\n 10.17. Taxation as Partnership………………………………………………………. 34
\n 10.18. Deliveries of Opinions……………………………………………………….. 34<\/p>\nARTICLE XI MISCELLANEOUS TAX COMPLIANCE PROVISIONS………………………………………….. 35<\/p>\n
11.1. Substantial Economic Effect…………………………………………………… 35
\n 11.2. Other Allocations……………………………………………………………. 35
\n 11.3. Income Tax Allocations……………………………………………………….. 36
\n 11.4. Withholding…………………………………………………………………. 37 <\/p>\n
EXHIBIT A Partners’ Capital Commitments; Partnership Percentages<\/p>\n
EXHIBIT B Securities Contributed by E*Trade
\n<\/c><\/s><\/table>\n
iii<\/p>\n
E*Trade eCommerce Fund, L.P.
\n a Delaware limited partnership<\/p>\n
AMENDED AND RESTATED
\n LIMITED PARTNERSHIP AGREEMENT<\/p>\n
E*Trade Ventures I, LLC, a Delaware limited liability company (the
\n“General Partner”), as general partner, and E*Trade Group, Inc., Christos M.
\n —————
\nCotsakos and Thomas A. Bevilacqua, as limited partners, entered into a Limited
\nPartnership Agreement dated September 23, 1999. By their execution of this
\nAgreement, said original Partners hereby amend and restate that Limited
\nPartnership Agreement to read as provided herein.<\/p>\n
Each of the individuals, corporations and other entities whose names
\nare set forth under the heading “Limited Partners” on Exhibit A attached hereto
\nwho execute a counterpart of this Agreement, as limited partners (the “Limited
\n ——-
\nPartners” and, together with the General Partner, the “Partners”) hereby enter
\n——–
\ninto this Amended and Restated Limited Partnership Agreement effective as of
\nOctober 8, 1999;<\/p>\n
The Partners, in consideration of their mutual covenants contained
\nherein, agree to carry on a limited partnership pursuant to the terms of this
\nAgreement and the Delaware Revised Uniform Limited Partnership Act (the
\n“Delaware Act”).<\/p>\n
ARTICLE I
\n NAME, PURPOSE AND
\n PRINCIPAL OFFICE OF PARTNERSHIP; DEFINITIONS<\/p>\n
1.1. Partnership Name. The name of the Partnership is “E*Trade
\n —————-
\neCommerce Fund, L.P.” The affairs of the Partnership shall be conducted under
\nsuch name or such other name as the General Partner may, in its discretion,
\ndetermine. The General Partner will provide prompt written notice to the Limited
\nPartners of any change in the name of the Partnership. E*Trade Group, Inc.
\nhereby grants the Partnership, at no cost, the right to use the “E*Trade” name
\nfor the term of the Partnership.<\/p>\n
1.2. Partnership Purpose; Powers.
\n —————————<\/p>\n
(a) Purpose. The purpose of the Partnership is to (i) seek
\n ——-
\ncapital appreciation through the acquisition, holding, sale, distribution or
\nother disposition of investments in Portfolio Companies and (ii) engage in any
\nother lawful activities determined by the General Partner to be necessary or
\nadvisable in connection with the foregoing.<\/p>\n
(b) Powers. Subject to all of the terms and provisions hereof,
\n ——
\nthe Partnership shall have all powers necessary, suitable or convenient for the
\naccomplishment of the purposes of the Partnership, including, without
\nlimitation, the following:<\/p>\n
(1) to purchase, sell, invest and dispose of Securities of
\n every kind, including, without limitation, capital stock, limited
\n partnership interests, bonds, notes, debentures, securities convertible
\n into other securities, trust receipts and other obligations, instruments or
\n evidences of indebtedness, as well as in rights, warrants and options to
\n purchase securities;<\/p>\n
(2) to make and perform all contracts and engage in all
\n activities and transactions necessary or advisable to carry out the
\n purposes of the Partnership, including, without limitation, the purchase,
\n sale, transfer, pledge and exercise of all rights, privileges and incidents
\n of ownership or possession with respect to any Partnership asset or
\n liability; and the guarantee of or becoming surety for the debts of others;
\n and<\/p>\n
(3) otherwise to have all the powers available to it as a
\n limited partnership under the Delaware Act.<\/p>\n
1.3. Registered Office and Agent. The initial address of the
\n —————————
\nPartnership’s registered office in Delaware is 15 East North Street, Dover,
\nCounty of Kent, and its initial agent at such address for service of process is
\nIncorporating Services Limited. The General Partner shall provide prompt written
\nnotice to the Limited Partners of any change of the Partnership’s registered
\noffices.<\/p>\n
1.4. Principal Office. The principal office of the Partnership shall
\n —————-
\ninitially be located at 4500 Bohannon Drive, Menlo Park, California 94025. The
\nGeneral Partner may change the location of the principal office of the
\nPartnership at any time upon prompt written notice to the Limited Partners
\nindicating the new location of such principal office.<\/p>\n
1.5. Definitions. As used in this Agreement, the following terms
\n ———–
\nshall have the following meanings:<\/p>\n
Adjusted Capital Balance. As of any date, the balance of the
\n ————————
\nGeneral Partner’s Capital Account as of such date computed without regard to any
\nsuch balance created as a result of any interest as a Limited Partner held by
\nthe General Partner.<\/p>\n
After-Tax Distribution Amount shall have the meaning set forth in
\n —————————–
\nParagraph 8.2.<\/p>\n
Agreement. This Amended and Restated Limited Partnership Agreement of
\n ———
\nE*Trade eCommerce Fund, L.P., a Delaware limited partnership, as it may be
\namended in accordance with the terms hereof.<\/p>\n
Bankruptcy. A person or entity shall be deemed bankrupt if such
\n ———-
\nperson:<\/p>\n
(1) makes an assignment for the benefit of creditors;<\/p>\n
2.<\/p>\n
(2) files a voluntary petition in bankruptcy;<\/p>\n
(3) is adjudicated as bankrupt or insolvent or has entered
\n against such person an order for relief in any bankruptcy or insolvency
\n proceeding;<\/p>\n
(4) files a petition or answer seeking for himself or
\n itself any reorganization, arrangement, composition, readjustment,
\n liquidation, dissolution or similar relief under any statute, law or
\n regulation;<\/p>\n
(5) files an answer or other pleading admitting or failing
\n to contest the material allegations of a petition filed against him or it
\n in any proceeding of this nature; or<\/p>\n
(6) seeks, consents to or acquiesces in the appointment of
\n a trustee, receiver or liquidator or of all or any substantial part of his
\n or its properties.<\/p>\n
Book Value. The Book Value with respect to any asset shall be the
\n ———-
\nasset’s adjusted basis for federal income tax purposes, except as follows:<\/p>\n
(1) The initial Book Value of any property other than money
\n contributed by a Partner to the Partnership shall be the fair market value
\n of such asset at the time of contribution, as determined by the
\n contributing Partner and the Partnership The initial Book Value of the
\n Securities contributed by E*Trade shall be as set forth on Exhibit B.<\/p>\n
(2) In the discretion of the General Partner, the Book
\n Values of all Partnership assets may be adjusted to equal their respective
\n fair market values, as determined by the General Partner consistent with
\n the principles of Paragraph 9.2, and the amount of such adjustment shall be
\n treated as Capital Transaction Gain or Loss and allocated to the Capital
\n Accounts of the Partners pursuant to Paragraph 4.3, as of the following
\n times: (A) the acquisition of an additional interest in the Partnership by
\n any new or existing Partner (other than pursuant to Paragraph 7.6(b)) in
\n exchange for more than a de minimis Capital Contribution; and (B) the
\n distribution by the Partnership to a Partner of more than a de minimis
\n amount of Partnership assets in connection with an adjustment of such
\n Partner’s Partnership Percentage.<\/p>\n
(3) The Book Values of all Partnership assets shall be
\n adjusted to equal their respective fair market values, as determined by the
\n General Partner consistent with the principles of Paragraph 9.2, and the
\n amount of such adjustment shall be treated as Capital Transaction Gain or
\n Loss and allocated to the Capital Accounts of the Partners pursuant to
\n Paragraph 4.3, as of the following times: (A) the date the Partnership is
\n liquidated within the meaning of Treasury Regulation Section 1.704-
\n 1(b)(2)(ii)(g); and (B) the termination of the Partnership pursuant to the
\n provisions of this Agreement.<\/p>\n
(4) The Book Values of Partnership assets shall be
\n increased or decreased to the extent required under Treasury Regulation
\n Section 1.704-1(b)(2)(iv)(m) in the event that the adjusted tax basis of
\n Partnership assets is adjusted pursuant to Code Section 732, 734 or 743.<\/p>\n
3.<\/p>\n
(5) The Book Value of a Partnership asset shall be adjusted
\n by the depreciation, amortization or other cost recovery deductions, if
\n any, taken into account by the Partnership with respect to such asset in
\n computing Net Income or Loss.<\/p>\n
Capital Commitment shall have the meaning set forth in Paragraph 3.1.
\n ——————<\/p>\n
Capital Transaction Gain or Loss. An amount computed for any relevant
\n ——————————–
\nperiod, as of the last day thereof, that is equal to the total of (i) the
\naggregate amount recognized on the Sale or Exchange of Securities or other
\nassets held by the Partnership during such period less the sum of (A) the Book
\nValue of such Securities or other assets as of the date of such Sale or
\nExchange, plus (B) the Partnership’s expenses associated with the Sale or
\nExchange of such Securities or other assets; (ii) the Partnership’s distributive
\nshare of income, gain, loss, deduction or credit (or item thereof) derived from
\nits interest in partnerships, limited liability companies and other pass-through
\nentities to the extent such amounts would be Capital Transaction Gain or Loss if
\nrealized directly by the Partnership; (iii) dividend income of the Partnership
\nduring such period with respect to Securities of Portfolio Companies, whether
\nderived from actual or constructive distributions of cash or property; (iv)
\ninterest (and original issue discount) income of the Partnership during such
\nperiod from Securities of Portfolio Companies; (v) the aggregate adjustment to
\nthe Book Value of Partnership assets during such period computed under
\nsubparagraphs (2), (3) and (4) of the definition “Book Value”; and (vi) any
\nother amount specifically designated as Capital Transaction Gain or Loss in this
\nAgreement, including (without limitation) such amounts so designated pursuant to
\nParagraph 6.4(f).<\/p>\n
Capital Contributions means a Partner’s capital contributions
\n ———————
\ntheretofore made to the Partnership at any point in time. For purposes of
\nParagraph 6.4(b), the General Partner’s Capital Contributions shall include
\nsolely its Capital Contributions made with respect to its interest as General
\nPartner.<\/p>\n
Certificate of Limited Partnership. The Certificate of Limited
\n ———————————-
\nPartnership of E*Trade eCommerce Fund, L.P., a Delaware limited partnership,
\nfiled with the Secretary of State of Delaware, as it may be amended in
\naccordance with the terms hereof.<\/p>\n
Code. The Internal Revenue Code of 1986, as amended from time to time
\n —-
\n(and any corresponding provisions of succeeding law).<\/p>\n
Defaulting Partner shall have the meaning set forth in Paragraph
\n ——————
\n3.5(a).<\/p>\n
Delaware Act means the Delaware Revised Uniform Limited Partnership
\n ————
\nAct.<\/p>\n
Drawdown shall have the meaning set forth in Paragraph 3.2.
\n ——–<\/p>\n
Drawdown Date shall have the meaning set forth in Paragraph 3.2.
\n ————-<\/p>\n
Drawdown Notice shall have the meaning set forth in Paragraph 3.2.
\n —————<\/p>\n
E*Trade. E*Trade Group, Inc. a Delaware corporation.
\n ——-<\/p>\n
Excess Distribution Amount shall have the meaning set forth in
\n ————————–
\nParagraph 8.2.<\/p>\n
4.<\/p>\n
Excess Negative Balance shall have the meaning set forth in Paragraph
\n ———————–
\n11.2(e).<\/p>\n
Fair Value Capital Accounts means the Partners’ Capital Accounts
\n —————————
\ncomputed in accordance with Article IV, but treating each security and each
\nother asset owned by the Partnership as if, on the date as of which such
\ncomputation is being made, such security or other asset had been sold as its
\nfair market value (determined in accordance with Paragraph 9.2) and any
\nresulting Capital Transaction Gain or Loss had been allocated to the Partners’
\nCapital Accounts in accordance with Article IV.<\/p>\n
Fair Value Test means that, with respect to each Limited Partner and
\n —————
\nany proposed Partnership distribution, the sum of (i) the amount of the
\ncumulative distributions which such Limited Partner has received from the
\nPartnership, plus (ii) the amount of such Limited Partner’s Fair Value Capital
\nAccount, in each case after giving effect to the proposed distribution, is equal
\nto at least one hundred percent (100%) of such Limited Partner’s Capital
\nContributions.<\/p>\n
Final Closing Date shall have the meaning set forth in Paragraph
\n ——————
\n7.6(b).<\/p>\n
Fiscal Quarter. The Fiscal Quarters of the Partnership shall begin on
\n ————–
\nJanuary 1, April 1, July 1, and October 1, and end on March 31, June 30,
\nSeptember 30, and December 31, respectively, except that the Partnership’s first
\nFiscal Quarter shall begin on the date of this Agreement and end on the next
\nregular quarter end.<\/p>\n
Fiscal Year. The Partnership’s first Fiscal Year shall begin on the
\n ———–
\ndate of this Agreement and end on December 31, 1999. Thereafter, the
\nPartnership’s Fiscal Year shall commence on January 1 of each year and end on
\nDecember 31 of such year or, if earlier, the date the Partnership terminated
\nduring such year. The General Partner at any time may, in its discretion, elect
\na different Fiscal Year. The General Partner shall provide prompt written notice
\nto the Limited Partners of any such election to change the Fiscal Year.<\/p>\n
Follow-On Investment. An investment in the Securities of any existing
\n ——————–
\nPortfolio Company in which the Partnership has previously made an investment.<\/p>\n
Foreign Entity shall have the meaning set forth in Paragraph 7.2(i).
\n ————–<\/p>\n
General Partner. E*Trade Ventures I, LLC.
\n —————<\/p>\n
General Partner Distributions shall have the meaning set forth in
\n —————————–
\nParagraph 8.2(d).<\/p>\n
Insulated Limited Partner shall have the meaning set forth in
\n ————————-
\nParagraph 7.5(b).<\/p>\n
Interim Period. If a Partnership interest is transferred, the General
\n ————–
\nPartner converts to a Limited Partner, the Partnership Percentage of any Partner
\nchanges, a Partner withdraws or a new Partner is admitted to the Partnership
\nother than on the first day of any Fiscal Year, if the General Partner shall so
\nelect, the date of such event or election shall commence an Interim Period. An
\nInterim Period shall end on the last day of the Fiscal Year in which the <\/p>\n
5.<\/p>\n
Interim Period began or on the day immediately preceding the beginning of a new
\nInterim Period, whichever is earlier.<\/p>\n
Investment Period. The period beginning as of the date of this
\n —————–
\nAgreement and ending December 31, 2005.<\/p>\n
Limited Liability Entity Opinion shall have the meaning set forth
\n ——————————–
\nin Paragraph 7.2(i).<\/p>\n
Limited Partners. Each of the persons listed under the heading
\n —————-
\n“Limited Partners” on Exhibit A attached hereto and each other person duly
\nadmitted to the Partnership as a limited partner subsequent to the date hereof.<\/p>\n
Majority in Interest of the Limited Partners. Limited Partners
\n ——————————————–
\nhaving Capital Contributions the sum of which is at least a majority of the
\naggregate Capital Contributions of the Partners (excluding, for the purpose of
\ncalculating such requisite percentage, the Capital Contributions of the General
\nPartner, including interests held by the General Partner as a Limited Partner).<\/p>\n
Management Fee shall have the meaning set forth in Paragraph 5.1.
\n ————–<\/p>\n
Marketable Securities. Securities that are (i) actively traded on
\n ———————
\na national securities exchange or through the National Association of Securities
\nDealers, Inc. Automated Quotation System and the aggregate total of all such
\nSecurities then held by the Partnership would, if distributed in kind to the
\nLimited Partners, be freely transferable pursuant to SEC Rule 144 (without
\nregard to any volume limitations thereunder), an effective registration under
\nthe Securities Act or an exemption therefrom, (ii) direct obligations of, or
\nobligations guaranteed as to principal and interest by, the United States, or
\n(iii) certificates of deposit maturing within one (1) year or less issued by an
\ninstitution insured by the Federal Deposit Insurance Corporation, or similar
\nsecurities.<\/p>\n
Media Company. An entity that, directly or indirectly, owns,
\n ————-
\ncontrols or operates or has an attributable interest in (i) a U.S. broadcast
\nradio or television station or a U.S. cable television system, (ii) a “daily
\nnewspaper” (as such term is defined in Section 73.3555 of the Federal
\nCommunication Commission’s (“FCC”) rules and regulations), (iii) any U.S.
\ncommunications facility operated pursuant to a license granted by the FCC and
\nsubject to the provisions of Section 310(b) of the Communications Act of 1934,
\nas amended, or (iv) any other business that is subject to FCC regulations under
\nwhich the ownership of the Partnership in such entity may be attributed to a
\nLimited Partner or under which the ownership of a Limited Partner in another
\nbusiness may be subject to limitation or restriction as a result of the
\nownership of the Partnership in such entity.<\/p>\n
Net Capital Gain. With respect to a Partner, the aggregate amount
\n —————-
\nof net taxable income and net taxable gain allocated to such Partner for federal
\nincome tax purposes under this Agreement to the extent such allocations of
\ntaxable income and gain are effected as a result of the allocation to the
\nCapital Account of such Partner under this Agreement of corresponding items of
\nCapital Transaction Gain (net of items of Capital Transaction Loss). In
\ncalculating Net <\/p>\n
6.<\/p>\n
Capital Gain for any year, capital losses of the Partnership in prior years
\nshall be deemed to be carried over and to offset Net Capital Gain in later
\nyears.<\/p>\n
Net Income and Net Loss. Except as otherwise specifically
\n ———————–
\nprovided in this Agreement, the net book income or loss of the Partnership for
\nany relevant period computed without taking into account items comprising
\nCapital Transaction Gain or Loss. The net book income or loss of the Partnership
\nshall be computed in accordance with Federal income tax principles, as adjusted
\npursuant to the following provisions, under the method of accounting elected by
\nthe Partnership for federal income tax purposes. The net book income or loss of
\nthe Partnership shall be computed, inter alia, by:<\/p>\n
(1) including as income or deductions, as
\n appropriate, any tax-exempt income and related expenses that are
\n neither properly included in the computation of taxable income nor
\n capitalized for federal income tax purposes;<\/p>\n
(2) including as a deduction when paid or incurred
\n (depending on the Partnership’s method of accounting) any amounts
\n utilized to organize the Partnership or to promote the sale of (or to
\n sell) an interest in the Partnership, except that amounts for which an
\n election is properly made by the Partnership under Section 709(b) of
\n the Code shall be accounted for as provided therein;<\/p>\n
(3) including as a deduction any losses incurred by
\n the Partnership in connection with the sale or exchange of property
\n notwithstanding that such losses may be disallowed to the Partnership
\n for federal income tax purposes under the related party rules of Code
\n Section 267(a)(1) or 707(b); and<\/p>\n
(4) calculating the gain or loss on disposition of
\n Partnership assets and the depreciation, amortization or other cost
\n recovery deductions, if any, with respect to Partnership assets by
\n reference to their Book Value rather than their adjusted tax basis.<\/p>\n
Nonmarketable Securities. All Securities other than Marketable
\n ————————
\nSecurities.<\/p>\n
One-Third in Interest of the Limited Partners. Limited Partners
\n ———————————————
\nhaving Capital Contributions the sum of which is at least one third of the
\naggregate Capital Contributions of the Partners (excluding for the purpose of
\ncalculating such requisite percentage, the Capital Contributions of the General
\nPartner, including interests held by the General Partner as a Limited Partner).<\/p>\n
Operating Expenses shall have the meaning set forth in Paragraph
\n ——————
\n4.6.<\/p>\n
Original Partners. Each of the persons listed as of the date
\n —————–
\nhereof as Limited Partners on Exhibit A attached hereto, and any transferee of
\nall or any portion of such Limited Partner’s interest in the Partnership.<\/p>\n
Partners. The General Partner and the Limited Partners.
\n ——–<\/p>\n
7.<\/p>\n
Partnership. E*Trade eCommerce Fund, L.P., the partnership
\n ———–
\nformed pursuant to this Agreement.<\/p>\n
Partnership Percentage. The Partnership Percentage for each
\n ———————-
\nPartner shall be determined by dividing the amount of each Partner’s Capital
\nCommitment by the sum of the Capital Commitments of all of the Partners. The sum
\nof the Partners’ Partnership Percentages shall be one hundred percent (100%).
\nThe aggregate Partnership Percentage of the Limited Partners as a group shall be
\nthe sum of the Partnership Percentages of each of the Limited Partners as
\nlimited partners.<\/p>\n
Payout means the time when each Limited Partner has received
\n ——
\ncumulative distributions from the Partnership in an amount equal to its Capital
\nCommitment, as adjusted pursuant to any provision of this Agreement (less any
\nportion thereof which such Limited Partner has failed to pay the Partnership
\nwhen due or subsequently pursuant to Paragraph 3.5). In the event a distribution
\nof cash or Securities causes the Partnership to reach and exceed Payout, the
\nportion of the amount distributed which was necessary to reach Payout will be
\ndeemed to have been distributed before Payout, and any remaining amount will be
\ndeemed to have been distributed after Payout.<\/p>\n
Portfolio Company. Any company in which the Partnership makes an
\n —————–
\ninvestment.<\/p>\n
Principals shall have the meaning set forth in Paragraph 7.8.
\n ———-<\/p>\n
Reallocated Loss shall have the meaning set forth in Paragraph
\n —————-
\n4.4.<\/p>\n
Sale or Exchange. A sale, exchange, liquidation or similar
\n —————-
\ntransaction, event, or condition with respect to any assets (except realizations
\nof purchase discounts on commercial paper, certificates of deposit, or other
\nmoney-market instruments) of the Partnership of the type that would cause any
\nrealized gain or loss to be recognized for income tax purposes under the Code
\n(as determined without giving effect to the related party rules of Code Sections
\n267(a)(1) and 707(b)).<\/p>\n
Securities. Securities of every kind and nature and rights and
\n ———-
\noptions with respect thereto, including stock, notes, bonds, debentures,
\nevidences of indebtedness and other business interests of every type, including
\ninterests in partnerships, joint ventures, proprietorships and other business
\nentities.<\/p>\n
Securities Act. The Securities Act of 1933, as amended.
\n ————–<\/p>\n
Shortfall Amount shall have the meaning set forth in Paragraph
\n —————-
\n3.5(d).<\/p>\n
Tax Distribution shall have the meaning set forth in Paragraph
\n —————-
\n6.3.<\/p>\n
Termination Date shall have the meaning set forth in Paragraph
\n —————-
\n2.3.<\/p>\n
TMP shall have the meaning set forth in Paragraph 10.16.
\n —<\/p>\n
Total Committed Capital shall have the meaning set forth in
\n ———————–
\nParagraph 3.1.<\/p>\n
8.<\/p>\n
Total General Partner Net Gain or Loss shall have the meaning set
\n ————————————–
\nforth in Paragraph 8.2(c).<\/p>\n
Treasury Regulations. The Income Tax Regulations promulgated
\n ——————–
\nunder the Code, as such Regulations may be amended from time to time (including
\ncorresponding provisions of succeeding Regulations).<\/p>\n
Two-Thirds in Interest of the Limited Partners. Limited Partners
\n ———————————————-
\nhaving Capital Contributions the sum of which is at least sixty-six and two-
\nthirds percent (66-2\/3%) of the aggregate Capital Contributions of the Partners
\n(excluding, for the purpose of calculating such requisite percentage, the
\nCapital Contributions of the General Partner, including interests held by the
\nGeneral Partner as a Limited Partner).<\/p>\n
Two-Thirds Invested shall have the meaning set forth in Paragraph
\n ——————-
\n7.8(b).<\/p>\n
Zero Balance Amount means, with respect to any Partner and at any
\n ——————-
\ntime, the amount of such Partner’s Capital Commitment which such Partner has not
\npaid to the Partnership in cash on or before such time, and in addition, solely
\nwith respect to the General Partner: the aggregate amount of distributions
\nreceived by the General Partner from the Partnership, but only to the extent
\nthat such distributions exceed the aggregate amount of distributions the General
\nPartner would have received if it had made its Capital Contribution as a Limited
\nPartner and did not hold an interest as a General Partner.<\/p>\n
ARTICLE II<\/p>\n
TERM AND TERMINATION OF THE PARTNERSHIP<\/p>\n
2.1. Term of Partnership. The Partnership shall continue until
\n ——————-
\nthe tenth (10th) anniversary of the Final Closing Date unless sooner terminated
\nas provided in Paragraph 2.2 or by operation of law or extended as provided in
\nParagraph 2.3.<\/p>\n
2.2. Termination. The Partnership shall terminate prior to the
\n ———–
\ntenth (10th) anniversary of the Final Closing Date:<\/p>\n
(a) Ninety (90) days after the Bankruptcy or dissolution
\nof the General Partner unless within thirty (30) days after such event Two-
\nThirds in Interest of the Limited Partners consent in writing to a continuation
\nof the Partnership and the appointment of a successor general partner;<\/p>\n
(b) One hundred twenty (120) days after the commencement
\nof any proceeding against the General Partner seeking reorganization,
\narrangement, composition, readjustment, liquidation, dissolution or similar
\nrelief under any statute, law or regulation, if the proceeding has not been
\ndismissed, or if within ninety (90) days after the appointment without its
\nconsent or acquiescence of a trustee, receiver or liquidator of the General
\nPartner or of all or any substantial part of his properties, the appointment is
\nnot vacated or stayed, or within ninety (90) days after the expiration of any
\nsuch stay, the appointment is not vacated, unless Two-Thirds in Interest of the
\nLimited Partners consent in writing to a continuation of the Partnership and the
\nappointment of a successor general partner;<\/p>\n
9.<\/p>\n
(c) Ninety (90) days after Christos M. Cotsakos ceases to
\nbe actively involved in the management of the Partnership for any reason unless
\nwithin such period a Majority in Interest of the Limited Partners (calculated by
\ntreating the interest of E*Trade as a non-voting interest) elect to continue the
\nPartnership, with such additional personnel being involved in the management of
\nthe Partnership as shall be acceptable to the General Partner and a Majority in
\nInterest of the Limited Partners (calculated by treating the interest of E*Trade
\nas a non-voting interest);<\/p>\n
(d) Upon the vote of Two-Thirds in Interest of the
\nLimited Partners after a final determination of a court of competent
\njurisdiction that the General Partner intentionally or willfully breached any
\nmaterial provision of this Agreement or that the General Partner was grossly
\nnegligent in the performance of its duties hereunder; or<\/p>\n
(e) Upon the consent of the General Partner and One-Third
\nin Interest of the Limited Partners.<\/p>\n
2.3. Extension of Term. The term of the Partnership may be
\n —————–
\nextended for up to one year after the tenth (10th) anniversary of the Final
\nClosing Date in the discretion of the General Partner. The General Partner shall
\ndeliver written notice of any such extension to the Limited Partners. The term
\nof the Partnership may be extended thereafter only with the consent of the
\nGeneral Partner and Two-Thirds in Interest of the Limited Partners. Any such
\nextension shall be subject to the earlier termination of the Partnership as
\nprovided in Paragraph 2.2. The last day of the term of the Partnership, as such
\nmay be extended as provided herein, is referred to herein as the “Termination
\n ———–
\nDate.”
\n—-<\/p>\n
2.4. Events Affecting a Member of the General Partner. The
\n ————————————————
\ndeath, temporary or permanent incapacity, insanity, incompetency, Bankruptcy,
\nexpulsion, retirement, withdrawal or removal of any member of the General
\nPartner or the admission of additional members to the General Partner shall not
\ndissolve the Partnership.<\/p>\n
2.5. Events Affecting a Limited Partner of the Partnership. The
\n —————————————————–
\ndeath, temporary or permanent incapacity, insanity, incompetency, Bankruptcy,
\nliquidation, dissolution, reorganization, merger, sale of substantially all the
\nstock or assets of, or other change in the ownership or nature of a Limited
\nPartner shall not terminate the Partnership.<\/p>\n
ARTICLE III<\/p>\n
CAPITAL CONTRIBUTIONS<\/p>\n
3.1. Capital Commitment of the Limited Partners. Set forth
\n ——————————————
\nopposite the name of each Limited Partner listed on Exhibit A attached hereto is
\nsuch Limited Partner’s capital commitment to the Partnership. (The capital
\ncommitment of each Partner (as it may be subsequently adjusted pursuant to the
\nterms hereof) is referred to herein as the Partner’s “Capital Commitment” and
\n ——————
\nthe total Capital Commitments of the Partners shall be referred to herein as the
\n“Total Committed Capital.”) Each Limited Partner’s Capital Commitment represents
\n ———————–
\nthe aggregate amount of capital that such Limited Partner has agreed to
\ncontribute to the Partnership in accordance with the terms hereof. No Limited
\nPartner shall be obligated to contribute capital to the Partnership an amount in
\nexcess of its Capital Commitment. E*Trade’s Capital Commit-<\/p>\n
10.<\/p>\n
ment set forth in Exhibit A reflects the agreed fair market value of the
\nSecurities being contributed by E*Trade to the Partnership and shall be the sole
\nCapital Commitment of E*Trade.<\/p>\n
3.2. Capital Contributions by the Limited Partners
\n ———————————————<\/p>\n
(a) As its sole Capital Contribution, E*Trade has
\ncontributed the Securities listed in Exhibit B, which Securities had the agreed
\nvalues when contributed set forth thereon. The Limited Partners (other than
\nE*Trade) shall make their Capital Contributions to the Partnership, payable by
\nwire transfer or check, in installments (each such payment being referred to as
\na “Drawdown”). Such Capital Contributions shall be made upon no less than
\n ——–
\nfourteen (14) days’ prior written notice from the General Partner (a “Drawdown
\n ——–
\nNotice”), in such amounts as may be determined in the sole discretion of the
\n——
\nGeneral Partner and at such time, subject to the fourteen (14) day notice
\nperiod, as the General Partner shall specify in the Drawdown Notice (the
\n“Drawdown Date”). All Drawdowns shall be in U.S. dollars. No Limited Partner
\n ————-
\nshall have the right to make partial payments of a required Capital
\nContribution. Each Drawdown Notice shall be given to each Limited Partner of the
\nPartnership. The additional capital required of the respective Limited Partners
\nupon any Drawdown shall be based on the relative amounts of the unpaid balances
\nof their respective Capital Commitments.<\/p>\n
(b) After the expiration of the Investment Period, the
\nGeneral Partner shall not be authorized to call (and the Partners shall not be
\nobligated to make) any Capital Contributions to fund investments which the
\nPartnership is not contractually obligated to make at such time other than for:<\/p>\n
(1) Investments reasonably expected to close within
\n ninety (90) days after the expiration of the Investment Period;<\/p>\n
(2) Investments as to which, prior to the
\n expiration of the Investment Period, the Partnership and the
\n prospective company or entity in which such investment is to be made
\n have a letter of intent or a definitive agreement setting forth the
\n material terms and conditions of such investment;<\/p>\n
(3) Investments in partnerships, limited liability
\n companies and other pass-through entities pursuant to capital
\n commitments made during the Investment Period; or<\/p>\n
(4) Follow-On Investments (including Follow-On
\n Investments with respect to investments in which the initial investment
\n by the Partnership is made pursuant to clause (1), (2) or (3) of this
\n Paragraph 3.2(b)).<\/p>\n
3.3. Capital Commitment of the General Partner. The General
\n —————————————–
\nPartner’s Capital Commitment shall be an aggregate amount of $350,000.<\/p>\n
3.4. Capital Contributions of the General Partner. On any date
\n ——————————————–
\non which a Limited Partner makes a contribution to the capital of the
\nPartnership, the General Partner shall contribute to the Partnership in such
\namount as may be necessary to cause the percentage of the General Partner’s
\nCapital Commitment actually contributed to the Partnership to be the same as the
\npercentage of the Capital Commitments of the Limited Partners (other than
\nE*Trade) actually <\/p>\n
11.<\/p>\n
contributed to the Partnership as of such date. Such contribution may be made,
\nat the General Partner’s discretion, in the form of a promissory note.<\/p>\n
3.5. Defaulting Partners
\n ——————-<\/p>\n
(a) If a Partner fails to pay any amount which it is
\nrequired to pay to the Partnership on or before the date when such amount is due
\nand payable, such Partner shall be deemed to be in default hereunder (a
\n“Defaulting Partner”), and written notice of default shall be given to such
\n ——————
\nLimited Partner by the General Partner by certified or registered mail. The
\nPartnership shall be entitled to enforce the obligations of each Partner to make
\nthe contributions to capital required in this Agreement and shall have all
\nremedies available at law or in equity in the event any such contribution is not
\nso made. In the event of any legal proceedings relating to a default by a
\nDefaulting Partner, such Defaulting Partner shall pay all costs and expenses
\nincurred by the Partnership, including attorneys’ fees, if the Partnership shall
\nprevail. Further, such Defaulting Partner shall be obligated to pay the
\nPartnership interest with respect to the amount of any Capital Contribution not
\nmade when required by this Article, with such interest commencing on the
\nDrawdown Date for such contribution and ending on the date such contribution is
\nmade to the Partnership. Such interest shall be calculated on the basis of the
\nthen current reference rate announced by Wells Fargo Bank, N.A., or by any other
\nU.S. commercial bank with capital in excess of Five Hundred Million Dollars
\n($500,000,000) selected by the General Partner, plus five percent (5%) per
\nannum, but not in excess of the amount allowable by law.<\/p>\n
(b) In addition to the remedies provided under Paragraph
\n3.5(a), if the Defaulting Partner does not cure a default in the payment of a
\nrequired contribution within ten (10) business days of the receipt of the notice
\nspecified in Paragraph 3.5(a), the General Partner (in its sole discretion) may,
\nas liquidated and agreed current damages to the non-defaulting Partners for such
\ndefault (it being agreed that it would be difficult to fix the actual damages to
\nsuch Partners), cause and treat the Defaulting Partner’s Capital Account to be
\nreduced by an amount equal to fifty percent (50%), which amount shall thereupon
\nbecome unrestricted assets of the Partnership and shall be allocated pro rata to
\nand among the respective Capital Accounts of the non-defaulting Partners in such
\nproportion as the Capital Account of each such non-defaulting Partner then bears
\nto the sum of the Capital Accounts of all non-defaulting Partners. The
\nDefaulting Partner’s remaining fifty percent (50%) interest in its Capital
\nAccount shall automatically be converted into a general unsecured obligation of
\nthe Partnership, which obligation shall not bear any interest and shall be due
\nsix (6) months after the Termination Date of the Partnership. Upon the
\nexpiration of the ten (10) day period after the mailing of the notice of default
\nand the election by the General Partner to exercise its remedy under this
\nsubparagraph (b), a Defaulting Partner shall automatically cease to be a Partner
\nunder this Agreement and shall have no further interest, right or claim in or
\nagainst the Partnership, including any right or obligation to make subsequent
\nCapital Contributions when called.<\/p>\n
(c) Notwithstanding the foregoing, if, at any time before
\na Capital Contribution required by Paragraph 3.2 becomes due, a Partner obtains
\nand delivers to the Partnership an opinion of counsel (which opinion shall be
\nreasonably acceptable to the General Partner) to the effect that the payment by
\nsuch Partner of any portion of any remaining Capital Contributions required by
\nthis Agreement will be unlawful or that there is a material likelihood that such
\npayment will be unlawful, then (A) such Partner shall have no further right or
\nobliga-<\/p>\n
12.<\/p>\n
tion to pay the pertinent portion of such Capital Contribution (depending on
\nwhether the Partner is withdrawing from or simply reducing its interest in the
\nPartnership), (B) such Partner’s Capital Commitment specified on Exhibit A shall
\nbe reduced by an amount equal to such Capital Contribution, and (C) such Partner
\nshall not, by reason of his or her failure to make such Capital Contribution, be
\ndeemed or treated as a Defaulting Partner for purposes of this Paragraph 3.5.<\/p>\n
(d) The General Partner may seek to fund the amount of
\nany Capital Contribution that a Defaulting Partner has failed to contribute or
\nthat is not contributed pursuant to Paragraph 3.5(c) (the “Shortfall Amount”) as
\n —————-
\nfollows:<\/p>\n
(1) The General Partner may in its discretion
\n determine to increase the amount of the Capital Contributions required
\n from each Partner to fund such Shortfall Amount ratably in accordance
\n with the Partners’ relative unpaid Capital Commitments (not to exceed
\n any Partner’s remaining Capital Commitment).<\/p>\n
(2) Alternatively, the General Partner may offer
\n the Partners who have made Capital Contributions the opportunity to
\n make additional Capital Contributions to fund such Shortfall Amount. If
\n any such Partner declines to invest in all or any portion of its share
\n of the Shortfall Amount, such uncommitted amount will be offered to any
\n other Partner who has invested its share of the Shortfall Amount and
\n concurrently advised the General Partner of its willingness to make a
\n Capital Contribution in excess of such share, and the General Partner
\n shall allocate such uncommitted amount among all such other Partner on
\n a basis the General Partner determines in its discretion is, under the
\n circumstances, equitable and practicable.<\/p>\n
(3) To the extent any Shortfall Amount has not been
\n fully funded by the Partners, the General Partner may seek to fund the
\n remaining Shortfall Amount by offering Limited Partner interests to any
\n other person on substantially the same economic terms and conditions as
\n are provided to the Partners.<\/p>\n
ARTICLE IV<\/p>\n
CAPITAL ACCOUNTS AND ALLOCATIONS<\/p>\n
4.1. Capital Accounts. A Capital Account shall be maintained
\n —————-
\non the Partnership’s books for each Partner. In the event any interest in the
\nPartnership is transferred in accordance with the terms of this Agreement, the
\ntransferee shall succeed to the Capital Account of the transferor to the extent
\nit relates to the transferred interest.<\/p>\n
4.2. Adjustments to Capital Accounts
\n ——————————-<\/p>\n
(a) The Capital Account of each Partner shall be
\nincreased by:
\n———<\/p>\n
(1) the amount of money and the fair market value
\n of any property other than money contributed to the Partnership by such
\n Partner (in the case of a contribution of property, net of any
\n liabilities secured by such property that the Partnership is considered
\n to assume or hold subject to for purposes of Section 752 of the Code),<\/p>\n
13.<\/p>\n
(2) such Partner’s share of Capital Transaction
\n Gain and Net Income (or items thereof) allocated to its Capital Account
\n pursuant to this Agreement, and<\/p>\n
(3) any other amounts required by Treasury
\n Regulation Section 1.704-1(b), provided the General Partner determines
\n that such increase is consistent with the economic arrangement among
\n the Partners as expressed in this Agreement.<\/p>\n
(b) The Capital Account of each Partner shall be
\ndecreased by:
\n———<\/p>\n
(1) the amount of money and the fair market value
\n of any property other than money distributed by the Partnership
\n (determined pursuant to Paragraph 9.2 hereof as of the date of
\n distribution) to such Partner pursuant to the provisions of this
\n Agreement (net of any liabilities secured by such property that such
\n Partner is considered to assume or hold subject to for purposes of
\n Section 752 of the Code),<\/p>\n
(2) such Partner’s share of Capital Transaction
\n Loss and Net Loss (or items thereof) allocated to its Capital Account
\n pursuant to this Agreement, and<\/p>\n
(3) any other amounts required by Treasury
\n Regulation Section 1.704-1(b), provided the General Partner determines
\n that such decrease is consistent with the economic arrangement among
\n the Partners as expressed in this Agreement.<\/p>\n
4.3. Allocation of Capital Transaction Gain or Loss
\n ———————————————-<\/p>\n
(a) Allocation of Capital Transaction Gain. Capital
\n ————————————–
\nTransaction Gain of the Partnership for each Fiscal Year or Interim Period shall
\nbe allocated as follows:<\/p>\n
(1) Twenty percent (20%) of the Partnership’s
\n Capital Transaction Gain shall be allocated to the General Partner.<\/p>\n
(2) The remaining eighty percent (80%) of the
\n Partnership’s Capital Transaction Gain shall be allocated to all
\n Partners as a group.<\/p>\n
(3) Notwithstanding the foregoing, if one or more
\n Limited Partners have been allocated a Reallocated Loss pursuant to
\n Paragraph 4.5, then Partnership Capital Transaction Gain that would
\n otherwise be allocated entirely to the General Partner pursuant to
\n Paragraph 4.3(a)(1) shall instead be allocated first to the Limited
\n Partners (in proportion to the amount of Reallocated Loss previously
\n allocated to them) until the Limited Partners have been allocated an
\n aggregate amount of Capital Transaction Gain equal to the previously
\n allocated Reallocated Loss that has not been restored by prior
\n allocations pursuant to this subparagraph and then any such remaining
\n Capital Transaction Gain shall be allocated to the General Partner.<\/p>\n
(b) Allocation of Capital Transaction Loss. Capital
\n ————————————–
\nTransaction Loss of the Partnership for each Fiscal Year or Interim Period shall
\nbe allocated as follows:<\/p>\n
14.<\/p>\n
(1) Twenty percent (20%) of the Partnership’s
\n Capital Transaction Loss shall be allocated to the General Partner.<\/p>\n
(2) The remaining eighty percent (80%) of such
\n Capital Transaction Loss shall be allocated to all Partners as a group.<\/p>\n
4.4. Allocation of Net Income or Loss. Net Income or Loss of
\n ——————————–
\nthe Partnership for each Fiscal Year or Interim Period shall be allocated to all
\nPartners as a group.<\/p>\n
4.5. Reallocation of Losses. If for any Fiscal Year or Interim
\n ———————-
\nPeriod after the Partnership’s Capital Transaction Gain or Loss and Net Income
\nor Loss has been allocated pursuant to Paragraphs 4.3 and 4.4 the closing
\nAdjusted Capital Balance of the General Partner has been reduced to less than
\nzero by more than the amount necessary to properly reflect the General Partner’s
\nobligation to recontribute amounts to the Partnership pursuant to Paragraph 8.2
\nupon termination of the Partnership, then an amount of Capital Transaction Loss
\nand, to the extent necessary, Net Loss (the “Reallocated Loss”) for such Fiscal
\n —————-
\nYear or Interim Period shall be reallocated from the General Partner to the
\nLimited Partners as a group so that the General Partner’s closing Adjusted
\nCapital Balance is not reduced below zero by more than the amount necessary to
\nproperly reflect the General Partner’s obligation to recontribute amounts to the
\nPartnership pursuant to Paragraph 8.2 upon termination of the Partnership. A
\nReallocated Loss may be restored only from future Capital Transaction Gain.<\/p>\n
4.6. Allocation Among Partners as a Group. Except as otherwise
\n ————————————
\nspecifically provided in this Agreement, all Capital Transaction Gain or Loss
\nand Net Income and Loss (and items thereof) allocated to the Partners (or a
\ngroup of Partners) as a group for any period shall be allocated among such
\nPartners in proportion to their respective Partnership Percentages as of the end
\nof such period. In making such allocations, any changes in Partnership
\nPercentages as a result of changes in the Capital Commitments of the Partners,
\nany exclusion of any Partners from particular investments, any contributions of
\nPartners to fund any Shortfall Amount and similar matters shall be taken into
\naccount.<\/p>\n
4.7. Special Allocation Among Late-Entering Limited Partners of
\n ———————————————————-
\nOrganization and Operating Expenses. The following items of Net Income or Loss
\n———————————–
\nare collectively referred to herein as “Operating Expenses”:<\/p>\n
(a) The Management Fee and other payments and
\nreimbursements of expenses paid pursuant to Article V other than amounts
\ncapitalized as part of the cost of Securities or other assets for federal income
\ntax purposes; and<\/p>\n
(b) All expenditures of the Partnership classified for
\nfederal income tax purposes as organization or syndication expenses.<\/p>\n
Notwithstanding Paragraph 4.6, if additional Limited Partners are
\nadmitted to the Partnership pursuant to Paragraph 7.6(b) hereof during a
\nparticular period, the Operating Expenses for such period allocable to the
\nLimited Partners shall be allocated among the Original Partners and the Limited
\nPartners admitted pursuant to Paragraph 7.6(b) hereof so that, to the extent
\npossible, the cumulative amount of Operating Expenses allocated to each Limited
\nPartner is proportionate to such Limited Partner’s Partnership Percentage as
\ncompared to the Partnership <\/p>\n
15.<\/p>\n
Percentages of the Limited Partners as a group (taking into account the
\nadditional Limited Partners admitted pursuant to Paragraph 7.6(b)).<\/p>\n
4.8. Allocations and Distributions Attributable to Removed
\nGeneral Partner. Notwithstanding the foregoing sections of this Article IV, if
\nthe initial General Partner ceases to be the General Partner and a successor
\nGeneral Partner is appointed pursuant to Paragraph 2.2, such initial General
\nPartner shall continue to receive the allocations and distributions otherwise
\nattributable to the General Partner pursuant to this Article IV, Article VI and
\nArticle VIII both in its capacity as a General Partner and in its capacity as a
\nLimited Partner; provided, however, that on or after the date a successor
\nGeneral Partner is appointed pursuant to Paragraph 2.2, such allocations and
\ndistributions attributable to the initial General Partner in its capacity as a
\nGeneral Partner shall be calculated only with respect to investments that were
\nmade or as to which the Partnership was committed to invest or had reserved
\ncapital to invest at such time. Notwithstanding the foregoing if the General
\nPartner is removed as a result of committing an act of fraud or willful
\nmisconduct against the interest of the Limited Partners, the General Partner’s
\nrights to further allocations pursuant to Paragraphs 4.3(a)(1) and 4.3(b)(1)
\nshall cease upon such removal. The General Partner shall nevertheless continue
\nto be subject to any obligations to the Partnership pursuant to Paragraph 8.2.<\/p>\n
ARTICLE V<\/p>\n
MANAGEMENT FEE; EXPENSES<\/p>\n
5.1. Entitlement to Management Fee. As compensation for its
\n —————————–
\nservices rendered in managing the Partnership, the General Partner shall be
\nentitled to recover a fee calculated as prescribed in this Article V (the
\n“Management Fee”). The Management Fee shall not be considered a distribution of
\nprofits or a return of capital for the purpose of any provision of this
\nAgreement, but shall be considered an expense of the Partnership, and shall be
\ndeducted from Partnership Net Income or added to Partnership Net Loss in
\ndetermining the Net Income or Net Loss of the Partnership pursuant to Article IV
\nhereof.<\/p>\n
5.2. Payment of Management Fee. The Management Fee shall be at
\n ————————-
\nan annual rate of 1.75% of the Total Committed Capital of the Partnership
\nthrough the end of the Investment Period. After the end of the Investment
\nPeriod, the Management Fee shall be at an annual rate of 1.75% of the total cost
\nof the Portfolio Securities held by the Partnership, with the cost of the
\nPortfolio Securities being redetermined for this purpose on January 1 and July 1
\nof each Fiscal Year after the end of the Investment Period. The Management Fee
\nshall commence to accrue on the date of this Agreement. Payment of the
\nManagement Fee shall be made (i) with respect to the first Fiscal Quarter of the
\nPartnership (ending September 30, 1999), at any time on or prior to September
\n30, 1999, in an amount equal to the percentage of the annual Management Fee as
\nreflects the number of days from the date of this Agreement through September
\n30, 1999, divided by 365 days, and (ii) thereafter quarterly in advance on the
\nfirst day of each Fiscal Quarter of the Partnership in an amount equal to 25% of
\nthe annualized Management Fee. Additional Management Fees resulting from an
\nincrease in the Total Committed Capital shall be payable promptly after the
\nacceptance of additional Capital Commitments (with such payment being prorated
\nto reflect the remaining term of the then current fiscal period). The Management
\nFee shall be reduced by the amount of any transaction fees (but not including
\ndirector options or <\/p>\n
16.<\/p>\n
director fees) received by the General Partner or its members or Affiliates (net
\nof associated expenses) from Portfolio Companies. Such reduction shall be made
\nin each installment of the Management Fee until the entire net amount of the
\ntransaction fees have offset the Management Fees.<\/p>\n
5.3. Payment of Expenses.
\n ——————-<\/p>\n
(a) Except as set forth in Paragraph 5.3(b) hereof, the
\nGeneral Partner agrees to incur on behalf of the Partnership and to otherwise
\nassume all expenses attributable to the management and administration of the
\ninvestment activities of the Partnership. Such expenses include (but are not
\nlimited to) consulting fees, compensation and expenses of the employees of the
\nGeneral Partner, including any salaries of members of the General Partner in
\ntheir capacity as employees of the General Partner, expenses for administrative,
\nbookkeeping, clerical and related support services, insurance, office space and
\nfacilities, utilities, telephone and travel insofar as they relate to the
\ninvestment activities of the Partnership.<\/p>\n
(b) The Partnership shall pay, or reimburse the General
\nPartner (or E*Trade if and to the extent it incurs expenses on behalf of the
\nPartnership) for all expenses of the Partnership (or incurred by the General
\nPartner or E*Trade for or on behalf of the Partnership) which (i) relate to the
\nmanagement and administration of the Partnership itself as a going concern (as
\nopposed to operating expenses incurred in connection with the Partnership’s
\ninvestment activities), or (ii) are incurred in the purchase, holding, sale,
\nexchange or other disposition of investments. Such expenses include (without
\nlimitation) organizational and offering expenses of the Partnership up to an
\naggregate of two hundred thousand dollars ($200,000); any taxes which may be
\nassessed against the Partnership; commissions or brokerage fees or similar
\ncharges incurred in connection with the purchase and sale of securities
\n(including any merger or transaction fees payable to third parties); interest
\nexpense and financing charges for borrowed money; all expenses relating to
\nlitigation and threatened litigation involving the Partnership; normal
\ninvestment banking, legal, custodial, registration, auditing and accounting
\nservices provided to the Partnership; and any other expenses associated with the
\nacquisition, holding or disposition of investments. The Partnership also shall
\npay or reimburse the General Partner (or E*Trade) for all payments to third
\nparties related to the investment activities of the Partnership in developing,
\nnegotiating and structuring prospective or potential investments with respect to
\nwhich the Partnership enters into a purchase agreement, letter of intent or
\nmemorandum of understanding, but that are not ultimately made.<\/p>\n
5.4. No Salaries to General Partner. The General Partner and
\n ——————————
\nits members shall receive no salaries from the Partnership. This paragraph shall
\nnot restrict the payment of salaries by the General Partner.<\/p>\n
ARTICLE VI<\/p>\n
WITHDRAWALS BY AND DISTRIBUTIONS TO THE PARTNERS<\/p>\n
6.1. Interest. No interest shall be paid to any Partner on
\n ——–
\naccount of its interest in the capital of, or on account of its investment in,
\nthe Partnership.<\/p>\n
17.<\/p>\n
6.2. Withdrawals by the Partners. No Partner may withdraw any
\n —————————
\namount from its Capital Account except as specifically provided in this
\nAgreement.<\/p>\n
6.3. Mandatory Cash Distributions. Within ninety (90) days
\n —————————-
\nafter the end of each Fiscal Year, the Partnership shall distribute to each
\nPartner cash in an amount equal to the aggregate federal and state income tax
\nliability such Partner would have incurred as a result of such Partner’s
\nownership of an interest in the Partnership, calculated: (i) as if allocations
\nfrom the Partnership of any Net Capital Gain and any Net Loss were, for such
\nFiscal Year, the sole source of taxable income and loss for such Partner; (ii)
\nas if such Partner were an individual taxable at the combined maximum marginal
\nrate provided with respect to such Net Capital Gain and Net Loss (taking into
\naccount the character of the items of Net Capital Gain and Net Loss for tax
\npurposes) under applicable federal and state income tax laws applicable to
\nindividuals residing in California; and (iii) taking into account the
\ndeductibility of state taxes in the calculation of federal income taxes (a “Tax
\n —
\nDistribution”). Any Tax Distributions to a Partner shall reduce the amounts
\n————
\notherwise distributable to the Partner pursuant to Paragraph 6.4.<\/p>\n
6.4. Additional Distributions. The General Partner (i) shall
\n ————————
\ndistribute any proceeds from the Sale or Exchange of Securities of Portfolio
\nCompanies as soon as practicable following such Sale or Exchange, subject to the
\nretention of such amounts as are necessary to pay Partnership expenses and
\nobligations (including the Management Fee) and\/or for permitted reinvestments
\nand (ii) may in its discretion make distributions of Securities of Portfolio
\nCompanies. All distributions under this Paragraph 6.4 shall be made as follows:<\/p>\n
(a) At any time prior to achievement of Payout if the
\nFair Value Test is not satisfied, all such distributions will be made to the
\nPartners as a group in proportion to their respective Partnership Percentages.<\/p>\n
(b) At any time prior to achievement of Payout if the
\nFair Value Test is satisfied, all such distributions will be made, in the
\nGeneral Partner’s sole discretion, either (1) to the Partners as a group in
\nproportion to their respective Partnership Percentages, or (2)(i) first, to the
\nGeneral Partner until the General Partner has received distributions pursuant to
\nthis Paragraph 6.4(b)(2)(i) and Tax Distributions pursuant to Paragraph 6.3
\nequal to a maximum of twenty percent (20%) of the total amount distributed and
\nbeing distributed to all Partners pursuant to Paragraphs 6.3 and 6.4(a) and this
\nParagraph 6.4(b), and (ii) the remainder of such distributions will be made to
\nthe Partners as a group in proportion to their respective Partnership
\nPercentages; provided, however, that the amount distributable to the General
\n —————–
\nPartner pursuant to Paragraph 6.4(b)(2)(i) will in no event exceed either (x)
\nthe cumulative amount of the Capital Transaction Gain net of Capital Transaction
\nLoss allocated to the General Partner under Paragraphs 4.3(a)(1) and 4.3(b)(1)
\nor (y) an amount which would cause the General Partner’s Fair Value Capital
\nAccount to be reduced below the amount of the General Partner’s Capital
\nContributions or would further reduce an existing balance of such Fair Value
\nCapital Account that is already less than the General Partner’s Capital
\nContributions; provided, further that the General Partner will not cause or
\n —————–
\npermit the Partnership to make any distribution to the General Partner pursuant
\nto Paragraph 6.4(b)(2)(i) unless the Partnership has made (and\/or provided
\nthrough reserves for) distributions to each Partner, with respect to the Fiscal
\nYear in which any proposed distribution under Paragraph 6.4(b)(2)(i) otherwise
\nwould occur, in aggregate amounts equal to <\/p>\n
18.<\/p>\n
the Tax Distribution to which each Partner would be entitled pursuant to
\nParagraph 6.3 with respect to such Fiscal Year if such Fiscal Year ended on the
\ndate of the proposed distribution.<\/p>\n
(c) After Payout has been achieved, all such
\ndistributions will be made to the Partners in proportion to the positive
\nbalances in their respective Capital Accounts after such Capital Accounts have
\nbeen adjusted to reflect all Capital Transaction Gain or Loss (including Capital
\nTransaction Gain or Loss arising in connection with the distribution and Sale or
\nExchange of Securities) through the date of the distribution.<\/p>\n
(d) Each class of Securities to be distributed in kind
\nshall be distributed to the Partners in proportion to their respective shares of
\nthe proposed distribution, except to the extent that a disproportionate
\ndistribution of Securities is necessary in order to avoid distributing
\nfractional shares. For purposes of the preceding sentence, each lot of stock or
\nother Securities having a separately identifiable tax basis or holding period
\nwill be treated as a separate class of Securities. Notwithstanding anything
\ncontained in this Agreement: (i) no distribution (other than a Tax Distribution)
\nwill be made to any Partner if, and to the extent that, such distribution would
\n(x) cause such Partner’s Capital Account to be negative by an amount which
\nexceeds such Partner’s Zero Balance Amount or (y) further reduce a balance in
\nsuch Partner’s Capital Account that is already negative by an amount which
\nexceeds such Partner’s Zero Balance Amount; and (ii) no distribution will be
\nmade unless all liabilities of the Partnership to persons other than Partners
\nhave been satisfied or, in the good faith judgment of the General Partner, there
\nremains property of the Partnership sufficient to satisfy such liabilities.<\/p>\n
(e) Except upon liquidation of the Partnership or with
\nthe approval of the General Partner and a Majority in Interest of the Limited
\nPartners, no distribution shall be made other than in cash or Marketable
\nSecurities.<\/p>\n
(f) Immediately prior to any distribution in kind of
\nSecurities (or other Partnership assets) pursuant to any provision of this
\nAgreement (including pursuant to Article VIII), the difference between the fair
\nmarket value and the Book Value of any Securities (or other Partnership assets)
\ndistributed shall be allocated to the Partners as Capital Transaction Gain or
\nLoss pursuant to Article IV.<\/p>\n
(g) Securities distributed in kind pursuant to this
\nParagraph 6.4 shall be subject to such conditions and restrictions as the
\nGeneral Partner determines are legally required.<\/p>\n
(h) For purposes of this Agreement, all distributions of
\nSecurities shall be deemed to have been made on the date on which the
\nPartnership commences the distribution of the Securities to the Limited
\nPartners, provided that the delivery of the Securities is promptly completed.<\/p>\n
ARTICLE VII<\/p>\n
MANAGEMENT, DUTIES AND RESTRICTIONS<\/p>\n
7.1. Management by General Partner. The General Partner shall
\n —————————–
\nhave the sole and exclusive right and power to manage, control, and conduct the
\naffairs of the Partnership and <\/p>\n
19.<\/p>\n
to perform any and all acts on behalf of the Partnership that the General
\nPartner deems necessary, advisable or incidental to carry out any or all of the
\nobjects and purposes of the Partnership.<\/p>\n
7.2. Indebtedness; Restrictions; Reinvestments
\n —————————————–<\/p>\n
(a) The Partnership may borrow money and guarantee the
\nobligations of, and supply letters of credit on behalf of, Portfolio Companies;
\nprovided that at no time shall the Partnership guarantee, directly or
\nindirectly, obligations of a General Partner or a Limited Partner; and further
\nprovided that the Partnership shall provide a guaranty to a Portfolio Company
\nonly if each member of the General Partner with an interest in that Portfolio
\nCompany provides a guaranty on the same terms and in amount proportional to the
\ninvestment of such member as compared to the Partnership. While outstanding, any
\nguarantee of the obligations of any Portfolio Company shall be considered an
\ninvestment in such Portfolio Company for purposes of Paragraph 7.2(b).
\nAdditionally, except with the approval of a Majority in Interest of the Limited
\nPartners, the Partnership shall not at any point in time be the guarantor (or
\nthe obligor on any letter of credit) of then-current liabilities that, in the
\naggregate, amount to more than thirty percent (30%) of the Total Committed
\nCapital of the Partnership.<\/p>\n
(b) Except with the approval of a Majority in Interest of
\nthe Limited Partners and except with respect to the Securities contributed by
\nE*Trade as described in Exhibit B, the Partnership shall not invest more than
\ntwenty-five percent (25%) of the aggregate amount of the Total Committed Capital
\n(i) in the Securities of any one issuer or its affiliates, (ii) in any other
\ninvestment pool or partnership, or (iii) in Securities purchased by the
\nPartnership in the over-the-counter market or that are listed on a securities
\nexchange (with the twenty-five percent (25%) test being applied separately with
\nrespect to each of the foregoing three categories of investments). The
\nlimitations set forth in this Paragraph 7.2(b) shall not apply to any funds of
\nthe Partnership which are invested in investments described in Paragraph 7.2(e).<\/p>\n
(c) The Partnership shall not reinvest any proceeds
\nrealized on the Sale or Exchange of Securities of Portfolio Companies in
\nSecurities of other Portfolio Companies except for Follow-On Investments. In no
\nevent shall the Partnership make cumulative investments in Securities of
\nPortfolio Companies in excess of the Total Committed Capital.<\/p>\n
(d) No Partner shall be permitted to borrow money from
\nthe Partnership.<\/p>\n
(e) Pending use of funds to make investments in
\nSecurities of Portfolio Companies, to make distributions or to pay expenses or
\nobligations of the Partnership in accordance with the terms hereof, the funds of
\nthe Partnership shall be invested by the General Partner only in (i) securities
\nissued by, or backed by the full faith and credit of, the United States
\ngovernment, (ii) certificates of deposit issued by commercial banks with capital
\nin excess of Five Hundred Million Dollars ($500,000,000), (iii) commercial paper
\nrated A-1 or P-1, or (iv) shares in investment companies generally known as
\n“money market funds” which have assets in excess of Two Hundred Fifty Million
\n ——————
\nDollars ($250,000,000).<\/p>\n
(f) The Partnership shall not invest in (i) any
\nSecurities the purchase of which is opposed by the issuer’s board of directors;
\nor (ii) options contracts or futures con-<\/p>\n
20.<\/p>\n
tracts, or any other security, the value of which is based upon, or derived
\nfrom, any underlying index, reference rate, other security, commodity or other
\nasset; provided, however, that this restriction shall not be deemed to prohibit
\nthe General Partner from (A) hedging Portfolio Company investments so long as
\nsuch transactions are reasonably related to the amount and type of Securities
\nbeing hedged and are not undertaken for independent investment purposes, (B)
\nhedging the currency risk of foreign Portfolio Company investments, (C)
\ninvesting in any Security the value of which is based upon, or derived from, any
\nSecurity already held by the Partnership, and (D) investing in traditional
\noptions, warrants and other rights to acquire Securities that would otherwise be
\npermitted Portfolio Company investments under the terms of this Agreement.<\/p>\n
(g) The Partnership shall not invest in real estate, oil
\nor gas investments, commodities or in securities bearing unlimited liability.<\/p>\n
(h) The Partnership shall not engage in uncovered short
\nsales.<\/p>\n
(i) The Partnership shall not make any investment in an
\nissuer which is organized in any jurisdiction outside the United States and
\nCanada (each such issuer being a “Foreign Entity”), unless the Partnership has
\n ————–
\nreceived, prior to or at the closing of any such investment, a Limited Liability
\nEntity Opinion with respect to the issuer’s form of entity. A “Limited Liability
\n —————–
\nEntity Opinion” shall be an opinion of counsel, licensed or otherwise authorized
\n————–
\nto practice in the jurisdiction in which a particular Foreign Entity is
\norganized, which opinion may be relied upon by the Partnership and does not
\ncontain more than reasonable carve-outs by opining counsel, stating (i) that the
\nPartnership shall not be obligated beyond its committed investment in such
\nForeign Entity for any debt, obligation or liability of an entity of the form of
\nthe particular issuer, solely by reason of the Partnership being an investor in
\nsuch an entity; and (ii) that no Limited Partner of the Partnership shall be
\nobligated for any debt, obligation or liability of an entity of the form of the
\nparticular issuer, solely by reason of the Partnership being an investor in such
\nan entity. Once the Partnership has received such an opinion for investments in
\na particular form of entity in a particular jurisdiction, such opinion shall
\nsatisfy the requirements of this paragraph for all investments in other Foreign
\nEntities of the same form as that which is the subject of the opinion. The
\nPartnership shall not invest an aggregate of more than thirty percent (30%) of
\nthe Total Committed Capital in Securities of Foreign Entities.<\/p>\n
(j) The Partnership shall not make any investment in any
\nother investment pool or partnership if a management fee and\/or “carried
\ninterest” is payable with respect to such investment unless the General Partner
\nwaives its Management Fee and\/or “carry” with respect to such investment.<\/p>\n
7.3. Investment Representation of the Limited Partners. This
\n ————————————————-
\nAgreement is made with each Limited Partner in reliance upon such Limited
\nPartner’s representation to the Partnership, which by executing this Agreement
\nthe Limited Partner hereby confirms, that such Partner’s interest in the
\nPartnership is being acquired for investment, and not with a view to the sale or
\ndistribution of any part thereof, and that such Partner has no present intention
\nof selling, granting participation in, or otherwise distributing the same. Each
\nLimited Partner further represents that such Limited Partner does not have any
\ncontract, undertaking, agreement, or arrange-<\/p>\n
21.<\/p>\n
ment with any person to sell or transfer to any third person such Limited
\nPartner’s interest in the Partnership.<\/p>\n
7.4. Accredited Investor Representation. Each Limited Partner
\n ———————————-
\nrepresents that such Partner has such knowledge and experience in financial and
\nbusiness matters as to be capable of evaluating the merits and risks of an
\ninvestment in the Partnership and that such Partner is an accredited investor,
\nas that term is defined in Regulation D promulgated by the Securities and
\nExchange Commission.<\/p>\n
7.5. No Control by the Limited Partners; Rights of the Limited
\n ———————————————————
\nPartners.
\n——–<\/p>\n
(a) The Limited Partners shall take no part in the
\ncontrol or management of the affairs of the Partnership nor shall a Limited
\nPartner have any authority to act for or on behalf of the Partnership except as
\nis specifically permitted by this Agreement and as is specifically required by
\nthe Delaware Act.<\/p>\n
(b) In addition to any other restrictions applicable to
\nLimited Partners set forth in this Agreement and notwithstanding any other
\nprovisions thereof, for so long as the Partnership has an investment in a Media
\nCompany, any Limited Partner that elects in writing to be insulated from the
\n“multiple ownership attribution” rules and policies of the FCC (an “Insulated
\nLimited Partner”) shall not (and if such Limited Partner is not an individual,
\neach officer, director, partner or equivalent non-corporate official of such
\nLimited Partner acting on behalf of or as a representative of such Limited
\nPartner in its capacity as a Limited Partner of the Partnership shall not):<\/p>\n
(1) act as an employee of the Partnership if his or
\n her functions, directly or indirectly, relate to the media business of
\n the Partnership or any Media Company in which the Partnership has an
\n investment;<\/p>\n
(2) serve, in any material capacity, as an
\n independent contractor or agent with respect to the media business of
\n the Partnership or any Media Company in which the Partnership has an
\n investment;<\/p>\n
(3) communicate on matters pertaining to the
\n day-to-day media operations of the Partnership or a Media Company with
\n (i) an officer, director, partner, agent, representative or employee of
\n such Media Company, or (ii) the General Partner;<\/p>\n
(4) perform any services for the Partnership
\n materially relating to the media activities of the Partnership or any
\n Media Company in which the Partnership has an investment, except that
\n any Limited Partner may make loans to, or act as a surety for, the
\n Partnership or any such Media Company;<\/p>\n
(5) vote on the admission of any new General
\n Partner to the Partnership unless such admission is approved by the
\n General Partner;<\/p>\n
(6) become actively involved in the management or
\n operation of the Partnership’s media businesses; or<\/p>\n
22.<\/p>\n
(7) vote for the removal of the General Partner
\n except where the General Partner is subject to Bankruptcy proceedings,
\n is adjudicated incompetent by a court of competent jurisdiction, or is
\n removed for any cause which is determined by an independent party to
\n constitute criminal conduct other such extraordinary conduct with
\n respect to which a prudent investor would require the right to remove
\n the General Partner.<\/p>\n
7.6. Admission of Additional Partners.
\n ——————————–<\/p>\n
(a) Subject to Paragraph 7.7 and subparagraph (b) below,
\nno additional person may be admitted to the Partnership, either as a limited or
\ngeneral partner, without the prior written consent of both the General Partner
\nand Two-Thirds in Interest of the Limited Partners.<\/p>\n
(b) For a period ending on October 31, 1999 (the “Final
\n —–
\nClosing Date”), the General Partner may admit persons as additional Limited
\n————
\nPartners without the consent of any of the then Limited Partners, provided that
\nthe Total Committed Capital of the Partnership shall not exceed one hundred
\nmillion dollars ($100,000,000). Following the admission of any such subsequently
\nadmitted Limited Partners pursuant to this Paragraph 7.6(b), such Limited
\nPartners shall be deemed for all purposes of this Agreement (unless expressly
\nprovided to the contrary herein) to have been admitted as of the original date
\nof this Agreement. Any Limited Partner admitted pursuant to this Paragraph
\n7.6(b) shall, upon admission, contribute to the Partnership the same portion of
\nsuch Limited Partner’s Capital Commitment as the previously admitted Limited
\nPartners have contributed with respect to their Capital Commitments. Upon the
\nadmission of any additional Limited Partners to the Partnership pursuant to this
\nParagraph 7.6(b), the assets of the Partnership shall not be revalued except in
\nthe discretion of the General Partner.<\/p>\n
(c) In addition to the Capital Contribution required
\nunder Paragraph 7.6(b), each Limited Partner admitted as an additional Limited
\nPartner pursuant to Paragraph 7.6(b) shall be required to pay to the Partnership
\ninterest at the Wells Fargo Bank, N.A. “prime rate” (in effect at the time the
\nadditional Limited Partner interest was acquired) based on the amount of the
\nCapital Contribution payable under Paragraph 7.6(b) and the time period(s) from
\nthe existing Limited Partners’ prior Capital Contributions to the Partnership to
\nthe date that the Capital Contribution under Paragraph 7.6(b) is made. Such
\ninterest shall accompany the Capital Contribution payable under Paragraph 7.6(b)
\nand shall be immediately distributed pro rata to and among all existing Partners
\n(based on their respective Partnership Percentages immediately prior to the
\nissuance of such additional Limited Partner interests). The payment of such
\ninterest to the Partnership shall not be considered a Capital Contribution and
\nshall not be considered an item of Capital Transaction Gain or Loss or Net
\nIncome or Loss allocable pursuant to Article IV; furthermore, the distribution
\nto the existing Partners shall not result in a reduction in their Capital
\nAccounts.<\/p>\n
23.<\/p>\n
7.7. Assignment or Transfer of Partnership Interests
\n ———————————————–<\/p>\n
(a) The General Partner shall not sell, assign, pledge,
\nmortgage or otherwise dispose of or transfer its interest in the Partnership
\nwithout the prior written consent of Two-Thirds in Interest of the Limited
\nPartners.<\/p>\n
(b) No Limited Partner shall sell, assign, pledge,
\nmortgage, or otherwise dispose of or transfer its interest in the Partnership
\nwithout the prior written consent of the General Partner. Notwithstanding the
\nforegoing, a Limited Partner may sell, assign, pledge, mortgage, or otherwise
\ndispose of or transfer its interest in the Partnership without such consent (i)
\nto any affiliate of the Limited Partner; or (ii) as may be required by any law
\nor regulation; provided, however, that in the case of any permitted transfer,
\nthe General Partner receives at least ten (10) days’ prior written notice of
\nsuch transfer; and provided further that no transferee of a Limited Partner’s
\ninterest may be admitted to the Partnership as a substitute Limited Partner
\nwithout the consent of the General Partner.<\/p>\n
(c) Notwithstanding any other provision of this
\nAgreement, no transfer or other disposition of the interest of a Limited Partner
\nshall be permitted until the General Partner shall have received, or waived
\nreceipt of, an opinion of counsel to the Partnership reasonably satisfactory to
\nit that the effect of such transfer or disposition would not:<\/p>\n
(1) result in a violation of the Securities Act;<\/p>\n
(2) require the Partnership to register as an
\n investment company under the Investment Company Act of 1940, as
\n amended;<\/p>\n
(3) require the Partnership, the General Partner or
\n any partner of the General Partner to register as an investment adviser
\n under the Investment Advisers Act of 1940, as amended;<\/p>\n
(4) result in a termination of the Partnership for
\n tax purposes if the General Partner determines that such termination
\n would result in a material adverse tax consequence to any of the
\n Partners;<\/p>\n
(5) result in a violation of any law, rule, or
\n regulation by the Limited Partner, the Partnership, the General Partner
\n or any partner of the General Partner;<\/p>\n
(6) increase the number of Limited Partners;<\/p>\n
(7) cause the Partnership to be characterized as a
\n “publicly traded partnership” taxable as a corporation (within the
\n meaning set forth in Sections 512 and 7704(b) of the Code) or
\n materially increase the risk that the Partnership will be so
\n characterized.<\/p>\n
All costs associated with such opinion shall be borne by the
\ntransferring Limited Partner.<\/p>\n
24.<\/p>\n
7.8. Investment Opportunities; Conflicts of Interest
\n ———————————————–<\/p>\n
(a) Christos M. Cotsakos and Thomas A. Bevilacqua (the
\n“Principals”) are the current principal members of the General Partner. Subject
\n ———-
\nto Paragraph 7.8(b), the Principals may serve as the general partners, sponsors,
\nprincipals of the general partners or investment advisers of other venture
\nfunds. The Principals are employed by E*Trade and shall devote significant and
\nsubstantial time and effort to E*Trade. The Principals shall be free to conduct
\nany and all such activities.<\/p>\n
(b) So long as the Partnership is less than Two-Thirds
\nInvested, neither of the Principals may, directly or indirectly, organize or act
\nas a general partner or managing member of any other entity that is a private
\nequity fund. For purposes of this Agreement, the Partnership shall be deemed to
\nbe “Two-Thirds Invested” when at least sixty-six and two-thirds percent (66-
\n ——————-
\n2\/3%) of the Partners’ Capital Commitments (other than any Capital Commitments
\nthat have been terminated) have been invested by the Partnership in Portfolio
\nCompanies (with E*Trade’s Capital Contribution made in Securities being deemed
\nto have been so invested), reserved for investments in such Portfolio Companies
\nbased upon the General Partner’s good faith estimate of the anticipated capital
\nrequirements of each Portfolio Company, or paid or reserved for the payment of
\nreasonably anticipated partnership liabilities and obligations, including
\npayment of the Management Fee.<\/p>\n
(c) The General Partner and the members of the General
\nPartner shall be permitted to receive fees (director’s, consulting, break-up,
\nfinancial advisory or other), commissions and other compensation (in whatever
\nform, including stock and options) from entities other than the Partnership,
\nincluding Portfolio Companies.<\/p>\n
(d) Except as expressly provided otherwise in this
\nAgreement, the Partners and the members and affiliates of the General Partner
\nmay engage in, invest in or possess an interest in, business activities of every
\nkind and description, independently or with others.<\/p>\n
(e) The Limited Partners hereby agree that E*Trade may
\nhave investment opportunities that are not made available to the Partnership. In
\naddition, the General Partner may offer the right to participate in investment
\nopportunities of the Partnership to other private investors, groups,
\npartnerships, or corporations. No Limited Partner shall be required to make any
\ninvestment opportunity available to the Partnership.<\/p>\n
(f) The General Partner may enter, on behalf of the
\nPartnership, into contracts, agreements, undertakings and transactions with any
\nPartners, or with any person, firm or corporation having any business, financial
\nor other relationship with any Partner, provided that such transactions with
\nsuch persons and entities are on terms no less favorable to the Partnership than
\nare generally afforded to unrelated third parties in comparable transactions.<\/p>\n
25.<\/p>\n
ARTICLE VIII<\/p>\n
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP<\/p>\n
8.1. Liquidation Procedures. Upon termination of the
\n ———————-
\nPartnership in accordance with Article II:<\/p>\n
(a) The affairs of the Partnership shall be wound up and
\nthe Partnership shall be dissolved. The General Partner shall serve as the
\nliquidator; provided that in the event of a termination of the Partnership
\npursuant to Paragraph 2.2(a),(b), or (c) another person or entity may be
\ndesignated by Two-Thirds in Interest of the Limited Partners to serve as
\nliquidator.<\/p>\n
(b) Distributions in dissolution may be made in cash or
\nin kind or partly in cash and partly in kind. Each Security (and each class of
\nSecurities, or portion of a class of Securities having a tax basis per share or
\nunit different from other portions of such class) distributed in kind shall be
\ndistributed ratably in accordance with the General Partner’s and the Limited
\nPartners’ Capital Accounts unless such distribution would result or there is a
\nmaterial likelihood that such distribution would result (i) in a violation of a
\nlaw or regulation applicable to a Limited Partner or a tax penalty to a Limited
\nPartner, in which event, upon receipt by the General Partner of notice to such
\neffect, such Limited Partner may designate a different entity to receive the
\ndistribution, or designate, subject to the approval of the General Partner, an
\nalternative distribution procedure or (ii) in a distribution of fractional
\nshares. Each such Security shall be valued at fair market value in accordance
\nwith Paragraph 9.2 as of the date of distribution and shall be subject to
\nreasonable conditions and restrictions necessary or advisable in order to
\npreserve the value of the assets distributed, or for legal reasons.<\/p>\n
(c) The General Partner (or other liquidator) shall in
\nits sole discretion determine the most advantageous time for the Partnership to
\nsell investments or to make distributions in kind provided that any such sales
\nshall be made as promptly as is consistent with obtaining the fair value
\nthereof.<\/p>\n
(d) The proceeds of dissolution shall be applied to
\npayment of liabilities of the Partnership and distributed to the Partners in the
\nfollowing order:<\/p>\n
(1) to the creditors of the Partnership in the
\n order of priority established by law; and<\/p>\n
(2) to the Partners, in respect of the positive
\n balances in their Capital Accounts, after all Capital Transaction Gain
\n or Loss and Net Income or Loss (including amounts arising in connection
\n with a distribution of Securities) has been allocated among the
\n Partners.<\/p>\n
In the discretion of the General Partner, a pro rata portion of
\nthe distributions that would otherwise be made to the Partners pursuant to this
\nParagraph 8.1 may be withheld to provide a reasonable reserve for Partnership
\nliabilities (contingent or otherwise) and to reflect the unrealized portion of
\nany installment obligations owed to the Partnership, provided that such withheld
\namounts (to the extent not used to pay partnership liabilities) shall be
\ndistributed to the Partners as soon as practicable.<\/p>\n
26.<\/p>\n
(e) If the General Partner’s Capital Account has a deficit
\nbalance (after giving effect to all contributions, distributions and allocations
\nfor all taxable years, including the year during which such liquidation occurs),
\nthen except as otherwise required pursuant to Paragraph 8.2, the General Partner
\nshall have no obligation at any time to repay or restore to the Partnership all
\nor any part of any distribution made to it from the Partnership or make any
\ncontribution to the capital of the Partnership with respect to such deficit. If
\nany Limited Partner has a deficit balance in his Capital Account (after giving
\neffect to all contributions, distributions and allocations for all taxable
\nyears, including the year during which such liquidation occurs), then other than
\nrequired by law or Paragraph 10.14, such Limited Partner shall have no
\nobligation to repay or restore to the Partnership any distribution made to it
\nfrom the Partnership or make any contribution to the capital of the Partnership
\nwith respect to such deficit, and such deficit shall not be considered a debt
\nowed to the Partnership or to any other person for any purpose whatsoever.<\/p>\n
8.2. Liability of General Partner to Return Excess Distributions. If
\n ———————————————————–
\nafter effecting the distributions provided for in this Article VIII the Excess
\nDistribution Amount is greater than zero, then the General Partner shall
\nforthwith contribute to the capital of the Partnership cash or Marketable
\nSecurities (with any such contributed Marketable Securities being valued
\npursuant to Paragraph 9.2 on the date of contribution) in an amount equal to the
\nlesser of (i) the Excess Distribution Amount, or (ii) the After-Tax Distribution
\nAmount. Such contribution shall be distributed to the Partners to the extent of
\nand in proportion to their positive Capital Account balances.<\/p>\n
For purposes of this Paragraph 8.2:<\/p>\n
(a) The “After-Tax Distribution Amount” shall be equal to the
\n —————————–
\nGeneral Partner Distributions less all federal, state and other jurisdictional
\n(including non-United States taxes) actual marginal tax liabilities that the
\nmembers of the General Partner have incurred by reason of having been members of
\nthe General Partner, but only to the extent attributable to (i) items of taxable
\nincome, gain, loss, deduction and credit allocated to the General Partner by the
\nPartnership and (ii) net capital gains realized by the General Partner or by
\nsuch members (offset by any capital losses realized by the General partner or by
\nsuch members) upon the sale or exchange of Securities distributed by the
\nPartnership to the General Partner (with such net capital gains being limited to
\nan amount based on the value as of the distribution date of the Securities
\ndistributed). The After-Tax Distribution amount shall be increased by all
\nfederal, state or other jurisdictional tax benefits actually realized by the
\nGeneral Partner’s members in the year of a contribution required by this
\nParagraph 8.2 as a result of such contribution.<\/p>\n
(b) The “Excess Distribution Amount” shall equal the lesser of
\n ————————–
\n(i) the amount by which the General Partner Distributions exceed the sum of the
\nTotal General Partner Net Gain or Loss plus the aggregate contributions made to
\nthe Partnership by the General Partner or (ii) the amount of the General Partner
\nDistributions.<\/p>\n
27.<\/p>\n
(c) “Total General Partner Net Gain or Loss” shall be calculated
\n ————————————–
\nas follows:<\/p>\n
(1) First, the Partnership’s aggregate Capital Transaction
\n Gain for all accounting periods shall be netted against the Partnership’s
\n aggregate Capital Transaction Loss for all accounting periods and the
\n result shall be multiplied by the sum of (x) twenty percent (20%) plus (y)
\n eighty percent (80%) of the General Partner’s Partnership Percentage. The
\n resulting product shall be considered a positive number if such aggregate
\n Capital Transaction Gain exceeded aggregate Capital Transaction Loss and a
\n negative number if such aggregate Capital Transaction Loss exceeded
\n aggregate Capital Transaction Gain;<\/p>\n
(2) Second, the Partnership’s aggregate Net Income for all
\n accounting periods shall be netted against the Partnership’s aggregate Net
\n Loss for all accounting periods and the result shall be multiplied by the
\n General Partner’s Partnership Percentage. The result shall be considered a
\n positive number if such aggregate Net Income exceeded such aggregate Net
\n Loss and a negative number if such aggregate Net Loss exceeded such
\n aggregate Net Income;<\/p>\n
(3) Third, the amount computed in clause (2) shall be added
\n to the amount computed in clause (1). If the result of such computation is
\n a positive number it shall be considered Total General Partner Net Gain and
\n if the result of such computation is a negative number it shall be
\n considered Total General Partner Net Loss.<\/p>\n
(d) “General Partner Distributions” shall equal the sum of all
\n —————————–
\ndistributions received by the General Partner pursuant to Article VI and this
\nArticle VIII.<\/p>\n
(e) All in-kind distributions shall be valued as provided in
\nParagraph 9.2 as of the date of the distribution.<\/p>\n
(f) Only allocations and distributions made to the General
\nPartner in its capacity as general partner of the Partnership (including
\nallocations and distributions resulting from the General Partner’s Capital
\nContributions made in such capacity) shall be considered for purposes of the
\nforegoing computations (such distributions shall, however, in no way be
\nconstrued so as to include amounts paid or otherwise received by the General
\nPartner pursuant to Article V hereof).<\/p>\n
(g) Each of the members of the General Partner shall be
\nseverally, but not jointly, liable to the Partnership for any unpaid liability
\nof the General Partner determined pursuant to this Paragraph 8.2, based on their
\nrelative distributions received from the General Partner. The Principals hereby
\nagree to obtain the written agreement of each member of the General Partner as
\nto the liability to the Partnership described in the preceding sentence.<\/p>\n
8.3. Liquidating Trust. In the discretion of the General Partner, any
\n —————–
\nNonmarketable Securities and other assets that would otherwise be distributed to
\nthe Partners pursuant to this Article VIII may be distributed to a trust
\nestablished for the benefit of the Partners for the purposes of holding and
\nliquidating such Nonmarketable Securities (and any other Partnership assets),
\ncollecting amounts owed to the Partnership, and paying any contingent <\/p>\n
28.<\/p>\n
or unforeseen liabilities or obligations of the Partnership. The trustee of such
\ntrust shall be the General Partner or other person appointed by a Two-Thirds in
\nInterest of the Limited Partners. During the term of the trust, any
\nNonmarketable Securities held in the trust shall continue to be held until they
\nbecome Marketable Securities except to the extent otherwise determined by the
\nGeneral Partner. Subject to the foregoing, the net assets of the trust shall be
\ndistributed to the Partners from time to time, in the discretion of the General
\nPartner (or other trustee), in the same proportions as such assets would have
\nbeen distributed if they had continued to be held (and disposed of) by the
\nPartnership. The term of the trust shall be for no more than two years, subject
\nto two one-year extensions with the approval of Two-Thirds in Interest of the
\nLimited Partners.<\/p>\n
ARTICLE IX
\n FINANCIAL ACCOUNTING AND REPORTS<\/p>\n
9.1. Financial and Tax Accounting and Reports. The General Partner
\n —————————————-
\nshall cause the Partnership’s tax returns and IRS Form 1065, Schedule K-1’s, to
\nbe prepared and delivered in a timely manner to the Limited Partners. The
\nGeneral Partner shall use its best efforts to cause the Schedule K-1’s for each
\nFiscal Year to be delivered to the Limited Partners within ninety (90) days
\nafter the end of the Fiscal Year. The books and records of the Partnership and
\nthe General Partner shall be kept in accordance with the provisions of this
\nAgreement and otherwise in accordance with generally accepted accounting
\nprinciples consistently applied. The Partnership’s financial statements for each
\nFiscal Year shall be prepared in accordance with such principles consistently
\napplied and shall be audited at the end of each Fiscal Year by an independent
\ncertified public accounting firm of recognized national standing selected by the
\nGeneral Partner. The General Partner shall transmit to each Limited Partner as
\nsoon as practicable after the close of each of the Partnership’s Fiscal Years
\n(but in no event later than ninety (90) days after the end of each Fiscal Year),
\nbeginning with the Fiscal Year ending December 31, 1999, the audited financial
\nstatements of the Partnership accompanied by a report from the General Partner
\nto the Limited Partners, which shall include a status report on investments then
\nheld, a valuation of each such investment, and a brief statement on the affairs
\nof the Partnership during the Fiscal Year then ended. In addition, the General
\nPartner shall, within a reasonable time following the completion of the report
\nreferred to above and following reasonable notice to each Partner, hold an
\nannual meeting of the Partners at which the General Partner shall present the
\naffairs of the partnership and provide the Limited Partners with the opportunity
\nto ask questions and discuss the Partnership’s affairs.<\/p>\n
9.2. Valuation of Securities and Other Assets Owned by the
\n —————————————————–
\nPartnership.
\n———–<\/p>\n
(a) Subject to the specific standards set forth below, the
\nvaluation of Securities and other assets and liabilities under this Agreement
\nshall be at fair market value, as determined by the General Partner in its
\ndiscretion. In determining the value of the interest of any Partner or in any
\naccounting between the Partners, no value shall be placed on the goodwill or the
\nname of the Partnership.<\/p>\n
29.<\/p>\n
(b) The following criteria shall be used for determining the
\nfair market value of Securities.<\/p>\n
(1) Securities not subject to legal or contractual
\n restrictions on free marketability:<\/p>\n
(A) If traded on one (1) or more securities exchanges
\n or on NASDAQ, the value of each Security shall be deemed to be the
\n average closing price of such Security for the five (5) trading days
\n immediately preceding the valuation date as reported in the Wall
\n Street Journal or another nationally recognized publication or service
\n that reports such data for the valuation date.<\/p>\n
(B) If actively traded over-the-counter (but not on
\n NASDAQ), the value shall be deemed to be the closing bid price of such
\n Security for the five (5) trading days immediately preceding the
\n valuation date.<\/p>\n
(C) If there is no active public market, the General
\n Partner shall make a determination of the fair market value on the
\n valuation date, taking into consideration the tax basis of the
\n Securities, developments concerning the issuing company subsequent to
\n the acquisition of the Securities, the pricing of other private
\n placements of Securities by the issuer, the price of the Securities of
\n other companies comparable to the issuer, any financial data and
\n projections of the issuing company provided to the General Partner and
\n such other factor or factors as the General Partner may deem relevant.<\/p>\n
(2) In the case of Securities subject to legal or
\n contractual restrictions on free marketability, appropriate adjustments to
\n the value determined under Paragraph 9.2(b)(1) above shall be made to
\n reflect the effect of the restrictions on transfer.<\/p>\n
(3) If the General Partner in good faith determines that,
\n because of special circumstances, the valuation methods set forth in this
\n paragraph do not fairly determine the value of a Security, the General
\n Partner shall make such adjustments or use such alternative valuation
\n method as it deems appropriate.<\/p>\n
9.3. Supervision; Inspection of Books. Proper and complete books of
\n ——————————–
\naccount of the affairs of the Partnership shall be kept under the supervision of
\nthe General Partner at the principal office of the Partnership. Such books shall
\nbe open to inspection by a Limited Partner, at any reasonable time, upon
\nreasonable notice, during normal business hours. A copy of a current list of
\nPartners, with telephone numbers, shall be provided to any Partner upon request.
\nThe General Partner shall provide any Limited Partner with information
\nreasonably requested by such Limited Partner for any purpose reasonably related
\nto such Limited Partner’s interest as a partner in the Partnership.<\/p>\n
9.4. Quarterly Reports. Beginning with the first Fiscal Quarter
\n —————–
\ncommencing after the date of this Agreement, the General Partner shall transmit
\nto each Limited Partner within forty-five (45) days after the close of each of
\nthe first three (3) Fiscal Quarters of each Fiscal Year, financial statements of
\nthe Partnership prepared in accordance with the terms of this<\/p>\n
30.<\/p>\n
Agreement and otherwise in accordance with generally accepted accounting
\nprinciples from its books without audit and subject to year-end adjustments, a
\nvaluation of each of the Partnership’s investments, a valuation of the
\nPartnership interest of the Limited Partner (based upon the interest of the
\nLimited Partner in the Partnership’s assets), the amount of each Partner’s
\nCapital Account and a list of investments then held with a brief description of
\neach Portfolio Company.<\/p>\n
9.5. Confidentiality. Each Limited Partner agrees to maintain the
\n —————
\nconfidentiality of the Partnership’s records and affairs, agrees not to provide
\nto any other person copies of any financial statements, tax returns or other
\nrecords or reports provided or made available to such Limited Partner, and
\nagrees not to disclose to any other person any information contained therein
\n(including, without limitation, information respecting Portfolio Companies),
\nwithout the express prior written consent of the General Partner; provided, that
\nany Limited Partner may make disclosure and may provide financial statements,
\ntax returns and other records (i) to its accountants, internal and external
\nauditors, legal counsel, financial advisors and other fiduciaries and
\nrepresentatives as long as it instructs such persons to maintain the
\nconfidentiality thereof and not to disclose to any other person any information
\ncontained therein, (ii) to potential transferees of such Limited Partner’s
\nPartnership interest who agree in writing, for the benefit of the Partnership,
\nto maintain the confidentiality thereof, but only after reasonable advance
\nnotice to the Partnership, (iii) if, and to the extent, required by law,
\nincluding judicial or administrative order (provided, that, to the extent
\npossible, the Partnership is given prior notice to enable it to seek a
\nprotective order or similar relief), (iv) in order to enforce rights under this
\nAgreement, (v) to any regulatory body having jurisdiction over the Limited
\nPartner and such of its advisors as need to or customarily have access to such
\ninformation, and (vi) to any of its equity holders, provided that it shall use
\nall commercially reasonable efforts to cause such persons to observe the
\nprovisions of this Paragraph 9.5.<\/p>\n
ARTICLE X
\n OTHER PROVISIONS<\/p>\n
10.1. Execution and Filing of Documents. The General Partner shall
\n ———————————
\nexecute and file a Certificate of Limited Partnership conforming to the
\nrequirements of the Delaware Act in the office of the Secretary of State for the
\nState of Delaware and shall execute a fictitious business name statement and
\nfile or cause such statement to be filed if required by Delaware law.<\/p>\n
10.2. Other Instruments and Acts. The Partners agree to execute any
\n ————————–
\nother instruments or perform any other acts that are or may be necessary to
\neffectuate and carry on the partnership created by this Agreement.<\/p>\n
10.3. Binding Agreement. This Agreement shall be binding upon the
\n —————–
\ntransferees, successors, assigns, and legal representatives of the Partners.<\/p>\n
10.4. Governing Law. This Agreement shall be governed by and
\n ————-
\nconstrued under the laws of the State of Delaware as applied to agreements among
\nDelaware residents made and to be performed entirely within Delaware.<\/p>\n
10.5. Notices. Any notice or other communication that a Partner
\n ——-
\ndesires to give to another Partner shall be in writing, and shall be deemed
\neffectively given upon personal<\/p>\n
31.<\/p>\n
delivery or upon deposit in any United States mail box, by registered or
\ncertified mail, postage prepaid, or upon transmission by telegram or telecopy,
\naddressed to the other Partner at the address shown on Exhibit A or at such
\nother address as a Partner may designate by fifteen (15) days’ advance written
\nnotice to the other Partners.<\/p>\n
10.6. Power of Attorney. By signing this Agreement, each Limited
\n —————–
\nPartner designates and appoints the General Partner its true and lawful
\nattorney, in its name, place and stead to make, execute, sign, and file such
\ninstruments, documents, or certificates that may from time to time be required
\nof the Partnership by the laws of the United States of America, the laws of the
\nState of Delaware, or any other state in which the Partnership shall conduct its
\ninvestment activities in order to qualify or otherwise enable the Partnership to
\nconduct its affairs in such jurisdictions; provided, however, that in no event
\nshall the General Partner be deemed to have the authority under this Paragraph
\n10.6 to take any action that would result in any Limited Partner losing the
\nlimitation on liability afforded hereunder. Such attorney is not hereby granted
\nany authority on behalf of the Limited Partner to amend this Agreement except
\nthat as attorney for each Limited Partner, the General Partner shall have the
\nauthority to amend this Agreement and the Certificate of Limited Partnership as
\nmay be required to effect:<\/p>\n
(a) Admissions of additional partners pursuant to Paragraph 7.6
\nor 7.7 above; or<\/p>\n
(b) Transfers of Limited Partnership interests pursuant to
\nParagraph 7.7 above.<\/p>\n
10.7. Amendment. This Agreement (and any exhibits to this Agreement)
\n ———
\nmay be amended only with the written consent of the General Partner and Majority
\nin Interest of the Limited Partners. No amendment shall, however, (i) increase
\nthe Capital Commitment of a Limited Partner or modify the allocation of Capital
\nTransaction Gain or Loss or Net Income or Loss or the distributions allocable to
\nany Limited Partner without the written consent of such Limited Partner, (ii)
\nincrease the Management Fee or alter or waive the terms of Paragraph 8.2 without
\nthe unanimous consent of the Limited Partners, (iii) alter or waive the terms of
\nthis Paragraph 10.7(a), or (iv) alter or waive the terms of Paragraphs 7.6,
\n10.14, or 10.17 without the written consent of each affected Limited Partner.
\nAny proposed amendment that would change the requisite percentage of Limited
\nPartner interests required to take any action shall require the approval of such
\nexisting requisite percentage. The General Partner shall promptly furnish copies
\nof all amendments to this Agreement and the Partnership’s Certificate of Limited
\nPartnership to all Partners.<\/p>\n
10.8. Effective Date. The Limited Partnership Agreement shall be
\n ————–
\neffective on the date set forth in the first paragraph of this Agreement.<\/p>\n
10.9. Entire Agreement. This Agreement constitutes the entire
\n —————-
\nagreement of the Partners and supersedes all prior agreements between the
\nPartners with respect to the Partnership.<\/p>\n
10.10. Titles; Subtitles. The titles and subtitles used in this
\n —————–
\nAgreement are used for convenience only and shall not be considered in the
\ninterpretation of this Agreement.<\/p>\n
32.<\/p>\n
10.11. Partnership Name. The Partnership shall have the exclusive
\n —————-
\nright to use the Partnership name (and any name under which the Partnership
\nshall elect to conduct its affairs) as long as the Partnership continues.<\/p>\n
10.12. Exculpation. Neither the General Partner, nor its members,
\n ———–
\nemployees or affiliates shall be liable to a Limited Partner or the Partnership
\nfor honest mistakes of judgment, or for action or inaction, taken reasonably and
\nin good faith for a purpose that was reasonably believed to be in the best
\ninterests of the Partnership, or for losses due to such mistakes, action, or
\ninaction, or to the negligence or dishonesty of any employee, broker, or other
\nagent of the Partnership or the General Partner, provided that such employee,
\nbroker, or agent was selected, engaged or retained and supervised with
\nreasonable care. This Paragraph 10.12 shall not extend to any action which
\nconstitutes fraud, willful misconduct or gross negligence. The General Partner
\nmay consult with counsel and accountants in respect of Partnership affairs and
\nbe fully protected and justified in any action or inaction that is taken in
\naccordance with the advice or opinion of such counsel or accountants, provided
\nthat they shall have been selected with reasonable care. Notwithstanding any of
\nthe foregoing to the contrary, the provisions of this Paragraph 10.12 and of
\nParagraph 10.13 hereof shall not be construed so as to relieve (or attempt to
\nrelieve) any person of any liability by reason of recklessness or intentional
\nwrongdoing or to the extent (but only to the extent) that such liability may not
\nbe waived, modified or limited under applicable law, but shall be construed so
\nas to effectuate the provisions of this Paragraph 10.12 and of Paragraph 10.13
\nto the fullest extent permitted by law.<\/p>\n
10.13. Indemnification. The Partnership agrees to indemnify, out
\n —————
\nof the assets of the Partnership only, the General Partner, the members of the
\nGeneral Partner and their agents, employees and affiliates (and each such
\nperson’s heirs and legal and personal representatives) to the fullest extent
\npermitted by law and to save and hold them harmless from and in respect of all
\n(a) reasonable fees, costs, and expenses paid in connection with or resulting
\nfrom any claims, actions, or demands against the General Partner, the members of
\nthe General Partner, the Partnership, or their agents or affiliates to the
\nextent that they arise out of or in any way relate to the Partnership, its
\nproperties, business, or affairs and (b) such claims, actions, and demands and
\nany losses or damages resulting from such claims, actions, and demands,
\nincluding amounts paid in settlement or compromise (if recommended by attorneys
\nfor the Partnership) of any such claim, action or demand; provided, however,
\nthat this indemnity shall not extend to any action which constitutes fraud,
\nwillful misconduct or gross negligence. Any person receiving an advance with
\nrespect to expenses shall be required to agree to return such advance to the
\nPartnership in the event it is subsequently determined that such person was not
\nentitled to indemnification hereunder. Any indemnified party shall promptly seek
\nrecovery under any other indemnity or any insurance policies by which such
\nindemnified party may be indemnified or covered or from any Portfolio Company in
\nwhich the Partnership has an investment, as the case may be. No payment or
\nadvance may be made to any person under this Paragraph 10.13 to any person who
\nmay have a right to any other indemnity (by insurance or otherwise) unless such
\nperson shall have agreed, to the extent of any other recovery, to return such
\npayments or advances to the Partnership.<\/p>\n
10.14. Limitation of Liability of the Limited Partners. No
\n ———————————————–
\nLimited Partner shall be bound by, nor be personally liable for, the expenses,
\nliabilities, or obligations of the Partnership in excess of the balance of such
\nPartner’s Capital Commitment to the Partnership.<\/p>\n
33.<\/p>\n
10.15. Arbitration. Any controversy or claim arising out of or
\n ———–
\nrelating to this Agreement, or the breach hereof, shall be settled by
\narbitration in San Francisco, California, in accordance with the rules, then
\nobtaining, of the American Arbitration Association. Any award shall be final,
\nbinding and conclusive upon the parties. A judgment upon the award rendered may
\nbe entered in any court having jurisdiction thereof.<\/p>\n
10.16. Tax Matters Partner. The General Partner shall be the
\n ——————-
\nPartnership’s Tax Matters Partner (“TMP”). The TMP may be removed by Two-Thirds
\n —
\nin Interest of the Limited Partners. Upon the removal, dissolution or Bankruptcy
\nof the TMP, a successor TMP shall be elected by Two-Thirds in Interest of the
\nLimited Partners. The TMP shall employ experienced tax counsel to represent the
\nPartnership in connection with any audit or investigation of the Partnership by
\nthe Internal Revenue Service (“IRS”) and in connection with all subsequent
\n —
\nadministrative and judicial proceedings arising out of such audit. The fees and
\nexpenses incurred by the TMP in serving as the TMP shall be Partnership expenses
\npursuant to Paragraph 5.2 and shall be paid by the Partnership. Notwithstanding
\nthe foregoing, it shall be the responsibility of the General Partner and of each
\nLimited Partner, at their expense, to employ tax counsel to represent their
\nrespective separate interests. If the TMP is required by law or regulation to
\nincur fees and expenses in connection with tax matters not affecting each of the
\nPartners, then the TMP may, in its sole discretion, seek reimbursement from or
\ncharge such fees and expenses to the Capital Accounts of those Partners on whose
\nbehalf such fees and expenses were incurred. The TMP shall keep the Limited
\nPartners informed of all administrative and judicial proceedings, as required by
\nSection 6223(g) of the Code, and shall furnish a copy of each notice or other
\ncommunication received by the TMP from the IRS to each Limited Partner, except
\nsuch notices or communications as are sent directly to such Partner by the IRS.
\nThe relationship of the TMP to the Limited Partners is that of a fiduciary, and
\nthe TMP has a fiduciary obligation to perform its duties as TMP in such manner
\nas will serve the best interests of the Partnership and all of the Partnership’s
\npartners. To the fullest extent permitted by law, the Partnership agrees to
\nindemnify the TMP and its agents and save and hold them harmless, from and in
\nrespect to all (i) reasonable fees, costs and expenses in connection with or
\nresulting from any claim, action, or demand against the TMP, the General Partner
\nor the Partnership that arise out of or in any way relate to the TMP’s status as
\nTMP for the Partnership, and (ii) all such claims, actions, and demands and any
\nlosses or damages therefrom, including amounts paid in settlement or compromise
\nof any such claim, action, or demand; provided that this indemnity shall not
\nextend to conduct by the TMP determined (i) not to have been undertaken in good
\nfaith to promote the best interests of the Partnership or (ii) to have
\nconstituted recklessness, fraud, gross negligence or intentional wrongdoing by
\nthe TMP.<\/p>\n
10.17. Taxation as Partnership. The General Partner, while
\n ———————–
\nserving as such, agrees to use its best efforts to avoid taking any action that
\nwould cause the Partnership to be classified as other than a partnership or to
\nbe taxable as a corporation for federal income tax purposes. In the event the
\nPartnership should ever be taxable as a corporation, any resulting tax imposed
\non the Partnership shall be treated as a reduction in Net Income or an increase
\nin Net Loss.<\/p>\n
10.18. Deliveries of Opinions. In the event that any opinion is
\n ———————-
\nrequired hereunder from a Limited Partner, the General Partner will reasonably
\ncooperate with such Limited Partner’s counsel to provide factual information in
\nthe possession of the General Partner which <\/p>\n
34.<\/p>\n
information is necessary to allow such counsel to provide the opinion. Any
\nexpense related thereto shall be borne by such Limited Partner.<\/p>\n
ARTICLE XI<\/p>\n
MISCELLANEOUS TAX COMPLIANCE PROVISIONS<\/p>\n
11.1. Substantial Economic Effect. The provisions of Article IV
\n —————————
\nand the other provisions of this Agreement relating to the maintenance of
\nCapital Accounts and procedures upon liquidation of the Partnership are intended
\nto comply generally with the provisions of Treasury Regulation Section 1.704-1,
\nand shall be interpreted and applied in a manner consistent with such
\nRegulations and, to the extent the subject matter thereof is otherwise not
\naddressed by this Agreement, the provisions of Treasury Regulations Section
\n1.704-1 are hereby incorporated by reference unless the General Partner shall
\ndetermine that such incorporation will result in economic consequences
\ninconsistent with the economic arrangement among the Partners as expressed in
\nthis Agreement. In the event the General Partner shall determine that it is
\nprudent to modify the manner in which the Capital Accounts, or any debits or
\ncredits thereto, are computed or allocated or the manner in which distributions
\nand contributions upon liquidation (or otherwise) of the Partnership (or any
\nPartner’s interest therein) are effected in order to comply with such
\nRegulations and other applicable tax laws, or to assure that the Partnership is
\ntreated as a partnership for tax purposes, or to achieve the economic
\narrangement of the Partners as expressed in this Agreement, then notwithstanding
\nParagraph 10.7 hereof, the General Partner may make such modification, provided
\nthat it is not likely to have more than an insignificant detrimental effect on
\nthe tax consequences and total amounts distributable to any Limited Partner
\npursuant to Articles VI and VIII as applied without giving effect to such
\nmodification. The General Partner shall also (i) make any adjustments that are
\nnecessary or appropriate to maintain equality between the Capital Accounts of
\nthe Partners and the amount of Partnership capital reflected on the
\nPartnership’s balance sheet, as computed for book purposes pursuant to this
\nAgreement, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g), and (ii)
\nmake any appropriate modifications in the event unanticipated events (such as
\nthe incurrence of nonrecourse indebtedness) might otherwise cause the
\nallocations under this Agreement not to comply with Treasury Regulations Section
\n1.704, provided in each case that the General Partner determines that such
\nadjustments or modifications shall not result in economic consequences
\ninconsistent with the economic arrangement among the Partners as expressed in
\nthis Agreement.<\/p>\n
11.2. Other Allocations. Notwithstanding the provisions of
\n —————–
\nArticle IV, the allocations provided therein shall be subject to the following
\nexceptions:<\/p>\n
(a) In the event any Partner’s Capital Account has an
\nUnadjusted Excess Negative Balance (as defined in subparagraph (f)) at the end
\nof any Fiscal Year, such Partner will be reallocated items of Capital
\nTransaction Gain and Net Income for such Fiscal Year (and, if necessary, future
\nFiscal Years) in the amount necessary to eliminate such Unadjusted Excess
\nNegative Balance as quickly as possible.<\/p>\n
(b) In the event any Partner unexpectedly receives any
\nadjustments, allocations or distributions described in Treasury Regulations
\nSections 1.704-1(b)(2)(ii)(d)(4) through (d)(6), items of Capital Transaction
\nGain and Net Income shall be specially allocated to<\/p>\n
35.<\/p>\n
such Partner’s Capital Account in an amount and manner sufficient to eliminate,
\nto the extent required by Treasury Regulations Section 1.704-1(b)(2)(ii)(d), the
\nExcess Negative Balance (as defined in subparagraph (e)) in such Partner’s
\nCapital Account created by such adjustments, allocations or distributions as
\nquickly as possible. This subparagraph (b) is intended to and shall in all
\nevents be interpreted so as to constitute a “qualified income offset” within the
\n ———————–
\nmeaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(d).<\/p>\n
(c) A Partner’s Capital Account shall not be allocated
\nany item of Capital Transaction Loss or Net Loss to the extent such allocation
\nwould cause such Capital Account to have an Excess Negative Balance (as defined
\nin subparagraph (e)).<\/p>\n
(d) Any special allocations pursuant to this Paragraph
\n11.2 shall be taken into account as soon as possible in computing subsequent
\nallocations, so that over the term of the Partnership the net amount of any
\nitems so allocated and the profit, gain, loss, income and expense and all other
\nitems allocated to each Partner shall, to the extent possible, be equal to the
\nnet amount that would have been allocated to each such Partner if such original
\nallocations pursuant to this Paragraph 11.2 had not occurred.<\/p>\n
(e) For purposes of this Paragraph 11.2, “Excess Negative
\n —————
\nBalance” shall mean the excess of the negative balance in a Partner’s Capital
\n——-
\nAccount (computed with any adjustments which are required for purposes of
\nTreasury Regulations Section 1.704-1(b)(2)(ii)(d)) over the amount such Partner
\nis obligated to restore to the Partnership (computed under the principles of
\nTreasury Regulations Section 1.704-1(b)(2)(ii)(c)) inclusive of any addition to
\nsuch restoration obligation pursuant to application of the provisions of
\nTreasury Regulations Sections 1.704-2), or any successor provisions thereto.<\/p>\n
(f) For purposes of this Paragraph 11.2 “Unadjusted
\n ———-
\nExcess Negative Balance” shall have the same meaning as Excess Negative Balance,
\n———————–
\nexcept that the Unadjusted Excess Negative Balance of a Partner shall be
\ncomputed without effecting the reductions to such Partner’s Capital Account
\nwhich are described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d).<\/p>\n
11.3. Income Tax Allocations.
\n ———————-<\/p>\n
(a) Except as otherwise provided in this Paragraph 11.3
\nor as otherwise required by the Code and the rules and Treasury Regulations
\npromulgated thereunder, Partnership income, gain, loss, deduction, or credit for
\nincome tax purposes shall be allocated in the same manner the corresponding book
\nitems are allocated pursuant to this Agreement.<\/p>\n
(b) In accordance with Code Section 704(c) and the
\nTreasury Regulations thereunder, income, gain, loss and deduction with respect
\nto any asset contributed to the capital of the Partnership shall, solely for tax
\npurposes, be allocated between the Partners so as to take account of any
\nvariation between the adjusted basis of such property to the Partnership for
\nfederal income tax purposes and its initial Book Value.<\/p>\n
(c) In the event the Book Value of any Partnership asset
\nis adjusted pursuant to the terms of this Agreement, subsequent allocations of
\nincome, gain, loss and deduction with respect to such asset shall take account
\nof any variation between the adjusted<\/p>\n
36.<\/p>\n
basis of such asset for federal income tax purposes and its Book Value in the
\nsame manner as under Code Section 704(c) and the Treasury Regulations
\nthereunder.<\/p>\n
11.4. Withholding. The Partnership shall at all times be
\n ———–
\nentitled to make payments with respect to any Partner in amounts required to
\ndischarge any obligation of the Partnership to withhold or make payments to any
\ngovernmental authority with respect to any federal, state, local or other
\njurisdictional tax liability of such Partner arising as a result of such
\nPartner’s interest in the Partnership. Any such withholding payment shall be
\ncharged to the Capital Account of the Partner subject to such withholding and
\nshall reduce the amounts otherwise distributable to such Partner hereunder.<\/p>\n
[Remainder of This Page Intentionally Left Blank]<\/p>\n
37.<\/p>\n
IN WITNESS WHEREOF, the Partners have executed this Agreement as
\nof the date first above written.<\/p>\n
GENERAL PARTNER: E*TRADE VENTURES I, LLC, a Delaware
\n limited liability company<\/p>\n
By \/s\/ THOMAS A. BEVILACQUA
\n __________________________________<\/p>\n
Title: Managing Member<\/p>\n
ORIGINAL LIMITED PARTNERS: E*TRADE GROUP INC.,<\/p>\n
By \/s\/ THOMAS A. BEVILACQUA
\n __________________________________<\/p>\n
Title _______________________________<\/p>\n
\/s\/ CHRISTOS M. COTSAKOS
\n _____________________________________
\n Christos M. Cotsakos<\/p>\n
\/s\/ THOMAS A. BEVILACQUA
\n _____________________________________
\n Thomas A. Bevilacqua<\/p>\n
ADDITIONAL LIMITED PARTNERS: E*TRADE VENTURES I, LLC, a Delaware
\n limited liability company, as their
\n authorized attorney-in-fact<\/p>\n
By \/s\/ THOMAS A. BEVILACQUA
\n __________________________________<\/p>\n
Title: Managing Member<\/p>\n
38.<\/p>\n
The undersigned members of E*Trade Ventures I, LLC, hereby specifically
\nacknowledge their obligation pursuant to Paragraph 8.2(g) of the Agreement.<\/p>\n
E*TRADE GROUP, INC.<\/p>\n
By \/s\/ THOMAS A. BEVILACQUA
\n _________________________________<\/p>\n
Title: _____________________________<\/p>\n
\/s\/ CHRISTOS M. COTSAKOS
\n _____________________________________
\n Christos M. Cotsakos<\/p>\n
\/s\/ THOMAS A. BEVILACQUA
\n ____________________________________
\n Thomas A. Bevilacqua<\/p>\n
39.<\/p>\n
EXHIBIT A<\/p>\n
PARTNERS’ CAPITAL COMMITMENTS;<\/p>\n
PARTNERSHIP PERCENTAGES<\/p>\n
\n\n Partnership
\n Capital Percentage*
\n Name Commitment (Rounded)
\n=================================================================================
\n
\n GENERAL PARTNER: <\/p>\n E*Trade Ventures I, LLC $ 350,000 0.35%<\/p>\n
LIMITED PARTNERS: <\/p>\n
E*Trade Group, Inc. 25,169,800 25.08%<\/p>\n
Cotsakos Venture, LLC 1,000,000 1.00%<\/p>\n
Thomas A. Bevilacqua 500,000 .50%<\/p>\n
Other Limited Partners 73,350,000 73.07%
\n (Aggregate Interests)
\n ————————————–<\/p>\n
TOTAL $ 100,369,800 100.00%
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
__________________________<\/p>\n
* Actual Percentages are based on the relative amounts of the Partners’ Capital
\n Commitments.<\/p>\n
A-1<\/p>\n
EXHIBIT B<\/p>\n
SECURITIES CONTRIBUTED BY E*TRADE<\/p>\n
\n\n Approximate
\n Company Agreed Fair Value* Percentage of Company
\n ======================================================================
\n
\n PlanetRx.com, Inc. $ 3,419,800 1.4%
\n Webvan Group, Inc. 10,000,000 1.4%
\n Equinix, Inc. 3,500,000 1.5%
\n LoanCity.com, Inc. 8,250,000 8.1%
\n ——————<\/p>\n $25,169,800
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
__________________________<\/p>\n
* Agreed Fair Value equals E*Trade’s cost basis in the listed securities.<\/p>\n
B-1<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7386],"corporate_contracts_industries":[],"corporate_contracts_types":[9573],"class_list":["post-41651","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-e-trade-group-inc","corporate_contracts_types-formation"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41651","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=41651"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41651"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41651"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}