EFTA00591691.pdf

VALAR GLOBAL FUND III LP LIMITED PARTNERSHIP AGREEMENT 126316015 v3 EFTA00591691  Table of Contents Page ARTICLE 1 NAME, PURPOSE AND OFFICES OF PARTNERSHIP 1.1 Name 1.2 Purpose 1.3 Principal Office 1 1.4 Registered Agent and Office 1 ARTICLE 2 TERM OF PARTNERSHIP 1 2.1 Term 1 2.2 Events Affecting a Member of the General Partner 2 2.3 Events Affecting a Limited Partner of the Partnership 2 2.4 Events Affecting the General Partner 2 ARTICLE 3 NAME AND ADMISSION OF PARTNERS 2 3.1 Name and Address 2 3.2 Admission of Additional Partners 2 3.3 Removal of the General Partner 3 ARTICLE 4 CAPITAL ACCOUNTS, CAPITAL CONTRIBUTIONS AND NONCONTRIBUTING PARTNERS 4 4.1 Capital Accounts 4 4.2 Capital Contributions of the Limited Partners 4 4.3 Capital Contributions of the General Partner 6 4.4 Acquisition of an Additional Interest by the General Partner 6 4.5 Noncontributing Partners 6 4.6 Suspension Period 10 ARTICLE 5 PARTNERSHIP ALLOCATIONS 11 5.1 Allocation of Profit or Loss 11 5.2 Allocation of Ordinary Income and Ordinary Loss 13 5.3 Reallocation of Contingent Losses 13 5.4 Special Allocations 14 5.5 Regulatory Allocations 14 5.6 Income Tax Allocations 15 ARTICLE 6 MANAGEMENT FEE; PARTNERSHIP EXPENSES 15 6.1 Management Fee 15 6.2 Expenses 17 r. 126316015 v3 EFTA00591692  Table of Contents (Cont'd) Page ARTICLE 7 WITHDRAWALS BY AND DISTRIBUTIONS TO THE PARTNERS 18 7.1 Interest 18 7.2 Withdrawals by the Partners 18 7.3 Partners' Obligation to Repay or Restore 18 7.4 Mandatory Distributions 18 7.5 Discretionary Distributions and Rules Regarding Distributions 19 7.6 Withholding Obligations 20 ARTICLE 8 MANAGEMENT DUTIES AND RESTRICTIONS 21 8.1 Management 21 8.2 No Control by the Limited Partners; No Withdrawal 22 8.3 Existing Funds: Follow-On Funds; Parallel Funds 22 8.4 Investment Opportunities and Conflicts of Interest 23 ARTICLE 9 INVESTMENT REPRESENTATION AND TRANSFER OF PARTNERSHIP INTERESTS 27 9.1 Investment Representation of the Limited Partners 27 9.2 Qualifications of the Limited Partners 28 9.3 Transfer by General Partner 28 9.4 Transfer by Limited Partner 28 9.5 Requirements for Transfer 28 9.6 Substitution as a Limited Partner 29 9.7 Expenses of Transfer 29 ARTICLE 10 DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP 30 10.1 Extension of Partnership Term 30 10.2 Early Termination of the Partnership 30 10.3 Winding Up Procedures 30 10.4 Payments in Liquidation 31 10.5 Return of Excess Distributions 31 ARTICLE 11 FINANCIAL ACCOUNTING, REPORTS AND MEETINGS 33 11.1 Financial Accounting; Fiscal Year 33 11.2 Supervision: Inspection of Books 33 11.3 Quarterly Reports 33 176316015 v3 EFTA00591693  Table of Contents (Cont'd) Page I 1.4 Annual Report; Financial Statements of the Partnership 33 I 1.5 Website Based Reporting 33 I 1.6 Annual Meeting 34 I 1.7 Tax Returns 34 11.8 Tax Matters Partner 34 11.9 Partnership Funds 35 ARTICLE 12 VALUATION; ADVISORY COMMITTEE 35 12.1 Valuation 35 12.2 Advisory Committee 36 ARTICLE 13 PARTNERS SUBJECT TO SPECIAL REGULATION 36 13.1 ERISA Partners 36 13.2 Governmental Plan Partners 37 13.3 Private Foundation Partners 38 ARTICLE 14 CERTAIN DEFINITIONS 38 14.1 Accounting Period 38 14.2 Adjusted Asset Value 38 14.3 Adjusted Capital Account Balance 38 14.4 Affiliate 39 14.5 Capital Account 39 14.6 Capital Commitment; Committed Capital 39 14.7 Code 39 14.8 Deemed Gain or Deemed Loss 39 14.9 Reserved 39 14.10 Marketable; Marketable Securities; Marketability 39 14.11 Nonmarketable Securities 40 14.12 Ordinary Income or Ordinary Loss 40 14.13 Partnership Percentage 40 14.14 Percentage in Interest; Majority in Interest 40 14.15 Prime Rate 40 14.16 Profit or Loss 40 14.17 Regulated Partner 41 126316015 v3 EFTA00591694  Table of Contents (Cont'd) Page 14.18 Securities 41 14.19 Securities Act 41 14.20 Short-Term Securities 41 14.21 Thiel Persons 41 14.22 Treasury Regulations 41 ARTICLE 15 OTHER PROVISIONS 41 15.1 Governing Law 41 15.2 Limitation of Liability of the Limited Partners 41 15.3 Exculpation 42 15.4 Indemnification 43 15.5 Arbitration 44 15.6 Execution of Documents 45 15.7 Other Instruments and Acts 45 15.8 Binding Agreement 45 15.9 Notices; Electronic Transmission of Reports 45 15.10 Power of Attorney 45 15.11 Amendment 46 15.12 Entire Agreement 46 15.13 Titles; Subtitles 47 15.14 Partnership Name 47 15.15 Confidentiality 47 EXHIBIT A: Schedule of Partners A-1 iv. 126316015 v3 EFTA00591695  INDEX OF DEFINITIONS Term Paragraph Accounting Period 14.1 Act Preamble Adjusted Asset Value 14.2 Adjusted Capital Account Balance 14.3 Administrator 15.5(a) Advisory Committee 12.2 Affected Parties 15.15(a) Affiliate 14.4 Affiliates Fund 8.3(c) Affiliated Party 8.4(b) After-Tax Distribution Amount 10.5(b) Agreement Preamble Annual Tax Amount 7.4(a) Arbitration 15.5(a) Arbitrator 15.5(a) Capital Account 14.5 Capital Commitment 14.6 Carried Interest Distributions 10.5(b) Cashless Portion 4.3 Claim 15.5(a) Code 14.7 Commencement Date 2.1 Commitment Period 4.2(a) Committed Capital 14.6 Confidential Information 15.15(a) Contingent Loss 5.3(a) Deemed Gain 14.8 Deemed Loss 14.8 Default Notice 4.5(b) Defaulting Limited Partner 4.5(b) Deemed Contribution Shortfall 10.5(d) DOL Regulations 4.2(b) ERISA 4.2(b) ERISA Partner 13.1(a) Fee Adjustment 6.1(c)(ii) First Allocation Hurdle 5.1(b) General Partner Preamble Governmental Plan Partner 13.2 Indemnified Parties 15.4 Late Admission Charge 3.2(c) Limited Partners Preamble Loss 14.16 Majority in Interest 14.14 Management Company 8.1 Management Fee 6.1(a) Management Fee Percentage 6.1(b) Managing Member 4.6(b) v. 126316015 v3 EFTA00591696  Term Paragraph Marketable 14.10 Marketable Securities 14.10 Marketability 14.10 Nonmarketable Securities 14.11 Optionees 4.5(b)(vii) Optionor 4.5(b)(vii) Ordinary Income 14.12 Ordinary Loss 14.12 Paragraph 10.5 Reapplication Amount 4.2(d)(iii) Parallel Funds 8.3(c) Partners 3.1 Partnership Preamble Partnership Percentage 14.13 Percentage in Interest 14.14 Pooled Vehicle Partner 15.15(e) Prime Rate 14.15 Prior Funds 8.3(a)(ii) Private Foundation Partner 13.2 Profit 14.16 Regulated Partner 14.17 Regulatory Allocations 5.5(a) Remaining Portion 4.5(b)(vii)(2) Reporting Site 11.5 Second Allocation Hurdle 5.1(b) Securities 14.18 Securities Act 14.19 Short-Term Securities 14.20 Side Letter 15.12 Special Purpose Investment Fund 8.4(a) Subject Reports 11.5 Successor Fund 8.3(a)(iii) Successor Fund Eligible Date 8.3(b) Suspension Event 4.6(b) Suspension Period 4.6(b) Tax Payments 7.6(a) Termination Date 2.1 Thiel Activities 15.3(d) Thiel Persons 14.21 Treasury Regulations 14.22 Trigger Event 3.3(c) UBTI 8.4(g) VCOC 4.2(b) VCOC Notice 4.2(b) vi. 126316015 v3 EFTA00591697  VALAR GLOBAL FUND III LP LIMITED PARTNERSHIP AGREEMENT This LIMITED PARTNERSHIP AGREEMENT (the "Agreement") of VALAR GLOBAL FUND III LP (the "Partnership") is made and entered into as of by and among VALAR VENTURES GP HI LLC, a Delaware limited liability company (the "General Partner"), and each investor who is identified as a limited partner on EXHIBIT A and who is admitted to the Partnership as of such date (the "Limited Partners"), who hereby form the Partnership pursuant to the provisions of the Delaware Revised Uniform Limited Partnership Act (the "Act"), as follows: ARTICLE 1 NAME, PURPOSE AND OFFICES OF PARTNERSHIP 1.1 Name. The name of the Partnership is VALAR GLOBAL FUND III LP. The affairs of the Partnership shall be conducted under the Partnership name, or such other name as the General Partner may, in its discretion, determine. 1.2 Purpose. The primary purpose of the Partnership is to provide a limited number of select investors with the opportunity to realize long-term appreciation, generally from venture capital investments in earlier-stage, high-growth technology companies as a result of direct, privately negotiated investments in equity or equity-oriented securities of private and public companies. The general purposes of the Partnership are to buy, sell, hold, and otherwise invest in Securities of every kind and nature and rights and options with respect thereto, including, without limitation, stock, notes, bonds, debentures, and evidence of indebtedness; to exercise all rights, powers, privileges, and other incidents of ownership or possession with respect to Securities held or owned by the Partnership; to enter into, make, and perform all contracts and other undertakings; and to engage in all activities and transactions as may be necessary, advisable, or desirable to carry out the foregoing. 1.3 Principal Office. The principal office of the Partnership shall be at 915 Broadway, Suite 1101, New York, NY 10010, or such other place or places as the General Partner may from time to time designate. The General Partner shall provide the Limited Partners with prompt written notice of any change in the location of the Partnership's principal office. 1.4 Registered Agent and Office. The name of the registered agent for service of process of the Partnership and the address of the Partnership's registered office in the State of Delaware shall be The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801, or such other agent or office in the State of Delaware as the General Partner may from time to time designate. ARTICLE 2 TERM OF PARTNERSHIP 2.1 Term. The term of the Partnership shall commence upon the date of the filing of the Certificate of Limited Partnership of the Partnership with the office of the Secretary of State of the State of Delaware. The term of the Partnership shall continue until the tenth anniversary of the date on which the initial capital contribution is due (such date of the initial capital contribution being referred to herein as the "Commencement Date" and such tenth anniversary being referred to as the "Termination Date"), unless extended pursuant to paragraph 10.1 or sooner dissolved as provided in paragraph 10.2. 126316015 v3 EFTA00591698  2.2 Events Affecting a Member of the General Partner. Except as specifically provided in paragraph 10.2, the death, bankruptcy, withdrawal, insanity, incompetency, temporary or permanent incapacity, expulsion, removal, liquidation, dissolution, reorganization, merger, sale of all or substantially all the stock or assets of, or other change in the ownership or nature of any member of the General Partner shall not dissolve the Partnership. 2.3 Events Affecting a Limited Partner of the Partnership. The death, bankruptcy, withdrawal, insanity, incompetency, temporary or permanent incapacity, liquidation, dissolution, reorganization, merger, sale of all or substantially all the stock or assets of, or other change in the ownership or nature of a Limited Partner shall not dissolve the Partnership. 2.4 Events Affecting the General Partner. Except as specifically provided in paragraph 10.2, the withdrawal, bankruptcy, expulsion, resignation, removal, liquidation, dissolution, reorganization, merger, sale of all or substantially all the stock or assets of, or other change in the ownership or nature of the General Partner shall not constitute an "event of withdrawal" of the General Partner under the Act, and upon the happening of any such event, the affairs of the Partnership shall be continued without dissolution by the General Partner or any successor entity thereto. ARTICLE 3 NAME AND ADMISSION OF PARTNERS 3.1 Name and Address. The name and address of the General Partner and each Limited Partner (hereinafter the General Partner and the Limited Partners shall be referred to collectively as the "Partners" and each individually as a "Partner"), the amount of such Partner's Capital Commitment to the Partnership, and such Partner's Partnership Percentage are set forth on a separate and confidential EXHIBIT A hereto, marked as EXHIBIT A•1 thru EXHIBIT Al (with a separate EXHIBIT A for each Partner). The General Partner shall cause EXHIBIT A to be amended from time to time to reflect the admission of any new Partner, the withdrawal or substitution of any Partner, the transfer of interests among Partners, receipt by the Partnership of notice of any change of address of a Partner or the change in any Partner's Capital Commitment or Partnership Percentage. An amended EXHIBIT A shall supersede any prior EXHIBIT A and become a part of this Agreement. A copy of the most recent amended EXHIBIT A shall be kept on file at the principal office of the Partnership. 3.2 Admission of Additional Partners. (a) Except as provided in paragraphs 3.2(b), 4.5(b)(vii)(4) and 9.6, an additional person may be admitted as a Partner only with the consent of the General Partner and Eighty Percent in Interest of the Limited Partners. (b) Notwithstanding subparagraph (a) above, additional persons may be admitted as Limited Partners (or existing Limited Partners may increase their Capital Commitments) with the consent of only the General Partner on or before the date that is six (6) months after the date hereof; provided that the aggregate capital commitments to the Partnership and the Parallel Funds shall not exceed two hundred and fifty million dollars ($250,000,000). (c) Each additional person admitted as a Limited Partner subsequent to the date hereof (and each existing Limited Partner that increases its Capital Commitment) shall (i) execute and deliver to the Partnership a counterpart of this Agreement or otherwise take such actions as the General Partner shall deem appropriate in order for such Limited Partner to become bound by the terms of this Agreement, (ii) contribute that portion of its (or such) Capital Commitment which is equal to the portion of the respective 2. 126316015 v3 EFTA00591699 Capital Commitments contributed to date by the Partnership's previously admitted Limited Partners, and (iii) pay to the Partnership a "Late Admission Charge" (which shall be deemed Ordinary Income of the Partnership and not be treated as a capital contribution) equal to interest on the amount contributed by such Partner pursuant to the preceding clause (ii) at an annual interest rate that is two hundred basis points (2.0%) higher than the Prime Rate (determined as of the close of business on the date of such admission or increase), compounded daily, from the date(s) that such Partner would have been required to contribute such amount if it had been admitted (or had such increased Capital Commitment) at the initial closing of the Partnership; provided that this clause (iii) shall not apply to a Limited Partner admitted to the Partnership (or allowed to increase its Capital Commitment) within ninety (90) days from the Commencement Date. Limited Partners admitted to the Partnership after the date hereof will not be entitled to share in or be allocated any Ordinary Income (including, without limitation, Late Admission Charges) accruing on or prior to their admission date. At the election of the General Partner, any Late Admission Charge owed to the Partnership by a Limited Partner may be paid to the Partnership through an offsetting reduction in such Limited Partner's Capital Account balance. (d) Upon the admission of any additional Limited Partner pursuant to this paragraph 3.2, the General Partner may, in its sole discretion, make a special distribution of all or a portion of the initial contribution of capital made by such additional Limited Partner. Such distribution shall be made to all Partners in accordance with Partnership Percentages (as adjusted to reflect the admission of such additional Limited Partner) and shall be deemed to be a return of capital to such Partners; provided, however, that such Partners shall be deemed, for the purposes of paragraph 4.2, not to have contributed the amount of such distribution, and the amounts of their respective unfunded Capital Commitments shall be increased accordingly. 3.3 Removal of the General Partner. (a) Immediately following a Trigger Event (as defined below), the General Partner shall provide notice to the Limited Partners of the Trigger Event, and at the election of Two-Thirds in Interest of the Limited Partners, pursuant to a vote occurring during any time during the one hundred and eighty (180) day period following such notice to the Limited Partners, the General Partner may be removed from its capacity as the general partner of the Partnership. (b) In the event of the removal of the General Partner pursuant to paragraph 3.3(a), the Limited Partners, acting by the same Percentage in Interest required of the vote to remove, shall be entitled to appoint a replacement general partner on such economic terms and other terms as the replacement general partner and a Two-Thirds in Interest of the Limited Partners may agree. In such event: (i) the removed General Partner shall not be entitled to retain any rights or powers of a general partner of the Partnership and shall become a special limited partner of the Partnership with a continued interest in allocations of Profit and Loss and distributions of Partnership cash and assets pursuant to Articles 5, 7 and I() hereof; (ii) the removed General Partner shall no longer be required to make additional capital contributions to the Partnership pursuant to paragraph 4.3 and the removed General Partner's Capital Commitment shall be equal to the amount actually contributed pursuant to paragraph 4.3; (iii) the removed General Partner shall be entitled to receive all allocations and distributions to which it would otherwise be entitled to receive had it not been removed when, as and if such allocations and distributions are made, in respect of all activities of and investments by the Partnership that occurred or were committed to by the Partnership prior to the effective date of removal; provided, however, that the removed General Partner shall be entitled to receive one hundred percent (100%) of all allocations and distributions in respect of its capital contributions; (iv) the removed General Partner shall not be entitled to receive any payments of management fee pursuant to paragraph 6.1 with respect to any period of time after the date of its removal; (v) the removed General Partner and any Indemnified Party shall remain entitled to exculpation and indemnification pursuant to paragraphs 15.3 and 15.4 with respect to any matter arising prior to or out of 3. 126316015 v3 EFTA00591700 events or circumstances existing prior to the General Partner's removal; and (vi) an interest in the Partnership equal to the General Partner's unfunded Capital Commitment and the remaining carried interest in the Partnership shall be transferred to the replacement general partner upon its admission to the Partnership. (c) For purposes of this paragraph 3.3, a "Trigger Event" shall have occurred if the General Partner or any Managing Member is (i) found by a court of competent jurisdiction or arbitration carried out pursuant to paragraph 15.5 to have committed (or enters a plea of nolo contendere to having committed) embezzlement, fraud or any other act involving material improper personal benefit against the Partnership or its assets, or (ii) is convicted of a violation of federal or state securities law or a felony (but not including a felony involving the use of a motor vehicle) in a manner that had a material adverse effect on the Partnership; provided, however, that no Trigger Event shall be deemed to have occurred if, in the case of acts by a Managing Member, the offending individual is removed as a managing member of the General Partner within thirty (30) days after the court judgment or arbitration decision, or conviction, which would otherwise have given rise to a Trigger Event under this paragraph 3.3. (d) Notwithstanding anything in paragraph 15.11 and in the event of any election made to remove the General Partner, the Partners agree to amend this Agreement in good faith in order to give effect to the foregoing provisions of this paragraph 3.3, including but not limited to revising Exhibit A to reflect changes in the Partners' identities, Capital Commitments and Partnership Percentages. (e) The General Partner shall promptly notify the Limited Partners if the General Partner or any Managing Member is found to have committed (or enters a plea of nolo contendere to having committed) embezzlement, fraud or any other act involving material improper personal benefit, or is convicted of a violation of federal or state securities law or a felony, regardless of whether any such act relates to the Partnership or not. ARTICLE 4 CAPITAL ACCOUNTS, CAPITAL CONTRIBUTIONS AND NONCONTRIBUTING PARTNERS 4.1 Capital Accounts. An individual Capital Account shall be maintained for each Partner. 4.2 Capital Contributions of the Limited Partners. (a) Each Limited Partner shall contribute capital to the Partnership as requested by the General Partner upon ten (10) business days' prior written notice (which such notice shall be given by electronic mail or by a nationally recognized overnight courier, specifying next day delivery, in accordance with paragraph 15.9); provided, that the initial capital contribution from each Limited Partner shall not be due earlier than January I, 2016. The General Partner may request capital contributions from the Limited Partners, on the terms specified in this paragraph 4.2(a) or as altered under a Side Letter. Except as set forth in paragraphs 3.2(c) and 4.2(b), each capital contribution shall be in accordance with Partnership Percentages; provided, however, that the capital contributions from the Limited Partners may be adjusted by the General Partner in good faith in order to account for the fact that no Management Fee is chargeable in respect of the General Partner's interest in the Partnership. Notwithstanding anything in the foregoing to the contrary, no Limited Partner shall be required to contribute any capital after the fifth anniversary of the Commencement Date (the period between the Commencement Date and the fifth anniversary thereof being referred to herein as the "Commitment Period"), except as may be necessary for (a) Partnership expenses, including, but not limited to, payment of any Management Fee (as defined below) due to the General Partner; (b) completion of transactions evidenced by a written terms sheet (or other similar statement of 4. 126316015 v3 EFTA00591701 intent to make an investment that has been executed by the Partnership) prior to the end of the Commitment Period; (c) follow-on investments in the Securities of issuers in which the Partnership holds a pre-existing interest as of the date of such proposed follow-on investment; and (d) fulfillment of such Limited Partner's obligations pursuant to paragraph 4.2(d)(i). Further, each Limited Partner's obligation to contribute capital shall also be subject to those limitations set forth in paragraph 4.6. Each capital contribution by any Limited Partner shall be made in U.S. dollars and made in cash or by transfer of immediately-available funds. (b) Notwithstanding paragraph 4.2(a), with respect to the Partnership's initial request for capital contributions under this paragraph 4.2, in the event that the sum of the Capital Commitments of all Limited Partners that are "benefit plan investors" is such as would make their "equity participation" in the Partnership "significant," within the meaning of those terms under U.S. Department of Labor Regulation § 2510.3-101, as modified by Section 3(42) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (the "DOL Regulations"), then no such Limited Partner shall be required to contribute capital to the Partnership pursuant to this Agreement until such time as the General Partner shall have delivered to such Limited Partner an opinion of counsel (which opinion and counsel shall be reasonably acceptable to the Limited Partner) to the effect that the Partnership's first portfolio company investment (other than a short-term investment of funds pending long-term commitment) has qualified or will qualify upon the funding of each Limited Partner's initial capital contribution as a "venture capital investment" within the meaning of the DOL Regulations such that the Partnership will qualify as a "venture capital operating company" (a "VCOC') within the meaning of the DOL Regulations (the "VCOC Opinion"). In the event that such a Limited Partner has not received the VCOC Opinion prior to the date on which any capital contribution would otherwise be due under paragraph 4.2(a), such Limited Partner shall pay such capital contribution into an interest-bearing escrow account designated by the General Partner. The terms of any such escrow account shall be determined by the General Partner in compliance with ERISA (including the principles and conditions indicated in Dept. of Labor Adv. Op. 95-04A), to the extent applicable. Upon delivery of the VCOC Opinion, all amounts in the escrow account shall be delivered to the Partnership in fulfillment of such Limited Partner's then-outstanding obligations under paragraph 4.2(a). (c) The General Partner may, in its sole discretion, return to the Partners all or a portion of any capital contribution intended for a proposed investment which is not consummated as anticipated pro raw in accordance with their respective capital contributions; provided, however, that such returned capital shall be added back to unfunded Capital Commitments pro rata in accordance with the percentages in which such returned capital was attributed to the Capital Commitments when such capital was called and be subject to recall by the General Partner pursuant to this Article 4. (d) (i) If, in the discretion of the General Partner, Partnership assets are insufficient to fulfill any indemnification obligation of the Partnership pursuant to paragraph 15.4 prior to the final liquidation of the Partnership, the General Partner may to the fullest extent permitted by applicable law require each Partner to contribute capital to the Partnership in an amount up to such Partner's unfunded Capital Commitment, if any. If, in the discretion of the General Partner, Partnership assets remain insufficient to fulfill any indemnification obligation of the Partnership pursuant to paragraph 15.4, and following the contribution to the Partnership of the maximum amount then permitted by paragraph 4.2(d)(i), the General Partner may recall distributions previously made to the Partners solely for the purpose of fulfilling or satisfying such an obligation or liability. Such distributions shall be recalled from the Partners in the same proportions as the expense (or loss) of the indemnity obligation giving rise to such recontribution was allocated to the Partners pursuant to Article 5. In no event shall any Partner be required to contribute capital pursuant to this paragraph 4.2(d)(ii) in an amount in excess of the lesser of (1) all distributions previously received by the Partner from the Partnership or (2) twenty-five percent (25%) of 5. 126316015 v3 EFTA00591702 such Partner's Capital Commitment. In no event will the General Partner be permitted to call capital pursuant to this paragraph 4.2(d)(ii) in connection with a certain distribution after the earlier of (A) the date two (2) years after the Termination Date (or any subsequent date to which the Partnership term has previously been extended pursuant to paragraph 10.1) and (B) the date three (3) years after the date of such distribution. (iii) In the event that the Partners are required to return distributions as provided in paragraph 4.2(d)(ii) following the final liquidation of the Partnership, paragraph 10.5 shall be reapplied to account for the associated indemnification expense and, to the extent that the General Partner would have any additional obligation to return capital pursuant to paragraph 10.5 as a result of such reapplication (the "Paragraph 10.5 Reapplication Amount"), the proportions in which the Partners bear the return obligation pursuant to paragraph 4.2(d)(ii) shall be appropriately adjusted by increasing the General Partner's obligation to contribute capital to the Partnership pursuant to paragraph 4.2(d)(ii) by the Paragraph 10.5 Reapplication Amount, and reducing the aggregate obligation of the Limited Partners to contribute capital pursuant to paragraph 4.2(d)(ii) by a like amount. For the purpose of this paragraph 4.2(d)(iii) only, the aggregate maximum amount that the General Partner may be required to return to the Partnership pursuant to paragraph 10.5 shall not be limited to After-Tax Distribution Amount. 4.3 Capital Contributions of the General Partner. The General Partner and/or its designated Affiliate shall contribute capital to the Partnership, and have a Capital Commitment, in an amount equal to at least one percent (1%) of the aggregate Capital Commitments of all Partners, on the same schedule and terms under which any Limited Partner makes a contribution. Further, the General Partner or its Affiliates, or their respective members, may contribute additional capital to one or more Parallel Funds. Each collective capital contribution to be made by the General Partner or its designated Affiliate shall be reduced by eighty percent (80%) (such amount being the "Cashless Portion"), provided, that the General Partner or its designated Affiliate may elect to contribute its respective portion of such collective contribution obligation entirely in cash. Notwithstanding the preceding, for purposes of applying all other provisions of this Agreement (other than this paragraph 4.3), the General Partner or its designated Affiliate shall be treated as if it had made each capital contribution in full without reduction for any Cashless Portion; provided, however, that the Capital Account of the General Partner or its designated Affiliate shall not include any Cashless Portion. If a designated Affiliate of the General Partner makes the Capital Commitment described in this paragraph 4.3, then the interest so held by the designated Affiliate shall be a Limited Partner's interest and treated as an interest held by a Limited Partner for all purposes under this Agreement. 4.4 Acquisition of an Additional Interest by the General Partner. In the event that the General Partner or its designated Affiliate acquires or holds an additional interest in the Partnership with a Capital Commitment that exceeds one percent (1%) of the aggregate Capital Commitments of all Partners (pursuant to a transfer from another Limited Partner or otherwise), the General Partner shall have two (2) Partnership Percentages and two (2) Capital Account balances for purposes of making Partnership allocations (including any reallocation of Contingent Losses pursuant to paragraph 5.3), as if such additional excess interest were held by a separate entity which is a Limited Partner, although for all other purposes the General Partner shall have only one Capital Account. 4.5 Noncontributing Partners. (a) The Partnership shall be entitled to enforce the obligations of each Limited Partner to make the contributions to capital set forth in paragraph 4.2, and the Partnership shall have all remedies available at law or in equity in the event any such contribution is not so made. If any legal proceedings relating to the failure of a Limited Partner to make such a contribution are commenced, such Limited 6. 126316015 v3 EFTA00591703 Partner shall pay all costs and expenses incurred by the Partnership, including attorneys' fees and expenses, in connection with such proceedings. (b) Additionally, without in any way limiting any remedy which the Partnership may pursue pursuant to paragraph 4.5(a), should any Limited Partner fail to make any of the capital contributions required of it under this Agreement, such Limited Partner shall be in default. In the event of such default, the General Partner may, in its sole discretion, elect to enforce one or more of the provisions of this paragraph 4.5(b) in connection with such a default, to which each Limited Partner hereby expressly consents, provided such default shall have continued uncured for ten (10) or more days after delivery of the Default Notice described in the following sentence (after such ten (10)-day period, such Limited Partner shall be deemed a "Defaulting Limited Partner"). The General Partner shall deliver written notice to such Defaulting Limited Partner in the event that it determines to utilize one or more of the powers set forth in this paragraph 4.5(b) (a "Default Notice"). If the default shall have continued uncured for ten (10) or more days after delivery of the Default Notice, the Defaulting Limited Partner may not make any additional contributions of capital against such Defaulting Limited Partner's Capital Commitment (other than to fund Management Fees and other expenses of the Partnership) without the written consent of the General Partner, which consent may be granted or denied in the sole discretion of the General Partner. In enforcing any of the following provisions of this paragraph 4.5(b) against a Defaulting Limited Partner, the General Partner agrees that it shall use commercially reasonable efforts to enforce such provisions against such Defaulting Limited Partner in a manner so as to prevent the other non-Defaulting Limited Partners from bearing a net economic burden attributable to Management Fees that, absent such default, would be borne by the Defaulting Limited Partner if the Defaulting Limited Partner were to retain its interest in the Partnership and make capital contributions in respect thereof. (i) The General Partner may waive, in whole or in part, the requirement of payment with respect to any due and unpaid capital contributions by a Defaulting Limited Partner pursuant to this Agreement and reduce such Defaulting Limited Partner's Capital Commitment accordingly. The General Partner may extend the time of payment for a Defaulting Limited Partner of any due and unpaid capital contributions by such Defaulting Limited Partner pursuant to this Agreement. (iii) The General Partner may declare the entire amount of a Defaulting Limited Partner's then unfunded Capital Commitment to be immediately due and payable. (iv) On behalf of the Partnership, the General Partner may enforce, by appropriate legal proceedings, the Defaulting Limited Partner's obligation to make payment on the amount of any due and unpaid capital contributions by such Defaulting Limited Partner pursuant to this Agreement or to pay the entire amount of such Defaulting Limited Partner's then unfunded Capital Commitment. (v) The Defaulting Limited Partner shall have no right to participate in any vote or consent of the Partners required under this Agreement or permitted under the Act and the Capital Commitment of such Defaulting Limited Partner shall not be included for purposes of calculating a Majority in Interest or other Percentage in Interest of the Limited Partners for purposes of this Agreement. (vi) Should the General Partner, in its sole discretion, elect to exercise the provisions of this paragraph 4.5(b)(vi), such Defaulting Limited Partner shall pay all expenses to be incurred or anticipated to be incurred by the Partnership in connection with the default and interest on the amount of the contribution to the Partnership then due at the Prime Rate plus one hundred (100) basis points per annum (or if less, the highest rate permitted by applicable law), such interest to accrue from the date the contribution to the Partnership was required to be made pursuant to this Agreement until the date the 7. 126316015 v3 EFTA00591704 contribution is made by such Defaulting Limited Partner, unless such payment is waived by the General Partner. The accrued interest shall be paid by the Defaulting Limited Partner to the Partnership upon payment of such contribution. The accrued interest so paid shall not be treated as an additional contribution to the capital of the Partnership, but shall be deemed to be income to the Partnership; provided, however, that such income shall not be allocated to the Capital Account of the Defaulting Limited Partner. Until such time as the unpaid contribution and accrued interest thereon shall have been paid by the Defaulting Limited Partner, the General Partner may elect to withhold any or all distributions to be made to such Defaulting Limited Partner pursuant to Article 7 or Article 10 and recover any such unpaid contribution and accrued interest thereon by set off against any such distribution withheld. (vii) Should the General Partner, in its sole discretion, elect to exercise the provisions of this paragraph 4.5(b)(vii), the General Partner and the nondefaulting Limited Partners (the "Optionees"), shall have the right and the option, but not the obligation, to acquire the Partnership interest of the Defaulting Limited Partner (the "Optionor"), as follows: (1) The General Partner shall notify the Optionees of the default within twenty (20) days of the expiration of the ten (10) day notice period commencing upon delivery of the Default Notice. Such notice shall advise each Optionee of the portion and the price of the Optionor's interest available to it. The portion available to each Optionee shall be a