<\/p>\nXII. MISCELLANEOUS ………………………………………. 51
\n ————-
\nSection 12.1 Registration of Securities …………………………… 51
\n ————————–
\nSection 12.2 Entire Agreement ……………………………………. 51
\n —————-
\nSection 12.3 Voting; Amendments ………………………………….. 51
\n ——————
\nSection 12.4 Severability ……………………………………….. 52
\n ————
\nSection 12.5 Notices ……………………………………………. 52
\n ——-
\nSection 12.6 Heirs and Assigns; Execution …………………………. 52
\n —————————-
\nSection 12.7 Waiver of Partition …………………………………. 53
\n ——————-
\nSection 12.8 Power of Attorney …………………………………… 53
\n —————–
\nSection 12.9 Headings …………………………………………… 53
\n ——–
\nSection 12.10 Further Actions …………………………………….. 53
\n —————
\nSection 12.11 Gender, Etc…………………………………………. 53
\n ————
\nSection 12.12 Tax Matters Partner …………………………………. 53
\n ——————-
\nSection 12.13 Applicable Law ……………………………………… 54
\n ————–<\/p>\n
Schedule 1 ………………………………………………………… 56
\n<\/c><\/c><\/s><\/table>\n
iii<\/p>\n
AGREEMENT OF
\n LIMITED PARTNERSHIP OF
\n @VENTURES III, L.P.<\/p>\n
AGREEMENT OF LIMITED PARTNERSHIP dated as of August 7, 1998 (the
\n“Agreement”), by and among @Ventures Partners III, LLC (referred to as the
\n“General Partner”) and the undersigned limited partners (together with any other
\nlimited partner which may hereafter be admitted referred to as the “Limited
\nPartners”). The General Partner and the Limited Partners are sometimes
\ncollectively referred to herein as the “Partners” and individually as a
\n“Partner”. Definitions of certain terms used in this Agreement are contained
\nin Article I.<\/p>\n
AGREEMENT
\n ———<\/p>\n
In consideration of the premises and for other good and valuable
\nconsideration, the receipt and sufficiency of which are hereby acknowledged, the
\nparties hereto agree as follows:<\/p>\n
I.<\/p>\n
DEFINITIONS
\n ———–<\/p>\n
As used herein, the following terms have the following meanings:<\/p>\n
@Ventures III:
\n————- <\/p>\n
@Ventures Partners III, LLC, a Delaware limited liability company, or any
\n successor general partner of the Partnership.<\/p>\n
Accredited Investor:
\n——————- <\/p>\n
An investor which qualifies as an “accredited investor” as defined in
\n Regulation Section 230.501 of Regulation D promulgated under the Securities
\n Act.<\/p>\n
Act:
\n— <\/p>\n
The Delaware Revised Uniform Limited Partnership Act, as amended from time
\n to time.<\/p>\n
Adjusted Capital Account Deficit:
\n——————————– <\/p>\n
With respect to any Partner, the deficit balance, if any, in such Partner’s
\n Capital Account as of the end of the relevant fiscal year or other
\n accounting period determined after (i) crediting to such Capital Account
\n any amounts which such Partner is obligated to restore thereto hereunder or
\n is deemed to be obligated to restore thereto pursuant to the penultimate
\n sentences of <\/p>\n
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury Regulations and
\n (ii) debiting to such Capital Account the items described in Sections
\n 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations. The
\n foregoing definition of Adjusted Capital Account Deficit is intended to
\n comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury
\n Regulations and shall be interpreted consistently therewith.<\/p>\n
Affiliates:
\n———- <\/p>\n
With respect to any person, any officer, director, employee or general
\n partner of, or any person that directly or indirectly through one or more
\n intermediaries controls, is controlled by or is under common control with,
\n such person. The General Partner and its individual members shall all be
\n deemed Affiliates of one another.<\/p>\n
Assignee:
\n——– <\/p>\n
As defined in Section 8.3.<\/p>\n
Break-up Fee:
\n———— <\/p>\n
Any fee, reimbursement or other form of compensation payable by a third
\n party as a result of the failure to consummate an investment.<\/p>\n
Bridge Financing:
\n—————- <\/p>\n
As defined in Section 4.1.<\/p>\n
Business Day:
\n———— <\/p>\n
Any day, excluding Saturday, Sunday and any other day on which commercial
\n banks in Boston, Massachusetts are authorized or required by law not to be
\n open for business.<\/p>\n
CMGI:
\n—- <\/p>\n
CMG Information Services, Inc., a Delaware corporation.<\/p>\n
CMGI Funds:
\n———- <\/p>\n
The Prior Funds and any other corporation, partnership or limited liability
\n company organized by CMGI in order to facilitate its co-investment
\n obligation under Section 7.4 hereof.<\/p>\n
2<\/p>\n
Capital Account:
\n————— <\/p>\n
As defined in Section 3.2.<\/p>\n
Capital Commitment:
\n—————— <\/p>\n
As defined in Section 3.1.<\/p>\n
Capital Contribution:
\n——————– <\/p>\n
As defined in Section 3.1.<\/p>\n
Capital Contribution Allocable to Liquidated Portfolio Securities:
\n—————————————————————– <\/p>\n
With respect to any Partner or class of Partners as of any time of
\n determination, that portion of the Capital Contributions of such Partner or
\n Partners equal to the cost basis of Portfolio Securities that have been
\n liquidated or otherwise disposed of. Capital Contributions Allocable to
\n Liquidated Portfolio Securities shall include (i) the unreimbursed cost to
\n the Partnership of acquiring, holding and selling Portfolio Securities,
\n (ii) any Deemed Portfolio Loss and (iii) that portion of the expenses of
\n the Partnership described in Section 6.5.A(1) that is equal to the ratio of
\n the cost basis of such liquidated Portfolio Security to the total Capital
\n Commitments of the Partnership (provided, however, that in the case of the
\n last investment by the Partnership in a Portfolio Security, any such
\n expenses that have not previously been allocated shall be allocated in
\n their entirety to such last investment for purposes of determining the
\n Capital Contribution of the Partners allocable to such Portfolio Security).
\n For the purposes of Section 5.2B(1) Capital Contributions Allocable to
\n Liquidated Portfolio Securities shall be reduced by any Deemed Portfolio
\n Loss previously distributed with respect to that security pursuant to
\n Section 5.2B(1).<\/p>\n
Capital Contribution Allocable to Portfolio Securities:
\n—————————————————— <\/p>\n
With respect to any Partner or class of Partners as of any time of
\n determination, (i) that portion of the Capital Contributions of such
\n Partner or Partners that have been invested in Portfolio Securities,
\n including the unreimbursed cost to the Partnership of acquiring, holding
\n and selling Portfolio Securities (to the extent not paid by break-up and
\n other fees as provided in Sections 6.5.E and 6.5.F), and (ii) that portion
\n of the expenses of the Partnership described in Section 6.5.A(1) that is
\n equal to the ratio of the cost basis of Portfolio Securities to the total
\n Capital Commitments of the Partnership (provided, however, that in the case
\n of the last investment by the Partnership in a Portfolio Security, any such
\n expenses that have not previously been allocated shall be allocated in
\n their entirety to such last investment for purposes of determining the
\n Capital Contribution of the Partners allocable to such Portfolio Security).<\/p>\n
3<\/p>\n
Code:
\n—- <\/p>\n
The Internal Revenue Code of 1986, as amended.<\/p>\n
Co-investment Obligation:
\n———————— <\/p>\n
As defined in Section 7.4.<\/p>\n
Committed Investment:
\n——————– <\/p>\n
An investment in Portfolio Securities in which the Partnership had an
\n obligation to invest as of the last day of the Commitment Period pursuant
\n to either (i) a commitment to make an initial investment in a Portfolio
\n Company or (ii) a commitment made at the time of the initial investment in
\n a Portfolio Company.<\/p>\n
Commitment Period:
\n—————– <\/p>\n
The period from the Initial Closing Date to four years from such date.<\/p>\n
Continuity Mode:
\n————— <\/p>\n
Status which the Limited Partners can impose upon the Partnership in the
\n event of a Triggering Event as described in Section 6.4.<\/p>\n
Deemed Portfolio Loss:
\n——————— <\/p>\n
As defined in Section 5.2.D.<\/p>\n
Defaulting Partner:
\n—————— <\/p>\n
As defined in Section 3.4.<\/p>\n
Dissolution Sale:
\n—————- <\/p>\n
Sales and liquidations by or on behalf of the Partnership of all or
\n substantially all of its assets in connection with or in contemplation of
\n the winding up of the Partnership.<\/p>\n
DOL Regulations:
\n————— <\/p>\n
The United States Department of Labor Regulations as in effect from time to
\n time.<\/p>\n
4<\/p>\n
Eighty Percent (80%) in Interest of the Limited Partners:
\n——————————————————– <\/p>\n
At any time, those Limited Partners whose aggregate Percentage of
\n Contributed Capital equals or exceeds eighty percent (80%).<\/p>\n
ERISA:
\n—– <\/p>\n
The Employee Retirement Income Security Act of 1974 as amended.<\/p>\n
ERISA Affiliate:
\n————— <\/p>\n
Any “plan sponsor” (within the meaning of Section 3(16)(B) of ERISA) with
\n respect to an ERISA Partner, and any other persons that would be aggregated
\n with any plan sponsor and treated as a single employer for purposes of
\n Section 414 of the Code or Title I of ERISA.<\/p>\n
ERISA Partner:
\n————- <\/p>\n
A Limited Partner that is either (a) an employee benefit plan as defined in
\n Section 3(3) of ERISA which is subject to Title I of ERISA (after taking
\n into account Section 4 of ERISA), or (b) a plan described in Section
\n 4975(e)(1) of the Code (after taking into account Section 4975(g) of the
\n Code).<\/p>\n
Escrow Account:
\n————– <\/p>\n
As defined in Section 5.2.F.<\/p>\n
Financial Institution:
\n——————— <\/p>\n
A bank, savings institution, trust company, insurance company, pension or
\n profit sharing trust, or similar entity which is a member of any group of
\n such persons having assets of at least $100 million, or other entity (other
\n than an individual) a substantial part of whose business consists of
\n investing in, purchasing or selling the securities of others.<\/p>\n
Follow-on Investment:
\n——————– <\/p>\n
An investment, other than a Committed Investment, in Portfolio Securities
\n of a Portfolio Company in which the Partnership holds, immediately prior
\n thereto, Portfolio Securities.<\/p>\n
Foreign Fund:
\n———— <\/p>\n
Any limited partnership or other investment vehicle formed or organized by
\n the General Partner or an Affiliate of the General Partner and designed for
\n investors formed or organized in a <\/p>\n
5<\/p>\n
jurisdiction other than the United States or any state, district or
\n territory thereof, which will coinvest with the Partnership in the
\n acquisition of Portfolio Securities.<\/p>\n
General Partner:
\n————— <\/p>\n
@Ventures Partners III, LLC or any successor general partner of the
\n Partnership.<\/p>\n
Incentive Distributions:
\n———————– <\/p>\n
As defined in the last paragraph of Section 5.2.B.<\/p>\n
Indemnitees:
\n———– <\/p>\n
As defined in Section 9.3.<\/p>\n
Initial Closing Date:
\n——————– <\/p>\n
The first date on which any Limited Partner, other than the Initial Limited
\n Partner, is admitted to the Partnership.<\/p>\n
Investment Company Act:
\n———————- <\/p>\n
The Investment Company Act of 1940, as amended.<\/p>\n
Investment Gain:
\n————— <\/p>\n
For any fiscal year or other accounting period of the Partnership, the
\n amount, if any, by which the Partnership’s gross taxable income and gains
\n with respect to interests in Portfolio Companies exceed the Partnership’s
\n gross taxable deductions and losses with respect to such interests in
\n Portfolio Companies. The following amounts shall be included in
\n determining Investment Gain: (i) any interest, dividend or similar
\n distribution with respect to Portfolio Securities, and (ii) any and all
\n payments arising out of the disposition of Portfolio Securities, including
\n without limitation any option payment, lump sum payment, principal or
\n interest paid or imputed under any promissory note, and any payment made
\n pursuant to a royalty or earn-out arrangement or similar form of contingent
\n payment. Calculations of Investment Gain shall be consistent with
\n calculations made for federal income tax purposes, except that Investment
\n Gain shall be determined (w) by taking into account unrealized gains and
\n losses with respect to Portfolio Securities that are revalued pursuant to
\n the penultimate sentence of Section 3.2 or distributed in kind hereunder,
\n (x) with reference to the book value rather than the adjusted tax basis of
\n any Portfolio Security that has been revalued pursuant to the penultimate
\n sentence of Section 3.2, (y) without regard to any amounts that are
\n specially allocated pursuant to <\/p>\n
6<\/p>\n
Sections 5.8. and 5.9, and (z) without giving effect to any adjustments
\n made pursuant to Sections 743 or 734 of the Code. Notwithstanding the
\n foregoing, Investment Gain shall not include (i) interest or dividends
\n received from, or gain received upon the disposition of, Temporary Bridge
\n Financing or Permanent Bridge Financing, (ii) the amount of any fees paid
\n to the Partnership pursuant to Section 6.5.E, and (iii) the amount of any
\n fees paid to the Partnership pursuant to Section 6.5.F.<\/p>\n
Investment Loss:
\n————— <\/p>\n
For any fiscal year or other accounting period of the Partnership, the
\n amount, if any, by which the Partnership’s gross taxable deductions and
\n losses with respect to interests in Portfolio Companies exceed the
\n Partnership’s gross taxable income and gains with respect to interests in
\n Portfolio Companies. Calculations of Investment Loss shall be consistent
\n with calculations made for federal income tax purposes and with the
\n calculation of Investment Gain.<\/p>\n
Investment Receipts:
\n——————- <\/p>\n
Amounts received by the Partnership with respect to (including payments and
\n distributions on and proceeds of dispositions of) interests in and assets
\n of Portfolio Companies, net of amounts necessary to pay all expenses, debts
\n and obligations of the Partnership or to establish reserves therefor.
\n Investment Receipts shall exclude (i) interest or dividends received from,
\n or gain received upon the disposition of, Temporary or Permanent Bridge
\n Financing, (ii) the amount of any fees paid to the Partnership pursuant to
\n Section 6.5.E, and (iii) the amount of any fees paid to the Partnership
\n pursuant to Section 6.5.F.<\/p>\n
Liabilities:
\n———– <\/p>\n
As defined in Section 9.3.<\/p>\n
Liquidated Portfolio Securities:
\n——————————- <\/p>\n
Portfolio Securities that have been liquidated or otherwise disposed of.<\/p>\n
Limited Partners:
\n—————- <\/p>\n
As defined in the recitals.<\/p>\n
7<\/p>\n
Majority in Interest of Limited Partners:
\n—————————————- <\/p>\n
At any time, those Limited Partners whose aggregate Percentage of
\n Contributed Capital exceeds fifty percent (50%).<\/p>\n
Management Company:
\n—————— <\/p>\n
@Ventures Management, LLC, a Delaware limited liability company.<\/p>\n
Management Contract:
\n——————- <\/p>\n
The management contract with the Management Company in the form attached
\n hereto as Exhibit A.
\n ——— <\/p>\n
Management Fee:
\n————– <\/p>\n
The management fee payable by the Partnership to the Management Company
\n pursuant to the Management Contract.<\/p>\n
Marketable Securities:
\n——————— <\/p>\n
Securities (i) that are freely tradeable pursuant to a registration under
\n the Securities Act of 1933, as amended, or an exemption therefrom, (ii)
\n that immediately after giving effect to their distribution will not be
\n subject to any contractual restriction on transfer, (iii) that will be
\n traded on a national securities exchange or reported through the National
\n Association of Securities Dealers Automated Quotation System, and (iv) that
\n may be sold without regard to volume limitations.<\/p>\n
Net Investment Gain:
\n——————- <\/p>\n
As of any time of determination, the amount, if any, by which the sum of
\n the Investment Gains for all fiscal years and other accounting periods of
\n the Partnership exceeds the sum of the Investment Losses for all fiscal
\n years and other accounting periods of the Partnership.<\/p>\n
Net Operating Income:
\n——————– <\/p>\n
As of any time of determination, the amount, if any, by which the sum of
\n the Operating Income for all fiscal years and other accounting periods of
\n the Partnership exceeds the sum of the Operating Losses for all fiscal
\n years and other accounting periods of the Partnership.<\/p>\n
8<\/p>\n
Operating Income (Loss):
\n———————– <\/p>\n
For any fiscal year or other accounting period of the Partnership the
\n excess (deficiency) of all income and gains of the Partnership, from
\n whatever source derived, over the losses and expenses borne by the
\n Partnership (including the Management Fee), including any income, gain,
\n losses or expenses relating to Temporary Bridge Financing or Permanent
\n Bridge Financing but excluding Investment Gain (Loss) all as calculated for
\n federal income tax purposes, except that Operating Income (Loss) shall be
\n computed with the following adjustments: (i) income of the Partnership
\n that is exempt from federal income tax and that is not otherwise taken into
\n account in computing income or loss shall be added to Operating Income
\n (Loss); (ii) expenditures of the Partnership that are neither deductible
\n for Federal income tax purposes nor allowable as additions to the basis of
\n Partnership property (or that are so treated pursuant to Section 1.704-
\n 1(b)(2)(iv)(i) of the Treasury Regulations) shall be subtracted from such
\n taxable income or loss; and (iii) there shall not be taken into account any
\n items that are specially allocated pursuant to Sections 5.8.A, 5.8.C, 5.8.D
\n and 5.9.<\/p>\n
Operating Receipts:
\n—————— <\/p>\n
All amounts received by the Partnership other than Investment Receipts, net
\n of amounts necessary to pay all expenses, debts and obligations of the
\n Partnership or to establish reserves therefor.<\/p>\n
Partners:
\n——– <\/p>\n
As defined in the recitals hereof.<\/p>\n
Partnership:
\n———– <\/p>\n
@Ventures III, L.P., a Delaware limited partnership.<\/p>\n
Percentage of Contributed Capital:
\n——————————— <\/p>\n
In the case of each Partner, except as provided in Sections 3.3 and 3.4,
\n the Capital Contributions of such Partner divided by the sum of the Capital
\n Contributions of all Partners.<\/p>\n
Permanent Bridge Financing:
\n————————– <\/p>\n
As defined in Section 4.3.<\/p>\n
9<\/p>\n
Portfolio Companies:
\n——————- <\/p>\n
Companies in which the Partnership makes investments in accordance with the
\n provisions of this Agreement.<\/p>\n
Portfolio Securities:
\n——————– <\/p>\n
Equity and equity-related securities of Portfolio Companies in which the
\n Partnership invests in accordance with the provisions of this Agreement.
\n Temporary Bridge Financing and Permanent Bridge Financing shall not be
\n considered to be Portfolio Securities except for the purpose of calculating
\n the amount of Investment Receipts to be distributed and allocated pursuant
\n to Sections 5.2.B(2) and 5.7.B(4).<\/p>\n
Prior Funds:
\n———– <\/p>\n
CMG@Ventures I, LLC and CMG@Ventures II, LLC.<\/p>\n
Prohibited Transaction:
\n———————- <\/p>\n
A non-exempt prohibited transaction (within the meaning of Section 406 of
\n ERISA or Section 4975 of the Code).<\/p>\n
Removal Date Securities:
\n———————– <\/p>\n
As defined in Section 8.5.<\/p>\n
Securities Act:
\n————– <\/p>\n
The Securities Act of 1933, as amended.<\/p>\n
Special Limited Partner:
\n———————– <\/p>\n
As defined in Section 8.5.<\/p>\n
Substitute Limited Partner:
\n————————– <\/p>\n
As defined in Section 8.3.<\/p>\n
Subscription Agreement:
\n———————- <\/p>\n
Each of the several Subscription Agreements between the Partnership and the
\n Limited Partners.<\/p>\n
10<\/p>\n
Target Allocation:
\n—————– <\/p>\n
With respect to any Partner as of the close of any fiscal year or other
\n accounting period of the Partnership for which an allocation of Investment
\n Loss is to be made pursuant to Section 5.7.C(1), the amount of Net
\n Investment Gain that would then be allocated to such Partner if (i) the Net
\n Investment Gain for all periods through the close of such fiscal year or
\n other period were equal to the Net Investment Gain as of the close of the
\n immediately preceding fiscal year or other accounting period of the
\n Partnership less the amount of Investment Loss to be then allocated
\n pursuant to Section 5.7.C(1) and (ii) the Net Investment Gain as then
\n calculated pursuant to clause (i) were then allocated to the Partners
\n pursuant to Sections 5.7.B(3), 5.7.B(4) and 5.7.B(5) as if there had been
\n no prior allocations of Investment Gain or Investment Loss.<\/p>\n
Tax Exempt Partner:
\n—————— <\/p>\n
Any individual retirement account or trust formed as part of a Keogh or
\n corporate pension or profit-sharing plan qualified under Section 401(a) of
\n the Code, any organization described in Section 501(c) of the Code and any
\n governmental entity tax-exempt under Section 115 of the Code, or any entity
\n which has ninety percent (90%) or more of its equity interests owned by one
\n or more entities of the type referred to above.<\/p>\n
Temporary Bridge Financing:
\n————————– <\/p>\n
Bridge Financing that has not been converted into Permanent Bridge
\n Financing pursuant to Section 4.3.<\/p>\n
Temporary Investments:
\n——————— <\/p>\n
(i) Investments in direct obligations of the United States of America,
\nor obligations of any instrumentality or agency thereof payment of principal and
\ninterest of which is unconditionally guaranteed by the United States of America,
\nall of such obligations having a final maturity not more than one year from the
\ndate of issue thereof;<\/p>\n
(ii) Investments in certificates of deposit or repurchase agreements
\n having a final maturity not more than one year from the date of acquisition
\n thereof issued by any bank or trust company organized under the laws of the
\n United States of America or any state thereof having capital and surplus of
\n at least $100 million;<\/p>\n
(iii) Investments in money market funds, provided that such funds
\n invest primarily in government securities described in subparagraph (i) or
\n in municipal obligations<\/p>\n
11<\/p>\n
that receive a rating of AAA or AA, or Aaa or Aa from a nationally
\n recognized financial rating service such as Standard & Poor’s Corporation
\n or Moody’s Investors Service, Inc., respectively;<\/p>\n
(iv) Investments in interest-bearing accounts of Financial
\n Institutions; and<\/p>\n
(v) Commercial paper payable on demand or having a final maturity not
\n more than one year from the date of acquisition thereof which has the
\n highest credit rating by either Standard & Poor’s Corporation or Moody’s
\n Investors Service, Inc.<\/p>\n
Treasury Rate:
\n————- <\/p>\n
An interest rate calculated quarterly at the average of the ninety (90) day
\n United States Treasury Bill weekly auction rates for the preceding quarter.<\/p>\n
Treasury Regulations:
\n——————– <\/p>\n
Income Tax Regulations promulgated from time to time under the Code.
\n References to specific sections of the Treasury Regulations shall be to
\n such sections as amended, supplemented or superseded by Treasury
\n Regulations currently in effect.<\/p>\n
Triggering Event:
\n—————- <\/p>\n
As defined in Section 6.4.<\/p>\n
Two-Thirds in Interest of the Limited Partners:
\n———————————————- <\/p>\n
Those Limited Partners whose aggregate Percentage of Contributed Capital
\n equals or exceeds sixty-six and two-thirds percent (66 2\/3%).<\/p>\n
UBTI:
\n—- <\/p>\n
Unrelated business taxable income as defined in Section 512 of the Code and
\n including unrelated debt-financed income as defined in Section 514 of the
\n Code.<\/p>\n
Venture Capital Operating Company:
\n——————————— <\/p>\n
A venture capital operating company as defined in the United States
\n Department of Labor regulation published at Section 2510.3-101 of Title 29
\n of the Code of Federal Regulations or corresponding provisions of
\n subsequent laws or regulations.<\/p>\n
12<\/p>\n
II.<\/p>\n
FORMATION
\n ———<\/p>\n
Section 2.1 Purpose.
\n ——- <\/p>\n
Pursuant to the Act, the Partners hereby agree to form the Partnership as a
\nlimited partnership for the principal purpose of making equity and equity-
\nrelated investments in Portfolio Companies, managing, supervising and disposing
\nof such investments, receiving the profits and losses therefrom, and engaging in
\nactivities necessarily incidental or ancillary thereto.<\/p>\n
Section 2.2 Name.
\n —- <\/p>\n
The name of the Partnership will be “@VENTURES III, L.P.” or such other
\nname or names as the General Partner may from time to time designate.<\/p>\n
Section 2.3 Principal Place of Business.
\n ————————— <\/p>\n
The principal office of the Partnership will be located at 100 Brickstone
\nSquare, Andover, Massachusetts 01801, or such other location in the United
\nStates as the General Partner may from time to time determine. The General
\nPartner shall give prompt notice of any change in the principal office of the
\nPartnership to each Limited Partner.<\/p>\n
Section 2.4 Registered Agent.
\n —————- <\/p>\n
The initial address of the Partnership’s registered office in Delaware is
\n1209 Orange Street, Wilmington, County of New Castle, and its initial registered
\nagent at such address for service of process is The Corporate Trust Company.<\/p>\n
Section 2.5 Term.
\n —- <\/p>\n
The Partnership shall continue in full force and effect until July 31,
\n2006, unless extended or until earlier terminated pursuant to Section 11.1.<\/p>\n
13<\/p>\n
III.<\/p>\n
CAPITAL CONTRIBUTIONS; PARTNERS’ ACCOUNTS
\n —————————————–<\/p>\n
Section 3.1 Capital Commitments and Contributions.
\n ————————————- <\/p>\n
Subject to the provisions of Sections 3.3 and 3.4, each Partner hereby
\ncommits and agrees to make cash contributions to the capital of the Partnership
\nin the amount set forth opposite its name on Schedule 1 attached hereto. The
\n ———-
\namount of such commitment, reduced by any portion of the commitment which is
\nreleased pursuant to Section 3.3 and increased or decreased by any amount
\npursuant to Section 3.4, is referred to herein as a “Capital Commitment”. With
\nrespect to each Partner, the amount of capital contributed pursuant to such
\nCapital Commitment and, after the end of the Commitment Period, amounts
\nproportional to the Partner’s Percentage of Contributed Capital that are
\nreserved from Operating Receipts or Investment Receipts and invested in Follow-
\non Investments or Committed Investments, are referred to as “Capital
\nContributions”. On any date when a Limited Partner makes a Capital Contribution
\nto the Partnership, the General Partner shall contribute to the capital of the
\nPartnership cash in such amount as is sufficient to cause the General Partner’s
\nCapital Contribution to equal one percent (1%) of the aggregate Capital
\nContributions of all Partners. Except as set forth in the Subscription
\nAgreement, five percent (5%) of each Partner’s Capital Commitment shall be paid
\nin upon admission to the Partnership. The General Partner shall call for
\npayment of the balance of each Partner’s Capital Commitment as needed to fund
\nthe Partnership’s investments in Portfolio Companies and other permitted uses
\nunder this Agreement; provided, however, that no call may be made at any time
\nsubsequent to the Commitment Period except to the extent necessary to (i)
\nprovide for the expenses of the Partnership including the Management Fee, (ii)
\nmake Committed Investments pursuant to Section 6.2.M or (iii) make Follow-on
\nInvestments pursuant to Section 6.2.L. All such calls shall be made in writing
\nto all Partners pro rata in proportion to their respective Capital Commitments
\nand shall specify the intended use of such called capital, including in the case
\nof a capital call to invest in a Portfolio Company the name of the Portfolio
\nCompany. Such calls shall be made at least ten (10) Business Days before the
\ndate on which the installment payable in response to that call is due. The
\nCapital Contributions of a Partner shall not in any case exceed the Capital
\nCommitment of such Partner. No Capital Contribution returned to a Partner,
\nother than a Capital Contribution that is allocable to a Temporary Bridge
\nFinancing which has been sold, refinanced or otherwise disposed of, shall be
\ncallable by the General Partner pursuant to this Section 3.1 again.<\/p>\n
Section 3.2 Capital Accounts.
\n —————- <\/p>\n
The Partnership shall establish and maintain a Capital Account for each
\nPartner. A Partner’s Capital Account shall be (i) increased by (a) the amount
\nof such Partner’s Capital Contributions, (b) such Partner’s allocations of
\nOperating Income and Investment Gain pursuant to Sections 5.7.A and 5.7.B, and
\n(c) items of income or gain specially allocated to such Partner pursuant to
\nSection 5.8 or 5.9, (ii) decreased by (x) the amount of money and the fair
\nmarket value of any property distributed to such Partner by the Partnership, (y)
\nsuch Partner’s allocations of Operating Loss and Investment Loss pursuant to
\nSections 5.7.A and 5.7.C and (z) items of loss, deduction or expenditure
\nspecially allocated to such Partner pursuant to Section 5.8 or 5.9, and (iii)
\nadjusted to reflect any liabilities that are assumed by such Partner or the
\nPartnership or that are secured by property contributed by or distributed to
\nsuch Partner, all in accordance with Sections 1.704-1(b)(2)(iv) and 1.704-2 of
\nthe Treasury Regulations. Except as otherwise provided in the Treasury
\nRegulations, a transferee of an <\/p>\n
14<\/p>\n
interest in the Partnership shall succeed to the Capital Account of its
\ntransferor to the extent allocable to the transferred interest. Notwithstanding
\nany provision of this Agreement other than Section 5.4, the General Partner
\nshall revalue Partnership properties, and make corresponding adjustments to the
\nPartners’ Capital Accounts, as prescribed by Section 1.704-1(b)(2)(iv)(f) of the
\nTreasury Regulations in connection with any contribution to or distribution by
\nthe Partnership of more than a de minimis amount of money or other property in
\nexchange for an interest in the Partnership unless the General Partner
\nreasonably determines that such revaluations and adjustments are not necessary
\nto reflect the economic interests of the Partners in the Partnership. In
\naddition, the book values of Partnership properties shall be increased or
\ndecreased, as the case may be, to reflect any adjustments to the adjusted tax
\nbases of such properties pursuant to Section 734(b) or Section 743(b) of the
\nCode to the extent that such basis adjustments are taken into account in
\ndetermining Capital Account balances pursuant to Treasury Regulations
\nSection 1.704-1(b)(2)(iv)(m) and have not been reflected in adjustments to the
\nbook values of such properties pursuant to the preceding sentence of this
\nSection 3.2.<\/p>\n
Section 3.3 Review or Modification of Capital Commitments.
\n ——————————————— <\/p>\n
Each Partner acknowledges that it is currently lawful for it to invest in
\nthe Partnership. Notwithstanding this acknowledgment and the provisions of
\nSections 3.1 and 3.4, no Partner shall be obligated to make any contribution of
\nits Capital Commitment if at the time such contribution is due (i) such Partner
\nis substantially likely to be prohibited from making investments in the
\nPartnership under any applicable federal or state law or regulations thereunder
\nthen in effect, including ERISA, or is substantially likely to subject itself or
\nan ERISA Affiliate to a tax for a Prohibited Transaction, (ii) if such Partner
\nis a Tax Exempt Partner, the proposed investment in a Portfolio Company would
\nresult in such Partner having UBTI, or (iii) if such Partner is a bank holding
\ncompany, it has a significant, pre-existing and continuing relationship with a
\nPortfolio Company in which the Partnership has proposed to invest (in each case,
\na “Modification Event”). Prior to making an investment in a Portfolio Company
\nwhich would result in a Partner having UBTI, the General Partner will advise the
\nPartners in writing as to the investment and the circumstances giving rise to
\nUBTI. In the case of a Modification Event, the affected Partner shall advise
\nthe General Partner of the specific terms of the Modification Event within five
\n(5) Business Days of receiving the call notice pursuant to Section 3.1. The
\nGeneral Partner shall promptly notify all other Partners of the alleged
\nModification Event. Unless (x) in the case of a Modification Event set forth in
\nclauses (i) or (ii) above, the Partner asserting such Modification Event shall,
\nat the request of the General Partner, have delivered to the General Partner an
\nopinion from counsel reasonably satisfactory to the General Partner confirming
\nthe existence of such Modification Event or (y) in the case of a Modification
\nEvent set forth in clause (iii) above, the affected Partner shall have provided
\nthe General Partner with such information and material, including, at the
\nrequest of the General Partner an opinion of counsel reasonably satisfactory to
\nthe General Partner confirming, in the sole discretion of the General Partner,
\nthe existence of this Modification Event, the General Partner may, as of the
\ndate on which the contribution at issue was due and upon fifteen (15) days
\nnotice to the affected Partner, reduce the Capital Account and percentage of
\nContributed Capital of such Partner by one fourth <\/p>\n
15<\/p>\n
and correspondingly increase the Capital Account and Percentage of Contributed
\nCapital of each other Partner in a manner similar to that provided in Section
\n3.4.B; provided, that the Partner asserting the prohibition shall not be deemed
\na Defaulting Partner, as defined in Section 3.4, for purposes of the provisions
\nthereof. Such reduction shall be the exclusive remedy against a Limited Partner
\nwhich fails to make a contribution of its Capital Commitment because of such an
\nalleged prohibition or Prohibited Transaction. The Partner who asserted the
\nprohibition or Prohibited Transaction may sue the Partnership to recover the
\namount of reduction to its Capital Account and Percentage of Contributed Capital
\nmade in accordance with this Section 3.3; provided, that the amount of its
\nrecovery shall be limited to the amount of such reduction and the reasonable
\ncosts and expenses (including reasonable fees of attorneys) incurred in bringing
\nsuch suit. However, if a Partner loses such a suit brought against the
\nPartnership, and the applicable period in which the decision in such suit can be
\nappealed has passed, such Partner shall reimburse the Partnership for the
\nreasonable costs and expenses (including reasonable fees of attorneys) incurred
\nby the Partnership in defending such suit or any prior unsuccessful suit brought
\nagainst the Partnership alleging the same cause of action; provided, however,
\nthat such Partner shall not be required to reimburse the Partnership for
\nexpenses of any prior unsuccessful suit with respect to which the Partnership
\nhas previously been reimbursed by a Partner pursuant to this Section 3.3.<\/p>\n
Notwithstanding the provisions of this Agreement, the General Partner may
\nrefuse to permit a Limited Partner to participate in an investment in a
\nPortfolio Company if, in the sole discretion of the General Partner, such
\nLimited Partner’s participation would impair the ability of the Partnership or
\nthe General Partner or make it impractical or inadvisable as a result of
\nregulatory or competitive considerations or otherwise to consummate or to
\nmaintain the investment in the Portfolio Company. In this event, at the time of
\nproviding call notices to the Limited Partners, the General Partner shall notify
\nthe affected Limited Partner of its non-participation in the proposed investment
\nand give such Partner such information and material as the General Partner
\ndetermines is sufficient to warrant the non-participation of such Partner in the
\ninvestment. The decision of the General Partner to refuse a Limited Partner the
\nopportunity to participate in an investment shall be in the sole discretion of
\nthe General Partner.<\/p>\n
Section 3.4 Default in Capital Commitment.
\n —————————– <\/p>\n
Except as provided in Section 3.3, in the event a Partner fails to fund
\nits Capital Commitment as required under Section 3.1 in a timely manner, and
\nsuch failure continues for ten (10) Business Days after written notice of such
\nfailure from the General Partner (or for such longer period (not to exceed
\ntwenty (20) business days) as the General Partner may in its sole discretion
\npermit under extraordinary circumstances), then such Partner which failed to
\nmake payment shall be a Defaulting Partner, and the following provisions of this
\nSection 3.4 shall apply:<\/p>\n
A. Whenever the vote, consent or decision of the Partners is required
\nor permitted pursuant to this Agreement, any Defaulting Partner shall not be
\nentitled to participate in such vote or <\/p>\n
16<\/p>\n
consent, or to make such decision, and such vote, consent or decision shall be
\nmade as if such Defaulting Partner were not a Partner. Notwithstanding this
\nprohibition, any such vote, consent or decision shall be binding upon such
\nDefaulting Partner.<\/p>\n
B. The Defaulting Partner shall not be required to make any further
\nCapital Contributions to the Partnership and there shall be released that
\nportion of a Defaulting Partner’s unfunded Capital Commitment (provided that
\nsuch Defaulting Partner shall remain fully liable to the creditors of the
\nPartnership to the extent of the installment of the Capital Commitment with
\nrespect to which the default occurred). Thereafter, the Defaulting Partner’s
\nPercentage of Contributed Capital in all investments made by the Partnership in
\nPortfolio Companies after the date of default shall be zero, and the Percentages
\nof Contributed Capital of the remaining Partners shall be adjusted accordingly.<\/p>\n
C. Except as set forth in this Section 3.4.C, the Defaulting Partner
\nshall not be entitled to receive any distribution of Operating Receipts or
\nInvestment Receipts until the termination of the Partnership. The General
\nPartner shall establish a separate escrow account with a Financial Institution
\ninto which will be deposited all of the distributions of Operating Receipts and
\nInvestment Receipts that the Defaulting Partner would otherwise be entitled to
\nreceive. Upon the liquidation of the Partnership, the Defaulting Partner will
\nbe entitled to receive from the separate escrow account an amount equal to the
\nlesser of (i) seventy-five percent (75%) of the distributions it was otherwise
\nentitled to receive with respect to investments in Portfolio Companies that were
\nconsummated prior to the date of the Defaulting Partner’s default (without the
\naddition of interest that accrued on the amounts held in the separate escrow
\naccount), and (ii) its aggregate Capital Contributions to the Partnership
\nreduced by all distributions made to the Defaulting Partner prior to the date of
\ndefault. Any amounts remaining in the separate escrow account, including all
\ninterest earned on such amounts, shall thereafter be distributed to the General
\nPartner to compensate the General Partner for any damages incurred as a result
\nof the default and then to the non-defaulting Limited Partners in proportion to
\ntheir respective Percentages of Contributed Capital recalculated as if the
\nDefaulting Partner were not a Partner of the Partnership. The Defaulting
\nPartner shall be allocated Operating Income and Loss and Investment Gain and
\nLoss only with respect to investments in Portfolio Companies that were
\nconsummated prior to the date of the Defaulting Partner’s default.<\/p>\n
D. The provisions of Sections 3.4.B and C shall not apply more than
\nonce to any Defaulting Partner.<\/p>\n
E. No Defaulting Partner shall be entitled to assign its interest in
\nthe Partnership in accordance with Section 8.3 without the consent of the
\nGeneral Partner, which it may withhold in its sole discretion.<\/p>\n
F. No right, power or remedy available to the General Partner in this
\nSection 3.4 shall be exclusive, and each such right, power or remedy shall be
\ncumulative and in addition to any other right, power or remedy available at law
\nor in equity. No course of dealing between the General Partner <\/p>\n
17<\/p>\n
and any Defaulting Partner, and no delay in exercising any right, power or
\nremedy shall operate as a waiver or otherwise prejudice the exercise of such
\nright, power or remedy.<\/p>\n
IV.<\/p>\n
BRIDGE FINANCING
\n —————-<\/p>\n
Section 4.1 Extension of Bridge Financing.
\n —————————– <\/p>\n
Solely in order to facilitate the making of investments in Portfolio
\nSecurities as expeditiously as practicable with the most favorable pricing
\nreasonably available, the Partnership may from time to time provide interim
\nfinancing (“Bridge Financing”) to one or more Portfolio Companies until
\npermanent financing is arranged. All such Bridge Financing shall be designated
\nas such by the General Partner at the time it is first provided. All Bridge
\nFinancing will be senior to the permanent investment of the Partnership in such
\nPortfolio Company, and bear interest or carry other compensation at rates not
\nless favorable to the Partnership than those available from an unaffiliated
\nFinancial Institution. The General Partner will use its best efforts to cause
\nBridge Financing to be converted into Portfolio Securities, and if not so
\nconverted, to be sold or refinanced as promptly as practicable, and in any event
\nwill use its best efforts to cause such conversion, sale or refinancing to occur
\nwithin one year after such Bridge Financing is first provided by the
\nPartnership. Bridge Financing may be provided to any single Portfolio Company
\nonly to the extent that the sum of the Partnership’s investment in such
\nPortfolio Company, including Portfolio Securities, Bridge Financings and the
\namount of any guarantees, shall not exceed the lesser of (i) thirty-five percent
\n(35%) of the Partnership’s aggregate Capital Commitments, or (ii) the remaining
\nunfunded Commitments as of the date of such Bridge Financing.<\/p>\n
Section 4.2 Funding of Bridge Financing.
\n ————————— <\/p>\n
The Partnership may fund Bridge Financing by borrowing pursuant to
\nSection 6.2.Q from one or more Financial Institutions, by calling upon the
\nPartners’ Capital Commitments, or by guarantying indebtedness incurred by the
\nPortfolio Company, in each case solely in order to facilitate the making of
\ninvestments in Portfolio Securities as expeditiously as practicable with the
\nmost favorable pricing reasonably available. The proceeds of the sale,
\nrefinancing or other disposition of Temporary Bridge Financing which has been
\nfunded by the call of Capital Commitments shall, to the extent of the Partners’
\nCapital Contributions allocable thereto, be returned to the Partners in
\nproportion to such Partners’ Capital Contributions allocable to such investment
\nwithin five (5) days after the receipt thereof by the Partnership. The
\nPartners’ Capital Commitments remaining to be called shall thereafter include
\nthat portion of such allocable Capital Contributions returned.<\/p>\n
18<\/p>\n
Section 4.3 Permanent Bridge Financing.
\n ————————– <\/p>\n
If and to the extent that Temporary Bridge Financing is not converted
\ninto Portfolio Securities or sold or refinanced within one year after it is
\nprovided, it promptly shall be converted as of the end of such one year period
\ninto financing (“Permanent Bridge Financing”) on terms and in proportions not
\nless favorable to the Partnership, than those most recently offered by the
\nPartnership to prospective investors during the period that the financing
\nremained outstanding pursuant to Temporary Bridge Financing. If the Temporary
\nBridge Financing was funded through borrowings by a Portfolio Company guaranteed
\nby the Partnership, the Partnership, shall purchase its portion of the Permanent
\nBridge Financing as if it were a permanent investment in a Portfolio Company.<\/p>\n
V.<\/p>\n
DISTRIBUTIONS; WITHHOLDING; VALUATION; ALLOCATIONS
\n ————————————————–<\/p>\n
Section 5.1 Withdrawal of Capital.
\n ——————— <\/p>\n
No Partner shall have the right to withdraw capital from the Partnership
\nor, except as otherwise set forth in this Agreement, to receive any distribution
\nor return of its Capital Contribution.<\/p>\n
Section 5.2 Distributions Prior to Liquidation.
\n ———————————- <\/p>\n
A. Subject to Sections 5.3 and 5.4, and except to the extent deemed
\nnecessary by the General Partner to reserve for Follow-on Investments pursuant
\nto Section 6.2.L and for Committed Investments pursuant to 6.2.M, Operating
\nReceipts for each fiscal year (or fractional portion thereof) shall be
\ndistributed to the Partners in proportion to their respective Percentages of
\nContributed Capital. Such distributions shall be made by the General Partner
\nwithin ninety (90) days after the close of each fiscal year and at such other
\ntime or times as the General Partner shall determine.<\/p>\n
B. Subject to Sections 5.3 and 5.4, and except to the extent deemed
\nnecessary by the General Partner to reserve for Follow-on Investments pursuant
\nto Section 6.2.L and for Committed Investments pursuant to 6.2.M, the General
\nPartner shall determine from time to time (but not less often than annually) the
\namount of Investment Receipts that are available for distribution, and shall
\ndistribute such Investment Receipts as follows:<\/p>\n
(1) First, to the Partners in proportion to their Percentages of
\n —–
\n Contributed Capital, until such Partners have received from all
\n distributions then or theretofore made pursuant to this Section
\n 5.2.B(1), on a cumulative basis, an amount of distributions equal
\n to the sum of (i) their Capital Contributions Allocable to
\n Liquidated Portfolio Securities and (ii) all Management Fees that
\n have been paid out of the Capital Contributions of the Limited
\n Partners to the Management Company as of any date on which a
\n distributions pursuant to this Section 5.2 will be made;<\/p>\n
19<\/p>\n
(2) Second, twenty percent (20%) to the Partners in proportion to
\n ——
\n their Percentages of Contributed Capital and eighty percent (80%)
\n to the General Partner until the General Partner has received
\n pursuant to this Section 5.2.B(2) an amount of distributions
\n equal to twenty percent (20%) of the sum of (x) amounts
\n distributed to the Partners in proportion to their Percentages of
\n Contributed Capital pursuant to (A) clause (i) of Section
\n 5.2.B(1), but only to the extent of the amount of Capital
\n Contributions Allocable to Portfolio Securities attributable to
\n expenses set forth in Sections 6.5.A(1) and (4) that have been
\n allocated to a particular Portfolio Security and (B) clause (ii)
\n of Section 5.2.B(1), and (y) amounts distributed pursuant to this
\n Section 5.2.B(2); and<\/p>\n
(3) Third, thereafter, eighty percent (80%) to the Partners in
\n —–
\n proportion to their Percentages of Contributed Capital and twenty
\n percent (20%) to the General Partner.<\/p>\n
For purposes of this Agreement, all amounts distributed to the General Partner
\npursuant to Sections 5.2.B(2) and 5.2.B(3) (other than in proportion to its
\nPercentage of Contributed Capital) shall be referred to herein as Incentive
\nDistributions.<\/p>\n
C. In addition to any other obligations hereunder, the General Partner
\nshall endeavor (if practical and reasonable to do so in light of the
\ncircumstances of the Partnership) to distribute, if available, sufficient
\namounts of Operating Receipts and\/or Investment Receipts to the Partners in
\naccordance with this Article V to enable them to make timely payment of any
\nFederal, state, local and foreign income tax liabilities incurred by them or
\ntheir principals as a result of their participation in the Partnership.<\/p>\n
D. As of any date on which the General Partner determines to make a
\ndistribution of Investment Receipts, the General Partner shall determine,
\npursuant to Section 5.6, the fair market value of each investment in a Portfolio
\nCompany which has not been sold or disposed of. The extent to which the
\naggregate fair market values of all such investments are less than the aggregate
\ncost bases of all such investments for book purposes shall constitute a “Deemed
\nPortfolio Loss”. That portion of each Liquidated Portfolio Security equal to
\nthe amount of Deemed Portfolio Loss allocated with respect thereto shall, upon
\nthe deemed or actual sale of that Liquidated Portfolio Security, be deemed to
\nhave been sold for an amount equal to the amount of Deemed Portfolio Loss and
\nshall be deemed to have a tax basis of zero, and the tax basis of the remaining
\nportion of the Liquidated Portfolio Security shall include the amount of such
\nDeemed Portfolio Loss.<\/p>\n
E. If upon the liquidation of the Partnership the General Partner shall
\nhave received as Incentive Distributions under Section 5.2B(3) (that have not
\nbeen recontributed to the Partnership pursuant to Section 5.3) an aggregate
\namount in excess of the amount the General Partner would have received <\/p>\n
20<\/p>\n
as Incentive Distributions pursuant to Section 5.2B(3), including liquidating
\ndistributions, had the entire amount of Investment Receipts actually received by
\nthe Partnership been received by the Partnership on the date of liquidation of
\nthe Partnership, then the General Partner shall, to the extent of all
\ndistributions received as Incentive Distributions pursuant to Section 5.2B(3)
\n(that have not been recontributed to the Partnership pursuant to Section 5.3),
\npay to the Partners in proportion to their Percentages of Contributed Capital
\nsuch excess.<\/p>\n
F. The General Partner shall establish in its name, but for the benefit
\nof the Partners, a separate bank account at a Financial Institution (the “Escrow
\nAccount”), in which it will maintain an amount equal to the lesser of (i)
\ntwenty-five percent (25%) of all Incentive Distributions paid to the General
\nPartner, and (ii) the amount required to be added to the fair market value of
\nthe existing Portfolio Securities of the Partnership, determined pursuant to
\nSection 5.6, so that the resulting total exceeds the total amount of Capital
\nContributions allocable to such investments by twenty-five percent (25%). Upon
\nthe liquidation of the Partnership, the General Partner shall distribute to the
\nPartners from the Escrow Account, in proportion to their Percentages of
\nContributed Capital, that portion of the escrowed funds equal to the General
\nPartner’s required payment under Section 5.2.E, or if such required payment is
\nin excess of such escrowed funds, the total amount held in such Escrow Account
\nplus an amount, paid directly by the General Partner, that when added to the
\nescrowed funds equals the General Partner’s required payment pursuant to Section
\n5.2.E. Any funds held in the Escrow Account upon liquidation of the Partnership
\nand after the required payment pursuant to this Section and Section 5.2.E shall
\nbe distributed immediately to the General Partner. The General Partner will
\ndirect the investment of amounts held in the Escrow Account, which shall in any
\nevent be made solely in investments qualifying as Temporary Investments. All
\nincome earned on the amounts retained in the Escrow Account shall be distributed
\nat the end of each calendar quarter immediately to the General Partner.<\/p>\n
Section 5.3 Distributions Upon Liquidation.
\n —————————— <\/p>\n
Upon the liquidation of the Partnership, the assets of the Partnership
\nshall first be applied to the payment of, or the establishment of adequate
\nreserves or other provision for the payment of, the debts and obligations of the
\nPartnership. Thereafter, there shall be made a final allocation of Operating
\nIncome or Loss and Investment Gain or Loss, as the case may be, and other items
\nto the Partners’ Capital Accounts in accordance with Section 5.7. If the
\nGeneral Partner has a negative balance in its Capital Account after such final
\nallocation, it shall contribute to the Partnership an amount of cash equal to
\nthe excess of such negative balance over the amount that it is required to pay
\nto the Partners pursuant to Section 5.2.E. Notwithstanding the foregoing, the
\nGeneral Partner’s obligation to pay such excess pursuant to this Section 5.3
\nshall not inure to the benefit of, or be invoked or enforced by or for the
\nbenefit of, any creditor who has otherwise contractually obligated itself to
\nlook solely to all or a part of the assets of the Partnership and not to the
\nassets of any Partner for satisfaction of any debt owed or owing to that
\ncreditor by the Partnership. The assets of the Partnership, including any
\nPortfolio Securities, whether or not such securities are Marketable Securities
\n(or the proceeds of sales or other <\/p>\n
21<\/p>\n
dispositions in liquidation of assets of the Partnership) remaining after the
\npayment or other provision for the Partnership’s debts and obligations shall
\nthen be distributed to the Partners in proportion to the positive balances in
\ntheir Capital Accounts, determined after the final allocation of Operating
\nIncome or Loss and Investment Gain or Loss, and of other items to Capital
\nAccounts has been made; provided that the name of the Partnership shall be
\ntransferred with a value of $1.00 ascribed thereto, to the General Partner. For
\npurposes of making this distribution, such assets shall be valued pursuant to
\nSection 5.6. Amounts reserved or set aside, in connection with the Partnership’s
\nliquidation, for the payment of Partnership debts and obligations, which are not
\nutilized for such payment, shall be distributed to the Partners in the same
\nproportions that such amounts would have been distributed hereunder if
\ndistributed upon the Partnership’s liquidation, as soon as practicable.<\/p>\n
Section 5.4 Distributions of Securities in Kind.
\n ———————————– <\/p>\n
A. The General Partner shall distribute to the Partners as an
\nInvestment Receipt any Portfolio Securities that become Marketable Securities
\npromptly upon their becoming Marketable Securities, unless the General Partner
\ndetermines that a distribution of such securities would not serve the best
\ninterests of the Partnership. Factors to be considered by the General Partner
\nin making such a determination shall include (i) the fiduciary obligations owed
\nto the stockholders of the issuer of such Marketable Securities by any Affiliate
\nof the General Partner who may serve as a director of such issuer, and (ii)
\nwhether retention of such Marketable Securities shall serve the best interests
\nof the Partnership by maintaining control of or influence over the issuer of the
\nsecurities, stabilizing the market for such securities until such time as the
\nsecurities are either distributed to the Partners pursuant to this Section 5.4
\nor are sold or otherwise disposed of or facilitating subsequent offerings by the
\nissuer which shall include such Marketable Securities. The General Partner
\nshall notify the Limited Partners each time a Portfolio Security becomes a
\nMarketable Security. The General Partner shall not distribute Portfolio
\nSecurities that are not Marketable Securities at any time other than upon the
\nliquidation of the Partnership.<\/p>\n
B. With respect to securities distributed in kind to the Partners in
\nliquidation or otherwise, (i) any unrealized appreciation or unrealized
\ndepreciation in the values of such securities shall be deemed to be realized by
\nthe Partnership immediately prior to the liquidation or other distribution
\nevent; and (ii) such appreciation or depreciation shall be allocated to the
\nPartners as part of the allocation of Investment Gain or Loss, as the case may
\nbe, for the year of the distribution in accordance with Section 5.7 hereof, and
\ntreating any property so distributed as a distribution of an amount in cash
\nequal to the fair market value of the property determined pursuant to Section
\n5.6. For the purposes of this Section 5.4.B, “unrealized appreciation” or
\n“unrealized depreciation” shall mean the difference between the fair market
\nvalue of such assets and the adjusted basis of such assets for federal income
\ntax purposes (or, in the case of any asset that is reflected on the books of the
\nPartnership at a value that is different from the Partnership’s federal tax
\nbasis in such asset in compliance with the Treasury Regulations, the value of
\nsuch asset as shown on the Partnership’s books). This Section 5.4.B is merely
\nintended to provide a rule for allocating unrealized gains and losses upon
\nliquidation or other <\/p>\n
22<\/p>\n
distribution event, and nothing contained in this Section 5.4.B or elsewhere in
\nthis Agreement is intended to treat or cause such distributions to be treated as
\nsales for value.<\/p>\n
C. If any Partner would otherwise receive a distribution of an amount
\nof any securities that would cause such Partner to own or control in excess of
\nthe amount of such securities that it may lawfully own or control or which, by
\nreason of any legal or contractual restriction, the General Partner may not
\ndistribute to such Partner, the Partner shall, solely for purposes of this
\nAgreement, be treated as if it had received such securities as a distribution in
\nkind pursuant to Section 5.4.B. The General Partner shall, at the written
\nrequest of such Partner and to the extent it is practicable to do so, dispose of
\nall or any portion of such securities on behalf of and as the agent for such
\nPartner and distribute the proceeds of such disposition to such Partner;
\nprovided that such Partner shall bear all of the reasonable expenses (including,
\nwithout limitation, underwriting costs) of such disposition. In the
\nalternative, at the request of such Partner, the General Partner shall use
\nreasonable efforts to recapitalize the Portfolio Company so as to distribute to
\nsuch Partner non-voting securities. In either event, any discrepancy between the
\nactual gain or loss recognized upon the sale or other disposition of Portfolio
\nSecurities (including Marketable Securities) and the unrealized appreciation or
\nunrealized depreciation in the values thereof as determined under Section 5.4.B,
\nshall constitute gain or loss of the Partner to whom the securities were
\nconstructively distributed, and shall in no event constitute gain or loss to the
\nPartnership.<\/p>\n
D. The General Partner may cause certificates evidencing any securities
\nto be distributed to be imprinted with legends as to such restrictions on
\ntransfers that it may deem necessary, including legends as to applicable federal
\nor state securities laws or other legal or contractual restrictions, and may
\nrequire any Partner to which securities are to be distributed to agree in
\nwriting that such securities will not be transferred except in compliance with
\nsuch restrictions and applicable law.<\/p>\n
Section 5.5 Withholding.
\n ———– <\/p>\n
Each Partner hereby authorizes the Partnership to withhold and to pay
\nover any withholding taxes payable by the Partnership, to the extent required by
\napplicable law, as a result of such Partner’s status as a Partner hereunder. If
\nand to the extent that the Partnership shall be required under applicable law to
\nwithhold any such taxes, such Partner shall be deemed for all purposes of this
\nAgreement to have received a payment from the Partnership as of the time such
\nwithholding is required to be paid, which payment shall be deemed to be a
\ndistribution to the extent that the Partner is then entitled to receive a
\ndistribution. The amount of any distribution to which such Partner would
\notherwise be entitled shall be reduced by the amount of such deemed
\ndistribution. To the extent that the aggregate of such payments to a Partner
\nfor any period exceeds the distributions to which such Partner is entitled for
\nsuch period, the amount of such excess shall be considered a loan from the
\nPartnership to such Partner, with interest at the Treasury Rate, until
\ndischarged by such Partner by repayment, which may be made out of distributions
\nto which such Partner would otherwise be subsequently entitled. The
\nwithholdings referred to in this Section 5.5 shall be made at the maximum
\nstatutory rate applicable to <\/p>\n
23<\/p>\n
such Partner under the applicable tax law unless the General Partner shall have
\nreceived either (i) an opinion of counsel, satisfactory to the General Partner,
\nto the effect that a lower rate is applicable, or that no withholding is
\napplicable, or (ii) any form authorized by the relevant taxing authority signed
\nby a Partner that establishes that no withholding is required for such Partner.<\/p>\n
Section 5.6 Valuation.
\n ——— <\/p>\n
For purposes of this Agreement, except as specifically provided in
\nSections 3.4.C, and 8.5, securities and other property of the Partnership shall
\nbe valued as follows:<\/p>\n
A. The Portfolio Securities of the Partnership shall be valued by the
\nGeneral Partner pursuant to subparagraphs B, C, D and E hereof (i) at the time
\nof any distribution pursuant to Section 5.2 in order to determine the amount of
\nany Deemed Portfolio Loss, (ii) at the time of any distribution pursuant to
\nSection 5.4, (iii) upon the distribution of Partnership assets in liquidation
\npursuant to Section 5.3 and (iv) annually pursuant to Section 10.3.<\/p>\n
B. Marketable Securities shall (i) if traded on a national securities
\nexchange, be valued at the average of their last sales prices on such exchange
\non which such Marketable Securities shall have traded on the last ten (10)
\ntrading days on which such Marketable Securities were traded immediately
\npreceding the date of determination, or (ii) if the trading of such Marketable
\nSecurities is reported through the National Association of Securities Dealers
\nAutomated Quotation System, such Marketable Securities shall be valued at the
\naverage of the last closing “bid” prices as shown by the National Association of
\nSecurities Dealers Automated Quotation System on the last ten (10) trading days
\non which such Marketable Securities were traded immediately preceding the date
\nof determination.<\/p>\n
C. Except as provided in subparagraph E below, all property other than
\nMarketable Securities shall be valued by the General Partner in such manner as
\nit may determine in good faith. Factors considered in valuing individual
\nsecurities will include purchase price, prices received in recent significant
\nprivate placements of securities of the same issuer, prices of securities of
\ncomparable public and private companies engaged in similar businesses and
\nchanges in the financial condition and prospects of the issuer.<\/p>\n
D. If within thirty (30) days after receipt of notice of any valuation
\nmade pursuant to subparagraph C above Two-Thirds in Interest of the Limited
\nPartners shall so request, the General Partner shall obtain at the expense of
\nthe Partnership a valuation of any securities (other than Marketable Securities
\nsubject to valuation under subparagraph B) or other property from an independent
\nfirm of investment bankers of nationally recognized standing selected by the
\nGeneral Partner and approved by Two-Thirds in Interest of the Limited Partners,
\nsuch approval not to be unreasonably withheld. The decision of such firm shall
\nbe binding on all Partners. Each distribution in kind of securities other than
\nMarketable Securities subject to valuation under subparagraph B shall be<\/p>\n
24<\/p>\n
accompanied by a notice from the General Partner reminding the Limited Partners
\nof their right to require an independent valuation under this subparagraph D.<\/p>\n
E. Upon liquidation of the Partnership, all assets which will be
\ndistributed to the Partners in liquidation, other than Marketable Securities
\nsubject to valuation under subparagraph B above, shall, upon request by Two-
\nThirds in Interest of the Limited Partners, be valued by an independent firm of
\ninvestment bankers of nationally recognized standing selected by the General
\nPartner. The decision of such firm as to the liquidation value of all such
\nassets shall be binding on all Partners.<\/p>\n
Section 5.7 Allocations of Operating Income and Loss and Investment
\n ——————————————————-
\n Gain and Loss.
\n ————- <\/p>\n
A. Subject to Sections 5.8 and 5.9, all Operating Income and Operating
\nLoss of the Partnership shall be allocated to the Partners in proportion to
\ntheir Percentages of Contributed Capital.<\/p>\n
B. Subject to Sections 5.8 and 5.9, an Investment Gain for any fiscal
\nyear or other accounting period of the Partnership shall be allocated as follows
\nand in the following order of priority as of the close of such fiscal year or
\nother accounting period:<\/p>\n
(1) First, to the General Partner until there has been allocated
\n —–
\n on a cumulative basis pursuant to this Section 5.7.B(1) for all
\n fiscal years and other accounting periods of the Partnership an
\n amount of Investment Gain equal to the amount of Investment Loss
\n that has been allocated pursuant to Section 5.7.C(3) for all
\n fiscal years and other accounting periods of the Partnership;<\/p>\n
(2) Second, to the Partners, in proportion to their Percentages
\n ——
\n of Contributed Capital, until there has been allocated on a
\n cumulative basis pursuant to this Section 5.7.B(2) for all fiscal
\n years and other accounting periods of the Partnership an amount
\n of Investment Gain equal to the amount of Investment Loss that
\n has been allocated pursuant to Section 5.7.C(2) for all fiscal
\n years and other accounting periods of the Partnership;<\/p>\n
(3) Third, to the Partners, in proportion to their Percentages of
\n —–
\n Contributed Capital, until there has been allocated on a
\n cumulative basis for all fiscal years and other accounting
\n periods of the Partnership pursuant to this Section 5.7.B(3), an
\n amount of Net Investment Gain equal to the sum of (i) the amount
\n of Deemed Portfolio Loss that has been included in the
\n determination of Capital Contributions Allocable to Liquidated
\n Portfolio Securities for purposes of making distributions
\n pursuant to Section 5.2.B, and (ii) the amount of distributions
\n made with respect to Management Fees pursuant to clause (ii) of
\n Section 5.2.B(1);<\/p>\n
25<\/p>\n
(4) Fourth, eighty percent (80%) to the General Partner and
\n ——
\n twenty percent (20%) to the Partners in proportion to their
\n Percentages of Contributed Capital until the General Partner has
\n been allocated on a cumulative basis for all fiscal years and
\n other accounting periods of the Partnership pursuant to this
\n Section 5.7.B(4), in addition to allocations made to the General
\n Partner pursuant to this Section 5.7 in proportion to its
\n Percentage of Contributed Capital, an amount of Net Investment
\n Gain of the Partnership equal to the amount distributed to the
\n General Partner pursuant to Section 5.2.B(2);<\/p>\n
(5) Fifth, thereafter with respect to the remaining Net
\n —–
\n Investment Gain, eighty percent (80%) to the Partners, in
\n proportion to their Percentages of Contributed Capital, and
\n twenty percent (20%) to the General Partner.<\/p>\n
C. Subject to Sections 5.8 and 5.9, an Investment Loss for any fiscal
\nyear or other accounting period of the Partnership shall be allocated as follows
\nand in the following order of priority as of the close of such fiscal year or
\nother accounting period:<\/p>\n
(1) First, to the extent of the Net Investment Gain, if any, that
\n —–
\n has been allocated hereunder for all prior fiscal years and other
\n accounting periods, to the Partners in proportion to the
\n respective amounts, if any, by which (i) their allocations of Net
\n Investment Gain for all such prior years and other periods exceed
\n (ii) their Target Allocations as of the close of the fiscal year
\n or other period for which an Investment Loss is then being
\n allocated;<\/p>\n
(2) Second, to the Partners, in proportion to their Percentages
\n ——
\n of Contributed Capital, until the Limited Partners’ Capital
\n Accounts have been reduced to zero; and<\/p>\n
(3) Third, thereafter, to the General Partner.
\n —– <\/p>\n
Section 5.8 Special Provisions.
\n —————— <\/p>\n
The following provisions shall be complied with notwithstanding any
\nprovision of this Agreement other than Section 5.9:<\/p>\n
A. If any Partner unexpectedly receives any adjustment, allocation or
\ndistribution described in Section 1.704-1(b)(2) (ii)(d)(4), 1.704-
\n1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations which
\ncauses it to have an, or increases the amount of its, Adjusted Capital Account
\nDeficit, items of Partnership income and gain shall be specially allocated to
\nsuch Partner in an amount and manner sufficient to eliminate, to the extent
\nrequired by the Treasury Regulations, such Partner’s Adjusted Capital Account
\nDeficit as quickly as possible, provided that an allocation pursuant <\/p>\n
26<\/p>\n
to this Section 5.8.A shall be made to a Partner only if and to the extent that
\nsuch Partner would have an Adjusted Capital Account Deficit after all other
\nallocations provided for in this Article V have been tentatively made as if this
\nSection 5.8.A were not in this Agreement. This Section 5.8.A is intended to
\nconstitute a “qualified income offset” as defined in Section 1.704-
\n1(b)(2)(ii)(d) of the Treasury Regulations.<\/p>\n
B. Notwithstanding Section 5.7.C, an allocation of Operating Loss or
\nInvestment Loss shall not be made to a Partner to the extent that such
\nallocation would cause such Partner to have an Adjusted Capital Account Deficit.
\nAn allocation that would be made to a Partner but for this Section 5.8.B shall
\ninstead be made to the other Partners to the extent, and in the proportions,
\nthat they could then be made such allocation without causing them to have
\nAdjusted Capital Account Deficits. Any excess allocation of Operating Loss or
\nInvestment Loss shall be made to the General Partner.<\/p>\n
C. The allocations set forth in Sections 5.8.A, 5.8.B, and 5.9 hereof
\n(the “Regulatory Allocations”) are intended to comply with certain provisions of
\nthe Treasury Regulations. Notwithstanding any other provision of this Article
\nV, the Regulatory Allocations shall be taken into account in making allocations
\nof other items of income, gain, loss, deduction and expenditure among the
\nPartners so that, to the extent possible consistent with the Code and the
\nTreasury Regulations, and on a cumulative basis, the respective net amounts of
\nsuch allocations of other items and the Regulatory Allocations to the Partners
\nare equal to the respective net amounts that would have been allocated to the
\nPartners had no Regulatory Allocations been made. The General Partner shall
\napply this Section 5.8.C at such times, in such order and in such manner as it
\ndetermines, in its sole discretion, is likely to minimize any economic
\ndistortions caused by the Regulatory Allocations.<\/p>\n
D. If contributions that would otherwise be required pursuant to
\nSection 3.1 with respect to the interest in the Partnership of a particular
\nLimited Partner are excused hereunder or by law, such interest shall be treated
\nfor purposes of this Article V as an interest in a separate portfolio of assets
\nin which, subject to all other provisions of this Agreement, only such Limited
\nPartner (or his assignees or legatees) and the General Partner shall be entitled
\nto participate (as provided in this Article V). Such separate portfolio shall
\nconsist of such Limited Partner’s pro rata share (by allocable Capital
\nContribution) of each Portfolio Security the Partnership’s interest in which
\nwas, or the assets of which were, acquired in part with capital contributions of
\nsuch Limited Partner. Such Limited Partner (and his assignees and legatees)
\nshall have no interest in the Partnership or its assets to the extent not
\nincluded in, and shall have no right to participate in the results of the
\nPartnership to the extent not attributable to, such separate portfolio. A
\nseparate portfolio shall be charged with portions of the Partnership’s expenses,
\nliabilities, costs and reserves in such manner as the General Partner reasonably
\ndetermines to be fair and equitable.<\/p>\n
E. Income, gain, loss and deduction with respect to property
\ncontributed to the Partnership by a Partner shall be shared among the Partners
\nso as to take account of the variation <\/p>\n
27<\/p>\n
between the basis of the property to the Partnership and its fair market value
\nat the time of contribution in accordance with the principles of Section 704(c)
\nof the Code.<\/p>\n
Section 5.9 Special Provisions in the Event of Borrowings or a
\n ————————————————–
\n Section 754 Election.
\n ——————– <\/p>\n
A. If the Partnership incurs any borrowings, the Partnership (i) shall
\nallocate any “non-recourse deductions,” computed and determined in accordance
\nwith Sections 1.704-2(b)(1), 1.704-2(c) and 1.704-2(j) of the Treasury
\nRegulations, it may have twenty percent (20%) to the General Partner and eighty
\npercent (80%) to the Partners in proportion to their Percentages of Contributed
\nCapital, (ii) shall allocate any “partner non-recourse deductions,” computed and
\ndetermined in accordance with Sections 1.704-2(i)(1), 1.704-2(i)(2) and 1.704-
\n2(j) of the Treasury Regulations, it may have so as to comply with Section
\n1.704-2(i) of the Treasury Regulations and (iii) shall make such allocations as
\nare necessary to comply with the “minimum gain chargeback” provisions of
\nSections 1.704-2(f), 1.704-2(i) and 1.704-2(j) of the Treasury Regulations,
\ntaking into account all exceptions provided by such provisions to the
\napplicability of this clause (iii).<\/p>\n
B. To the extent an adjustment to the adjusted tax basis of any asset
\nof the Partnership pursuant to Section 734(b) or Section 743(b) of the Code is
\nrequired, pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations,
\nto be taken into account in determining Capital Accounts, the amount of such
\nadjustment to the Capital Accounts shall be treated as an item of gain (if the
\nadjustment increases the basis of the asset) or loss (if the adjustment
\ndecreases the basis of the asset), and such gain or loss shall be specially
\nallocated to the Partners in a manner that is consistent with the manner in
\nwhich their Capital Accounts are required to be adjusted pursuant to Section
\n1.704-1(b)(2)(iv)(m) of the Treasury Regulations.<\/p>\n
VI.<\/p>\n
MANAGEMENT; PAYMENT OF EXPENSES
\n ——————————-<\/p>\n
Section 6.1 Description of General Partner.
\n —————————— <\/p>\n
@Ventures Partners III, LLC, a limited liability company comprised of
\nDavid S. Wetherell, Guy M. Bradley, Jonathan Callaghan, Andrew Hajducky, Peter
\nH. Mills and CMGI as its members, is the General Partner of the Partnership.<\/p>\n
Section 6.2 Management by the General Partner.
\n ——————————— <\/p>\n
The management, policy and operation of the Partnership shall be vested
\nexclusively in the General Partner who shall perform all acts and enter into
\nand perform all contracts and other undertakings which it deems necessary or
\nadvisable to carry out any and all of the purposes of the Partnership. Without
\nlimiting the foregoing general powers and duties, and except as is otherwise<\/p>\n
28<\/p>\n
expressly set forth herein, the General Partner is hereby authorized and
\nempowered on behalf of the Partnership and, as relevant herein, is required:<\/p>\n
A. To enter into a Management Contract with the Management Company on
\nthe terms, including those pertaining to payment of the Management Fee, set
\nforth in Exhibit A attached hereto; provided that such Contract may not be
\n ———
\namended without the written consent of Two-Thirds in Interest of the Limited
\nPartners unless such Contract is amended to increase the Management Fee, in
\nwhich case unanimous consent of the Limited Partners shall be required in
\naccordance with Section 12.3.<\/p>\n
B. To identify investment opportunities for the Partnership, negotiate
\nand structure the terms of such investments, arrange additional financing needed
\nto consummate such investments and monitor such investments.<\/p>\n
C. To invest the assets of the Partnership in the securities of any
\norganization, domestic or foreign, without other limitation as to kind and
\nwithout other limitation as to marketability of the securities, and pending such
\ninvestment, to invest the assets of the Partnership in Temporary Investments.<\/p>\n
D. To exercise all rights, powers, privileges and other incidents of
\nownership with respect to the Portfolio Securities, including, without
\nlimitation the voting of such Portfolio Securities, the approval of a
\nrestructuring of an investment, participation in arrangements with creditors,
\nthe institution and settlement or compromise of suits and administrative
\nproceedings, and other similar matters.<\/p>\n
E. To sell, transfer, liquidate or otherwise terminate investments made
\nby the Partnership.<\/p>\n
F. To employ or consult brokers, accountants, attorneys, or specialists
\nin any field of endeavor whatsoever, including such persons or firms who may be
\nPartners, provided, however, that no Affiliate of the General Partner may be
\nhired or employed without the approval of Two-Thirds in Interest of the Limited
\nPartners.<\/p>\n
G. To deposit any funds of the Partnership in any bank or trust company
\nor money market fund provided that, in the case of any bank or trust company
\nsuch bank or trust company qualifies as a Financial Institution and in the case
\nof any money market fund such fund would qualify as a money market fund in which
\nthe Partnership may make a Temporary Investment, and to entrust to such bank or
\ntrust company any of the securities, monies, documents and papers belonging to
\nor relating to the Partnership; provided, however, that from time to time, in
\norder to facilitate any transaction, any of the said securities, monies,
\ndocuments and papers belonging to or relating to the Partnership may be
\ndeposited in and entrusted to any brokerage firm that is a member of the <\/p>\n
29<\/p>\n
New York Stock Exchange and which has minimum net capital of $10 million as
\ncalculated in accordance with the Securities Exchange Act of 1934.<\/p>\n
H. To determine, settle and pay all expenses, debts and obligations of
\nand claims against the Partnership and, in general, to make all accounting and
\nfinancial determinations and decisions.<\/p>\n
I. To enter into, make and perform all contracts, agreements and other
\nundertakings as may be determined to be necessary or advisable or incident to
\nthe carrying out of the foregoing objectives and purposes, the execution thereof
\nby the General Partner to be conclusive evidence of such determination.<\/p>\n
J. To execute all other instruments of any kind or character which the
\nGeneral Partner determines to be necessary or appropriate in connection with the
\nbusiness of the Partnership, the execution thereof by the General Partner to be
\nconclusive evidence of such determination.<\/p>\n
K. To provide Bridge Financing on the terms and subject to the
\nconditions set forth in Section 4.1 to Portfolio Companies and to borrow funds
\nand provide guarantees in the name and on behalf of the Partnership in
\nconnection therewith solely in order to facilitate or expedite the closing of
\ninvestments in Portfolio Securities.<\/p>\n
L. To make Follow-on Investments in Portfolio Companies from Capital
\nContributions called from the Partners pursuant to Section 3.1 and, after the
\nend of the Commitment Period, from amounts reserved from Operating Receipts and
\nInvestment Receipts. The aggregate amount of Follow-on Investments made after
\nthe end of the Commitment Period shall not exceed the lesser of (x) the uncalled
\nCapital Commitments as of the last day of the Commitment Period reduced by
\nCapital Contributions used to make Committed Investments or (y) ten percent
\n(10%) of the Capital Commitments of the Partnership. Except upon the approval
\nof Two-Thirds in Interest of the Limited Partners, no Follow-on Investment may
\nbe made by the Partnership after the third anniversary of the last day of the
\nCommitment Period.<\/p>\n
M. To make Committed Investments in Portfolio Companies after the end
\nof the Commitment Period from Capital Contributions called from the Partners
\npursuant to Section 3.1 and from amounts reserved from Operating Receipts and
\nInvestment Receipts. The General Partner shall notify the Limited Partners at
\nthe end of the Commitment Period of any Committed Investments of the Partnership
\ndescribed in clause (i) of the definition thereof. In addition, any Committed
\nInvestment of the Partnership described in clause (i) of the definition thereof,
\nshall be consummated within six months of the end of the Commitment Period. The
\naggregate amount of Committed Investments shall not exceed the lesser of (x) the
\nuncalled Capital Commitments as of the last day of the Commitment Period reduced
\nby Capital Contributions used to make Follow-on Investments after the end of the
\nCommitment Period or (y) fifteen percent (15%) of the Capital Commitments of the
\nPartnership. Except upon the approval of Two-Thirds in Interest of the Limited
\nPartners, no Committed Investment may be made by the Partnership after the third
\nanniversary of the last day of the Commitment Period.<\/p>\n
30<\/p>\n
N. Subject to Section 6.2.O, to guarantee obligations of Portfolio
\nCompanies, provided that the sum of any such guarantee, the Partnership’s
\ninvestment in Portfolio Securities of such Portfolio Company and the amount of
\nBridge Financing provided that total guarantees made by the Partnership at any
\none time shall not exceed twenty percent (20%) of the aggregate Capital
\nCommitments of the Partnership, exclusive of guarantees made in connection with
\nTemporary Bridge Financing.<\/p>\n
O. To use best efforts to avoid the generation of UBTI to Tax-Exempt
\nPartners understanding that it is the intention of the General Partner not to
\nmake or structure investments by the Partnership or operate the Partnership in
\nsuch a manner so that UBTI is generated to such Partners.<\/p>\n
P. To take such steps as the General Partner shall consider necessary
\nor appropriate in its sole discretion to cause the Partnership to qualify as a
\nVenture Capital Operating Company as of the date of the Partnership’s first
\nacquisition of Portfolio Securities and at all relevant times thereafter.<\/p>\n
Q. To cause the Partnership or one or more corporate subsidiaries of
\nthe Partnership to borrow funds (i) to purchase Portfolio Securities pending the
\nreceipt of Capital Contributions called from the Partners pursuant to Section
\n3.1, or (ii) to provide Bridge Financing to a Portfolio Company pursuant to
\nSection 4.2; provided, however, that the Partnership shall not borrow funds as
\nprovided in this Section 6.2.Q, if as a result of such borrowing UBTI would be
\ngenerated to Tax-Exempt Partners; and provided, further, that any borrowing
\nshall be on terms that are no less favorable to such corporate subsidiary than
\nthose applicable to loans extended by the lender to borrowers comparable to such
\ncorporate subsidiary, and that the General Partner shall cause the corporate
\nsubsidiary to retire this indebtedness with such Capital Contributions
\nimmediately upon receipt thereof.<\/p>\n
Section 6.3 Powers of Limited Partners.
\n ————————– <\/p>\n
The Limited Partners shall not participate in the control of the
\nPartnership and shall have no authority to act for or bind the Partnership.<\/p>\n
Section 6.4 Continuity Mode.
\n ————— <\/p>\n
If during the Commitment Period, or during any eighteen month period
\nafter the end of the Commitment Period, both David S. Wetherell and Peter H.
\nMills cease to be members of either the General Partner or the Management
\nCompany or otherwise cease to be actively involved in the business thereof (such
\nevent hereinafter referred to as a “Triggering Event”), prompt notice of such
\nTriggering Event shall be given to all Limited Partners. At any time within
\nninety (90) days after receipt of notice of a Triggering Event, Two-Thirds in
\nInterest of the Limited Partners may by an election in writing <\/p>\n
31<\/p>\n
determine to put the Partnership in a Continuity Mode. While in a Continuity
\nMode (i) the General Partner shall only be permitted to retain the investments
\nof the Partnership and to make further investments solely in (x) Temporary
\nInvestments, (y) securities of companies as to which the Partnership had an
\nexisting legal commitment to make an investment on the date the Partnership was
\nput in the Continuity Mode and (z) investments in current Portfolio Companies
\nbeing considered on the date the Partnership was placed in a Continuity Mode,
\nand (ii) the General Partner shall not be permitted to call for payment of any
\nremaining installments of Capital Commitments except for the purpose of funding
\ninvestment commitments pursuant to (y) and (z) above and to pay current expenses
\nof the Partnership pursuant to Section 6.6 of this Agreement. Except as
\nhereinabove expressly provided, from and after the date the Partnership enters
\nthe Continuity Mode, the General Partner shall continue to act on behalf of the
\nPartnership to perform the functions of the General Partner and to have all the
\nrights and privileges of the General Partner hereunder. If within sixty (60)
\ndays after commencement of the Continuity Mode (or such shorter period of time
\nas may be agreed to by Two-Thirds in Interest of the Limited Partners) Two-
\nThirds in Interest of the Limited Partners do not by an election in writing
\nremove the General Partner or dissolve the Partnership, the Continuity Mode
\nshall automatically terminate and all decisions with respect to the management
\nand operation of the Partnership will again be made by the General Partner in
\naccordance with the terms of this Agreement. As provided in the Management
\nContract, the Management Fee shall be reduced by one half while the Partnership
\nis in the Continuity Mode.<\/p>\n
Section 6.5 Payment of Fees and Expenses.
\n —————————- <\/p>\n
Fees and expenses incurred with respect to the business of the
\nPartnership shall be payable as follows:<\/p>\n
A. Subject to the provisions of Section 6.5.D, the Partnership shall be
\nresponsible for and shall pay all fees and reasonable expenses not specified in
\nsubparagraph B as being the responsibility of the Management Company, including
\nwithout limitation:<\/p>\n
(1) out-of-pocket expenses incurred and fees paid by the Partnership
\n or the General Partner in connection with the formation of the
\n Partnership and the offering and distribution of interests therein to the
\n Limited Partners in an amount not in excess of $200,000 (when aggregated
\n with amounts paid by the Foreign Fund);<\/p>\n
(2) any government or regulatory filings, returns or reports,
\n including without limitation fees and expenses for annual reports and
\n foreign qualification certificates;<\/p>\n
(3) expenses incurred in connection with the administration of the
\n Partnership including without limitation, the Management Fee and fees
\n paid to consultants, custodians, outside counsel, accountants, agents,
\n investment bankers and other similar outside advisors;<\/p>\n
32<\/p>\n
(4) unreimbursed fees and out-of-pocket costs of acquiring, holding
\n or selling, Temporary Investments, Portfolio Securities or Bridge
\n Financing, whether or not such transactions close, including fees and
\n expenses of consultants, outside counsel and accountants and similar
\n outside advisors in connection with identifying, evaluating, structuring
\n and consummating potential investments by the Partnership and
\n recordkeeping expenses and finders’, placement, brokerage and other
\n similar fees; provided that with respect to consummated investments, it
\n is expected, and the Management Company will use its reasonable best
\n efforts to ensure, that such fees and expenses paid by the Partnership
\n will be reimbursed by the Portfolio Company in which the investment is
\n made;<\/p>\n
(5) out-of-pocket costs of reporting to the Limited Partners;<\/p>\n
(6) any taxes, fees or other governmental charges levied against the
\n Partnership or on its income or assets or in connection with its business
\n or operations;<\/p>\n
(7) costs of litigation or other matters that are the subject of
\n indemnification pursuant to Section 9.3; and<\/p>\n
(8) costs of winding-up and liquidating the Partnership.<\/p>\n
B. The Management Company, so long as the Management Contract is in
\neffect, shall be responsible for and shall pay all of its out-of-pocket expenses
\nand those of the General Partner, including expenses which relate to salaries,
\noffice space, supplies and other facilities of their businesses except as set
\nforth in Section 6.5.A(4).<\/p>\n
C. The Management Company shall serve as the management company of the
\nPartnership in accordance with the terms of the Management Contract, and shall
\nbe entitled to receive a Management Fee in the amount and payable in the manner
\nprovided in such Contract.<\/p>\n
D. The amount of any unreimbursed fees and expenses incurred directly
\nin connection with a proposed or consummated investment in a Portfolio Company
\nand payable by the Partnership under subparagraph A shall be allocated among the
\nPartnership, the Foreign Fund and CMGI in proportion to the amount which would
\nhave been or which was invested by each.<\/p>\n
E. Subject to Section 6.2.O, any Break-Up Fee payable to the
\nPartnership, the General Partner, the Management Company or their respective
\nAffiliates shall be paid as follows. An amount equal to the aggregate
\nunreimbursed fees and expenses paid by the Partnership, the General Partner, the
\nManagement Company or their Affiliates which were specific to the transaction
\ngiving rise to such fee shall be paid to each such entity in proportion to the
\nfees and expenses incurred by it. The balance of any such Break-Up Fee shall be
\npaid to the Management Company; provided that one-half <\/p>\n
33<\/p>\n
of the remaining Break-Up Fee shall be credited against the Management Fee
\npayable by the Partnership, the Foreign Fund and CMGI in subsequent periods in
\nproportion to their respective aggregate capital commitments.<\/p>\n
F. The General Partner, the Management Company and their respective
\nAffiliates shall be entitled to receive management, directors’, consulting and
\nother similar fees and compensation from Portfolio Companies; provided that the
\namount of such fees and other compensation is reasonable in relation to the work
\ninvolved and bears a reasonable relation to fees and compensation charged for
\nsimilar work by third parties. One half of such fees shall be credited against
\nthe Management Fee payable by the Partnership, the Foreign Fund and CMGI in
\nproportion to their respective aggregate capital commitments and if such portion
\nof such fees exceeds the Management Fee, such excess shall be credited against
\nthe Management Fee payable by the Partnership, the Foreign Fund and CMGI in
\nsubsequent periods in proportion to their respective aggregate capital
\ncommitments. To the extent such amounts exceed total future installments of the
\nManagement Fee, they shall be paid to the Partnership, the Foreign Fund and CMGI
\nin proportion to their respective aggregate capital commitments and included in
\ntheir respective Operating Receipts.<\/p>\n
VII.<\/p>\n
OTHER ACTIVITIES OF PARTNERS; CO-INVESTMENT OBLIGATION
\n ——————————————————<\/p>\n
Section 7.1 Commitment of General Partner.
\n —————————– <\/p>\n
The General Partner hereby agrees to use its best efforts in furtherance
\nof the purposes and objectives of the Partnership and to devote to such purposes
\nand objectives such of its time as shall be necessary for the management of the
\naffairs of the Partnership. During the Commitment Period, each of the members
\nof the General Partner will devote substantially all of his business time to the
\naffairs of the Partnership, the Foreign Fund and the CMGI Funds and the
\nManagement Company (solely with respect to its responsibilities to the
\nPartnership, to the Foreign Fund and to the CMGI Funds); provided that David S.
\nWetherell and Andrew Hajducky shall be permitted to devote such business time to
\nthe affairs of CMGI and its subsidiaries as each of them deems necessary to
\nfulfill his duties as an executive officer of CMGI. Following expiration of the
\nCommitment Period, each of the members of the General Partner shall devote to
\nthe Partnership such time as may be reasonably necessary to manage the assets of
\nthe Partnership for the benefit of the investors therein.<\/p>\n
Subject to the other provisions of this Agreement, the General Partner
\nand any of its Affiliates (i) may act as a director, officer, employee or
\nadvisor of any corporation, a trustee of any trust, or a partner of any
\npartnership; (ii) may receive compensation for his services as an advisor with
\nrespect to, or participation in profits derived from, the investments of any
\nsuch corporation, trust or partnership; and (iii) may, subject to the time
\ncommitments as set forth above, acquire, invest in, hold and sell securities of
\nany entity. Neither the Partnership nor any other Partner shall have <\/p>\n
34<\/p>\n
by virtue of this Agreement, any right, title or interest in or to such other
\ncorporation, trust, partnership or investment.<\/p>\n
Section 7.2 Opportunity to Participate in Future Investment Vehicles.
\n ——————————————————– <\/p>\n
The General Partner will not, without the consent of Two-Thirds in
\nInterest of the Limited Partners, create, manage, sponsor or act as investment
\nadvisor to any limited partnership or other investment vehicle, other than the
\nForeign Fund, the CMGI Funds, the Partnership and CMGI (a “New Investment
\nVehicle”) until the earlier of (i) the end of the Commitment Period, and (ii)
\nthe commitment by the Partnership of at least seventy-five percent (75%) of its
\nCapital Commitments. In the event that prior to the termination of the
\nPartnership, the General Partner or any of its Affiliates creates, manages,
\nsponsors or acts as investment advisor to another limited partnership or other
\ninvestment vehicle with primary investment objectives and policies substantially
\nsimilar to those of the Partnership, each Partner will be offered an opportunity
\nto invest in such limited partnership or other investment vehicle pursuant to
\nthe terms of the offering of interests in such limited partnership or other
\ninvestment vehicle on terms no less favorable than those offered to other
\ninvestors in such vehicles.<\/p>\n
Section 7.3 Dealings with Limited Partners.
\n —————————— <\/p>\n
The General Partner shall not enter into any agreement, contract,
\nmodification or undertaking of any kind with any Limited Partner that would
\ngrant rights in the Partnership as a Limited Partner by the acquisition of a
\nCapital Commitment that are more favorable than those offered to any other
\nLimited Partner. Notwithstanding the foregoing, the General Partner may permit
\ncertain Limited Partners to co-invest with it and the Partnership in Portfolio
\nSecurities and may enter into agreements with any Limited Partner for the
\nprovision to the Partnership or the General Partners of any services thereunder,
\nprovided that any such agreement will be on terms equivalent to those entered
\ninto with independent third parties.<\/p>\n
Section 7.4 Co-Investment Obligation.
\n ———————— <\/p>\n
A. CMGI will co-invest with the Partnership in Portfolio Companies an
\naggregate amount which shall be equal to the greater of (i) $30 million, and
\n(ii) 19.9% of the sum of the aggregate Capital Commitments of the Partnership
\nand the aggregate capital commitments to the Foreign Fund (the “Co-investment
\nObligation”). The Co-investment Obligation shall arise with respect to all
\ninvestments made by the Partnership in Portfolio Companies (including Follow-on
\nInvestments, Committed Investments, Bridge Financing and through the funding of
\nguarantees), shall be satisfied in cash and shall be made on the same terms,
\nsame price and in securities identical to the Portfolio Securities purchased by
\nthe Partnership. In the case of each investment in a Portfolio Company, the
\npercentage of such investment made by the Partnership and CMGI will be computed
\nas follows: (x) the percentage of such investment made by the Partnership will
\nbe equal to the sum of the aggregate Capital Commitments of the Partnership and
\nthe aggregate capital commitments to the Foreign Fund <\/p>\n
35<\/p>\n
divided by the sum of the aggregate Capital Commitments of the Partnership, the
\naggregate capital commitments of the Foreign Fund and the Co-investment
\nObligation, and (y) the percentage invested by CMGI will be equal to the Co-
\ninvestment Obligation divided by the sum of the aggregate Capital Commitments of
\nthe Partnership, the aggregate capital commitments of the Foreign Fund and the
\nCo-investment Obligation.<\/p>\n
B. CMGI may assign all or any portion of its Co-investment Obligation
\nto any of its Affiliates, including, without limitation, any CMGI Fund; however,
\nfor purposes of this Section 7.4, the Co-investment Obligation shall remain an
\nobligation of CMGI.<\/p>\n
Section 7.5 Other Co-Investment Rights.
\n ————————– <\/p>\n
In the case of any investment by the Partnership, the General Partner
\nshall cause employees of the Management Company or other persons who perform
\nservices to or for the benefit of the Partnership (including without limitation,
\nthe members of the Management Company) to co-invest with the Partnership an
\namount equal to two percent (2%) of the aggregate amount to be invested by the
\nPartnership, the Foreign Fund and CMGI, collectively; provided that the
\ninvestment by such employees and other persons shall be on the same terms, same
\nprice and in securities identical to the Portfolio Securities purchased by the
\nPartnership. The obligations of the employees or other persons under this
\nSection 7.5 may be funded through a partnership or limited liability company,
\nall of the equity holders of which are employees of the Management Company or
\nother persons who perform services to or for the benefit of the Partnership
\n(herein referred to as the “Employee Fund”).<\/p>\n
Section 7.6 Foreign Fund Co-Investment.
\n ————————– <\/p>\n
The General Partner shall cause the Partnership to coinvest with the
\nForeign Fund and to invest only in the same Portfolio Companies and on the same
\nterms and at the same times as the Foreign Fund. Investments by the Foreign
\nFund, the Partnership and CMGI shall be made by the Foreign Fund, the
\nPartnership and CMGI at the same times and shall be in proportion to their
\nrespective capital commitments.<\/p>\n
Section 7.7 Co-investments by the Other Participating Funds. (a) In
\n ———————————————–
\nconnection with each investment opportunity pursuant to which any investment is
\nmade under this Agreement at any time, the Foreign Fund, CMGI and the Employee
\nFund, including the employees or other persons who invest pursuant to Section
\n7.5 either directly or through the Employee Fund (the “Other Participating
\nFunds”) that participate in such investment pursuant to the terms of this
\nAgreement shall at such time each make an investment as a co-investment with
\nrespect to such investment made pursuant to such investment opportunity, in the
\nsame class or series of securities as such investment and on terms substantially
\nthe same as those that apply to such investment in an amount that in the case of
\neach Other Participating Fund that is participating in such investment
\nopportunity, is in the same proportion to the aggregate amount invested by the
\nPartnership and all such Other Participating Funds as the proportion <\/p>\n
36<\/p>\n
that the aggregate capital commitments of all partners of such Other
\nParticipating Fund at such time bears to the aggregate Capital Commitments plus
\nthe aggregate capital commitments of all partners of all such Other
\nParticipating Funds at such time.<\/p>\n
(b) No Other Participating Fund shall at any time sell, exchange,
\ntransfer or otherwise dispose of any securities that were acquired as a co-
\ninvestment with the Partnership in the same investment opportunity as
\ncontemplated by Section 7.7(a) unless (i) the Partnership also sells, exchanges,
\ntransfers or otherwise disposes of, at substantially the same time, securities
\nthat were acquired by the Partnership in such investment opportunity, and the
\naggregate amount of such securities sold, exchanged, transferred or otherwise
\ndisposed of by the Partnership and such Other Participating Fund is pro rata in
\nproportion to the aggregate amount respectively invested by the Partnership and
\nsuch Other Participating Fund and (ii) the terms of such sale, exchange,
\ntransfer or other disposition, except to the extent necessary to address
\nregulatory or other legal considerations, are substantially the same as those
\napplicable to such sale, exchange, transfer or other disposition by the
\nPartnership at such time. In connection with any sale, exchange, transfer or
\nother disposition by the Partnership at any time of any securities comprising
\nall or part of an investment acquired pursuant to any investment opportunity,
\neach of the Other Participating Funds shall, at substantially the same time,
\nsell, exchange, transfer or otherwise dispose of securities in respect of its
\nrelated co-investment in an aggregate amount equal to the amount determined
\npursuant to clause (i) of the immediately preceding sentence and on terms
\ndescribed in clause (ii) of the immediately preceding sentence.<\/p>\n
(c) The General Partner undertakes, represents and warrants that the
\npartnership agreement or other operative agreement for each of the Other
\nParticipating Funds will contain provisions substantially to the effect set
\nforth in Sections 7.7(a) and 7.7(b) and that no such provision of such limited
\npartnership agreements shall be amended or waived unless Sections 7.7(a) and
\n7.7(b) shall have been amended or waived in substantially the same manner.<\/p>\n
VIII.<\/p>\n
ADMISSIONS; ASSIGNMENTS; REMOVAL AND WITHDRAWALS
\n ————————————————<\/p>\n
Section 8.1 Admission of Additional General Partner.
\n ————————————— <\/p>\n
It is not contemplated that any additional general partners will be
\nadmitted to the Partnership. A person may be admitted to the Partnership as a
\ngeneral partner only with the written consent of the General Partner and Two-
\nThirds in Interest of the Limited Partners. Any such person so admitted as a
\ngeneral partner shall be liable for all the obligations of the Partnership
\narising before its admission as though it had been a general partner when such
\nobligations were incurred. In the event of the addition of a general partner,
\nthe participation of such person in the management of the Partnership and the
\ninterest of such person in the Partnership’s Operating Income and Loss and
\nInvestment Gain and Loss must be approved by the General Partner and Two-Thirds
\nin Interest of the Limited Partners at the time of such person’s admission.<\/p>\n
37<\/p>\n
Section 8.2 Admission of Additional Limited Partners.
\n —————————————- <\/p>\n
After the expiration of the 270 day period commencing on the Initial
\nClosing Date of the Partnership, additional Limited Partners (other than
\nSubstitute Limited Partners admitted pursuant to Section 8.3) shall be admitted
\nto the Partnership only with the written consent of, and on the terms approved
\nby, all Partners. Until such time, the General Partner may admit one or more
\nadditional Limited Partners, subject only to satisfaction of the following
\nconditions: (i) each such additional Limited Partner shall execute and deliver
\na Subscription Agreement and an appropriate amendment to this Agreement pursuant
\nto which such additional Limited Partner agrees to be bound by the terms and
\nprovisions hereof, (ii) such admission would not result in a violation of any
\napplicable law, including the federal or state securities laws, or any term or
\ncondition of this Agreement and, as a result of such admission, the Partnership
\nwould not be required to register as an investment company under the Investment
\nCompany Act, and (iii) such additional Limited Partner shall pay to the
\nPartnership, on the date of its admission to the Partnership, an amount equal to
\nthe sum of (x) the percentage of its Capital Commitment which is equal to the
\npercentage of the other Limited Partners’ Capital Commitments that shall have
\nbeen payable at or prior to the admission of the additional Limited Partner, and
\n(y) an amount equal to interest on that portion of the Capital Commitment
\npayable upon admission at the Treasury Rate from the date such portion would
\nhave been payable if such additional Limited Partner had been admitted on the
\ndate of formation of the Partnership to the date of actual payment, which amount
\nshall be treated as Operating Receipts. The Partnership shall pay, from such
\ninitial Capital Contribution of such additional Limited Partner, its allocable
\nportion of the Management Fee computed as if such additional Limited Partner had
\nbeen a Partner of the Partnership since the Initial Closing Date. The name and
\nbusiness address of each Limited Partner admitted to the Partnership under this
\nSection 8.2 and the amount of its Capital Commitment shall be added to
\nSchedule 1 hereto. Each additional Limited Partner admitted pursuant to this
\n———-
\nSection 8.2 during the 270 day period commencing with the formation of the
\nPartnership shall be deemed for purposes of all allocations of Operating Income
\nor Loss and Investment Gain or Loss to have been admitted on the date of
\nformation of the Partnership. Admission of an additional Limited Partner shall
\nnot be a cause of dissolution of the Partnership.<\/p>\n
Section 8.3 Assignment of Partnership Interest.
\n ———————————- <\/p>\n
The General Partner shall not assign or otherwise transfer its interest
\nas the general partner of the Partnership. A Limited Partner may assign or
\notherwise transfer all or any part of its interest in the Partnership (provided
\nthat such part shall include a Capital Commitment, whether funded or unfunded,
\nof at least $1 million), subject to the limitations set forth in Section 8.4.
\nThe assignee or transferee of a Limited Partner’s interest in the Partnership
\n(an “Assignee”) shall have the right to become a Substitute Limited Partner only
\nif the following conditions are satisfied:<\/p>\n
38<\/p>\n
A. A duly executed and acknowledged written instrument of assignment
\nshall have been filed with the Partnership.<\/p>\n
B. The Limited Partner and the Assignee shall have executed and
\nacknowledged such other instruments and taken such other action as the General
\nPartner shall reasonably deem necessary or desirable to effect such
\nsubstitution, including, without limitation, the execution by the Assignee of a
\nSubscription Agreement, an appropriate amendment to this Agreement and a Power
\nof Attorney substantially similar to that referred to in Section 12.8 hereof.<\/p>\n
C. The restrictions on transfer contained in Section 8.4 shall be
\ninapplicable, and, if requested by the General Partner, the Limited Partner or
\nthe Assignee shall have obtained an opinion of counsel reasonably satisfactory
\nto the General Partner as to the legal matters set forth in that Section. The
\nLimited Partner may request that the General Partner seek to obtain the required
\nopinion from counsel recommended by such Limited Partner which is reasonably
\nsatisfactory to the General Partner, provided that the expense of such counsel
\nshall be an expense of the Partnership that is paid out of the Capital
\nCommitment of such Partner.<\/p>\n
D. The Limited Partner or the Assignee shall have paid to the
\nPartnership such amount of money as is sufficient to cover all expenses incurred
\nby or on behalf of the Partnership in connection with such substitution.<\/p>\n
E. The General Partner shall have consented, in its sole and absolute
\ndiscretion, to such substitution.<\/p>\n
The pledge or hypothecation of a Partner’s interest in the Partnership shall not
\nbe deemed an assignment or transfer; provided, that such pledge or hypothecation
\nshall nonetheless be subject to the restrictions set forth in Section 8.4. An
\nAssignee who is not admitted to the Partnership as a Substitute Limited Partner
\nshall have none of the rights of a Partner and the assignor in such case shall
\nremain fully liable for the unpaid portion of its Capital Commitment.<\/p>\n
Section 8.4 Restrictions on Transfer.
\n ———————— <\/p>\n
Notwithstanding any other provision of this Agreement, no Limited Partner
\nmay assign or otherwise transfer all or any part of its interest in the
\nPartnership, and no attempted or purported assignment or transfer of such
\ninterest shall be effective, unless (i) after giving effect thereto, the
\naggregate of all the assignments or transfers by the Partners of interests in
\nthe Partnership within the 12 month period ending on the proposed date of such
\nassignment or transfer would not equal or exceed 50% of the total interests of
\nthe Partners in the capital or profits of the Partnership, and such assignment
\nor transfer would not otherwise terminate the Partnership for the purposes of
\nSection 708 of the Code, (ii) such assignment or transfer would not result in a
\nviolation of applicable law, including the federal and state securities laws, or
\nany term or condition of this Agreement and, as a result of such assignment or<\/p>\n
39<\/p>\n
transfer, the Partnership would not be required to register as an investment
\ncompany under the Investment Company Act, (iii) if requested by the General
\nPartner, such Limited Partner shall deliver a favorable opinion of counsel
\nsatisfactory to the General Partner that such transfer would not result in (x) a
\nviolation of the Securities Act or any blue sky laws or other securities laws of
\nany state of the United States applicable to the Partnership or the interest to
\nbe transferred, (y) the Partnership being required to register, or seek an
\nexemption from registration, under the Investment Company Act, and (z) the
\nPartnership being deemed to be a “publicly traded partnership” within the
\nmeaning of Section 7704 of the Code, (iv) the General Partner shall have
\nconsented thereto, which consent may be granted or withheld in its sole
\ndiscretion, and (v) such assignment or transfer is to an entity which is an
\nAccredited Investor.<\/p>\n
Section 8.5 Removal of General Partner.
\n ————————– <\/p>\n
A. The General Partner may be removed by the Limited Partners only upon
\nthe approval of at least Two-Thirds in Interest of the Limited Partners, (i) if
\nany act or omission of the General Partner in connection with the Partnership
\nconstitutes bad faith, willful misconduct or fraud, (ii) if the General Partner
\nis in material violation of its obligations hereunder or (iii) if a Triggering
\nEvent occurs; provided, however, that the Limited Partners may remove the
\nGeneral Partner pursuant to clauses (i) and (ii) above only if a court of
\ncompetent jurisdiction or, at the election of Two-Thirds in Interest of the
\nLimited Partners, an arbitration committee (which shall conduct its proceedings
\nin accordance with the commercial rules of the American Arbitration Committee
\nand shall consist of three individuals, of whom one shall be selected by the
\nGeneral Partner, one shall be selected by Two-Thirds in Interest of the Limited
\nPartners and one shall be selected by written agreement of the other two) has
\npreviously determined that any act or omission of the General Partner in
\nconnection with the Partnership constitutes bad faith, willful misconduct or
\nfraud or that the General Partner is in material violation of its obligations
\nhereunder.<\/p>\n
B. In the event of any such removal of the General Partner, the
\nPartnership shall, within sixty (60) days of the date of such removal, obtain an
\nappraisal of the Portfolio Securities of the Partnership, including Portfolio
\nSecurities the purchase of which the Partnership has committed to as of such
\nremoval date (together “Removal Date Securities”) from an independent firm of
\ninvestment bankers of nationally recognized standing selected by the removed
\nGeneral Partner and approved by Two-Thirds in Interest of the Limited Partners,
\nwhich approval shall not unreasonably be withheld. As of the removal date, the
\nremoved General Partner shall become a Special Limited Partner. The Special
\nLimited Partner shall be entitled to receive as distributions pursuant to
\nSection 5.2 that portion of all distributions made with reference to its
\nPercentage of Contributed Capital, and that portion of all Incentive
\nDistributions it would have received pursuant to Section 5.2 with respect to the
\nRemoval Date Securities, provided that all such distributions received in
\nconnection with such Removal Date Securities do not in the aggregate exceed the
\naggregate fair market value determinations for such securities made pursuant to
\nthis Section 8.5.C. Notwithstanding the foregoing, if after the removal of the
\nGeneral Partner the Partnership then terminates under Article XI without there
\nhaving been elected a successor <\/p>\n
40<\/p>\n
General Partner, the General Partner shall be entitled to the same allocations
\nand distributions arising out of the Dissolution Sale as if it had not been
\nremoved. The Special Limited Partner shall not have the limited approval rights
\naccorded to Limited Partners in this Agreement, and as a Special Limited
\nPartner, the General Partner and its Affiliates shall be released from all
\ncommitments and obligations under Article VII effective upon the date of such
\nremoval.<\/p>\n
Section 8.6 Withdrawals.
\n ———– <\/p>\n
Except as provided in this Section 8.6 or in Section 8.7 below, no
\nPartner shall have the right to withdraw from the Partnership. Any Limited
\nPartner may withdraw from the Partnership in the event that (a) continuation of
\nthe Partner as a Limited Partner of the Partnership is substantially likely to
\nbe prohibited under any applicable federal or state law or regulations
\nthereunder then in effect, including ERISA, or (b) the continuation of any Tax-
\nExempt Partner as a Limited Partner of the Partnership is substantially likely
\nto result in the loss of tax-exempt status by such Partner. In such event, such
\nPartner shall advise the General Partner of the specific legal prohibition or
\nother reason against continuing as a Partner of the Partnership. The General
\nPartner may, in its sole discretion, require the Limited Partner to provide an
\nopinion to the General Partner from counsel reasonably satisfactory to the
\nGeneral Partner to the effect that such Partner is so prohibited from continuing
\nas a Limited Partner of the Partnership as provided in clauses (a) or (b) of
\nthis Section 8.6. Only after reviewing such legal opinion and approval by the
\nGeneral Partner, or otherwise upon approval by the General Partner may the
\nLimited Partner withdraw from the Partnership. As of the date of such
\nwithdrawal, such Limited Partner shall be entitled to receive, but subject to
\nthe prior satisfaction in full of all liabilities of the Partnership and its
\ncorporate subsidiaries, direct and contingent, an amount determined as provided
\nin Section 8.7(c) below, payable in the manner determined by the General Partner
\nunder Section 8.7(c). Such Limited Partner shall in all other respects have no
\nrights of any Partner under this Agreement. The General Partner will provide to
\nthe remaining Partners of the Partnership the opportunity to acquire the
\nremaining Capital Commitment of such Limited Partner pro rata in proportion to
\ntheir Percentages of Contributed Capital, and if not all Partners so choose to
\nacquire, to any Partner who desires to acquire an additional Capital Commitment
\nin such amount as such Partner may request.<\/p>\n
Section 8.7 ERISA Matters.
\n ————- <\/p>\n
(a) The General Partner, on behalf of the Partnership, shall use its
\nbest efforts to ensure that the Partnership qualifies as a Venture Capital
\nOperating Company and that none of the assets of the Partnership shall be deemed
\nto be “plan assets” (within the meaning of the DOL Regulations) of any ERISA
\nPartner. As used in the remainder of this Section 8.7 all terms in quotation
\nmarks have the meanings assigned to them in the DOL Regulations.<\/p>\n
(b) If the General Partner shall so elect, the General Partner and the
\nPartnership shall no longer be required to comply with Section 8.7(a) at any
\ntime after the General Partner determines (i) that the equity participation in
\nthe Partnership by “benefit plan investors” is not “significant” <\/p>\n
41<\/p>\n
as such term is defined in the DOL Regulations, and (ii) not to permit a
\ntransfer of an interest in the Partnership or an Interest in the Partnership’s
\ncapital assets or property pursuant to Sections 8.2, 8.3 or 8.4 if such
\nadmission or transfer would result in the equity participation in the
\nPartnership by “benefit plan investors” being “significant”. If the General
\nPartner so elects to discontinue compliance of its obligations under Section
\n8.7(a), then, thereafter, notwithstanding any other provision of this Agreement,
\nno transfer of Limited Partner interests to, or admission of, a “benefit plan
\ninvestor” shall be permitted if the General Partner shall determine that such
\ntransfer shall cause the equity participation of “benefit plan investors” to be
\n“significant”.<\/p>\n
(c) In the event that either (i) the General Partner shall determine
\nthat it has become necessary for any ERISA Partner to withdraw from the
\nPartnership or (ii) any ERISA Partner shall determine that it is necessary for
\nit to withdraw from the Partnership, in either case (i) because there is a
\nmaterial risk of a material violation of, or breach of the fiduciary duties of
\nany person (other than a breach of the fiduciary duties of any such person based
\nupon the investment strategy or performance of the Partnership) under ERISA or
\nthe related provisions of the Code if such ERISA Partner continues as a Limited
\nPartner of the Partnership, or (ii) because there is a material likelihood that
\nthe assets of the Partnership are or may be deemed to be “plan assets” of such
\nERISA Partner within the meaning of the DOL Regulations; then the General
\nPartner or such ERISA Partner, as the case may be, shall deliver to the other a
\nnotice to that effect, accompanied by an opinion of counsel (which may be
\ncounsel retained or employed by the General Partner or such ERISA Partner, as
\nthe case may be, so long as such counsel shall be reasonably acceptable to such
\nERISA Partner and the General Partner) to that effect, which opinion shall be
\nreasonably acceptable to such ERISA Partner and the General Partner and shall
\nexplain in reasonable detail the reasons therefor. In the case of such notice
\nfrom the ERISA Partner, unless within 90 days after the date on which such
\nnotice was given, the General Partner, using reasonably practicable efforts, is
\nable to eliminate the necessity for such withdrawal to the reasonable
\nsatisfaction of such ERISA Partner and its counsel, whether by correction of the
\ncondition giving rise thereto or amendment of this Agreement or otherwise, such
\nERISA Partner shall be entitled, at its election, upon written notice to the
\nGeneral Partner, to withdraw from the Partnership on the terms set forth in
\nSection 8.7(d) below. In the case of such notice from the General Partner, such
\nERISA Partner shall be required to withdraw from the Partnership pursuant to
\nSection 8.7(d) below unless, within 90 days after the date on which notice was
\ngiven, the General Partner, using reasonably practicable efforts, or the ERISA
\nPartner, using reasonably practicable efforts, as appropriate, shall eliminate
\nthe necessity for such withdrawal to the reasonable satisfaction of the General
\nPartner and its counsel, whether by correction of the condition giving rise
\nthereto or an amendment to this Agreement or otherwise. The obligation of the
\nERISA Partner to make additional Capital Contributions pursuant to Section 3.1
\nshall be suspended during the above referenced ninety (90) day period and shall
\nbe terminated if such ERISA Partner withdraws pursuant to Section 8.7(d).<\/p>\n
(d) The withdrawing Limited Partner shall be entitled to receive
\nwithin ninety (90) days after the effective date of such withdrawal an amount
\nequal to the excess, if any, of the positive closing Capital Account balance the
\nLimited Partner would have had (computed as provided in <\/p>\n
42<\/p>\n
Section 3.2) if such effective date had constituted the date of the liquidation
\nof the Partnership over the aggregate amount of distributions (with such
\ndistributions valued at fair market value pursuant to Section 5.4 as of the date
\nof such distribution) made to such Limited Partner from and after such effective
\ndate. The General Partner shall provide the withdrawing Limited Partner with a
\nwritten explanation of its determination of the Capital Account of such
\nwithdrawing Limited Partner as computed pursuant to the preceding sentence
\nwithin sixty (60) days of the effective date of such withdrawal. The withdrawing
\nLimited Partner shall thereafter have ten (10) business days from the date of
\nreceipt of such notice to make known any objections to such determination. Any
\nsuch objection made shall indicate briefly the reasons for such objection. If
\nwithin ten (10) business days of the date of receipt of such determination, the
\nwithdrawing Limited Partner fails to notify the General Partner of any objection
\nto such determination, such determination shall be final and conclusive. If
\nwithin the ten (10) day period the withdrawing Limited Partner notifies the
\nGeneral Partner of its objection to such determination, the General Partner and
\nthe withdrawing Limited Partner shall attempt to agree upon a mutually
\nacceptable determination. If within ten (10) days of the first-mentioned ten
\n(10) day period a determination satisfactory to the General Partner and the
\nwithdrawing Limited Partner shall not have been agreed to, the General Partner
\nshall submit the dispute between the General Partner and the withdrawing Limited
\nPartner to arbitration in accordance with the Rules of the American Arbitration
\nAssociation. The parties agree to hold such arbitration in Boston,
\nMassachusetts. The fees and expenses of any arbitrators retained in accordance
\nwith the provisions hereof shall be borne equally by the Partnership and the
\nwithdrawing Limited Partner.<\/p>\n
Any distribution or payment to a withdrawing Limited Partner pursuant
\nto this subparagraph (d) may, in the sole discretion of the General Partner, be
\nmade in cash, in Portfolio Securities (in which event the withdrawing Limited
\nPartner shall not, without its express written consent, be distributed more than
\nits pro rata interest in any type, class or portion of the Partnership’s
\nPortfolio Securities), in the form of a promissory note, the terms of which
\nshall be mutually agreed upon by the General Partner and the withdrawing Limited
\nPartner, or any combination thereof. Notwithstanding anything in the foregoing
\nsentence, if the distribution of any Portfolio Security to the withdrawing
\nLimited Partner would result in a violation of a law or regulation applicable to
\nthe Limited Partner or a tax penalty to the Limited Partner and the Limited
\nPartner delivers a notice to such effect to the General Partner, such Limited
\nPartner may designate a different entity to receive the distribution or
\ndesignate, subject to the approval of the General Partner, an alternative
\ndistribution procedure. In the event that an ERISA Partner shall provide an
\nopinion reasonably acceptable to the General Partner by counsel reasonably
\nacceptable to the General Partner (which counsel may be employed by the ERISA
\nPartner so long as such counsel is reasonably acceptable to the General Partner)
\nthat the acceptance or retention of a promissory note by such ERISA Partner
\npursuant to this Section 8.7(d) would result in a violation of ERISA or the
\nrelated provision of the Code, then the General Partner shall use its best
\nefforts to use an alternative means of making such payment or distribution.<\/p>\n
(e) In the event that either (i) the General Partner shall determine
\nthat it has become necessary for any ERISA Partner to discontinue making
\nadditional Capital Contributions <\/p>\n
43<\/p>\n
pursuant to Section 3.1 or (ii) any ERISA Partner shall determine that it is
\nnecessary for it to discontinue making such additional Capital Contributions, in
\neither case (i) because there is a material risk of violation of, or breach of
\nthe fiduciary duties of any person (other than a breach of the fiduciary duties
\nof any such person based upon the investment strategy or performance of the
\nPartnership, unless such investment strategy is inconsistent with the primary
\npurpose of the Partnership as set forth in Section 2.1) under ERISA or the
\nrelated provisions of the Code if the ERISA Partner were to make additional
\nCapital Contributions to the Partnership, or (ii) because there is a material
\nrisk that the assets of the Partnership are or will be deemed to be “plan
\nassets” of such ERISA Partner within the meaning of the DOL Regulations; then
\nthe General Partner or such ERISA Partner, as the case may be, shall deliver to
\nthe other a notice to that effect, accompanied by an opinion of counsel (which
\nmay be counsel retained or employed by the General Partner or such ERISA
\nPartner, as the case may be, so long as such counsel shall be reasonably
\nacceptable to such ERISA Partner and General Partner) to that effect which
\nopinion shall be reasonably acceptable to such ERISA Partner and the General
\nPartner and shall explain in reasonable detail the reason therefor. In the case
\nof such notice from the ERISA Partner, unless within ninety (90) days after the
\ndate on which such notice was given, the General Partner, using reasonably
\npracticable efforts, is able to eliminate the necessity for such discontinuance
\nto the reasonable satisfaction of such ERISA Partner and its counsel, whether by
\ncorrection of the condition giving rise thereto or amendment of this Agreement
\nor otherwise, such ERISA Partner shall be entitled, at its election, upon
\nwritten notice to the General Partner, to be released from its obligation to
\nmake additional Capital Contributions pursuant to Section 3.1. In the case of
\nsuch notice from the General Partner, such ERISA Partner shall be required to
\ndiscontinue making additional Capital Contributions pursuant to Section 3.1
\nunless, within ninety (90) days after the date on which the notice was given,
\nthe General Partner, using reasonably practicable efforts, or the ERISA Partner,
\nusing reasonably practicable efforts, as appropriate, shall eliminate the
\nnecessity for such discontinuance of its obligation to make additional capital
\ncontributions to the reasonable satisfaction of the General Partner and its
\ncounsel, whether by correction of the condition giving rise thereto or an
\namendment to this Agreement or otherwise. The obligation of the ERISA Partner to
\nmake additional capital contributions pursuant to Section 3.1 shall be suspended
\nduring the above referenced ninety (90) day period. An ERISA Partner who has
\nbeen released of its obligation to make additional contributions shall not be
\ntreated as in default of its obligation to make such Contributions, in which
\ncase such ERISA Partner’s Capital Contribution obligation set forth in Section
\n3.1 shall be reduced to the amount of capital actually contributed by such ERISA
\nPartner to the Partnership. The General Partner will provide to the remaining
\nPartners of the Partnership the opportunity to acquire the remaining Capital
\nCommitment of such Limited Partner pro rata in proportion to their Percentages
\nof Contributed Capital, and if not all Partners so choose to acquire, to any
\nPartner who desires to acquire an additional Capital Commitment in such amount
\nas such Partner may request.<\/p>\n
(f) In lieu of the procedures for redemption of an interest set forth
\nin this Section 8.7, the General Partner may cause some or all of the interest
\nof the withdrawing Limited Partner to be sold for cash to the remaining Partners
\npro rata in proportion to their Percentage of Contributed Capital, and if not
\nall Partners so choose to acquire such interest, <\/p>\n
44<\/p>\n
such interest shall be allocated pro rata among those Partners who elect to
\npurchase such interest in proportion to their Percentage of Contributed Capital,
\nand the proceeds thereof to be remitted to the withdrawing Limited Partner;
\nprovided, however, that (i) the price at which such interest or any portion
\nthereof may be sold shall be based on the amount due to the withdrawing Limited
\nPartner with respect to such portion as set forth in Section 8.7(d), and (ii)
\nthe entire interest of the withdrawing Limited Partner must be sold and\/or
\nredeemed prior to or upon the effective date of the withdrawal as provided in
\nthis Section 8.7.<\/p>\n
IX.<\/p>\n
LIABILITY OF PARTNERS; INDEMNIFICATION
\n ————————————–<\/p>\n
Section 9.1 Liability of General Partner.
\n —————————- <\/p>\n
A. The General Partner shall be subject to the liabilities of a partner
\nin a partnership without limited partners, and nothing herein shall be deemed to
\nrelieve the General Partner of liabilities to third parties which it otherwise
\nhas under applicable law. The General Partner shall not be liable to the
\nPartnership or any other Partner for any act or omission taken or suffered by
\nthe General Partner in good faith and in the belief that such act or omission is
\nin the best interests of the Partnership; provided that such act or omission is
\nnot in violation of this Agreement and does not constitute willful misconduct,
\nfraud or a willful violation of law by the General Partner. The General Partner
\nshall not be liable to the Partnership or any other Partner for any action taken
\nby any other Partner, nor shall the General Partner (in the absence of willful
\nmisconduct, fraud or a willful violation of law by the General Partner) be
\nliable to the Partnership or any other Partner for any action of any employee or
\nagent of the Partnership provided that the General Partner shall have exercised
\nappropriate care in the selection and supervision of such employee or agent.<\/p>\n
B. Whenever in this Agreement the General Partner is permitted or
\nrequired to make a decision (i) in its “discretion” or “sole discretion” or
\nunder a grant of similar authority or latitude, the General Partner shall be
\nentitled to consider only such interests and factors as it desires, including
\nits own interests, and shall have no duty or obligation to give any
\nconsideration to any interests of or factors affecting the Partnership or any
\nother Person, or (ii) in its “good faith” or under another express standard, the
\nGeneral Partner shall act under such express standard and shall not be subject
\nto any other or different standard imposed by this Agreement or other applicable
\nlaw; provided that all judgments and determinations shall comply with the
\nfiduciary duty of the General Partner to the Limited Partners.<\/p>\n
C. Notwithstanding Section 9.3 below, the General Partner shall not be
\nindemnified for any losses, liabilities or expenses arising from or out of an
\nalleged violation of federal or state securities laws unless (i) there has been
\na successful adjudication on the merits of each count involving alleged
\nsecurities law violations as to the particular indemnitee, or (ii) such claims
\nhave been dismissed with prejudice on the merits by a court of competent
\njurisdiction as to the particular indemnitee, <\/p>\n
45<\/p>\n
or (iii) a court of competent jurisdiction approves a settlement of the claims
\nagainst a particular indemnitee. In any claim for indemnification for federal or
\nstate securities law violations, the party seeking indemnification shall place
\nbefore the court the position of the Securities and Exchange Commission and the
\nMassachusetts Securities Division with respect to the issue of indemnification
\nfor securities law violations. The Partnership shall not incur the cost of that
\nportion of any insurance, other than public liability insurance, which insures
\nany party against any liability the indemnification of which is herein
\nprohibited.<\/p>\n
Section 9.2 Liability of Limited Partners.
\n —————————– <\/p>\n
The liability of any Limited Partner shall be limited to its uncalled
\nCapital Commitment (as such may be reduced under Section 3.3 or 3.4); provided,
\nthat a Limited Partner shall be liable for the return of any part of a
\ndistribution in respect of its Capital Contribution to the extent required by
\nlaw.<\/p>\n
Section 9.3 Indemnification of the General Partner and Limited
\n ————————————————–
\n Partners.
\n ——– <\/p>\n
The General Partner and its partners, agents, employees and Affiliates
\nand the Limited Partners (the “Indemnitees”) shall be and hereby are (i)
\nindemnified and held harmless by the Partnership and (ii) released by the other
\nPartners from and against any and all claims, demands, liabilities, costs,
\nexpenses, damages, losses, suits, proceedings and actions for which such
\nIndemnitee has not otherwise been reimbursed (collectively, “Liabilities”),
\nwhether judicial, administrative, investigative or otherwise, of any nature
\nwhatsoever, known or unknown, liquidated or unliquidated, that may accrue to the
\nPartnership or any other Partner or in which any of the Indemnitees may become
\ninvolved, as a party or otherwise, arising out of the conduct of the business or
\naffairs of the Partnership by the respective Indemnitee or otherwise relating to
\nthis Agreement, provided that an Indemnitee shall not be entitled to
\nindemnification or release hereunder if it shall have been determined by a court
\nof competent jurisdiction that (x) such person did not act in good faith and in
\na manner such person reasonably believed to be in the best interests of the
\nPartnership and, in the case of a criminal proceeding, did not have reasonable
\ncause to believe that his conduct was lawful, or (y) such Liabilities shall have
\narisen from a violation of this Agreement or the gross negligence, willful
\nmisconduct, fraud or willful violation of law by such Indemnitee, or actions of
\nsuch Indemnitee outside the scope of and unauthorized by this Agreement. The
\ntermination of any proceeding by settlement shall not, of itself, create a
\npresumption that the Indemnitee did not act in good faith and in a manner that
\nsuch person reasonably believed to be in the best interests of the Partnership
\nor that the Indemnitee did not have reasonable cause to believe that its conduct
\nwas lawful. Any indemnification right provided for in this Section 9.3 shall be
\nretained by any removed General Partner and its partners, agents, employees and
\nAffiliates. The indemnification rights provided for in this Section 9.3 shall
\nsurvive the termination of the Partnership or this Agreement.<\/p>\n
46<\/p>\n
Section 9.4 Payment of Expenses.
\n ——————- <\/p>\n
Expenses incurred by an Indemnitee in defense or settlement of any claim
\nthat may be subject to a right of indemnification hereunder may be advanced by
\nthe Partnership prior to the final disposition thereof provided that the
\nfollowing conditions are satisfied: (i) the claim relates to the performance of
\nduties or services by the Indemnitee on behalf of the Partnership, and (ii) the
\nIndemnitee undertakes to repay the advanced funds to the Partnership if it is
\nultimately determined that the Indemnitee is not entitled to be indemnified
\nhereunder or under applicable law. The right of any Indemnitee to the
\nindemnification provided herein shall be cumulative of, and in addition to, any
\nand all rights to which such Indemnitee may otherwise be entitled by contract or
\nas a matter of law or equity and shall extend to such Indemnitee’s successors,
\nassigns and legal representatives. All judgments against the Partnership and
\nthe General Partner, in respect of which such General Partner is entitled to
\nindemnification, must first be satisfied from Partnership assets before the
\nGeneral Partner is responsible therefor. The obligations of Limited Partners
\nunder this Article IX shall be satisfied only after any applicable insurance
\nproceeds have been exhausted and then only out of Partnership assets and, to the
\nextent required by law, distributions made by the Partnership to its Partners,
\nand Limited Partners shall have no personal liability to fund indemnification
\npayments hereunder.<\/p>\n
X.<\/p>\n
ACCOUNTING FOR THE PARTNERSHIP; REPORTS
\n —————————————<\/p>\n
Section 10.1 Accounting for the Partnership.
\n —————————— <\/p>\n
The Partnership shall use the accrual method of accounting and its
\nfinancial statements shall be prepared in accordance with generally accepted
\naccounting principles. The Partnership’s tax return shall be prepared on an
\naccrual basis. The fiscal year of the Partnership shall end on December 31.<\/p>\n
Section 10.2 Books and Records.
\n —————– <\/p>\n
The General Partner shall keep or cause to be kept complete and
\nappropriate records and books of account. Except as otherwise expressly
\nprovided herein, such books and records shall be maintained on the basis used in
\npreparing the Partnership’s federal income tax returns. Such information as is
\nnecessary to reconcile such books and records with generally accepted accounting
\nprinciples shall also be maintained. The books and records shall be maintained
\nat the principal office of the Partnership, and shall be available for
\ninspection and copying by any Partner at its expense during ordinary business
\nhours following reasonable notice.<\/p>\n
Section 10.3 Reports to Partners.
\n ——————- <\/p>\n
Within forty-five (45) days after the end of each calendar quarter, the
\nGeneral Partner will prepare and deliver to each Partner (i) an unaudited
\nbalance sheet and income statement of the Partnership for such quarter,
\naccompanied by a report on any material developments in existing investments<\/p>\n
47<\/p>\n
which occurred during such quarter and a newsletter relating to the
\nPartnership’s activities, (ii) a statement showing the balance in such Partner’s
\nCapital Account and a reconciliation of such balance, and (iii) a statement
\nshowing the amount of UBTI, if any, generated by the Partnership during such
\nquarter. After the end of each fiscal year, the General Partner shall cause an
\naudit of the Partnership to be made by an independent public accountant of
\nnationally recognized status of the financial statements of the Partnership for
\nthat year. Such audit shall be certified and a copy thereof shall be delivered
\nto each Partner within ninety (90) days after the end of each of the
\nPartnership’s fiscal years. Such certified financial statements shall also be
\naccompanied by a report on the Partnership’s activities during the year prepared
\nby the General Partner. Within ninety (90) days after the end of each fiscal
\nyear, the Partnership will deliver to each Partner the General Partner’s good
\nfaith estimate of the fair value of the Partnership’s investments as of the end
\nof such year, a statement showing the balances in each Partner’s Capital Account
\nas of the end of such year, and such other information, reports and forms as are
\nnecessary to assist each Partner in the preparation of his federal, state and
\nlocal tax returns. The General Partner shall give prompt notice to the Limited
\nPartners if at any time the Partnership’s general counsel or accountants
\nwithdraw or are replaced, or if in the opinion of counsel to the Partnership the
\nPartnership ceases to qualify as a Venture Capital Operating Company.<\/p>\n
Section 10.4 Annual Meeting.
\n ————– <\/p>\n
The General Partner will convene an annual meeting of all Partners, at
\nsuch time and on such date, beginning in 1999, as it deems appropriate, at which
\nthe General Partner will report on the activities of the Partnership during the
\nyear and respond to questions pertaining to the Partnership’s affairs. The
\nGeneral Partner shall call a special meeting of all Partners upon request of a
\nMajority in Interest of the Limited Partners. The General Partner will give all
\nPartners at least thirty (30) days notice of each annual or special meeting;
\nprovided that such notice may be waived by a Majority in Interest of the Limited
\nPartners in the case of any special meeting.<\/p>\n
XI.<\/p>\n
DISSOLUTION AND WINDING UP
\n ————————–<\/p>\n
Section 11.1 Termination.
\n ———– <\/p>\n
The existence of the Partnership shall terminate upon the first to occur
\nof the following events:<\/p>\n
(1) July 31, 2006; provided that the duration of the Partnership may
\n be extended by the General Partner for not more than two additional one
\n year periods;<\/p>\n
48<\/p>\n
(2) the sale or other disposition at any one time of all or
\n substantially all of the assets of the Partnership;<\/p>\n
(3) the happening of any event which causes the cessation of the
\n General Partner’s status as a general partner under the Act unless, in
\n any such case (i) at the time of such event there is at least one other
\n general partner of the Partnership who agrees to and does continue the
\n business of the Partnership, or (ii) all of the remaining Partners agree
\n in writing to continue the business of the Partnership and to the
\n appointment of one or more additional general partners in accordance with
\n the Act;<\/p>\n
(4) the entry of a decree of judicial dissolution under the Act; and<\/p>\n
(5) the written agreement of Two-Thirds in Interest of the Limited
\n Partners to terminate the Partnership.<\/p>\n
Section 11.2 Winding Up.
\n ———- <\/p>\n
Upon the occurrence of an event specified in Section 11.1, the
\nPartnership shall be wound up, liquidated and dissolved. At any time during the
\nwind up, liquidation and dissolution of the Partnership as provided in this
\nSection 11.2, Eighty Percent (80%) in Interest of the Limited Partners may
\nremove the General Partner and replace it with a liquidator. In addition, if
\nthere is no General Partner, Two-Thirds in Interest of the Limited Partners may
\nappoint a liquidator. The General Partner shall proceed with the Dissolution
\nSale or a liquidating distribution of the securities and other property of the
\nPartnership pursuant to the required valuation in Section 5.6, all within the
\nsole discretion of the General Partner or liquidator as promptly as practicable;
\nprovided that in the event of a Dissolution Sale the General Partner or such
\nliquidator shall continue such sale only as long as it feels is reasonably
\nnecessary to obtain fair value for the investments in Portfolio Companies and
\nother assets of the Partnership. In the Dissolution Sale the General Partner or
\nsuch liquidator shall use its best efforts to reduce the Partnership’s
\ninvestments in Portfolio Companies to cash and cash equivalents, subject to
\nobtaining fair value therefor and other legal and tax considerations.<\/p>\n
Section 11.3 Liquidating Trust.
\n —————– <\/p>\n
In the sole discretion of the General Partner or the liquidator at the
\ntermination of the Partnership pursuant to Section 11.1, all or a portion of the
\nnon-cash assets of the Partnership (other than Marketable Securities) may be
\ndistributed to a trust established for the benefit of the Partners for the sole
\npurposes of liquidating Partnership assets, collecting amounts owed to the
\nPartnership and paying any contingent or unforeseen liabilities or obligations
\nof the Partnership. The distribution to the trust will constitute a final,
\nliquidating distribution of assets pursuant to Section 5.3. The Partners’<\/p>\n
49<\/p>\n
beneficial interests in the trust will be equal to their respective interests in
\nthe assets of the Partnership upon liquidation. The trustee of the trust shall
\nbe the General Partner or the liquidator.<\/p>\n
XII.<\/p>\n
MISCELLANEOUS
\n ————-<\/p>\n
Section 12.1 Registration of Securities.
\n ————————– <\/p>\n
Stocks, bonds, securities and other property owned by the Partnership
\nshall be registered in the Partnership name or a “street name”. Any corporation
\nor transfer agent called upon to transfer any stocks, bonds and securities to or
\nfrom the name of the Partnership shall be entitled to rely on instructions or
\nassignments signed or purporting to be signed by the General Partner without
\ninquiry as to the authority of the person signing or purporting to sign such
\ninstructions or assignments or as to the validity of any transfer to or from the
\nname of the Partnership. At the time of transfer, the corporation or transfer
\nagent is entitled to assume (i) that the Partnership is still in existence and
\n(ii) that this Agreement is in full force and effect and has not been amended
\nunless the corporation or transfer agent has received written notice to the
\ncontrary.<\/p>\n
Section 12.2 Entire Agreement.
\n —————- <\/p>\n
This Agreement and the Exhibits and Schedules attached hereto set forth
\nthe full and complete agreement of the Partners with respect to the subject
\nmatter hereof and supersede any prior agreement or undertaking among the
\nparties; provided that the representations of the General Partner, the
\nPartnership and the Limited Partners contained in the Subscription Agreement
\nwill survive the execution of this Agreement.<\/p>\n
Section 12.3 Voting; Amendments.
\n —————— <\/p>\n
On any occasion on which the General Partner submits to the Limited
\nPartners for their approval a proposed amendment, waiver or other action (a
\n“Vote”) with respect to a provision of this Agreement, and the General Partner
\nalso submits to the Limited Partners of the Foreign Fund for their approval a
\nproposed Vote with respect to a provision with a substantially similar impact of
\nthe partnership agreement for the Foreign Fund, then for purposes of determining
\nwhether such Vote was approved by the Limited Partners, (x) the Partnership will
\nbe deemed to have Capital Commitments equal to the Capital Commitments of the
\nForeign Fund and the Capital Commitments of the Partnership (“Deemed Total
\nCapital Commitments”); (y) the portion of the Deemed Total Capital Commitments
\nattributable to the Foreign Fund shall be deemed voted as actually voted by the
\nLimited Partners of the Foreign Fund and (z) the portion of the Deemed Total
\nCapital Commitments attributable to the Partnership shall be voted as the
\nLimited Partners actually vote. Subject to the foregoing, this Agreement may be
\nmodified from time to time by the General Partner and a Majority in Interest of
\nthe <\/p>\n
50<\/p>\n
Limited Partners; provided that the written consent of all Partners shall be
\nrequired for any amendment which would do any of the following: (i) increase the
\nCapital Commitment of any Partner; (ii) modify the distributions of Operating
\nReceipts or Investment Receipts in Section 5.2 or the allocations of Operating
\nIncome or Loss or Investment Gain or Loss in Section 5.7; (iii) extend the
\nperiod in which additional Limited Partners may be admitted to the Partnership
\nbeyond 270 days as specified in Section 8.2; (iv) amend the Management Contract
\nso as to increase the Management Fee or other compensation of the General
\nPartner; (v) increase the percentage in interest of the Limited Partners needed
\nto remove the General Partner under Section 8.5 or to terminate the Partnership
\nunder Section 11.1; or (vii) amend this Section 12.3. In addition, the written
\nconsent of all Tax-Exempt Partners shall be required to amend Section 6.2.O
\n(requiring the General Partner to use best efforts to avoid the generation of
\nUBTI), that portion of Section 6.2.Q that relates to the generation of UBTI,
\nSection 3.3 or Section 8.6, and the written consent of all ERISA Partners shall
\nbe required to amend those portions of Section 3.3, Section 6.2.P or Section 8.6
\nthat apply to ERISA Partners. No amendment may be made to any provision of this
\nAgreement which contemplates action by a vote or consent of greater than a
\nMajority in Interest of the Limited Partners without a vote or consent of such
\ngreater majority as therein specified.<\/p>\n
Section 12.4 Severability.
\n ———— <\/p>\n
If any provision of this Agreement, or the application of such provision
\nto any person or circumstance, shall be held invalid, the remainder of this
\nAgreement or the application of such provision to other persons or circumstances
\nshall not be affected thereby. Any default hereunder by a Limited Partner shall
\nnot excuse a default by any other Limited Partner.<\/p>\n
Section 12.5 Notices.
\n ——- <\/p>\n
All notices, requests, demands and other communications shall be in
\nwriting and shall be deemed to have been duly given if personally delivered or
\nsent by United States mails, or private or postal express mail service or by
\nfacsimile transmission confirmed by letter, if to the Partners, at the addresses
\nset forth on Schedule 1 attached hereto, and if to the Partnership, to the
\n ———-
\nGeneral Partner at its address set forth in said Schedule, or to such other
\naddress as any Partner shall have last designated by notice to the Partnership
\nand the other Partners, or as the General Partner shall have last designated by
\nnotice to the Limited Partners, as the case may be. Any notice shall be deemed
\nreceived, unless earlier received, (i) if sent by first-class mail, postage
\nprepaid, when actually received, (ii) if sent by private or postal express mail
\nservice, when actually received, (iii) if sent by facsimile transmission, on the
\ndate sent provided confirmatory notice is sent by first-class mail, postage
\nprepaid, and (iv) if delivered by hand, on the date of receipt.<\/p>\n
51<\/p>\n
Section 12.6 Heirs and Assigns; Execution.
\n —————————- <\/p>\n
This Agreement (i) shall be binding on the executors, administrators,
\nestates, heirs, legal representatives, successors, and assigns of the Partners;
\nand, (ii) may be executed in more than one counterpart with the same effect as
\nif the parties executing the several counterparts had all executed one
\ncounterpart; provided, however, that each separate counterpart shall have been
\nexecuted by the General Partner and that the several counterparts, in the
\naggregate, shall have been signed by all of the Partners.<\/p>\n
Section 12.7 Waiver of Partition.
\n ——————- <\/p>\n
Except as may be otherwise provided by law in connection with the
\nwinding-up, liquidation and dissolution of the Partnership, each Partner hereby
\nirrevocably waives any and all rights that it may have to maintain an action for
\npartition of any of the Partnership’s property.<\/p>\n
Section 12.8 Power of Attorney.
\n —————– <\/p>\n
Concurrently with the execution of this Agreement, each Limited Partner
\nshall execute a Power of Attorney in the form attached to the Subscription
\nAgreement.<\/p>\n
Section 12.9 Headings.
\n ——– <\/p>\n
The section headings in this Agreement are for convenience of reference
\nonly, and shall not be deemed to alter or affect the meaning or interpretation
\nof any provisions hereof.<\/p>\n
Section 12.10 Further Actions.
\n ————— <\/p>\n
Each Partner shall execute and deliver such other certificates,
\nagreements and documents, and take such other actions, as may reasonably be
\nrequested by the General Partner in connection with the formation of the
\nPartnership and the achievement of its Purposes, including, without limitation,
\n(i) any documents that the General Partner deems necessary or appropriate to
\nform, qualify, or continue the Partnership as a limited Partnership in all
\njurisdictions in which the Partnership conducts or plans to conduct business and
\n(ii) all such agreements, certificates, tax statements and other documents as
\nmay be required to be filed in respect of the Partnership.<\/p>\n
Section 12.11 Gender, Etc.
\n ———– <\/p>\n
Whenever the context permits, the use of a particular gender shall
\ninclude the masculine, feminine and neuter genders, and any reference to the
\nsingular or the plural shall be interchangeable with the other.<\/p>\n
52<\/p>\n
Section 12.12 Tax Matters Partner.
\n ——————- <\/p>\n
The General Partner shall be designated as the Tax Matters Partner in
\naccordance with Section 6231 of the Code and shall promptly notify the other
\npartners if any tax return or report of the Partnership is audited or if any
\nadjustments are proposed. In addition, the General Partner shall promptly
\nfurnish to the Partners all notices concerning administrative or judicial
\nproceedings relating to federal income tax matters as required under the Code
\nand shall supply such information to the Internal Revenue Service as may be
\nnecessary to identify the Partners as Notice Partners under Section 6231 of the
\nCode. During the pendency of any administrative or judicial proceeding, the
\nGeneral Partner shall furnish to the Partners periodic reports concerning the
\nstatus of any such proceeding. Without the consent of a Majority in Interest of
\nthe Partners, the General Partner shall not extend the statute of limitations,
\nfile a request for administrative adjustment or enter into any settlement
\nagreement relating to any Partnership item of income, gain, loss, deduction or
\ncredit for any fiscal year of the Partnership.<\/p>\n
Section 12.13 Applicable Law.
\n ————– <\/p>\n
This Agreement shall be construed and enforced in accordance with and
\ngoverned by the laws of the Commonwealth of Massachusetts.<\/p>\n
IN WITNESS WHEREOF, the parties to this Agreement have executed the same
\nas of the date first above set forth and have executed separate counterparts
\nbearing the signature of the General Partner.<\/p>\n
GENERAL PARTNER<\/p>\n
@Ventures Partners III, LLC<\/p>\n
By: \/s\/ Andrew J. Hajducky, III
\n ———————————- <\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7128],"corporate_contracts_industries":[9417],"corporate_contracts_types":[9573,9577],"class_list":["post-41384","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-cmgi-inc","corporate_contracts_industries-financial__holding","corporate_contracts_types-formation","corporate_contracts_types-formation__partner"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41384","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41384"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41384"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41384"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41384"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}