parallel
Investor's Pro Rata Share.
ARTICLE 10- PORTFOLIO COMPANY FEES
10.1 QLP GP, MAIN FUND GP, US FUND GP AND US-INST FUND GP TO RECEIVE ALL
PORTFOLIO COMPANY FEES
It is acknowledged and agreed that:
(a) the QLP GP (and/or the Manager on behalf of the QLP GP), the Main Fund
GP (and/or the Manager on behalf of the Main Fund GP), the US Fund GP
(and/or the Manager on behalf of the US Fund GP) and the US-Inst Fund GP
(and/or the Manager on behalf of the US-Inst Fund GP) may provide certain
services to or in respect of Portfolio Companies and proposed Portfolio
Companies, in respect of which the Portfolio Companies, proposed Portfolio
Companies and other Persons may pay Portfolio Company Fees;
(b) each of the QLP GP, the Main Fund GP, the US Fund GP, the US Fund GP
and the US-Inst Fund GP is entitled to 100% of all Portfolio Company Fees,
subject to the terms of the QLP Fund Partnership Agreement, the Main Fund
Partnership Agreement, the US Fund Partnership Agreement or the US-Inst
Fund Partnership Agreement, as applicable, the Management Services
Agreement to which it is a party, the other provisions of this Article 10
and the comparable provisions of the other Parallel Investor Agreements;
(c) pursuant to each of the Management Services Agreements, the Fund which
is a party thereto is entitled to a reduction in the amount of the
Management Fee (as such term is defined in such agreement) payable by it
thereunder, based upon a portion of such Fund's Pro Rata Share of
Portfolio Company Fees received by the general partner of such Fund or the
Manager or their respective Affiliates, shareholders, partners,
principals, members, officers, directors or employees;
(d) the QLP GP, the Main Fund GP, the US Fund GP and the US-Inst Fund GP
and/or the Manager may earn other fees or remuneration in connection with
activities that are not related to the investment or proposed investment
by the Parallel Investors in any Portfolio Company; and
(e) all of the fees and remuneration referred to in Section 10.1(d) will
not constitute Portfolio Company Fees.
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10.2 QLP GP, MAIN FUND GP, THE US FUND GP AND US-INST FUND GP TO PAY
UNREIMBURSED COSTS AND EXPENSES RESPECTING PORTFOLIO COMPANY INVESTMENTS
It is acknowledged that, pursuant to the Management Services Agreements to which
each of the QLP GP, the Main Fund GP, the US Fund GP and the US-Inst Fund GP is
a party, each of the QLP GP, the Main Fund GP, the US Fund GP and US-Inst Fund
GP, respectively, has agreed to pay all unreimbursed costs and expenses incurred
by the Parallel Investors which are directly attributable to an investment in a
Portfolio Company or a proposed investment in any Person, out of any Portfolio
Company Fees received by the QLP GP, the Main Fund GP, the US Fund GP or the
US-Inst Fund GP, as the case may be, related to such investment or proposed
investment, up to but not exceeding the amount of such Portfolio Company Fees.
ARTICLE 11- INDEMNIFICATION BY PARALLEL INVESTORS
11.1 INDEMNIFICATION BY PARALLEL INVESTORS (OTHER THAN THE FUNDS)
Each of the Parallel Investors (including NBF, in its capacity as a Parallel
Investor), other than the Funds, shall indemnify and hold harmless each
Indemnified Party from and against any and all Losses, which any Indemnified
Party may suffer or incur or become subject to by reason of or related to such
Indemnified Party's activities on behalf of the Parallel Investors hereunder or
in furtherance of the interests of the Parallel Investors hereunder or otherwise
arising out of or in connection with this Agreement (including, without
limitation, an Indemnified Party serving as an officer, director, consultant or
employee of any Portfolio Company or any direct or indirect subsidiary thereof),
including without limitation any Losses incurred in connection with the defence
of any actual or threatened action, proceeding or claim and any payments made by
an Indemnified Party to any other Indemnified Party pursuant to an
indemnification agreement no broader than this Section 11.1. Notwithstanding the
foregoing, no Indemnified Party shall be entitled to indemnification under this
Section 11.1 if and to the extent that the acts, omissions, or alleged acts or
omissions upon which an actual or threatened action, proceeding or claim is
based were performed or omitted fraudulently or in bad faith or as a result of
wilful misconduct or negligence by such Indemnified Party or by any of its
directors, officers, shareholders, partners, employees, agents, members,
advisors or representatives or any of their respective Affiliates. The
indemnification provided for in this Section 11.1 shall not extend to Losses
which were caused as a result of an Indemnified Party acting as a lender to a
Parallel Investor or a Portfolio Company, economic losses incurred by an
Indemnified Party as a result of such Indemnified Party's ownership of an
interest in a Parallel Investor or of an ownership interest in a Portfolio
Company, or expenses that such Indemnified Party has agreed to bear.
Notwithstanding the foregoing, no Indemnified Party shall be entitled to
indemnification under this Section 11.1 in respect of incidental or
consequential damages, including damages for loss of revenue or lost profits.
The Main Fund GP may require the Parallel Investors to pay the expenses incurred
by any Indemnified Party hereunder in connection with any action, proceeding or
claim in advance of the final disposition, so long as the Parallel Investors
receive a written undertaking by such Indemnified Party to repay the full amount
advanced if there is a final determination that such Indemnified Party did not
satisfy the standards set forth in this Section 11.1 or is not entitled to
indemnification as provided in this Section 11.1 for other reasons.
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Promptly after becoming aware of any matter that may give rise to a claim for
indemnification hereunder, the Main Fund GP will give the Parallel Investors
written notice of the claim, specifying (to the extent that information is
available) the factual basis for the claim and the amount of the claim or if an
amount is not then determinable, an estimate of the amount of the claim, if an
estimate is feasible in the circumstances. The Main Fund GP will keep the
Parallel Investors informed of the status of any claims on a regular basis. In
the event that an Indemnified Party shall be unable to obtain timely advice from
the Parallel Investors with respect to any matter relating to negotiations
regarding the subject matter of the indemnity, the Indemnified Party shall be
entitled to deal with same in such manner as it, in the reasonable exercise of
its judgment, deems appropriate.
11.2 SATISFACTION OF INDEMNITY OBLIGATIONS
It is acknowledged that any amounts to be paid under Section 11.1 shall form
part of Parallel Investor Expenses and shall be borne on a several basis and not
joint and several among all Parallel Investors (including the Funds) based on
each Parallel Investor's Pro Rata Share thereof. It is further acknowledged and
agreed that the primary obligation to satisfy any Losses for which any Parallel
Investor is obligated to indemnify hereunder shall be the Portfolio Securities
held by the Parallel Investors hereunder, and the Indemnified Parties shall be
required to first exhaust all recourse against such Portfolio Securities (on the
basis that recourse to the Portfolio Securities held by each Parallel Investor
will be limited to such Parallel Investor's Pro Rata Share of the Losses) before
requiring the payment of any amounts hereunder. A Parallel Investor will only be
required to pay amounts hereunder to the extent that such Portfolio Securities
are insufficient and only if the Limited Partners of the QLP Fund or the Main
Fund, as applicable, are required to contribute capital pursuant to the QLP Fund
Partnership Agreement or the Main Fund Partnership Agreement (including section
6.7 thereof) and then only to the extent of such Parallel Investor's Pro Rata
Share of the amount required to be paid to satisfy such Losses; provided that in
no event shall the Parallel Investor be required to pay more than the amount it
is then required to pay pursuant to Section 2.2. Further, it is intended that
the amounts payable by any Investor pursuant to this Article 11, section 6.7 of
the QLP Fund Partnership Agreement and of the Main Fund Partnership Agreement
and the comparable provisions of any other Parallel Investor Agreement shall not
exceed the amount which would have been paid by such Investor had all of the
Investors invested through a common vehicle and their obligations were shared on
proportionate basis based on the amount of cash each Investor agreed to invest
in Portfolio Companies (including NBF's Backstop Commitment Amount).
11.3 INDEMNIFIED PARTY TO SEEK RECOVERY FROM THIRD PARTIES
Any Person entitled to indemnification from the Parallel Investors under section
6.7 of the QLP Fund Partnership Agreement or of the Main Fund Partnership
Agreement and/or under Section 11.1 shall seek recovery under any other
indemnity (except any indemnity provided under any other Parallel Investor
Agreement or the QLP Fund Partnership Agreement or the Main Fund Partnership
Agreement, as applicable) or any insurance policies by which such Person is
indemnified or covered, as the case may be, and any amounts received by such
Person shall reduce the Parallel Investors' obligations or liabilities to such
Person under this Article 11. In the event that the amount of the Parallel
Investors' obligations and liabilities to such Person arising under this Article
11 is less than the aggregate of the amount paid by the Parallel Investors in
respect thereof plus the amount received by the Person under any other indemnity
or any insurance policies, such Person
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shall forthwith pay to the QLP GP and the Main Fund GP, as applicable, on behalf
of the Parallel Investors, the difference. If such Person is other than the QLP
GP or the Main Fund GP, such Person shall obtain the written consent of the QLP
GP or the Main Fund GP, as applicable, prior to entering into any compromise or
settlement which would result in an obligation of the Parallel Investors to
indemnify such Person.
11.4 PROTECTION BY PORTFOLIO COMPANIES
Each of the QLP GP and the Main Fund GP shall use its reasonable efforts to
require:
(a) that the constating documents of each Portfolio Company include the
broadest covenant permitted by law of such Portfolio Company to indemnify
and hold harmless any Indemnified Party representing the Parallel
Investors who is serving as an officer, director, consultant or employee
of such Portfolio Company or any direct or indirect subsidiary thereof or
who otherwise participates in the management of the Portfolio Company from
all Losses arising from such relationship with the Portfolio Company. Such
indemnity shall extend to the Parallel Investors to the extent that it
indemnifies such Indemnified Party in respect of such Loss; and/or
(b) each Portfolio Company to maintain director's and officer's liability
insurance covering any Indemnified Party representing the Parallel
Investors who is serving as an officer, director, consultant or employee
of such Portfolio Company or any direct or indirect subsidiary thereof or
who otherwise participates in the management of the Portfolio Company. The
coverage afforded by such insurance shall be consistent with the standards
of coverage obtained generally by Persons carrying on business in the
industry in which the Portfolio Company operates.
11.5 QLP GP AND MAIN FUND GP TO HOLD BENEFITS FOR OTHER INDEMNIFIED PARTIES
Each of the QLP GP and the Main Fund GP shall hold the benefit of this Article
11 for its own benefit and for the benefit of the other Indemnified Parties.
11.6 SURVIVAL OF INDEMNIFICATION RIGHTS
The provisions of this Article 11 shall survive the termination of this
Agreement and, for the purposes of this Article 11, the QLP GP and the Main Fund
GP, on behalf of the Indemnified Parties, may pursue and enforce all rights and
remedies it or they may have against any Parallel Investor under this Article
11, including instituting a law suit to collect any amount payable hereunder
with interest from the date the amount was to be paid by a Parallel Investor
hereunder at a rate equal to the Base Rate plus six percent (6%) per annum (but
not in excess of the highest rate per annum permitted by law).
11.7 AFFILIATE FUND DEEMED TO BE PARALLEL INVESTOR
For the purposes of determining a "PARALLEL INVESTOR'S PRO RATA SHARE" of any
amount referred to in this Article 11, each Affiliate Fund shall be deemed to be
a separate Parallel Investor and the Affiliate Funds, collectively, shall be
deemed not to be a Parallel Investor.
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ARTICLE 12- STRUCTURE OF INVESTMENTS
12.1 INVESTMENTS IN PORTFOLIO COMPANIES
The parties hereby acknowledge that:
(a) the form of investment in each Portfolio Company shall be determined
by the Main Fund GP; and
(b) any investment in a Portfolio Company (including the provisions of any
Portfolio Company Guarantee) may be made through the QLP GP or the Main
Fund GP, as applicable, or through a nominee company as bare trustee, for
the benefit, and on behalf, of each of the Parallel Investors on a basis
consistent with the relative separate beneficial interests of each
Parallel Investor in such investment (and related Portfolio Company
Guarantee, if applicable).
The QLP GP or the Main Fund GP, as applicable, or such nominee company, as the
case may be, shall exercise the rights of the Parallel Investors under all
shareholder and other investment agreements governing the interests of the
Parallel Investor in a Portfolio Company to which the QLP GP or the Main Fund
GP, as applicable, or such nominee company, as applicable, is a party, in
accordance with Section 2.8.
At the request of the QLP GP or the Main Fund GP, each Parallel Investor shall
execute and deliver an acknowledgement or agreement concerning its interest in
any Portfolio Securities or its several obligation in respect of any Portfolio
Company Guarantee (including, without limitation, a form of guarantee evidencing
its Pro Rata Share of any Portfolio Company Guarantee).
ARTICLE 13 - MATTERS CONCERNING THE QLP AND THE MAIN FUND
13.1 OPPORTUNITIES BETWEEN QLP AND MAIN FUND
The QLP Fund and the Main Fund agree that it is their mutual intention that,
where possible, all investment opportunities available to the QLP Fund and/or
the Main Fund which are in respect of "foreign property" (as such term is
defined in the Income Tax Act (Canada)) or which, if made by the QLP Fund, would
compromise its qualification as a QLP, shall be made by the Main Fund and all
other investment opportunities shall be made by the QLP Fund, and each of the
QLP Fund and the Main Fund agree to consult with each other to the extent
necessary to ensure that this occurs.
ARTICLE 14- SUCCESSOR AFFILIATE FUNDS
14.1 FORMATION OF SUCCESSOR AFFILIATE FUND
No Successor Affiliate Fund shall be formed or financed without the prior
approval of the Main Fund GP and NBF. Neither of the Main Fund GP nor the QLP GP
shall form or allow the formation of a Successor Affiliate Fund unless the
Successor Affiliate Fund agrees to be bound by this Agreement as an Affiliate
Fund by executing and delivering an Assumption Agreement.
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14.2 NO OBLIGATION TO FORM SUCCESSOR AFFILIATE FUNDS
The parties acknowledge and agree that nothing contained in this Agreement
obligates any of the QLP GP, the Main Fund GP or NBF to form, permit the
formation of or finance any Successor Affiliate Fund or obligates NBF to provide
loans or financial assistance to any of the Limited Partners of any Successor
Affiliate Fund.
14.3 NOTICE OF OFFERING OF INTEREST BY SUCCESSOR AFFILIATE FUND
At least twenty (20) Business Days prior to the scheduled commencement of the
offering of partnership interests of a Successor Affiliate Fund, the Main Fund
GP shall deliver written notice of such commencement date to NBF in order to
facilitate the exercise by NBF of the option referred to in Section 4.5.
ARTICLE 15- TERMINATION
15.1 TERMINATION OF AGREEMENT
Notwithstanding anything to the contrary contained herein, this Agreement shall
terminate automatically and shall have no further force and effect on the
earliest of the dates upon which:
(a) any law or governmental regulation now existing or hereafter enacted
shall render illegal or impracticable the operation of this Agreement in
any material respect;
(b) the existence or the operation of this Agreement shall result in any
of the Parallel Investors or any Investor being subject or liable to any
tax in any jurisdiction to which such Parallel Investor or Investor would
not have been liable or subject but for the existence or operation of this
Agreement;
(c) the QLP Fund is terminated in accordance with the terms of the QLP
Fund Partnership Agreement and the Main Fund is terminated in accordance
with the terms of the Main Fund Partnership Agreement;
(d) all of the parties hereto consent to such termination.
ARTICLE 16 - NO JOINT VENTURE OR MUTUAL AUTHORITY
16.1 DISCLAIMER OF JOINT VENTURE OR ASSOCIATION
The parties agree and confirm that nothing contained herein shall involve or be
deemed to involve the parties (or any two or more of them) in any pooling of
resources or sharing of risk in relation to any investments made by all or any
of them, and in particular nothing contained herein shall constitute the
Parallel Investors, the QLP GP, the Main Fund GP, the US Fund GP, the US-Inst
Fund GP or any two or more of them as partners or joint venturers or any of the
Parallel Investors as the agent of any of the other Parallel Investors. The
Parallel Investors shall at all times be the beneficial owners of all Portfolio
Securities and other investments purchased or held on their behalf hereunder.
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16.2 NO MUTUAL AUTHORITY
Except as otherwise expressly provided herein:
(a) no Parallel Investor shall have any authority to act for or to assume
any obligation or responsibility on behalf of any other Parallel Investor,
except as otherwise expressly provided herein; and
(b) the rights and obligations of each Parallel Investor hereunder shall
be several and not joint and several, except as otherwise expressly
provided herein.
16.3 INCOME TAX LIABILITIES
Each Parallel Investor shall be directly responsible for any income tax
consequences or tax consequences of any other nature or kind arising directly or
indirectly from its ownership of its investments (including Portfolio
Securities) or the disposition of its investments (including Portfolio
Securities) hereunder.
ARTICLE 17 - L.P. ADVISORY COMMITTEE AND DECISIONS OF PARALLEL INVESTORS
17.1 L.P. ADVISORY COMMITTEE
Within twelve months of the date hereof, an advisory committee for all of the
Funds which are Voting Parallel Investors (the "L.P. ADVISORY COMMITTEE") shall
be established by the Funds' GPs (other than the QLP GP) consisting of a minimum
of three (3) and a maximum of five (5) individuals appointed by such Funds' GPs
for a two (2) year term, and selected by such Funds' GPs from among the Limited
Partners. No employee of EdgeStone Partners, Inc. or the Manager shall be
entitled to be appointed a member of the L.P. Advisory Committee. The L.P.
Advisory Committee shall, subject to applicable law, perform the duties
expressly contemplated herein and in the limited partnership agreement of each
Fund, and shall review any potential material conflicts of interest involving
any of the Funds (as contemplated by such agreements); provided that the general
partner of each Fund shall retain ultimate responsibility for making all
decisions relating to the operation and management of such Fund, including, but
not limited to, making all investment decisions. Notwithstanding the foregoing,
in the event of a potential material conflict of interest involving any Fund (as
contemplated by such limited partnership agreements), the manner in which such
conflict is resolved shall be subject to the approval of the L.P. Advisory
Committee which shall be binding upon the general partner of the applicable
Fund. Each Parallel Investor shall reimburse each member of the L.P. Advisory
Committee for his or her reasonable out-of-pocket expenses incurred in
connection with the proceedings of such committee. The amount that each Parallel
Investor shall be required to pay pursuant to the preceding sentence shall be
based upon its Pro Rata Share. The Funds' GPs (other than the QLP GP) shall be
entitled to attend all L.P. Advisory Committee meetings, unless a member thereof
requests in writing that they not attend such meeting.
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17.2 COMMITTEE MEETINGS
(a) Meetings of the L.P. Advisory Committee shall be held at the Main
Fund's office in Toronto, Ontario, or in such other place in Canada as a
majority of the members of such committee may authorize from time to time.
Committee meetings may be conducted in person, telephonically, or through
the use of other communications equipment by means of which all
individuals participating in a meeting can communicate with each other.
All approvals, disapprovals, votes, determinations and other actions of
any committee will be authorized by a majority of the members of the
committee present and voting at the applicable meeting or by the written
consent of all of the committee's members. The committee shall appoint a
chairman and a secretary from amongst its members. The secretary shall
prepare and circulate minutes of each committee meeting as soon as
practicable.
(b) Meetings of the L.P. Advisory Committee may be called by any two
members thereof or the Main Fund GP upon not less than five (5) Business
Days' notice or such shorter period of time as may be agreed to by the
committee. A quorum for a meeting of the L.P. Advisory Committee shall be
a majority of its members. If within one (1) hour of the time appointed
for a meeting of a committee, a quorum is not present, the meeting shall
stand adjourned to the same hour on the second Business Day following the
date of such meeting at the same place. If at the adjourned meeting such
quorum is not present within one (1) hour of the time appointed for such
adjourned meeting, such meeting shall stand adjourned to the same hour on
the second Business Day following the date of meeting at the same place.
If at the second adjourned meeting such quorum is not present, the quorum
for the adjourned meeting shall consist of the members of the committee
then present.
17.3 JOINT MEETINGS
It is acknowledged and agreed that pursuant to Section 6.4 and to the VPI Funds
Partnership Agreements certain matters (each, a "SPECIAL MATTER") require
approval by Ordinary Resolution, Special Resolution or Extraordinary Resolution
passed by the Voting Parallel Investors. Each such Special Matter shall be dealt
with in the following manner:
(a) the Main Fund GP may at any time call a meeting of the Voting Parallel
Investors (a "JOINT MEETING") for the purpose of considering one or more
Ordinary Resolutions, Special Resolutions and/or Extraordinary Resolutions
in respect of which the approval of the Voting Parallel Investors is or
may be required as contemplated by the VPI Funds Partnership Agreements;
(b) any of the general partners of the VPI Funds may, by written notice to
the Main Fund GP, require the Main Fund GP to call a Joint Meeting for the
purpose of considering one or more Ordinary Resolutions, Special
Resolutions and/or Extraordinary Resolutions in respect of which the
approval of the Voting Parallel Investors is or may be required, as
contemplated by the VPI Funds Partnership Agreements;
(c) the Limited Partners of one or more VPI Funds holding, in the
aggregate, at least 20% of the issued and outstanding Units of the VPI
Funds may, by written notice to the
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general partners of each of their respective VPI Funds (containing a
summary of the Special Matter to be considered by the Voting Parallel
Investors and the form of the related Ordinary Resolution, Special
Resolution or Extraordinary Resolution), require such general partners to
cause the Main Fund GP to call a Joint Meeting to consider such Special
Matter and, upon receipt of notice to that effect from such general
partners, the Main Fund GP shall call such Joint Meeting to be held within
21 days following receipt by the Main Fund GP of such last-mentioned
notice;
(d) notice of any Joint Meeting will be delivered by the Main Fund GP to
each of the Voting Parallel Investors no less than three nor more than ten
(10) days prior to the date of the Joint Meeting. Such notice shall
include the date, time and place of the Joint Meeting, a brief explanation
of each Special Matter to be considered at the Joint Meeting and the text
of each related Ordinary Resolution, Special Resolution or Extraordinary
Resolution;
(e) Joint Meetings shall be held at such place in the City of Toronto or
other city in Canada as the Main Fund GP may designate or, in the event of
a Joint Meeting called by Limited Partners in the circumstances described
in Section 17.3(c), at such place in the City of Toronto as such Limited
Partners may designate in the written notice delivered by them;
(f) Joint Meetings shall be conducted in a manner determined by the Main
Fund GP having regard to rules of conduct customary for the holding of
meetings of shareholders of a corporation regarding such matters as
adjournments, amendments, voting and proxies;
(g) a quorum at any Joint Meeting shall be constituted by two or more
Voting Parallel Investors present in person or by proxy and holding or
representing at least 25% of the aggregate of the Affiliate Funds' Maximum
Commitment plus the Commitments of all of the Investors (excluding the
Limited Partners of the Affiliate Funds and of the QLP Fund). For the
purposes of calculating the foregoing aggregate Commitments, the
Commitment of each of the Limited Partners of the Main Fund shall be
deemed to be equal to its Commitment to the QLP Fund. For the purposes of
determining the Commitment of any Voting Parallel Investor present at such
Joint Meeting:
(i) the Commitment of each of the Limited Partners of each Affiliate
Fund shall be such Limited Partner's actual Commitment calculated as
at the date of delivery of the notice of such Joint Meeting; and
(ii) in the event that the aggregate actual Commitments of all of
the Limited Partners of all of the Affiliate Funds is less than $35
million, NBF shall be deemed to have made an additional Commitment
hereunder equal to the deficiency;
(h) at each Joint Meeting:
(i) each Voting Parallel Investor (other than a Fund) shall be
entitled to cast one vote for each $1,000 Commitment made by it;
(ii) the number of votes that each VPI Fund (other than the Main
Fund) shall be entitled to cast shall be equal to the number of
Units represented by instruments delivered by the Limited Partners
of such Fund to the general partner thereof
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indicating the manner in which such VPI Fund is to vote in respect
of each Special Matter to be considered at such Joint Meeting;
(iii) the number of votes that the Main Fund shall be entitled to
cast shall be equal to 3.3 multiplied by the number of Units
represented by instruments delivered by the Limited Partners of the
Main Fund to Main Fund GP indicating the manner in which the Main
Fund is to vote in respect of each Special Matter to be considered
at such Joint Meeting; and
(iv) in the event that the aggregate actual Commitments made by the
Limited Partners of the Affiliate Funds, calculated as at the date
of delivery of the notice of such Joint Meeting, is less than $35
million, for the purposes of voting in respect of each Special
Matter the Commitment of NBF shall be deemed to be increased by the
difference between $35 million and the aggregate amount of such
actual Commitments;
(i) the general partner of each VPI Fund shall cast the votes which it is
entitled to cast in accordance with the indications given by each of its
Limited Partners pursuant to the instruments received by it in connection
with the Joint Meeting;
(j) a Special Matter considered at a Joint Meeting shall be deemed, for
the purposes of each of the VPI Funds Partnership Agreements, to have been
approved by:
(i) Special Resolution if, and only if, Voting Parallel Investors
holding not less than 66-2/3% of the aggregate number of votes
entitled to be voted thereon at such Joint Meeting, or an
adjournment or postponement thereof, voted in favour of such Special
Matter (a "SPECIAL RESOLUTION");
(ii) Ordinary Resolution if, and only if, Voting Parallel Investors
holding not less than 50% of the aggregate number of votes entitled
to be voted thereon at such Joint Meeting, or an adjournment or
postponement thereof, voted in favour of such Special Matter (an
"ORDINARY RESOLUTION"); or
(iii) Extraordinary Resolution if, and only if, Voting Parallel
Investors holding not less than 75% of the aggregate number of votes
entitled to be voted thereon at such Joint Meeting, or an
adjournment or postponement thereof, voted in favour of such Special
Matter (an "EXTRAORDINARY RESOLUTION");
(k) at the option of the Main Fund GP, any Special Matter or other matter
to be approved by the Voting Parallel Investors may be approved by written
resolution, in which case, in lieu of calling a Joint Meeting, the Main
Fund GP shall deliver the form of written Special Resolution, Ordinary
Resolution and/or Extraordinary Resolution to each of the Voting Parallel
Investors. The Main Fund GP shall indicate, in a letter accompanying the
form of written resolution, the date by which such resolution must be
executed and returned by the Voting Parallel Investors, which date shall
be no less than seven days following the date of delivery of such letter.
A Special Matter referred to in this Section 17.3(k) shall be deemed, for
the purposes of each of the VPI Funds Partnership Agreements to have been
approved by:
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(i) Special Resolution if, and only if, Voting Parallel Investors
holding not less than 66-2/3% of the aggregate number of votes
entitled to be voted thereon at such Joint Meeting execute a written
resolution respecting the Special Matter in one or more counterparts
(a "SPECIAL RESOLUTION");
(ii) Ordinary Resolution if, and only if, Voting Parallel Investors
holding not less than 50% of the aggregate number of votes entitled
to be voted thereon at such Joint Meeting execute a written
resolution respecting the Special Matter in one or more counterparts
(an "ORDINARY RESOLUTION"); or
(iii) Extraordinary Resolution if, and only if, Voting Parallel
Investors holding not less than 75% of the aggregate number of votes
entitled to be voted thereon at such Joint Meeting execute a written
resolution respecting the Special Matter in one or more counterparts
(an "EXTRAORDINARY RESOLUTION");
(l) forthwith following the passage or rejection of any Special
Resolution, Ordinary Resolution or Extraordinary Resolution, the Main Fund
GP and the general partners of each of the Funds shall deliver notice
thereof to each of the Parallel Investors (other than the Funds) and to
each of the Limited Partners, respectively, together with any additional
information relating thereto;
(m) in the event that the Extraordinary Resolution being considered by the
Voting Parallel Investors relates to the termination of any of the VPI
Funds (as contemplated by section 10.4 of each of the VPI Funds
Partnership Agreements), such Extraordinary Resolution shall provide for
the termination of all of the VPI Funds on the same date. In the event
that the Limited Partners of any of the VPI Funds are not being requested
to pass a Fund Extraordinary Resolution (as such term is defined in each
of the VPI Funds Partnership Agreements) in respect of the termination of
such VPI Fund, the general partner of each of such VPI Funds shall call a
meeting of its Limited Partners to consider passing such a Fund
Extraordinary Resolution at a meeting to be held prior to the Joint
Meeting at which the Extraordinary Resolution is to be considered;
(n) any Voting Parallel Investor may attend any Joint Meeting by means of
a conference call, so long as all those individuals participating in the
Joint Meeting can hear each other;
(o) the general partner of each VPI Fund shall be entitled to exercise all
voting rights of such VPI Fund hereunder; and
(p) NBF covenants and agrees to vote in respect of each Special Matter in
the same manner as it indicated in the instrument(s) referred to in
Section 17.3(i), delivered by it to the general partner of each Fund of
which it is a limited partner, in respect of such Special Matter.
17.4 TERMINATION OF VPI FUNDS
It is acknowledged and agreed that it is a condition to the termination of any
of the VPI Funds, pursuant to a resolution passed by its Limited Partners
pursuant to its limited partnership
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agreement, that a Special Resolution, Ordinary Resolution or Extraordinary
Resolution, as applicable, approving such termination shall be passed pursuant
to the provisions hereof.
ARTICLE 18 - GENERAL CONTRACT PROVISIONS
18.1 COMPLETE AGREEMENT
This Agreement and, to the extent applicable, all agreements referred to herein
contain the entire agreement between the parties in relation to subject matter
hereof and supersede any prior agreement, representation or understanding with
respect thereto.
18.2 AMENDMENTS
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by each of the
parties; provided that the Main Fund GP alone shall be entitled to, and shall,
amend Schedule 2 hereto in order to reflect any increases or decreases in
Commitments made in accordance with Section 7.3.
18.3 SUCCESSORS
Except as otherwise provided herein, this Agreement shall enure to the benefit
of and be binding upon the parties and their legal representatives, heirs,
successors and assigns. No Parallel Investor shall be entitled to transfer or
assign its interests herein without the prior written consent of the Main Fund
GP.
18.4 FURTHER ASSURANCES
Each of the parties agrees to execute and deliver such agreements, instruments
and other documents, and do and perform and cause to be done and performed such
acts and things as may be necessary or desirable in order to give full effect to
this Agreement, including, without limitation, any decisions made in accordance
with Section 2.8 relating to the acquisition, holding, exercise of rights
respecting and the sale, transfer or other disposition of Portfolio Securities.
18.5 REMEDIES
Each party acknowledges that a violation of any provision of this Agreement will
result in immediate and irreparable harm to the other parties which cannot be
compensated adequately by recovery of damages alone and agrees that, in the
event of any such violation or threatened violation, the other parties (or the
Main Fund GP on behalf of the other parties) shall, in addition to any other
rights or remedies available at law, in equity or otherwise, be entitled to
temporary and permanent injunctive relief, specific performance and other
equitable remedies.
18.6 LANGUAGE
The parties hereto confirm their express wish that this Agreement and all
documents and agreements directly or indirectly relating thereto be drawn up in
the English language.
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Les parties reconnaissent leur volonte expresse que la presente ainsi que tous
les documents et contrats s'y rattachant directment ou indirectment soient
rediges en anglais.
18.7 NOTICES
All notices, demands and other communications to be given and delivered under or
by reason of provisions under this Agreement shall be in writing and, if
properly addressed to the recipient in the manner set forth below, shall be
deemed for the purposes of this Agreement to have been delivered:
(a) on the date of actual receipt if delivered personally to the
recipient;
(b) three Business Days after mailing by first class mail, postage
prepaid;
(c) one Business Day after the date of transmission by electronic
facsimile transmission; or
(d) one Business Day after deposit with a reputable overnight courier
service.
A written document shall be deemed to be properly addressed to a party if
addressed to its address or telecopy number set forth below or in the Assumption
Agreement executed by it, or to such other address or telecopy number as it may
have indicated to the other parties hereto by notice to such other parties given
in the manner herein provided:
QLP GP AND QLP FUND NBF & CO. AND NBFCI
------------------- -------------------
EdgeStone Capital Equity Fund II-A GP, L.P. National Bank Financial & Co. Inc.
The Exchange Tower 0000 Xxxxxxxx Xxxxxx
000 Xxxx Xxxxxx Xxxx, Xxxxx 000 0xx Xxxxx
Xxxxxxx, XX X0X 1A6 Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxx X. Xxxxx, President Attention: Xxxx Xxxxxx
Telecopier: 416/860-9838 Telecopier: 514/394-4341
MAIN FUND, MAIN FUND GP, AFFILIATE FUNDS With a copy to:
----------------------------------------
EdgeStone Capital Equity Fund II-B GP, X.X. XxXxxxxx Xxxxxxxx
Xxx Xxxxxxxx Xxxxx Xx Xxxxxxx, 0000, rue Peel
000 Xxxx Xxxxxx Xxxx, Xxxxx 000 Xxxxxxxx, Xxxxxx X0x 0x0
Xxxxxxx, XX X0X 0X0
Attention: Xxxx-Xxxx Xxxxxxxx
Attention: Xxxxxx X. Xxxxx, President Telecopier: 514/875-6246
Telecopier: 416/860-9838
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US-INST FUND GP AND US-INST FUND
--------------------------------
EdgeStone Capital Equity Fund II-US-Inst. GP, L.P.
The Exchange Tower
000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxx X. Xxxxx, President
Telecopier: 416/860-9838
US FUND GP AND US FUND
----------------------
EdgeStone Capital Equity Fund II-US GP, L.P.
The Exchange Tower
000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxx X. Xxxxx, President
Telecopier: 416/860-9838
18.8 COUNTERPARTS
This Agreement may be executed in several counterparts, each of which so
executed shall be deemed to be an original and such counterparts together shall
constitute one and the same agreement and notwithstanding their date of
execution shall be deemed to be executed on the date first written above.
IN WITNESS WHEREOF the parties have duly executed this Agreement.
EDGESTONE CAPITAL EQUITY FUND II-A GP, INC., in its own
capacity and in its capacity as general partner of, and
on behalf of, EDGESTONE CAPITAL EQUITY FUND II-A GP,
L.P. in EDGESTONE CAPITAL EQUITY FUND II-A GP, L.P.'s
own capacity and in its own capacity and in its capacity
as general partner of, and on behalf of, EDGESTONE
CAPITAL EQUITY FUND II-A, L.P.
Per: /s/ Xxxxxx Xxxxx
---------------------------------------------------
Per: Xxxxxx Xxxxx
Executive Vice President
---------------------------------------------------
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EDGESTONE CAPITAL EQUITY FUND II-B GP, INC., in its own
capacity and in its capacity as general partner of, and
on behalf of, EDGESTONE CAPITAL EQUITY FUND II-B, L.P.
Per: /s/ Xxxxxx Xxxxx
---------------------------------------------------
Per: Xxxxxx Xxxxx
Executive Vice President
---------------------------------------------------
EDGESTONE CAPITAL EQUITY FUND II-B GP, INC., in its
capacity as general partner of, and on behalf of,
EDGESTONE CAPITAL EQUITY FUND II GP, L.P. in EDGESTONE
CAPITAL EQUITY FUND II GP, L.P.'s own capacity and in
its capacity as general partner of, and on behalf of,
EDGESTONE AFFILIATE 2002 EQUITY FUND II, L.P.
Per: /s/ Xxxxxx Xxxxx
---------------------------------------------------
Per: Xxxxxx Xxxxx
Executive Vice President
---------------------------------------------------
EDGESTONE CAPITAL EQUITY FUND II-US GP, INC., in its own
capacity and in its capacity as general partner of, and
on behalf of, EDGESTONE AFFILIATE NON-CANADIAN 2002
EQUITY FUND II, L.P.
Per: /s/ Xxxxxx Xxxxx
---------------------------------------------------
Per: Xxxxxx Xxxxx
Executive Vice President
---------------------------------------------------
NATIONAL BANK FINANCIAL & CO. INC.
Per: /s/ Xxxxxxxx Xxxxx
---------------------------------------------------
Per: Xxxxxxxx Xxxxx
Executive Vice President
---------------------------------------------------
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NBF CAPITAL INC.
Per: /s/ Xxxxxxxx Xxxxx
---------------------------------------------------
Per: Xxxxxxxx Xxxxx
Executive Vice President
---------------------------------------------------
EDGESTONE CAPITAL EQUITY FUND II-US MAIN GP, INC., in
its capacity as general partner of, and on behalf of,
EDGESTONE CAPITAL EQUITY FUND II-US GP, L.P. in
EDGESTONE CAPITAL EQUITY FUND II-US GP, L.P.'s own
capacity and in its capacity as general partner of, and
on behalf of, EDGESTONE CAPITAL EQUITY FUND II-US, L.P.
Per: /s/ Xxxxxx Xxxxx
---------------------------------------------------
Per: Xxxxxx Xxxxx
Executive Vice President
---------------------------------------------------
EDGESTONE CAPITAL EQUITY FUND II-US-INST. GP, INC., in
its capacity as general partner of, and on behalf of,
EDGESTONE CAPITAL EQUITY FUND II-US-INST. GP, L.P. in
EDGESTONE CAPITAL EQUITY FUND II-US-INST. GP, L.P.'s own
capacity and in its capacity as general partner of, and
on behalf of, EDGESTONE CAPITAL EQUITY FUND II-US-INST.,
L.P.
Per: /s/ Xxxxxx Xxxxx
---------------------------------------------------
Per: Xxxxxx Xxxxx
Executive Vice President
---------------------------------------------------
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SCHEDULE 1
DEFINITIONS
"A.F. CLOSING DATE" means the date upon which an Offering Affiliate Fund
completes an offering of its partnership interests.
"ACQUISITION COST" means the cost of acquisition of the Portfolio Securities
which are the subject matter of a Portfolio Transaction or the amount required
to be paid pursuant to a Portfolio Company Guarantee, as applicable.
"ADMISSION DATE" has the meaning given to it in Section 7.2.
"AFFILIATE" of a Person means any Person that would be deemed to be an
"affiliated entity" of such first-mentioned Person under Rule 45-501 promulgated
under the Securities Act (Ontario) as it exists on the date of this Agreement.
"AFFILIATE FUNDS" means, collectively, the Initial Affiliate Fund and all
Successor Affiliate Funds, and "AFFILIATE FUND" means any of the Affiliate
Funds.
"AFFILIATE FUNDS' MAXIMUM CAPITAL COMMITMENT" means $35 million.
"AGREEMENT" means this agreement and all schedules attached hereto and all
amendments and supplements hereto and thereto and all restatements and
replacements hereof and thereof.
"ASSUMPTION AGREEMENT" means an instrument in writing, in form and substance
satisfactory to the Main Fund GP, executed by:
(i) a proposed Successor Affiliate Fund, pursuant to which it agrees to
be bound by the provisions terms hereof as an Affiliate Fund;
(ii) an Affiliate of a Parallel Investor to which Portfolio Securities
are being transferred in accordance with Section 6.2, pursuant to
which such Affiliate agrees to be bound by the provisions hereof to
the same extent and in the same manner as such Parallel Investor; or
(iii) a Person which has been accepted by the Main Fund GP as a Parallel
Investor, pursuant to which such Person agrees to be bound by the
provisions hereof as a Parallel Investor,
and, in each case, accepted by the Main Fund GP.
"BASE RATE" means, on any date, the commercial lending rate of interest in
effect from time to time, expressed as an annual rate, which National Bank of
Canada quotes in Toronto as the reference rate of interest (commonly known as
"prime") to determine the rate of interest it would charge to its commercial
customers for loans in Canadian dollar funds.
"BUSINESS DAY" means a day, other than a Saturday or Sunday, which is a day upon
which chartered banks in Toronto, Ontario are open for the transaction of
business.
"CAPITAL ACCOUNT" has the meaning given to it in the QLP Fund Partnership
Agreement, the Main Fund Partnership Agreement, the US Fund Partnership
Agreement or the US-Inst Fund Partnership Agreement, as the context requires.
"CAPITAL CONTRIBUTION" has the meaning given to it in the QLP Fund Partnership
Agreement, the Main Fund Partnership Agreement, the US Fund Partnership
Agreement or the US-Inst Fund Partnership Agreement, as the context requires.
"COMMITMENT" means, as at a particular date:
(i) with respect to each Investor in a Parallel Investor that is a
limited partnership, (including each Limited Partner of a Fund), the
aggregate amount of cash contributed previously by such Investor,
and the additional amount, if any, that, pursuant to the applicable
limited partnership agreement, such Investor is then required to
contribute, as a capital contribution to such partnership (and, if
applicable, the amount deemed to have been contributed by such
Investor as a capital contribution to such partnership);
(ii) with respect to each Parallel Investor that is a limited partnership
(including each of the Funds), the aggregate Commitments of all of
the Investors in such Parallel Investor (which amount, in the case
of a party hereto, shall be set out in Schedule 2 hereto or in such
party's Assumption Agreement);
(iii) with respect to the Affiliate Funds, the Affiliate Funds' Maximum
Capital Commitment;
(iv) with respect to each Parallel Investor (including NBF, in its
capacity as a Parallel Investor hereunder), other than a Parallel
Investor that is a limited partnership, the amount of cash which
such Parallel Investor has agreed to pay in respect of Acquisition
Costs, Parallel Investor Expenses and Organizational Expenses (which
amount, in the case of a party hereto, shall be set out in Schedule
2 hereto or in such party's Assumption Agreement); and
(v) for purposes of Article 7, with respect to a Limited Partner of the
QLP Fund or the Main Fund has the meaning set out in the QLP Fund
Partnership Agreement or the Main Fund Partnership Agreement, as the
case may be.
"DISTRIBUTABLE LOCK-UP SECURITIES" has the meaning given to it in Section 6.4.
"EXERCISE NOTICE" has the meaning given to it in Section 7.2.
"EXPENSE NOTICE" has the meaning given to it in Section 5.2
"EXTRAORDINARY RESOLUTION" has the meanings given to it in Section 17.3.
-2-
"FUND OPTION" has the meaning given to it in Section 7.2.
"FUNDS" means, collectively, the QLP Fund, the Main Fund, the US-Inst Fund, the
US Fund, the Initial Affiliate Fund and the Successor Affiliate Funds, and
"FUND" means any of the Funds.
"FUNDS' GPS" means, collectively, the QLP Fund GP, the Main Fund GP, the US-Inst
Fund GP, the US Fund GP, the Initial Affiliate Fund GP and the general partner
of each of the Successor Affiliate Funds.
"INDEMNIFICATION EXPENSES" means, subject to section 6.7 of each of the QLP Fund
Partnership Agreement, the Main Fund Partnership Agreement, the US-Inst Fund
Partnership Agreement and the US Fund Partnership Agreement, Section 11.1 of
this Agreement and the comparable provisions of each Parallel Investor
Agreement, all expenses relating to litigation and indemnification incurred with
respect to the activities of the Parallel Investors (including their investments
in Portfolio Companies) contemplated by this Agreement, the Partnership
Agreements or any other Parallel Investor Agreement.
"INDEMNIFIED PARTY" means the QLP GP, the Main Fund GP, the US-Inst Fund GP, the
US Fund GP, the Manager, the members of any investment committee or advisory
committee of any Parallel Investor, the L.P. Advisory Committee members, each
individual appointed to serve as any Parallel Investor's nominee on the board of
directors (or similar governing body) of a Portfolio Company (or a direct or
indirect subsidiary thereof) or any committee of such board or governing body,
and the direct and indirect shareholders and partners of the QLP GP, the Main
Fund GP, the US-Inst Fund GP, the US Fund GP, the Manager, and, in each case,
their respective directors, officers, partners, employees, agents, members,
advisors, representatives and Affiliates.
"INITIAL CANADIAN AFFILIATE FUND GP" means EdgeStone Capital Equity Fund II GP,
L.P., a limited partnership formed under the laws of the Province of Ontario.
"INITIAL CANADIAN AFFILIATE FUND PARTNERSHIP AGREEMENT" means the amended and
restated limited partnership agreement dated April 28, 2003 among the Initial
Canadian Affiliate Fund GP, the Limited Partners of the Initial Canadian
Affiliate Fund, the Class B limited partners of the Initial Canadian Affiliate
Fund and others, governing the Initial Canadian Affiliate Fund, as the same may
be amended or amended and restated from time to time.
"INITIAL NON-CANADIAN AFFILIATE FUND GP" means EdgeStone Capital Equity Fund
II-US GP, Inc., a corporation incorporated under the laws of Canada, and its
successors and assigns.
"INITIAL NON-CANADIAN AFFILIATE FUND PARTNERSHIP AGREEMENT" means the amended
and restated limited partnership agreement dated April 28, 2003 among the
Initial Non-Canadian Affiliate Fund GP, the Limited Partners of the Initial
Non-Canadian Affiliate Fund, the Class B limited partners of the Initial
Non-Canadian Affiliate Fund and others, governing the Initial Non-Canadian
Affiliate Fund, as the same may be amended or amended and restated from time to
time.
"INVESTMENT NOTICE" has the meaning given to it in Section 5.1.
"INVESTORS" means, collectively:
-3-
(i) NBF, in its capacity as a Parallel Investor;
(ii) the Limited Partners;
(iii) the limited partners in each Parallel Investor (other than the
Funds) that is a limited partnership; and
(iv) any Parallel Investor (other than NBF, the Funds or any Parallel
Investor that is a limited partnership) in its capacity as a
Parallel Investor,
and "INVESTOR" means any of the Investors.
"JOINT MEETING" has the meaning given to it in Section 17.3(a).
"JUNE PARALLEL INVESTOR AGREEMENT" has the meaning given to it in the recitals
to this Agreement.
"LIMITED PARTNERS" means, collectively, the limited partners of each of the
Funds excluding any Class B limited partners thereof, if any, and "LIMITED
PARTNER" means any of the Limited Partners.
"LOCK-UP AGREEMENT" means any agreement entered into by a Fund at the request of
a participating underwriter in connection with any registration or public
offering of an issuer's securities, pursuant to which such Fund agrees, on its
own behalf and/or on behalf of its Limited Partners, not to effect any sale,
transfer or other disposition of securities of such issuer held by, or on behalf
of, such Fund during a fixed period following the effective date of such
registration or offering.
"LOSSES" means, in respect of any matter, all claims, demands, proceedings,
losses, damages, liabilities, deficiencies, costs and expenses arising as a
consequence of such matter including, without limitation, all legal and other
professional fees and disbursements, interest, penalties and amounts paid in
settlement, but excluding loss of profit.
"L.P. ADVISORY COMMITTEE" has the meaning given to it in Section 17.1.
"MAIN FUND COMMITMENT" means a Limited Partner's Commitment to the Main Fund.
"MAIN FUND UNIT" means a Class A Unit issued by the Main Fund representing a
Class A limited partnership interest in the Main Fund.
"MAIN FUND GP" means EdgeStone Capital Equity Fund II-B GP, Inc., a corporation
incorporated under the laws of Canada, and its successors and assigns.
"MAIN FUND PARTNERSHIP AGREEMENT" means the amended and restated limited
partnership agreement dated as of April 28, 2003 among the Main Fund GP, the
Class A Limited Partners of the Main Fund and the Class B Limited Partners of
the Main Fund, governing the Main Fund, as the same may be amended or amended
and restated from time to time.
"MANAGEMENT SERVICES AGREEMENTS" means the management services agreements
between the Manager, on the one hand, and any of the Main Fund GP, in its own
capacity, the Main Fund GP on
-4-
behalf of any Fund, the QLP Fund GP on behalf of the QLP Fund, the US-Inst Fund
GP on behalf of the US-Inst Fund, the US Fund GP on behalf of the US Fund and
any Parallel Investor, on the other hand, pursuant to which the Manager agrees
to provide certain management services to the other parties thereto, as the same
may be amended or amended and restated from time to time, and "MANAGEMENT
SERVICES AGREEMENT" means any of the Management Services Agreements.
"MANAGER" means EdgeStone Capital Partners, L.P., a limited partnership formed
under the laws of Ontario, and its successors and assigns.
"NBF'S BACKSTOP COMMITMENT" means the agreement of NBF contained in Sections 4.1
and 4.2.
"NBF'S BACKSTOP COMMITMENT AMOUNT" means, as at a particular date, the amount
equal to:
(i) $35 million,
minus
(ii) the aggregate Commitments of the Limited Partners of all of the
Affiliate Funds (other than an Offering Affiliate Fund),
minus
(iii) the aggregate amount previously paid by NBF pursuant to Sections 4.1
and 4.2,
plus
(iv) the aggregate Acquisition Costs initially paid by NBF in respect of
the Portfolio Securities previously transferred by NBF to the
Affiliate Funds pursuant to Sections 4.4 and 4.5,
plus
(v) the amounts previously returned to NBF pursuant to Section 2.6(b)
and paid to NBF pursuant to Section 8.1(f)(ii)(D) excluding the
amount referred to in Section 8.1(f)(ii)(B).
"NBF'S EXPENSE BACKSTOP" means, as at the date of delivery of an Expense Notice,
the amount equal to:
(i) the Affiliate Funds' Pro Rata Share of the Parallel Investor
Expenses and Organizational Expenses required to be paid by all of
the Parallel Investors pursuant to such Expense Notice,
multiplied by:
(ii) the fraction (expressed in percentage terms) determined by dividing:
-5-
(a) the difference between the Affiliate Funds' Maximum Capital
Commitment and the aggregate Commitments of the Limited
Partners of all of the Affiliate Funds (other than an Offering
Affiliate Fund),
by
(b) the Affiliate Funds' Maximum Capital Commitment.
"NEW LIMITED PARTNERSHIP" has the meaning given to it in the QLP Fund
Partnership Agreement, the Main Fund Partnership Agreement, the US Fund
Partnership Agreement or the US-Inst Fund Partnership Agreement, as applicable.
"OFFERING AFFILIATE FUND" means:
(i) on the date hereof, the Initial Affiliate Fund; or
(ii) as at a particular date following the Initial Affiliate Fund's final
A.F. Closing Date, the Successor Affiliate Fund, if any, which is
then offering partnership interests to Investors.
"OPTIONOR" has the meaning given to it in Section 7.2.
"ORDINARY RESOLUTION" has the meanings given to it in Section 17.3.
"ORGANIZATIONAL EXPENSES" means all expenses (including, without limitation,
travel, filing, printing, legal and accounting fees and expenses) reasonably
incurred in connection with the organization and funding of the Parallel
Investors and the Main Fund GP, the QLP GP, the US Fund GP and the US-Inst Fund
GP, excluding any private placement fees (and expenses related thereto) paid to
third parties in connection with the funding of any Parallel Investor.
"ORIGINAL PARALLEL INVESTOR AGREEMENT" has the meaning given to it in the
recitals to this Agreement.
"PARALLEL INVESTOR AGREEMENTS" means, collectively, such agreements as may be
entered into to establish Parallel Investors or pursuant to which Parallel
Investors have agreed to invest in all Portfolio Companies, as such agreements
may be amended or amended and restated from time to time.
"PARALLEL INVESTOR EXPENSES" means all expenses directly related to the
activities of the Parallel Investors (including their investments in Portfolio
Companies) contemplated by this Agreement, the Partnership Agreements or any
other Parallel Investor Agreement, including, without limitation:
(i) all expenses of legal counsel, accountants, professional advisors
and service providers;
(ii) all insurance premiums;
-6-
(iii) all Indemnification Expenses and expenses relating to the
enforcement and protection of rights relating to any Parallel
Investor;
(iv) all expenses incurred by the Main Fund GP or the QLP GP or by the
Manager on behalf of any Parallel Investor in connection with
locating, identifying and pursuing any investment for the Parallel
Investors, whether or not consummated, and of holding and disposing
of Portfolio Securities; and
(v) all expenses of any Parallel Investor's advisory or investment
committee incurred in accordance with the applicable Parallel
Investor Agreement or any similar agreement entered into between any
Parallel Investor and the Manager,
but excluding any expenses referred to above which:
(vi) the Main Fund GP, the US Fund GP, the QLP GP, the US-Inst Fund GP or
the Manager has agreed to pay for its own account pursuant to any of
the Management Services Agreements;
(vii) relate particularly to a Parallel Investor and are required to be
borne exclusively by such Person, as determined by the Main Fund GP;
or
(viii) are borne or reimbursed by any Portfolio Company, including amounts
reimbursed as described under clause (g) of the definition of
"Portfolio Company Fees" in the Management Services Agreement
respecting each of the QLP Fund, the Main Fund, the US Fund and the
US-Inst Fund,
and excluding:
(ix) Organizational Expenses;
(x) ordinary overhead and administrative expenses which are payable by
the General Partner pursuant to applicable provisions of any
Partnership Agreement or other Parallel Investor Agreement; and
(xi) any management fees payable by any Parallel Investor (including,
without limitation, NBF or any Fund) and/or the Main Fund GP, the
QLP Fund GP, the US Fund GP or the US-Inst Fund GP to the Manager
pursuant to any of the Management Services Agreements.
"PARALLEL INVESTORS" means, collectively, the Affiliate Funds, the QLP Fund, the
Main Fund, the US Fund, the US-Inst Fund and
(i) any fund established for the purpose of enabling Persons acceptable
to the General Partner (who may include employees, officers and
directors of the Manager or the General Partner and other Persons)
to invest in parallel with the Main Fund and other Parallel
Investors; and
(ii) all other Persons,
-7-
that agree to invest in all Portfolio Companies pursuant to this Agreement
(including NBF and each Person which executes an Assumption Agreement), any of
the Parallel Investor Agreements or a parallel investment agreement among
Parallel Investors, and "Parallel Investor" means any of the Parallel Investors,
provided that, for purposes of this Agreement, the Main Fund and the QLP Fund
together shall be deemed to be one Parallel Investor.
"PARTNERSHIP AGREEMENTS" means, collectively, the limited partnership agreements
governing each of the Funds, and "Partnership Agreement" means any of the
Partnership Agreements.
"PERSON" means any individual, partnership, limited partnership, corporation,
limited liability company, unincorporated organization or association, trust
(including the trustees thereof, in their capacity as such), government (or
agency or political subdivision thereof) or other entity.
"PORTFOLIO COMPANY" means, at any time, any Person which has been identified in
an Investment Notice as being the subject matter of a proposed Portfolio
Transaction and in which any Fund has invested (other than pursuant to a Short
Term Investment) or committed to invest at that time pursuant to this Agreement
or a Parallel Investor Agreement, whether such investment or commitment is
direct or indirect and whether such investment or commitment is certain or
contingent.
"PORTFOLIO COMPANY FEES" means:
(i) all monitoring fees, consulting fees, directors' fees and other
similar fees received by the Main Fund GP, the QLP GP, the US-Inst
Fund GP, the US Fund GP, the Manager, or any of their respective
Affiliates, shareholders, partners, principals, members, officers,
directors or employees from Portfolio Companies directly related to
the Parallel Investors' investment therein;
(ii) the proceeds from any options, warrants and other rights to purchase
securities of any Portfolio Companies received by the Main Fund GP,
the QLP GP, the US-Inst Fund GP, the US Fund GP, the Manager, or
their respective Affiliates, shareholders, partners, principals,
members, officers, directors or employees;
(iii) all breakup fees and litigation proceeds received by the Main Fund
GP, the QLP GP, the US-Inst Fund GP, the US Fund GP, the Manager or
their respective Affiliates, shareholders, partners, principals,
members, officers, directors or employees from transactions which
are intended to be consummated by the Parallel Investors but which
are not consummated by the Parallel Investors; and
(iv) all funding fees, working fees, commitment fees, closing fees and
any other fees and payments received by the Main Fund GP, the QLP
GP, the US-Inst Fund GP, the US Fund GP, the Manager or their
respective Affiliates, shareholders, partners, principals, members,
officers, directors or employees from Portfolio Companies, which are
directly related to the Parallel Investors' investment therein and
which are not otherwise specifically referred to in paragraph (i),
(ii) or (iii) above,
(provided that the fees referred to in paragraphs (i), (ii), (iii) and
(iv) above shall not be more than those generally charged by arm's-length
third parties providing similar services
-8-
in the applicable market sector at the applicable time in the applicable
circumstances), but not including:
(v) any fees, payments, options, warrants or rights to purchase
securities (or proceeds therefrom) not received in connection with
the investment or proposed investment by the Parallel Investors in
such Portfolio Companies (and, for greater certainty, Portfolio
Company Fees shall not include any fees, payments, options, warrants
or rights to purchase securities received by the Affiliates,
shareholders, partners, principals, members, officers, directors or
employees of the Main Fund GP, the QLP GP, the US-Inst Fund GP, the
US Fund GP, or the Manager from Portfolio Companies in connection
with any activities not related to the investment by the Parallel
Investors in such Portfolio Company, such as merger and acquisition
consulting fees, fiscal advisory fees, and commissions and fees
relating to financings in which the Parallel Investors do not
participate);
(vi) any options, warrants or other rights to purchase securities (or the
proceeds therefrom) of Portfolio Companies received by the Funds and
in turn distributed to the partners thereof, or held or received by
any Parallel Investor in its capacity as such;
(vii) any amount received by the Main Fund GP, the QLP GP, the US-Inst
Fund GP, the US Fund GP, the Manager or their respective Affiliates,
shareholders, partners, principals, members, officers, directors or
employees from Portfolio Companies:
(A) as reimbursement for out-of-pocket expenses directly related
to such Portfolio Company; or
(B) in connection with services rendered to any Portfolio Company
which are not directly related to the Parallel Investors'
investment therein, such as merger and acquisition consulting
fees, fiscal advisory fees, and commissions and fees relating
to financings in which the Parallel Investors do not
participate; and
(viii) any fees, proceeds, payments, options, warrants or rights to
purchase securities received by Canada Pension Plan Investment
Board, National Bank Financial & Co. Inc. or NBF Capital Inc. or any
of their respective Affiliates which are received in connection with
activities or relationships unrelated to the interests of each of
National Bank Financial & Co. Inc. and Canada Pension Plan
Investment Board and their respective Affiliates in the Manager or
in the General Partner.
"PORTFOLIO COMPANY GUARANTEE" means a guarantee by the Parallel Investors of the
obligations of a Portfolio Company (or any direct or indirect subsidiaries
thereof).
"PORTFOLIO SECURITIES" means securities of a Portfolio Company purchased
pursuant to a Portfolio Transaction or otherwise held by a Parallel Investor in
accordance with this Agreement, but excluding Short Term Investments.
-9-
"PORTFOLIO TRANSACTION" means a transaction in which the QLP Fund is permitted
to participate pursuant to the QLP Fund Partnership Agreement or the Main Fund
is permitted to participate pursuant to the Main Fund Partnership Agreement and
whereby Parallel Investors acquire Portfolio Securities or provide, or make
payments under, Portfolio Company Guarantees pursuant to this Agreement.
"PRO RATA SHARE" means, as of the date of the determination:
(i) in respect of the QLP Fund and the Main Fund, collectively, the
fraction (expressed in percentage terms) determined by dividing (x)
the aggregate Commitments all of the QLP Fund's Limited Partners by
(y) the Total Commitment;
(ii) in respect of the Affiliate Funds, the fraction (expressed in
percentage terms) determined by dividing (x) the Affiliate Funds'
Maximum Capital Commitment by (y) the Total Commitment;
(iii) in respect of any other Parallel Investor that is a limited
partnership (including an individual Affiliate Fund), the fraction
(expressed in percentage terms) determined by dividing (x) the
aggregate Commitments of the Investors in such partnership by (y)
the Total Commitment;
(iv) in respect of any Parallel Investor (including NBF) that is not a
limited partnership, the fraction (expressed in percentage terms)
determined by dividing (x) the Commitment of such Parallel Investor
by (y) the Total Commitment; and
(v) as between the Main Fund and the QLP Fund, as may be determined from
time to time by the Main Fund GP and the QLP GP, acting reasonably.
"PROPORTION" means, as of the date of the determination, the fraction (expressed
in percentage terms) determined by dividing (x) the QLP Fund Commitment then
being made by the Parallel Investor by (y) such Parallel Investor's Commitment
hereunder calculated prior to giving effect to any reduction pursuant to Section
7.1.
"QLP FUND COMMITMENT" means a Limited Partner's Commitment to the QLP Fund.
"QLP FUND PARTNERSHIP AGREEMENT" means the amended and restated limited
partnership agreement dated as of April 28, 2003 among the QLP GP, the Limited
Partners of the QLP Fund and others, governing the QLP Fund, as the same may be
amended or amended and restated from time to time.
"QLP FUND UNIT" means a unit issued by the QLP Fund representing a limited
partnership interest in the QLP Fund.
"QLP GP" means EdgeStone Capital Equity Fund II-A GP, L.P., a limited
partnership formed under the laws of Ontario, and its successors and assigns.
"SHORT TERM INVESTMENTS" means commercial paper, governmental obligations, money
market instruments, certificates of deposit and other similar obligations and
securities, in each case having
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a minimum rating of no less than the highest two ratings issued by the Dominion
Bond Rating Service and the Canadian Bond Rating Service, or similar U.S. bond
rating institutions and maturing in one year or less at the time of investment
by a Parallel Investor; provided that such obligation or security is a
"specified property" (as such term is defined in Section 5100(1) of the
regulations to the Tax Act).
"SPECIAL APPROVAL" means approval by the Voting Parallel Investors given by
means of a Special Resolution.
"SPECIAL MATTER" has the meaning given to it in Section 17.3.
"SPECIAL RESOLUTION" has the meanings given to it in Section 17.3.
"SUCCESSOR AFFILIATE FUND" means any fund:
(i) which is established by any Person as a successor to any of the
Affiliate Funds for the purpose of investing in parallel with the
Main Fund or the QLP Fund in all Portfolio Securities;
(ii) the participants in which are primarily employees of NBF and/or any
of their Affiliates; and
(iii) which has become a party to this Agreement by executing and
delivering an Assumption Agreement.
"TOTAL COMMITMENT" means the aggregate of:
(i) the Affiliate Funds' Maximum Capital Commitment, plus
(ii) the Commitments of all of the Investors (excluding the Limited
Partners of the Affiliate Funds and the Limited Partners of the Main
Fund).
"UNIT" means a Class A unit issued by a Fund and, for the purposes of this
definition, each Limited Partner of an Affiliate Fund shall be deemed to have
been issued one (1) Class A unit in such Affiliate Fund for each $1,000
Commitment made by such Limited Partner to such Affiliate Fund.
"US FUND PARTNERSHIP AGREEMENT" means the amended and restated limited
partnership agreement dated as of April 28, 2003 among the US Fund GP, the
Limited Partners of the US Fund and others, governing the US Fund, as the same
may be amended or amended and restated from time to time.
"US FUND UNIT" means a unit issued by the US Fund representing a limited
partnership interest in the US Fund.
"US FUND GP" means EdgeStone Capital Equity Fund II-US GP, L.P. a limited
partnership formed under the laws of Ontario and its successors and assigns.
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"US-INST FUND PARTNERSHIP AGREEMENT" means the limited partnership agreement
dated as of April 28, 2003 among the US-Inst Fund GP, the Limited Partners of
the US-Inst Fund and others, governing the US-Inst Fund, as the same may be
amended or amended and restated from time to time.
"US-INST FUND UNIT" means a unit issued by the US-Inst Fund representing a
limited partnership interest in the US-Inst Fund.
"US-INST FUND GP" means EdgeStone Capital Equity Fund II-US-Inst. GP, L.P. a
limited partnership formed under the laws of Ontario and its successors and
assigns.
"VOTING PARALLEL INVESTORS" means all of the VPI Funds and all other Parallel
Investors, other than the QLP Fund.
"VPI FUNDS" means, collectively all of the Funds, other than the QLP Fund, and
"VPI FUND" means any of the VPI Funds.
"VPI FUNDS PARTNERSHIP AGREEMENTS" means, collectively, the limited partnership
agreements of each of the VPI Funds, as the same may be amended or amended and
restated from time to time.
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