<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 31, 1997
NEW ENGLAND INVESTMENT COMPANIES, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-9468 13-3405992
(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION)
399 BOYLSTON STREET, BOSTON, 02116
MASSACHUSETTS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (617) 578-3500
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This Current Report on Form 8-K is being filed to report the completion of a
restructuring by New England Investment Companies, L.P. ("NEIC" or the
"Partnership").
The Taxpayer Relief Act of 1997, signed into law on August 5, 1997, permits
certain publicly traded partnerships to elect to extend their grandfathered
partnership tax status from year-to-year on an indefinite basis upon payment
of an annual 3.5% federal tax on gross income and satisfaction of certain
other conditions. On September 16, 1997, the Board of Directors approved a
plan of Restructuring (as defined below) under which the Partnership will make
such an election. Were the Partnership not to make this election, fail to
qualify to make this election, or decide in the future not to pay the 3.5%
gross income tax, it would become subject to the regular federal corporate
income tax, with a maximum rate of 35% of taxable income.
Pursuant to the plan of Restructuring approved by the Board of Directors, at
year-end 1997, the Partnership contributed, on a tax-free basis, all of the
Partnership's business and assets (consisting principally of the operating
firms owned by the Partnership), subject to all of its liabilities, to an
operating partnership, NEIC Operating Partnership, L.P. ("NEICOP" or the
"Operating Partnership"). In consideration of the asset contribution, the
Partnership received a number of partnership units of NEICOP equal to the
number of outstanding units of the Partnership. NEIC serves as advising
general partner of the Operating Partnership.
As contemplated by the NEIC partnership agreement, certain NEIC unitholders
(primarily those who acquired NEIC units in exchange for contributions of
appreciated investment management businesses and certain persons providing
ongoing services to NEIC) were permitted to choose to become partners of
NEICOP by exchanging NEIC units with NEIC for an equal number of NEICOP units.
Such unitholders who did not transfer their ownership to the Operating
Partnership and NEIC's other unitholders (primarily persons who have acquired
their NEIC units for cash in the public market) remained partners in NEIC.
Holders of approximately 38 million units exchanged their NEIC units for
NEICOP units, representing approximately 86% of the economic interests in
NEICOP. The remaining approximately 14% of the economic interests in NEICOP
are held by NEIC. The transactions involving the creation of NEICOP, the
transfer of NEIC's assets and liabilities to NEICOP and the exchange of NEIC
units for NEICOP units, together with NEIC's election to retain its tax status
and pay the 3.5% federal gross income tax, are referred to herein as the
"Restructuring."
Under the Restructuring, the Partnership will remain publicly traded and
will continue to file public reports with the Securities and Exchange
Commission. The Partnership's business will be to serve as advising general
partner of NEICOP. In this regard, NEIC will receive proportionate
distributions from NEICOP. NEIC will pay the 3.5% federal tax on its gross
income, including its proportionate share of NEICOP's gross income, in lieu of
corporate income tax, so long as NEIC maintains the applicable election and
satisfies certain other conditions. NEIC currently expects that it will
distribute to its unitholders substantially all of the distributions received
from NEICOP after payment of the 3.5% federal gross income tax, any state tax,
and any other expenses of the Partnership.
NEIC believes that the creation of a lower-tier partnership has significant
benefits. In particular, acquisition targets of NEIC have expressed a desire
for a structure of the type that would result from the Restructuring, and NEIC
therefore believes that the existence of a lower tier would facilitate future
acquisitions. Furthermore, NEIC believes that it is desireable to have key
persons owning equity interests in a separate legal structure with
arrangements designed to encourage long-term participation in NEIC's
operations.
As a result of the unit exchange described above, NEICOP has a limited
number of partners, including the Partnership. NEICOP units will not be
publicly traded, and there will be no market for such units. Subject to
various limitations under federal tax law and regulations and the terms of the
partnership agreements of NEIC and NEICOP and an agreement entered into by
them at the time of the Restructuring, NEICOP unitholders will from time to
time be permitted to sell their NEICOP units to NEIC for NEIC units or (at
NEIC's option) cash.
2
<PAGE>
Any such exchange of units would be on a one-for-one basis, subject to
adjustment in the event of certain changes in the capitalization of NEIC or
NEICOP, including unit repurchases, or the retention of assets or incurrence
of liabilities in significant amounts. The Operating Partnership is not
expected to pay federal tax on its gross income.
New England Investment Companies, Inc. ("NEIC, Inc."), the general partner
of the Partnership, is also the managing general partner of NEICOP. As noted
above, the Partnership is the advising general partner of NEICOP. As of
December 31, 1997, Metropolitan Life Insurance Company ("MetLife")
beneficially owned all of the Partnership's 110,000 units of general partner
interest ("GP units"), 207,900 (3.4%) of the Partnership's units of limited
partner interest ("LP units") and 20,582,100 (46.3%) of NEICOP's units of
partner interest ("NEICOP units"). In the aggregate, MetLife owns general
partner and limited partner interests in NEIC and NEICOP representing
approximately 47% of the economic interests in the business of NEIC and
NEICOP, the same as before the Restructuring.
Due to NEIC's minority interest in NEICOP, in accordance with generally
accepted accounting principles, NEIC will account for its investment in NEICOP
under the equity method of accounting. In addition, the complete financial
statements of NEICOP will be presented in conjunction with the financial
statements of the Partnership.
The following diagram illustrates the structure of the Partnership after the
Restructuring:
[Chart appears showing New England Investment Companies, L.P. and limited
partners holding interests therein; NEIC Operating Partnership, L.P. and limited
partners holding interests therein; New England Investment Companies, Inc.
("NEIC, Inc.") as the general partner of New England Investment Companies, L.P.
and the managing general partner of NEIC Operating Partnership, L.P.; and New
England Investment Companies, L.P. as advising general partner of NEIC Operating
Partnership, L.P.]
3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a)Financial Statements of Businesses Acquired.
Not applicable.
(b)Pro Forma Financial Information.
The following pro forma financial information of New England Investment
Companies, L.P., is filed with this report:
Unaudited Pro Forma Condensed Balance Sheet as of September 30, 1997
Unaudited Pro Forma Condensed Statement of Income for the Nine Months
Ended September 30, 1997
Unaudited Pro Forma Condensed Statement of Income for the Year Ended
December 31, 1996
The following pro forma financial information of NEIC Operating
Partnership, L.P., is filed with this report:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1997
Unaudited Pro Forma Condensed Consolidated Statement of Income for the
Nine Months Ended September 30, 1997
Unaudited Pro Forma Condensed Consolidated Statement of Income for the
Year Ended December 31, 1996
(c) Exhibits. The following exhibits are filed with this report:
1. Second Amended and Restated Agreement of Limited Partnership of New
England Investment Companies, L.P. dated as of December 29, 1997, filed
as Exhibit 1 to the Registrant's Form 8-A/A dated December 29, 1997, and
incorporated by reference herein.
2. Amended and Restated Agreement of Limited Partnership of NEIC Operating
Partnership, L.P.
3. Intercompany Agreement between New England Investment Companies, L.P.
and NEIC Operating Partnership, L.P. dated as of December 29, 1997,
filed as Exhibit 3 to the Registrant's Form 8-A/A dated December 29,
1997, and incorporated by reference herein.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereupon duly authorized.
NEW ENGLAND INVESTMENT COMPANIES, L.P.
By: New England Investment Companies,
Inc., its general partner
Date: January 5, 1998 /s/ Edward N. Wadsworth
By: ____________________________________
Edward N. Wadsworth
Executive Vice President
5
<PAGE>
NEW ENGLAND INVESTMENT COMPANIES, L.P.
SELECTED UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF NEIC AND NEICOP
The selected unaudited pro forma financial information for the nine months
ended September 30, 1997 and the year ended December 31, 1996 presented below
reflects the pro forma effect of the Restructuring as if it occurred on
January 1, 1996. The data reflects the pro forma effect of the 3.5% federal
gross income tax as if it was effective beginning January 1, 1996. The
selected unaudited pro forma financial information as of September 30, 1997
presented below reflects the pro forma effect of the Restructuring as if it
occurred on September 30, 1997. The selected unaudited pro forma financial
information presented below is derived from the unaudited pro forma condensed
statements of income and the unaudited pro forma condensed balance sheets of
the Partnership and the Operating Partnership, which are included in this
Report on Form 8-K, and from the historical financial statements of the
Partnership incorporated herein by reference.
The unaudited pro forma condensed financial information as of and for the
nine months ended September 30, 1997 and for the year ended December 31, 1996
does not necessarily reflect the Partnership's and the Operating Partnership's
results of operations or financial position that would have been obtained had
the Restructuring actually occurred on January 1, 1996 or if the gross income
tax had been effective beginning January 1, 1996, nor is the pro forma
financial information intended to be a projection of results for any future
period.
Any statements in this Form 8-K that are not historical facts are intended
to fall within the safe harbor for forward-looking statements provided by the
Private Securities Litigation Reform Act of 1995. Any forward-looking
statements should be considered in light of the risks and uncertainties
associated with NEIC, NEICOP and their business, economic and market
conditions prevailing from time to time, and the application and
interpretation of federal and state tax laws and regulations, all of which are
subject to material changes and which may cause actual results to vary
materially from what has been anticipated. NEIC's and NEICOP's actual results
could differ materially from those set forth in the forward-looking statements
as a result of matters discussed in the risk factors set forth in NEIC's
Annual Report on Form 10-K for the year ended December 31, 1996.
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------- -------------------
NEICOP(1) NEIC NEICOP(1) NEIC
------------------- -------------------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues....................... $ 400,861 $ 9,759(2) $ 392,651 $ 10,993(2)
Expenses....................... 332,239 -- 322,427 --
Gross income tax expense....... -- 2,193(3) -- 2,217(3)
--------- -------- --------- --------
Net income..................... $ 68,622 $ 7,566 $ 70,224 $ 8,776
========= ======== ========= ========
Net income per unit............ $ 1.23 $ 1.65
======== ========
Distributions declared per
unit.......................... $ 1.89 $ 1.53(4) $ 2.05 $ 1.63(4)
========= ======== ========= ========
Weighted average units
outstanding................... 6,146(5) 5,324(5)
======== ========
BALANCE SHEET DATA:
Total assets................... $ 935,289 $ 76,103(6)
Notes payable.................. 273,333 --
Total liabilities.............. 467,694 4,393
Partners' capital.............. 467,595 71,710
</TABLE>
F-1
<PAGE>
NEW ENGLAND INVESTMENT COMPANIES, L.P.
NOTES TO SELECTED UNAUDITED PRO FORMA
FINANCIAL INFORMATION OF NEIC AND NEICOP
(1) Under the Restructuring which was completed on December 31, 1997, NEIC
contributed all of its operating assets, subject to all of its
liabilities, to NEICOP in exchange for 44,424,000 NEICOP units (a number
equal to the number of NEIC units outstanding immediately prior to the
Restructuring). NEIC then exchanged 38,149,000 NEICOP units for the same
number of NEIC LP units held by certain NEIC unitholders. After this
exchange, NEIC held 6,275,000 NEICOP units or 14.1% of total NEICOP units
outstanding. Subsequent to the Restructuring, NEICOP now conducts the
business formerly conducted by NEIC prior to the Restructuring, therefore,
the selected unaudited condensed pro forma financial information of NEICOP
reflects the historical financial information of NEIC prior to the
Restructuring.
(2) Represents NEIC's equity in earnings of NEICOP which is based on NEICOP
net income plus restricted unit plan compensation expense multiplied by
NEIC's percentage equity interest in NEICOP. Public unitholders bear no
expense of the restricted unit plan as such costs are allocated
exclusively to MetLife and Reich & Tang, Inc.
(3) Represents the pro forma effect of the 3.5% federal gross income tax on
NEIC's proportionate share of NEICOP's revenues subject to such tax.
(4) NEIC currently expects it will distribute to its unitholders substantially
all of the distributions received from NEICOP after accruing the 3.5%
federal gross income tax, any state tax and any other expenses of the
Partnership.
(5) The number of NEIC units outstanding during the respective period
corresponds to 14.1% of the weighted average actual units outstanding of
NEICOP (i.e. weighted average units outstanding of NEICOP, exclusive of
any dilutive units assumed outstanding for contingent unit issuances or
option exercises).
(6) Primarily represents the book value of NEIC's investment in 6,275,000
NEICOP units.
F-2
<PAGE>
NEIC OPERATING PARTNERSHIP, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
1997(1)
--------------
(IN THOUSANDS)
<S> <C>
REVENUES:
Management and advisory fees................................... $367,583
Other revenues and interest income............................. 33,278
--------
400,861
--------
EXPENSES:
Compensation and benefits...................................... 196,861
Restricted unit plan compensation.............................. 460
Amortization of intangibles.................................... 27,941
Depreciation and amortization.................................. 4,788
Occupancy and equipment........................................ 10,832
Interest expense............................................... 14,001
Other.......................................................... 74,783
--------
329,666
--------
Income before income taxes..................................... 71,195
Income tax expense............................................. 2,573
--------
Net income..................................................... $ 68,622
========
</TABLE>
See notes to Unaudited Pro Forma Financial Statements.
F-3
<PAGE>
NEIC OPERATING PARTNERSHIP, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
DECEMBER 31,
1996(1)
--------------
(IN THOUSANDS)
<S> <C>
REVENUES:
Management and advisory fees................................... $341,345
Other revenues and interest income............................. 46,318
Gain on partial sale of affiliate.............................. 4,988
--------
392,651
--------
EXPENSES:
Compensation and benefits...................................... 189,986
Restricted unit plan compensation.............................. 7,598
Amortization of intangibles.................................... 25,277
Depreciation and amortization.................................. 5,131
Occupancy and equipment........................................ 11,470
Interest expense............................................... 8,728
Other.......................................................... 71,380
--------
319,570
--------
Income before income taxes..................................... 73,081
Income tax expense............................................. 2,857
--------
Net income..................................................... $ 70,224
========
</TABLE>
See notes to Unaudited Pro Forma Financial Statements.
F-4
<PAGE>
NEIC OPERATING PARTNERSHIP, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
1997(1)
----------------
(IN THOUSANDS)
<S> <C>
ASSETS
Cash and cash equivalents.................................... $112,728
Accounts receivable.......................................... 87,670
Other........................................................ 10,037
--------
Total current assets....................................... 210,435
Intangible assets:
Investment advisory contracts................................ 529,520
Goodwill..................................................... 122,578
Fixed assets................................................... 23,238
Other assets................................................... 49,518
--------
Total assets............................................... $935,289
========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses........................ $ 52,432
Accrued compensation and benefits............................ 58,654
Distribution payable......................................... 31,094
Notes payable................................................ 27,600
--------
Total current liabilities.................................. 169,780
Deferred compensation, benefits and other...................... 24,581
Notes payable.................................................. 273,333
Deferred purchase consideration................................ --
--------
Total liabilities.......................................... 467,694
Partners' capital.............................................. 467,595
--------
Total liabilities and partners' capital.................... $935,289
========
</TABLE>
See notes to Unaudited Pro Forma Financial Statements.
F-5
<PAGE>
NEW ENGLAND INVESTMENT COMPANIES, L.P.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
-------------------------
(IN THOUSANDS, EXCEPT
PER UNIT DATA)
<S> <C>
REVENUES
Equity in earnings of NEICOP......................................... $9,759(6)
EXPENSES
Gross income tax..................................................... 2,193(4)
------
Net income........................................................... $7,566
======
Net income per unit.................................................. $ 1.23
======
Distributions declared per unit...................................... $ 1.53(5)
======
Weighted average units outstanding................................... 6,146(7)
======
</TABLE>
See notes to Unaudited Pro Forma Financial Statements.
F-6
<PAGE>
NEW ENGLAND INVESTMENT COMPANIES, L.P.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
DECEMBER 31, 1996
---------------------
(IN THOUSANDS, EXCEPT
PER UNIT DATA)
<S> <C>
REVENUES
Equity in earnings of NEICOP........................................ $10,993(6)
EXPENSES
Gross income tax.................................................... 2,217(4)
-------
Net income.......................................................... $ 8,776
=======
Net income per unit................................................. $ 1.65
=======
Distributions declared per unit..................................... $ 1.63(5)
=======
Weighted average units outstanding.................................. 5,324(7)
=======
</TABLE>
See notes to Unaudited Pro Forma Financial Statements.
F-7
<PAGE>
NEW ENGLAND INVESTMENT COMPANIES, L.P.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
---------------------
(IN THOUSANDS)
<S> <C>
ASSETS
Distribution receivable from NEICOP....................... $ 4,393(2)
Investment in NEICOP...................................... 71,710(3)
--------
Total assets............................................ $ 76,103
========
LIABILITIES AND PARTNERS' CAPITAL
Gross income tax payable.................................. $ 731(4)
Distribution payable...................................... 3,662(5)
--------
Total liabilities....................................... 4,393
Partners' capital......................................... 71,710
--------
Total liabilities and partners' capital................. $ 76,103
========
</TABLE>
See notes to Unaudited Pro Forma Financial Statements.
F-8
<PAGE>
NEW ENGLAND INVESTMENT COMPANIES, L.P.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(1) Under the Restructuring which was completed on December 31, 1997, NEIC
contributed all of its operating assets, subject to all of its
liabilities, to NEICOP in exchange for 44,424,000 NEICOP units (a number
equal to the number of NEIC units outstanding immediately prior to the
Restructuring). NEIC then exchanged 38,149,000 NEICOP units for the same
number of NEIC LP units held by certain NEIC unitholders. After this
exchange, NEIC held 6,275,000 NEICOP units or 14.1% of total NEICOP units
outstanding. Subsequent to the Restructuring, NEICOP now conducts the
business formerly conducted by NEIC prior to the Restructuring, therefore,
the unaudited condensed pro forma financial information of NEICOP reflects
the historical financial information of NEIC prior to the Restructuring.
(2) Represents the September 30, 1997 NEICOP distribution declared per unit of
$0.70 per NEICOP unit multiplied by the 6,275,000 NEICOP units owned by
NEIC at September 30, 1997.
(3) Represents the historical book value of NEIC's investment in NEICOP.
(4) Represents the pro forma effect of the 3.5% federal gross income tax on
NEIC's proportionate share of NEICOP's revenues subject to such tax.
(5) NEIC currently expects it will distribute to its unitholders substantially
all of its distributions received from NEICOP after accruing the 3.5%
federal gross income tax, any state tax and any other expenses of the
Partnership.
(6) Represents NEIC's equity in earnings of NEICOP which is based on NEICOP
net income plus restricted unit plan compensation expense multiplied by
NEIC's percentage interest in NEICOP. Public unitholders bear no expense
of the restricted unit plan as such costs are allocated exclusively to
MetLife and Reich & Tang, Inc.
(7) The number of NEIC units outstanding during the respective period
corresponds to 14.1% of the weighted average actual units outstanding of
NEICOP (i.e. weighted average units outstanding of NEICOP, exclusive of
any dilutive units assumed outstanding for contingent unit issuances or
option exercises).
F-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S> <C>
2 Amended and Restated Agreement of Limited Partnership of NEIC
Operating Partnership, L.P.
</TABLE>
<PAGE>
Exhibit 2
---------
================================================================================
AMENDED AND RESTATED
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
NEIC OPERATING PARTNERSHIP, L.P.
================================================================================
<PAGE>
NEIC OPERATING PARTNERSHIP, L.P.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS............................................................... 1
"Additional Voting Units"................................................. 1
"Advising General Partner"................................................ 1
"Affiliate"............................................................... 1
"Agent"................................................................... 1
"Agreed Value"............................................................ 2
"Agreement"............................................................... 2
"Allocable Excludable Units".............................................. 2
"Associate"............................................................... 2
"Block Transfers"......................................................... 2
"Capital Accounts"........................................................ 2
"Capital Contribution".................................................... 2
"Carrying Value".......................................................... 2
"Certificate of Limited Partnership"...................................... 2
"Closing Time"............................................................ 2
"Code".................................................................... 2
"Contributed Property".................................................... 2
"Delaware Act"............................................................ 2
"Designated AGP Expenses"................................................. 3
"Designated MGP Expenses"................................................. 3
"Eighty Percent Interest"................................................. 3
"Exchange Act"............................................................ 3
"Exchange Date"........................................................... 3
"Excludable Units"........................................................ 3
"Formation Date".......................................................... 3
"General Partner"......................................................... 3
"GP Unit"................................................................. 3
"Group"................................................................... 3
"Indemnitee".............................................................. 3
"Initial Limited Partner.................................................. 4
"Intercompany Agreement".................................................. 4
"Interest Coverage Ratio"................................................. 4
"Issue Price"............................................................. 4
"Limited Partner"......................................................... 4
"Liquidator".............................................................. 4
"Loss of Partnership Status".............................................. 4
"LP Unit"................................................................. 4
-i-
<PAGE>
"Majority Interest"....................................................... 4
"Majority of Minority Interest"........................................... 4
"Management Committee".................................................... 4
"Managing General Partner"................................................ 5
"Market Value"............................................................ 5
"MetLife"................................................................. 5
"MetLife Designated Units"................................................ 5
"NEIC Exchange Ratio"..................................................... 5
"NEIC, Inc.".............................................................. 6
"NEIC, L.P.".............................................................. 6
"NEIC, L.P. Partnership Agreement"........................................ 6
"NEIC LP Units"........................................................... 6
"NEICOP Exchange Ratio"................................................... 6
"NEM"..................................................................... 6
"Net Agreed Value"........................................................ 6
"Ninety-Five Percent Interest"............................................ 6
"NYSE".................................................................... 6
"Offer"................................................................... 6
"Operating Partnership"................................................... 6
"Opinion of Counsel"...................................................... 6
"Partner"................................................................. 7
"Partnership"............................................................. 7
"Partnership Interest".................................................... 7
"Percentage Interest"..................................................... 7
"Person".................................................................. 7
"Recapture Income"........................................................ 7
"Record Date"............................................................. 7
"Restricted Unit Plan".................................................... 7
"Restructuring"........................................................... 7
"RTI"..................................................................... 7
"RTI Designated Units".................................................... 7
"Subsidiary".............................................................. 7
"Tax Realization Event"................................................... 7
"Trading Day"............................................................. 8
"Treasury Regulations".................................................... 8
"Unit".................................................................... 8
"Unitholder".............................................................. 8
"Unrealized Gain"......................................................... 8
"Unrealized Loss"......................................................... 8
"Voting Unit"............................................................. 8
-ii-
<PAGE>
ARTICLE II
ORGANIZATIONAL MATTERS..................................................... 8
2.1. Formation......................................................... 8
2.2. Name.............................................................. 9
2.3. Principal Office; Registered Office............................... 9
2.4. Power of Attorney................................................. 9
2.5. Term.............................................................. 10
2.6. Organizational Certificate........................................ 10
ARTICLE III
PURPOSE.................................................................... 11
3.1. Purpose........................................................... 11
ARTICLE IV
CAPITAL CONTRIBUTIONS; EXCHANGE OF
GP UNITS AND LP UNITS; ADDITIONAL ISSUANCES................................ 11
4.1. Capital Contributions............................................. 11
4.2. Exchange of GP Units and LP Units................................. 12
4.3. Issuance of Additional LP Units and Other Securities.............. 12
4.4. Ownership of GP Units and LP Units................................ 13
4.5. No Preemptive Rights.............................................. 13
4.6. No Interest....................................................... 13
4.7. Loans from Partners............................................... 13
ARTICLE V
CAPITAL ACCOUNTS AND DISTRIBUTIONS......................................... 13
5.1. Capital Accounts.................................................. 13
5.2. Distributions in Respect of Units................................. 16
5.3. Special Allocations Pertaining to Grants to Employees............. 17
5.4. Special Allocation Relating to Tax Payments....................... 17
ARTICLE VI
INCOME TAX MATTERS......................................................... 18
6.1. Tax Allocations................................................... 18
6.2. Preparation of Tax Returns........................................ 19
6.3. Tax Elections..................................................... 19
6.4. Tax Controversies................................................. 19
6.5. Withholding....................................................... 19
-iii-
<PAGE>
ARTICLE VII
MANAGEMENT OF OPERATION OF BUSINESS; INDEMNIFICATION....................... 19
7.1. Powers of Managing General Partner................................ 19
7.2. Powers of Advising General Partner................................ 21
7.3. Duties of Managing General Partner................................ 23
7.4. Reliance by Third Parties......................................... 24
7.5. Compensation and Reimbursement of the General Partners............ 24
7.6. Purchase or Sale of LP Units...................................... 25
7.7. Partnership Funds................................................. 25
7.8. Outside Activities; Contracts with Affiliates; Loans to or from
Affiliates....................................................... 25
7.9. Tax Basis and Value Determinations................................ 26
7.10. Resolution of Conflicts of Interest; Standard of Care............. 27
7.11. Other Matters Concerning the General Partners..................... 27
7.12. Limited Liability; Indemnification................................ 28
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................................. 30
8.1. Limitation of Liability........................................... 30
8.2. Management of Business............................................ 30
8.3. Outside Activities................................................ 30
8.4. Return of Capital................................................. 30
8.5. Rights of Limited Partners Relating to the Partnership............ 30
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS..................................... 31
9.1. Books, Records and Accounting..................................... 31
9.2. Fiscal Year....................................................... 31
9.3. Reports........................................................... 32
ARTICLE X
TRANSFER OF LP UNITS....................................................... 32
10.1. In General....................................................... 32
10.2. Avoidance of Publicly Traded Partnership Status.................. 32
10.3. Permitted Transfers.............................................. 33
10.4. Permitted Exchanges.............................................. 34
-iv-
<PAGE>
ARTICLE XI
TRANSFER OF GP UNITS....................................................... 36
11.1. Transfer of GP Units............................................. 36
11.2. Successor General Partner........................................ 36
11.3. Admission of Additional General Partner.......................... 36
ARTICLE XII
ADMISSION OF INITIAL AND SUBSTITUTED
LIMITED PARTNERS AND SUCCESSOR GENERAL PARTNERS............................ 37
12.1. Withdrawal of Initial Limited Partner............................ 37
12.2. Admission of Substituted Limited Partners........................ 37
12.3. Admission of Successor General Partner........................... 37
12.4. Restructuring ................................................... 37
ARTICLE XIII
REMOVAL OF A GENERAL PARTNER............................................... 39
13.1. Removal of a General Partner..................................... 39
13.2. Sale of Former General Partner's Interest........................ 40
ARTICLE XIV
DISSOLUTION AND LIQUIDATION................................................ 40
14.1. Dissolution...................................................... 40
14.2. Reconstitution................................................... 41
14.3. Liquidation...................................................... 42
14.4. Distribution in Kind............................................. 42
14.5. Cancellation of Certificate of Limited Partnership............... 43
14.6. Return of Capital................................................ 43
14.7. Waiver of Partition.............................................. 43
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT......................................... 43
15.1. Amendments Which May be Adopted Solely by the Managing General
Partner........................................................ 43
15.2. Other Amendments................................................. 44
15.3. Amendment Requirements........................................... 45
15.4. Limitation of Voting Power of Certain LP Unit Holders............ 45
-v-
<PAGE>
ARTICLE XVI
MEETINGS................................................................... 48
16.1. Meetings......................................................... 48
16.2. Record Date...................................................... 49
16.3. Conduct of Meeting............................................... 49
16.4. Action Without a Meeting......................................... 49
ARTICLE XVII
CERTAIN RESTRICTIONS....................................................... 50
17.1. Additional Units................................................. 50
17.2. Sale of Assets................................................... 50
ARTICLE XVIII
MISCELLANEOUS.............................................................. 50
18.1. Opinions Regarding Taxation as a Partnership..................... 50
18.2. Personal Property................................................ 50
18.3. Addresses and Notices............................................ 51
18.4. Headings......................................................... 51
18.5. Binding Effect................................................... 51
18.6. Integration...................................................... 51
18.7. Waiver........................................................... 51
18.8. Counterparts..................................................... 51
18.9. Severability..................................................... 51
18.10. Applicable Law................................................... 51
Appendix A: Power of Attorney
Appendix B: Limited Partners
-vi-
<PAGE>
AMENDED AND RESTATED
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
NEIC OPERATING PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
December 29, 1997, is entered into by and among NEW ENGLAND INVESTMENT
COMPANIES, INC. ("NEIC, Inc."), a Massachusetts corporation, NEW ENGLAND
INVESTMENT COMPANIES, L.P. ("NEIC, L.P."), a Delaware limited partnership, and
the Initial Limited Partner, together with any other persons admitted as limited
partners but excluding persons who withdraw as limited partners (herein
collectively referred to as "Limited Partners").
ARTICLE I
DEFINITIONS
The following definitions shall for all purposes, unless otherwise clearly
indicated to the contrary, apply to the terms used in this Agreement.
"Additional Voting Units" owned by any Person or Group means the product
of (i) the number of Voting Units owned by NEIC, L.P., and (ii) a fraction, the
numerator of which is the number of units of NEIC, L.P. owned by such Person or
Group, and the denominator of which is the total number of units of NEIC, L.P.
outstanding; provided, however, that for the purposes of this definition, Voting
Units shall be deemed to include both GP Units and LP Units.
"Advising General Partner" means NEIC, L.P. or any person or entity that
becomes an additional or successor Advising General Partner of the Partnership
pursuant to Article XI.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with the Person in question; provided, however, that, for purposes of the
restrictive provisions of Sections 7.7, 7.8 and 7.10, neither the Partnership
nor any Operating Partnership nor any of their respective Subsidiaries shall be
deemed to be Affiliates of any General Partner. As used herein, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Agent" has the meaning specified in Section 2.4.
<PAGE>
"Agreed Value" of any Contributed Property means the fair market value of
such property as of the time of contribution (or, in the case of cash, the
amount thereof), as determined by the Managing General Partner using such
reasonable method of valuation as it may adopt.
"Agreement" means this Agreement of Limited Partnership, as amended or
restated from time to time.
"Allocable Excludable Units" has the meaning specified in Section 15.4.
"Associate" has the meaning specified in Section 15.4.
"Block Transfers" has the meaning specified in Section 10.3(e).
"Capital Accounts" means the capital accounts maintained with respect to
Units pursuant to Section 5.1(a).
"Capital Contribution" means any Contributed Property which a Partner
contributes to the Partnership.
"Carrying Value" means (a) with respect to Contributed Property, the
Agreed Value of such property reduced as of the time of determination (but not
below zero) by (i) all depreciation, cost recovery and amortization deductions
charged to the Capital Accounts pursuant to Section 5.1(a) with respect to such
property and (ii) an appropriate amount to reflect any sales, retirements and
other dispositions of assets included in such property, and (b) with respect to
any other property, the adjusted basis of such property for federal income tax
purposes as of the time of determination, in either case as may be adjusted from
time to time pursuant to Section 5.1(e).
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of Delaware as
described in the first sentence of Section 2.6, as amended or restated from time
to time.
"Closing Time" means the time at which Units are issued to NEIC, L.P.
pursuant to the Intercompany Agreement and Section 4.1(a)(ii)(B) hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Contributed Property" means any cash, property or other consideration (in
such form as may be permitted under the Delaware Act) contributed to the
Partnership.
"Delaware Act" means the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, and any successor to such Act.
-2-
<PAGE>
"Designated AGP Expenses" means all costs and expenses (direct or
indirect) incurred by the Advising General Partner which are directly or
indirectly related to the formation, capitalization, business or activities of
the Partnership and any Operating Partnership (including, without limitation,
expenses, direct or indirect, reasonably allocated to the Advising General
Partner by its Affiliates); provided, however, that Designated AGP Expenses
shall not include any cost or expense for which the Advising General Partner is
not entitled to be reimbursed by reason of failing to satisfy the standard set
forth in the proviso in Section 7.12(b)(ii).
"Designated MGP Expenses" means all costs and expenses (direct or
indirect) incurred by the Managing General Partner which are directly or
indirectly related to the formation, capitalization, business or activities of
the Partnership and any Operating Partnership (including, without limitation,
expenses, direct or indirect, reasonably allocated to the Managing General
Partner by its Affiliates); provided, however, that Designated MGP Expenses
shall not include any cost or expense for which the Managing General Partner is
not entitled to be reimbursed by reason of failing to satisfy the standard set
forth in the proviso in Section 7.12(b)(ii).
"Eighty Percent Interest" means the holders of an aggregate of at least
80% of the outstanding GP Units and LP Units entitled to vote voting together as
a class.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor to such statute.
"Exchange Date" has the meaning specified in Section 10.4(a).
"Excludable Units" has the meaning specified in Section 15.4.
"Formation Date" means the date on which Units are issued to NEIC, Inc.,
NEIC, L.P. and the Initial Limited Partner pursuant to Section 4.1.
"General Partner" means the Managing General Partner, the Advising General
Partner and any Person that becomes an additional or successor Managing General
Partner or Advising General Partner pursuant to Article XI.
"GP Unit" means a Partnership Interest issued pursuant to Section
4.1(a)(i), 4.1(a)(ii) or 4.2(a) and representing a General Partner's interest in
the Partnership.
"Group" has the meaning specified in Section 15.4.
"Indemnitee" means any General Partner, any Affiliate of any General
Partner (other than an Operating Partnership), any Person who is or was a
director, partner, officer, employee or agent of the Partnership, any General
Partner, or any such Affiliate, any Person
-3-
<PAGE>
who is or was serving at the request of a General Partner or any such Affiliate
as a director, officer, partner, trustee, employee or agent of another Person,
or any other Person deemed an Indemnitee by the Managing General Partner
pursuant to Section 7.12(b).
"Initial Limited Partner" means Edward N. Wadsworth.
"Intercompany Agreement" means the Intercompany Agreement dated as of
December 29, 1997 by and between the Partnership and NEIC, L.P.
"Interest Coverage Ratio" has the meaning specified for such term (or a
substantially equivalent term) in NEICOP's then outstanding credit agreement
with its senior noteholders or other lenders (if more than one such agreement
exists, the definition of such term in the agreement related to the largest
amount of indebtedness shall govern).
"Issue Price" means the price at which a Unit is purchased from the
Partnership (or, in the case of an issue of Units in exchange for a
contribution, the Net Agreed Value of the contribution per Unit received).
"Limited Partner" has the meaning specified in the introduction hereto.
"Liquidator" has the meaning specified in Section 14.3.
"Loss of Partnership Status" means any one or more events, conditions or
circumstances (including without limitation the public trading of Units or the
ownership of Units by more than any particular number of Persons) in which, or
as a result of which, the Partnership would cease to be treated as a partnership
for federal income tax purposes.
"LP Unit" means a Partnership Interest issued pursuant to Section
4.1(a)(iii), 4.2(b) or 4.3 and representing a Limited Partner's interest in the
Partnership.
"Majority Interest" means the holders of an aggregate of more than 50% of
the outstanding GP Units and LP Units entitled to vote, voting together as a
class.
"Majority of Minority Interest" means the holders of an aggregate of more
than 50% of the outstanding Units entitled to vote (other than those held by (a)
the Managing General Partner or (b) any of the Managing General Partner's
Affiliates other than the Advising General Partner), voting together as a class;
provided, however, that if the Advising General Partner submits any such vote to
its unitholders in compliance with Section 8.1 of the Intercompany Agreement and
Section 15.4(d) hereof, votes shall not be solicited from any partnership units
of the Advising General Partner owned by the Managing General Partner or any of
its Affiliates.
"Management Committee" has the meaning specified in Section 7.2.
-4-
<PAGE>
"Managing General Partner" means NEIC, Inc. or any person or entity that
becomes an additional or successor managing general partner of the Partnership
pursuant to Article XI.
"Market Value" on any day means the average of the last reported sales
price per NEIC LP Unit or, in the event that no such reported sale takes place
on any such day, the average of the last reported bid and ask prices per NEIC LP
Unit, on the NYSE (or any alternate national securities market on which NEIC LP
Units are traded) for the five Trading Days immediately prior to such day.
"MetLife" means Metropolitan Life Insurance Company, a New York mutual
life insurance company, successor by merger to NEM.
"MetLife Designated Units" has the meaning specified in Section 5.3.
"NEIC Exchange Ratio" shall initially be equal to one, but if (1) the
excess of NEIC, L.P.'s assets (excluding its investment in the Partnership) over
its total liabilities (excluding short-term intercompany loans), or of its total
liabilities (excluding short-term intercompany loans) over its assets (excluding
its investment in the Partnership), in each case as reflected on its financial
records, is greater than $100,000, or (2) if the aggregate number of Units owned
by NEIC, L.P. is no longer equal to the aggregate number of units representing a
partnership interest of NEIC, L.P. outstanding, the NEIC Exchange Ratio as of
any date shall mean the quotient obtained by dividing:
(a) the sum (which shall never be less than zero) of:
(i) the product of the number of NEIC LP Units outstanding and
the Market Value; plus
----
(ii) the excess (if any), to the extent it exceeds $100,000, of
(A) the total liabilities (excluding short-term intercompany
loans) of NEIC, L.P., over (B) the assets of NEIC, L.P.
(excluding its investment in the Partnership), both as reflected
on its financial records; minus
-----
(iii) the excess (if any), to the extent it exceeds $100,000, of
(A) the assets of NEIC, L.P. (excluding its investment in the
Partnership), over (B) the total liabilities (excluding short-
term intercompany loans) of NEIC, L.P., both as reflected on its
financial records;
by (b) the product of:
(i) the number of Units that are owned by NEIC, L.P.; and
(ii) the Market Value;
-5-
<PAGE>
all determined as of such date; provided, however, that if such date is not a
Trading Day, the NEIC Exchange Ratio as of such date shall be determined as of
the last Trading Day immediately preceding such date.
"NEIC, Inc." has the meaning specified in the introduction hereto.
"NEIC, L.P." has the meaning specified in the introduction hereto.
"NEIC, L.P. Partnership Agreement" means the Second Amended and Restated
Agreement of Limited Partnership of NEIC, L.P. dated as of December 29, 1997, as
amended or restated from time to time.
"NEIC LP Units" means units representing a limited partnership interest in
NEIC, L.P.
"NEICOP Exchange Ratio" means the reciprocal of the NEIC Exchange Ratio.
"NEM" means New England Mutual Life Insurance Company, Inc., a mutual life
insurance company, which was merged with and into MetLife in 1996, and is
MetLife's predecessor in interest with respect to NEIC, L.P.
"Net Agreed Value" means (a) in the case of any Contributed Property, the
Agreed Value of such Contributed Property reduced by any indebtedness either
assumed by the Partnership upon contribution of such Contributed Property or to
which such Contributed Property is subject when contributed, (b) in the case of
any property distributed to a Partner pursuant to Section 5.2, 14.3 or 14.4, the
fair market value of such property at the time of such distribution reduced by
any indebtedness either assumed by such Partner upon such distribution or to
which such property is subject at the time of such distribution.
"Ninety-Five Percent Interest" means the holders of an aggregate of at
least 95% of the outstanding GP Units and LP Units entitled to vote, voting
together as a class.
"NYSE" means the New York Stock Exchange.
"Offer" has the meaning specified in Section 10.4(b).
"Operating Partnership" means any partnership or other entity taxed as a
partnership for federal income tax purposes through which the Partnership may
conduct any and all of its activities and the operations of which are directly
or indirectly controlled by the Managing General Partner or the Partnership.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel of the Managing General Partner or any of its Affiliates)
acceptable to the Managing General Partner.
-6-
<PAGE>
"Partner" means a General Partner or a Limited Partner.
"Partnership" means NEIC Operating Partnership, L.P., a Delaware limited
partnership.
"Partnership Interest" means a General Partner's or Limited Partner's
interest in the Partnership.
"Percentage Interest" means, with respect to any Partner, the number of
Units held by such Partner divided by the number of Units outstanding.
"Person" means an individual, a corporation, a partnership, a trust, an
unincorporated organization, an association or any other entity.
"Recapture Income" means any gain recognized by the Partnership upon the
disposition of any asset of the Partnership that is not a capital gain due to
the recapture of deductions previously taken with respect to such asset.
"Record Date" means the date established by the Managing General Partner
for determining the identity of Partners entitled (a) to notice of or to vote at
any meeting of Partners, to vote by ballot or approve Partnership action in
writing without a meeting or to exercise rights in respect of any other lawful
action of Partners, or (b) to receive any report or distribution.
"Restricted Unit Plan" has the meaning specified in Section 5.3.
"Restructuring" means any action, event, transaction or series of actions,
events or transactions that the Managing General Partner believes will (or is
reasonably likely to) prevent or avoid the occurrence of either or both a Loss
of Partnership Status or a Tax Realization Event.
"RTI" means Reich & Tang, Inc.
"RTI Designated Units" has the meaning specified in Section 5.3.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" has the meaning specified in Section 15.4.
"Tax Realization Event" means any one or more events, conditions or
circumstances in which, or as a result of which, any one or more Partners (or
any affiliated Person of any one or more Partners) realizes or is reasonably
likely to be treated as realizing, either directly or through allocations of
Partnership income, income (including without limitation capital gain
-7-
<PAGE>
income), for federal income tax purposes, with respect to all or any part of the
difference between (A) the value of any property contributed (or deemed
contributed under applicable law) by such Partner (or any affiliated Person of
such Partner) to the Partnership on or after June 30, 1993, determined either as
of the time of such contribution (or deemed contribution) or the time of such
realization, and (B) such Partner's (or such affiliated Person's) or the
Partnership's basis, for federal income tax purposes, in such property, other
than as a result of a sale of such property by the Partnership exclusively for
cash.
"Threshold Number" means 1,000, or such higher number as the Managing
General Partner shall specify from time to time.
"Trading Day" means any day on which the NYSE (or any alternate national
securities market on which NEIC LP Units are traded) is open for trading.
"Treasury Regulations" means the Income Tax Regulations promulgated under
the Code, as such regulations may be amended, supplemented or replaced from time
to time.
"Unit" means a GP Unit or an LP Unit.
"Unitholder" means any holder of a GP Unit or an LP Unit.
"Unrealized Gain" attributable to a Partnership property means, as of any
date of determination, the excess, if any, of the fair market value of such
property as of such date of determination over the Carrying Value of such
property as of such date of determination (prior to any adjustment to be made
pursuant to Section 5.1(e) as of such date).
"Unrealized Loss" attributable to a Partnership property means, as of any
date of determination, the excess, if any, of the Carrying Value of such
property as of such date of determination (prior to any adjustment to be made
pursuant to Section 5.1(e) as of such date) over the fair market value of such
property as of such date of determination.
"Voting Unit" has the meaning specified in Section 15.4.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1. Formation. The Partners hereby associate themselves for the purpose
of continuing a limited partnership formed pursuant to the provisions of the
Delaware Act. The administration, dissolution and termination of the
Partnership shall be governed by the Delaware Act and this Agreement.
-8-
<PAGE>
2.2. Name. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of "NEIC Operating Partnership,
L.P."; provided, however, that (a) the Partnership's business may be conducted
under any other name or names deemed advisable by the Managing General Partner,
(b) the Managing General Partner in its sole discretion may change the name of
the Partnership at any time and from time to time and (c) the name under which
the Partnership conducts business shall include "Ltd." or "Limited Partnership"
(or similar words or letters) where necessary for purposes of maintaining the
limited liability status of each Limited Partner or otherwise complying with the
laws of any jurisdiction that so requires.
2.3. Principal Office; Registered Office. (a) The principal office of the
Partnership shall be 399 Boylston Street, Boston, MA 02116, or such other place
as the Managing General Partner may from time to time designate. The
Partnership may maintain offices at such other places as the Managing General
Partner deems advisable.
(b) The address of the Partnership's registered office in the State of
Delaware shall be Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801, and the name of the
Partnership's registered agent for service of process at such address shall be
The Corporation Trust Company.
2.4. Power of Attorney. (a) Each Partner (other than the Managing General
Partner) hereby constitutes and appoints the Managing General Partner or, if the
Advising General Partner is liquidating the Partnership pursuant to Section
14.3, the Advising General Partner, or if a Liquidator shall have been selected
pursuant to Section 14.3, the Liquidator, with full power of substitution, as
such Partner's true and lawful agent and attorney-in-fact ("Agent"), with full
power and authority in such Partner's name, place and stead to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (A) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate of Limited Partnership and any amendments or restatements
thereof) which the Agent deems appropriate or necessary to form or qualify,
or continue the existence or qualification of, the Partnership as a limited
partnership (or a partnership in which the Limited Partners have limited
liability) under the laws of any state or jurisdiction; (B) all
certificates, documents and other instruments which the Agent deems
appropriate or necessary to reflect any amendments, changes or
modifications of this Agreement in accordance with its terms; (C) all
conveyances and other documents or instruments which the Agent deems
appropriate or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including a
certificate of cancellation; (D) all certificates, documents and other
instruments relating to the admission, substitution, withdrawal or removal
of any Partner pursuant to Article XII, XIII or XIV and other events
described in Article XII, XIII or XIV; (E) all certificates, documents and
other instruments (including, without limitation, this Agreement and the
Certificate of
-9-
<PAGE>
Limited Partnership and any amendments or restatements thereof) relating to
the determination of the rights, preferences and privileges of any class or
series of Units issued pursuant to Section 4.3 and (F) all certificates,
documents, and other instruments (including, without limitation, this
Agreement and the Certificates of Limited Partnership and any amendment or
restatements thereof), relating to implementation of a Restructuring; and
(ii) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates, documents and other instruments which the
Agent deems appropriate or necessary in order to make, evidence, give,
confirm, or ratify any vote, consent, approval, agreement or other action
which is made or given by the Partners hereunder, is deemed to be made or
given by the Partners hereunder, is consistent with the terms of this
Agreement or is deemed by the Agent to be appropriate or necessary to
effectuate the terms or intent of this Agreement or the purposes of the
Partnership; provided, however, that if any vote or approval of Limited
Partners or the Advising General Partner is specifically required for an
action by any provision of this Agreement, the Agent may exercise the power
of attorney made in this subsection (ii) to take such action only after
such required vote or approval is obtained.
(b) The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive and not be affected
by the subsequent death, incompetency, disability, incapacity, dissolution,
bankruptcy or termination of any Partner and the transfer of all or any portion
of such Partner's Units and shall extend to such Partner's heirs, transferees,
successors, assigns and personal representatives. Each Partner hereby agrees to
be bound by any representations made by the Agent acting in good faith pursuant
to such power of attorney; and each Partner hereby waives any and all defenses
which may be available to contest, negate or disaffirm the action of the Agent
taken in good faith pursuant to such power of attorney. Each Partner shall
execute and deliver to the Agent, within fifteen days after receipt of the
Agent's request therefor, such further designations, powers of attorney and
other instruments as the Agent deems appropriate or necessary to effectuate the
terms or intent of this Agreement or the purposes of the Partnership.
2.5. Term. The Partnership shall continue in existence until its
termination in accordance with the provisions of Article XIV.
2.6. Organizational Certificate. A Certificate of Limited Partnership of
the Partnership has been filed with the Secretary of State of the State of
Delaware as required by the Delaware Act. The Managing General Partner shall
cause to be filed such other certificates or documents as may be required for
the formation, operation and qualification of a limited partnership in Delaware
and any other state or jurisdiction in which the Partnership may elect to do
business. The Managing General Partner shall thereafter file any necessary
amendments to the Certificate of Limited Partnership and any such other
certificates and documents and do all things requisite to the maintenance of the
Partnership as a limited partnership (or as a
-10-
<PAGE>
partnership in which the Limited Partners have limited liability) under the laws
of Delaware and any other state or jurisdiction in which the Partnership may
elect to do business. Subject to applicable law, the Managing General Partner
may omit from the Certificate of Limited Partnership and any such other
certificates and documents, and from all amendments thereto, the names and
addresses of the Limited Partners and information relating to the Capital
Contributions and shares of profits and compensation of the Limited Partners, or
state such information in the aggregate rather than with respect to each
individual Limited Partner.
ARTICLE III
PURPOSE
3.1. Purpose. The purpose and business of the Partnership shall be to
engage in any lawful activity for which limited partnerships may be organized
under the Delaware Act.
ARTICLE IV
CAPITAL CONTRIBUTIONS; EXCHANGE OF
GP UNITS AND LP UNITS; ADDITIONAL ISSUANCES
4.1. Capital Contributions. (a) The Partners have made or shall make the
following Capital Contributions to the Partnership:
(i) Managing General Partner. On the Formation Date, NEIC, Inc.
contributed $2950 to the Partnership in exchange for 100 GP Units.
NEIC, Inc. became the Managing General Partner on the Formation Date.
(ii) Advising General Partner. (A) On the Formation Date, NEIC,
L.P. contributed fixed assets worth $2950 to the Partnership in
exchange for 100 GP Units. NEIC, L.P. became the Advising General
Partner on the Formation Date.
(B) Pursuant to the Intercompany Agreement, NEIC, L.P. shall
contribute all of its operating assets, subject to all of its
liabilities, to the Partnership at the Closing Time in exchange for GP
Units, such that after the Closing Time, NEIC, L.P. will own a number
of GP Units equal to the number of units representing a partnership
interest in NEIC, L.P. then outstanding. These GP Units shall be
issued at the Closing Time.
(iii) Initial Limited Partner. On the Formation Date, the Initial
Limited Partner contributed $2950 to the Partnership in exchange for
100 LP Units.
-11-
<PAGE>
4.2. Exchange of GP Units and LP Units. (a) Any General Partner shall have
the right at any time to freely exchange any of its LP Units for an equal number
of GP Units without the approval of any other General Partner or the Limited
Partners, provided, however, that no exchange of LP Units for GP Units shall be
permitted without the approval of a Majority of Minority Interest if the
relative rights, powers and duties of the outstanding GP Units and LP Units have
been altered such that the equivalence of the economic interests of the Units
(i.e., rights to current and liquidating distributions) has been affected;
additional issuances of LP Units will not be deemed to alter the equivalence of
the economic interests of the Units. LP Units transferred to the Advising
General Partner pursuant to transfers permitted by Article X shall automatically
be exchanged for GP Units at the time of such transfer.
(b) Any General Partner shall have the right at any time to freely
exchange any of its GP Units for an equal number of LP Units without the
approval of any other General Partner or the Limited Partners, provided,
however, that no exchange of GP Units for LP Units shall be permitted without
the approval of a Majority of Minority Interest if the relative rights, powers
and duties of the outstanding GP Units and LP Units have been altered such that
the equivalence of the economic interests (i.e., rights to current and
liquidating distributions) of the Units has been affected; additional issuances
of LP Units will not be deemed to alter the equivalence of the economic
interests of the Units; and provided, further, however, that the Managing
General Partner may not exchange all of its GP Units for LP Units unless (i) the
Managing General Partner is the general partner of the Advising General Partner,
and (ii) the Managing General Partner is not the sole General Partner, both as
of the time of such exchange. If the Managing General Partner exchanges all of
its GP Units for LP Units pursuant to this Section 4.2(b), the Advising General
Partner shall become the Managing General Partner of the Partnership. GP Units
issued to NEIC, L.P. pursuant to Section 4.1(a)(ii)(B) hereof shall be
automatically exchanged for LP Units at the time such Units are transferred to
partners of NEIC, L.P. pursuant to Section 2.2 of the Intercompany Agreement.
4.3. Issuance of Additional LP Units and Other Securities. (a) The
Managing General Partner is hereby authorized to cause the Partnership to issue,
in addition to the LP Units issued pursuant to Section 4.1, additional LP Units,
or classes or series thereof, or options, rights, warrants or appreciation
rights relating thereto or any other type of security that the Partnership may
lawfully issue, for any Partnership purpose, at any time or from time to time,
to Partners or to other Persons (including, without limitation, to employee
benefit plans sponsored by any General Partner, the Partnership, any Operating
Partnership, or any of their respective Affiliates), for such consideration and
on such terms and conditions, and entitling the holders thereof to such relative
rights and powers, including rights and powers senior to existing classes and
groups of Partnership Interests, as shall be established by the Managing General
Partner in its sole discretion, all without the approval of any other Partners.
(b) The Managing General Partner is hereby authorized and directed to do
all acts which it deems appropriate or necessary in connection with each
issuance of LP Units or other securities by the Partnership and to amend this
Agreement in any manner which it deems
-12-
<PAGE>
appropriate or necessary to provide for each such issuance, to admit additional
limited partners in connection therewith and to specify the relative rights,
powers and duties of the holders of the LP Units or other securities being
issued, all without the approval of any other Partners.
4.4. Ownership of GP Units and LP Units. With respect to any Partner who
owns both GP Units and LP Units, any references in this Agreement to the rights
and/or obligations of General Partners and Limited Partners shall apply to such
Partners only in their capacity as holders of GP Units and LP Units,
respectively.
4.5. No Preemptive Rights. No Partner shall have any preemptive right with
respect to the issuance or sale of Units or other securities that may be issued
by the Partnership. No General Partner shall have any duty or obligation to
offer Units or other securities to any Partner.
4.6. No Interest. No interest shall be paid by the Partnership on Capital
Contributions.
4.7. Loans from Partners. Loans or other advances by a Partner to or for
the account of the Partnership shall not be considered Capital Contributions.
ARTICLE V
CAPITAL ACCOUNTS AND DISTRIBUTIONS
5.1. Capital Accounts. (a) The Partnership shall maintain for each Partner
a separate Capital Account with respect to Units in accordance with the
regulations issued pursuant to Section 704 of the Code. The Capital Account of
any Partner shall be credited with (i) the Net Agreed Value of all Capital
Contributions made by such Partner in exchange for Units or other Partnership
interests and (ii) all items of income and gain computed in accordance with
Section 5.1(b) and allocated to such Partner pursuant to Section 5.1(c) and
debited by (iii) the Net Agreed Value of all distributions of cash or property
made to such Partner with respect to Units or other Partnership interests and
(iv) all items of deduction and loss computed in accordance with Section 5.1(b)
and allocated to such Partner pursuant to Section 5.1(c).
(b) For purposes of computing the amount of each item of income, gain,
loss or deduction to be reflected in the Capital Accounts, the determination,
recognition and classification of such item shall be the same as its
determination, recognition and classification for federal income tax purposes,
except as otherwise provided in the Treasury Regulations issued pursuant to
Section 704 of the Code and provided that:
(i) Any deductions for depreciation, cost recovery or amortization
attributable to any Partnership property shall be determined as if the
adjusted basis of such property were equal to the Carrying Value of such
property. Upon an adjustment of the Carrying Value of any Partnership
property subject to depreciation, cost recovery or
-13-
<PAGE>
amortization pursuant to Section 5.1(e) or 7.9, any further deductions for
such depreciation, cost recovery or amortization attributable to such
property shall be determined as if the adjusted basis of such property were
equal to the Carrying Value of such property immediately following such
adjustment.
(ii) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined by the Partnership as if
the adjusted basis of such property as of such date of disposition were
equal in amount to the Carrying Value of such property as of such date.
(iii) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can neither be
deducted nor amortized under Section 709 of the Code shall be treated as
items of deduction.
(iv) The computation of all items of income, gain, loss and deduction
shall be made without regard to any election under Section 754 of the Code
which may be made by the Partnership and, as to those items described in
Section 705(a)(1)(B) or Section 705(a)(2)(B) of the Code or treated as
expenditures described in Section 705(a)(2)(B) pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(i)(2), without regard to the fact
that such items are not includible in gross income or are neither currently
deductible nor capitalizable for federal income tax purposes.
(c) (i) For purposes of maintaining the Capital Accounts and except as
otherwise provided in the Treasury Regulations issued pursuant to Section 704 of
the Code or in this Section 5.1(c), after making the allocations described in
Section 5.3 hereof, each remaining item of income, gain, loss and deduction
(computed in accordance with Section 5.1(b)) shall be allocated to the Partners
in accordance with their respective Percentage Interests.
(ii) If any Partner receives any adjustment, allocation or
distribution described in (4), (5) or (6) of Treasury Regulations Section 1.704-
1(b)(2)(ii)(d), items of Partnership income and gain (consisting of a pro rata
portion of each item of Partnership income, including gross income and gain)
shall be specially allocated to such Partner in an amount and manner sufficient
to eliminate a deficit in its Capital Account created by such adjustment,
allocation or distribution as quickly as possible. This Section 5.1(c)(ii) is
intended to be a qualified income offset provision as described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner
consistent therewith.
(iii) To preserve uniformity of Units or to otherwise promote the
purposes of the Partnership, the Managing General Partner shall have discretion
pursuant to Section 6.1(b) to make special allocations of income or deduction,
including curative and/or remedial allocations within the meaning of Treasury
Regulations Section 1.704-3(c).
-14-
<PAGE>
(iv) If there is a net decrease in Partnership minimum gain, within
the meaning of Treasury Regulations Section 1.704-2(d), during a Partnership
taxable year, all Partners with deficit balances in their Capital Accounts,
computed before any allocations pursuant to this Article V for such taxable
year, will be allocated items of Partnership income and gain for such year (and,
if necessary, subsequent years) in the amounts and in the proportions needed to
eliminate such deficits as quickly as possible, before any other allocations are
made under Section 704(b) of the Code. This Section 5.1(c)(iv) is intended to be
a minimum gain chargeback provision as described in Treasury Regulations Section
1.704-2(f) and shall be interpreted in a manner consistent therewith.
(v) Losses, deductions or expenditures described in Section
705(a)(2)(B) attributable to a partner nonrecourse debt (as described in
Treasury Regulations Section 1.704-2(b)(4)) shall be allocated in a manner
consistent with Treasury Regulations Section 1.704-2(i). If there is a net
decrease during a taxable year in minimum gain attributable to a partner
nonrecourse debt, net profits for such taxable year (and if necessary for
subsequent taxable years) shall be allocated to the Partners in the amounts and
in such character as determined according to Treasury Regulations Section 1.704-
2(i)(4).
(vi) Any special allocations of items of income or gain pursuant to
Section 5.1(c)(ii), (iv) or (v) shall be taken into account in computing
subsequent allocations of profits pursuant to Sections 5.1(c) and 6.1, so that
the net amount of any items so allocated and the profits, losses and all other
items allocated to each Partner pursuant to Sections 5.1(c) and 6.1 shall, to
the extent possible, be equal to the net amount that would have been allocated
to each such Person pursuant to the provisions of Sections 5.1(c) and 6.1 if
such special allocations had not occurred.
(d) (i) Except as otherwise provided in this Section 5.1(d), a transferee
of LP Units shall, upon becoming a Limited Partner, succeed to the portion of
the transferor's Capital Account maintained with respect to the Units
transferred.
(ii) If a transfer of Units or other Partnership interests causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code, the
Partnership shall be deemed to contribute all of its assets and liabilities to a
new partnership in exchange for interests in the new partnership and then to
distribute the interests in the new partnership to the Partners (including the
transferee(s) of the Units or other Partnership interests) in proportion to
their respective interests in the Partnership in complete liquidation of the
Partnership. The Capital Accounts of the Partnership will continue to be
maintained in accordance with this Article V following the termination.
(e) If any additional Units are to be issued pursuant to Section 4.3 or
otherwise, or if any Partnership property (other than a de minimis amount) is to
be distributed (including a deemed distribution under Section 5.1(d)(ii)
hereof), (i) the Carrying Values of all Partnership properties may, at the
discretion of the Managing General Partner, immediately prior to such
-15-
<PAGE>
issuance or distribution, be adjusted (consistent with the provisions hereof and
of Section 704(b) of the Code) upwards or downwards to reflect any Unrealized
Gain and Unrealized Loss attributable to all Partnership properties (as if such
Unrealized Gain or Unrealized Loss had been recognized upon an actual sale of
such properties immediately prior to such issuance) and (ii) the Capital
Accounts of all Partners may, at the discretion of the Managing General Partner,
immediately prior to such issuance or distribution be adjusted upwards or
downwards to reflect any Unrealized Gain and Unrealized Loss, less the amount of
Partnership indebtedness outstanding as of the date of determination. In
determining such Unrealized Gain or Unrealized Loss, the fair market value of
Partnership properties, as of any date of determination, (i) shall, in the case
of the issuance of additional Units, be deemed to be equal to (A) the number of
Units outstanding, as of the date of determination, times the Issue Price for
which such additional Units are so issued, plus (B) the amount of any
Partnership indebtedness outstanding as of the date of determination and (ii)
shall, in the case of the distribution of Partnership property, be determined in
the manner provided in Section 7.9.
In the event the Carrying Value of any Partnership property is adjusted
pursuant to the preceding paragraph, subsequent allocations of income, gain,
loss, and deduction with respect to such property shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Carrying Value in the same manner, subject to such reasonable
conventions as may be adopted by the Managing General Partner, as under Section
704(c) of the Code and the Treasury Regulations thereunder.
5.2. Distributions in Respect of Units. From time to time, not less often
than quarterly, the Managing General Partner shall review the Partnership's
accounts to determine whether distributions are appropriate. The Managing
General Partner may make such cash distributions as it, in its sole discretion,
may determine, without being limited to current or accumulated income or gains,
from any Partnership funds, including, without limitation, Partnership revenues,
Capital Contributions or borrowed funds. In its sole discretion, the Managing
General Partner may also distribute to the Partners other Partnership property,
additional Units or other securities of the Partnership or other entities.
All distributions in respect of Units shall be made concurrently to all
Unitholders on the Record Date set for purposes of such distribution and shall
be prorated in accordance with such Unitholders' respective Percentage Interests
as of such Record Date.
Amounts paid pursuant to Section 7.5 shall not be deemed to be
distributions for purposes of this Agreement.
5.3. Special Allocations Pertaining to Grants to Employees. On September
15, 1993, NEM contributed 1,100,000 NEIC LP Units to NEIC, L.P. and RTI
contributed 326,000 NEIC LP Units to NEIC, L.P. (pending vesting of such units
as described below). Pursuant to NEIC, L.P.'s Restricted Unit Plan, 1,426,000
NEIC LP Units were authorized to be issued subject to certain vesting
requirements. Promptly following the Formation Date, any NEIC LP
-16-
<PAGE>
Units in NEIC, L.P.'s Restricted Unit Plan which have not been issued and/or
have not yet vested will be exchanged for LP Units pursuant to the Intercompany
Agreement. Any LP Units issued in exchange for NEM Designated Units (as defined
in the NEIC, L.P. Partnership Agreement) shall be MetLife Designated Units
("MetLife Designated Units") and any LP Units issued in exchange for RTI
Designated Units (as defined in the NEIC, L.P. Partnership Agreement) shall be
RTI Designated Units ("RTI Designated Units"). Such MetLife Designated Units and
RTI Designated Units shall be issued subject to certain vesting requirements,
pursuant to the Partnership's Restricted Unit Plan (the "Restricted Unit Plan").
To the extent such Units are not vested, MetLife Designated Units and RTI
Designated Units shall for federal income tax purposes and for purposes of
maintaining Capital Account balances be treated as owned by MetLife and RTI,
respectively. Distributions made with respect to any such unvested MetLife
Designated Units and unvested RTI Designated Units, respectively, that are paid
to holders of such Units shall be charged to MetLife and RTI, respectively, as a
compensation expense and any tax deductions associated with such payments shall
be allocated accordingly to MetLife and RTI, respectively. Immediately prior to
vesting of any LP Units issued under the Restricted Unit Plan, the Carrying
Value of Partnership assets shall be adjusted as if the vesting of such LP Units
constituted the admission of a new Partner. Any recognition of Partnership
income or gain and any Partnership deduction for federal income tax purposes or
for Capital Account maintenance purposes resulting from the vesting of LP Units
issued pursuant to the Restricted Unit Plan shall, in the case of MetLife
Designated Units, be specially allocated and charged to MetLife and, in the case
of RTI Designated Units, be specially allocated and charged to RTI. To the
extent that any MetLife Designated Units or RTI Designated Units have not yet
been issued under the Restricted Unit Plan or have been forfeited and not
reissued, they shall be treated as outstanding and owned by MetLife and RTI,
respectively, for all tax distribution and Capital Account purposes,
notwithstanding that the certificates representing such Units are held by the
Managing General Partner for issuance to employees pursuant to the Restricted
Unit Plan.
5.4. Special Allocation Relating to Tax Payments. If the Partnership is
required to pay any tax (as well as any interest or penalties thereon) or to
reimburse the Advising General Partner pursuant to Section 7.5(d)(ii), the
amount of such payment shall be debited to the Capital Accounts of those persons
that were Partners at any time during the taxable years to which the underlying
tax assessment relates. Each Partner's proportionate share of such payment
shall be determined in good faith by the Managing General Partner based on the
number of Units owned by such Partner and the portion of the relevant taxable
year for which such Units were held. Such good faith determination shall be
binding on all Partners in the absence of manifest error. Each Partner agrees
that if such Partner is no longer a Partner at the time a payment is made to the
Advising General Partner pursuant to Section 7.5(d)(ii), such Partner will, upon
request by the Partnership, promptly pay to the Partnership its proportionate
share of such payment.
-17-
<PAGE>
ARTICLE VI
INCOME TAX MATTERS
6.1. Tax Allocations. (a) For federal income tax purposes, each item of
income, gain, loss, deduction and credit of the Partnership shall be allocated
among the Partners in accordance with their Percentage Interests, after taking
into account the special allocations described in Section 5.3 hereof, except as
provided in Article V and except that the Managing General Partner shall have
the authority to make such other allocations as are necessary and appropriate to
comply with Section 704 of the Code and the Treasury Regulations.
(b) To preserve uniformity of LP Units or to otherwise promote the
interests of the Partnership, the Managing General Partner shall have sole
discretion to (i) adopt such conventions as it deems appropriate or necessary in
determining the amount of depreciation and cost recovery deductions; (ii) make
special allocations of income or deduction; (iii) amend the provisions of this
Agreement as appropriate (x) to reflect the proposal or promulgation of
regulations under, to adopt conventions relating to, or to make elections
pertaining to, Section 704(c) of the Code or (y) otherwise to preserve the
uniformity of Units issued or sold from time to time; and (iv) adopt such other
conventions as are desirable in administrating the allocation rules of
subchapter K of the Code. The Managing General Partner may adopt such
conventions and make such allocations and amendments only if, in the good faith
opinion of the Managing General Partner, they would not have a material adverse
effect on the other Partners and are consistent with the principles of Section
704 and, if applicable, Section 754 of the Code.
(c) Items of Partnership income, gain, loss, deduction and credit shall,
for federal income tax purposes, be determined on a monthly basis (or other
basis, as required or permitted by Section 706 of the Code) and shall be
allocated to the Persons who are holders of Units or other Partnership interests
at such times and in such manner as determined in the reasonable discretion of
the Managing General Partner; provided, however, that gain or loss on a sale or
other disposition of all or a substantial portion of the assets of the
Partnership shall be allocated to the Persons who are holders of Units or other
Partnership interests as of the close of business on the date of such sale.
If the Internal Revenue Service, or other taxing authority, includes in the
income of any General Partner income from the Partnership in addition to any
income allocated to such General Partner under this Section 6.1, any deduction
or other tax benefit allowable to the Partnership in respect of such additional
income shall likewise be allocated to such General Partner.
6.2. Preparation of Tax Returns. The Managing General Partner shall
arrange for the preparation and timely filing of all returns of Partnership
income, gains, losses, deductions, credits and other items necessary for federal
and state income tax purposes and shall use all
-18-
<PAGE>
reasonable efforts to furnish to each other Partner within 90 days after the
close of the taxable year the tax information reasonably required for federal
and state income tax reporting purposes. The classification, realization and
recognition of income, gains, losses, deductions, credits and other items shall
be on the accrual method of accounting for federal income tax purposes, unless
the Managing General Partner shall determine otherwise in its sole discretion.
6.3. Tax Elections. Except as otherwise provided herein, the Managing
General Partner shall, in its sole discretion, determine whether to make any
available election. The Managing General Partner specifically has the authority
to make an election under Section 754 of the Code.
6.4. Tax Controversies. Subject to the provisions hereof, the Managing
General Partner is designated as the Tax Matters Partner (as defined in Section
6231 of the Code) and is authorized and required to represent the Partnership
(at the Partnership's expense) in connection with all examinations of the
Partnership's affairs by tax authorities, including resulting administrative and
judicial proceedings, and to expend Partnership funds for professional services
and costs associated therewith. Each other General Partner and each Limited
Partner agrees to cooperate with the Managing General Partner and to do or
refrain from doing any and all things reasonably required by the Managing
General Partner to conduct such proceedings.
6.5. Withholding. The Managing General Partner is authorized to take any
action necessary to comply with any withholding requirements established by
applicable law. Any amounts so withheld shall be treated as amounts distributed
to the Partners for all purposes under this Agreement. The Managing General
Partner may allocate any such amounts among the Unitholders in any manner that
is in accordance with applicable law.
ARTICLE VII
MANAGEMENT OF OPERATION OF BUSINESS;
INDEMNIFICATION
7.1. Powers of Managing General Partner. Except as otherwise expressly
provided in this Agreement, all powers to control and manage the business and
affairs of the Partnership shall be exclusively vested in the General Partners,
and no Limited Partner shall have any power to control or manage the business
and affairs of the Partnership. Except as expressly provided herein, the
authority of the General Partners to manage and control the business of the
Partnership shall be exercised only by the Managing General Partner, and no
General Partner other than the Managing General Partner shall have any control
over the business of the Partnership.
Subject to the provisions of Section 7.2, in addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to
-19-
<PAGE>
the Managing General Partner under any other provisions of this Agreement, the
Managing General Partner is hereby authorized and empowered, in the name of and
on behalf of the Partnership, to do and perform any and all acts and things
which it deems appropriate or necessary in the conduct of the business and
affairs of the Partnership, including, without limitation, the following:
(a) to lend or borrow money, to assume, guarantee or otherwise become
liable for indebtedness and other liabilities and to issue evidences of
indebtedness;
(b) to buy, lease (as lessor or lessee), sell, mortgage, encumber or
otherwise acquire or dispose of any or all of the assets of the Partnership;
(c) to own, use and invest the assets of the Partnership;
(d) to purchase or sell products, services and supplies;
(e) to make tax, regulatory or other filings, and to render periodic and
other reports to governmental agencies or bodies having jurisdiction over the
assets or business of the Partnership;
(f) to open, maintain and close bank accounts and to draw checks and
other orders for the payment of money;
(g) to negotiate, execute and perform any contracts, conveyances or
other instruments, including the Intercompany Agreement;
(h) to distribute Partnership cash;
(i) to utilize the services of officers and employees of the Managing
General Partner or of any other Persons and to select and dismiss employees (if
any) and outside attorneys, accountants, consultants and contractors;
(j) to maintain insurance for the benefit of the Partnership and the
Partners;
(k) to form, participate in or contribute or loan cash or property to
limited or general partnerships, joint ventures, corporations or similar
arrangements;
(l) to expand the business activities in which the Partnership is
engaged or engage in new business activities by acquisition or internal
development;
(m) to conduct litigation and incur legal expenses and otherwise deal
with or settle claims or disputes;
-20-
<PAGE>
(n) to purchase, sell or otherwise acquire or dispose of Units;
(o) to cause the Partnership to merge another entity into itself or to
allow the Partnership to be merged into another entity, provided that the
Managing General Partner has first obtained the approval of a Majority of
Minority Interest for such merger if (i) the surviving entity of such merger is
a partnership, and either (A) the Managing General Partner and its Affiliates
will not hold, directly or indirectly, a majority of the general partnership
interests of such surviving entity, or (B) the Managing General Partner or an
Affiliate thereof will not be the Managing General Partner of such surviving
entity, or (ii) the surviving entity of such merger is not a partnership and the
Managing General Partner and its Affiliates will not hold a majority of the
beneficial interests therein entitled to vote generally;
(p) to cause the Partnership to redeem (or cause the Advising General
Partner to purchase), in the sole discretion of the Managing General Partner,
all of the LP Units held by a holder of less than the Threshold Number of LP
Units, in exchange for either:
(i) an amount of cash equal to the product of (A) the Market Value,
and (B) the number of LP Units to be redeemed, and (C) the NEICOP
Exchange Ratio, or
(ii) a number of NEIC LP Units equal to the product of (A) the
number of LP Units to be redeemed, and (B) the NEIC Exchange Ratio; and
(q) to take all such actions as may be necessary or appropriate to
effect a Restructuring in accordance with Section 12.4.
7.2. Powers of Advising General Partner. Notwithstanding the generality of
Section 7.1, the Advising General Partner shall have the following powers:
(a) Decision Participation Rights. The Advising General Partner shall be
entitled to appoint one representative to a management committee of the
Partnership (the "Management Committee") and any subcommittee thereof. Such
--------------------
representative may be an officer, director, employee or other official of the
Managing General Partner. The size of the Management Committee and the
designation of the other members thereof shall be at the absolute discretion of
the Managing General Partner. The Management Committee shall meet on a periodic
basis, not less than annually, at such times and locations as are designated by
the Managing General Partner. The Partnership shall give the representative of
the Advising General Partner on the Management Committee the same advance notice
of any proposed meeting thereof which the Partnership gives to the other members
thereof. The Management Committee shall review all issues relating to management
of the Partnership to be presented to the Board of Directors of the Managing
General Partner, and shall review each of the following issues, whether or not
presented for such a vote:
-21-
<PAGE>
(i) Approval of the annual budget of the Partnership and any other
budget covering at least a twelve-month period of the Partnership;
(ii) Incurrence of a material amount of additional indebtedness by the
Partnership;
(iii) Incurrence of a material amount of additional contingent
liability as a result of any guarantee;
(iv) Any issuance of Units, other than pursuant to Section 4.1,
Section 4.2, any equity incentive plan, or the Restricted Unit Plan;
(v) Any material merger of another entity into the Partnership or any
merger of the Partnership into another entity, and any material purchase of
substantially all of the assets of another entity or any sale of a
substantial portion of the Partnership's assets, other than transfers to
Operating Partnerships;
(vi) Any material new product initiatives or marketing strategies;
(vii) Any material litigation to which the Partnership is party;
(viii) Any approval of compensation for senior officers of the
Partnership or the Managing General Partner;
(ix) Any proposed form of Restructuring pursuant to Section 12.4; and
(x) Any proposed amendment to this Agreement.
(b) Approval Rights. The approval of each General Partner shall be
required for the Partnership to:
(i) Adopt a capital expenditure budget for any period which exceeds
the Partnership's anticipated revenues for such period; provided, however,
that for the purposes of this Section 7.2(b)(i), a capital expenditure
budget shall be deemed not to include any amounts to be expended by the
Partnership in connection with acquisitions;
(ii) Adopt any plan pursuant to which the Partnership is authorized to
issue Units, or options or warrants to acquire Units, to employees or
consultants of the Partnership, in an amount exceeding ten (10) percent of
the number of Units outstanding at the time of such adoption;
(iii) Incur any indebtedness for borrowed money such that the Managing
General Partner reasonably anticipates that the Partnership's Interest
Coverage Ratio for any period of four consecutive fiscal quarters will be
less than 2 to 1; and
-22-
<PAGE>
(iv) Issue Units to the Managing General Partner or any of its
Affiliates (other than any such Affiliates controlled by the Partnership);
provided, however, that the Partnership can issue Units to such parties
without the approval of the Advising General Partner pursuant to (A) an
issue of Units in exchange for consideration with a fair value of not less
than the number of Units so issued multiplied by the product of the NEIC
Exchange Ratio and the Market Value; (B) an issue of Units in exchange for
a number of units of NEIC, L.P. equal to the product of the NEIC Exchange
Ratio and the number of Units so issued; (C) an issue of Units in which all
Partners are given the opportunity to participate on a pro rata basis on
the same terms and conditions as the Managing General Partner and any
Affiliate thereof; or (D) any exchange pursuant to the Intercompany
Agreement .
7.3. Duties of Managing General Partner. The Managing General Partner
shall manage the business and affairs of the Partnership in the manner the
Managing General Partner deems appropriate or necessary. Without limiting the
generality of the foregoing, the Managing General Partner's duties shall include
the following:
(a) to take possession of the assets of the Partnership;
(b) to staff and operate the business of the Partnership with the
officers and employees of the Managing General Partner or of other
Persons;
(c) to render or cause to be rendered technical services and perform or
cause to be performed financial, accounting, logistical and other
administrative functions for the Partnership;
(d) to render such reports and make such periodic and other filings as
may be required under applicable federal, state and local laws, rules and
regulations;
(e) to provide or cause to be provided purchasing, procurement, repair
and other services for the Partnership; and
(f) to conduct the business of the Partnership in accordance with this
Agreement and all applicable laws, rules and regulations;
in each case in such a manner as the Managing General Partner deems appropriate
or necessary.
7.4. Reliance by Third Parties. (a) Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that any General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the
-23-
<PAGE>
Partnership, and such Person shall be entitled to deal with such General Partner
as if it were the Partnership's sole party in interest, both legally and
beneficially. Each other Partner hereby waives any and all defenses and other
remedies which may be available against such Person to contest, negate or
disaffirm any action of such General Partner in connection with any such
dealing. In no event shall any Person dealing with a General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of such General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by a General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (a) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (b) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (c)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
(b) Notwithstanding Section 7.4(a), the Advising General Partner, acting
on its own and not in conjunction with the Managing General Partner, may only
act on behalf of the Partnership pursuant to or in furtherance of authorization
provided by the Management Committee and/or the Board of Directors of the
Managing General Partner, as the case may be. In the event that the Managing
General Partner determines that the Advising General Partner has acted on behalf
of the Partnership in any way in a manner inconsistent with any such
authorization or in the absence of such authorization, the Managing General
Partner may terminate the Advising General Partner's authority to act on behalf
of the Partnership, at which time third parties shall no longer be entitled to
assume that the Advising General Partner has such authority pursuant to Section
7.4(a).
7.5. Compensation and Reimbursement of the General Partners. (a) Except
as provided in this Section 7.5 or elsewhere in this Agreement, or any other
agreement contemplated or permitted hereby or thereby, no General Partner shall
be compensated for its service as General Partner to the Partnership.
(b) The Managing General Partner shall be promptly reimbursed for all
Designated MGP Expenses, in addition to any reimbursement as a result of
indemnification in accordance with Section 7.12. The Managing General Partner
shall determine such Designated MGP Expenses in any reasonable manner determined
by it. The Advising General Partner shall be promptly reimbursed for all
Designated AGP Expenses, in addition to any reimbursement as a result of
indemnification in accordance with Section 7.12. The Advising General Partner
shall determine such Designated AGP Expenses in any reasonable manner determined
by it.
(c) The Managing General Partner may propose and adopt without the
approval of any other Partner fringe benefit plans, including, without
limitation, plans comparable to those that
-24-
<PAGE>
covered employees employed by the predecessors to the Partnership and plans
involving the issuance of Units or the sale or transfer of units of partnership
interest of NEIC, L.P., for the benefit of employees of any General Partner, the
Partnership, any Operating Partnership, or any of their respective Affiliates,
in respect of services performed, or obligated to be performed, directly or
indirectly, for the benefit of the Partnership or any Operating Partnership,
except that the Partnership shall not be obligated to reimburse MetLife, any
Affiliate of MetLife, or RTI for any costs or value associated with any MetLife
Designated Units or RTI Designated Units issued pursuant to the Restricted Unit
Plan as described in Section 5.3.
(d) In addition to the reimbursement provided for in Section 7.5(b), the
Advising General Partner shall be reimbursed for: (i) any costs associated with
the solicitation of voting instructions pursuant to Section 8.1 of the
Intercompany Agreement; and (ii) pursuant to Section 5.4, any tax (as well as
any interest or penalties thereon) paid by the Advising General Partner that is
imposed on the Partnership or the Advising General Partner attributable to
income or gain of the Partnership other than the Advising General Partner's
ratable share of such income or gain. The Partnership may, in the sole
discretion of the Managing General Partner, pay any other expenses incurred by
the Advising General Partner.
7.6. Purchase or Sale of LP Units. Subject to Section 7.2, the Managing
General Partner may, on behalf of the Partnership, purchase or otherwise acquire
or sell or otherwise dispose of LP Units. As long as LP Units are held by the
Partnership, such LP Units shall not be considered outstanding for any purpose.
The Managing General Partner or any of its Affiliates may also purchase or
otherwise acquire or sell or otherwise dispose of LP Units for its own account.
In particular, the Advising General Partner may acquire, sell or otherwise
dispose of LP Units pursuant to and in accordance with the provisions of Article
X.
7.7. Partnership Funds. The funds of the Partnership shall be deposited in
such account or accounts as shall be designated by the Managing General Partner,
and shall not be commingled with the funds of the Managing General Partner or
any of its Affiliates. All withdrawals from or charges against such accounts
shall be made by the Managing General Partner or by its agents, which agents may
be Affiliates of the Managing General Partner. Funds of the Partnership may be
invested as determined by the Managing General Partner.
7.8. Outside Activities; Contracts with Affiliates; Loans to or from
Affiliates. (a) No General Partner shall have any business interests or engage
in any business activities except for those relating to the Partnership and any
Operating Partnership, provided that each General Partner shall be allowed to
manage its own passive investments and the investments of any related pension
fund. The Managing General Partner shall have no duty or obligation to refer
business opportunities known by or available to it to the Partnership or any
Partner.
(b) Any Affiliate of any General Partner (other than an Affiliate that is
a General Partner) and any director, officer, partner or employee of any General
Partner or any of its
-25-
<PAGE>
Affiliates shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership and any
Operating Partnership, including business interests and activities in direct
competition with the Partnership and any Operating Partnership, for their own
account and for the account of others, without having or incurring any
obligation to offer any interest in such businesses or activities to the
Partnership, or any Partner. Neither the Partnership, any Operating Partnership,
any of the Partners nor any other Person shall have rights by virtue of this
Agreement or the partnership relationship governed hereby in any such business
interests or in the profits or revenues derived therefrom.
(c) Subject to the provisions of Section 7.5(a), the Managing General
Partner and its Affiliates may enter into contracts with, or render services to,
the Partnership or any Operating Partnership, provided that such contracts or
services are on terms that are fair and reasonable to the Partnership.
(d) No General Partner nor any Affiliate thereof shall sell, transfer or
convey property to, or purchase property from, the Partnership, directly or
indirectly, except pursuant to transactions that are fair and reasonable to the
Partnership.
(e) Any General Partner or any Affiliate thereof may lend to the
Partnership funds needed by the Partnership for such periods of time as the
Managing General Partner may determine; provided, however, that such General
Partner or Affiliate thereof may not charge the Partnership interest greater
than the rate (including points or other financing charges or fees) that would
be charged to the Partnership by unrelated lenders on comparable loans. The
Partnership shall reimburse the General Partner or its Affiliate, as the case
may be, for any costs incurred by the General Partner or its Affiliate in
connection with the borrowing of funds obtained by such General Partner or its
Affiliate and loaned to the Partnership.
(f) The Partnership may lend funds to any General Partner or any Affiliate
thereof; provided, however, that the Partnership may not lend funds to any
General Partner or an Affiliate thereof unless such funds consist of funds
available after provision for working capital and such reserves as the Managing
General Partner deems appropriate and such loans shall bear interest at the rate
(including points or other financing charges or fees) that such General Partner
would be charged by unrelated lenders on comparable loans.
7.9. Tax Basis and Value Determinations. To the extent that the Managing
General Partner is required pursuant to the provisions of this Agreement to
establish fair market values or allocate amounts realized, tax basis, Agreed
Values or Net Agreed Values, the Managing General Partner shall establish such
values and make such allocations in a manner that is reasonable and fair to each
other General Partner and the Limited Partners, taking into account all
applicable laws, governmental regulations, rulings and decisions. The Managing
General Partner may, in its sole discretion, modify or revise such allocations
in order to comply with such laws, governmental regulations, rulings or
decisions or to the extent it otherwise deems such modification or revision
appropriate or necessary. The Managing General Partner is
-26-
<PAGE>
authorized, to the extent deemed by it to be appropriate or necessary, to
utilize the services of an independent appraiser in establishing such values or
allocations and the Managing General Partner shall in such cases be entitled to
rely on the values or allocations established by such independent appraiser.
7.10. Resolution of Conflicts of Interest; Standard of Care. (a) Unless
otherwise expressly provided in this Agreement or any other agreement
contemplated hereby, (i) whenever a conflict of interest exists or arises
between any General Partner or any Affiliate thereof, on the one hand, and the
Partnership or any other Partner, on the other hand, or (ii) whenever this
Agreement or any other agreement contemplated hereby provides that any General
Partner or any Affiliate thereof shall act in a manner which is, or provide
terms which are, fair and/or reasonable to the Partnership, any Operating
Partnership or any other Partner, such General Partner or such Affiliate shall
resolve such conflict of interest, take such action or provide such terms
considering, in each case, the relative interests of each party to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interests, any customary or accepted industry practices, and
any applicable generally accepted accounting practices or principles, and in the
absence of bad faith by such General Partner or such Affiliate, the resolution,
action or terms so made, taken or provided by such General Partner or such
Affiliate shall not constitute a breach of this Agreement or any other agreement
contemplated hereby or a breach of any standard of care or duty imposed hereby
or under the Delaware Act or any other applicable law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that any General Partner or any Affiliate thereof is permitted or
required to make a decision (i) in its "discretion" or under a grant of similar
authority or latitude, such General Partner or such Affiliate shall be entitled
to consider only such interests and factors as it desires and shall have no duty
or obligation to give any consideration to any interest of or factors affecting
the Partnership or any other Partners, or (ii) in its "good faith" or under
another express standard, such General Partner or such Affiliate shall act under
such express standard and shall not be subject to any other or different
standards imposed by this Agreement, any other agreement contemplated hereby or
applicable law.
7.11. Other Matters Concerning the General Partners. (a) Each General
Partner may rely and shall be protected in acting or refraining from acting upon
any certificate, document or other instrument believed by it to be genuine and
to have been signed or presented by the proper party or parties. No General
Partner shall be liable to the Partnership or any other Partner and shall be
protected in acting, or refraining from acting, in good faith reliance on the
provisions of this Agreement, and the good faith exercise of any of the powers
or rights granted to such General Partner by this Agreement, including in the
case of the Managing General Partner the power to effect (or not to effect) a
Restructuring as provided in Section 12.4, shall not constitute a breach of
fiduciary duty to any Partner adversely affected thereby.
-27-
<PAGE>
(b) Each General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisors selected by it and any opinion or advice of any such Person as to
matters which such General Partner believes to be within such Person's
professional or expert competence shall be full and complete authorization and
protection with respect to any action taken or suffered or omitted by such
General Partner hereunder in good faith and in accordance with such opinion or
advice.
(c) Each General Partner may exercise any of the powers granted to it by
this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and no General Partner shall be
responsible for any misconduct or negligence on the part of any such agent
appointed by such General Partner in good faith.
7.12. Limited Liability; Indemnification.
(a) Notwithstanding anything to the contrary in this Agreement, and except
to the extent required by applicable law, no Indemnitee shall be liable to the
Partnership or any Partner for any action taken or omitted to be taken by such
Indemnitee, provided that such Indemnitee acted in good faith and such action or
omission does not involve the gross negligence or willful misconduct of such
Indemnitee or, if the Indemnitee is a General Partner or an Affiliate thereof
and the provisions of Section 7.10 apply, such Indemnitee acted or omitted to
act in a manner not violating Section 7.10. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
an Indemnitee did not act in good faith or that an action or omission involves
gross negligence or willful misconduct or, if the Indemnitee is a General
Partner or an Affiliate thereof and the provisions of Section 7.10 apply, that
the Indemnitee acted or omitted to act in a manner violating Section 7.10.
(b) The Partnership shall, to the fullest extent permitted by applicable
law, indemnify each Indemnitee against expenses (including legal fees and
expenses), judgments, fines and amounts paid in settlement, actually and
reasonably incurred by such Indemnitee, in connection with any threatened,
pending or completed claim, demand, action, suit or proceeding to which such
Indemnitee was or is a party or is threatened to be made a party, by reason of
(i) such Indemnitee's status as a General Partner, any Affiliate of a General
Partner, any Person who is or was a director, partner, officer, employee or
agent of a General Partner or any such Affiliate, or any Person who is or was
serving at the request of a General Partner or any such Affiliate as a director,
officer, partner, trustee, employee or agent of another Person or (ii) any
action taken or omitted to be taken by such Indemnitee in any capacity referred
to in clause (i) of this Section 7.12(b), relating to this Agreement or the
property, business affairs or management of the Partnership or any Operating
Partnership (provided the Indemnitee acted in good faith and the act or omission
which is the basis of such claim, demand, action, suit or proceeding does not
involve the gross negligence or wilful misconduct of such Indemnitee or, if the
Indemnitee is a General Partner or an Affiliate thereof and the provisions of
Section 7.10
-28-
<PAGE>
apply, such Indemnitee acted or omitted to act in a manner not violating Section
7.10). The indemnification provided by this Section 7.12(b) shall include the
right to advancement of expenses pursuant to Section 7.12(c). In the sole
discretion of the Managing General Partner, the Partnership may, but shall not
be required to, treat any Operating Partnership, any Affiliate of any Operating
Partnership, or any Person who is or was a director, partner, officer, employee
or agent of any Operating Partnership or any Affiliate thereof as an Indemnitee
for the purposes of this Section 7.12(b).
(c) Expenses (including legal fees and expenses) incurred in defending any
claim, demand, action, suit or proceeding subject to Section 7.12(b) shall be
paid by the Partnership in advance of the final disposition of such claim,
demand, action, suit or proceeding upon receipt of an undertaking (which need
not be secured) by or on behalf of the Indemnitee to repay such amount if it
shall ultimately be determined, as permitted by the Delaware Act or other
applicable law, that the Indemnitee is not entitled to be indemnified by the
Partnership as authorized hereunder.
(d) The indemnification provided by Section 7.12(b) shall be in addition
to any other rights to which an Indemnitee may be entitled, and shall continue
as to an Indemnitee who has ceased to serve in a capacity for which the
Indemnitee is entitled to indemnification and shall inure to the benefit of the
heirs, successors, assigns, administrators and personal representatives of the
Indemnitee.
(e) To the extent commercially reasonable, the Partnership shall purchase
and maintain insurance on behalf of the Indemnitees against any liability which
may be asserted against or expense which may be incurred by an Indemnitee in
connection with the Partnership's activities, whether or not the Partnership
would have the power to indemnify an Indemnitee against such liability under the
provisions of this Agreement.
(f) An Indemnitee shall not be denied indemnification in whole or in part
under Section 7.12(b) because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 7.12 are for the benefit of the
Indemnitees and the heirs, successors, assigns, administrators and personal
representatives of the Indemnitees and shall not be deemed to create any rights
for the benefit of any other Persons.
(h) Notwithstanding any other provision of this Agreement, the
indemnification provisions of this Agreement shall not be amended to limit the
right of any Person to indemnification for action, or failure to act, during any
period prior to the amendment.
-29-
<PAGE>
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 Limitation of Liability. The Limited Partners, in their capacity as
Limited Partners, shall have no liability under this Agreement (including,
without limitation, liability under Section 7.12); provided, however, that the
Limited Partners shall be liable to pay their proportionate share of a payment,
if any, pursuant to Section 5.4 and Section 7.5(d)(ii).
8.2 Management of Business. No Limited Partner shall, in its capacity as
a Limited Partner, take part in the operation, management or control (within the
meaning of the Delaware Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by a
director, partner, officer, employee or agent of a General Partner or an
Affiliate of a General Partner in such Person's capacity as such (whether or not
such Person is also a Limited Partner) shall not affect, impair or eliminate the
limitations on the liability of the Limited Partners under this Agreement.
8.3 Outside Activities. Limited Partners shall be entitled to and may
have business interests and engage in business activities in addition to those
relating to the Partnership, including business interests and activities in
direct competition with the Partnership or any Operating Partnership. Neither
the Partnership, any Operating Partnership, any of the other Partners nor any
other Person shall have any rights by virtue of this Agreement or the
partnership relationship created hereby in any business ventures of any Limited
Partner or in the profits and revenues derived therefrom.
8.4 Return of Capital. No Limited Partner shall be entitled to the
withdrawal or return of his Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
8.5 Rights of Limited Partners Relating to the Partnership. In addition
to other rights provided by this Agreement or by applicable law, each Limited
Partner shall have the right for a proper purpose reasonably related to such
Limited Partner's interest in the Partnership, upon reasonable written demand
and at such Limited Partner's own expense:
(a) to obtain true and full information regarding the status of the
business and financial condition of the Partnership;
(b) promptly after becoming available, to obtain a copy of the
Partnership's federal and state income tax returns for each year;
(c) to obtain a current list of the name and address of each Partner
as set forth in the Partnership's records;
-30-
<PAGE>
(d) to obtain a description and statement of the Net Agreed Value of
any Capital Contribution made or agreed to be made by each Partner, and
the date on which such Partner became a Partner;
(e) to obtain a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with executed copies of
any powers of attorney pursuant to which this Agreement, the Certificate of
Limited Partnership and all amendments thereto have been executed; and
(f) to obtain such other information regarding the affairs of the
Partnership as may be just and reasonable; provided, however, that the
Managing General Partner may keep confidential from the Limited Partners or
any Limited Partner, for such period of time as the Managing General
Partner deems reasonable, any information which the Managing General
Partner reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the Managing General Partner in good
faith believes could damage the Partnership or its business or be in
violation of applicable law, including, without limitation, federal
securities law, or which the Partnership is required by agreements with
third parties to keep confidential.
Notwithstanding the provisions of this Section 8.5, the Managing General
Partner may, in its sole discretion, adopt additional standards with respect to
access to Partnership books and records.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Books, Records and Accounting. The Managing General Partner shall
keep or cause to be kept books and records with respect to the Partnership's
business, which books and records shall at all times be kept at the principal
office of the Partnership. Any books and records maintained by the Partnership
in the regular course of business, including the books of account and records of
Partnership proceedings, may be kept on, or be in the form of, punch cards,
disks, magnetic tape, photographs, micrographics or any other information
storage device, provided that the records so kept are convertible into clearly
legible written form within a reasonable period of time. The books of the
Partnership shall be maintained, for financial reporting purposes, on the
accrual basis, or on a cash basis adjusted periodically to an accrual basis, as
the Managing General Partner shall determine in its sole discretion, in
accordance with generally accepted accounting principles and applicable law.
9.2. Fiscal Year. The fiscal year of the Partnership for financial
reporting purposes shall be the calendar year, unless the Managing General
Partner shall determine otherwise in its sole discretion.
-31-
<PAGE>
9.3. Reports. (a) As soon as practicable, but in no event later than 120
days after the close of each fiscal year, the Managing General Partner shall
cause to be prepared as of the last day of that fiscal year and promptly mailed
to each other Partner reports containing financial statements of the Partnership
for the fiscal year, presented in accordance with generally accepted accounting
principles, including a balance sheet, statement of income, statement of
Partners' capital and statement of changes in financial position, such
statements to be audited by a nationally recognized firm of independent public
accountants selected by the Managing General Partner.
(b) As soon as practicable, but in no event later than 45 days after the
close of each calendar quarter, except the last calendar quarter of each fiscal
year, the Managing General Partner shall cause to be prepared as of the last day
of that calendar quarter and promptly mailed to each other Partner a quarterly
report for the calendar quarter containing such financial and other information
as the Managing General Partner deems appropriate.
ARTICLE X
TRANSFER OF LP UNITS
10.1. In General. Except as otherwise set forth in this Article X, no
Limited Partner (a) may sell, assign, transfer, encumber, pledge, subject to a
security interest or otherwise dispose of all or any part of such Limited
Partner's LP Units or any economic or other interest therein, or (b) shall have
the right to substitute in its place any purported purchaser, assignee,
transferee, pledgee, donee, heir, legatee, or other recipient of all or any
portion of the LP Units of such Limited Partner, without the prior written
consent of the Managing General Partner, which consent may be withheld in the
sole discretion of the Managing General Partner. Any transfer of LP Units made
not in accordance with this Article X shall be null and void and shall not be
recognized by the Managing General Partner, which may refuse to recognize the
transferee as a partner and may refuse to recognize any rights of such
transferee.
10.2. Avoidance of Publicly Traded Partnership Status. It is the intent of
the Partners that the Partnership not be classified as a publicly traded
partnership under Section 7704 of the Code and not be required to register any
class of its securities with the SEC under the Exchange Act. The Managing
General Partner shall take such steps as it believes, in its sole discretion,
are necessary or desirable to prevent a risk of such classification or
registration requirement. In particular, the Managing General Partner shall not
permit transfers of LP Units that, in the opinion of the Managing General
Partner, do not fit within the regulatory safe harbors described in Treasury
Regulations Section 1.7704-1 or would obligate the Partnership to register any
class of its securities under the Exchange Act. In addition, the Managing
General Partner may in its sole discretion adopt such conventions as it deems
-32-
<PAGE>
appropriate or necessary to comply with Code Section 7704 and the regulations
promulgated thereunder.
10.3. Permitted Transfers. Subject to Section 10.2, the Managing General
Partner shall consent to the following transfers of LP Units:
(a) transfers in which the transferee's basis in the transferred LP Units
is determined in whole or in part by reference to the transferor's
basis in such units, as more fully described in Treasury Regulations
Section 1.7704-1(e)(1)(i); provided, however, that such transfers
shall not include exchanges of LP Units for NEIC LP Units pursuant to
Section 10.4;
(b) transfers made upon the death of the holder of LP Units, including
transfers from an estate, as more fully described in Treasury
Regulations Section 1.7704-1(e)(1)(ii);
(c) transfers between members of a family, as more fully described in
Treasury Regulations Section 1.7704-1(e)(1)(iii);
(d) transfers involving issuances of LP Units by the Partnership in
exchange for cash, property, or services, as more fully described in
Treasury Regulations Section 1.7704-1(e)(1)(iv);
(e) transfers to the Advising General Partner by MetLife, RTI, their
respective Affiliates, or any other limited partners of LP Units
representing more than two percent of the total Units outstanding (in
general excluding from the denominator Units held by the General
Partners or their affiliates) in exchange for NEIC LP Units, that
qualify as block transfers as that term is defined in Treasury
Regulations Section 1.7704-1(e)(2) ("Block Transfers");
(f) transfers of LP Units to the Advising General Partner in exchange for
NEIC LP Units pursuant to Section 10.4; and
(g) transfers of not less than five percent (5%) of the LP Units then
outstanding in one or more of a series of related transactions
pursuant to one or more binding agreements; provided, however, that
each of such transfers qualifies as a Block Transfer.
In addition, the Managing General Partner, in its sole discretion, may consent
to other transfers of LP Units.
-33-
<PAGE>
10.4. Permitted Exchanges. Subject to Section 10.2, Limited Partners shall
be permitted to transfer LP Units to the Advising General Partner in exchange
for NEIC LP Units in accordance with the procedures described in this Section
10.4.
(a) Exchange Dates. The exchanges contemplated by this Section 10.4 will
occur quarterly on the first business day in January, April, July,
and October of each year or, if an exchange cannot occur on such
date, on another date promptly thereafter as determined by the
Managing General Partner in its sole discretion (each such date, an
"Exchange Date"), beginning on April 1, 1998. The Managing General
Partner may, in its sole discretion, designate one or more other
dates as the sole Exchange Date(s) in any given year.
(b) Notice to Limited Partners. At least 75 days before each Exchange
Date, the Managing General Partner will send each Limited Partner a
written notice specifying the next Exchange Date and inviting each
Limited Partner to participate in the exchange that will occur on
that Exchange Date. The notice will be accompanied by (i) a form (the
"Offer") that must be executed by the Limited Partner to participate
in the exchange, and (ii) if required by applicable securities laws,
a prospectus or other offering statement for NEIC, L.P.
(c) Submission of Offer. At least 60 days prior to the relevant Exchange
Date, each Limited Partner that wishes to participate in the exchange
that will occur on that date must submit to the Managing General
Partner an executed Offer in which the Limited Partner irrevocably
offers to transfer the specified number of LP Units to the Advising
General Partner on the next Exchange Date in exchange for a number of
NEIC LP Units as is determined in accordance with Section 10.4(f).
(d) Number of LP Units Exchanged. The Managing General Partner will
determine how many LP Units will be permitted to be exchanged on a
particular Exchange Date, based on whether the underlying transfers
fit within the safe harbors contained in Treasury Regulations Section
1.7704-1, as determined by the Managing General Partner in its sole
discretion. If the number of LP Units tendered for exchange exceeds
the number of LP Units that the Managing General Partner will permit
to be exchanged, the Managing General Partner will reduce the number
of LP Units specified in each Limited Partner's Offer in proportion
to the ratio of total LP Units accepted for exchange to total LP
Units tendered for exchange, or by such other method as the Managing
General Partner may determine in its sole discretion.
(e) Acceptance of Offer. No later than five business days after each
Exchange Date, the Managing General Partner will send a written
notice to each Limited Partner that has submitted an Offer indicating
the number of LP Units offered by such
-34-
<PAGE>
Limited Partner that were accepted for exchange, and the number of
units representing a limited partner's interest in NEIC, L.P. that
were received by such Limited Partner in the exchange. Appropriate
book entries will be made on the partnership books of the Partnership
and on the units register of NEIC, L.P. to reflect such exchange. As
soon thereafter as practicable, the exchanging Limited Partner will
be sent a certificate evidencing the units representing a limited
partner's interest in NEIC, L.P. received by such Limited Partner in
the exchange, which certificate shall be executed on behalf of NEIC,
L.P. by the General Partner of NEIC, L.P. (as defined in the NEIC,
L.P. Partnership Agreement) and manually or facsimile countersigned
by the transfer agent for NEIC, L.P.
(f) Units Issued in Exchange. In return for each LP Unit accepted for
exchange, a Limited Partner shall be entitled to receive that number
of NEIC LP Units equal to the NEIC Exchange Ratio. No fractional NEIC
LP Units shall be issued upon exchange of LP Units. In lieu of any
fractional LP Units to which such Limited Partner would otherwise be
entitled, NEIC, L.P. shall pay to such Limited Partner cash equal to
the product of (i) such fraction, and (ii) the Market Value used in
the determination of the NEIC Exchange Ratio.
(g) Cash in Lieu of Units. The Advising General Partner may, at its
option, tender to any Limited Partner surrendering LP Units for
exchange, in lieu of NEIC LP Units pursuant to Section 10.4(f), an
amount of cash equal to the product of (i) the Market Value on the
Exchange Date, and (ii) the total number of NEIC LP Units that would
have been issued pursuant to Section 10.4(f).
(h) Suspension of Exchanges. The Managing General Partner may suspend at
any time the exchange right provided in this Section 10.4 if the
Managing General Partner determines, in its sole discretion, that
such a suspension is necessary or desirable (i) to prevent a risk
that the Partnership will be classified as a publicly traded
partnership under Section 7704 of the Code, or (ii) as a result of
any required prospectus or offering statement no longer being
complete or accurate or failing to set forth all information required
to be set forth therein (all as determined in the sole discretion of
the Managing General Partner) or otherwise to comply with applicable
securities or other laws. In the event of such a suspension, the
Managing General Partner will attempt in good faith to remedy the
circumstances causing such suspension in order to resume the
quarterly exchanges described in this Section 10.4; provided,
however, that neither NEIC, L.P. nor the Partnership shall be
required to disclose any information which NEIC, L.P. or the Managing
General Partner, as the case may be, considers in its sole discretion
to be inadvisable to disclose.
-35-
<PAGE>
ARTICLE XI
TRANSFER OF GP UNITS
11.1. Transfer of GP Units. The Advising General Partner may not transfer
any GP Units without the consent of the Managing General Partner. The Managing
General Partner may not transfer any GP Units unless (a) all of its GP Units are
being transferred and the transferee assumes all of the rights and obligations
of the Managing General Partner under this Agreement, including the rights and
obligations of a Managing General Partner, (b) the transfer (i) is to an
Affiliate of the Managing General Partner (including without limitation the
Advising General Partner), or (ii) is in connection with the Managing General
Partner's merger or consolidation with, or a transfer of all or substantially
all of the Managing General Partner's assets to, another Person, and such merger
or consolidation or transfer of all or substantially all of the Managing General
Partner's assets is approved by a Majority of Minority Interest (treating the
proposed purchaser as an Affiliate of the Managing General Partner for this
purpose) and (c) the Partnership receives an Opinion of Counsel that such
transfer would not result in the loss of limited liability of any Limited
Partner or cause the Partnership or any Operating Partnership to be treated as
an association taxable as a corporation for federal income tax purposes,
provided, however, that neither the exchange by the Managing General Partner of
GP Units for LP Units pursuant to Section 4.2 nor the exchange by the Advising
General Partner pursuant to Section 2.2 of the Intercompany Agreement shall
constitute a transfer of GP Units for purposes of this Section.
11.2. Successor General Partner. Any transferee of GP Units of the
Advising General Partner pursuant to Section 11.1 shall automatically be
admitted to the Partnership as a successor Advising General Partner, and the
transferor of such GP Units shall automatically cease to be an Advising General
Partner, effective at the time provided in Section 12.3. Any transferee of GP
Units of the Managing General Partner pursuant to Section 11.1 shall
automatically be admitted to the Partnership as the successor Managing General
Partner, and the transferor of such GP Units shall automatically cease to be the
Managing General Partner, effective at the time provided in Section 12.3. Any
successor General Partner admitted pursuant to this Section 11.2 shall continue
the business of the Partnership on the terms and conditions set forth herein.
11.3. Admission of Additional General Partner. With the approval of a
Majority Interest and a Majority of Minority Interest, any Person may be
admitted as a general partner, effective upon the filing with the Secretary of
State of the State of Delaware of an amendment to the Certificate of Limited
Partnership to reflect the admission of the new approved partner as a general
partner. No such approval shall be required to admit as a general partner any
Affiliate of a General Partner. Notwithstanding any provision of this Section
11.3, a successor General Partner shall be admitted to the Partnership upon the
approvals required by Sections 13.1, 14.1 or 14.2.
-36-
<PAGE>
ARTICLE XII
ADMISSION OF INITIAL AND SUBSTITUTED
LIMITED PARTNERS AND SUCCESSOR GENERAL PARTNERS
12.1. Withdrawal of Initial Limited Partner. The Initial Limited Partner
shall be deemed to have withdrawn from the Partnership upon the admission to the
Partnership of any other Limited Partner, whereupon the Initial Limited Partner
shall receive only the return of his initial capital contribution.
12.2. Admission of Substituted Limited Partners. A transferee of LP Units
pursuant to and in compliance with Article X shall be admitted to the
Partnership as a Limited Partner (and the transferor of such LP Units shall, if
such transferor is assigning all of such transferor's LP Units, automatically
cease to be a Limited Partner) at and as of the time the transferee executes a
power of attorney substantially in the form of Appendix A to this Agreement.
12.3. Admission of Successor General Partner. A successor General Partner
approved pursuant to Section 13.1 or the transferee of all of a General
Partner's GP Units pursuant to Section 11.1 shall be admitted to the Partnership
as a successor General Partner, effective as of the date an amendment or
restatement of the Certificate of Limited Partnership is filed with the
Secretary of State of the State of Delaware effecting such substitution,
provided, however, that no such successor shall be so admitted to the
Partnership until it has agreed in writing to assume the former General
Partner's obligations under this Agreement, including in the case of a successor
to the Managing General Partner, the obligations of a Managing General Partner.
This Agreement and the Certificate of Limited Partnership shall be amended as
appropriate to reflect the termination of a former General Partner as a general
partner and the admission of the successor General Partner. Any successor
General Partner shall continue the business of the Partnership on the conditions
set forth herein.
12.4. Restructuring. (a) Power of Managing General Partner to Effect a
Restructuring. If the Managing General Partner at any time shall have reason to
believe that there is a material possibility that either a Loss of Partnership
Status or a Tax Realization Event will occur at any future time, then the
Managing General Partner in its absolute discretion may (but shall not be
required to) take any and all actions that the Managing General Partner deems
necessary, appropriate or desirable to accomplish any one or more
Restructurings. The Managing General Partner shall have full and complete power
and authority to take any and all such actions not prohibited by law (including
without limitation the power and authority to effect any amendments to this
Agreement other than Amendments that, pursuant to Section 15.3 of this
Agreement, may be effected only with the approval of a Ninety-Five Percent
Interest), all without obtaining consent thereto or approval thereof by any
other Partner, and each Partner hereby confers upon the Managing General Partner
an irrevocable power of attorney, coupled with an interest, to take any and all
such actions. Such actions authorized pursuant to this Section 12.4 include,
but are not limited to:
-37-
<PAGE>
(i) Creation of Affiliated Entities. The creation of one or more
entities (including, without limitation, limited partnerships, general
partnerships, corporations, trusts and limited liability companies)
controlled by any General Partner, Affiliates of any General Partner or
Affiliates of the Partnership.
(ii) Asset and Business Transfers. The transfer of all or part of the
businesses or assets of the Partnership to an existing or newly-organized
entity or entities in exchange for interests in such entity or entities,
which interests may be subject to substantial restrictions on transfer.
(iii) Initiation of Mandatory Exchanges. The initiation of exchange or
redemption transactions which will permit and may automatically effect,
without the consent of any Partner, the exchange of some or all outstanding
LP Units for interests in an existing or new entity holding a direct or
indirect interest in all or part of the businesses or assets of the
Partnership.
(iv) Imposition of Transfer Restrictions. The imposition of
substantial restrictions on the transferability of some or all of the LP
Units (or interests in an entity or entities that are successors to all or
any part of the businesses or assets of the Partnership) for both limited
and extended periods of time, which restrictions may provide for damages
(including forfeiture) for attempted transfer in violation of such
restrictions.
The Managing General Partner may not, in effecting a Restructuring, subject any
holder of LP Units to liability to Partnership creditors without such holder's
consent.
(b) Provisions Effective Notwithstanding Contrary Provisions. The
provisions of this Section 12.4 shall be effective notwithstanding any provision
to the contrary contained elsewhere in this Agreement, other than Section 15.3
hereof.
(c) Consequences of Restructuring. It is understood and agreed by all
Partners that the power, authority and discretion of the Managing General
Partner to effect (or not to effect) one or more Restructurings is a bargained
for and material condition of the willingness of the General Partner and its
Affiliates to enter into this Agreement, and of the obligation of the General
Partner and its Affiliates to consummate the transactions contemplated by the
Intercompany Agreement. It is further understood and agreed by all Partners
that the power of the Managing General Partner pursuant to this Section 12.4
includes the power, authority and discretion to effect one or more
Restructurings that result in benefits to one or more Partners (including
without limitation the Managing General Partner, any Affiliate of the Managing
General Partner, the Advising General Partner, or any Affiliate of the Advising
General Partner) that are not enjoyed by all Partners, and may result in
disadvantageous consequences to one or more Partners that are not suffered by
all Partners (including without limitation the
-38-
<PAGE>
Managing General Partner, any Affiliate of the Managing General Partner, the
Advising General Partner, or any Affiliate of the Advising General Partner), and
that no Partner shall have any cause of action against, or right to receive any
compensation from, the Partnership, the Managing General Partner, any Affiliate
of the Managing General Partner, the Advising General Partner, any Affiliate of
the Advising General Partner, or any other Partner, as a result of, or in
respect of (i) any Restructuring or the disparate effects thereof on any one or
more Partners, (ii) the Managing General Partner's failure to effect any one or
more Restructurings, or (iii) the Managing General Partner's determination to
effect a particular Restructuring or Restructurings instead of any other
Restructuring or Restructurings.
(d) Release of General Partners. To the fullest extent permitted by
applicable law (including without limitation Section 17-1101(d) of the Delaware
Act), the Partnership and each Partner hereby release each General Partner and
all directors, officers, employees and Affiliates thereof from any and all
duties (including fiduciary duties) and liabilities that any of them may
otherwise have, at law, in equity or under this Agreement, with respect to any
and all actions that either General Partner may in good faith take or omit to
take in connection with or relating in any way to any Restructuring or
Restructurings or any determination to effect or not effect any Restructuring or
Restructurings.
ARTICLE XII
REMOVAL OF A GENERAL PARTNER
13.1. Removal of a General Partner. (a) Each General Partner agrees to
continue to act as General Partner of the Partnership, and the Managing General
Partner agrees to continue to act as Managing General Partner of the
Partnership, until such date as the Partnership shall terminate pursuant to
Articles XII or XIV, subject to its prior removal as General Partner pursuant
hereto and subject to its right to transfer all of its GP Units pursuant to
Section 11.1.
(b) Any General Partner may be removed only by an Eighty Percent Interest,
or, if the Partnership Interest of such General Partner, together with its
Affiliates other than NEIC, L.P. (calculated by treating the General Partner or
such Affiliates as also owning the number of Units equal to the product of (i)
the number of Units owned by NEIC, L.P., and (ii) a fraction, the numerator of
which is the number of units of NEIC, L.P. owned by such General Partner or such
Affiliates, and the denominator of which is the total number of units of NEIC,
L.P. then outstanding) is less than 33% of the outstanding Units, such General
Partner may be removed by a Majority Interest, and only if (i) in connection
therewith, a successor Managing General Partner or Advising General Partner (as
applicable) is approved by a Majority Interest and (ii) the Partnership shall
have received an Opinion of Counsel that the removal of such General Partner and
the approval of a successor General Partner will not result in the loss of
limited liability of any Limited Partner or cause the Partnership or any
Operating Partnership to be treated as an association taxable as a corporation
for federal
-39-
<PAGE>
income tax purposes. Such removal shall be effective upon the admission of the
successor General Partner pursuant to Section 12.3. The Person so approved (or
its designated Affiliates) shall become the successor general partner or
partners of any Operating Partnership.
13.2. Sale of Former General Partner's Interest. If a successor General
Partner is approved pursuant to Section 13.1 or 14.2 or the proviso to Section
14.1, such successor shall purchase the GP Units of the former General Partner
for an amount in cash or such other form of consideration acceptable to the
former General Partner in its sole discretion with a fair market value equal to
the fair market value of such GP Units or as otherwise agreed, determined as of
the date the successor General Partner is admitted pursuant to Section 12.3,
provided, however, that any General Partner shall have the right to exchange a
portion of its GP Units pursuant to Section 4.2. Such fair market value shall
be determined by agreement between the former General Partner and its successor
or, failing agreement within 30 days after the date the successor General
Partner is so admitted, by a firm of independent appraisers jointly selected by
the former General Partner and its successor (or, if the former General Partner
and its successor cannot agree on the selection of such a firm within 45 days
after the date the successor General Partner is so admitted, by a firm of
independent appraisers selected by two firms, one of which will be selected by
the former General Partner and the other of which will be selected by the
successor).
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
14.1. Dissolution. The Partnership shall be dissolved, and its affairs
shall be wound up, upon:
(a) bankruptcy or dissolution of the sole or last remaining General
Partner, or any other event that results in such General Partner ceasing to
be a general partner in the Partnership (other than by reason of removal
pursuant to Section 13.1 or a transfer pursuant to Section 11.1);
(b) an election by the Managing General Partner to dissolve the
Partnership made pursuant to Section 12.4; or
(c) an election by the Managing General Partner to dissolve the
Partnership which is approved by a Majority Interest; provided, however,
that the Partnership shall not be dissolved upon an event described in
Section 14.1(a) if, within 90 days of such event, all Partners agree in
writing to continue the business of the Partnership and to the appointment
of a successor Managing General Partner.
-40-
<PAGE>
For purposes of this Section 14.1, bankruptcy of a General Partner shall be
deemed to have occurred when (i) it commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (ii) it seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for it or for
all or any substantial part of its properties, (iii) it is adjudged a bankrupt
or insolvent, or has entered against it a final and nonappealable order for
relief, under any bankruptcy, insolvency or similar law now or hereafter in
effect, (iv) it executes and delivers a general assignment for the benefit of
its creditors, (v) it files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
involuntary proceeding of the nature described in clause (i) above, or (vi) (A)
any involuntary proceeding of the nature described in clause (i) above has not
been dismissed 120 days after the commencement thereof or (B) the appointment
without its consent or acquiescence of a trustee, receiver or liquidator for it
or for all or any substantial part of its properties has not been vacated or
stayed within 90 days of such appointment, or (C) such appointment has been
stayed but is not vacated within 90 days after the expiration of any such stay.
14.2. Reconstitution. Upon dissolution of the Partnership in accordance
with Section 14.1(a), and a failure of all Partners to agree to continue the
business of the Partnership and to the appointment of a successor Managing
General Partner as provided in the proviso to Section 14.1(c), then within 180
days after the event described in Section 14.1(a), a Majority Interest may elect
to reconstitute the Partnership and continue its business by forming a new
limited partnership on terms identical to those set forth in this Agreement and
having as a general partner a Person approved by a Majority Interest. Upon any
such election by a Majority Interest, all Partners shall be bound thereby and
shall be deemed to have consented thereto. Unless such an election is made
within such 180-day period, the Partnership shall conduct only activities
necessary to wind up its affairs. If such an election is made within such 180-
day period, then (a) the reconstituted partnership shall continue until
dissolved in accordance with this Article XIV and (b) all necessary steps shall
be taken to cancel this Agreement and the Certificate of Limited Partnership and
to enter into a new partnership agreement and certificate of limited
partnership, and the successor general partner may for this purpose exercise the
powers of attorney granted the Managing General Partner pursuant to this
Agreement; provided, however, that the right of a Majority Interest to
reconstitute and to continue the business of the Partnership shall not exist and
may not be exercised unless the Partnership has received an Opinion of Counsel
that (i) the exercise of the right would not result in the loss of limited
liability of any Limited Partner and (ii) neither the Partnership nor the
reconstituted partnership would be treated as an association taxable as a
corporation for federal income tax purposes.
14.3. Liquidation. Upon dissolution of the Partnership, unless the
Partnership is reconstituted pursuant to Section 14.2, the Managing General
Partner, or in the event the Managing General Partner has been removed or
dissolved or become bankrupt (as defined in Section 14.1), the Advising General
Partner, or in the event the Advising General Partner has
-41-
<PAGE>
been removed or dissolved or become bankrupt (as defined in Section 14.1), a
liquidator or liquidating committee approved by a Majority Interest, shall be
the liquidator of the Partnership (the "Liquidator"). The Liquidator (if other
than a General Partner) shall be entitled to receive such compensation for its
services as may be approved by a Majority Interest. The Liquidator shall agree
not to resign at any time without 15 days' prior written notice and (if other
than a General Partner) may be removed at any time, with or without cause, by
notice of removal approved by a Majority Interest. Upon dissolution, resignation
or removal of the Liquidator, a successor and substitute Liquidator (who shall
have and succeed to all rights, powers and obligations of the original
Liquidator) shall, within 30 days thereafter, be approved by a Majority
Interest. Except as expressly provided in this Article XIV, the Liquidator
approved in the manner provided herein shall have and may exercise, without
further authorization or approval of any of the parties hereto, all of the
powers conferred upon the Managing General Partner under the terms of this
Agreement (but subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers, other than the restrictions set
forth in Article XVII) to the extent appropriate or necessary in the good faith
judgment of the Liquidator to carry out the duties and functions of the
Liquidator hereunder for and during such period of time as shall be reasonably
required in the good faith judgment of the Liquidator to complete the winding-up
and liquidation of the Partnership as provided for herein. The Liquidator shall
liquidate the assets of the Partnership and apply and distribute the proceeds of
such liquidation in the following order of priority, unless otherwise required
by mandatory provisions of applicable law:
(a) to creditors of the Partnership (including Partners); and
(b) to the Partners, in proportion to and to the extent of the
positive balances in their respective Capital Accounts;
provided, however, that the Liquidator may place in escrow a reserve of cash or
other assets of the Partnership for contingent, conditional, or unmatured claims
and obligations known to the Partnership and all claims and obligations known to
the Partnership but for which the identity of the claimant is unknown in an
amount determined by the Liquidator to be appropriate for such purposes.
14.4. Distribution in Kind. Notwithstanding the provisions of Section 14.3
requiring the liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if on dissolution of the Partnership the
Liquidator determines that an immediate sale of part or all of the Partnership's
assets would be impractical or would cause undue loss to the Partners, the
Liquidator may, in its sole discretion, defer for a reasonable time the
liquidation of any assets except those necessary to satisfy liabilities of the
Partnership and may, in its sole discretion, distribute to the Partners, or to
specific classes of Partners, as tenants in common, in lieu of cash, and as
their interests may appear in accordance with the provisions of Section 14.3(b),
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any distributions in kind shall be subject to such
conditions relating to the
-42-
<PAGE>
disposition and management thereof as the Liquidator deems reasonable and
equitable and to any joint ownership agreements or other agreements governing
the ownership and operation of such properties at such time. The Liquidator
shall determine the fair market value of any property distributed in kind using
such reasonable method of valuation as it may adopt.
14.5. Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership property pursuant to Sections 14.3
and 14.4, the Partnership shall be terminated, and the Liquidator (or the
Limited Partners if necessary) shall cause the cancellation of the Certificate
of Limited Partnership and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware and shall
take such other actions as may be necessary to terminate the Partnership.
14.6. Return of Capital. No General Partner shall be personally liable for
the return of the Capital Contributions of the Limited Partners, or any portion
thereof, it being expressly understood that any such return shall be made solely
from Partnership assets.
14.7. Waiver of Partition. Each Partner hereby waives any rights to
partition of the Partnership property.
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT
15.1. Amendments Which May be Adopted Solely by the Managing General
Partner. Subject to Section 15.2 and Section 15.3, the Managing General Partner
may amend any provision of this Agreement without the approval of any other
General Partner or any Limited Partner, and may execute, swear to, acknowledge,
deliver, file and record whatever documents may be required in connection
therewith, to reflect:
(a) a change in the name of the Partnership, in the location of the
principal place of business of the Partnership or in the registered office
or registered agent of the Partnership;
(b) a change that the Managing General Partner deems appropriate or
necessary to (i) qualify, or continue the qualification of, the Partnership
as a limited partnership (or a partnership in which the Limited Partners
have limited liability) under the laws of any state or jurisdiction or (ii)
ensure that neither the Partnership nor any Operating Partnerships will be
treated as an association taxable as a corporation for federal income tax
purposes;
(c) a change in the provisions of Article X which the Managing
General Partner in its sole discretion considers necessary or desirable to
prevent a risk that the Partnership will be classified as a publicly traded
partnership pursuant to Section 7704
-43-
<PAGE>
of the Code or will be obligated to register a class of its securities
under the Exchange Act;
(d) a change to divide outstanding Units into a greater number of
Units, to combine outstanding Units into a smaller number of Units, or to
reclassify Units in a manner that, in the good faith opinion of the
Managing General Partner, does not adversely affect any General Partner or
any class of Limited Partners in any material respect;
(e) a change that the Managing General Partner in its sole
discretion deems appropriate or necessary to satisfy any requirements,
conditions or guidelines contained in any order, rule or regulation of any
federal or state agency or contained in any federal or state statute;
(f) a change that is appropriate or necessary, as stated in an
Opinion of Counsel, to prevent the Partnership, any Operating Partnership,
any General Partner, their Affiliates and their respective directors and
officers from in any manner being subjected to the provisions of the
Investment Company Act of 1940, the Investment Advisers Act of 1940, or
"plan asset" regulations adopted under the Employee Retirement Income
Security Act of 1974, as amended, whether or not substantially similar to
plan asset regulations currently applied or proposed by the United States
Department of Labor;
(g) a change that is required or contemplated by any provision of
this Agreement, including, without limitation, Sections 4.3, 12.3 and 12.4;
(h) a change allowing for the operation of any and all of the
activities of the Partnership through one or more Operating Partnerships;
(i) a change that in the good faith opinion of the Managing General
Partner does not adversely affect any other General Partner or the Limited
Partners in any material respect; or
(j) any changes or events similar to the foregoing.
15.2. Other Amendments. Amendments to this Agreement may be proposed only
by the Managing General Partner. Subject to Section 15.3, a proposed amendment
(other than amendments adopted pursuant to Section 4.3(b) or Section 15.1) shall
be effective only when approved by a Majority Interest (including the approval
of the Managing General Partner), provided, however, that any amendment which
alters the relative rights, powers and duties of outstanding GP Units and LP
Units such that the equivalence of the economic interests of the Units is
affected shall be effective only when approved by an Eighty Percent Interest,
including the approval of the Managing General Partner (additional issuances of
LP Units will not be
-44-
<PAGE>
deemed to alter the equivalence of the economic interests of the Units);
provided, further, however, that any amendment which adversely affects the
rights, powers and duties of the Advising General Partner (but does not so
affect the rights, powers and duties of the Limited Partners) shall be effective
only if approved by each General Partner; provided, further, however, that the
approval of a Majority of Minority Interest shall be required for any amendment
to Section 12.4. The Managing General Partner shall notify all other General
Partners and all Limited Partners upon final adoption of any proposed amendment.
15.3. Amendment Requirements. Notwithstanding the provisions of Sections
15.1 and 15.2, (a) the approval of a Ninety-Five Percent Interest shall be
required for any amendment unless the Partnership has received an Opinion of
Counsel that such amendment would not result in the loss of limited liability of
any Limited Partner or result in the Partnership or any Operating Partnership
being treated as an association taxable as a corporation for federal income tax
purposes, (b) no provision of this Agreement requiring each General Partner to
take or approve any action shall be amended in any respect which would have the
effect of no longer requiring such action or approval, unless such amendment is
approved by each General Partner, (c) no provision of this Agreement which
establishes a percentage of the Limited Partners required to take or approve any
action shall be amended in any respect which would have the effect of reducing
the voting requirement, unless such amendment is approved by at least such
percentage of Limited Partners and (d) this Section 15.3 shall be amended only
with the approval of a Ninety-Five Percent Interest.
15.4. Limitation of Voting Power of Certain LP Unit Holders. (a) For
purposes of this Section 15.4, the following words have the meanings indicated:
"Associate" means, with respect to any Person, (i) any other Person
(other than the Partnership or a Subsidiary of the Partnership) of which
such Person is an officer, director, trustee, partner or employee or is,
directly or indirectly, the beneficial owner of 10% or more of any class of
equity securities; (ii) any trust or other estate in which such Person
serves as a trustee or in a similar fiduciary capacity; and (iii) any
relative or spouse of such Person, or any relative of such spouse, who has
the same home as such Person.
A Person shall be deemed to "own" any Voting Units:
(A) that such Person owns directly, whether or not of record; or
(B) that it has the right to acquire pursuant to any agreement or
understanding or upon exercise of conversion rights, warrants or options or
otherwise; or
(C) that are beneficially owned, directly or indirectly, by any
other Person who is not an Affiliate or Associate of such Person (including
any Voting Units
-45-
<PAGE>
which such other Person has the right to acquire pursuant to any agreement
or understanding or upon exercise of conversion rights, warrants or options
or otherwise) with whom such Person has any agreement or arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
Voting Units; provided, however, that (1) directors, officers, and
employees of any General Partner and employees of the Partnership or of any
Subsidiary of the Partnership shall not be deemed to have any such
agreement, arrangement or understanding on the basis of their status, or
actions taken in their capacities as directors, officers or employees of
such General Partner or employees of the Partnership or of any Subsidiary
of the Partnership, and (2) a Person shall not be deemed the owner of or to
own any Voting Units solely because such Voting Units have been tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered Voting Units are
accepted for payment or exchange.
The outstanding Voting Units of the Partnership shall include Voting
Units deemed owned through the application of clauses (B) and (C) above,
but shall not include any other Voting Units that may be issuable pursuant
to any agreement or upon exercise of conversion rights, warrants, options
or otherwise. "Group", with respect to any Person, shall include:
(i) such Person;
(ii) any Affiliates and Associates of such Person;
(iii) those additional Persons that, together with such Person,
jointly file (or are required to file) a statement of beneficial ownership
pursuant to Section 13(d) of the Exchange Act or any successor provision,
irrespective of any disclaimers of beneficial ownership.
"Voting Unit" means all outstanding LP Units entitled to vote on any matter
pursuant to this Agreement; and each reference to a proportion of Voting Units
shall refer to such proportion of the votes entitled to be cast by such LP
Units.
"Subsidiary" means, with respect to the Partnership, any Operating
Partnership and any corporation or other entity of which a majority of any class
of equity security is owned, directly or indirectly, by the Partnership.
(b) Notwithstanding any other provision of this Agreement, with respect
to any matter submitted to a vote of the holders of the Voting Units (or to a
vote of the holders of Units generally) at any meeting of such holders or any
matter upon which the holders of Voting Units (or the holders of Units
generally) propose or purport to take action by written consent without a
meeting: (i) no Person that owns Voting Units may vote that amount of such
Voting Units that constitutes the Excludable Units, if any, owned by such Person
(provided,
-46-
<PAGE>
however, that if such Person is a member of a Group, such Person shall be
subject to clause (ii) below rather than to this clause (i)); (ii) no Person
that is a member of a Group of Persons owning Voting Units may vote that amount
of Voting Units owned by such Person that constitutes the Allocable Excludable
Units, if any, owned by such Person; and (iii) that amount of Voting Units
having the status of Excludable Units (adjusted as necessary to give effect to
the provisos to the definition set forth below of "Allocable Excludable Units")
shall be excluded and deducted from the total number of Voting Units deemed to
be outstanding for purposes of determining the number of Voting Units necessary
to constitute a quorum at any such meeting or to approve a matter submitted for
approval at any such meeting or by means of any such written consent.
(x) The term "Excludable Units" means, with respect to any Person or
Group, that amount of Voting Units owned by such Person or Group, as the
case may be, that would result in such Person or Group, as the case may be,
owning more than 20% of the combined voting power of the outstanding Voting
Units (with the determination of the voting power of each Person and Group
owning Voting Units being calculated and recalculated for this purpose as
often as is necessary to give effect to the exclusion from voting and the
determination of Units deemed to be outstanding for purposes related
thereto of Excludable Units held by other Persons or Groups).
(y) The term "Allocable Excludable Units" means, with respect to each
Person that is a member of a Group which owns Excludable Units, an amount
of Voting Units owned by such Person equal to such Person's pro rata share
within such Group of the total amount of Excludable Units owned by such
Group; provided, however, that Voting Units that are deemed owned by two or
more Persons who are members of such Group as a result of attributions in
accordance with the definition of "own" as set forth in Section 15.4(a)
hereof shall for this purpose be deemed to be owned by such one of such
Persons which most directly owns such voting Units; and provided, further,
that, with respect to any Person that is a member of more than one such
Group, "Allocable Excludable Units" means the greatest number of Excludable
Units so allocated with respect to such Person with respect to any single
Group.
(c) The provisions of this Section 15.4 shall not apply to (i) MetLife or
any entity as to which MetLife possesses the voting power to elect a majority of
the directors of such subsidiary (in the case of a corporation) or controls at
least a majority of the other beneficial interests entitled to vote generally
(in the case of a non-corporate entity) or (ii) any savings, profit sharing,
stock bonus or employee stock ownership plan or plans established by the
Partnership or a Subsidiary of the Partnership and qualified under Section
401(a) of the Code, or any successor provision, which holds Voting Units on
behalf of participating employees and their beneficiaries with the right to
instruct the trustee how to vote such Voting Units with respect to all matters
submitted to the holders of Voting Units (or the holders of Units generally) for
voting, or (iii) participating employees and beneficiaries under the plans
referred to in the immediately preceding clause (ii), but only to the extent
that such employees or
-47-
<PAGE>
beneficiaries own Voting Units by reason of being such employees or
beneficiaries. In addition, the provisions of this Section 15.4 shall not be
applicable with respect to any Person or Group if either of the following
conditions is met:
(x) the Managing General Partner (i) has expressly approved in
advance either (A) the acquisition of outstanding Voting Units by such
Person or Group that caused such Person or Group to become the owner of
Excludable Units, or (B) the issue or sale by the Partnership of Voting
Units to such Person or Group that caused such effect, and (ii) in advance
of such acquisition or issue or sale has expressly determined that such
provisions shall not be applicable to such Person or Group; or
(y) the Managing General Partner has determined that such provision
shall not apply to such Person or Group.
(d) The Managing General Partner shall have the power to determine, for
the purposes of this Section 15.4, on the basis of information known to it after
reasonable inquiry, all facts necessary to determine compliance with or
implementation of this Section 15.4, including without limitation (i) the number
of Voting Units owned by any Person or Group or a member of any Group, (ii)
whether any two or more Persons constitute a Group, (iii) whether a Person is an
Affiliate or Associate of another or a member of any Group, (iv) whether a
Person has an agreement, arrangement or understanding with another Person, (v)
the calculation (including the manner of calculation) of the amount of
Excludable Units held by any Person or Group or the Allocable Excludable Units
held by any Person, and (vi) any other facts which the Managing General Partner
determines to be relevant. In the event that the vote of the unitholders of
NEIC, L.P. is solicited pursuant to Section 8.1 of the Intercompany Agreement,
for the purposes of this Section 15.4, the number of Voting Units owned by a
Person or Group shall be deemed to be equal to the sum of (a) the number of
Voting Units owned by such Person or Group, and (b) any Additional Voting Units
deemed owned by such Person or Group. Any determinations made by the Managing
General Partner pursuant to this Section 15.4 in good faith and on the basis of
such information and advice as was then reasonably available to it for such
purpose shall be conclusive and binding upon the Partnership and all holders of
Units.
ARTICLE XVI
MEETINGS
16.1. Meetings. Meetings of Partners may be called by any General Partner
or by Limited Partners holding an aggregate of at least 20% of the outstanding
LP Units. Within 60 days after receipt by the Managing General Partner of a
written proposal to call a meeting signed by any General Partner or Limited
Partners holding the requisite number of LP Units and indicating the purpose for
which the meeting is to be called (or such longer period as shall
-48-
<PAGE>
be reasonably required by the Managing General Partner in order to prepare
documents required therefor), the Managing General Partner shall cause a notice
of the meeting to be given to each other Partner. A meeting shall be held at a
time and place determined by the Managing General Partner within 60 days after
the giving of notice of the meeting. A Majority Interest represented in person
or by proxy shall constitute a quorum at a meeting of the Partners.
16.2. Record Date. For purposes of determining the Limited Partners
entitled to notice of or to vote at any meeting or to give approvals without a
meeting as provided in Section 16.4, the Managing General Partner may set a
Record Date, which date for purposes of notice of a meeting shall not be less
than 10 days nor more than 60 days before the date of the meeting.
16.3. Conduct of Meeting. (a) The Managing General Partner shall have full
power and authority concerning the manner of conducting any meeting of Partners
or the solicitation of proxies or approvals in writing, including, without
limitation, the determination of Persons entitled to vote, the existence of a
quorum, the conduct of voting, the validity and effect of any proxies, and the
determination of any controversies, votes or challenges arising in connection
with or during the meeting or voting. The Managing General Partner shall
designate an individual to serve as chairman of any meeting and shall further
designate an individual to take the minutes of any meeting, which individuals
may be directors or officers of the Managing General Partner. All minutes shall
be kept with the records of the Partnership maintained by the Managing General
Partner.
(b) The Managing General Partner may vote its Units in such manner as it
in its sole discretion may determine.
16.4. Action Without a Meeting. Any action that may be taken at a meeting
of the Partners may be taken without a meeting if approvals in writing setting
forth the action so taken are signed by Partners holding in the aggregate at
least the minimum number of Units that would be necessary to authorize or take
such action at a meeting at which all the Partners were present and voted.
Prompt notice of the taking of action without a meeting shall be given to the
Partners who have not approved in writing. If approvals to the taking of any
action by the Partners is solicited by any Person other than by or on behalf of
the Managing General Partner, the approvals shall have no force and effect
unless and until (a) they are deposited with the Partnership in care of the
Managing General Partner, (b) approvals sufficient to take the action proposed
are dated not more than 60 days prior to the date sufficient consents are
deposited with the Partnership, and (c) the Partnership receives an Opinion of
Counsel that giving effect to such approvals would not result in the loss of
limited liability of any Limited Partner or cause the Partnership or any of the
Operating Partnerships to be treated as an association taxable as a corporation
for federal income tax purposes.
-49-
<PAGE>
ARTICLE XVI
CERTAIN RESTRICTIONS
17.1. Additional Units. Except pursuant to the Restricted Unit Plan, the
Managing General Partner shall not cause the Partnership to issue Units to the
Managing General Partner or any of its Affiliates (other than pursuant to
Section 4.1) unless (i) the Units are of a class, or not materially different in
their voting, distribution and liquidation rights from Units of a class, which
is, prior to such issuance, outstanding, and the Net Agreed Value of the
Contributed Property being contributed in exchange for such Units is at least
equal to the number of Units being so issued times the product of the NEIC
Exchange Ratio and the Market Value or (ii) such issuance is approved by a
Majority of Minority Interest, provided, however, that the exchange by the
Managing General Partner of GP Units held by it for LP Units or LP Units for GP
Units in accordance with Section 4.2 shall not constitute an issuance of Units
by the Partnership to the Managing General Partner for the purposes of this
Section 17.1.
17.2. Sale of Assets. Except as otherwise permitted by Section 12.4,
without the prior approval of a Majority Interest, the Managing General Partner
shall not permit the sale or other disposition of all or substantially all of
the consolidated assets owned by the Partnership and any Operating Partnership.
ARTICLE XVI
MISCELLANEOUS
18.1. Opinions Regarding Taxation as a Partnership. Notwithstanding any
other provisions of this Agreement, the requirement, as a condition to any
action proposed to be taken under this Agreement, that the Partnership receive
an Opinion of Counsel that the proposed action would not result in the
Partnership or any Operating Partnership being treated as an association taxable
as a corporation for federal income tax purposes (a) shall not be applicable to
the extent that the Partnership or any Operating Partnership is at such time
treated in all material respects as an association taxable as a corporation for
federal income tax purposes and (b) shall be deemed satisfied by an Opinion of
Counsel containing conditions, limitations and qualifications which are
acceptable to the Managing General Partner in its sole discretion.
18.2. Personal Property. The Partnership Interest of any Partner shall be
personal property for all purposes.
18.3. Addresses and Notices. Any notice, demand, request, payment or
report required or permitted to be given or made to a Limited Partner under this
Agreement shall be in writing and shall be deemed given or made when delivered
in person or when sent by first class mail or by other means of written
communication to the Limited Partner at such Limited Partner's address as shown
on the Partnership's records. Any notice to the Partnership shall
-50-
<PAGE>
be deemed given if received in writing by the Managing General Partner at the
principal office of the Partnership designated pursuant to Section 2.3. Any
notice to a General Partner shall be deemed given if received in writing by such
General Partner at the principal office of the Partnership designated pursuant
to Section 2.3.
18.4. Headings. All article or section headings in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any of the provisions hereof.
18.5. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto (including the additional Persons that become
Limited Partners as provided herein) and their heirs, executors, administrators,
successors, legal representatives and assigns.
18.6. Integration. This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
18.7. Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or of any other covenant, duty, agreement
or condition.
18.8. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the parties hereto (including the additional Persons that become Limited
Partners as provided herein).
18.9. Severability. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions hereof, or of such provision in other
respects, shall not be affected thereby.
18.10. Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Delaware,
without giving effect to any conflicts or choice of law provisions that would
make applicable the substantive laws of any other jurisdiction.
-51-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
GENERAL PARTNERS
NEW ENGLAND INVESTMENT
COMPANIES, INC.
By /s/ Edward N. Wadsworth
__________________________________
NEW ENGLAND INVESTMENT
COMPANIES, L.P.
By: NEW ENGLAND INVESTMENT
COMPANIES, INC.,
its general partner
By /s/ Edward N. Wadsworth
__________________________________
LIMITED PARTNERS
INITIAL LIMITED PARTNER
/s/ Edward N. Wadsworth
__________________________________
Edward N. Wadsworth
All Limited Partners now or hereafter admitted as
limited partners of the Partnership, as listed on
Appendix B hereto, pursuant to powers of attorney
now or hereafter executed in favor of, and
delivered to, the Managing General Partner
By NEW ENGLAND INVESTMENT
COMPANIES, INC.
As Managing General Partner
By /s/ Edward N. Wadsworth
_______________________________
-52-
<PAGE>
Appendix A
Power of Attorney
-53-
<PAGE>
Appendix B
Limited Partners
-54-
