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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
Carrizo Oil & Gas, Inc.
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
144577 10 3
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(CUSIP Number)
Kenneth C. Huff
DAPHAM Partnership, L.P.
462 Broadway, Second Floor
New York, New York 10013
(212) 219-3935
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 8, 1998
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(Date of Event which Requires Filing of this Statement)
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 [].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page should be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 144577 10 3
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
DAPHAM Partnership, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 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
441,695 Shares
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0 Shares
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
441,695 Shares
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
0 Shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
441,695 Shares
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
[X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.3%
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14 TYPE OF REPORTING PERSON (See Instructions)
PN
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*Based on the assumptions stated by virtue of Rule 13d-3(d)
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ITEM 1. SECURITY AND ISSUER
The class of securities to which this statement relates is common
stock, par value $.01 per share (the "Common Stock"), of Carrizo Oil & Gas,
Inc., a Texas corporation (the "Company"). The address of the principal
executive offices of the Company is 14811 St. Mary's Lane, Suite 148, Houston,
Texas 77079.
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed by DAPHAM Partnership, L.P. ("DAPHAM"). The
principal business address and the address of the principal office of DAPHAM is
462 Broadway, Second Floor, New York, New York 10013. DAPHAM was organized
under the laws of the State of Delaware. The principal business of DAPHAM is
to invest in securities of every kind, including stocks, options, warrants,
promissory notes secured by deeds of trust, bonds, partnership interests and
other securities, physical commodities and commodity futures, and ownership
interests and indebtedness of every kind and to engage in other investment
activities, including, without limitation, investing in mutual funds, real
estate and other investments that offer the opportunity for an appropriate
return. Kenneth C. Huff ("Mr. Huff") serves as general partner of DAPHAM. The
business address of Mr. Huff is 9256 N. Pelham Parkway, Milwaukee, Wisconsin
53217. Mr. Huff is a citizen of the United States of America, and he is a
retired business executive, other than acting as general partner of DAPHAM.
During the last five years, neither DAPHAM nor Mr. Huff has (i) been convicted
in any criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been 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
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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
See Item 4, Purpose of Transaction, and Item 6, Contracts,
Arrangements, Understandings or Relationships with Respect to Securities of the
Issuer.
ITEM 4. PURPOSE OF TRANSACTION
DAPHAM acquired 45,735 shares of Common Stock pursuant to a
Combination Agreement dated as of June 6, 1997 (the "Combination Agreement")
among the Company, Carrizo Production, Inc., a Texas corporation
("Production"), Encinitas Partners Ltd., a Texas limited partnership
("Encinitas"), La Rosa Partners Ltd., a Texas limited partnership ("La Rosa"),
Carrizo Partners Ltd., a Texas limited partnership ("Carrizo Partners"), Paul
B. Loyd, Jr., Steven A. Webster, S.P. Johnson IV, Douglas A.P. Hamilton and
Frank A. Wojtek, a copy of which has been filed as Exhibit 2 hereto and is
incorporated herein by reference, and as described in the Company's
Registration Statement on Form S-1 (Reg. No. 333-29187), as amended (the
"Registration Statement"). DAPHAM acquired 15,564 shares and 30,171 shares of
Common Stock in the acquisition of Encinitas and Carrizo Partners,
respectively, by the Company in respect of the limited partner interests of
Encinitas and Carrizo Partners held by DAPHAM. Mr. Huff acquired an aggregate
of 45,734 shares of Common Stock pursuant to the Combination Agreement. Mr.
Huff acquired 15,563 shares and 30,171 shares of Common Stock in the
acquisition of Encinitas and Carrizo Partners, respectively, by the Company in
respect of the limited partner interests of Encinitas and Carrizo Partners held
by Mr. Huff.
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Mr. Huff, both for himself and as general partner of DAPHAM, will
review on a continuous basis the investment in the Common Stock and the
Company's business affairs and financial condition, as well as conditions in
the securities markets and general economic and industry conditions. Mr. Huff,
both for himself and as general partner of DAPHAM, may in the future take such
actions in respect of the investment in the Common Stock as he deems
appropriate in light of the circumstances existing from time to time.
Currently, these actions include continuing to hold shares or disposing of
shares. Such dispositions could be effected in private transactions, through a
public offering or, upon compliance with the rules under the Securities Act of
1933, as amended (the "Securities Act"), in the open market. Additionally, it
is possible that Mr. Huff could seek to acquire additional shares either as
general partner of DAPHAM or for himself, although he has no current plans to
do so. Any acquisition of shares could be effected in the open market, in
privately negotiated transactions, or otherwise. Any sales, purchases or
transfers or other actions described herein may be made at any time without
further prior notice. In reaching any conclusion as to the foregoing matters,
Mr. Huff, as general partner of DAPHAM and acting for himself, may take into
consideration various factors, such as the Company's business and prospects,
other developments concerning the Company, the obligations of, cash and
financial resources and needs of, investment goals of and other business
opportunities available to himself and to DAPHAM, developments with respect to
Mr. Huff's or DAPHAM's business, general economic conditions, the market price
for shares of Common Stock and stock market conditions.
Dispositions of the 45,735 shares of Common Stock received by DAPHAM
and the 45,734 shares of Common Stock received by Mr. Huff pursuant to the
Combination Agreement are restricted (subject to certain limitations) by the
Company's Bylaws, a copy of which has been filed
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as Exhibit 3 hereto and is incorporated herein by reference, without the prior
written consent of the Company. Additionally, pursuant to a Lock-up Agreement
dated July 31, 1997 of DAPHAM (the "Lock-up Agreement"), a copy of which has
been filed as Exhibit 4 hereto and is incorporated herein by reference,
delivered pursuant to the Underwriting Agreement of the Company dated August 5,
1997, DAPHAM agreed not to sell (subject to certain limitations) any shares of
Common Stock held by DAPHAM until February 2, 1998 (180 days after August 6,
1997 (the date of the Prospectus of the Company (the "Prospectus") relating to
the initial public offering of shares of Common Stock (the "IPO") as described
in the Company's Registration Statement) without the prior written consent of
the underwriters for the IPO. DAPHAM has agreed to certain restrictions on the
transfer of shares of Common Stock deemed beneficially owned by DAPHAM as of
January 8, 1998 pursuant to the Shareholders' Agreement dated January 8, 1998
(the "Shareholders' Agreement") among the Company, S.P. Johnson IV, Frank A.
Wojtek, Steven A. Webster, Paul B. Loyd, Jr., Douglas A.P. Hamilton, DAPHAM,
the Douglas A.P. Hamilton 1997 GRAT, Enron Capital & Trade Resources Corp.
("Enron") and Joint Energy Development Investments II Limited Partnership
("JEDI II"). See Item 5, Interest in Securities of the Issuer, and Item 6,
Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer, for a discussion of the Shareholders' Agreement and
the restrictions on transfer pursuant to such agreement.
Except as set forth in Item 6, Contracts, Arrangements, Understandings
or Relationships with Respect to Securities of the Issuer, neither DAPHAM nor
Mr. Huff has any present plans or proposals which relate to or would result in
any of the actions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
DAPHAM beneficially owns an aggregate of 441,695 shares of Common
Stock (approximately 4.3% of the 10,375,000 shares outstanding (as reported in
the Company's Form 10-Q for the quarter ended September 30, 1997)). Mr. Huff
could be deemed to beneficially own an aggregate of 487,429 shares of Common
Stock (which number includes an aggregate of 441,695 shares beneficially owned
by DAPHAM, as to which Mr. Huff may be deemed to be the beneficial owner;
approximately 4.7% of the 10,375,000 shares outstanding (as reported in the
Company's Form 10-Q for the quarter ended September 30, 1997)). The foregoing
does not constitute an admission by Mr. Huff as to the beneficial ownership of
the shares of Common Stock beneficially owned by DAPHAM.
On January 8, 1998, the Company consummated the transactions
contemplated by the Stock Purchase Agreement dated January 8, 1998 (the
"Purchase Agreement") among the Company, Enron and JEDI II. Such transactions
included (i) the payment by Enron and JEDI II of an aggregate purchase price of
$30,000,000, (ii) the sale of 75,000 shares of 9% Series A Preferred Stock, par
value $.01 per share, of the Company (the "Preferred Stock"), the terms of
which are set forth in the Statement of Resolution Establishing Series of
Shares designated 9% Series A Preferred Stock (the "Statement of Resolution"),
to Enron and 225,000 shares of Preferred Stock to JEDI II, (iii) the grant of
warrants (the "Warrants") to purchase 250,000 and 750,000 shares of the Common
Stock, the terms of which are set forth in a Warrant Certificate to be issued
to each of Enron and JEDI II, at an exercise price of $11.50 per share to Enron
and JEDI II, respectively, and which are exercisable during the period
beginning January 8, 1999 and ending January 8, 2005, and (iv) the execution
and delivery of the Shareholders' Agreement, pursuant to which certain
transfers of
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Common Stock are restricted. The terms of the Purchase Agreement, the
Statement of Resolution, the Warrant Certificates and the Shareholders'
Agreement are described in the Form 8-K filed by the Company with the
Securities and Exchange Commission on January 9, 1998.
The parties to the Shareholders' Agreement may be deemed to have
formed a group pursuant to Rule 13d-5(b)(1) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Nothing herein shall
constitute an affirmance that any such group exists; however, any such group
could be deemed to have beneficial ownership, for purposes of Sections 13(g)
and 13(d) of the Exchange Act, of all equity securities of the Company
beneficially owned by such parties. Such parties would, as of January 8, 1998,
be deemed to beneficially own an aggregate of 6,221,334 shares of Common Stock
(7,221,334 shares of Common Stock if the Warrants were exercisable within 60
days of the date hereof), or approximately 60.0% (approximately 63.5% if the
Warrants were exercisable within 60 days of the date hereof), of the total
number of shares reported to be outstanding in the Company's Form 10-Q for the
quarter ending September 30, 1997. DAPHAM disclaims the beneficial ownership
of any Common Stock owned by such other parties. For a description of the
Shareholders' Agreement, see Item 6, Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Mr. Huff, as general partner of DAPHAM, has sole voting power with
respect to the Common Stock held by DAPHAM, and the sole power to dispose or
direct the disposition of the Common Stock held by DAPHAM (subject to the
Shareholders' Agreement). Mr. Huff has sole voting power with respect to the
Common Stock held by him, and the sole power to dispose or direct the
disposition of the Common Stock held by him.
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Except as set forth in this Schedule 13D, to the best of his
knowledge, Mr. Huff has not, either as general partner of DAPHAM or acting on
his own behalf, effected any transaction in Common Stock during the past sixty
days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Except as described in this statement or in the documents referred to
herein, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) between either DAPHAM or Mr. Huff and any person with
respect to any securities of the Company.
The Company was formed in September 1993. Prior to consummation of
the Combination Agreement, the Company conducted its operations directly, with
industry partners and through the following affiliated entities: Production,
Encinitas, La Rosa and Carrizo Partners. The Company was the general partner
of Carrizo Partners and La Rosa. Production was the general partner of
Encinitas. On August 11, 1997, pursuant to the Combination Agreement, the
following transactions were consummated: (i) Production was merged into the
Company and the outstanding shares of capital stock of Production were
converted into an aggregate of 343,000 shares of Common Stock; (ii) the Company
acquired Encinitas in two steps: (a) the Company acquired the limited partner
interests in Encinitas held by certain of the Company's directors for an
aggregate consideration of 468,533 shares of Common Stock and (b) Encinitas was
merged into the Company, and the outstanding limited partner interests in
Encinitas were converted into an aggregate of 860,699 shares of Common Stock;
(iii) La Rosa was merged into the Company and the outstanding partnership
interests in La Rosa converted into an aggregate of 48,700 shares of Common
Stock; and (iv) Carrizo Partners was merged into the Company and the
outstanding partnership interests in Carrizo Partners converted into an
aggregate of 569,068 shares of Common Stock. The closing of
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the transactions under Combination Agreement occurred simultaneously with the
closing of the sale of 2,500,000 shares of Common Stock pursuant to the
Company's IPO as described in the Registration Statement.
The current directors of the Company are S. P. Johnson IV, Frank A.
Wojtek, Steven A. Webster, Paul B. Loyd, Jr. and Douglas A.P. Hamilton. Prior
to the consummation of the Combination Agreement, the shareholders of the
Company at such time ratified the appointment of each of such directors to the
Board of Directors of the Company by unanimous written consent.
The Company's Bylaws restrict the disposition of the 45,735 shares of
Common Stock received by DAPHAM and the 45,734 shares of Common Stock received
by Mr. Huff pursuant to the Combination Agreement (subject to certain
limitations) without the prior written consent of the Company in order to
ensure that such dispositions are made pursuant to registration under the
Securities Act or an exemption therefrom. The Lock-up Agreement restricts the
disposition by DAPHAM of shares of Common Stock until February 2, 1998 (subject
to certain limitations) without the prior written consent of the underwriters
for the Company's IPO.
The Registration Rights Agreement dated as of June 6, 1997 among the
Company, Paul B. Loyd, Jr., Steven A. Webster, S. P. Johnson IV, Douglas A.P.
Hamilton, Frank A. Wojtek and DAPHAM ("Registration Rights Agreement"), a copy
of which has been filed as Exhibit 5 hereto and is incorporated herein by
reference, provides registration rights with respect to shares of Common Stock
that were outstanding prior to the IPO and the issuance of shares pursuant to
the Combination Agreement, as well as shares issued pursuant to the Combination
Agreement or otherwise purchased from the Company (the "Registrable
Securities") (currently approximately 6,267,069 shares of Common Stock).
Shareholders owning not less than 51% of the then-outstanding
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shares of Registrable Securities may demand that the Company effect a
registration under the Securities Act for the sale of not less than 5% of the
shares of Registrable Securities then outstanding. The holders of the
registration rights also have limited rights to require the Company to include
their shares of Common Stock in connection with registered offerings by the
Company. The Company may generally be required to effect three demand
registrations (provided that no such registration may occur prior to February
11, 1998 (the date six months after the closing of the IPO)) and three
additional demand registrations for certain offerings registered on SEC Form
S-3, subject to certain conditions and limitations. The registration rights
will terminate as to any holder of Registrable Securities at the later of (i)
one year after the closing of the IPO or (ii) at such time as such holder may
sell under Rule 144 in a three-month period all Registrable Securities then
held by such holder. The holders of the registration rights may not exercise
their registration rights with respect to any shares received pursuant to the
Combination Agreement for a period of at least one year following the effective
date of the Registration Statement.
Registration of shares under the Securities Act would result in such
shares becoming freely tradeable without restriction under the Securities Act
(except for shares purchased by affiliates of the Company) immediately upon the
effectiveness of such registration.
Each of S.P. Johnson IV, Frank A. Wojtek, Steven A. Webster, Paul B.
Loyd, Jr., Douglas A.P. Hamilton, DAPHAM and the Douglas A.P. Hamilton 1997
GRAT (the "Major Shareholders") have agreed with the Company, Enron and JEDI II
that it shall not (without the consent of Enron or, if Enron, JEDI II and their
respective affiliates do not beneficially own the largest outstanding amount of
Preferred Stock that is then beneficially owned by any shareholder, then only
with the consent of the holders of a majority of the shares of Preferred Stock)
transfer,
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assign, donate, sell, devise, encumber or in any other manner alienate
(collectively, "Transfer") any portion of the Common Stock deemed beneficially
owned by it (441,695 shares for DAPHAM) as of the date of the Shareholders'
Agreement, except as provided below.
Each Major Shareholder may Transfer during each calendar year
beginning January 1, 1998 through and including 2001 up to 20% of the number of
shares of Common Stock held by such Major Shareholder as of the date of the
Shareholders' Agreement and any portion of such shares permitted to be
Transferred in prior calendar years that were not so Transferred. Upon
redemption of shares of Preferred Stock, a proportionate number of shares of
Common Stock held by each Major Shareholder will be released from all transfer
restrictions imposed by the Shareholders' Agreement, which release will be in
addition to the other releases from the transfer restrictions provided therein.
Notwithstanding the foregoing, each Major Shareholder has agreed to retain the
final 20% of his holdings of Common Stock until all shares of Preferred Stock
have been redeemed.
A partition of shares of Common Stock held by a Major Shareholder
between a Major Shareholder and his spouse upon divorce and Transfers upon a
Major Shareholder's death are not Transfers that are restricted pursuant to the
Shareholders' Agreement; provided that the spouse or transferee, as a condition
to the partition or Transfer, agrees in writing to take such shares of Common
Stock subject to the terms of the Shareholders' Agreement. In addition,
Transfers by a Major Shareholder to his Family Group (as defined herein) are
not restricted; provided that the transferee has agreed in writing to be bound
by the terms of the Shareholders' Agreement. "Family Group" means, for
purposes hereof, (i) the spouse of a Major Shareholder or (b) certain trusts
established solely for the benefit of the Major Shareholder, the Major
Shareholder's spouse or any of their respective ancestors or descendants.
Transfers back to a Major Shareholder from his Family
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Group are permitted. Pledges of Common Stock are not restricted by the
Shareholders' Agreement, although attempts to realize upon the value of the
pledged Common Stock constitute Transfers and are therefore subject to the
limitations described above.
In addition, the Major Shareholders consented to certain transactions
contemplated by the Stock Purchase Agreement, including (i) the adoption of the
Statement of Resolution, (ii) the election of directors of the Board of
Directors by the holders of shares of Preferred Stock to the extent provided in
the Statement of Resolution, and (iii) the provisions allowing Enron, JEDI II
and their affiliates to engage in business activities that might be, directly
or indirectly, in competition with the Company.
If one of the Major Shareholders transfers shares of Common Stock in
violation of the Shareholders' Agreement, the holders of the Preferred Stock
have the right to request redemption of the shares of Preferred Stock held by
them from the Company pursuant to the Statement of Resolution. If, and only
if, the Company fails to redeem the shares of Preferred Stock with respect to
which redemption has been requested, the number of directors constituting the
Board of Directors of the Company will be expanded by the number equal to the
difference between (i) the whole number nearest to the quotient of (A) the
number of directors then constituting the Board of Directors (unless such
number is less than two, in which case the number of directors then
constituting the Board of Directors will be deemed to be two) divided by (B)
0.73 and (ii) the number of directors then constituting the Board of Directors,
and the holders of shares of Preferred Stock have the right, voting separately
as a class, to elect the directors to fill such newly created directorships.
These voting rights continue only until such time as the shares of Preferred
Stock
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presented for redemption and required to be redeemed have been redeemed or all
necessary funds have been set aside for payment.
The foregoing are summaries of certain provisions of the Combination
Agreement, the Company's Bylaws, the Lock-up Agreement, the Registration
Rights Agreement and the Shareholders' Agreement, copies of which have been
filed as Exhibits 2, 3, 4, 5 and 9, respectively, hereto and are incorporated
by reference herein; and such summaries are qualified by, and subject to, the
more complete information contained in such agreements.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Limited Partnership Agreement of DAPHAM Partnership,
L.P., dated May 16, 1997.
Exhibit 2 Combination Agreement dated as of June 6, 1997 among
the Company, Production, Encinitas, La Rosa, Carrizo
Partners, Paul B. Loyd, Jr., Steven A. Webster, S. P.
Johnson IV, Douglas A.P. Hamilton and Frank A.
Wojtek (Incorporated by reference to Exhibit 2.1 to
the Company's Registration Statement on Form S-1
(Registration No. 333-29187)).
Exhibit 3 Amended and Restated Bylaws of the Company
(Incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-1
(Registration No. 333-29187)).
Exhibit 4 Lock-up Agreement dated July 31, 1997 of DAPHAM
Partnership, L.P.
Exhibit 5 Registration Rights Agreement by and among the
Company, Paul B. Loyd, Jr., Steven A. Webster, S. P.
Johnson IV, Douglas A.P. Hamilton and Frank A. Wojtek
dated as of June 6, 1997 (Incorporated by reference
to Exhibit 10.7 to the Company's Registration
Statement on Form S-1 (Registration No. 333-29187)).
Exhibit 6 Statement of Resolution Establishing Series of Shares
designated 9% Series A Preferred Stock (incorporated
herein by reference to Exhibit 4.1 to the Company's
Form 8-K filed January 9, 1998).
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Exhibit 7 Warrant Certificates (incorporated herein by
reference to Exhibit 4.2 to the Company's Form 8-K
filed January 9, 1998).
Exhibit 8 Stock Purchase Agreement dated January 8, 1998 among
the Company, Enron Capital & Trade Resources Corp.
and Joint Energy Development Investments II Limited
Partnership (incorporated herein by reference to
Exhibit 99.1 to the Company's Form 8-K filed January
9, 1998).
Exhibit 9 Shareholders' Agreement dated January 8, 1998 among
the Company, S.P. Johnson IV, Frank A. Wojtek,
Steven A. Webster, Paul B. Loyd, Jr., Douglas A.P.
Hamilton, DAPHAM Partnership, L.P., The Douglas A.P.
Hamilton 1997 GRAT, Enron Capital & Trade Resources
Corp. and Joint Energy Development Investments II
Limited Partnership (incorporated herein by reference
to Exhibit 99.2 to the Company's Form 8-K filed
January 9, 1998).
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After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: January 16, 1998.
DAPHAM PARTNERSHIP, L.P.
/s/ KENNETH C. HUFF
--------------------------------------
By: Kenneth C. Huff,
its General Partner
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EXHIBIT INDEX
Exhibit 1 Limited Partnership Agreement of DAPHAM Partnership,
L.P., dated May 16, 1997.
Exhibit 4 Lock-up Agreement dated July 31, 1997 of DAPHAM
Partnership, L.P.
<PAGE> 1
LIMITED PARTNERSHIP AGREEMENT
of
THE DAPHAM PARTNERSHIP, L.P.
(A Delaware Limited Partnership)
Dated as of
May 16, 1997
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01. Formation of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03. Principal Place of Business; Registered Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04. Business of the Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - CAPITAL CONTRIBUTIONS AND ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.01. Contributions by General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.02. Contributions by Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.03. Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.04. No Liability; Form of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.05. No Interest on Capital Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III - INCOME AND LOSSES; ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.01. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.02. Valuation of Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.03. Allocation for Capital Account Purposes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.04. Other Allocation Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.05. Allocations for Income Tax Purposes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.06. Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV - DISTRIBUTIONS AND WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.01. Periodic Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.02. Distributions of Property Other Than Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.03. Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V - THE GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.01. Authority, Rights and Powers of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.02. Partnership Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.03. Limitations on Powers of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.04. Time Required of and Duties of General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.05. Permitted Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.06. Co-Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.07. Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.08. Indemnification and Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI - THE LIMITED PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.01. Rights and Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.02. Approval or Consent of Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.03. Limitations on Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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6.04. Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.05. Liability of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.06. Incapacity, Bankruptcy, or Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.07. Other Activities; Permitted Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.08. Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII - TRANSFERS OF INTERESTS BY PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.01. Transfer of General Partners' Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.02. Transfer and Assignment of Limited Partners' Interests; Substituted Limited Partners . . . . . . . 22
7.03. Removal, Withdrawal, Incapacity, Bankruptcy and Death of General Partners . . . . . . . . . . . . . 25
7.04. Additional Consents to Transfers of Limited Partner's Interest. . . . . . . . . . . . . . . . . . . 27
7.05. Transferees Bound by Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII - COSTS AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.01. Payment and Reimbursement of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IX - DISSOLUTION, LIQUIDATION AND TERMINATION
OF PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.01. Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.02. Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.03. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE X - ADMISSION OF ADDITIONAL LIMITED PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.01. Additional Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.02. Authority of the General Partner upon Admission of Additional Limited Partners . . . . . . . . . . 29
ARTICLE XI - ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.01. Accounts of the Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.02. Annual Reports to Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.03. Tax Returns and Tax Elections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XII - AMENDMENT OF PARTNERSHIP AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.01. Approval of Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.01. Meetings of the Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.03. Partial Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.04. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.05. Copy on File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.06. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.07. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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13.08. Waiver of Right to Proceed Adversely. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.09. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.10. Pronouns and Plurals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.11. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.12. Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.13. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
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<PAGE> 5
LIMITED PARTNERSHIP AGREEMENT
OF
THE DAPHAM PARTNERSHIP, L.P.
AGREEMENT made as of the 16th day of May, 1997, among KENNETH
C. HUFF, of Milwaukee, Wisconsin, as General Partner (herein called the
"General Partner" and, collectively with any additional General Partners
admitted to the Partnership pursuant to this Agreement, the "General
Partners"), and DOUGLAS A.P. HAMILTON as Limited Partner (herein called along
with any additional Limited Partners admitted to the Partnership pursuant to
this Agreement, collectively the "Limited Partners").
WHEREAS, the undersigned desire to form a limited partnership
pursuant to the partnership law of the State of Delaware,
WHEREAS, certain capitalized terms used herein are defined in
Section 1.06 hereof,
NOW THEREFORE, in consideration of the promises and mutual
covenants herein contained, the undersigned hereby agree as follows:
ARTICLE I
GENERAL PROVISIONS
1.01. Formation of the Partnership.
(a) The parties hereto hereby form a limited partnership
under and pursuant to the Act.
(b) The General Partner, for himself and as agent for the
Limited Partners, shall as promptly as practicable after the date hereof file a
Certificate of Limited Partnership of The Dapham Partnership, L.P. with the
Secretary of State of Delaware and shall accomplish all filing, recording,
publishing and other acts necessary or appropriate for compliance with all the
requirements for the establishment of the Partnership as a limited partnership
under the Act and under all other laws of the State of Delaware or such other
jurisdictions in which the General Partner determines that the Partnership may
conduct business. The Limited Partners and the General Partner shall promptly
execute all such relevant certificates and other documents as the General
Partner shall request. The rights and
<PAGE> 6
duties of the Partners shall be as provided in the Act as modified by this
Agreement.
1.02. Name. The business of the Partnership shall be
conducted under the name of "The Dapham Partnership, L.P." and under such name
or variation thereof as the General Partner deems necessary or appropriate to
comply with the requirements of any other jurisdiction in which the Partnership
may elect to do business. The General Partner shall have the right to change
the name of the Partnership upon written notice to each of the other Partners.
1.03. Principal Place of Business; Registered Office. The
principal office of the Partnership shall be maintained at 462 Broadway, 2nd
Floor, New York, New York, 10013, or at such other location as the General
Partner may designate from time to time. The General Partner shall give prompt
notice of any such change to each Partner. In addition, the Partnership may
maintain such other offices as the General Partner may deem advisable at any
other place or places within or without the United States. The registered
office of the Partnership shall be Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, in the County of New Castle, in the State of
Delaware. The name of the registered agent at that address is The Corporation
Trust Company.
1.04. Business of the Partnership. The Partnership is
authorized to engage in any or all activities permitted to limited partnerships
under the Delaware Revised Uniform Limited Partnership Act, including, without
limitation, to (a) invest in securities of every kind, including stocks,
options, warrants, promissory notes secured by deeds of trust, bonds,
partnership interests and other securities, physical commodities and commodity
futures, and ownership interests and indebtedness of every kind, (b) engage in
other investment activities, including, without limitation, investing in mutual
funds, real estate and other investments that offer the opportunity for an
appropriate return, and (c) may make direct investments or form partnerships,
corporations or other entities for the purpose of making investments.
The Partnership shall have authority to engage in any and all
activities incident to the foregoing and to do all things necessary or
convenient for the accomplishment thereof.
1.05. Term. The term of the Partnership commenced on the
date hereof, and shall continue until it is dissolved in accordance with the
provisions of Section 9.01 hereof.
1.06. Certain Definitions. For the purposes of this
Agreement, the following terms shall have the meanings set forth below:
2
<PAGE> 7
"Accountants" means the independent public accountants as
shall be engaged from time to time by the General Partner for the Partnership.
"Accounting Period" means, as the context may require, the
period beginning on the date hereof or on the day following the last day of the
immediately preceding Accounting Period, and ending on the next succeeding of
the following:
1. The last day of each Fiscal Year of the Partnership;
2. The day prior to the day as of which a Person is admitted as
a Partner;
3. The day prior to the day as of which any Partner makes a
Capital Contribution;
4. The effective date of any withdrawal pursuant to Section 4.03;
5. Any day specified as the last day of an Accounting Period by
the General Partner; or
6. The day of the dissolution of the Partnership pursuant to
Section 9.01.
"Act" means the Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time.
"Affiliate" with respect to the Partnership or a Partner means
any Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with the Partnership
or such Partner.
"Agreement" means this Limited Partnership Agreement,
including all schedules and exhibits hereto, as amended, modified or
supplemented from time to time.
"Bankruptcy" or "Bankrupt" with respect to any Person means
(i) the filing of an application by the Person for, or a consent to, the
appointment of a trustee for the Person's assets, (ii) the filing by a Person
of a voluntary petition in bankruptcy or the filing of a pleading in any court
of record admitting in writing the Person's inability to pay the Person's debts
as they come due, (iii) the making by the Person of a general assignment for
the benefit of creditors, (iv) the filing by the Person of an answer admitting
the material allegations of, or consenting to, or defaulting in answering a
bankruptcy petition filed against the Person in any bankruptcy proceeding, or
(v) the entry of an order, judgment or decree by any court of competent
jurisdiction adjudicating the Person a bankrupt or appointing a trustee of the
3
<PAGE> 8
Person's assets, and such order, judgment or decree continues unstayed and in
effect for a period of 60 days.
"Capital Account" means, with respect to each Partner, the
account established and maintained for each Partner on the books of the
Partnership in compliance with Treasury Regulation Section 1.704-1(b)(2)(iv),
as amended, and Treasury Regulation Section 1.704-2. Subject to the preceding
sentence, each Partner's Capital Account will equal (a) the Partner's Capital
Contribution plus (b) the amount of Net Income and items thereof credited,
minus the amount of Net Loss and items thereof charged, to that Partner's
Capital Account pursuant to Article III; minus (c) the amount of distributions
in cash and the value of any property (net of liabilities secured by the
property that the Partner is considered to assume or take subject to)
distributed to that Partner.
"Capital Contribution" means, with respect to any Partner, the
amount of cash and the fair market value (net of any liabilities secured by the
property that the Partnership is considered to assume or take subject to) of
any assets actually contributed to the capital of the Partnership by such
Partner pursuant to Article II hereof.
"Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time (or any succeeding law).
"Fiscal Year" has the meaning specified in Section 3.01.
"General Partner" means the Person executing this Agreement as
a General Partner and each Person admitted as a General Partner pursuant to
Article VII. Unless the context specifically requires otherwise, references in
this Agreement to "the General Partner" shall be deemed to refer to the initial
General Partner and to each person subsequently admitted as a General Partner
and acting as such from time to time and, if at any time there is more than one
Person acting as General Partner, to all of such Persons together.
"GP Required Capital Amount" means, at any given time, 0.01%
of the aggregate Capital Account balances of all Partners at such time.
4
<PAGE> 9
"Incapacity" or "Incapacitated" with respect to any Person
means the adjudicated incompetence or insanity, death, disability, dissolution
or termination of such Person.
"Interest", when used in reference to an interest in the
Partnership, means the entire ownership interest of a Partner in the
Partnership at any particular time.
"Legal Representative" with respect to any Partner means, as
the context requires, the estate, heirs, legatees, executors, surviving joint
tenants, administrators, committees, guardians, conservators, receivers or
trustees, in bankruptcy or otherwise, of such Partner.
"Limited Partner" means each Person executing this Agreement
as a Limited Partner, each Person admitted as a substituted Limited Partner
pursuant to Section 7.02, each person admitted as a Limited Partner pursuant to
Article X, any General Partner whose Interest is converted to a Limited
Partner's Interest and, with respect to those provisions of this Agreement
concerning a Limited Partner's rights to receive distributions or a share of
Net Income or Net Loss, any assignee of a Limited Partner's Interest.
"Majority-in-Interest of the General Partners" at any time
means General Partners whose aggregate Capital Account balances, at such time,
exceed 50% of the aggregate Capital Account balances of all General Partners.
"Majority-in-Interest of the Limited Partners" at any time
means Limited Partners whose aggregate Capital Account balances, at such time,
exceed 50% of the aggregate Capital Account balances of all Limited Partners.
"Majority-in-Interest of the Partners" at any time means those
Partners whose aggregate Capital Account balances, at such time, exceed 50% of
the aggregate Capital Account balances of all Partners.
"Net Income" and "Net Loss" means, respectively, the income or
loss of the Partnership as determined in accordance with the method of
accounting followed by the Partnership for federal income tax purposes,
including, for all purposes, any income exempt from tax and any expenditures of
the Partnership which are described in Code Section 705(a)(2)(B); provided,
however, that if any property is carried on the books of the Partnership at a
value that differs from that property's adjusted basis for tax purposes, gain,
loss, depreciation and amortization with respect to such property shall be
computed with reference to the book basis of such property, consistently with
the requirements of Treas. Reg. Section 1.704-1(b)(2)(iv)(g); and provided,
5
<PAGE> 10
further, that any item allocated under Section 3.04 shall be excluded from the
computation of Net Income and Net Loss.
"Partners" means all General Partners, and all Limited
Partners, collectively, where no distinction is required by the context in
which the term is used.
"Partnership" means The Dapham Partnership, L.P., a Delaware
limited partnership.
"Percentage Interest" means that percentage interest set forth
opposite each Partner's name on Schedule A, as adjusted pursuant to Section
3.02(c) hereof.
"Person" means any individual, partnership, corporation,
trust, association, institution or other entity or organization.
"Treasury Regulations" or "Treas. Reg." shall mean the
regulations promulgated by the Department of the Treasury pursuant to the Code.
ARTICLE II
CAPITAL CONTRIBUTIONS AND ACCOUNTS
2.01. Contributions by General Partner.
(a) The General Partner has contributed to the capital of the
Partnership as of the date of this Agreement the amounts set forth opposite the
General Partner's name on Schedule A.
(b) The General Partner shall from time to time make such
additional Capital Contributions as are necessary to maintain its Capital
Account balance at least equal to the GP Required Capital Amount. Whenever
there is more than one General Partner, such additional Capital Contributions
shall be allocated among the General Partners as they shall agree or, if they
can not agree to an allocation, then such additional Capital Contributions
shall be allocated among the General Partners according to the balance of each
General Partner's Capital Account as compared to the aggregate balances of the
Capital Accounts of all General Partners. The General Partner need not make
the Capital Contributions provided for in this Section 2.01(b) if Treasury
Regulations are issued under which the failure to make such Capital
Contributions cannot affect the classification of the Partnership as a
partnership for Federal income tax purposes.
(c) The General Partner may make Capital Contributions in any
form permitted by applicable law. The value of any non-cash Capital
Contribution made by the General Partner shall be
6
<PAGE> 11
determined in accordance with Section 3.02 as of the date of the contribution.
2.02. Contributions by Limited Partners.
(a) Each Limited Partner has contributed to the capital of
the Partnership as of the date of this Agreement the amount set forth opposite
such Partner's name on Schedule A.
(b) Except as otherwise permitted by the General Partner, no
Limited Partner shall have the right or obligation to make additional Capital
Contributions. With the consent of the General Partner, each Limited Partner
may, but shall not be required to, make additional Capital Contributions.
(c) Limited Partners may make Capital Contributions in any
form permitted by applicable law, provided that the General Partner consents to
the form of the Capital Contribution. The value of any non-cash Capital
Contribution made by a Limited Partner shall be determined in accordance with
Section 3.02 as of the date of the contribution.
(d) Nothing contained in this Agreement shall prohibit the
General Partner from contributing to the Partnership as a Limited Partner.
2.03. Withdrawal. No Partner shall withdraw any part of its
Capital Contribution or Capital Account or receive any distribution from the
Partnership, except as specifically provided in this Agreement.
2.04. No Liability; Form of Return. Notwithstanding anything
to the contrary contained herein, neither the General Partner nor any Affiliate
of the General Partner shall be personally liable for the distribution, return
or payment of all or any portion of the Capital Contributions or any additions
to the Capital Account of any Limited Partner (or successor, assignee or
transferee), upon dissolution or otherwise, it being expressly agreed that any
such distribution, return or payment as may be made at any time, or from time
to time, shall be made solely from the assets of the Partnership without any
right of contribution from the General Partner or any Affiliate of the General
Partner. Except as otherwise provided herein, no General Partner, nor any
Affiliate of a General Partner, shall be liable to the other Partners to
contribute cash or other assets to the Partnership or make payments to any
Limited Partner to make up deficits in its or their Capital Accounts.
2.05. No Interest on Capital Accounts. Except as otherwise
expressly provided herein, no Partner shall be entitled to receive from the
Partnership any interest on or in respect of
7
<PAGE> 12
its Capital Contributions or the outstanding balance or any amount credited to
the Partner's Capital Account.
ARTICLE III
INCOME AND LOSSES; ALLOCATION
3.01. Fiscal Year. Unless another Fiscal Year is required by
applicable law, the fiscal year of the Partnership for Partnership accounting
and tax purposes (the "Fiscal Year") shall be the calendar year; provided,
however, that (i) the first Fiscal Year shall commence upon the commencement of
the Partnership and end on the December 31 thereafter, and (ii) upon
termination of the Partnership, "Fiscal Year" shall mean the period from the
January 1 immediately preceding such termination to the date of such
termination.
3.02. Valuation of Property. (a) The assets of the
Partnership shall be revalued on the books of the Partnership to equal their
fair market values in accordance with Treas. Reg. Section 1.704-1(b)(iv)(f) at
the following times: (A) the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis contribution to the capital of the Partnership pursuant to Section
2.02(b) or 10.01; (B) the withdrawal by a Partner of more than a de minimis
portion of its Capital Account pursuant to Section 4.03; (C) the termination of
the Partnership for federal income tax purposes, including a dissolution of the
Partnership or a termination pursuant to Code Section 708(b)(1)(B); and (D) any
other event upon which the General Partner believes such revaluation is
appropriate. Upon revaluation of the Partnership's assets pursuant to this
Section 3.02(a), (i) the fair market value of such assets shall be determined
pursuant to Section 3.02(b) and each Partner's Capital Account shall be
adjusted as if such assets were sold for their fair market values and the Net
Income and Net Losses recognized on such sale were allocated to the Partners in
accordance with Section 3.03 and (ii) the Percentage Interests of the Partners
shall be adjusted pursuant to Section 3.02(c).
(b) Unless the General Partner shall in the General Partner's
good faith judgment determine otherwise, all securities or other instruments
with a publicly quoted price shall be valued at their last sales price, on the
date as of which their value is being determined, or, if appropriate, at their
closing bid price if held long or ask price if held short as provided by market
makers making a market in the respective securities or instruments selected by
the General Partner, or, if no market maker makes a market, as determined by
the General Partner in the General Partner's good faith judgment. If on the
date as of which any valuation is being made, no exchange or market is open
8
<PAGE> 13
for business, the valuation of such security or instruments shall be determined
as of the last preceding date on which such exchange or market was open for
business. All other assets and liabilities of the Partnership shall be valued
by the General Partner in the General Partner's good faith judgment utilizing
such projections and assumptions as the General Partner may deem appropriate
and reasonable or on such other basis as the General Partner may deem
appropriate and reasonable.
All values assigned by the General Partner pursuant to this Section 3.02 shall
be conclusive and binding upon all Partners.
(c) Upon the revaluation of the assets of the Partnership
pursuant to Section 3.02(a), each Partner's Percentage Interest shall be
adjusted to equal the percentage determined by dividing the balance in each
Partner's Capital Account immediately after such revaluation by the aggregate
balance of all Partners' Capital Accounts immediately after such revaluation.
3.03. Allocation for Capital Account Purposes.
The Partnership's Net Income and Net Loss for any Fiscal Year
and each item entering into the computation thereof shall be allocated to the
Partners in proportion to their Percentage Interest.
3.04. Other Allocation Provisions.
(a) If there is a net decrease in "partnership minimum gain"
(within the meaning of Treas. Reg. Section 1.704-2(d)) for a fiscal year, then
there shall be allocated to each Partner items of income and gain for that year
equal to that Partner's share of the net decrease in partnership minimum gain
(within the meaning of Treas. Reg. Section 1.704-2(g)(2)), subject to the
exceptions set forth in Treas. Reg. Section 1.704-2(f)(2), (3), and (5),
provided, that if a Partnership have any discretion as to an exception set
forth pursuant to Treas. Reg. Section 1.704- 2(f)(5), the General Partner may
exercise such discretion on behalf of the Partnership. The General Partner
shall, if the application of the minimum gain chargeback requirement would
cause a distortion in the economic arrangement among the Partners, ask the
Commissioner to waive the minimum gain chargeback requirement pursuant to
Treas. Reg. Section 1.704-2(f)(4). The foregoing is intended to be a "minimum
gain chargeback" provision as described in Treas. Reg. Section 1.704-2(f) and
shall be interpreted and applied in all respects in accordance with that
Regulation.
If during a fiscal year there is a net decrease in
partner nonrecourse debt minimum gain (as determined in accordance with Treas.
Reg. Section 1.704-2(i)(3)), then, in addition to the amounts, if any,
allocated pursuant to the preceding
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paragraph, any Partner with a share of that partner nonrecourse debt minimum
gain (determined in accordance with Treas. Reg. Section 1.704-2(i)(5)) as of
the beginning of the fiscal year shall be allocated items of income and gain
for the year (and, if necessary, for succeeding years) equal to that Partner's
share of the net decrease in the partner nonrecourse minimum gain, subject to
the exceptions set forth in Treas. Reg. Section 1.704-2(i)(4), provided, that
if a Partnership have any discretion as to an exception, the General Partner
may exercise such discretion on behalf of the Partnership. The General Partner
shall, if the application of the partner nonrecourse debt minimum gain
chargeback requirement would cause a distortion in the economic arrangement
among the Partners, ask the Commissioner to waive the minimum gain chargeback
requirement pursuant to Treas. Reg. Sections 1.704-2(f)(4) and 1.704-2(i)(4).
The foregoing is intended to be the "chargeback of partner nonrecourse debt
minimum gain" required by Treas. Reg. Section 1.704-2(i)(4) and shall be
interpreted and applied in all respects in accordance with that Regulation.
(b) If during any fiscal year of the Partnership a Partner
unexpectedly receives an adjustment, allocation or distribution described in
Treas. Reg. Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), which causes or
increases a deficit balance in the Partner's Adjusted Capital Account, there
shall be allocated to the Partner items of income and gain (consisting of a pro
rata portion of each item of Partnership income, including gross income, and
gain for such year) in an amount and manner sufficient to eliminate such
deficit as quickly as possible. The foregoing is intended to be a "qualified
income offset" provision as described in Treas. Reg. Section
1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in all respects in
accordance with that Regulation.
A Partner's "Adjusted Capital Account", at any time, shall
equal the Partner's Capital Account at such time (x) increased by the sum of
(A) the amount of the Partner's share of partnership minimum gain (as defined
in Treas. Reg. Section 1.704-2(g)(1) and (3)), (B) the amount of the Partner's
share of partner nonrecourse debt minimum gain (as defined in Treas. Reg.
Section 1.704-2(i)(5)), and (C) any amount of the deficit balance in its
Capital Account the Partner is obligated to restore on liquidation of the
Partnership and (y) decreased by reasonably expected adjustments, allocations
and distributions described in Treas. Reg. Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6).
(c) Notwithstanding anything to the contrary in this Article
III, Partnership losses, deductions, or Code Section 705(a)(2) (b) expenditures
that are attributable to a particular partner nonrecourse liability shall be
allocated to the Partner that bears the economic risk of loss for the liability
in accordance with the rules of Treas. Reg. Section 1.704-2(i).
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(d) Notwithstanding any provision of Section 3.03 no
allocation of Net Losses shall be made to a Partner if it would cause the
Partner to have a negative balance in its Adjusted Capital Account.
Allocations of Net Losses that would be made to a Partner but for this Section
3.04(d) shall instead be made to other Partners pursuant to Section 3.03 to the
extent not inconsistent with this Section 3.04(d). To the extent allocations
of Net Losses cannot be made to any Partner because of this Section 3.04(d),
such allocations shall be made to the Partners in accordance with Section 3.03
notwithstanding this Section 3.04(d).
(e) To the extent that any item of income, gain, loss or
deduction has been specially allocated pursuant to paragraphs (b) or (d) of
this Section 3.04 and such allocation is inconsistent with the way in which the
same amount otherwise would have been allocated under Section 3.03, subsequent
allocations under Section 3.03 shall be made, to the extent possible and
without duplication, in a manner consistent with paragraphs (a), (b), (c) and
(d), which negate as rapidly as possible the effect of all such inconsistent
allocations under said paragraphs (b) and (d).
(f) Solely for the purpose of adjusting the Capital
Accounts of the Partners, and not for tax purposes, if any property is
distributed in kind to any Partner, the difference between its fair market
value and its book value at the time of distribution shall be treated as gain
or loss recognized by the Partnership and allocated pursuant to the provisions
of Section 3.03.
(g) Notwithstanding anything to the contrary that may be
expressed or implied in this Article III, the interest of the General Partner
(or any successor General Partner) in each item of income, gain, loss,
deduction and credit will be equal to at least 0.01% of each such item,
provided, however, that such interest need not meet this minimum requirement if
Treasury Regulations are issued under which the failure to make such Capital
Contributions cannot affect the classification of the Partnership as a
partnership for Federal income tax purposes.
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(h) Any allocations made pursuant to this Article III shall be
made in the following order:
(i) Section 3.04(a);
(ii) Section 3.04(b);
(iii) Section 3.04(c);
(iv) Section 3.04(e); and
(v) Section 3.03, as modified by Section
3.04(d)).
These provisions shall be applied as if all distributions and allocations were
made at the end of the fiscal year. Where any provision depends on the Capital
Account of any Partner, that Capital Account shall be determined after the
operation of all preceding provisions for the year. These allocations shall be
made consistently with the requirements of Treas. Reg. Section 1.704-2(j).
3.05. Allocations for Income Tax Purposes.
(a) The income, gains, losses, deductions and credits of the
Partnership for federal, state and local income tax purposes shall be allocated
in the same manner as the corresponding items entering into the computation of
Net Income and Net Losses were allocated pursuant to Sections 3.03 and 3.04;
provided that solely for federal, state and local income and franchise tax
purposes and not for book or Capital Account purposes, income, gain, loss and
deduction with respect to property properly carried on the Partnership's books
at a value other than its tax basis shall be allocated in accordance with the
requirements of Code section 704(c) and section 1.704-3 of the Regulations
thereunder.
3.06. Withholding.
The Partnership shall comply with withholding requirements
under Federal, state and local law and shall remit amounts withheld to and file
required forms with the applicable jurisdictions. To the extent the Partnership
is required to withhold and pay over any amounts to any authority with respect
to distributions or allocations to any Partner, the amount withheld shall be
treated as a distribution in the amount of the withholding to that Partner. In
the event of any claimed overwithholding, Partners shall have no rights against
the Partnership or any other Partner. If the amount withheld was not withheld
from actual distributions, the Partnership may, at its option, (i) require the
Partner to reimburse the Partnership for such withholding or (ii) reduce any
subsequent distributions by the amount of such withholding. Each Partner agrees
to furnish the Partnership with any representations in such form as shall
reasonably be requested by the Partnership to assist it in
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determining the extent of, and in fulfilling, its withholding obligations.
ARTICLE IV
DISTRIBUTIONS AND WITHDRAWALS
4.01. Periodic Distributions. The General Partner may, but
is not required to, make distributions to the Partners of cash or property of
the Partnership in any amount and combination thereof and at any time and from
time to time, provided that whenever there is more than one General Partner,
the General Partners' approval of any such distribution must be unanimous. Any
such distribution shall be made to the Partners in proportion to their
Partnership Interests as of the day in which such distribution is made.
4.02. Distributions of Property Other Than Cash. The amount
of any distribution of property other than cash shall be accounted for at the
fair market value of the property distributed, determined pursuant to Section
3.02 (b).
4.03. Withdrawals.
(a) Effective as of the last day of any month, after all
allocations pursuant to Article III and distributions pursuant to Section 4.01
for the Accounting Period which ended on such day have been taken into account,
with the consent of the General Partner, any Partner may withdraw all or a
portion of such Partner's Capital Account by delivering written notice to the
Partnership specifying the amount to be withdrawn. If the General Partner
consents, the General Partner shall distribute to the withdrawing Partner the
amount specified in the withdrawal notice, within 30 days after the date of
such Partner's withdrawal notice, without interest thereon.
(b) The General Partner may withhold from any distribution to
a withdrawing Partner a reserve to pay for contingent liabilities arising from
events occurring during the period of time in which the withdrawing Partner was
a Partner in the Partnership, which reserve, or any remaining balance thereof,
shall be paid to the Partner upon the determination of the General Partner that
the reserve (or the remaining balance) is no longer required.
(c) Any distribution under this Section 4.03 may be made in
property other than cash in accordance with Section 4.02.
(d) Notwithstanding anything contained herein to the contrary,
no General Partner may receive a withdrawal pursuant to
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this Section 4.03 if such withdrawal would cause such General Partner's Capital
Account to be in the aggregate with the Interests of any other General Partners
less than the GP Required Capital Amount.
(e) The withdrawal of a Limited Partner shall not dissolve the
Partnership. The parties to this agreement intend that in order to achieve the
business purposes of the Partnership, their relationship hereunder shall be a
long-term one, and that accordingly the General Partner will grant requests
for withdrawals hereunder only rarely.
ARTICLE V
THE GENERAL PARTNER
5.01. Authority, Rights and Powers of the General Partner.
Except as otherwise specifically provided herein, the General Partner shall
have exclusive and complete authority and discretion to manage the operations
and affairs of the Partnership and to make all decisions regarding the business
of the Partnership.
Except as otherwise specifically provided herein, whenever the
approval or consent of the General Partner is necessary by the terms of this
Agreement or otherwise and there is more than one General Partner, such
approval or consent may be given by a Majority-in-Interest of the General
Partners as defined in Section 1.06 of this Agreement.
Except as otherwise specifically provided herein, any action
taken by the General Partner or, whenever there is more than one General
Partner, by a Majority-in-Interest of the General Partners shall constitute the
act of and serve to bind the Partnership, the Partners and their respective
successors, assigns, and Legal Representatives. Persons dealing with the
Partnership are entitled to rely conclusively on the power and authority of the
General Partner or General Partners as set forth in this Agreement.
Except as otherwise specifically provided herein, the General
Partner shall have all rights and powers of a general partner under the Act,
and shall have, subject to Section 5.03 all authority, rights and powers in the
management of the Partnership business to do any and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes and
powers of the Partnership, including, by way of illustration but not by way of
limitation, the following:
(a) to expend Partnership funds in the furtherance of the
business and purpose of the Partnership;
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(b) to administer investments made by the Partnership and
the realization of those investments;
(c) to purchase or sell any securities or investments
whatsoever in the name or for the account of the Partnership or enter into any
contract or endorsement in the name or for the account of the Partnership with
respect to any securities or investments whatsoever or in any other manner bind
the Partnership to purchase or sell any securities or investments whatsoever,
including without limitation securities of or investments in a Limited Partner
or any Affiliate of a Limited Partner or in a business sponsored or advised by
a Limited Partner or any Affiliate of a Limited Partner, or securities of or
investments in businesses which compete with the business of a Limited Partner,
on such terms as the General Partner shall deem advisable and proper and to
otherwise deal in any manner with the assets of the Partnership;
(d) to lend funds and other property of the Partnership
either with or without security upon such terms and conditions as the General
Partner may deem advisable and proper;
(e) to employ, retain, or otherwise secure or enter into
contracts, agreements and other undertakings with Persons, whether or not they
are associates or Affiliates of the Partnership or any General Partner, in
connection with the management and operation of the Partnership's business,
including, without limitation, contracts, agreements, or other undertakings
providing for indemnification by the Partnership of persons providing services
to the Partnership, all on such terms and for such consideration as the General
Partner deems advisable and proper;
(f) to waive any default under any agreement to which the
Partnership is a party;
(g) to open, maintain and close, in the name of the
Partnership, brokerage, bank and other accounts and to draw checks and other
orders for the payment of money;
(h) to resolve any questions relating to potential conflicts
of interest between the Partnership and the General Partner;
(i) to purchase for the Partnership's own account Interests
in the Partnership;
(j) to make such elections under the Code and other relevant
tax laws as to the treatment of items of Partnership income, gain, loss and
deduction, and as to all other relevant matters as the General Partner deems
advisable and proper, including without limitation, elections referred to in
Section
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754 of the Code, determinations of which items of cash outlay are to be
capitalized or treated as current expenses, and the selection of the
bookkeeping procedures to be used by the Partnership;
(k) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Partnership, including without limitation, acting as "Tax Matters Partner"
within the meaning of Section 6231(a)(7) of the Code;
(l) to deposit, withdraw, invest, pay, retain and distribute
the Partnership's funds in a manner consistent with the provisions of this
Agreement;
(m) to take all action which may be necessary or appropriate
for the continuation of the Partnership's valid existence as a limited
partnership under the laws of the State of Delaware and of each other
jurisdiction in which that existence is necessary to protect the limited
liability of the Limited Partners or to enable the Partnership to conduct the
business in which it is engaged;
(n) to enter into, execute, amend, supplement, acknowledge
and deliver any and all contracts, agreements or other instruments as are
necessary to carry out the intentions and purposes of the Partnership;
(o) to delegate authority and responsibility for any of the
foregoing to any Person; and
(p) to act for and on behalf of the Partnership in all matters
incidental to the foregoing.
5.02. Partnership Funds. All funds of the Partnership shall
be deposited by the General Partner into such bank account or accounts, or
invested in such interest bearing or non-interest bearing investments, as shall
be designated by the General Partner. Partnership funds shall be held in the
name of the Partnership and shall not be commingled with those of any other
Person. Partnership funds shall be used by the General Partner only for the
business of the Partnership.
5.03. Limitations on Powers of the General Partner. (a)
Notwithstanding anything in this Agreement to the contrary, without the prior
written consent or ratification of the specific act by all the Limited Partners
by written instrument executed and delivered by all the Limited Partners
subsequent to the date
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of this Agreement, the General Partner shall not cause or permit the
Partnership to:
(i) do any act which would make it impossible to carry on
the ordinary business of the Partnership;
(ii) possess or assign Partnership property for other than a
Partnership purpose;
(iii) make any loans to a General Partner; or
(iv) perform any act that would subject any Limited Partner to
liability as a General Partner in any jurisdiction.
(b) The General Partner shall use best efforts to avoid the
receipt of UBTI by the Partnership.
5.04. Time Required of and Duties of General Partner. The
General Partner shall not be required to devote full time to the management of
the Partnership, but shall devote such time and effort to the Partnership's
business as may be necessary to carry out the purpose of the Partnership and to
manage and control the affairs of the Partnership to the best of the General
Partner's ability for the benefit of all Partners. Nothing in this Agreement
shall preclude the employment of any agent or third party to provide any
services with respect to the Partnership's business.
5.05. Permitted Transactions.
(a) The General Partner, consistent, however, with Section
5.04, and Affiliates of the General Partner, and their agents, officers,
directors or employees may (i) act as a director, officer or employee of any
corporation (including any corporation in which the Partnership is invested), a
trustee of any trust, an executor or administrator of any estate, a partner in
any partnership or an owner or administrative official of any other business
entity, and may receive compensation for services rendered and participate in
profits in connection with any of the foregoing; and (ii) may engage in or
possess any interests in investments or business ventures (including, without
limitation, investments in or business ventures with a Limited Partner or
investments in businesses which compete with the business of a Limited Partner)
and may engage in other activities of every kind and description independently
or with others in addition to those relating to the Partnership, including
without limitation the rendering of advice or services of any kind to other
investors or management of other investments, including investments which are
the same or different from those traded in or held by the Partnership and
investments in businesses which compete with the business of the Partnership or
with businesses in which the
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Partnership has invested. No other Partner shall have any right by virtue of
this Agreement or the partnership relationship created hereby to participate in
any manner in any profits or income earned or derived by any of these Persons
from or in connection with the conduct of any such other business venture or
activity. Each Limited Partner authorizes, consents to and approves of such
present and future activities by these Persons. Without in any way limiting
the foregoing, the General Partner, and any Affiliates of the General Partner
and their agents, officers, directors and employees shall not have any
obligation or responsibility to disclose or refer any of these investments or
other activities to the Partnership or any Partner.
(b) Subject to Section 5.03, the General Partner, the General
Partner's Affiliates and their agents, officers, directors or employees may
transact any business with the Partnership permitted by law or be employed or
retained by the Partnership in any capacity and shall have the same rights and
obligations with respect thereto as a Person who is not a Partner. Except as
provided in Section 5.03, the validity of any transaction, agreement or payment
involving the Partnership and a General Partner or any Affiliate thereof
otherwise permitted by this Agreement shall not be affected by reason of the
relationship between the General Partner and such Affiliate or the approval of
said transaction, agreement or payment by the General Partner.
5.06. Co-Investments.
(a) If an investment available to the Partnership is in an
amount greater than the General Partner proposes to make for the Partnership,
the General Partner in the General Partner's sole discretion, may offer a
co-investment opportunity outside the Partnership to any Person upon such terms
and conditions as the General Partner shall determine; provided, however, that
the General Partner shall reasonably determine that the offer of any
co-investment opportunity outside the Partnership is beneficial to the
Partnership. The General Partner, in the General Partner's sole discretion, may
offer a co-investment opportunity to (i) any Partner and, without notice to any
other Partner, may exclude any or all other Partners from such offer; or (ii)
any third party, including any Affiliate of any Partner, any limited partnership
of which a General Partner is the general or a limited partner, any Person
associated with any Partner, or any competitor of any Partner. No Limited
Partner shall have any option or right to invest in or otherwise participate or
have any interest in any co-investment opportunity.
(b) Any amounts invested by any Partner in a co-investment
pursuant to this Section 5.06 shall not be accounted for as contributions to
the Partnership and shall in no way
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affect the Capital Account or Capital Contribution of any Partner hereunder.
5.07. Liability.
(a) Notwithstanding any provision of law or this Agreement to
the contrary, the General Partner of the Partnership is liable for Partnership
debts to the same extent as if the General Partner was a partner in a
partnership without limited partners.
(b) Notwithstanding anything contained in this Agreement to
the contrary, no General Partner, nor any of such General Partner's Affiliates,
nor their agents, officers, directors, employees, advisors or consultants, shall
be liable, responsible or accountable in damages or otherwise to the Partnership
or to any Limited Partner, successor, assignee or transferee for (a) any act or
omission performed or omitted by such persons, including without limitation,
acts performed or omitted as Tax Matters Partner or on advice of legal counsel,
accountants, brokers or consultants of the Partnership, or for any costs,
damages or liabilities arising therefrom, or by law, unless that act or omission
was performed or omitted fraudulently or in bad faith or constituted gross
negligence, (b) any tax liability imposed on the Partnership or any Limited
Partner, or (c) any loss due to the negligence, dishonesty, or bad faith of any
employee, officer, broker, consultant or other agent of the Partnership
selected, engaged or retained in good faith by a General Partner.
5.08. Indemnification and Reimbursement.
(a) The Partnership shall indemnify, defend and hold each
General Partner, his, her or its Affiliates and their respective agents,
officers, directors employees, advisors and consultants (the "Indemnified
Party"), harmless from and against any loss, liability, damage, cost or expense,
including reasonable attorneys' fees, incurred by or asserted against any
Indemnified Party and arising in connection with any of their activities on
behalf of the Partnership or in furtherance of the interests of the Partnership,
including, without limitation, any action taken by a General Partner as Tax
Matters Partner or any payment made by a General Partner to any of his, her or
its Affiliates or any of their respective officers, agents or employees pursuant
to an indemnification agreement no broader than this Section 5.08, or any
demands, claims or lawsuits initiated by a Limited Partner or resulting from or
relating to the offer and sale of the Interests in the Partnership; except to
the extent that such liability arises from such Indemnified Party's fraud, bad
faith or gross negligence or such lesser standard of conduct as under applicable
law prevents indemnification hereunder. All rights of the Indemnified Party
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to indemnification shall survive the dissolution of the Partnership and the
withdrawal, Incapacity or Bankruptcy of the Indemnified Party.
(b) Each Indemnified Party shall be entitled to receive, upon
application therefor, advances to cover the legal costs and other expenses
(including the cost of any investigation and preparation) incurred by any
Indemnified Party in connection with any of his, her or its activities on
behalf of the Partnership or in furtherance of the interests of the
Partnership; provided, however, that such advances shall be repaid to the
Partnership if it shall ultimately be determined that the Indemnified Party was
not entitled to indemnification pursuant to the provisions of the preceding
paragraph (a).
ARTICLE VI
THE LIMITED PARTNERS
6.01. Rights and Powers. Except as otherwise, specifically
provided in this Agreement, each Limited Partner shall have all rights and
powers of a limited partner under the Act.
6.02. Approval or Consent of Limited Partners. Whenever the
approval or consent of all or some percentage-in-interest of Limited Partners
is necessary by the terms of this Agreement, such approval or consent may be
given by written approval or consent of all, or the required
percentage-in-interest of, Limited Partners addressed to the Partnership
pursuant to Section 13.02 or by a vote taken at a meeting called pursuant to
Section 13.01.
6.03. Limitations on Powers. The Limited Partners shall not
take part in the management or control of the Partnership or its business. No
Limited Partner shall transact any business for the Partnership, and none may
bind or obligate the Partnership. The Limited Partners shall have no interest
in the properties or assets of the General Partner, or any equity therein, or
in any proceeds of any sales thereof (which sales shall not be restricted in
any respect), by virtue of acquiring or owning an Interest in the Partnership.
6.04. Priority. No Limited Partner shall have priority over
any other Limited Partner as to Partnership allocations or distributions.
6.05. Liability of Limited Partners. Except as otherwise
required by the Act, Limited Partners shall not be
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liable for the repayment, satisfaction or discharge of any debts, liabilities
or obligations of the Partnership.
6.06. Incapacity, Bankruptcy, or Death. The Incapacity,
Bankruptcy or death of a Limited Partner shall not cause a dissolution of the
Partnership, but the rights of such Limited Partner to share in the profits and
losses of the Partnership, to receive distributions of Partnership funds, and
to assign its Partnership Interest pursuant to this Agreement shall, on the
happening of such an event, devolve on such Partner's Legal Representative,
subject to the terms and conditions of this Agreement, and the Partnership
shall continue as a limited partnership. However, in no event shall such Legal
Representative become a Substituted Limited Partner, except in accordance with
Section 7.02.
6.07. Other Activities; Permitted Transactions. Nothing
contained in this Agreement shall preclude a Limited Partner from engaging in
any other activity, including activities for profit. No other Partner shall
have any right to participate or have any interest in those activities by
virtue of acquiring or owning an Interest in the Partnership. A Limited
Partner may transact any business with the Partnership permitted by law, and
shall have the same rights and obligations with respect thereto as a Person who
is not a Partner.
6.08. Power of Attorney. Each of the Limited Partners hereby
constitutes and appoints the General Partner true and lawful representative and
attorney-in-fact in the Limited Partner's name, place and stead, with full
power of substitution, to make, execute, publish, sign, deliver, record,
acknowledge and file with respect to the Partnership:
(a) all amendments to this Agreement required or permitted by
law or the provisions of this Agreement and all instruments which the
attorney-in-fact deems appropriate to reflect any duly adopted amendment, change
or modification of the Partnership in accordance with the terms of the
Agreement, including, without limitation, the admission of any substituted or
additional Limited Partners;
(b) all such other agreements, applications, 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
jurisdiction in which the Partnership shall determine to do business, or any
political subdivision or agency thereof to effectuate, implement, continue and
defend the valid and subsisting existence of the Partnership as a limited
partnership;
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(c) all papers which may be deemed necessary or desirable by
the General Partner to effect the dissolution and liquidation of the
Partnership; and
(d) all certificates and other instruments deemed necessary or
advisable by the General Partner to carry out the provisions of this Agreement.
The foregoing Power of Attorney is hereby declared to be a power
coupled with an interest and irrevocable, and shall not be revoked by the
Incapacity or Bankruptcy of a Limited Partner and shall extend to such Limited
Partner's Legal Representatives, successors and assigns. Each Limited Partner
agrees to be bound by any representation made by the attorney-in-fact acting in
good faith pursuant to this Power of Attorney, and hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the attorney-in-fact taken in good faith under this Power of Attorney.
ARTICLE VII
TRANSFERS OF INTERESTS BY PARTNERS
7.01. Transfer of General Partners' Interests. Except as
provided in Section 7.03, no General Partner may sell, pledge, assign, convey,
transfer or in any manner dispose of, or create, or suffer the creation of, a
security interest in or any encumbrance on (collectively, "Transfer") such
General Partner's Interest in the Partnership in whole or in part without the
prior written consent of all Partners; provided, however, that no Transfer of a
General Partner's Interest may in any event be made unless such General Partner
represents, and, at the request of the other Partners, furnishes to the
Partnership an opinion of counsel satisfactory to the other Partners, in form
and substance satisfactory to the other Partners, that such Transfer is not in
violation of any Federal, state or other applicable laws including, by way of
illustration but not by way of limitation, the items set forth in (A) through
(E) in Section 7.02(a)(iv).
7.02. Transfer and Assignment of Limited Partners' Interests;
Substituted Limited Partners.
(a) Except as provided in Section 6.06, no Limited Partner may
Transfer all or any portion of that Limited Partner's Interest in the
Partnership (including any beneficial interest therein) without the prior
written consent of the General Partner, which consent may be granted or
withheld in the General Partner's sole discretion. If such consent is given,
the transferee is entitled to become a Substituted Limited Partner hereto,
provided the following conditions are met:
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(i) the assignee, pledgee, secured party or transferee ("Transferee")
executes documents reasonably satisfactory to the General Partner pursuant
to which the Transferee agrees to be bound by this Agreement and any
amendments hereto ("Instrument of Transfer");
(ii) the Transferee assumes, if so requested, the obligations, if any,
of the transferor to the Partnership;
(iii) all certificates or other instruments shall have been recorded or
filed in the proper records of each jurisdiction in which such recordation
or filing is necessary to qualify the Partnership to conduct business or to
preserve the limited liability of the Limited Partners; and
(iv) the Limited Partner represents, and, at the request of the General
Partner, furnishes to the Partnership an opinion of counsel satisfactory to
the General Partner, in form and substance satisfactory to the General
Partner, to the effect that such Transfer (A) was made in accordance with
and would not violate the Securities Act of 1933, as amended, or any other
applicable federal, state or local law; (B) would not require the
Partnership to register as an investment company under the Investment
Company Act of 1940, as amended or require the registration of the General
Partner as an Investment Adviser under the Investment Advisers Act of 1940,
as amended; (C) would not jeopardize the status of the Partnership as a
partnership for federal income tax purposes or cause a termination of the
Partnership pursuant to the then applicable provisions of the Act; (D)
would not cause a termination of the Partnership under Section 708(b)(1)(B)
of the Code; (E) would not cause the Partnership to be treated as a
"publicly traded partnership" within the meaning of Section 7704 of the
Code; or (F) any other matters as the General Partner may reasonably
request.
(b) Any Transfer by a Limited Partner shall be subject to a
right of first refusal as provided herein. The transferring Limited Partner
shall give the General Partner written notice of the proposed Transfer which
shall state the name of the proposed Transferee, the portion of the transferor's
Interest proposed to be Transferred, the proposed purchase price (if any) and
any other material terms of such proposed Transfer. The Partnership shall, for
a period of thirty days after such notice is given, have the right to purchase
such Interest at the proposed purchase price (or, in the case of a gift, if
there is no proposed purchase price, at a price equal to the fair market value
of the Interest proposed to be transferred) and on the proposed terms or to
assign such right or any portion thereof to such other Person or Persons as the
General Partner, in the General Partner's sole discretion, shall determine.
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(c) Any Transfer made pursuant to this Section 7.02 shall be
effective as of the date on which the General Partner actually accepts the
Instrument of Transfer. Any purported Transfer which is not made in compliance
with this Agreement is of no force or effect whatsoever.
(d) All expenses incurred by the Partnership, the General
Partner or any Affiliates of the General Partner in connection with any Transfer
or substitution of a Limited Partner pursuant to this Section 7.02 shall be paid
by the transferring Limited Partner, prior to the time of the Transfer or
substitution (including, without limitation, any fees and costs of the
preparation, filing and publishing of any amendment to this Agreement or to the
Certificate of Limited Partnership, if any, and any legal and other fees,
expenses and costs of any investigation and preparation, in connection with any
action, proceeding or investigation related to any Transfer or attempted
Transfer by a Limited Partner of a Limited Partner's Interest or in connection
with the admission into the Partnership of that transferring Limited Partner's
transferee). The transferring Limited Partner also will indemnify the
Partnership, the General Partner and any Affiliates of the General Partner
against any losses, claims, damages or liabilities to which any of them may
become subject in connection therewith. The reimbursement and indemnity
obligations of the transferring Limited Partner under this paragraph shall be in
addition to any liability which the transferring Limited Partner may otherwise
have, shall extend upon the same terms and conditions to the Partnership, the
General Partner and any Affiliates of the General Partner, shall inure to the
benefit of any successors, assigns and Legal Representatives of the Partnership,
the General Partner and the General Partner's Affiliates and shall survive any
termination of this Agreement.
(e) In the event that the Transfer of a Partner's Interest
occurs at any time other than the end of a Partnership Fiscal Year, the
transferor's allocable share of the various items of income, gain, loss,
deduction and credit as computed for tax and book purposes shall be allocated
between the transferor and Transferee on such proper basis as the transferor and
Transferee shall agree, provided, however, that no allocation shall be effective
unless (i) the transferor and the Transferee shall have given the Partnership
written notice, prior to the effective date of the Transfer, stating their
agreement that the allocation shall be made on such proper basis; (ii) the
General Partner shall have consented to the allocation; and (iii) the transferor
and the Transferee shall have agreed to reimburse the Partnership for any
incremental accounting fees and other expenses incurred by the Partnership in
making the allocation. If either the transferor and the Transferee have not
agreed on the allocation of such items or the agreed upon allocation is not
effective pursuant to the preceding sentence, the allocation of
24
<PAGE> 29
such items shall be prorated between the transferor and the Transferee on the
basis of the number of days in such Fiscal Year before and on or after the
effective date of the Transfer.
(f) The Transfer of a Limited Partner's Interest and the
admission of a Substituted Limited Partner shall not be cause for dissolution of
the Partnership.
7.03. Removal, Withdrawal, Incapacity, Bankruptcy and Death
of General Partners.
(a) A General Partner shall not voluntarily withdraw from the
Partnership. In the event that a General Partner's actions constitute fraud,
bad faith or gross negligence or such lesser standard of conduct as under
applicable law prevents indemnification under Section 5.08 of this Agreement,
such General Partner may be removed as a General Partner of the Partnership,
if, within 90 days after the Limited Partners receive a written report showing
such conduct, a Majority-in-Interest of the Limited Partners elect in writing
to remove such General Partner.
(b) Except when the provisions of Section 7.03(a) apply, all
of the Limited Partners acting unanimously may elect in writing to remove any
General Partner with or without cause on 30 days written notice to the General
Partner or, whenever there is more than one General Partner, to all of the
General Partners.
(c) Notwithstanding anything to the contrary contained herein,
if a General Partner is removed pursuant to Section 7.03(a) or withdraws from
the Partnership in violation of this Agreement, such General Partner shall not
in respect of such withdrawal or removal be entitled to the return of or any
payment in respect of such General Partner's Capital Contribution, and shall
not be entitled to continue to participate in any profits, losses or
distributions of the Partnership accruing after the date of such withdrawal or
have any other rights or powers of a general partner hereunder, but shall be
entitled only to payment of an amount equal to the balance of such General
Partner's Capital Account as of the end of the month in which such withdrawal
took place (based on an interim closing of the Partnership's books and a
revaluation of the Partnership's assets pursuant to Section 3.02(a) as of the
end of such month), such payment to be made only at the time and in the manner
provided with respect to the distribution of assets upon dissolution of the
Partnership in Section 9.02. The General Partner shall be liable in damages to
the Limited Partners if such General Partner withdraws from the Partnership in
violation of this Agreement.
(d) In the event of the Incapacity, Bankruptcy, removal,
withdrawal or death of a General Partner and if at the time there is at least
one other General Partner, the business of the
25
<PAGE> 30
Partnership shall be carried on by the remaining General Partner(s). In the
event of the continuation of the Partnership as provided in this paragraph (d),
a Majority-in-Interest of the Limited Partners (excluding, for this purpose,
any Limited Partners who are also General Partners) may elect one or more
persons to be a General Partner or General Partners of the Partnership, and
such additional General Partner(s) shall exercise the rights and powers
hereunder of the Incapacitated, Bankrupt, removed, withdrawn or deceased
General Partner, and shall have such interest in the profits, losses and
distributions of the Partnership as shall be agreed upon by the successor
General Partner(s) and the Limited Partners, upon execution of a written
acceptance of this Agreement.
(e) In the event of the Incapacity, Bankruptcy, removal,
withdrawal or death of all General Partners of the Partnership, the Partnership
shall continue only if all of the Limited Partners, within 90 days after the
happening of such event, elect to carry on the business of the Partnership by
electing one or more Persons to be a General Partner or General Partners of the
Partnership. In the event of the continuation of the Partnership as provided
in this paragraph (e), the successor General Partner(s) shall exercise the
rights and powers hereunder of the Incapacitated, Bankrupt, removed, withdrawn
or deceased General Partner or General Partners, and shall have such interest
in the profits, losses and distributions of the Partnership as shall be agreed
upon by the successor General Partner(s) and the Limited Partners, upon
execution of a written acceptance of this Agreement.
(f) In the event of the Incapacity, Bankruptcy or death of a
General Partner or the removal of a General Partner pursuant to Section
7.03(b), and upon the continuation of the Partnership pursuant to Section
7.03(d) or upon the election of a successor General Partner pursuant to Section
7.03(e), any Incapacitated, Bankrupt, removed or deceased General Partner or
its Legal Representative shall have the right either (i) to withdraw from the
Partnership and receive such General Partner's entire Capital Account balance
as of the end of the Fiscal Year in which such Incapacity, Bankruptcy, removal
or death occurs (and the Partnership's assets shall be revalued at the end of
such Fiscal Year pursuant to Section 3.02(c)) or (ii) to possess an interest in
the profits, losses and distributions of the Partnership as though a permitted
transferee of a Limited Partner and may be admitted to the Partnership as a
Limited Partner in the sole and absolute discretion of the successor General
Partner(s), as provided in Section 7.02.
(g) Following the Incapacity, Bankruptcy, removal, withdrawal
pursuant to Section 7.03(b) or death of a General Partner, such General Partner
or such General Partner's Legal Representative, as the case may be, shall
remain entitled to
26
<PAGE> 31
exculpation and indemnification from the Partnership pursuant to Sections 5.07
and 5.08 with respect to any matter arising prior to such General Partner's
Incapacity, Bankruptcy, withdrawal, removal or death and such General Partner
(or Legal Representative) shall have no liability to the Partnership in respect
of any matter arising after such General Partner's Incapacity, Bankruptcy,
withdrawal, removal or death.
7.04. Additional Consents to Transfers of Limited Partner's
Interest. In no event shall the consent of any Limited Partner (other than the
transferor) be required to effect a substitution under Section 7.02.
7.05. Transferees Bound by Agreement. Any successor or
transferee of a Limited Partner hereunder or any successor or transferee
General Partner shall be subject to and bound by all the provisions of this
Agreement as if originally a party to this Agreement.
ARTICLE VIII
COSTS AND EXPENSES
8.01. Payment and Reimbursement of Expenses.
The Partnership shall (i) pay, or cause to be paid, all costs,
fees, operating expenses and other expenses of the Partnership (including all
expenses related to investments by the Partnership, the costs, fees and
expenses of attorneys, accountants or other professionals and the compensation
of all personnel providing services to the Partnership incurred in the creation
and organization of the Partnership and the sale of Partnership Interests and
in pursuing and conducting, or otherwise related to, the activities of the
Partnership), and (ii) reimburse the General Partner and the General Partner's
Affiliates for any out-of-pocket costs, fees and expenses related to the
activities of the Partnership incurred by the General Partner and the General
Partner's Affiliates. Without limiting the foregoing, the amount of any costs,
fees and expenses incurred in connection with the purchase, sale or carrying of
any security or other investment, including, but not limited to, brokerage
commissions or other fees, other transaction costs and margin interest expenses
shall be paid by the Partnership.
27
<PAGE> 32
ARTICLE IX
DISSOLUTION, LIQUIDATION AND TERMINATION OF PARTNERSHIP
9.01. Dissolution. The Partnership shall dissolve upon the
first to occur of the following:
(a) December 31, 2080;
(b) the occurrence of an event described in Section 7.03(d) or
(e) unless the Partnership is continued as provided therein; and
(c) any other event causing the dissolution of the Partnership
under the laws of the State of Delaware.
Subject to Section 9.02, upon the dissolution of the
Partnership, no further business shall be done in the Partnership name except
the completion of any incomplete transactions and the taking of such action as
shall be necessary for the winding up of the affairs of the Partnership and the
distribution of its assets.
9.02. Liquidation.
(a) Upon dissolution of the Partnership for any reason, the
General Partner, or if there is no General Partner, a liquidating agent
appointed by a Majority-in-Interest of the Limited Partners (the General
Partner or such other liquidating agent shall hereafter be referred to as the
"Liquidating Agent"), shall commence to wind up the affairs of the Partnership
and to liquidate the Partnership's assets. The Partners shall continue to
share profits and losses during the period of liquidation in accordance with
Article III. The Liquidating Agent shall have full right and unlimited
discretion to determine the time, manner and terms of any sale or sales of
Partnership property pursuant to the liquidation, giving due regard to the
activity and condition of the relevant market and general financial and
economic conditions.
(b) Subject to the right of the Liquidating Agent to set up
such cash reserves as may be deemed reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership, (at the expiration of
such period of time as the Liquidating Agent may deem advisable, the balance of
such reserves remaining after the payment of such contingent or unforeseen
liabilities or obligations shall be distributed as hereinafter provided), the
proceeds of the liquidation and any other funds of the Partnership shall be
distributed as follows:
28
<PAGE> 33
(i) first, to pay all debts and liabilities of the Partnership
(other than debts and liabilities owed to Partners with respect to loans
made by Partners to the Partnership) and expenses of liquidation in the
order of priority provided by law;
(ii) next, to the General Partner for any expenses of the
Partnership paid by the General Partner;
(iii) next, to the Partners for loans, if any, made by them to the
Partnership in the relative proportions that the outstanding balance of
each Partner's loans to the Partnership bears to the aggregate outstanding
balance of all such loans, until all such loans have been repaid; and
(iv) next, to the Partners in the relative proportions that their
Capital Accounts bear to each other immediately prior to the distribution.
(c) Within a reasonable time following the completion of the
liquidation of the Partnership's properties, the Liquidating Agent shall supply
to each of the Partners a statement prepared by the Accountants which shall set
forth (i) the assets and liabilities of the Partnership as of the date of
complete liquidation and (ii) each Partner's portion of distributions pursuant
to paragraph (b) above.
9.03. Termination. The Partnership shall terminate when all
property owned by the Partnership shall have been disposed of and all
distributions made as provided in Section 9.02.
ARTICLE X
ADMISSION OF ADDITIONAL LIMITED PARTNERS
10.01. Additional Limited Partners. The General Partner, or,
at any time when there is more than one General Partner, the General Partners
by unanimous agreement, may admit one or more additional Limited Partners on
such terms and conditions as the General Partner or General Partners may deem
appropriate. Additional Limited Partners, either directly or by
attorney-in-fact, shall execute a counterpart of this Agreement, as it may be
amended, and shall agree to be bound by all the terms and provisions hereof.
10.02. Authority of the General Partner upon Admission of
Additional Limited Partners. To accomplish the purpose of Article X, the
General Partner may do all things appropriate or convenient in connection with
the admission of any additional Limited Partner. The admission of an
additional Limited Partner to the Partnership shall not dissolve the
Partnership.
29
<PAGE> 34
ARTICLE XI
ACCOUNTING
11.01. Accounts of the Partnership. Proper and complete
records and books of account shall be kept by the General Partner in which
shall be entered fully and accurately all transactions and other matters
relative to the Partnership's business as are usually entered into records and
books of account maintained by Persons engaged in businesses of a like
character. The Partnership books and records shall be kept in accordance with
such method of accounting for income tax and other reporting purposes as the
General Partner shall determine. All methods of bookkeeping, elections and the
treatment of particular transactions shall be as consistent as possible with
the methods of bookkeeping, elections and treatments employed for Federal
income tax purposes. The determination of the General Partner with respect to
the treatment of any item or its allocation for Federal, state or local tax
purposes shall be binding upon all Partners so long as that determination is
not inconsistent with any express term of this Agreement. The books and
records shall at all times be maintained at the principal office of the
Partnership and shall be open to the inspection and examination of the Partners
or their duly appointed agents or Legal Representatives. The Partnership shall
maintain at its office and make available to any Limited Partner or any duly
appointed agent or Legal Representative of any Limited Partner a list of names
and addresses of, and Interests owned by, all Partners.
11.02. Annual Reports to Partners. As soon as practicable
after the end of each Fiscal Year, the General Partner shall cause to be
prepared and delivered to each Person who was a Partner at any time during the
Fiscal Year (i) financial statements including a balance sheet, statement of
income (loss) and changes in Partners' capital and cash flows and (ii) the
amount of such Partner's share of the Partnership's taxable income or loss for
such Fiscal Year, in sufficient detail to enable the Partner to prepare
federal, state and other tax returns. Notwithstanding the foregoing provisions
of this Section 11.02, any Person who is entitled to receipt of the financial
statements described in subdivision (i) of this Section 11.02 may, in his, her
or its own discretion, waive the receipt thereof for any particular year or
years by written notice to the General Partner, or may agree in writing with
the General Partner to accept in lieu thereof, for any year or years specified
in such writing, a statement or statements prepared in a form specified in such
writing.
30
<PAGE> 35
11.03. Tax Returns and Tax Elections.
(a) The General Partner shall determine, in a manner
consistent with Section 11.01, the methods and conventions used to report the
Partnership's income, gain, deduction, loss and credits under the tax laws of
the United States, the several states and other relevant jurisdictions, and such
other methods or procedures related to the preparation of such tax returns. The
General Partner may cause the Partnership to make or refrain from making any and
all elections permitted by such tax laws (including, without limitation, an
election under Section 754 of the Code).
(b) Kenneth C. Huff shall be the Tax Matters Partner as that
term is defined in Section 6231(a)(7) of the Code provided, that if Kenneth C.
Huff is not a General Partner, the General Partner shall be the Tax Matters
Partner and shall so inform the Internal Revenue Service or, if there is more
than one General Partner, the General Partners shall select a General Partner to
be the Tax Matters Partner and shall inform the Internal Revenue Service of that
selection. In that capacity, in the event of an income tax audit of any
Partnership return, to the extent the Partnership is treated as an entity for
purposes of the audit, including administrative settlement and judicial review,
the Tax Matters Partner shall be authorized to act for and represent the
Partnership, and to enter into a settlement agreement within the meaning of
Section 6224(c)(1) of the Code (or comparable provisions under state or local
law) to which each Partner agrees to be bound. All expenses incurred in
connection with any such audit shall be expenses of the Partnership. The Tax
Matters Partner shall be authorized to carry out on behalf of the Partnership
and at the Partnership's expense all acts appropriate to such designation with
respect to federal, state and local taxing authorities.
ARTICLE XII
AMENDMENT OF PARTNERSHIP AGREEMENT
12.01. Approval of Amendments. Amendments to this Agreement
which do not adversely affect the rights of any Limited Partner in any material
respect may be made by the General Partner or, if there is more than one
General Partner, by the unanimous agreement of the General Partners, without
the consent of any Limited Partner if such amendments are (i) of an
inconsequential nature (as reasonably determined by the General Partner or, if
there is more than one General Partner by the unanimous agreement of the
General Partners), (ii) necessary to maintain the Partnership's status as a
partnership according to Section 7701(a)(2) of the Code, (iii) necessary to
preserve the validity of any and all allocations of Partnership Income and
31
<PAGE> 36
Partnership Loss pursuant to Section 704(b) of the Code, (iv) to admit,
pursuant to this Agreement, substitute Limited Partners or (v) contemplated by
this Agreement. Amendments to this Agreement other than those described in the
preceding sentence may be made by the General Partner or, if there is more than
one General Partner, by the unanimous agreement of the General Partners, only
if a Majority-in-Interest of the Limited Partners have given their consent
thereto. Notwithstanding any of the foregoing to the contrary, and except
where approval of the Limited Partners is specifically provided for elsewhere
in this Partnership Agreement, no amendment, without the approval or written
consent of each of the Partners affected thereby, shall alter or modify this
Section 12.01, cause the Partnership to become a general partnership, increase
the liability of any Limited Partner, increase the responsibilities or
obligations of any Limited Partner, increase the allocation of Partnership Loss
to any Limited Partner, decrease the allocation of Partnership Income to any
Limited Partner or reduce the Capital Account of any Limited Partner or alter
any right of withdrawal or right to distribution with respect thereto. The
General Partner or General Partners shall give written notice to all Partners
promptly after any amendment has become effective. Any such supplemental or
amendatory agreement shall be adhered to and have the same effect from and
after its effective date as if the same had originally been embodied in, and
formed a part of, this Agreement. Any amendment to this Agreement must be in
writing.
ARTICLE XIII
MISCELLANEOUS
13.01. Meetings of the Partnership.
(a) Meetings of the Partnership may be called by any General
Partner by written notice to the Partners which states the nature of the
business to be transacted.
(b) Any meeting of the Partnership called by a General Partner
shall be held during regular business hours at the principal place of business
of the Partnership not less than 30 and no more than 60 days after the mailing
of the notice, unless all Partners waive such notice by written consent. If
the business to be transacted at any meeting requires the vote of the Limited
Partners, such vote may be made by any Limited Partner in person or by proxy.
(c) Any Limited Partner, upon written request addressed to the
Partnership, at that Limited Partner's expense, shall be entitled to obtain
from the Partnership a list of the names and addresses of record of all
Partners and the status of each Partner's Capital Account.
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<PAGE> 37
13.02. Notices. All notices, written requests, consents,
approvals or other communications to the Partnership shall be addressed to its
principal place of business. All notices, written requests, consents,
approvals or other communications addressed to a Partner or its Legal
Representative shall be addressed to such Partner or Legal Representative at
the address of such Partner set forth in the records of the Partnership. Any
Partner or the Legal Representative of any Partner may designate a new address
by notice to such effect given to the Partnership. Unless otherwise
specifically provided in this Agreement, a notice shall be deemed to have been
given to the Partnership when received by the Partnership and to have been duly
given when delivered in person, by registered or certified mail or by courier.
13.03. Partial Enforceability. If any provisions of this
Agreement, or the application of such provision to any person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
13.04. No Waiver. No waiver of any breach or condition of
this Agreement shall be deemed to be a waiver of any other subsequent breach or
condition, whether of like or different nature.
13.05. Copy on File. One executed counterpart of this
Agreement or set of executed counterparts shall be held at the principal place
of business of the Partnership; the Certificate of Limited Partnership and all
amendments thereto shall be filed in the Office of the Secretary of State of
Delaware and copies thereof shall be held at the principal place of business of
the Partnership. There shall be distributed to each Partner, upon the request
of such Partner, a conformed copy of this Agreement as amended from time to
time.
13.06. Governing Law. This Agreement and the rights of the
parties hereunder shall be governed by and construed in accordance with the
laws of the State of Delaware.
13.07. Counterparts. This Agreement may be executed, either
directly or by attorney in fact, in one or more counterparts, including
counterparts executed by additional Partners admitted to the Partnership, and
each of such counterparts shall, for all purposes, be deemed to be an original,
but all of such counterparts shall constitute one and the same instrument.
13.08. Waiver of Right to Proceed Adversely. Each of the
Partners (other than any Partner who is a Trust or who is a Partner in a
fiduciary capacity) hereby agrees not to file a bill
33
<PAGE> 38
for a partnership accounting or otherwise proceed adversely in any manner
whatsoever against the other Partners or the Partnership with respect to any
matter concerning the Partnership, except for fraud, bad faith or gross
negligence or violation of this Agreement.
13.09. Entire Agreement. This Agreement, including the
exhibits and schedules hereto, constitutes the entire agreement among the
parties, supersedes all prior agreements and understandings among the Partners
with respect to the subject matter hereof, and may not be modified or amended
in any manner other than as set forth herein.
13.10. Pronouns and Plurals. Whenever the context may
require, any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
13.11. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of all of the parties hereto and, to the extent
permitted herein, their respective Legal Representatives, successors and
assigns.
13.12. Captions. The Article and Section captions contained
in this Agreement are for convenience only, and shall not be deemed a part of
this Agreement.
13.13. Rights and Remedies Cumulative. The rights and
remedies provided by this Agreement are cumulative and the use of any one right
or remedy by any Partner shall not preclude or waive his right to use any or
all other remedies, said rights and remedies are given in addition to any other
rights such Partner may have by law, statute, ordinance or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
GENERAL PARTNER: LIMITED PARTNER:
/s/ KENNETH C. HUFF /s/ DOUGLAS A.P. HAMILTON
- --------------------- ---------------------------
Kenneth C. Huff Douglas A.P. Hamilton
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<PAGE> 39
SCHEDULE A
Partners, Initial Capital Contributions and
Initial Partnership Interests
<TABLE>
<CAPTION>
INITIAL INITIAL
CAPITAL PARTNERSHIP
NAME AND ADDRESS CONTRIBUTION INTEREST
---------------- ------------ -----------
<S> <C> <C>
Kenneth C. Huff 0.076 shares 00.01%
9256 Pelham Parkway Carrizo Oil & Gas, Inc.
Milwaukee, WI 52317
Douglas A.P. Hamilton 759.924 shares 99.99%
462 Broadway, 2nd Floor Carrizo Oil & Gas, Inc.
New York, NY 10013
</TABLE>
<PAGE> 1
Exhibit 4
July 31, 1997
Carrizo Oil & Gas, Inc.
14811 St. Mary's Lane
Suite 148
Houston, TX 77079
Schroder & Co. Inc.
Jefferies & Company, Inc.
c/o Schroder & Co. Inc.
787 Seventh Avenue
New York, NY 10019
Dear Sirs:
The undersigned understands that Schroder & Co. Inc. and Jefferies &
Company, Inc., as Representatives of the several underwriters (the
"Underwriters"), propose to enter into an Underwriting Agreement with Carrizo
Oil & Gas, Inc. (the "Company"), providing for the public offering (the
"Public Offering") of the Company's common stock, par value $0.01 per share
(the "Common Stock"), pursuant to the Company's Registration Statement on Form
S-1 (Reg. No. 333-29187) (the "Registration Statement").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned, during the period commencing on the date of the Underwriting
Agreement and ending 180 days after the date of the final prospectus relating
to the Public Offering:
(i) agrees not to (x) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (including, without limitation, shares
of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock which may be deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations
of the Securities and Exchange Commission by virtue of the
undersigned's power to dispose, or direct the disposition of, such
shares or securities) or (y) enter into any swap or other arrangement
that transfers all or a portion of the economic consequences
associated with the ownership of any Common Stock (regardless of
whether any of the transactions described in clause (x) or (y) is to
be settled by the delivery of Common Stock, or such other securities,
in cash or otherwise), without the prior written consent of Schroder &
Co. Inc., provided that the foregoing restrictions shall not apply to
intra-family transfers and transfers for estate planning purposes;
<PAGE> 2
(ii) agrees not to make any demand for, or exercise any
right with respect to, the registration of any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for
Common Stock, without the prior written consent of Schroder & Co.
Inc.;
(iii) authorizes the Company to cause the transfer agent to
decline to transfer and/or to note stop transfer restrictions on the
transfer books and records of the Company with respect to any shares
of Common Stock and any securities convertible into or exercisable or
exchangeable for Common Stock for which the undersigned is the record
holder and, in the case of any such shares or securities for which the
undersigned is the beneficial but not the record holder by virtue of
the undersigned's power to dispose, or direct the disposition of, such
shares or securities, agrees to use reasonable efforts to cause the
record holder to cause the transfer agent to decline to transfer
and/or to note stop transfer restrictions on such books and records
with respect to such shares or securities.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into the agreements set forth herein, and
that, upon request, the undersigned will execute any additional documents
necessary or desirable in connection with the enforcement hereof. All
authority herein conferred or agreed to be conferred shall survive the death or
incapacity of the undersigned and any obligations of the undersigned shall be
binding upon the heirs, personal representatives, successors, and assigns of
the undersigned.
Very truly yours,
Kenneth C. Huff, General Partner /S/ KENNETH C. HUFF
- ---------------------------------- -----------------------------------
(Name - Please Type)
14811 St. Mary's Lane
- ----------------------------------
Suite 148
- ----------------------------------
Houston, Texas 77079
- ----------------------------------
(Address)
- ----------------------------------
(Social Security No.)
Number of shares of Common Stock owned: 441,695
-----------
Certificate Numbers:
-------------------------
-------------------------
Number of shares of Common Stock issuable upon exercise of stock options:
------
