SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
Select Software Tools, Ltd.
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(Name of Issuer)
Sponsored ADR's
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(Title of Class of Securities)
816200109
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(CUSIP Number)
Erinch Ozada
Archery Capital, LLC
237 Park Avenue, Suite 801
New York, NY 10017
Telephone: (212) 808-7484
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(Name, Address and Telephone Number of
Person Authorized to Receive Notices and
Communications)
Copy to:
Paul S. Schreiber, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 848-4000
November 13 , 1997
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(Date of Event which Requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d- 1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with this Statement |_|.
<PAGE>
CUSIP No. 816200109
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Archery Capital, LLC
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Tax Identification Number 13-3884177
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(2) Check the Appropriate Box if a Member of a Group (See Instructions)
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(3) SEC Use Only
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(4) Source of Funds (See Instructions) AF
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e).
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(6) Citizenship or Place of Organization United States
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- -------------------- (7) Sole Voting Power
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Number of ----------------------------------------------
Shares (8) Shared Voting Power 649,750
Beneficially --------------------------
Owned by ----------------------------------------------
Each (9) Sole Dispositive Power
Reporting -------------------------
Person ----------------------------------------------
With (10) Shared Dispositive Power 649,750
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person 649,750
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
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<PAGE>
CUSIP No. 816200109
(13) Percent of Class Represented by Amount in Row (11) 6.3%
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(14) Type of Reporting Person (See Instructions) IN
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<PAGE>
CUSIP No. 816200109
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Pharos Fund Limited
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(2) Check the Appropriate Box if a Member of a Group (See Instructions)
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(3) SEC Use Only
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(4) Source of Funds (See Instructions) WC
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e).
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(6) Citizenship or Place of Organization British Virgin Islands
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- -------------------- (7) Sole Voting Power
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Number of ----------------------------------------------
Shares (8) Shared Voting Power 649,750
Beneficially --------------------------
Owned by ----------------------------------------------
Each (9) Sole Dispositive Power
Reporting -------------------------
Person ----------------------------------------------
With (10) Shared Dispositive Power 649,750
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- -------------------- ----------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person 649,750
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
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<PAGE>
CUSIP No. 816200109
(13) Percent of Class Represented by Amount in Row (11) 6.3%
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(14) Type of Reporting Person (See Instructions) IC
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<PAGE>
CUSIP No. 816200109
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Lighthouse USA Partners, L.P.
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(2) Check the Appropriate Box if a Member of a Group (See Instructions)
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|_| (b)
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(3) SEC Use Only
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(4) Source of Funds (See Instructions) WC
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e).
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(6) Citizenship or Place of Organization Delaware
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- -------------------- (7) Sole Voting Power
--------------------------
Number of ----------------------------------------------
Shares (8) Shared Voting Power 649,750
Beneficially --------------------------
Owned by ----------------------------------------------
Each (9) Sole Dispositive Power
Reporting -------------------------
Person ----------------------------------------------
With (10) Shared Dispositive Power 649,750
--------------------
- -------------------- ----------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person 649,750
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
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<PAGE>
CUSIP No. 816200109
(13) Percent of Class Represented by Amount in Row (11) 6.3%
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(14) Type of Reporting Person (See Instructions) IC
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<PAGE>
Item 1. Security and Issuer.
The class of equity securities to which this Statement on
Schedule 13D relates is the Sponsored ADRs, par value $0.0001 per share (the
"Securities"), of Select Software Tools, Ltd. (the "Issuer"), a company formed
under the laws of the United Kingdom, with its principal executive offices
located at Westmoreland House, 80-86 Bath Road, Cheltenham, Gloucester, England
GL53 7JT.
Item 2. Identity and Background.
(a) This statement is being filed by Archery Capital, LLC, a
Delaware limited liability company, Pharos Fund Limited, a company organized
under the laws of the British Virgin Islands, and Lighthouse Partners USA, L.P.,
a Delaware limited partnership (collectively, the "Reporting Persons").
Archery Capital, LLC is a Delaware limited liability company,
and has as its business address 237 Park Avenue, Suite 801, New York, NY 10017.
Archery Capital, LLC is a privately-placed unregistered investment adviser and
does not hold itself out to the general public as an investment adviser. During
the preceding 12 months, Archery Capital, LLC has acted as the investment
adviser to fewer than 15 clients, none of which were investment companies
required to be registered under the Investment Company Act of 1940, as amended.
Pharos Fund Limited is a company organized under the laws of
the British Virgin Islands, and has its business address at 20 Reid Street,
Hamilton HM 11, Bermuda. Pharos Fund Limited is an unregistered foreign
investment fund that is not making, nor does it propose to make, any public
offering of its securities in the United States or to U.S. resident investors
and currently has no U.S. resident investors. Archery Capital, LLC acts as the
investment adviser to Pharos Fund Limited pursuant to an Investment Management
Agreement dated April 30, 1996 and, as such, has full discretionary investment
management authority with respect to the assets of Pharos Fund Limited.
Lighthouse Partners USA, L.P. is a Delaware limited
partnership, and has as its business address 237 Park Avenue, Suite 801, New
York, NY 10017. Lighthouse Partners USA, L.P. is a privately-placed unregistered
investment fund whose outstanding securities are beneficially owned by less than
100 persons. Pursuant to the Lighthouse Limited Partnership Agreement dated
January 1, 1997, Archery Capital, LLC, is the investing general partner of
Lighthouse Partners USA, L.P., and, as such, has full discretionary investment
management authority with respect to the assets of Lighthouse Partners USA, L.P.
(b)-(c), (f) The directors and executive officers of Archery
Capital, LLC and Pharos Fund Limited are set forth on Schedule I and Schedule
II, respectively, attached hereto, and the general partners of Lighthouse
Partners USA, L.P. are set forth on Schedule
<PAGE>
III, attached hereto. Schedule I, Schedule II and Schedule III set forth the
following information with respect to each such person:
(i) name;
(ii) business address (or residence address where
indicated);
(iii) present principal occupation or employment and
the name, principal business and address of any
corporation or other organization in which such
employment is conducted; and
(iv) citizenship.
(d)-(e) During the last five years, neither the Reporting
Persons nor any person named in Schedule I, Schedule II or Schedule III attached
hereto has been (a) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (b) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
From March 4, 1997 to October 30, 1997, Archery Capital, LLC,
pursuant to its authority under the Pharos Advisory Agreement, caused Pharos
Fund Limited to use its working capital to purchase 467,850 shares of sponsored
ADRs of Select Software Tools, Ltd. in market transactions. From February 11,
1997 to October 30, 1997, Archery Capital, LLC, pursuant to its authority under
the Lighthouse Limited Partnership Agreement, caused Lighthouse Partners USA,
L.P. to purchase 47,900 shares of sponsored ADRs of Select Software Tools, Ltd.
in market transactions. Prior to November 13, 1997, the Reporting Persons were
the beneficial owners of approximately 4.9% of the sponsored ADRs of Select
Software Tools, Ltd. On November 13, 1997, Archery Capital, LLC, pursuant to its
authority under the Pharos Advisory Agreement, caused Pharos Fund Limited to use
$262,480 of working capital to purchase an additional 34,000 shares of the
sponsored ADRs of Select Software Tools, Ltd. (the "November 13 Transaction"),
and on November 14, 1997, Archery Capital, LLC, pursuant to its authority under
the Pharos Advisory Agreement, caused Pharos Fund Limited to use $795,000 of its
working capital to purchase an additional 100,000 shares of the sponsored ADRs
of Select Software Tools, Ltd. (the "November 14 Transaction"). As of November
13, 1997, the Reporting Persons were the beneficial owners of 549,750 shares of
Securities, representing approximately 5.3% of the outstanding Securities of the
Issuer, and as of November 14, 1997, the Reporting Persons were the beneficial
owners of 649,750 shares of Securities, representing approximately 6.3% of the
outstanding Securities of the Issuer.
<PAGE>
None of the Reporting Persons have acquired any additional
shares of Securities of the Issuer since November 14, 1997.
Item 4. Purpose of Transaction.
As described more fully in Item 3 above, this statement
relates to the acquisition of beneficial ownership of 649,750 shares of
Securities by the Reporting Persons. The Securities acquired by the Reporting
Persons have been acquired for the purpose of making an investment in the Issuer
and not with the present intention of acquiring control of the Issuer's
business.
The Reporting Persons from time to time intend to review their
investment in the Issuer on the basis of various factors, including the Issuer's
business, financial condition, results of operations and prospects, general
economic and industry conditions, the securities markets in general and those
for the Issuer's securities in particular, as well as other developments and
other investment opportunities. Based upon such review, the Reporting Persons
will take such actions in the future as the Reporting Persons may deem
appropriate in light of the circumstances existing from time to time. If the
Reporting Persons believe that further investment in the Issuer is attractive,
whether because of the market price of the Issuer's securities or otherwise,
they may acquire shares of sponsored ADRs or other securities of the Issuer
either in the open market or in privately negotiated transactions. Similarly,
depending on market and other factors, the Reporting Persons may determine to
dispose of some or all of the Securities currently owned by the Reporting
Persons or otherwise acquired by the Reporting Persons either in the open market
or in privately negotiated transactions.
Except as set forth above, the Reporting Persons have not
formulated any plans or proposals which relate to or would result in: (a) the
acquisition by any person of additional securities of the Issuer or the
disposition of securities of the Issuer, (b) an extraordinary corporate
transaction involving the Issuer or any of its subsidiaries, (c) a sale or
transfer of a material amount of the assets of the Issuer or any of its
subsidiaries, (d) any change in the present board of directors or management of
the Issuer, (e) any material change in the Issuer's capitalization or dividend
policy, (f) any other material change in the Issuer's business or corporate
structure, (g) any change in the Issuer's charter or bylaws or other or
instrument corresponding thereto or other action which may impede the
acquisition of control of the Issuer by any person, (h) causing a class of the
Issuer's securities to be deregistered or delisted, (i) a class of equity
securities of the Issuer becoming eligible for termination of registration or
(j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a)-(b) As a result of the November 13 Transaction and the
November 14 Transaction, the Reporting Persons may be deemed to be the
beneficial owners of 649,750 shares of Securities. Based upon information
received from Select Software Tools, Ltd.,
<PAGE>
such Securities constitute approximately 6.3% of the issued and outstanding
Securities. As described above in Item 2, Archery Capital, LLC has full
discretionary investment management authority with respect to the assets of
Pharos Fund Limited and Lighthouse Partners USA, L.P., respectively. As a
result, the Reporting Persons share power to direct the vote and to direct the
disposition of the 649,750 shares of Securities.
(c) Except as disclosed in Item 3, neither the Reporting
Persons, nor, to the knowledge of the Reporting Persons, any person named in
Schedule I, Schedule II, or Schedule III, has effected any transaction in the
Securities during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Pursuant to the Pharos Advisory Agreement Archery Capital, LLC
has full discretionary investment management authority with respect to the
assets of Pharos Fund Limited. Such authority includes the power to vote and
otherwise dispose of securities purchased by Archery Capital, LLC on behalf of
Pharos Fund Limited.
Pursuant to the Lighthouse Limited Partnership Agreement,
Archery Capital, LLC has full discretionary investment management authority with
respect to the assets of Lighthouse Partners USA, L.P. Such authority includes
the power to vote and otherwise dispose of securities purchased by Archery
Capital, LLC on behalf of Lighthouse Partners USA, L.P.
Other than the investment management agreement and the
relationship mentioned above, to the best knowledge of the Reporting Persons,
there are no contracts, arrangements, understandings or relationships (legal or
otherwise) among the persons named in Item 2 and between such persons and any
persons with respect to any securities of the Issuer, including, but not limited
to, transfer or voting of any of the Securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving of withholding of proxies.
<PAGE>
Item 7. Material to Be Filed as Exhibits.
Exhibit Description
- ------- -----------
A. Advisory Agreement between Archery Capital, LLC and Pharos Fund
Limited, dated April 30, 1996 (the "Pharos Advisory Agreement").
B. Limited Partnership Agreement of Lighthouse Partners USA, L.P., dated
January 1, 1997 (the "Lighthouse Limited Partnership Agreement").
C. Joint Filing Agreement among Archery Capital, LLC, Pharos Fund Limited
and Lighthouse Partners USA, L.P.
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
November 21, 1997 ARCHERY CAPITAL, LLC
By: /s/ Erinch Ozada
------------------------------
Name: Erinch Ozada
Title: Managing Member
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
November 21, 1997 PHAROS FUND LIMITED
By: /s/ Philip C. Pedro
------------------------------
Name: Philip C. Pedro
Title: Secretary
<PAGE>
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
November 21, 1997 LIGHTHOUSE PARTNERS USA, L.P.
By: ARCHERY CAPITAL, LLC
its General Partner
By: /s/ Erinch Ozada
------------------------------
Name: Erinch Ozada
Title: Managing Member
<PAGE>
Schedule I
The name and present principal occupation of each of the
executive officers and directors of Archery Capital, LLC are set forth below.
<TABLE>
<CAPTION>
=================================================================================================
Name and Position with Reporting Principal Occupation
Citizenship Person and Business Address
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Erinch Ozada Managing Member Managing Member
Archery Capital, LLC
Republic of Cyprus citizen 237 Park Avenue
Suite 801
New York, NY 10017
=================================================================================================
</TABLE>
<PAGE>
Schedule II
The name and present principal occupation of each of the
executive officers and directors of Pharos Fund Limited are set forth below.
<TABLE>
<CAPTION>
=================================================================================================
Name and Position with Reporting Principal Occupation
Citizenship Person and Business Address
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Alan L. Brown Secretary and Director Executive Vice President
Winchester Global Trust
British citizen Company Limited
Williams House
20 Reid Street
Hamilton HM 11
Bermuda
- -------------------------------------------------------------------------------------------------
Patrik Hannell Director Executive Vice President
Hannells Industrier
Swedish citizen Kvekatorpsvagen 25
Box 174
Falkenberg, 311 22
Sweden
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Oskar P. Lewnowski Director Chairman and Director
Olympia Capital
Austrian citizen International Inc.
Williams House
20 Reid Street
Hamilton HM 11
Bermuda
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Zakiya M. Alireza Director Loutfy Mansour
International Distribution
Egyptian citizen Co.
9, Maksoud Pasha Street
P.O. Box 726
Alex.
Smouha-Alexandria
Egypt
- --------------------------------------------------------------------------------------------------
Paul S. Schreiber Director Partner
Shearman & Sterling
United States citizen 599 Lexington Avenue
New York, New York
10022
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Philip C. Pedro Alternate Director Consultant
'Philobie'
British Citizen 3 Park View Lane
Devonshire DV03
Bermuda
=================================================================================================
</TABLE>
<PAGE>
Schedule III
The names and present principal occupations of each of the
general partners of Lighthouse Partners USA, L.P. are set forth below.
<TABLE>
<CAPTION>
=================================================================================================
Name and Position with Reporting Principal Occupation
Citizenship Person and Business Address
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Archery Capital, LLC General Partner Investment advisory
services
237 Park Avenue
Suite 801
New York, NY 10017
- -------------------------------------------------------------------------------------------------
Lighthouse Management, General Partner Fund administrative
Inc. services
237 Park Avenue
Suite 801
New York, NY 10017
=================================================================================================
</TABLE>
<PAGE>
EXHIBIT INDEX
================================================================================
Exhibit Description Page No.
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A. Advisory Agreement between Archery Capital,
LLC and Pharos Fund Limited, dated April
30, 1996
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B. Limited Partnership Agreement of Lighthouse
Partners USA, L.P., dated January 1, 1997.
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C. Joint Filing Agreement among Archery
Capital, LLC, Pharos Fund Limited and
Lighthouse Partners USA, L.P.
================================================================================
Exhibit A
INVESTMENT MANAGEMENT AGREEMENT
April 30, 1996
Pharos Fund Limited
Wickams Cay
P.O. Box 662
Road Town
Tortola, B.V.I.
Dear Sirs:
We confirm that Archery Capital LLC (the "Investment Manager")
will act as Investment Manager for Pharos Fund Limited (the "Fund"), a British
Virgin Islands corporation.
The Fund has advised us that it proposes to offer and sell its
shares in accordance with the confidential Explanatory Memorandum of the Fund
dated April 30, 1996, which may be amended or supplemented from time to time
(the "Memorandum"). We acknowledge receipt of the Memorandum and confirm our
reliance on the statements therein. We understand that our activities for the
Fund are subject to (i) the Fund's investment objectives and the investment
restrictions and other statements in the Memorandum, (ii) the provisions of this
investment management agreement ("Agreement"), and (iii) such other directions
as to which the Fund shall from time to time notify the Investment Manager in
writing.
The Investment Manager believes that its services can best be performed
as follows:
1. The Investment Manager will have full discretion to allocate the
Fund assets among investment vehicles ("Portfolio Investments")
(as described in the Memorandum). The Investment Manager shall
monitor the performance of the Portfolio Investments on a
continuing basis. The Investment Manager shall have discretion to
place orders with broker/dealers, foreign currency dealers or
others pursuant to the Investment Manager's determinations in
accordance with Fund's investment objectives and policies as
expressed in the Memorandum. The Investment Manager shall
determine what portion of the Fund's assets shall be invested in
securities and other assets and what portion, if any, should be
held as cash.
<PAGE>
2
2. The Investment Manager shall send or cause to be sent by
facsimile transmission or other electronic means to the Fund on
the last business day of each month (and such additional dates as
the Fund and we may from time to time agree upon in advance) a
portfolio statement reflecting the allocation of assets of the
Fund as of the close of business (4:00 pm New York time) on the
immediately preceding business day. For such purpose, the
portfolio shall be deemed to include, without limitation,
investment securities, receivables in respect of securities sold
and cash items, including proceeds of sales of securities. On the
second business day following each trade date, we shall send or
cause to be sent by facsimile transmission or other electronic
means confirmations of all trades executed on the Fund's behalf
on such trade date and provide such other information on the
trades as the Fund and we may agree upon.
3. Upon reasonable request the Investment Manager shall provide the
Fund or its board of directors with such information as the Fund
or its board of directors deems necessary for purposes of
monitoring the performance of the Investment Manager's
obligations and duties set forth herein. Notwithstanding the
foregoing, neither the Fund nor its board of directors shall have
direct access to the Investment Manager's books and records,
which shall be deemed the confidential and proprietary property
of the Investment Manager.
4. The Investment Manager shall not be liable for its acts, or
omissions to act, in connection with its obligations hereunder,
provided that it has not acted with bad faith, gross negligence
or reckless disregard of its obligations and duties set forth
herein. The Advisory Board (as described in the Memorandum) shall
not be liable for any acts, or omissions to act, in connection
with the rendering of advisory services to the Investment Manager
or in connection with the Investment Manager's rendering of
services to the Fund.
5. (a) The Investment Manager represents and confirms to the Fund
(i) that all statements concerning the Investment Manager, its
affiliates, the investments it will make on behalf of the Fund
and the characteristics, potential benefits and risks of such
investments, as contained in the Memorandum, are in all material
respects true and accurate and do not omit any material fact
which would, in light of the circumstances under which such
statements are made or otherwise, be required in order to make
such statements not misleading; (ii) that the Investment Manager
will advise the Fund promptly of any change which, from time to
time, may be necessary to ensure that such statements remain in
all material respects true and accurate and do not omit any
material fact which, in light of the circumstances under which
such statements are made or otherwise, is required in order to
make
<PAGE>
3
such statements not misleading; and (iii) that the Investment
Manager (a) has all the requisite authority to enter into,
execute and deliver and perform its obligations hereunder, and
(b) will not breach any agreement or law to which it is subject
by performing its obligations hereunder. The Investment Manager
hereby agrees to indemnify and hold the Fund harmless from,
against and in respect of any and all damage, liability, cost and
expense, including reasonable legal fees and expenses, suffered
or incurred by the Fund by reason of any breach of any
representation contained in this paragraph.
(b) The Fund represents and confirms to the Investment Manager
that (i) the shares of the Fund (the "Shares") have not been and
will not be registered under the U.S. Securities Act of 1933, as
amended; (ii) the Fund will not be registered under the U.S.
Investment Company Act of 1940, as amended; and (iii) except as
provided in the Memorandum, (a) the Shares have not been and are
not being offered for sale in the United States (or any of its
territories, possessions or areas subject to its jurisdiction) or
(b) to any person who is a "U.S. Person" (as defined in the
Memorandum) or (c) to any person purchasing for the account of or
for resale to any U.S. Person. By its signature at the foot of
this Agreement, the Fund agrees to indemnify and hold the
Investment Manager harmless from, against and in respect of any
and all damage, liability, cost and expense, including reasonable
legal fees and expenses, suffered or incurred by the Investment
Manager by reason of any breach of any representation contained
in this paragraph.
6. This Agreement has an indefinite term but may be terminated
without penalty by the Investment Manager or by the Fund on
thirty (30) days' prior written notice, and terminates
automatically upon assignment by the Investment Manager without
the Fund's consent.
7. The Investment Manager shall receive a management fee from the
Fund for its services at the rate of 1% per annum, payable
monthly in advance, based on the net asset value of the Fund (as
determined in the Memorandum) as of the Fund's Valuation Date (as
defined in the Memorandum) immediately preceding the beginning of
each month.
8. (a) You have represented to us that (i) under the laws of the
British Virgin Islands, the Fund may pay an incentive fee to the
Investment Manager of the Fund; and (ii) the payment of incentive
fees to investment advisors by enterprises such as the Fund is
legal under the applicable laws of the British Virgin Islands.
Based on the foregoing, the Investment Manger agrees to accept an
incentive fee (as calculated below) as payment for its services.
<PAGE>
4
b) The Investment Manager shall receive an incentive fee from the
Fund for its services paid annually at the rate of 20% of the
full increase in the aggregate net asset value of the Fund since
the beginning of that Fiscal Year (as defined in the Memorandum),
appropriately adjusted for any subscriptions, distributions or
redemptions in that year, provided that no incentive fee will be
paid unless the Fund has achieved at least a return at the rate
of 6% per annum in that year (prorated for partial years). The
annual period upon which the incentive fee shall be based ends on
the Valuation Date on or immediately preceding the end of the
Fund's Fiscal Year and commences on the last Valuation Date of
the preceding Fiscal Year (which in the case of the first year of
the Fund is the date on which the Fund commences operations).
Upon redemption of Shares at any time other than the end of the
Fiscal Year, the Fund will deduct from the proceeds of
redemption, and pay to the Investment Manager, an amount equal to
20% of the full aggregate increase in the net asset value of the
Shares being redeemed since the end of the preceding Fiscal Year,
provided that such increase is at least 6% per annum, prorated
for the time elapsed since the beginning of the Fiscal Year (but
in no event shall any such deduction reduce the increase in such
net asset value to below 6% per annum, prorated for the period
involved).
9. The Investment Manager anticipates that many of its costs and
expenses incurred in providing investment advisory services to
the Fund will be recompensed through "soft dollar" arrangements
with brokerage firms to which the Investment Manager directs the
Fund's trades. The Investment Manager may, to the extent it can
do so, obtain reimbursement payments from brokers or have brokers
assume some or all of its expenses (including operating expenses
such as salaries, benefits, rent, communication and other costs
of the Investment Manager) unrelated to research. To the extent
that "soft dollars" and other forms of reimbursement are not
sufficient to cover the Investment Manager's costs and expenses,
it will seek reimbursement from the Fund. The Fund will reimburse
the Investment Manager for such expenses, including the
Investment Manager's own organizational and operational costs, in
an amount not to exceed 1.25% of the Fund's net asset value, per
annum. Amounts in excess of the 1.25% cap will be paid by the
Investment Manager. The calculation and timing of the Investment
Manager's reimbursement payments, and the appropriateness
thereof, will be determined exclusively by the Investment
Manager, who shall direct the Fund to pay such expenses. The Fund
may, at the Investment Manager's request, periodically advance
all or a portion of the 1.25%. To the extent that advances exceed
amounts actually required, the Investment Manager will refund
such amounts on a quarterly basis.
<PAGE>
5
10. It is understood that the Investment Manager is an independent
contractor and not an employee or agent of the Fund.
11. The Investment Manager's services hereunder are not to be deemed
exclusive and it is understood that we may render investment
advice, management and services to others. It is specifically
understood and agreed that our advice to others may, from time to
time, be inconsistent with that given to the Fund. The Investment
Manager may purchase and sell assets for the accounts of other of
its clients with investment objectives similar to those of the
Fund. In case of a conflict between the Fund's account and one or
more of such other accounts, where there is a limited supply of a
particular investment or a limited opportunity to sell any
investment, the Investment Manager will act in the manner it
considers equitable and consistent with its obligations both to
the Fund and to its other clients. It is specifically understood
and agreed that the Investment Manager cannot assure equal
treatment among all of its clients at all times.
<PAGE>
6
If these terms meet with your approval, please indicate by
signing and returning to us the extra copy of this letter which is enclosed
herewith.
Very truly yours,
ARCHERY CAPITAL LLC
By: /s/ Erinch Ozada
------------------------
The foregoing is hereby
approved and accepted.
PHAROS FUND LIMITED
By: /s/ Philip C. Pedro
---------------------------
Dated: April 30, 1996
Exhibit B
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE LIMITED PARTNERSHIP INTERESTS EVIDENCED BY THIS AGREEMENT ARE REDEEMABLE AND
IT IS NOT CONTEMPLATED THAT ANY TRADING OF INTERESTS WILL OCCUR. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM, AND THIS AGREEMENT, WHICH PROVIDES THE GENERAL PARTNER THE
RIGHT TO PROHIBIT ANY PARTICULAR TRANSFER AND TO REQUIRE OPINIONS OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION REASONABLY SATISFACTORY TO THE GENERAL
PARTNER AS A CONDITION TO ANY TRANSFER. INVESTORS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
LIGHTHOUSE PARTNERS USA, LP
---------------------
LIMITED PARTNERSHIP AGREEMENT
---------------------
January 1, 1997
<PAGE>
LIGHTHOUSE PARTNERS USA, LP
TABLE OF CONTENTS
Page
ARTICLE I
Organization
1.01 FORMATION.............................................................. 1
1.02 PARTNERSHIP NAME....................................................... 2
1.03 FISCAL YEAR............................................................ 2
1.04 PURPOSE................................................................ 2
1.05 LIABILITY OF PARTNERS.................................................. 3
1.06 PLACE OF BUSINESS...................................................... 4
1.07 CERTAIN DEFINED TERMS.................................................. 4
ARTICLE II
Capital Accounts
2.01 CONTRIBUTIONS.......................................................... 8
2.02 CAPITAL ACCOUNTS....................................................... 9
2.03 OPENING CAPITAL ACCOUNTS............................................... 10
2.04 PARTNERSHIP PERCENTAGES................................................ 10
2.05 CLOSING CAPITAL ACCOUNTS (ALLOCATIONS)................................. 11
2.06 NET ASSET VALUE AND VALUATION OF SECURITIES............................ 14
2.07 ALLOCATIONS FOR TAX PURPOSES........................................... 17
2.08 DETERMINATION BY ADMINISTRATIVE GENERAL PARTNER OF
CERTAIN MATTERS...................................................... 18
2.09 CERTAIN WITHHOLDING TAXES.............................................. 18
ARTICLE III
Management
3.01 DUTIES AND POWERS OF THE GENERAL PARTNERS.............................. 19
3.02 COMPENSATION OF THE ADMINISTRATIVE GENERAL PARTNER
AND EXPENSES OF THE PARTNERSHIP...................................... 21
3.03 ACTIVITY OF THE GENERAL PARTNERS....................................... 21
3.04 INTERESTED PARTNERS.................................................... 23
3.05 PARTNERS' TRANSACTIONS IN SECURITIES................................... 23
3.06 RELIANCE BY THIRD PARTIES.............................................. 24
<PAGE>
ii
3.07 REGISTRATION OF SECURITIES............................................. 24
ARTICLE IV
Admission of Partners
4.01 NEW PARTNERS........................................................... 24
4.02 ASSIGNABILITY OF INTERESTS............................................. 24
ARTICLE V
Withdrawal from Capital Accounts by
Partners and Retirement of Partners/Distributions
5.01 WITHDRAWALS AND DISTRIBUTIONS IN GENERAL............................... 25
5.02 VOLUNTARY WITHDRAWALS FROM BASIC CAPITAL ACCOUNTS...................... 25
5.03 REQUIRED RETIREMENT OF A PARTNER....................................... 25
5.04 EFFECT OF WITHDRAWAL BY A LIMITED PARTNER OF ENTIRE
CAPITAL ACCOUNT...................................................... 26
5.05 DEATH OF A LIMITED PARTNER............................................. 26
5.06 DISTRIBUTIONS.......................................................... 26
5.07 WITHDRAWAL BY INVESTING GENERAL PARTNER AND SPECIAL
LIMITED PARTNER OF SPECIAL ALLOCATION................................ 26
ARTICLE VI
Payment of Withdrawals
6.01 TIME OF PAYMENT ON VOLUNTARY WITHDRAWALS............................... 27
6.02 TIME OF PAYMENT OF CAPITAL ACCOUNT ON REQUIRED
RETIREMENT........................................................... 27
6.03 MANNER OF PAYMENT OF WITHDRAWALS....................................... 27
6.04 LIMITATION ON PAYMENT OF WITHDRAWALS................................... 27
ARTICLE VII
Duration and Dissolution of the Partnership
7.01 DURATION............................................................... 28
7.02 RESCISSION OF DISSOLUTION.............................................. 28
<PAGE>
iii
ARTICLE VIII
Winding Up of Partnership
8.01 DESIGNATION OF PERSON TO WIND UP PARTNERSHIP........................... 28
8.02 WINDING UP............................................................. 28
ARTICLE IX
Books of Account and Reports to Partners
9.01 BOOKS OF ACCOUNT....................................................... 29
9.02 ANNUAL REPORTS......................................................... 29
9.03 INTERIM REPORTS........................................................ 30
9.04 AUDIT OF BOOKS, DETERMINATION BY THE ACCOUNTANT........................ 30
9.05 ADJUSTMENT OF BASIS OF PARTNERSHIP PROPERTY............................ 30
ARTICLE X
Miscellaneous Provisions
10.01 POWERS OF LIMITED PARTNERS; VOTING RIGHTS............................. 30
10.02 POWER OF ATTORNEY..................................................... 31
10.03 AMENDMENT............................................................. 32
10.04 GENERAL............................................................... 32
10.05 NOTICES............................................................... 33
10.06 LIMITED PARTNERS' LIABILITY........................................... 33
10.07 INDEMNIFICATION OF THE GENERAL PARTNERS............................... 33
10.08 CERTAIN TAX MATTERS................................................... 34
10.09 DETERMINATION BY THE GENERAL PARTNERS OF MATTERS NOT
PROVIDED FOR IN THIS AGREEMENT....................................... 34
SCHEDULE A -- PARTNERS' NAMES, ADDRESSES AND CAPITAL
CONTRIBUTIONS
<PAGE>
PARTNERSHIP AGREEMENT
of
LIGHTHOUSE PARTNERS USA, LP
January 1, 1997
This Limited Partnership Agreement made by and between (A)
Archery Capital LLC, a limited liability company organized under the laws of
Delaware (the "Investing General Partner"), and Lighthouse Management, Inc., a
corporation organized under the laws of Delaware (the "Administrative General
Partner") (collectively, the "General Partners") and (B) Ian P. Ellis, as the
special and initial limited partner (referred to herein as the "Special Limited
Partner" or the "Initial Limited Partner"), who together with all other persons
who shall execute this Agreement as Limited Partners, whether in counterpart, by
separate instrument or otherwise, shall be collectively referred to as the
"Limited Partners" and each of whom is hereinafter sometimes referred to
individually as a "Limited Partner" (the General Partners and the Limited
Partners are hereinafter collectively referred to as the "Partners"), to form a
limited partnership (the "Partnership") pursuant to the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C. ss.ss. 17-101 et seq. (the "Partnership
Act"), which shall be governed by and pursuant to the terms and provisions
hereinafter set forth.
WHEREAS, on December 26, 1996 the Partnership was formed by
the filing of the Certificate of Limited Partnership of the Partnership in the
Office of the Secretary of State, in the State of Delaware; and
WHEREAS, the Partners desire to enter into this Limited
Partnership Agreement for the purpose of admitting the Limited Partners as
Limited Partners of the Partnership and setting forth the rights, duties and
obligations of the Partners of the Partnership.
NOW, THEREFORE, the parties hereto hereby covenant and agree
as follows:
ARTICLE I
Organization
1.01 FORMATION. The Partners do hereby form the Partnership as
a limited partnership pursuant to the Partnership Act.
<PAGE>
2
1.02 PARTNERSHIP NAME. The Partnership shall do business under
the name of "Lighthouse Partners USA, LP."
1.03 FISCAL YEAR. The "Fiscal Year" of the Partnership shall
end on December 31 or on such other date as the Administrative General Partner
in its sole discretion shall determine, from time to time.
1.04 PURPOSE. The Partnership is organized for the purpose of
making investments in accordance with the Partnership's objectives and policies
set forth in the Confidential Explanatory Memorandum of the Partnership dated
January 1, 1997, as supplemented or otherwise modified from time to time (the
"Memorandum"). The Partnership shall have the power to engage in all activities
and transactions that the General Partners deem necessary or advisable in
connection with the foregoing (but subject at all times to any restrictions set
forth in the Memorandum), including, without limitation:
(a) To invest and trade, on margin, "long," "short" or otherwise
(i) in capital stock, shares of beneficial interest, warrants, bonds,
notes, debentures, whether subordinated, convertible or otherwise,
mutual funds, partnership interests, money market funds, commercial
paper, certificates of deposit, bank debt, trade claims, obligations
of the United States, any State thereof, any foreign government or
international agency and instrumentalities of any of them, American
Depositary Receipts, long term equity appreciation securities,
bankers' acceptances, trust receipts and other obligations, and
instruments or evidences of indebtedness commonly referred to as
securities of whatever kind or nature of any person, corporation,
partnership, trust, government or entity whatsoever, (ii) in rights
and options relating thereto (including covered and naked put and call
options), whether readily marketable or not, and (iii) in commodities,
commodity contracts, commodity futures contracts, forward contracts,
options, "spot" transactions and swap arrangements involving stock
indexes or other indexes, financial instruments, interest rates and
currencies (all items listed in clauses (i) through (iii) being called
herein a "Security" or "Securities"), and to sell Securities short and
cover such sales, all as determined by the Investing General Partner;
(b) To engage in any other lawful transactions in Securities
which the Investing General Partner from time to time determines;
(c) To lend any of its Securities, as determined by the
Investing General Partner;
(d) To possess, transfer, mortgage, pledge or otherwise deal in,
and to exercise all rights, powers, privileges and other incidents of
ownership or possession with respect to, Securities and other property
and funds held or owned by the Partnership, and to secure the payment
of such or other obligations of the Partnership by mortgage upon, or
hypothecation or pledge of, all or part of the property of the
<PAGE>
3
Partnership, whether at the time owned or thereafter acquired, as
determined by the Investing General Partner;
(e) To borrow or raise moneys and to issue, accept, endorse and
execute promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and
evidences of indebtedness, as determined by the Investing General
Partner or the Administrative General Partner;
(f) To maintain for the conduct of Partnership affairs one or
more offices and in connection therewith rent or acquire office space,
engage personnel, whether part time or full time, and do any other
acts that the Administrative General Partner deems necessary or
advisable in connection with the maintenance and administration of
such office or offices;
(g) To engage attorneys, independent accountants, consultants
and any other Persons that the Administrative General Partner deems
necessary or advisable;
(h) To do all acts on behalf of the Partnership, and exercise
all rights of the Partnership, with respect to its interest in any
person, firm, corporation or other entity, including, without
limitation, participation in arrangements with creditors, the
institution and settlement or compromise of suits and administrative
proceedings and other similar matters; and
(i) To do any other act that the Administrative General Partner
or the Investing General Partner deems necessary or advisable in
connection with the management and administration of the Partnership.
1.05 LIABILITY OF PARTNERS. (a) Subject to Sections 1.05(b),
2.09 and 10.06, no Limited Partner shall have any personal liability whatsoever
in its capacity as a Limited Partner, whether to the Partnership, to any of the
Partners or to the creditors of the Partnership, for the debts, liabilities,
contracts or any other obligations of the Partnership or for any losses of the
Partnership. A Limited Partner shall be liable only to make its Capital
Contribution (as defined below) and shall not be required to lend any funds to
the Partnership or, after its Capital Contribution shall have been paid, subject
to Sections 1.05(b), 2.09 and 10.06, to make any Additional Capital
Contributions (as defined below) to the Partnership or to repay to the
Partnership, any Partner, or any creditor of the Partnership all or any fraction
of any negative amount of such Limited Partner's Capital Account (as defined
below).
(b) In accordance with the laws of the State of Delaware, a
limited partner of a partnership may, under certain circumstances, be required
to return to the partnership, for the benefit of partnership creditors, amounts,
with interest thereon, previously distributed to such partner as a return of
capital. If any court of competent jurisdiction holds that any
<PAGE>
4
Limited Partner is obligated to make any such payment, such obligation shall be
the obligation of such Limited Partner and not of the General Partners.
(c) None of the General Partners nor any of their Affiliates
(as defined below) shall have any personal liability to any Limited Partner for
the repayment of any amounts outstanding in the Capital Account of a Limited
Partner, including but not limited to, Capital Contributions. Any such payment
shall be solely from the assets of the Partnership.
(d) No creditor who makes a loan to the Partnership may have
or acquire, at any time as a result of making the loan, any direct or indirect
interest in the profits, capital or property of the Partnership, other than as a
creditor or other than as a result of the exercise of the rights thereof.
(e) Except as provided under applicable law, none of the
General Partners, in their capacity as such, nor any of their Affiliates, shall
be liable for honest mistakes in judgment or for losses due to such mistakes or
for the negligence of employees, brokers or other agents of the Partnership;
rather, any liability of either General Partner or any of its Affiliates shall
be limited to losses or damages that result from fraud, willful misconduct,
gross negligence or bad faith on the part of such General Partner or Affiliate
thereof.
1.06 PLACE OF BUSINESS. The principal place of business of the
Partnership shall be in New York, New York, or such other place as the
Administrative General Partner may, from time to time, determine.
1.07 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Additional Capital Contributions" has the meaning specified in
Section 2.01(a).
"Administrative General Partner" has the meaning specified in the
Preamble.
"Affiliate" means, when used with reference to a specified
Person, (i) any Person that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control
with the specified Person, or (ii) any Person that is an officer or
director of, partner in, or trustee of, or serves in a similar
capacity with respect to, the specified Person or of which the
specified Person is an officer, partner or trustee, or with respect to
which the specified Person serves in a similar capacity; and, when
used with reference to a natural Person, any Person who is related to
the specified Person by blood or marriage.
"Annual Report" has the meaning specified in Section 9.02.
<PAGE>
5
"Beginning Value" means, with respect to any Measuring Period,
the Partnership's Net Asset Value at the beginning of that Measuring
Period, determined as provided herein.
"Business Day" means a day when financial institutions are
authorized to do business in each of the cities of London and New
York.
"Capital Account" has the meaning specified in Section 2.02(a).
"Capital Contributions" has the meaning specified in Section
2.01(a).
"Class" has the meaning specified in Section 3.03(b)(iii).
"Closing Capital Account" has the meaning specified in Section
2.03(c).
"Customer" or "Customers" has the meaning specified in Section
3.03(b)(iii).
"Ending Value" with respect to any Measuring Period, means the
Partnership's Net Asset Value at the end of that Measuring Period
(prior to the Special Allocation for such Measuring Period),
determined as provided herein.
"Fiscal Year" has the meaning specified in Section 1.03.
"General Partners" has the meaning specified in the Preamble.
"Indemnitee" has the meaning specified in Section 10.07.
"Independent Client Representative" has the meaning specified in
Section 3.03(b)(vi).
"Initial Limited Partner" has the meaning specified in the
Preamble.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, together with the regulations promulgated thereunder.
"Investing General Partner" has the meaning specified in the
Preamble.
"Investing General Partner Special Allocation" has the meaning
set forth in Section 2.05(c).
"Investments" has the meaning specified in Section 2.06(d).
"Lighthouse Partners USA, LP" has the meaning specified in
Section 1.02.
<PAGE>
6
"Limited Partner" has the meaning specified in the Preamble.
"Limited Partners" has the meaning specified in the Preamble.
"Management Fee" has the meaning specified in Section 3.02.
"Measuring Period" means the period beginning on each month.
"Memorandum" has the meaning specified in Section 1.04.
"Net Asset Value" has the meaning specified in Section 2.06(a).
"Net Losses," with respect to any Measuring Period, means the
excess of the Beginning Value over the Ending Value, minus the amount
of any distributions or withdrawals during that Measuring Period, plus
the amount of any capital contributions to the Partnership during that
Measuring Period. All calculations of Net Losses shall be made after
deduction of all general, administrative and other operating expenses
of the Partnership.
"Net Profits," with respect to any Measuring Period, means the
excess of the Ending Value over the Beginning Value, plus the amount
of any distributions or withdrawals during that Measuring Period minus
the amount of any capital contributions to the Partnership during that
Measuring Period. All calculations of Net Profits shall be made after
deduction of all general, administrative and other operating expenses
of the Partnership.
"Notifying Partner" has the meaning specified in Section 2.02(b).
"Opening Capital Account" has the meaning specified in Section
2.03(a).
"Original Capital Contribution" has the meaning specified in
Section 2.01(a).
"Partners" has the meaning specified in the Preamble.
"Partnership" has the meaning specified in the Preamble.
"Partnership Act" has the meaning specified in the Preamble.
"Partnership Expenses" has the meaning specified in Section
3.02(b).
"Partnership Percentage" has the meaning specified in Section
2.04.
"Performance Period" means, with respect to each Limited Partner,
the period commencing either as of the date of admission of such
Limited Partner to the
<PAGE>
7
Partnership or as of the day following the last day of the preceding
Performance Period with respect to such Limited Partner, and, in each
case, ending at the close of business on the first to occur of the
following: (A) the last day of a Fiscal Year; (B) the effective date
on which a Limited Partner retires from the Partnership pursuant to
Article V herein; and (C) the effective date on which the Partnership
is dissolved pursuant to Article VII herein.
"Person" means any individual, partnership, joint venture,
corporation, limited liability company, unincorporated organization or
association, trust (including the trustees thereof in their capacity
as such), government (or agency or subdivision thereof) or other
entity.
"Quarter" means the period of three calendar months ending on the
last day of March, June, September or December, as the case may be.
"Security" or "Securities" has the meaning specified in Section
1.04(a).
"Securities Act" has the meaning specified on the cover page to
this Agreement.
"Segregated Account" has the meaning specified in Section
2.02(b)(i).
"Special Allocation" has the meaning specified in Section
2.05(c).
"Special Limited Partner Allocation" has the meaning set forth in
Section 2.05(c).
"Tax Matters Partner" has the meaning specified in Section 10.08.
"Treasury Regulations" means the final, temporary [and proposed]
regulations issued under the Internal Revenue Code.
"Valuation Day" has the meaning specified in Section 2.06(b)(i).
ARTICLE II
Capital Accounts
2.01 CONTRIBUTIONS. (a) Each Partner has paid cash, or
conveyed by way of contribution, marketable Securities, in the amount set forth
beside its name at the end of this Agreement ("Original Capital Contribution").
Additional capital contributions ("Additional Capital Contributions," together
with the Original Capital Contribution, the "Capital Contributions") may be made
in cash and/or marketable Securities, on the first
<PAGE>
8
Business Day of each month, subject to acceptance by the Administrative General
Partner, in its sole discretion, or at such other time as determined by the
Administrative General Partner, in its sole discretion. Unless otherwise
determined by the General Partners in their absolute discretion, the Original
Capital Contribution of any Limited Partner other than the Special Limited
Partner shall be in an amount that is not less than $1,000,000, and any
Additional Capital Contribution of any Limited Partner shall be in an amount
which is not less than $250,000. The Administrative General Partner has the
authority, in its absolute discretion, to reject the Capital Contribution of any
Person for any reason whatsoever, including the Capital Contribution of any
Person which, by virtue of its Capital Contribution, would cause the Fund in
which such investment was to be made to be deemed an investment company under
the Investment Company Act of 1940 (the "Investment Company Act"), and the
Capital Contribution of any person that would cause the Partnership to fail to
satisfy the private placement exception to treatment as a publicly traded
partnership set forth in Treasury Regulation Section 1.7704-1(h). For purposes
of the immediately preceding sentence, "the aggregate Capital Contribution of
all of the Partners" shall not include Capital Contributions previously returned
to a Partner or Partners pursuant to Articles V and VI (treating for this
purpose a distribution of cash or property to a Partner as not representing a
return of Capital Contributions to the extent that, as of immediately prior to
such distribution, such Partner's Capital Account balance exceeds the aggregate
Capital Contributions made by such Partner and not previously returned). The
General Partners shall be entitled to receive allocations and distributions on
any and all Capital Contributions made by them to the same extent as though such
Capital Contributions were made by a Limited Partner.
(b) The Initial Limited Partner shall contribute to the
capital of the Partnership $100, as set forth opposite his name on Schedule A
attached hereto.
(c) The Administrative General Partner, in its sole
discretion, has the right to compel the Special Limited Partner to redeem his
interest for $100 plus an amount equal to the enhanced value of the Special
Limited Partner's initial investment as reflected in the Special Limited
Partner's capital account, if any, in the matter provided for in Section 6.03
hereof.
(d) The Administrative General Partner may only accept Capital
Contributions of marketable Securities that would not constitute prohibited
investments of the Partnership hereunder. Each Limited Partner who contributes
marketable Securities to the Partnership hereby consents and agrees to pay to
the Partnership, if so requested, concurrently with the making of such
contribution, and as a further Capital Contribution, or alternatively, to have
deducted from the value of such Securities, such amount as the Administrative
General Partner may determine to cover all costs in connection with holding,
transferring and/or selling such Securities.
<PAGE>
9
(e) Each General Partner may subscribe for Limited Partnership
interests and shall be treated as a Limited Partner to the extent that it does
so purchase or becomes the transferee of a Limited Partnership interest.
2.02 CAPITAL ACCOUNTS. (a) There shall be established for each
Partner on the books of the Partnership a capital account ("Capital Account").
The provisions of this Agreement relating to the maintenance of Capital Accounts
shall be interpreted and applied in a manner consistent with Section
1.704-1(b)(2)(iv) of the Treasury Regulations.
(b) In the event that any Partner (the "Notifying Partner")
notifies the General Partners that such Partner is precluded from participating
in certain types of investments and, if so requested by the Administrative
General Partner, not later than seven Business Days after such notice, the
Administrative General Partner shall have received a written opinion (in form
and substance satisfactory to it) of such Notifying Partner's counsel
(satisfactory to it) to the effect that it is highly probable that the making of
such types of investments by such Partner would result in a violation of any law
or regulation of the United States of America or any state thereof in any such
case applicable to such Partner or to the Partnership, then the Administrative
General Partner, in its sole discretion, may create a special account for the
Partners that may participate in such investments in accordance with the
following provisions:
(i) for any time during which the Partnership holds any
investment of such type, the Capital Accounts of the Partners other
than the Notifying Partner shall be maintained on a segregated basis
(a "Segregated Account"), but otherwise in accordance with the
provisions of this Article II;
(ii) the Notifying Partner shall not have any beneficial interest
in a Segregated Account and the Partners other than the Notifying
Partner shall not have any beneficial interest in the Capital Account
of the Notifying Partner;
(iii) the Capital Account Percentages (as defined in Section
2.04), Opening Capital Accounts (as defined in Section 2.03) and
Closing Capital Accounts (as defined in Section 2.05) of the Notifying
Partner shall be determined independently of a Segregated Account, and
vice versa; and
(iv) securities will be purchased in a Segregated Account, held
there and eventually sold out of such Segregated Account (or
transferred from such account to the regular account, in the sole
discretion of the Administrative General Partner, at such time as the
Notifying Partner is no longer precluded from participating in such
investment).
<PAGE>
10
(c) The Administrative General Partner may also, with the
consent of the affected Partner, create a Segregated Account for the benefit of
such Partner for any reason that the Administrative General Partner, in its sole
discretion, may determine.
(d) The Investing General Partner shall determine in which, if
any, alternative investments a Notifying Partner will invest in lieu of the
investments in a Segregated Account.
(e) In determining whether to create a Segregated Account, the
Administrative General Partner may consider whether such Segregated Account
would violate, or cause the Partnership to violate, any applicable law or
regulation and whether the Segregated Account would be treated as a separate
entity for purposes of the 25% Test, as described in the Memorandum.
2.03 OPENING CAPITAL ACCOUNTS. (a) There shall be established
for each Partner on the books of the Partnership as of such Partner's admission
to the Partnership and thereafter, as of the beginning of each Measuring Period,
an opening capital account ("Opening Capital Account").
(b) For the Measuring Period as of which such Partner was
admitted to the Partnership, its Opening Capital Account shall be the amount of
its Original Capital Contribution.
(c) For each Measuring Period thereafter, such Partner's
Opening Capital Account shall be an amount equal to the "Closing Capital
Account" (as described in Section 2.05) for the immediately preceding Measuring
Period, plus any Additional Capital Contributions made by such Partner on the
first day of the Measuring Period in question and accepted by the Administrative
General Partner minus any withdrawals made from such Closing Capital Account
effective as of immediately after the last day of the immediately preceding
Measuring Period.
2.04 PARTNERSHIP PERCENTAGES. On the first day of each
Measuring Period, the Partnership shall establish a percentage on its books for
each Partner (the "Partnership Percentage"). The Partnership Percentage of a
Partner for a particular Measuring Period shall be determined by dividing the
balance of the Partner's Opening Capital Account for such Measuring Period by
the sum of the Opening Capital Accounts of all of the Partners for such
Measuring Period. The sum of the Capital Account Percentages of all Partners
shall at all times equal one hundred percent, so that admissions of new
Partners, Additional Capital Contributions by the General Partner or any Limited
Partner, and withdrawals shall require recalculation of the affected Partnership
Percentages. The Partnership Percentages for each Measuring Period shall be
filed with the records of the Partnership.
<PAGE>
11
2.05 CLOSING CAPITAL ACCOUNTS (ALLOCATIONS). (a) Each
Partner's Capital Account shall from time to time be:
(i) increased by (A) the amount of any cash contributed to the
Partnership's capital in addition to the Original Capital Contribution
made by the Partner and (B) the positive adjustments to the Partner's
Capital Account provided for in its Section 2.05; and
(ii) decreased by (A) the amount of cash and the fair market
value of other property distributed to or withdrawn by the Partner and
(B) the negative adjustments to the Partner's Capital Account provided
for in this Section 2.05.
(b) Except as provided in Section 2.02(b), at the end of each
Measuring Period, the Capital Account of each Partner, including the General
Partners, shall be tentatively credited to reflect the Net Profits or debited to
reflect the Net Losses of the Partnership during the Measuring Period then
ended, in proportion to the Partners' respective Partnership Percentages. In
addition, the Capital Account of the Limited Partners shall be tentatively
debited to reflect an amount of the Administrative Fee equal to the total
Administrative Fee for such Measuring Period multiplied by a fraction the
numerator of which is such Limited Partner's Opening Capital Account and the
denominator of which is the sum of the Opening Capital Accounts for all Limited
Partners.
(c) Notwithstanding Section 2.05(b), after giving effect to
the allocations provided for in Sections 2.05(b) and 2.05(d), the amount, if
any, of Net Profits tentatively credited to the Capital Account of each Limited
Partner other than the Special Limited Partner for such Measuring Period shall
be allocated between such Limited Partner, the Investing General Partner, and
the Special Limited Partner as follows:
(i) at the end of each Performance Period, after the tentative
allocation of Net Profits, if any, the Capital Account of each Limited
Partner shall be debited in an amount equal to the Special Allocation,
if any, and the Capital Account of the Investing General Partner shall
be credited, in an amount equal to the Investing General Partner's
corresponding Special Allocation, and the Capital Account of the
Special Limited Partner shall be credited in an amount equal to the
corresponding Special Limited Partner Special Allocation, with respect
to such Limited Partner for such Performance Period; and
(ii) on the day on which a Limited Partner makes any withdrawal
from the Partnership, the Capital Account of such Limited Partner
shall be debited in an amount equal to such portion of the Special
Allocation with respect to such Limited Partner as of such date as is
in proportion to the reduction of such Limited Partner's Capital
Account (which proportion shall be equal to the ratio of the amount
withdrawn to the amount of such Limited Partner's Capital Account
immediately before giving effect to such withdrawal), and the
Investing General Partner's Capital
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12
Account shall be credited with the corresponding Investing General
Partner Special Allocation, and the Special Limited Partner's Capital
Account shall be credited with the Special Limited Partner Allocation
to the Special Limited Partner, if any, as provided below.
All tentative allocations shall become final allocations for all purposes, after
taking into account the Special Allocations, if any, at the times specified in
paragraphs (i) and (ii) of this Section 2.05(c).
The "Special Allocation" with respect to any Limited Partner,
as of the end of any Performance Period, means 20% of the excess, if any, of
such Limited Partner's Closing Capital Account (taking into account the
tentative allocations for all Measuring Periods within the Performance Period,
but without taking into account any allocation pursuant to this Section 2.05(c))
over 105% of such Limited Partner's Opening Capital Account for such Performance
Period, provided that each Limited Partner has received at least a 5% return on
its investment.
The "Special Limited Partner Allocation" means 20% of the
Special Allocation, if any.
The "Investing General Partner Special Allocation" means 80%
of any Special Allocation.
(d) Notwithstanding anything to the contrary contained herein,
no allocation of Net Losses shall be made pursuant to this Section 2.05 to the
Capital Account of any Limited Partner to the extent that it would cause or
increase a deficit balance in the Limited Partner's Capital Account as of the
end of the Measuring Period to which the allocation relates. Solely for purposes
of this Section 2.05(d), the balance of a Limited Partner's Capital Account
shall be reduced by the amounts described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). The amount of any Net Losses that, but for
this Section 2.05(d), would otherwise be allocated to a Limited Partner shall be
allocated and charged to the Capital Account of the General Partners.
(e) Notwithstanding anything to the contrary contained herein,
any Partner which unexpectedly receives an adjustment, allocation or
distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) that creates or increases a deficit balance in the Partner's Capital
Account shall be allocated items of gross income and gain in an amount and
manner sufficient to eliminate, to the extent required by the Treasury
Regulations, the deficit balance as quickly as possible (but only to the extent
that a deficit would exist after crediting to such Capital Account any amount
which such General Partner or Limited Partner is obligated to restore pursuant
to any provision of this Agreement or is deemed to be obligated to restore
pursuant to Section 1.704-1(b)(2)(ii)(c) of the Treasury Regulations and the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Treasury Regulations and after all allocations provided for in this Agreement
have been
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13
tentatively made). The foregoing is intended to be a "qualified income offset"
provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted and applied in all respects in accordance with such
Treasury Regulations.
(f) Notwithstanding anything to the contrary contained herein,
gain or loss on the sale, exchange or other disposition of any security
contributed to the Partnership by the Investing General Partner in accordance
with Internal Revenue Code Section 704(c) and the Treasury Regulations
thereunder.
(g) Nonrecourse deductions (as defined in Section
1.704-2(b)(1) of the Treasury Regulations) for which no Partner bears any
economic risk of loss shall be allocated among the Partners in proportion to
their Partnership Percentages.
(h) Nonrecourse deductions for which a Partner bears the
economic risk of loss shall be allocated to the Partner who bears the economic
risk of loss with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Treasury Regulations
Section 1.704-2(i)(1).
(i) Notwithstanding anything to the contrary contained herein,
if there is a net decrease in Partnership Minimum Gain, as defined in Section
1.704-2(d) of the Treasury Regulations, during any fiscal year, except to the
extent provided in Section 1.704-2(f)(2), (3), (4) or (5) of the Treasury
Regulations, each Partner shall be specially allocated items of income and gain
for such year (and, if necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to the portion of such Partner's share of the net
decrease in Partnership Minimum Gain, determined in accordance with Section
1.704-2(g) of the Treasury Regulations. The items of income and gain to be so
specially allocated pursuant to this Section 2.05(i) shall be determined in
accordance with Section 1.704-2(f)(6) of the Treasury Regulations. This Section
2.05(h) is intended to comply with the minimum gain chargeback requirement of
Section 1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(j) Notwithstanding any provision of this Agreement to the
contrary (except Section 2.05(i)), if there is a net decrease in Partner Minimum
Gain, as defined in Section 1.704-2(i)(3) of the Treasury Regulations,
attributable to a nonrecourse debt for which a Partner is liable during any
Fiscal Year, except to the extent provided otherwise in Section 1.704-2(j) of
the Treasury Regulations, each Partner who has a share of the Partner Minimum
Gain attributable to such nonrecourse debt, determined in accordance with
Section 1.704-2(i)(5) of the Treasury Regulations, as of the beginning of such
Fiscal Year, shall be specially allocated items of income and gain for such
Fiscal Year (and, if necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to the portion of such Partner's share of the net
decrease in Partner Minimum Gain attributable to such nonrecourse debt,
determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations.
The items of income and gain to be so specially allocated pursuant to this
Section 2.05(i) shall be determined in accordance with Section 1.704-2(i)(4) of
the Treasury
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14
Regulations. This Section 2.05(i) is intended to comply with the minimum gain
chargeback requirement of Section 1.704-2(i)(4) of the Treasury Regulations and
shall be interpreted consistently therewith.
(k) Notwithstanding anything to the contrary contained herein,
but subject to Sections 2.05(d) through (j), if any allocations are made
pursuant to Sections 2.05(d) through (j), subsequent allocations pursuant to
this Section 2.05 shall be made to the extent not inconsistent with Treasury
Regulations so that the net amount of any items allocated to each Partner shall,
to the extent possible, be equal to the net amount that would have been
allocated to each Partner if allocations pursuant to Sections 2.05(d) through
(i) had not been made.
(l) To the extent, if any, that expenses to be borne by a
General Partner are deemed to constitute items of Partnership loss, expense or
deduction rather than items of loss, expense or deduction of such General
Partner, the payment of such expenses by the General Partner shall be deemed a
capital contribution to the Partnership and such items shall be allocated 100%
to such General Partner.
(m) In no event shall a General Partner's interest in each
Partnership item of income, profits, losses and expenses for any period be less
than that percent of the aggregate amount of each such item allocated to all
Partners as equals the percent that would result from aggregate Capital
Contributions by the General Partners in the amounts required under Section
2.01(a).
(n) To the extent that withholding or other taxes are incurred
by reason of the status of one or more Partners, such taxes (and any refund
thereof and costs associated with any such refund claim) shall be specially
allocated to such Partner(s) as provided in Section 2.09.
(o) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Treasury Regulations Section 1.704-1(b) and shall be interpreted and
applied in a manner consistent with those Regulations.
2.06 NET ASSET VALUE AND VALUATION OF SECURITIES. (a) The "Net
Asset Value" of the Partnership's assets shall be calculated by the
Administrative General Partner monthly. The Net Asset Value shall be equal to
the difference between:
(i) the value of all assets of the Partnership, including, but
not limited to, securities, cash, receivables, prepaid expenses and
deferred charges and fixed assets, less appropriate provisions for
depreciation; and
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15
(ii) the amount of all liabilities of the Partnership and all
proper reserves with respect thereto, including, without limitation,
brokerage fees, advisory fees, professional and administrative fees,
notes and accounts payable and accrued expenses, including, without
limitation, deferred income and expense reimbursement.
(b) For purposes of determining the value of the assets of the
Partnership at any time (including, without limitation, valuing Securities
contributed by Partners as Original or Additional Capital Contributions and for
the purpose of calculating the Partnership's Net Asset Value), the assets of the
Partnership shall be valued as follows:
(i) Equities quoted on a stock exchange will be valued on the day
Net Asset Value is calculated (the "Valuation Day"), at the last
reported bid price for all long securities and the last reported offer
price for all short securities on such exchange, or if no such last
reported price is available for such equities on the Valuation Day,
such equities will be valued at a price that the Administrative
General Partner determines to be fair, reasonable and appropriate.
(ii) Equities traded over-the-counter will be valued on the
Valuation Day, at the last reported bid price for all long securities
and the last reported offer price for all short securities on or prior
to the time of valuation through the facilities of a recognized
interdealer quotation system (such as the NASDAQ national market
system), or if no such last reported price is available from such
system, such equities will be valued at a price that the
Administrative General Partner determines to be fair, reasonable and
appropriate.
(iii) Fixed income securities listed on securities exchanges or
traded on other regulated markets shall be valued at the last reported
bid price for all long securities and the last reported offer price
for all short securities on the principal securities exchange or
market on which such fixed income securities are traded as of the
close of business on such exchange or market. In the absence of
reported prices on any Valuation Day, such fixed income securities
will be valued at a price the Administrative General Partner
determines to be fair, reasonable and appropriate.
(iv) Indirect investments by the Partnership in other mutual
funds or investment vehicles will be valued at the current available
net asset value per share or comparable valuation.
(v) With respect to open securities and open futures positions,
unrealized profit or loss shall be included and the value shall be
equivalent to the last settlement price on any exchange on which a
transaction in the applicable security was effected or, failing which,
shall be equivalent to the most recent quotation by a clearing broker
or bank through which a transaction in the applicable security was
effected.
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16
(vi) The value of a written option not traded on an exchange
shall include as an asset an amount equal to the premium received by
the Partnership and as a liability an amount reflecting the option's
market value at such time, as determined by the Administrative General
Partner.
(vii) The value of a written option traded on an exchange shall
include as an asset an amount equal to the premium received by the
Partnership and as a liability an amount equal to the last reported
bid price on the principal exchange on which such option is traded, or
if no such last reported price is available for such option, such
option will be valued at a price that the Administrative General
Partner determines to be fair, reasonable and appropriate.
(viii) Where a written option expires either on its stipulated
expiration date or if the Partnership enters into a closing purchase
transaction, there will be a realized gain (or loss if the cost of a
closing purchase transaction exceeds the premium received when the
option is sold) without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option shall be
extinguished.
(ix) The value of a purchased option not traded on an exchange
shall include as an asset the premium paid for such option, which
subsequently shall be adjusted to the current market value of such
option as determined by the Administrative General Partner.
(x) The value of a purchased option traded on an exchange shall
include as an asset the premium paid for such option, which
subsequently shall be adjusted to the current market value of such
option. The current market value of a purchased option traded on an
exchange shall be the last reported offer price on the principal
exchange on which such option is traded, or in the case of an
over-the-counter option, the last offer price of at least one market
maker.
(xi) The effect of valuing options as described in clauses (ix)
and (x) above is that if the current market value of an option exceeds
the premium paid, the excess shall be an unrealized appreciation and,
conversely, if the premium exceeds the current market value, such
excess shall be an unrealized depreciation.
(xii) Where no method of calculation of the value of an asset is
specified or where, in the opinion of the Administrative General
Partner, the method of calculation is unfair or impractical, the
Administrative General Partner shall use such method of calculation as
it considers fair and reasonable.
(xiii) The rate of exchange for converting the value of
investments to dollars shall, in the case of securities denominated in
currencies other than United States dollars, be the rate quoted to the
Administrative General Partner by its primary correspondent in that
jurisdiction.
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17
(c) The Administrative General Partner has the discretion to
suspend the calculation of the Net Asset Value of the Partnership, from time to
time, in such circumstances as the Administrative General Partner deems
appropriate, including, among others:
(i) during any period when any of the principal markets or stock
exchanges on which a substantial portion of the assets owned by the
Partnership is closed (other than for the ordinary holidays) or
trading has been restricted or suspended;
(ii) during any state of affairs which, in the judgment of the
Administrative General Partner, constitutes an emergency which would
render a disposition of the assets owned by the Partnership
impracticable or seriously detrimental to the Limited Partners;
(iii) when, for any reason, including a breakdown in the means of
communication normally employed in determining the Net Asset Value of
the Partnership, such Net Asset Value cannot be promptly and fairly
ascertained; and
(iv) during any period when remittance or transfer of moneys that
will or may be involved in the realization of or payment in respect of
any of the investments owned by the Partnership or the withdrawal of
the Interests from the Partnership is not reasonably practicable,
including any disruptions in the foreign exchange markets.
(d) Notwithstanding anything to the contrary contained in this
Section 2.06, in the sole discretion of the Administrative General Partner, the
investments of the Partnership ("Investments") may be valued, from time to time,
by and in accordance with the methods employed by a pricing service or services,
selected from time to time by the Administrative General Partner in its sole and
absolute discretion.
(e) This Section 2.06, together with Section 2.05(a), is
intended to comply with Section 1.704-1(b)(2)(iv)(f) of the Treasury Regulations
and shall be interpreted and applied consistently therewith.
2.07 ALLOCATIONS FOR TAX PURPOSES. (a) For federal income tax
purposes, subject to Section 2.07(b) hereof, Securities gains and losses shall
be allocated, to the extent deemed feasible and equitable by the Administrative
General Partner, in accordance with the manner in which the aggregate of the
increase or decrease in the value of the Securities positions giving rise to
such gains or losses was added to or deducted from the Capital Accounts of the
Partners, and other items of income or deduction shall be allocated as nearly as
is practicable, in accordance with the manner in which such other items were
allocated to such Capital Accounts.
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18
(b) Section 2.07(a) shall be interpreted and applied in a
manner consistent with the requirements of Sections 704(b) and 704(c) of the
Internal Revenue Code and the Treasury Regulations with respect thereto
(including Section 1.704-1(b)(2)(iv)(f)(4)), and without limiting the foregoing,
all precontribution gain or loss with respect to property contributed by a
General Partner shall, in all events on or before the date such General partner
ceases to be a Partner in the Partnership, be allocated to such General Partner.
Any elections or other decisions relating to allocations under this Section
2.07(b) (including with respect to aggregating Partnership property) shall be
made by the General Partner in a manner that in its judgment and discretion
reasonably reflects the purpose and intention of this Agreement and Sections
704(b) and 704(c).
(c) Without limiting the foregoing, upon the withdrawal of any
Partner from the Partnership if the cumulative allocations of Net Profits
(reduced by Capital Account debits on account of Special Allocations), Net
Losses and Administrative Fees are algebraically greater than the cumulative
allocations of taxable income, gains, losses and deductions (in each case
treating income and gain as positive and losses and deductions as negative) to
such withdrawing Partner, the Administrative General Partner shall increase the
amount of taxable income and gain allocable to the withdrawing Partner and
reduce the amount of taxable income and gain allocable to the remaining Partners
for the taxable year including the date of withdrawal to the extent of such
excess.
(d) Foreign taxes paid or accrued by the Partnership for a
Fiscal Year shall be tentatively allocated to the Partners in the same manner as
the corresponding income (as reduced by any such taxes paid or accrued), subject
to adjustment to the extent that the Partnership secures a refund of any foreign
taxes credited.
2.08 DETERMINATION BY ADMINISTRATIVE GENERAL PARTNER OF
CERTAIN MATTERS. All matters concerning the valuation of the assets and
liabilities of the Partnership, including, without limitation, any valuation
necessary for the allocation of profits, gains and losses among the Partners,
including taxes thereon, and accounting procedures not expressly provided for by
the terms of this Agreement shall be equitably determined in good faith by the
Administrative General Partner, whose determination shall be final and binding
on all Partners and former Partners. The Administrative General Partner, in its
discretion, may require that an equitable adjustment be made with respect to the
determination and allocation of profits, gains and losses among Partners,
including taxes thereon, and accounting procedures relating thereto. In such
event, the Administrative General Partner's determination shall be final and
binding on all Partners and former Partners.
2.09 CERTAIN WITHHOLDING TAXES. If an amount received by the
Partnership is reduced by withholding tax or the Partnership itself is required
to withhold or pay tax with respect to the share of Partnership income allocable
to any Partner, then the General Partner, without limitation of any other rights
of the Partnership or the Administrative General Partner, shall cause the amount
of such tax when paid to be debited
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19
against the Capital Account of such Partner, and any amounts then or thereafter
distributable to such Partner shall be reduced by the amount of such tax. If the
amount of such tax is greater than any such distributable amounts, then such
Partner and any successor to such Partner's interest shall pay to the
Partnership as a contribution to the capital of the Partnership, upon demand of
the Administrative General Partner, the amount of such excess. If the
Administrative General Partner determines that the cost associated with claiming
a refund of any withholding tax will exceed such refund, it may, in its sole
discretion, decide not to make such a claim. In addition, if a refund is not
received within a year from the date such tax is withheld, the Administrative
General Partner may deem such tax to be nonrefundable.
ARTICLE III
Management
3.01 DUTIES AND POWERS OF THE GENERAL PARTNERS. (a) The
management and administration of the Partnership shall be vested exclusively in
the General Partners. The General Partners shall have all of the rights and
powers of a general partner as provided under the Partnership Act and as
otherwise provided by law, and any action taken by the General Partner shall
constitute the act of and serve to bind the Partnership. The Investing General
Partner is hereby authorized and empowered to carry out and implement any and
all of the objects and purposes of the Partnership including, by way of example
and not limitation:
(i) to open, conduct and close accounts, including margin and
discretionary accounts, with brokers (which may be Affiliates of the
General Partner) and to pay the customary fees and charges applicable
to transactions in all such accounts;
(ii) to pay a member of an exchange, broker or dealer an amount
of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer
would have charged for effecting that transaction, if the General
Partner determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage, administrative,
information and research services provided by such member, broker or
dealer (as contemplated by Section 28(e) of the Securities Exchange
Act of 1934, as amended, which permits the use of "soft dollars" to
obtain "research and execution" services); and
(iii) to engage research consultants and to pay for research
services provided to the Partnership.
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20
The Administrative General Partner is hereby authorized and
empowered to carry out and implement any and all of the objects and purposes of
the Partnership, including, by way of example and not limitation:
(i) to open, maintain and close bank accounts and draw checks or
other orders for the payment of monies;
(ii) to organize one or more corporations formed to hold record
title, as nominee for the Partnership, with respect to Securities or
funds of the Partnership;
(iii) to authorize any partner, director, officer, employee or
other agent of the General Partner or agent or employee of the
Partnership to act for and on behalf of the Partnership in all matters
incidental to the foregoing;
(iv) to make, in its sole discretion, any and all elections for
federal, state, local and foreign tax purposes, including any election
to adjust the basis of Partnership property pursuant to Section 754 of
the Internal Revenue Code;
(v) to enter into such custodial agreements as the General
Partner may determine; and
Both of the General Partners are hereby authorized and
empowered to carry out and implement any and all of the objects and purposes of
the Partnership, including, by way of example and not limitation, to enter into,
make and perform such contracts, agreements and other undertakings, and to do
such other acts, as it may deem necessary or advisable or as may be incidental
to or necessary for the conduct of the business of the Partnership, including,
without in any manner limiting the generality of the foregoing, contracts,
agreements, undertakings and transactions with any Partner or with any other
person, firm or corporation having any business, financial or other relationship
with the General Partner and/or any other Partner.
(b) A General Partner shall also be a Limited Partner to the
extent that it purchases or becomes a transferee of all or any part of the
interest of a Limited Partner, and to such extent shall be treated as a Limited
Partner in all respects.
(c) The General Partners are hereby authorized to take any
action they have determined in good faith to be necessary or desirable in order
for (i) the Partnership not to be in violation of the Investment Company Act or
any other material law, regulation or guideline applicable to the Partnership,
(ii) the Partnership's assets not to be deemed to be "plan assets" for purposes
of ERISA, or (iii) the General Partners not to be in violation of the Advisers
Act or any other material law, regulation or guideline applicable to the General
Partners, including making structural, operating or other changes in the
Partnership by amending this Agreement, requiring the sale in whole or in part
of any Partner's interest in
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21
the Partnership or dissolving the Partnership. Any action taken by the General
Partners pursuant to this Section 3.01(c) shall not require the approval of any
Partner.
3.02 COMPENSATION OF THE ADMINISTRATIVE GENERAL PARTNER AND
EXPENSES OF THE PARTNERSHIP. (a) The General Partner shall be compensated by the
Partnership for administrative and management services rendered hereunder at the
rate of 1% per annum, payable monthly in advance, based on the Net Asset Value
of the Fund as of the Fund's Valuation Date immediately preceding the beginning
of the month (the "Management Fee"). The Administrative General Partner shall
also be entitled to receive from the Partnership, upon delivery of bills
therefor, reimbursement of all out-of-pocket expenses constituting Partnership
Expenses (as defined below) paid by the Administrative General Partner on behalf
of the Partnership, including start-up and other organizational costs in respect
of the Partnership, which costs shall, to the extent permissible under Section
709 of the Internal Revenue Code, be amortized over a period of 60 months; such
reimbursement shall in no event include payments for the general overhead of the
Administrative General Partner.
(b) Subject to Section 2.05 herein, all expenses of operating
the Partnership (the "Partnership Expenses") shall be borne by the Partnership,
which expenses include, among others, expenses described in Section 3.01(a)(ii)
and (iii) hereof; expenses described under "SELECTED TERMS OF THE PARTNERSHIP
AGREEMENT--Administrative Fees and Partnership Expenses" in the Memorandum;
taxes and other governmental charges imposed on the Partnership or its
activities; fund accounting and audit fees (including tax compliance costs);
expenses and liabilities incurred by the Administrative General Partner or its
affiliates related to (x) any proxy fight, tender offer or similar investment
strategy with respect to any investment or (y) any actual or threatened legal
action or proceeding in connection with purchasing, selling or holding any
investment; custodial fees; bank service fees and any other reasonable expenses
related to the purchase, sale, holding or transmittal of Partnership assets as
shall be determined by the Administrative General Partner in its sole
discretion. Partnership Expenses shall be taken into account in determining net
increases or net decreases in the Net Asset Value of the Partnership.
3.03 ACTIVITY OF THE GENERAL PARTNERS. (a) Although nothing
herein shall require the General Partners to devote their full time and
attention to the Partnership, the General Partners hereby agree to use their
best efforts in connection with the purposes and objectives of the Partnership
and to devote such of its time and activity during normal business days and
hours as it, in its sole discretion, shall deem necessary for the management of
the affairs of the Partnership.
(b) The parties hereto acknowledge that:
(i) nothing contained in this Agreement shall preclude either of
the General Partners (or any officer or employee thereof) from acting,
consistent with the foregoing, as a director, officer or employee of
any corporation, a trustee of any
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22
trust, a partner of any partnership, or an administrative official of
any business entity, and from receiving compensation for services with
respect to, or participating in profits derived from the investments
of any such corporation, trust, partnership or other business entity,
or from investing in any investment media for its own account,
including those in which the Partnership has invested;
(ii) either of the General Partners may act as investment
adviser, sponsor or general partner for other customers, accounts and
pooled investment vehicles and may give advice, and take action, with
respect to any of those customers, accounts and pooled investment
vehicles which may differ from the advice given, or the timing or
nature of action taken, with respect to the Partnership;
(iii) because either of the General Partners may act as
investment adviser, sponsor or general partner for other customers,
accounts and pooled investment vehicles (individually, a "Customer"
and collectively, "Customers"), certain situations may arise in which
the Partnership may hold one class (a "Class") of Security of an
issuer's capital structure while another Customer may hold a different
Class of Security of the capital structure of the same issuer; the
General Partner will take such action as it deems appropriate and
equitable to minimize potential conflicts of interest that may arise
in this situation, and such actions may include, among others, (A) to
the extent permitted by applicable law, the purchase by the
Partnership from such Customer of a pro rata amount of such Customer's
Class, (B) to the extent permitted by applicable law, a sale by the
Partnership of a pro rata amount of its Class to such Customer, and
(C) the sale by the Partnership or such Customer of all of its Class
to a third party; when practicable, the Partnership will arrange for a
nationally recognized investment banking firm to value the Securities
being purchased or sold by the Partnership from or to the Customer;
(iv) where there is a limited supply of a Security, the General
Partners will use their best efforts to allocate or rotate investment
opportunities in a manner deemed equitable, but the General Partners
cannot assure, and assume no responsibility for, equality among all
accounts and Customers;
(v) the General Partners, their Affiliates and the partners,
shareholders, officers, directors and employees of the General
Partners and such Affiliates may engage in transactions or cause or
advise other Customers to engage in transactions that may differ from
or be identical to the transactions engaged in by the Investing
General Partner for the Partnership's account;
(vi) the Administrative General Partner has the authority to
appoint a Person (the "Independent Client Representative")
unaffiliated with either of the General Partners or any of their
Affiliates to act as agent for the Partnership to give or withhold any
consent of the Partnership required under applicable law to a
transaction in which the General Partners cause the Partnership to
purchase Securities
<PAGE>
23
from, or sell Securities to any advisory client of either of the
General Partners or their Affiliates; and
(vii) the General Partners shall not have any obligation to
engage in any transaction for the Partnership's account or to
recommend any transaction to the Partnership that any of the General
Partners, their Affiliates or any of the officers, directors or
employees of the General Partners or the General Partners' Affiliates
may engage in for their own accounts or the account of any other
customer, except as otherwise required by applicable law. To the
extent permitted by law, the General Partners shall be permitted to
bunch or aggregate orders for the Partnership's account with orders
for other accounts.
(c) By reason of the Investing General Partner's investment
advisory activities, the General Partners may acquire confidential information
or be restricted from initiating transactions in certain Securities. It is
acknowledged and agreed that the General Partners will not be free to divulge,
or to act upon, any such confidential information with respect to the General
Partner's performance of its responsibilities under this Agreement and that, due
to such a restriction, neither of the General Partners may initiate a
transaction that such General Partner otherwise might have initiated.
(d) No Limited Partner shall, by reason of being a Limited
Partner in the Partnership, have any right to participate in any manner in any
profits or income earned or derived by or accruing to either of the General
Partners, any of their Affiliates or their respective partners, directors,
officers, employees or shareholders from the conduct of any business other than
the business of the Partnership or from any transaction in Securities effected
by either of the General Partners, any of their Affiliates or their respective
partners, members, directors, officers, employees or shareholders for any
account other than that of the Partnership.
3.04 INTERESTED PARTNERS. The fact that the General Partners
(or any officer or employee thereof) or one or more of the Limited Partners is
directly or indirectly interested in or connected with any company or persons
with which or with whom the Partnership may have dealings, including, but not
limited to, the payment of brokerage commissions, research fees and other
expenses, shall not preclude such dealings or make them void or voidable, and
neither the Partnership nor any of the Partners shall have any rights in or to
such dealings or any profits derived therefrom.
3.05 PARTNERS' TRANSACTIONS IN SECURITIES. Nothing in this
Agreement shall restrict either General Partner (or any officers or employees
thereof) or any other Partner from buying or selling securities for its own
account, including securities of the same issuers as those held by the
Partnership.
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24
3.06 RELIANCE BY THIRD PARTIES. Third parties dealing with the
Partnership are entitled to rely conclusively upon the power and authority of
the General Partners as herein set forth.
3.07 REGISTRATION OF SECURITIES. Securities and other property
owned by the Partnership shall be registered in the name of the Partnership or
in the name of a nominee of the Partnership or of any bank or broker with whom
the Partnership maintains securities or a securities account. Any corporation or
transfer agent called upon to transfer any Securities to or from the name of the
Partnership shall be entitled to rely on instructions or assignments signed or
purporting to be signed by the Investing General Partner or the Administrative
General Partner without inquiry as to the authority of the person signing or
purporting to sign such instructions or assignments or as to the validity of any
transfer to or from the name of the Partnership. At the time of transfer, the
corporation or transfer agent is entitled to assume (i) that the Partnership is
still in existence, and (ii) that this Agreement is in full force and effect and
has not been amended unless the corporation or transfer agent has received
written notice to the contrary.
ARTICLE IV
Admission of Partners
4.01 NEW PARTNERS. (a) The Administrative General Partner may,
in its sole discretion, on any Business Day, admit one or more new Partners;
provided, however, that each such new Limited Partner shall execute a signature
page to this Agreement, which execution shall be deemed to represent the
execution of a counterpart of this Agreement.
(b) Upon the admission of a new Limited Partner, the
computations to be made pursuant to the terms and provisions of Article II
(relating to Capital Accounts, participation in profits and ownership in the
Partnership) shall be proportionately adjusted as the Administrative General
Partner may determine.
(c) Unless otherwise determined by the Administrative General
Partner, in its sole discretion, the number and character of Limited Partners
and the amounts of their respective Capital Contributions shall at no time
exceed such number or amount as would cause the Partnership to be required to
register as an "investment company" under the Investment Company Act, and shall
not cause the Partnership at any time to fail to satisfy the private placement
exception to treatment as a publicly traded partnership set forth in Treasury
Regulation Section 1.7704-1(h). The Administrative General Partner may require
Limited Partners to withdraw from the Partnership, in whole or in part, pursuant
to Section 5.03 in order to ensure compliance with this Section 4.01(c).
4.02 ASSIGNABILITY OF INTERESTS. Without the written consent
of the Administrative General Partner, exercised in its sole and absolute
discretion, no Limited
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25
Partner may directly or indirectly transfer, sell, assign or hypothecate its
interest in the Partnership, or any beneficial interest therein, in whole or in
part, to any other Person, nor shall a Limited Partner be entitled to substitute
any other Person for itself. In addition, as a condition to any transfer, sale,
assignment or hypothecation of an interest in the Partnership or any beneficial
interest therein, the Administrative General Partner may in its sole and
absolute discretion require that a Partner deliver such opinions of counsel,
certifications and/or other information deemed necessary by the Administrative
General Partner, including, without limitation, such opinions of counsel,
certifications and/or other information satisfactory to the Administrative
General Partner to the effect that such transfer, sale, assignment or
hypothecation does not require registration under the Securities Act or any
applicable laws or regulations of the United States, or any state or foreign
laws governing the offer and sale of securities. Any purported assignment or
hypothecation in contravention hereof shall be null and void ab initio.
ARTICLE V
Withdrawal from Capital Accounts by
Partners and Retirement of Partners/Distributions
5.01 WITHDRAWALS AND DISTRIBUTIONS IN GENERAL. No Partner
shall be entitled to receive distributions, withdraw any amount from such
Partner's Capital Account or withdraw from the Partnership, except as provided
in this Article V and Section 8.02 hereof.
5.02 VOLUNTARY WITHDRAWALS FROM BASIC CAPITAL ACCOUNTS. Any
Partner, except the Investing General Partner, may not withdraw all or any part
of its Capital Account for one year following the purchase of its interest, but
thereafter a Partner may voluntarily withdraw all or any part of its Capital
Account, effective as of the last day of any Quarter for payment in accordance
with Article VI hereof; provided that in the event of a proposed withdrawal by a
Limited Partner, such Limited Partner shall deliver written notice at least 30
days prior to the proposed effective date of withdrawal to the Administrative
General Partner, setting forth the amount proposed to be withdrawn or the basis
on which the amount proposed to be withdrawn is to be determined; and provided
further that any withdrawal by a General Partner shall be subject to the
requirements of Sections 2.01 and 5.07. Payment shall be made in cash, in kind,
or partly in cash and in kind at the discretion of the Administrative General
Partner.
5.03 REQUIRED RETIREMENT OF A PARTNER. The Administrative
General Partner may for any reason it determines (including, e.g., death,
insanity, dissolution, liquidation, insolvency, bankruptcy or avoidance of
regulatory requirements), on 15 days' prior written notice, require any Limited
Partner to retire from the Partnership at the end of the month in which such
notice is given or on such earlier date as determined by the Administrative
General Partner, in its sole discretion. A Limited Partner who is so
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26
required to retire shall be entitled to receive the value of its Capital Account
as of the effective date of its required retirement from the Partnership in the
manner and at the time provided in Sections 6.02 and 6.03.
5.04 EFFECT OF WITHDRAWAL BY A LIMITED PARTNER OF ENTIRE
CAPITAL ACCOUNT. A Limited Partner who gives notice of withdrawal of all of its
Capital Account shall be deemed to have retired from the Partnership as of the
effective date of such withdrawal and shall be entitled to receive the value of
its Capital Account as of the effective date of its retirement in the manner and
at the time provided in Section 6.01.
5.05 DEATH OF A LIMITED PARTNER. In the event the beneficial
interest of a Limited Partner passes to its estate or another person by reason
of its death, the Administrative General Partner may, at its sole discretion,
with the consent of its estate or the person or persons to whom such interest
passed, admit the estate or such person as a Limited Partner to the Partnership
as a successor to the deceased Limited Partner. Except as otherwise provided in
the preceding sentence, the deceased Limited Partner shall be deemed to have
elected to withdraw all of its Capital Account immediately after the last day of
the month in which such Limited Partner shall have died.
5.06 DISTRIBUTIONS. As a general matter, the Investing General
Partner intends to reinvest income and capital gains. To the extent practicable,
the Investing General Partner may, in its sole discretion, cause the Partnership
to make annual cash distributions of a portion of the Partnership's net
investment income to a Limited Partner if such Limited Partner notifies the
Administrative General Partner of such Limited Partner's need to receive such
distribution to pay federal and/or state taxes due from it on its taxable net
investment income. The Administrative General Partner may also, in its sole
discretion, make other distributions pro rata, based on Capital Account balances
in amounts and at times that it determines.
5.07 WITHDRAWAL BY INVESTING GENERAL PARTNER AND SPECIAL
LIMITED PARTNER OF SPECIAL ALLOCATION. The Investing General Partner and the
Special Limited Partner may, at the end of any Performance Period, withdraw an
amount equal to the excess, if any, of the aggregate Special Allocation that has
been allocated to such Partner for the current and previous Performance Periods
less all prior distributions of Special Allocation to such Partner; provided
that all such withdrawals by the Partner shall be subject to Section 2.01
hereof.
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27
ARTICLE VI
Payment of Withdrawals
6.01 TIME OF PAYMENT ON VOLUNTARY WITHDRAWALS. In the case of
a voluntary withdrawal by a Partner from its Capital Account of an amount equal
to 50% or less of its Capital Account, the amount withdrawn pursuant to Section
5.02 shall be paid to such Partner on the day immediately following the
effective date of such withdrawal. In the case of a voluntary withdrawal by a
Partner from its Capital Account of more than 50% of its Capital Account, at
least 95% of the amount withdrawn pursuant to Section 5.02 shall be paid to such
Partner within 15 five Business Days following the effective date of such
withdrawal, and the balance shall be paid within 45 days of such date, without
interest. The amount to be paid to a Partner upon withdrawal shall be based upon
the amount of such Partner's Closing Capital Account as of the effective date of
the withdrawal.
6.02 TIME OF PAYMENT OF CAPITAL ACCOUNT ON REQUIRED
RETIREMENT. In the case of the required retirement of a Limited Partner pursuant
to Section 5.03, at least 95% of the amount of such Limited Partner's Capital
Account on the day following the effective date of such retirement (as
tentatively determined) shall be paid to such Limited Partner within five
Business Days following the effective date of its retirement, and the balance
shall be paid within 45 days of such date, without interest. The amount to be
paid to a Partner upon withdrawal shall be based upon the amount of such
Partner's Closing Capital Account as of the effective date of the withdrawal.
6.03 MANNER OF PAYMENT OF WITHDRAWALS. Distributions to a
withdrawing Partner shall be made in cash, in kind, or partly in cash and partly
in kind, and the determination as to the manner in which such distributions
shall be made shall be in the sole discretion of the Administrative General
Partner. To the extent that a Limited Partner is paid in kind, or partly in
kind, he will receive its pro rata share of any securities paid to it.
6.04 LIMITATION ON PAYMENT OF WITHDRAWALS. Notwithstanding
anything to the contrary in this Agreement, the timing of all withdrawals shall
be subject to the ability of the Partnership to liquidate sufficient investments
and repatriate sufficient funds to satisfy the redemption. In general, the
Administrative General Partner intends to process redemptions through the pro
rata liquidation of investments that are attributed to the Capital Account of
the Limited Partner for which redemption is sought. The Administrative General
Partner may alter this practice in its sole discretion.
<PAGE>
28
ARTICLE VII
Duration and Dissolution of the Partnership
7.01 DURATION. The Partnership shall continue until it is
dissolved and subsequently terminated, which dissolution shall occur upon the
earliest of (i) December 31, 2046, (ii) a determination made by the
Administrative General Partner at any time to liquidate and dissolve the
Partnership for any reason in its sole and absolute discretion, (iii) the
bankruptcy, insolvency or dissolution of either of the General Partners, (iv)
the withdrawal of either of the General Partners, or (v) the entry of a decree
of dissolution. Neither the admission of Partners nor the retirement,
bankruptcy, death or insanity of a Limited Partner shall dissolve the
Partnership.
7.02 RESCISSION OF DISSOLUTION. Notwithstanding a dissolution
pursuant to Section 7.01, the Partnership shall not be dissolved upon a
withdrawal of either of the General Partners (within the meaning of the
Partnership Act) or the bankruptcy, insolvency or dissolution of either of the
General Partners if within 90 days after such event the remaining Partners
holding interests representing a majority of the total interests in Partnership
profits and capital agree in writing to continue the business of the Partnership
and to the appointment, effective as of the date of the event, of a replacement
Administrative General Partner or Investing General Partner, as the case may be.
ARTICLE VIII
Winding Up of Partnership
8.01 DESIGNATION OF PERSON TO WIND UP PARTNERSHIP. If the
Partnership is dissolved pursuant to Section 7.01, the Partnership shall be
wound up by the Administrative General Partner or, if the Administrative General
Partner has been dissolved, is bankrupt or has previously withdrawn from the
Partnership, then by the Investing General Partner or if the Investing General
Partner has been dissolved, the Person or Persons previously designated by the
Partners or, if the Partners have made no such designation, by the Person or
Persons designated by Limited Partners owning a majority in interest of the
capital then in the Capital Accounts of all Limited Partners.
8.02 WINDING UP. Upon the dissolution of the Partnership, the
Administrative General Partner (or the person picked to wind up the Partnership
as provided for in Section 8.01 or as otherwise provided by law) shall proceed
to wind up the affairs of the Partnership and in such winding up shall make the
following distributions out of the Partnership assets, in the following manner
and order (subject to the priorities of distribution required by applicable
law):
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29
(i) to payment and discharge of the claims of all creditors of
the Partnership who are not Partners;
(ii) to payment and discharge pro rata of the claims of all
creditors of the Partnership who are Partners; and
(iii) to the Partners in proportion to their Closing Capital
Accounts (including any Segregated Account) for the Business Day on
which dissolution takes place, without distinction between the General
Partners and Limited Partners. Any distribution under this Section
shall be followed by an audited report as of the date of dissolution,
comparable to the Annual Report required by Section 9.02.
ARTICLE IX
Books of Account and Reports to Partners
9.01 BOOKS OF ACCOUNT. Proper books of account of the
Partnership shall be kept on the accrual basis in accordance with U.S. generally
accepted accounting principles, by or under the supervision of the
Administrative General Partner at the principal place of business of the
Partnership, and shall be open to inspection by any Partner or its duly
authorized representative at any reasonable time.
9.02 ANNUAL REPORTS. Within 120 days after the close of each
Fiscal Year, the Administrative General Partner shall mail to each Partner a
written report (the "Annual Report"), audited by the Partnership's certified
public accountant, setting forth as of the end of such Fiscal Year:
(i) the assets and liabilities of the Partnership;
(ii) the net operating profit or net operating loss of the
Partnership for such Fiscal Year;
(iii) the net realized and unrealized capital gains or losses of
the Partnership for such Fiscal Year;
(iv) the aggregate of such Partner's Closing Capital Account and
the manner of its calculation; and
(v) any information necessary to enable such Partner to prepare
U.S. federal income tax returns.
<PAGE>
30
9.03 INTERIM REPORTS. The Administrative General Partner shall
cause to be prepared and delivered to each Limited Partner an unaudited
semiannual statement of assets and liabilities and a statement of income and
expenses.
9.04 AUDIT OF BOOKS, DETERMINATION BY THE ACCOUNTANT. The
books of account and records of the Partnership shall be audited as of the end
of each Fiscal Year at the principal place of business of the Partnership by a
certified public accountant designated from time to time by the Administrative
General Partner. The determinations by the accountant for the Partnership
relating to Partnership accounting matters shall be final and binding upon all
Partners.
9.05 ADJUSTMENT OF BASIS OF PARTNERSHIP PROPERTY. In the event
of a distribution of Partnership property to a Partner or an assignment or other
transfer (including by reason of death) of all or part of the interest of a
Limited Partner in the Partnership, the Administrative General Partner, in its
sole and absolute discretion, may cause the Partnership to elect, pursuant to
Section 754 of the Internal Revenue Code, or the corresponding provision of
subsequent law, to adjust the basis of the Partnership property as provided by
Sections 734 and 743 of the Internal Revenue Code. The Administrative General
Partner does not intend to cause the Partnership to make an election pursuant to
Section 754 of the Internal Revenue Code.
ARTICLE X
Miscellaneous Provisions
10.01 POWERS OF LIMITED PARTNERS; VOTING RIGHTS. (a) The
Limited Partners shall take no part in the conduct or control of the Partnership
business and shall have no authority or power to act for or to bind the
Partnership, except as provided in Section 10.01(b) hereof.
(b) The Partners shall have a right to vote (in person or by
proxy) at a meeting (convened by a General Partner or any Limited Partner) with
respect to the following matters:
(i) the Partners owning a majority in interest of the capital
then in the Opening Capital Accounts of all Partners shall be entitled
to remove a General Partner, but only upon (1) the breach by a General
Partner of any material obligation under this Agreement, which if not
cured could have a material adverse effect on the Partnership; (2) the
determination by the Limited Partners that such General Partner has
been grossly negligent in any material respect, or has engaged in
fraud or willful misconduct in carrying out its duties under this
Agreement; (3) the conviction of a General Partner of a felony; and
(4) (A) the entrance of an order for relief against a General Partner
under Chapter 7 of the bankruptcy law or a General Partner (I)
<PAGE>
31
making a general assignment for the benefit of creditors, (II) filing
a voluntary petition under the federal or any other bankruptcy law,
(III) filing a petition or answer seeking for a General Partner any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation,
(IV) filing an answer or other pleading admitting or failing to
contest the material allegation of a petition filed against a General
Partner in any proceeding of this nature, or (V) seeking, consenting
to, or acquiescing in the appointment of a trustee, receiver or
liquidator of a General Partner or of all or any substantial part of a
General Partner's properties, or (B) 60 days after the commencement of
any proceeding against a General Partner seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation, if the proceeding
has not been dismissed or 60 days after the appointment without a
General Partner's consent or acquiescence of a trustee, receiver, or
liquidator of a General Partner or of all or any substantial part of a
General Partner's properties, if the appointment is not vacated or
stayed, or 60 days after the expiration of any such stay, if the
appointment is not vacated;
(ii) the Partners owning a majority in interest of the capital
then in the Opening Capital Accounts of all remaining Partners shall
be entitled to unanimously select a replacement General Partner to
replace the General Partner removed in accordance with paragraph (i);
(iii) upon an event of withdrawal of the General Partner, the
remaining Partners shall have the right to appoint a replacement
General Partner to the extent provided in Section 7.02;
(iv) the Partners shall be entitled to designate a Person or
Persons to wind up the Partnership to the extent provided in Section
8.01; and
(v) the Partners shall have the right to vote with respect to
amendments to the Partnership Agreement as provided in Section 10.03
hereof.
10.02 POWER OF ATTORNEY. Each of the undersigned for itself
does hereby constitute and appoint the General Partners, irrevocably its true
and lawful representative and attorney-in-fact, in its name, place and stead to
make, execute, sign and file a Certificate of Limited Partnership of the
Partnership and any amendment thereof or termination thereof as required by law
and all such other instruments, documents and certificates which may from time
to time be required by the laws of the United States of America, the State of
Delaware or any other city, state or country in which the Partnership shall
determine to do business, or any political subdivision or agency thereof, to
effectuate, implement, continue or terminate the valid existence of the
Partnership. Such representative and attorney-in-fact shall not, however, have
any right, power or authority to amend or modify this Agreement when acting in
such capacities.
<PAGE>
32
10.03 AMENDMENT. This Agreement may be modified or amended at
any time by a writing signed by both of the General Partners and by Partners who
hold limited partnership interests representing in the aggregate more than 50%
of the capital then in the Opening Capital Accounts of all Partners as of the
date such amendment is made; provided, however, that without the specific
consent of each Partner affected thereby, no such modification or amendment
shall reduce the Capital Account of any Partner or its rights of withdrawal with
respect thereto or amend this Section; and provided further that without consent
of any other Partner, the General Partners together may amend this Agreement:
(i) to reflect changes validly made in the membership of the Partnership and the
Capital Contributions of the Partners; (ii) to add to the representations,
duties or obligations of either of the General Partners or surrender any right
or power granted to a General Partner herein; (iii) to cure any ambiguity, or
correct or supplement any provision herein which may be inconsistent with any
other provision herein or any provision of relevant law (including amendments to
the allocations provided herein that may be appropriate in view of the
Regulations under Section 704 of the Internal Revenue Code or otherwise to
comply with relevant law), provided that any such ambiguity or inconsistency is
resolved in a manner which the General Partners believe in good faith to be
neutral or favorable to the Limited Partners or required by law; (iv) to correct
any printing, stenographic or clerical errors or omissions; (v) to ensure that
the Special Allocation conforms to any applicable requirements of law (whether a
requirement of the Securities and Exchange Commission or another regulatory
authority, or otherwise); provided that no amendment shall provide for a Special
Allocation with respect to any Limited Partner for any Performance Period in an
amount greater than 20% of the aggregate Net Profits allocated to such Limited
Partner during such Performance Period without the consent of such Limited
Partner; and (vi) to make any other provision with respect to matters or
questions arising under this Agreement that will not be inconsistent with the
provisions of this Agreement, in each case so long as the change does not
materially adversely affect the Limited Partners and no Limited Partner objects
to such change in writing within ten days of being advised thereof. In addition,
in the event that either of the General Partners determines that amendment of
this Agreement is necessary or desirable to permit it to continue to serve as
General Partner and comply with applicable laws and rules and regulations of the
Securities and Exchange Commission and other regulatory authorities then in
effect, then such General Partner may, upon 60 days' prior written notice to the
Limited Partners, make such changes to this Agreement without the consent of the
Limited Partners so long as such changes do not adversely affect the rights of
the Limited Partners granted herein.
10.04 GENERAL. This Agreement: (i) shall be binding on the
executor(s), administrator(s), custodian(s), heir(s) and legal survivor(s) of
the Partners; (ii) shall be governed by, and construed in accordance with, the
laws of the State of Delaware; and (iii) may be executed in several counterparts
with the same effect as if the parties executing the several counterparts had
all executed one counterpart as of the day and year first above written.
<PAGE>
33
10.05 NOTICES. Each notice relating to this Agreement shall be
in writing and delivered in person or by certified or registered mail. All
notices to the Partnership shall be addressed to:
Archery Capital LLC
237 Park Avenue
Suite 801
New York, New York 10017
Attention: Erinch Ozada
All notices and reports shall be addressed to each Partner at its address as set
forth in the Partnership records. Any Partner may designate a new address by
notice to that effect given to the Partnership. Unless otherwise specifically
provided in this Agreement, a notice shall be deemed to have been given to a
Partner when deposited in a post office or a regularly maintained letter box
addressed to a Partner at its address as shown in the Partnership records, or
when delivered in person.
10.06 LIMITED PARTNERS' LIABILITY. Nothing in this Agreement
nor any action taken under this Agreement, including the withdrawal of a Limited
Partner, shall affect in any way the right of the Partnership to claim
contributions in regard to liabilities or to the return of that part of a
withdrawn Limited Partner's Capital Contribution necessary to discharge
applicable liabilities to the creditors of the Partnership, all in accordance
with the applicable statutes and regulations applying to the Partnership.
10.07 INDEMNIFICATION OF THE GENERAL PARTNERS. The Partnership
shall, subject to applicable law, indemnify each of the General Partners and its
Affiliates (each, an "Indemnitee"), and hold each of them harmless, from and
against any and all claims, liabilities, damages, losses, costs, and expenses
(including amounts paid in satisfaction of judgments, in compromises and
settlements, as fines and penalties and legal or other costs and expenses of
investigating or defending against any claim or alleged claim) of any nature
whatsoever, known or unknown, liquidated or unliquidated, that are actually and
reasonably incurred by any Indemnitee and arise out of or in connection with the
business of the Partnership or the performance by such Indemnitee of any of the
General Partners's= responsibilities hereunder; provided that an Indemnitee
shall be entitled to indemnification hereunder only if such Indemnitee's conduct
did not constitute fraud, willful misconduct, bad faith or gross negligence, the
Indemnitee acted in a manner reasonably believed to be in or not against the
best interests of the Partnership and, with respect to any criminal action or
proceeding, had no reasonable cause to believe its conduct was unlawful. The
satisfaction of any indemnification and any holding harmless pursuant to this
Section 10.07 shall come from and be limited to Partnership assets, and, except
as otherwise provided herein, no Partner shall be personally liable on account
thereof. Notwithstanding this Section 10.07 or any other provisions of this
Agreement, no Indemnitee shall be indemnified or held harmless from any
liability, loss, damage or expense incurred by it in connection with any claim
or settlement involving allegations that any federal or state securities laws
were violated by such
<PAGE>
34
Indemnitee unless: (x) such Indemnitee successfully defends such action, suit or
proceeding or (y) such indemnification is specifically approved by a court of
competent jurisdiction that shall have been advised of the current position of
the Securities and Exchange Commission and any applicable state securities
regulatory authority regarding indemnification for violations of federal or
state securities laws or independent legal counsel advises the Partnership that
the matter of indemnification for violations of federal or state securities laws
has been favorably settled by controlling precedent.
10.08 CERTAIN TAX MATTERS. The "Tax Matters Partner,"as
defined in Section 6231(a)(7) of the Internal Revenue Code, shall be the
Administrative General Partner. The Tax Matters Partner is authorized to carry
out, on behalf of the Partnership and at the Partnership's expense, all acts
appropriate to such designation.
10.09 DETERMINATION BY THE GENERAL PARTNERS OF MATTERS NOT
PROVIDED FOR IN THIS AGREEMENT. The General Partners shall decide any questions
arising with respect to the Partnership or this Agreement which are not
specifically and expressly provided for in this Agreement.
<PAGE>
35
IN WITNESS WHEREOF, the undersigned has hereto executed and
delivered this Agreement.
ARCHERY CAPITAL LLC
as General Partner
/s/ Erinch Ozada
-------------------------------------
By: Erinch Ozada
Title: Managing Member
LIGHTHOUSE MANAGEMENT, INC.
as General Partner
/s/ Erich Ozada
-------------------------------------
By: Erich Ozada
Title: Director
/s/ Ian P. Ellis
-------------------------------------
Ian P. Ellis,
as Special and Initial Limited Partner
Exhibit C.
JOINT FILING AGREEMENT
The undersigned hereby agree that the Statement on Schedule
13D, dated November 21, 1997, (the "Schedule 13D"), with respect to the
Sponsored ADRs, par value $0.0001 per share, of Select Software Tools, Ltd. is,
and any amendments thereto executed by each of us shall be, filed on behalf of
each of us pursuant to and in accordance with the provisions of Rule 13d-1(f)
under the Securities and Exchange Act of 1934, as amended, and that this
Agreement shall be included as an Exhibit to the Schedule 13D and each such
amendment. Each of the undersigned agrees to be responsible for the timely
filing of the Schedule 13D and any amendments thereto, and for the completeness
and accuracy of the information concerning itself contained therein. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the 21st day of November, 1997.
ARCHERY CAPITAL, LLC PHAROS FUND LIMITED
By: /s/ Erinch Ozada By: /s/ Philip C. Pedro
------------------------------ --------------------------------
Name: Erinch Ozada Name: Philip C. Pedro
Title: Managing Member Title: Secretary
LIGHTHOUSE PARTNERS USA, L.P.
By: ARCHERY CAPITAL, LLC
its General Partner
By: /s/ Erinch Ozada
------------------------------
Name: Erinch Ozada
Title: Managing Member
