SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM A-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
ALBERICH, LLLP
(Exact name of Registrant as specified in its
charter)
MINNESOTA 3570
Application Filed
(State or other jurisdiction (Primary Standard Industrial
(I.R.S. Employer
of incorporation or organization) Classification Code Number)
Identification No.)
(Address, including zip code and telephone number,
including area code, of
Registrant's principal executive offices)
General Counsel and Secretary
Alberich, LLLP
1754 Market Dr.
Suite 500
Stillwater, MN 55082
(612) 605-8665
(Name, address, including zip code and telephone number,
including area code, of
agent for service)
Copies to:
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, check the following box.
[*]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. []
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. []
If this Form is post-effective amendment filed pursuant to
Rule 462(d) under the Securities act, check the following box
and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. []
If delivery of the prospectus is expected to be made pursuant
to Rule 434, check the following box. []
i
The information in this prospectus supplement and the
accompanying prospectus is not complete and may be changed.
This prospectus supplement and the accompanying prospectus are
not an offer to sell these securities and are not soliciting
an offer to buy these securities in any state where the offer
or sale is not permitted.
Subject to Completion, dated December 8, 2005
Alberich, LLLP
Subject to Completion
$5,000,000
Debt Securities
Units
Warrants to Purchase Units
Warrants to Purchase Debt Securities
Third-Party Warrants
Foreign Currency Exchange Warrants
Other Warrants
-------------------------------------------------
- ----
We will provide the specific terms of these
securities in
supplements to this prospectus. You should read this
prospectus
and any supplement carefully before you
invest.
-------------------------------------------------
- ----
THIS PROSPECTUS PROVIDES YOU WITH A GENERAL DESCRIPTION OF THE
SECURITIES WE MAY OFFER. EACH TIME WE SELL SECURITIES WE WILL
PROVIDE A PROSPECTUS SUPPLEMENT THAT WILL CONTAIN SPECIFIC
INFORMATION ABOUT THE TERMS OF THAT OFFERING. THE PROSPECTUS
SUPPLEMENT MAY ALSO ADD, UPDATE OR CHANGE INFORMATION
CONTAINED IN THIS PROSPECTUS. WE WILL PROVIDE INFORMATION IN
THE PROSPECTUS SUPPLEMENT FOR THE EXPECTED TRADING MARKET, IF
ANY, FOR THE SECURITIES.
THE REGISTRANT AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT FILES A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ACCORDING TO SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS
THE SECURITIES EXCHANGE COMMISSION, ACTING UNDER SECTION 8(A),
MAY DETERMINE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THE SECURITIES AND IT
IS NOT SOLICITING ANY OFFER TO BUY THE SECURITIES IN ANY STATE
WHERE THE OFFER AND SALE IS NOT PERMITTED. NEITHER THE
SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT
PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES
OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON
THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER
SELLING LITERATURE. THESE SECURITIES ARE OFFERED PURSUANT TO
AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER,
THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT
THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.
ii
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
S-1
PROSPECTUS SUPPLEMENT SUMMARY
S-2
THE PARTNERSHIP
S-3
SUMMARY FINANCIAL DATA
S-4
MATERIAL TAX CONSIDERATIONS
S-6
RISK FACTORS
S-9
USE OF PROCEEDS
S-10
CAPITALIZATION
S-11
DESCRIPTION OF DEBT SECURITIES
S-12
DESCRIPTION OF UNITS
S-22
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIES
S-26
DESCRIPTION OF THE WARRANTS TO PURCHASE UNITS
S-27
DESCRIPTION OF THE THIRD-PARTY WARRANTS
S-29
DESCRIPTION OF THE FOREIGN CURRENCY EXCHANGE WARRANTS
S-31
DESCRIPTION OF THE OTHER WARRANTS
S-34
PLAN OF DISTRIBUTION
S-36
LEGAL MATTERS
S-37
WHERE YOU CAN FIND MORE INFORMATION
S-38
INFORMATION NOT REQUIRED IN PROSPECTUS
S-39
iii
IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
This document is in two parts. The first part is the
prospectus supplement, which describes our business and the
specific terms of this offering. The second part, the
accompanying prospectus, gives more general information, some
of which may not apply to this offering.
If the description of the offering varies between the
prospectus supplement and the accompanying prospectus, you
should rely on the information in this prospectus supplement.
You should rely only on the information contained in or
incorporated by reference in this prospectus supplement and
the accompanying prospectus. We have not, and the underwriters
have not, authorized anyone to provide you with different
information. We are not making an offer securities in any
jurisdiction where the offer is not permitted. You should not
assume that the information contained in this prospectus
supplement, the accompanying prospectus or in the documents
incorporated by reference in this prospectus supplement or the
accompanying prospectus is accurate as of any date other than
the date on the front of those documents.
S-1
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information from this prospectus
supplement and the accompanying prospectus. It is not complete
and may not contain all of the information that you should
consider before investing in the securities. This prospectus
supplement and the accompanying prospectus include specific
terms of the offering of the securities, information about our
business and our financial data. You should read carefully the
entire prospectus supplement, the accompanying prospectus and
the documents we have incorporated by reference, including
"Risk Factors" of this prospectus supplement and the
accompanying prospectus, and our financial statements and the
notes to those statements, before making an investment
decision.
As used in this prospectus supplement and the accompanying
prospectus, "we," "us," "our" and "Alberich Partners" mean
Alberich, LLLP. Our Class A Common Units represent limited
partner interests in Alberich, LLLP. We also have limited
partner interests that are represented by Class B Common Units
and i-units. All of our Class B Common Units and i-units are
owned by our genera partner.
S-2
THE PARTNERSHIP
ALBERICH, LLLP
Alberich is a direct marketer, designer and manufacturer of
embedded computer solutions based upon a wide variety of open
standard bus designs such as VME, CPCI, PCI, PMC, Multibus,
ISA, and special custom buses. The Company's products are
used by original equipment manufacturers ("OEMs"), systems
integrators and end-users in various industries; including
Manufacturing Automation, Business Intelligence, Healthcare,
Oil & Gas Refining/Extraction, Telecommunications,
Environmental Monitoring, and Test and Measurement. Unlike
general purpose computers, embedded computer solutions are i)
incorporated into systems and equipment to provide a single or
a limited number of critical system control functions; ii)
generally integrated into larger automated systems; and iii)
often have extended product life cycles. The Company's
embedded computers are based upon the Intel & AMD x86
architecture and are typically capable of running personal
computer ("PC") compatible operating systems and application
software.
Recently the Company introduced its ALB suite of PC-based
control software modules that run on standard PC platforms
using the Windows operating system. ALB modules provide a
comprehensive set of tools used to create data acquisition and
control systems and to interconnect the large number of legacy
control products commonly found in industrial plants. The
Company's ALB software is designed for compliance with open
industry standards, and the software modules can be mixed and
matched to provide solutions for a variety of industrial
applications. The Data Acquisition and Control market
represents the largest market for Alberich's product
solutions.
The Company is also involved in networking systems of
dissimilar buses using adapters, high-performance networks,
and synergistic software. The Company's family of networking
products is based on a technology known in the computer
industry as "Reflective Memory." Alberich's connectivity
products allow low maintenance, high-speed communication
between PC computers, workstations, computer mainframes and
embedded computers manufactured by a wide variety of
companies.
The Company markets and sells more than 200 different products
worldwide, including application-specific embedded computer
subsystems, board-level modules, control and driver software,
and network products. In addition to offering standard
commercial products, the Company is involved in the
development of custom products for high-volume applications.
Alberich continues to invest heavily in new and enhanced
technology, including software, and has focused its attention
on highly vertical markets to support faster growth, and more
consistent profitability. The Company's business strategy
consists of these key elements:
* Expand the Company's leadership position in its core
board-level products and systems markets.
* Further develop markets for new PC based control software
such as ALB.
* Widen the Company's philosophy and reputation as a
company dedicated to customer support and relations.
* Apply the Company's technology and industry knowledge to
create new solutions for existing and new customers.
* Focus on PC single-board computers and related software
for multiple markets.
* Focus on the communications industry with the Company's
Reflective Memory product line and PC single board computer
product line.
* Expand the Company's new business of offering software
and complimentary hardware products for the Industrial
Automation and Test and Measurement markets.
S-3
SUMMARY FINANCIAL DATA
WE ARE PROVIDING THE FOLLOWING SUMMARY FINANCIAL INFORMATION
OF THE COMPANY TO HIGHLIGHT SELECTED FINANCIAL INFORMATION FOR
YOUR BENEFIT. WE DERIVED THIS INFORMATION FROM THE FINANCIAL
STATEMENTS OF THE COMPANY FOR EACH OF THE FISCAL YEARS SHOWN.
THE FOLLOWING INFORMATION IN ONLY A SUMMARY AND YOU SHOULD
READ IT IN CONJUNCTION WITH ALBERICH'S FINANCIAL STATEMENTS
AND NOTES THERETO. FOR A MORE DETAILED NARRATIVE EXPLANATION
OF THE FOLLOWING RESULTS AND CONDITIONS, SEE "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."
(dollars in millions expect per unit amounts)
(Unaudited)
Year Ended December 31,
2005 2004
Income Statement Data:
-
Operating Revenues
$ -
Gross Profit
-
Selling, General and Administrative Expenses
-
Research and Development
-
Income From Operations
-
Net Income(4)
$
Net Income Per Common Unit(1)
$
Cash Distributions Paid Per Common Unit
$
Financial Position Data (at period end):
Working Capital
$
Total Assets
Long-Term Debt
Partners' Capital
Class A Common Units
Class B Common Units
i-units
General Partner
Accumulated Other Comprehensive Income (loss)
Total Partners' Capital(4)
$
Other Financial Data:
EBITDA(2) (4)
$
Cash Flow Provided by Operating Activities(4)
Cash Flow (used in) Investing Activities(4)
Cash Flow Provided by Financing Activities(4)
Additions to Property Equipment and Asset Acquisitions
Included in Investing Activities(4)
__________
(1) Represents cash distributions declared for the four
quarters of the calendar year. Actual cash distributions paid
during each year is slightly different since distributions are
paid 45 days after the end of the respective quarter.
(2) We define EBITDA as net income before (a) depreciation
and amortization, (b) interest expense, net of capitalized
interest and (c) income taxes. EBITDA is used as a
supplemental financial measurement in the evaluation of our
business, as described more fully below, and should not
S-4
be considered as an alternative to net income as an indicator
of our operating performance, cash flows from operating
activities or other cash flow data calculated in accordance
with accounting principles generally accepted in the United
States or as a measure of liquidity. EBITDA is not defined
under accounting principles generally accepted in the United
States, and it may not be the same as similarly titled
measures used by others.
(3) EBITDA is used as a supplemental financial measure to
assess: (a) the ability of assets to generate cash sufficient
to pay interest costs and make cash distributions to common
unit holders, (b) the financial performance of assets and (c)
the appropriateness of the purchase price of assets being
considered for acquisition. As such, this supplemental
financial measure provides a basis for investors and
management to assess and measure performance over time and in
relation to companies who own similar assets. Moreover, our
credit facility may require us to use EBITDA in calculating
certain financial ratios. Although EBITDA is used as a
supplemental financial measure to assess our ability to
generate cash sufficient to pay interest costs and make cash
distributions to common unit holders as noted above, the
amount of cash available for such payments is also subject to
our ability to reserve cash for other uses, such as debt
repayments, capital expenditures and operating activities.
(4) To be provided pursuant to 17CFR229.512(a)(4).
__________
S-5
MATERIAL TAX CONSIDERATIONS
This section is a summary of material United States federal
income tax considerations that may be relevant to prospective
owners of units and, unless otherwise noted in the following
discussion, expresses the opinion of our counsel insofar as it
relates to legal conclusions with respect to United States
federal income tax law. This section is based upon current
provisions of the Internal Revenue Code, existing and proposed
regulations and current administrative rulings and court
decisions, all of which are subject to change. Later changes
in these authorities may cause the tax consequences to vary
substantially from the consequences described below.
Unless the context otherwise requires, references in this
section to us or we are references to Alberich, LLLP.
No attempt has been made in the following discussion to
comment on all United States federal income tax matters
affecting us or the owners of units. Moreover, the discussion
does not address the United States federal income tax
consequences that may be relevant to certain types of
investors subject to specialized tax treatment, such as non-
U.S. persons, financial institutions, insurance companies,
real estate investment trusts, estates, trusts, dealers and
persons entering into hedging transactions. Accordingly, each
prospective owner of units is urged to consult with, and is
urged to depend on, his own tax advisor in analyzing the
United States federal, state, local and foreign tax
consequences particular to him of the ownership or disposition
of units.
All statements as to matters of law and legal conclusions, but
not as to factual matters, contained in this section, unless
otherwise noted, are the opinion of our counsel and are based
on the accuracy of the representations made by us.
No ruling has been or will be requested from the IRS regarding
any matter affecting us or prospective owners of units. Unlike
a ruling, the opinion of our counsel represents only that
firm's best legal judgment and does not bind the IRS or the
courts. Accordingly, the opinions and statements made here may
not be sustained by a court if contested by the IRS. Any
contest of this sort with the IRS may materially and adversely
impact the market for units and the prices at which units
trade. In addition, the cost of any contest with the IRS will
be borne directly or indirectly by us and the owners of units.
Furthermore, the tax treatment of us or of an investment in us
may be significantly modified by future legislative or
administrative changes or court decisions. Any modifications
may or may not be retroactively applied.
U.S. Federal Income Tax Considerations Associated with the
Ownership and Disposition of units
Tax Consequences of Unit Ownership
Distributions of Additional units. Under the terms of our
partnership agreement, except in connection with our
liquidation, we will not make distributions of cash in respect
of units but rather will make distributions of additional
units. Because these distributions of additional units will be
made proportionately to all owners of units, the receipt of
these additional units will not be includable in the gross
income of an owner of units for United States federal income
tax purposes. As each owner of units receives additional
units, he will be required to allocate his basis in his units
in the manner described below. Please read Basis of Units.
Basis of units. An owner's initial tax basis for his units
will be the amount paid for them. As additional units are
distributed to an owner of units, he will be required to
allocate his tax basis in his units equally between the old
units and the new units received. If the old units were
acquired for different prices, and the owner can identify each
separate lot, then the basis of each old lot of units can be
used separately in the allocation to the new units received
with respect to the identified old lot. If an owner of units
cannot identify each lot, then he must use the first-in first-
out tracing approach. a unit holder cannot use the average
cost for all lots for this purpose.
S-6
Disposition of units. Gain or loss will be recognized on a
sale or other disposition of units, whether to a third party
or to Alberich, LLLP pursuant to the Alberich, LLLP purchase
provisions or in connection with the liquidation of us, equal
to the difference between the amount realized and the owner's
tax basis for the units sold or otherwise disposed of. An
owner's amount realized will be measured by the sum of the
cash and the fair market value of other property received by
the owner.
Except as noted below, gain or loss recognized by an owner of
units, other than a dealer in securities, on the sale or other
disposition of an unit will generally be taxable as capital
gain or loss. Capital gain recognized by an individual on the
sale of units held more than 12 months will generally be taxed
at a maximum rate of 15%, subject to the discussion below
relating to straddles. Capital gain recognized by a
corporation on the sale of units will generally be taxed at a
maximum rate of 35%. Net capital loss may offset capital gains
and no more than $3,000 of ordinary income, in the case of
individuals, and may only be used to offset capital gains in
the case of corporations.
Capital gain treatment may not result from a sale of units to
Alberich, LLLP pursuant to the Alberich, LLLP purchase
provisions or otherwise if a single unit holder of us or our
unit holders as a group own 50% or more of the units of
Alberich, LLLP In that case, if either we or Alberich, LLLP
has earnings and profits, then the amount received by a seller
of units may be taxed as ordinary income to the extent of his
portion of those earnings and profits, but only if the seller
sells less than all of his units or is a unit holder of
Alberich, LLLP after applying the ownership attribution rules.
For purposes of determining whether capital gains or losses on
the disposition of units are long or short term, subject to
the discussion below relating to straddles, an owner's holding
period begins on his acquisition of units. As additional units
are distributed to him, the holding period of each new unit
received will also include the period for which the owner held
the old units to which the new unit relates.
Because the purchase rights in respect of the units arise as a
result of an agreement other than solely with us, these rights
do not appear to constitute inherent features of the units for
tax purposes. Please read Description of Our units Optional
Purchase, and Mandatory Purchase. As such, it is possible that
the IRS would assert that units and the related purchase
rights constitute a straddle for United States federal income
tax purposes to the extent that those rights are viewed as
resulting in a substantial diminution of a unit purchaser's
risk of loss from owning his units. In that case, any owner of
units who incurs interest or other carrying charges that are
allocable to the units (as would be the case if the owner
finances his acquisition of units with debt) would have to
capitalize those interest or carrying charges to the basis of
the related units and purchase rights rather than deducting
those interest or carrying charges currently. In addition, the
holding period of the units would be suspended, resulting in
short-term capital gain or loss (generally taxed at ordinary
income rates) upon a taxable disposition even if the units
were held for more than 12 months. However, we believe that
the purchase rights have minimal value and do not result in a
substantial diminution of a unit purchaser's risk of loss from
owning units. Based on that, the units and the related
purchase rights should not constitute a straddle for United
States federal income tax purposes and therefore should not
result in any suspension of an owner's holding period or
interest and carrying charge capitalization, although there
can be no assurance that the IRS or the courts would agree
with this conclusion.
Investment in Units by Tax-Exempt Investors, Regulated
Investment Companies, and Non-U.S. Persons. Employee benefit
plans and most other organizations exempt from United States
federal income tax, including individual retirement accounts,
known as IRAs, and other retirement plans, are subject to
United States federal income tax on unrelated business taxable
income. Because we will be treated as a corporation for United
States federal income tax purposes, an owner of units will not
report on its United States federal income tax return any of
our items of income, gain, loss and deduction. Therefore, a
tax-exempt investor will not have unrelated business taxable
income attributable to its ownership or sale of units unless
its ownership of the units is debt financed. In general, a
unit would be debt financed if the tax-exempt owner of units
incurs debt to acquire a unit or otherwise incurs or maintains
a debt that would not have been incurred or maintained if that
unit had not been acquired.
S-7
A regulated investment company, or mutual fund, is required to
derive at least 90% of its gross income for every taxable year
from qualifying income. As stated above, an owner of units
will not report on its United States federal income tax return
any of our items of income, gain, loss and deduction. Thus,
ownership of units will not result in income which is not
qualifying income to a mutual fund. Furthermore, any gain from
the sale or other disposition of the units, and the associated
purchase rights, will qualify for purposes of that 90% test.
Finally, units, and the associated purchase rights, will
constitute qualifying assets to mutual funds which also must
own at least 50% qualifying assets at the end of each quarter.
Because distributions of additional units will be made
proportionately to all owners of units, the receipt of these
additional units will not be includable in the gross income of
an owner of units for United States federal income tax
purposes. Therefore, no withholding taxes will be imposed on
distributions of additional units to non-resident alien
individuals and foreign corporations, trusts or estates. A
non-United States owner of units generally will not be subject
to United States federal income tax or subject to withholding
on any gain recognized on the sale or other disposition of
units unless:
* the gain is considered effectively connected with the
conduct of a trade or business by the non-United States owner
within the United States and, where a tax treaty applies, is
attributable to a United States
* permanent establishment of that owner (and, in which
case, if the owner is a foreign corporation, it may be subject
to an additional branch profits tax equal to 30% or a lower
rate as may be specified by an applicable income tax treaty);
* the non-United States owner is an individual who holds
the units as a capital asset and is present in the United
States for 183 or more days in the taxable year of the sale or
other disposition and other conditions are met; or
* we are or have been a United States real property holding
corporation, or a USRPHC, for United States federal income tax
purposes.
We believe that we are a USRPHC for United States federal
income tax purposes. Therefore, any gain on the sale or other
disposition of units by a non-United States owner will be
subject to United States federal income tax unless the units
are regularly traded on an established securities market and
the non-United States owner has not actually or constructively
held more than 5% of the units at any time during the shorter
of the five-year period preceding the disposition or that
owner's holding period. Our units currently trade on an
established securities market.
S-8
RISK FACTORS
Before you invest in our securities, you should be aware that
such an investment involves various risks, including those
described in the accompanying prospectus and the documents we
have incorporated by reference. If any of those risks actually
occurs, then our business, financial condition or results of
operations could be materially adversely affected. In such
case, the trading price of our securities could decline, and
you could lose all or part of your investment. We have listed
below the risks that we consider to be material to your
decision whether to invest in our securities at this time. You
should consider carefully the risk factors listed and
described below as well as the more detailed discussions of
these risks on the accompanying prospectus.
RISKS ARISING FROM OUR PARTNERSHIP.
* The interests of Alberich, LLLP may differ from our
interests and the interests of our unit holders, and the board
of directors may consider the interests of all parties to a
conflict, not just the interests of our unit holders, in
making important business decisions.
* We can issue additional units, including additional i-
units which would dilute your ownership interest.
* Alberich, LLLP's discretion in establishing our cash
reserves gives it the ability to reduce the amount of cash
available for distribution to our unit holders.
RISKS RELATED TO OUR DEBT AND OUR ABILITY TO DISTRIBUTE CASH.
Agreements relating to our debt may restrict our ability to
make cash distributions, which could adversely affect the
value of our units, and our ability to incur additional debt.
TAX RISKS TO UNIT HOLDERS.
* We may be classified as an association taxable as a
corporation rather than as a partnership, which would
substantially reduce the value of our Units.
* If the Internal Revenue Service does not respect our
curative tax allocations, your after-tax return on your
investment in our Units would be adversely affected.
* Your tax liability could exceed your cash distributions
or proceeds from sales of Units.
* A holder of Units may be required to file tax returns
with and pay income taxes to the states where we or our
subsidiaries own property and conduct business.
* Ownership of Units raises issues for tax-exempt entities
and other investors.
* We may be required to register with the Secretary of the
Treasury as a "tax shelter" possibly increasing your risk of
an Internal Revenue Service audit.
* Our treatment of a purchaser of Units as having the same
tax benefits as the seller could be challenged, resulting in a
reduction in value of the Units.
S-9
USE OF PROCEEDS
We will use the net proceeds from the sale of the Securities,
after transaction and hedging costs, if any, for general
business purposes, including debt repayment, future
acquisitions, capital expenditures and working capital. We may
change the potential uses of the net proceeds in a prospectus
supplement.
S-10
CAPITALIZATION
The following table sets forth the unaudited capitalization of
the Company as of December 8, 2005. The following table should
be read in conjunction with the Company's historical financial
statements.
Revenues:
Current Portion of Long-term Debt
$ 0
Long-Term Debt - Net of Current Portion
$ 0
unit holders' Equity
Common units, $0.10 par value
$ 0
Additional Paid-in Capital
$ 0
Retained Earnings
$ 0
unit holders' Equity
$ 0
Total capitalization
$ 0
S-11
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be our direct unsecured general
obligations. The Debt Securities will be either senior debt
securities or subordinated debt securities. The Debt
Securities will be issued under one or more separate
indentures between us and a trustee to be named in the
prospectus supplement. Senior Debt Securities will be issued
under a "Senior Indenture" and Subordinated Debt Securities
will be issued under a "Subordinated Indenture". Together the
Senior Indentures and the Subordinated Indentures are called
"Indentures".
We have summarized selected provisions of the Indentures
below. The summary is not complete. The forms of the
Indentures have been filed as exhibits to the registration
statement and you should read the Indentures for provisions
that may be important to you. In the summary below, we have
included references to section numbers of the applicable
Indentures so that you can easily locate these provisions.
Capitalized terms used in the summary have the meanings
specified in the Indentures.
GENERAL
The Debt Securities will be our direct, unsecured obligations.
The Senior Debt Securities will rank equally in right of
payment with all of our other senior and unsubordinated debt.
The Subordinated Debt Securities will rank junior in right of
payment to all of our Senior Debt.
We are a holding company that conducts all of our operations
through our subsidiaries. The Senior Indenture will require
any of our Subsidiaries which are guarantors or co-obligors of
our Funded Debt to fully and unconditionally guarantee, as
"Guarantors," our payment obligations on the Senior Debt
Securities.
"Funded Debt" means all debt maturing one year or more from
the date of its creation, all debt directly or indirectly
renewable or extendable, at the option of the debtor, by its
terms or by the terms of any instrument or agreement relating
to the debt, to a date one year or more from the date of its
creation, and all debt under a revolving credit or similar
agreement obligating the lender or lenders to extend credit
over a period of one year or more.
In particular, the Senior Indenture will require those
Subsidiaries who are guarantors or borrowers under our Credit
Agreement to equally guarantee the Senior Debt Securities.
However, holders of Senior Debt Securities will generally have
a junior position to claims of creditors and preferred
stockholders of our subsidiaries who are not Guarantors.
The Subordinated Indenture will not require our Subsidiaries
to guarantee the Subordinated Debt Securities. As a result,
the holders of Subordinated Debt Securities will generally
have a junior position to claims of all creditors and
preferred stockholders of our subsidiaries.
In the Indentures, the term "Subsidiary" means, with respect
to any person:
* any corporation, association or other business entity of
which more than 50% of the total voting power of the equity
interests entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
trustees thereof, or
* any partnership of which more than 50% of the partners'
equity interests (considering all partners' equity interests
as a single class) is at the time owned or controlled,
directly or indirectly, by such person or one or more of the
other Subsidiaries of such person or combination thereof.
* A prospectus supplement and a supplemental indenture
relating to any series of Debt Securities being offered will
include specific terms relating to the offering. These terms
will include some or all of the following:
S-12
* the form and title of the Debt Securities;
* the total principal amount of the Debt Securities;
* the portion of the principal amount which will be payable
if the maturity of the Debt Securities is accelerated;
* any right we may have to defer payments of interest by
extending the dates payments are due whether interest on those
deferred amounts will be payable as well;
* the dates on which the principal of the Debt Securities
will be payable;
* the interest rate which the Debt Securities will bear and
the interest payment dates for the Debt Securities;
* any optional redemption provisions;
* any sinking fund or other provisions that would obligate
us to repurchase or otherwise redeem the Debt Securities;
* any changes to or additional Events of Default or
covenants; and
* any other terms of the Debt Securities.
Neither of the Indentures limits the amount of Debt Securities
that may be issued. Each Indenture allows Debt Securities to
be issued up to the principal amount that may be authorized by
us and may be in any currency or currency unit designated by
us.
Debt Securities of a series may be issued in registered,
bearer, coupon or global form. (Sections 201 & 202)
DENOMINATIONS
The prospectus supplement for each issuance of Debt Securities
will state whether the securities will be issued in registered
form in other amounts than $1,000 each or multiples thereof.
NO PERSONAL LIABILITY OF GENERAL PARTNER
The General Partner and its directors, officers, employees and
shareholders will not have any liability for our obligations
under the Indentures or the Debt Securities. Each holder of
Debt Securities by accepting a Debt Security waives and
releases all such liability. The waiver and release are part
of the consideration for the issuance of the Debt Securities.
SUBORDINATION
Under the Subordinated Indenture, payment of the principal,
interest and any premium on the Subordinated Debt Securities
will generally be junior in right of payment to the prior
payment in full of all Senior Debt. "Senior Debt" is defined
to include all notes or other unsecured evidences of
indebtedness, including guarantees of the Partnership for
money borrowed by the Partnership, not expressed to be
subordinate or junior in right of payment to any other
indebtedness of the Partnership.
The Subordinated Indenture provides that no payment of
principal, interest and any premium on the Subordinated Debt
Securities may be made in the event:
* we or our property are involved in any voluntary or
involuntary liquidation or bankruptcy;
S-13
* we fail to pay the principal, interest, any premium or
any other amounts on any Senior Debt when due; or
* we have a nonpayment default on any Senior Debt that
imposes a payment blockage on the Subordinated Debt Securities
for a maximum of 179 days at any one time. (Sections 1401,
1402 and 1403 of the Subordinated Indenture)
The Subordinated Indenture will not limit the amount of Senior
Debt that we may incur.
CONSOLIDATION, MERGER OR SALE
Each Indenture generally allows us to consolidate or merge
with a domestic partnership or corporation. They also allow us
to sell, lease or transfer all or substantially all of our
property and assets. If this happens, the remaining or
acquiring partnership or corporation must assume all of our
responsibilities and liabilities under the Indentures
including the payment of all amounts due on the Debt
Securities and performance of the covenants in the Indentures.
However, we will only consolidate or merge with or into any
other partnership or corporation or sell, lease or transfer
all or substantially all of our assets according to the terms
and conditions of the Indentures, which include the following
requirements:
* the remaining or acquiring partnership or corporation is
organized under the laws of the United States, any state or
the District of Columbia;
* the remaining or acquiring partnership or corporation
assumes the Partnership's obligations under the Indentures;
and
* immediately after giving effect to the transaction no
Default or Event of Default exists.
The remaining or acquiring partnership or corporation will be
substituted for us in the Indentures with the same effect as
if it had been an original party to the Indenture. Thereafter,
the successor may exercise our rights and powers under any
Indenture, in our name or in its own name. Any act or
proceeding required or permitted to be done by our Board of
Directors or any of our officers may be done by the board or
officers of the successor. If we sell or transfer all or
substantially all of our assets, we will be released from all
our liabilities and obligations under any Indenture and under
the Debt Securities. If we lease all or substantially all of
our assets, we will not be released from our obligations under
the Indentures. (Sections 801 & 802)
The Senior Indenture contains similar provisions for the
Guarantors.
MODIFICATION OF INDENTURES
Under each Indenture, generally our rights and obligations,
the Guarantors' rights and obligations and the rights of the
holders may be modified with the consent of the holders of a
majority in aggregate principal amount of the outstanding Debt
Securities of each series affected by the modification. No
modification of the principal or interest payment terms, and
no modification reducing the percentage required for
modifications, is effective against any holder without its
consent. In addition, the Partnership and the trustee may
amend the Indentures without the consent of any holder of the
Debt Securities to make certain technical changes, such as:
* correcting errors;
* providing for a successor trustee;
* qualifying the Indentures under the Trust Indenture Act;
or
S-14
* adding provisions relating to a particular series of Debt
Securities. (Sections 901 & 902)
EVENTS OF DEFAULT
"Event of Default" when used in an Indenture, will mean any of
the following:
* failure to pay the principal of or any premium on any
Debt Security when due;
* failure to pay interest on any Debt Security for 30 days;
* failure to perform any other covenant in the Indenture
that continues for 60 days after being given written notice;
* certain events in bankruptcy, insolvency or
reorganization of the Partner- ship; or
* any other Event of Default included in any Indenture or
supplemental indenture. (Section 501)
An Event of Default for a particular series of Debt Securities
does not necessarily constitute an Event of Default for any
other series of Debt Securities issued under an Indenture. The
Trustee may withhold notice to the holders of Debt Securities
of any default (except in the payment of principal or
interest) if it considers such withholding of notice to be in
the best interests of the holders. (Section 602)
If an Event of Default for any series of Debt Securities
occurs and continues, the Trustee or the holders of at least
25% in aggregate principal amount of the Debt Securities of
the series may declare the entire principal of all the Debt
Securities of that series to be due and payable immediately.
If this happens, subject to certain conditions, the holders of
a majority of the aggregate principal amount of the Debt
Securities of that series can void the declaration. (Section
502)
Other than its duties in case of a default, a Trustee is not
obligated to exercise any of its rights or powers under any
Indenture at the request, order or direction of any holders,
unless the holders offer the Trustee reasonable indemnity.
(Section 601) If they provide this reasonable indemnification,
the holders of a majority in principal amount of any series of
Debt Securities may direct the time, method and place of
conducting any proceeding or any remedy available to the
Trustee, or exercising any power conferred upon the Trustee,
for any series of Debt Securities. (Section 512)
PROVISIONS ONLY IN THE SENIOR INDENTURE
General. The Senior Indenture contains provisions that limit
our ability to put liens on our principal assets or to sell
and lease back those assets. The Senior Indenture also
requires our Subsidiaries that guarantee our long term debt to
guarantee the Senior Debt Securities on an equal basis. The
Subordinated Indenture does not contain any similar
provisions. We have described below these provisions and some
of the defined terms used in them. In this section, references
to the Partnership relate only to Alberich, LLLP, the issuer
of the Debt Securities, and not our Subsidiaries.
Limitations on Liens. The Senior Indenture provides that the
Partnership will not, nor will it permit any Subsidiary to,
create, assume, incur or suffer to exist any lien upon any
Principal Property (as defined below) or upon any shares of
capital stock of any Subsidiary owning or leasing any
Principal Property, whether owned or leased on the date of the
Senior Indenture or thereafter acquired, to secure any debt of
the Partnership or any other person (other than the Senior
Debt Securities issued thereunder), without in any such case
making effective provision whereby all of the Senior Debt
Securities Outstanding thereunder shall be secured equally and
ratably with, or prior to, such debt so long as such debt
shall be so secured.
"Principal Property" means, whether owned or leased on the
date of the Senior Indenture or thereafter acquired:
S-15
(a) any pipeline assets of the Partnership or any Subsidiary,
including any related facilities employed in the
transportation, distribution, storage or marketing of refined
petroleum products, natural gas liquids, coal and carbon
dioxide, that are located in the United States of America or
any territory or political subdivision thereof; and
(b) any processing or manufacturing plant or terminal owned or
leased by the Partnership or any Subsidiary that is located in
the United States or any territory or political subdivision
thereof, except, in the case of either of the foregoing
clauses (a) or (b): (1) any such assets consisting of
inventories, furniture, office fixtures and equipment
(including data processing equipment), vehicles and equipment
used on, or useful with, vehicles, and (2) any such assets,
plant or terminal which, in the opinion of the Board of
Directors, is not material in relation to the activities of
the Partnership or of the Partnership and its Subsidiaries,
taken as a whole.
There is excluded from this restriction:
1. Permitted Liens (as defined below);
2. any lien upon any property or assets created at the time of
acquisition of such property or assets by the Partnership or
any Subsidiary or within one year after such time to secure
all or a portion of the purchase price for such property or
assets or debt incurred to finance such purchase price,
whether such debt was incurred prior to, at the time of or
within one year after the date of such acquisition;
3. any lien upon any property or assets to secure all or part
of the cost of construction, development, repair or
improvements thereon or to secure debt incurred prior to, at
the time of, or within one year after completion of such
construction, development, repair or improvements or the
commencement of full operations thereof (whichever is later),
to provide funds for any such purpose;
4. any lien upon any property or assets existing thereon at
the time of the acquisition thereof by the Partnership or any
Subsidiary; provided, however, that such lien only encumbers
the property or assets so acquired;
5. any lien upon any property or assets of a person existing
thereon at the time such person becomes a Subsidiary by
acquisition, merger or otherwise; provided, however, that such
lien only encumbers the property or assets of such person at
the time such person becomes a Subsidiary;
6. with respect to any series, any lien upon any property or
assets of the Partnership or any Subsidiary in existence on
the date the Senior Debt Securities of such series are first
issued or provided for pursuant to agreements existing on such
date;
7. liens imposed by law or order as a result of any proceeding
before any court or regulatory body that is being contested in
good faith, and liens which secure a judgment or other court-
ordered award or settlement as to which the Partnership or the
applicable Subsidiary has not exhausted its appellate rights;
8. any extension, renewal, refinancing, refunding or
replacement (or successive extensions, renewals, refinancing,
refunding or replacements) of liens, in whole or in part,
referred to in clauses (1) through (7) above; provided,
however, that any such extension, renewal, refinancing,
refunding or replacement lien shall be limited to the property
or assets covered by the lien extended, renewed, refinanced,
refunded or replaced and that the obligations secured by any
such extension, renewal, refinancing, refunding or replacement
lien shall be in an amount not greater than the amount of the
obligations secured by the lien extended, renewed, refinanced,
refunded or replaced and any expenses of the Partnership and
its subsidiaries (including any premium) incurred in
connection with such extension, renewal, refinancing,
refunding or replacement; or
9. any lien resulting from the deposit of moneys or evidence
of indebtedness in trust for the purpose of defeasing debt of
the Partnership or any Subsidiary.
S-16
Notwithstanding the foregoing, under the Senior Indenture, the
Partnership may, and may permit any Subsidiary to, create,
assume, incur, or suffer to exist any lien upon any Principal
Property to secure debt of the Partnership or any person
(other than the Senior Debt Securities) that is not excepted
by clauses (1) through (9), inclusive, above without securing
the Senior Debt Securities issued under the Senior Indenture,
provided that the aggregate principal amount of all debt then
outstanding secured by such lien and all similar liens,
together with all net sale proceeds from Sale-Leaseback
Transactions (excluding Sale-Leaseback Transactions permitted
by clauses (1) through (4), inclusive, of the first paragraph
of the restriction on sale-leasebacks covenant described
below) does not exceed 10% of Consolidated Net Tangible
Assets. (Section 1006)
"Permitted Liens" means:
(1) liens upon rights-of-way for pipeline purposes;
(2) any statutory or governmental lien or lien arising by
operation of law, or any mechanics', repairmen's, material-
men's, suppliers', carriers', landlords', warehousemen's or
similar lien incurred in the ordinary course of business which
is not yet due or which is being contested in good faith by
appropriate proceedings and any undetermined lien which is
incidental to construction, development, improvement or
repair;
(3) the right reserved to, or vested in, any municipality or
public authority by the terms of any right, power, franchise,
grant, license, permit or by any provision of law, to purchase
or recapture or to designate a purchaser of, any property;
(4) liens of taxes and assessments which are (A) for the then
current year, (B) not at the time delinquent, or (C)
delinquent but the validity of which is being contested at the
time by the Partnership or any Subsidiary in good faith;
(5) liens of, or to secure performance of, leases, other than
capital leases;
(6) any lien upon, or deposits of, any assets in favor of any
surety company or clerk of court for the purpose of obtaining
indemnity or stay of judicial proceedings;
(7) any lien upon property or assets acquired or sold by the
Partnership or any Subsidiary resulting from the exercise of
any rights arising out of defaults on receivables;
(8) any lien incurred in the ordinary course of business in
connection with workmen's compensation, unemployment
insurance, temporary disability, social security, retiree
health or similar laws or regulations or to secure obligations
imposed by statute or governmental regulations;
(9) any lien in favor of the Partnership or any Subsidiary;
(10) any lien in favor of the United States of America or any
state thereof, or any department, agency or instrumentality or
political subdivision of the United States of America or any
state thereof, to secure partial, progress, advance, or other
payments pursuant to any contract or statute, or any debt
incurred by the Partnership or any Subsidiary for the purpose
of financing all or any part of the purchase price of, or the
cost of constructing, developing, repairing or improving, the
property or assets subject to such lien;
(11) any lien securing industrial development, pollution
control or similar revenue bonds;
(12) any lien securing debt of the Partnership or any
Subsidiary, all or a portion of the net proceeds of which are
used, substantially concurrent with the funding thereof (and
for purposes of determining such "substantial concurrence,"
taking into consideration, among other things, required
notices to be given to Holders of outstanding securities under
the Indenture (including the Debt Securities)
S-17
in connection with such refunding, refinancing or repurchase,
and the required corresponding durations thereof), to
refinance, refund or repurchase all outstanding securities
under the Indenture (including the Debt Securities), including
the amount of all accrued interest thereon and reasonable fees
and expenses and premium, if any, incurred by the Partnership
or any Subsidiary in connection therewith;
(13) liens in favor of any person to secure obligations under
the provisions of any letters of credit, bank guarantees,
bonds or surety obligations required or requested by any
governmental authority in connection with any contract or
statute; or
(14) any lien upon or deposits of any assets to secure
performance of bids, trade contracts, leases or statutory
obligations.
"Consolidated Net Tangible Assets" means, at any date of
determination, the total amount of assets after deducting
there from:
(1) all current liabilities (excluding (A) any current
liabilities that by their terms are extendable or renewable at
the option of the obligor thereon to a time more than 12
months after the time as of which the amount thereof is being
computed, and (B) current maturities of long-term debt), and
(2) the value (net of any applicable reserves) of all
goodwill, trade names, trademarks, patents and other like
intangible assets, all as set forth, or on a pro forma basis
would be set forth, on the consolidated balance sheet of the
Partnership and its consolidated subsidiaries for the
Partnership's most recently completed fiscal quarter, prepared
in accordance with generally accepted accounting principles.
Restriction on Sale-Leasebacks. The Senior Indenture provides
that the Partnership will not, and will not permit any
Subsidiary to, engage in the sale or transfer by the
Partnership or any Subsidiary of any Principal Property to a
person (other than the Partnership or a Subsidiary) and the
taking back by the Partnership or any Subsidiary, as the case
may be, of a lease of such Principal Property (a "Sale-
Leaseback Transaction"), unless:
(1) such Sale-Leaseback Transaction occurs within one year
from the date of completion of the acquisition of the
Principal Property subject thereto or the date of the
completion of construction, development or substantial repair
or improvement, or commencement of full operations on such
Principal Property, whichever is later;
(2) the Sale-Leaseback Transaction involves a lease for a
period, including renewals, of not more than three years;
(3) the Partnership or such Subsidiary would be entitled to
incur debt secured by a lien on the Principal Property subject
thereto in a principal amount equal to or exceeding the net
sale proceeds from such Sale-Leaseback Transaction without
equally and ratably securing the Senior Debt Securities; or
(4) the Partnership or such Subsidiary, within a one-year
period after such Sale-Leaseback Transaction, applies or
causes to be applied an amount not less than the Attributable
Indebtedness from such Sale-Leaseback Transaction to (A) the
prepayment, repayment, redemption, reduction or retirement of
any debt of the Partnership or any Subsidiary that is not
subordinated to the Senior Debt Securities, or (B) the
expenditure or expenditures for Principal Property used or to
be used in the ordinary course of business of the Partnership
or its Subsidiaries.
"Attributable Indebtedness," when used with respect to any to
any Sale-Leaseback Transaction, means, as at the time of
determination, the present value (discounted at the rate set
forth or implicit in the terms of the lease included in such
transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of
property taxes, maintenance, repairs, insurance, assessments,
utilities, operating and labor costs and other items that do
not constitute payments for property rights) during the
remaining term of the lease included in such Sale-Leaseback
Transaction (including any period for which such lease has
been extended). In the case of any lease that is terminable by
the lessee upon the payment of a penalty or other termination
payment, such amount shall be the lesser of the amount
determined assuming termination upon the first date such lease
may be terminated (in which case the
S-18
amount shall also include the amount of the penalty or
termination payment, but no rent shall be considered as
required to be paid under such lease subsequent to the first
date upon which it may be so terminated) or the amount
determined assuming no such termination.
Notwithstanding the foregoing, under the Senior Indenture the
Partnership may, and may permit any Subsidiary to, effect any
Sale-Leaseback Transaction that is not excepted by clauses (1)
through (4), inclusive, of the above paragraph, provided that
the net sale proceeds from such Sale-Leaseback Transaction,
together with the aggregate principal amount of outstanding
debt (other than the Senior Debt Securities) secured by liens
upon Principal Properties not excepted by clauses (1) through
(9), inclusive, of the first paragraph of the limitation on
liens covenant described above, do not exceed 10% of the
Consolidated Net Tangible Assets. (Section 1007)
Addition and Release of Guarantees. The Senior Indenture will
provide that if any Subsidiary of the Partnership is a
guarantor or obligor of any Funded Debt of the Partnership at
any time on or subsequent to the date on which the Senior Debt
Securities are originally issued (including, without
limitation, following any release of such Subsidiary from its
Guarantee as described below), then the Partnership will cause
the Senior Debt Securities to be equally and ratably
guaranteed by such Subsidiary. Under the terms of the Senior
Indenture, a Guarantor may be released from its Guarantee if
such Guarantor is not a guarantor or obligor of any Funded
Debt of the Partnership, provided that no Default of Event of
Default under the Senior Indenture has occurred or is
continuing. (Section 1008)
Initially, we expect that the Guarantors will be Alberich,
LLLP. Each of the Guarantees will be an unsecured obligation
of a Guarantor and will rank equally with that Guarantor's
guarantee under the Partnership's existing credit facility and
existing and future unsecured debt that is not expressly
subordinated to its Guarantee.
Each Guarantor is obligated under its Guarantee only up to an
amount that will not constitute a fraudulent conveyance or
fraudulent transfer under federal, state or foreign law.
PAYMENT AND TRANSFER
Principal, interest and any premium on fully registered
securities will be paid at designated places. Payment will be
made by check mailed to the persons in whose names the Debt
Securities are registered on days specified in the Indentures
or any prospectus supplement. Debt Securities payments in
other forms will be paid at a place designated by us and
specified in a prospectus supplement. (Section 307)
Fully registered securities may be transferred or exchanged at
the corporate trust office of the Trustee or at any other
office or agency maintained by us for such purposes, without
the payment of any service charge except for any tax or
governmental charge. (Section 305)
DEFEASANCE
We and the Guarantors may choose to either discharge our
obligations on the Debt Securities of any series in a covenant
defeasance, or to release ourselves from our covenant
restrictions on the Debt Securities of any series in a
covenant defeasance. We may do so at any time on the 91st day
after we deposit with the Trustee sufficient cash or
government securities to pay the principal, interest, any
premium and any other sums due to the stated maturity date or
a redemption date of the Debt Securities of the series. If we
choose the legal defeasance option, the holders of the Debt
Securities of the series will not be entitled to the benefits
of the Indenture except for registration of transfer and
exchange of Debt Securities, replacement of lost, stolen or
mutilated Debt Securities conversion or exchange of Debt
Securities, sinking fund payments and receipt of principal and
interest on the original stated due dates or specified
redemption dates. (Section 1302)
We may discharge our obligations under the Indentures or
release ourselves from covenant restrictions only if we meet
certain requirements. Among other things, we must deliver an
opinion of our legal counsel that the discharge will not
result in holders having to recognize taxable income or loss
or subject then to
S-19
different tax treatment. In the case of legal defeasance, this
opinion must be based on either an IRS letter ruling or change
in federal tax law. We may not have a default on the Debt
Securities discharged on the date of deposit. The discharge
may not violate any of our agreements. The discharge may not
result in our becoming an investment company in violation of
the Investment Company Act of 1940.
BOOK ENTRY, DELIVERY AND FORM
The Debt Securities of a series may be issued in whole or in
part in the form of one or more global certificates that will
be deposited with a depositary identified in a prospectus
supplement.
Unless otherwise stated in any prospectus supplement, The
Depository Trust Company, New York, New York ("DTC") will act
as depositary. Book-entry notes of a series will be issued in
the form of a global note that will be deposited with DTC.
This means that we will not issue certificates to each holder.
One global note will be issued to DTC who will keep a
computerized record of its participants (for example, your
broker) whose clients have purchased the notes. The
participant will then keep a record of its clients who
purchased the notes. Unless it is exchanged in whole or in
part for a certificate note, a global note may not be
transferred; except that DTC, its nominees and their
successors may transfer a global note as a whole to one
another.
Beneficial interests in global notes will be shown on, and
transfers of global notes will be made only through, records
maintained by DTC and its participants.
DTC has provided us the following information: DTC is a
limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the United States
Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the provisions of Section
17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants")
deposit with DTC. DTC also records the settlement among Direct
Participants of securities transactions, such as transfers and
pledges, in deposited securities through computerized records
for Direct Participant's accounts. This eliminates the need to
exchange certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations.
DTC's book-entry system is also used by other organizations
such as securities brokers and dealers, banks and trust
companies that work through a Direct Participant. The rules
that apply to DTC and its participants are on file with the
SEC.
DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., The American Stock Exchange,
Inc. and the National Association of Securities Dealers, Inc.
We will wire principal and interest payments to DTC's nominee.
We and the Trustee will treat DTC's nominee as the owner of
the global notes for all purposes. Accordingly, we, the
Trustee and any paying agent will have no direct
responsibility or liability to pay amounts due on the global
notes to owners of beneficial interests in the global notes.
It is DTC's current practice, upon receipt of any payment of
principal or interest, to credit Direct Participants' accounts
on the payment date according to their respective holdings of
beneficial interests in the global notes as shown on DTC's
records. In addition, it is DTC's current practice to assign
any consenting or voting rights to Direct Participants whose
accounts are credited with notes on a record date, by using an
omnibus proxy. Payments by participants to owners of
beneficial interests in the global notes, and voting by
participants, will be governed by the customary practices
between the participants and owners of beneficial interests,
as is the case with notes held for the account of customers
registered in "street name." However, payments will be the
responsibility of the participants and not of DTC, the Trustee
or us.
S-20
Notes represented by a global note will be exchangeable for
certificate notes with the same terms in authorized
denominations only if:
* DTC notifies us that it is unwilling or unable to
continue as depositary or if DTC ceases to be a clearing
agency registered under applicable law and a successor
depositary is not appointed by us within 90 days; or o we
determine not to require all of the notes of a series to be
represented by a global note and notify the Trustee of our
decision.
CONVERSION RIGHTS
We will describe in the applicable prospectus supplement the
particular terms and conditions, if any, on which debt
securities may be convertible into shares of our units. These
terms will include the conversion price, the conversion
period, provisions as to whether conversion will be at our
option or the option of the holder, events requiring an
adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of the debt
securities.
CERTIFICATES AND OPINIONS TO BE FURNISHED TO TRUSTEE
Each Indenture provides that, in addition to other
certificates or opinions that may be specifically required by
other provisions of an Indenture, every application by us for
action by the Trustee shall be accompanied by a certificate of
certain of our officers and an opinion of counsel (who may be
our counsel) stating that, in the opinion of the signers, all
conditions precedent to such action have been complied with by
us. (Section 102)
REPORT TO HOLDERS OF DEBT SECURITIES
The Trustee is required to submit an annual report to the
holders of the Debt Securities regarding, among other things,
the Trustee's eligibility to serve as such, the priority of
the Trustee's claims regarding certain advances made by it,
and any action taken by the Trustee materially affecting the
Debt Securities.
THE TRUSTEE
We will name the trustee for each Indenture in the applicable
prospectus supplement. We anticipate that the same person
initially will act as trustee under the Senior Indenture and
the Subordinated Indenture.
Pursuant to the Indentures and the Trust Indenture Act of
1939, as amended, governing trustee conflicts of interest, any
uncured Event of Default with respect to any series of Senior
Debt Securities will force the trustee to resign as trustee
under either the Subordinated Indenture or the Senior
Indenture. Likewise, any uncured Event of Default with respect
to any series of Subordinated Debt Securities will force the
trustee to resign as trustee under either the Senior Indenture
or the Subordinated Indenture. Any resignation will require
the appointment of a successor trustee under the applicable
Indenture in accordance with the terms and conditions.
The trustee may resign or be removed by us with respect to one
or more series of Debt Securities and a successor trustee may
be appointed to act with respect to any such series. The
holders of a majority in aggregate principal amount of the
Debt Securities of any series may remove the trustee with
respect to the Debt Securities of such series. (Section 610)
Each Indenture contains certain limitations on the right of
the trustee thereunder, in the event that it becomes a
creditor of the Partnership, to obtain payment of claims in
certain cases, or to realize on certain property received in
respect of any such claim as security or otherwise. (Section
613)
S-21
DESCRIPTION OF UNITS
NUMBER OF UNITS
Our partnership agreement does not limit the number of Units
we may issue.
DISTRIBUTIONS
Our partnership agreement requires us to distribute 100% of
"Available Cash" to the Partners within 45 days following the
end of each calendar quarter. "Available Cash" consists
generally of all of our cash receipts, less cash disbursements
and net additions to reserves.
We distribute Available Cash for each quarter as follows:
* first, 98% to the Limited Partners and 2% to the General
Partner until the Limited Partners have received a total of
$.3025 per Unit for such quarter;
* second, 85% to the limited Partners and 15% to the
General Partner until the Limited Partners have received a
total of $.3575 per Unit for such quarter;
* third, 75% to the Limited Partners and 25% to the General
Partner until the Limited Partners have received a total of
$.4675 per Unit for such quarter; and
* fourth, thereafter 50% to the Limited Partners and 50% to
the General Partner.
TRANSFER AGENT AND REGISTRAR
Our transfer agent and registrar for the Units will be
determined before distribution of the units.
SUMMARY OF PARTNERSHIP AGREEMENT
A summary of the important provisions of our partnership
agreement is included in the reports filed with the SEC.
A copy of the partnership agreement is filed as an exhibit to
the registration statement of which this prospectus is a part.
Unless otherwise specifically described, references in this
prospectus to the term "partnership agreement" constitute
references to the partnership agreements of Alberich, LLLP and
its operating partnerships collectively
ADMINISTRATIVE MATTERS
Information Returns and Audit Procedures. The Partnership
intends to furnish to each holder of Units within 90 days
after the close of each Partnership taxable year, certain tax
information, including a Schedule K-1. The Schedule K-1 will
list each holder's allocable share of the Partnership's
income, gain, loss, deduction and credit. In preparing this
information, which counsel will generally not review, the
General Partner will use various accounting and reporting
conventions to determine the respective Unit holder's
allocable share of income, gain, loss, deduction and credits.
Some of these conventions were discussed above. There is no
assurance that any such conventions will yield a result which
conforms to the requirements of the Code, the Regulations or
administrative interpretations of the IRS. The General Partner
cannot assure a current or prospective holder of Units that
the IRS will not successfully contend in court that such
accounting and reporting conventions are impermissible.
The IRS may in the future audit the Partnership which could
result in adjustments to the Partnership's tax returns. A
holder of Units owning less than a 1% profits interest in the
Partnership has limited rights to participate in the income
tax audit process. Further, any adjustments in the
Partnership's returns will lead to
S-22
adjustments in Unit holder's returns and may lead to audits of
their returns and adjustments of items unrelated to the
Partnership. Each Unit holder would bear the cost of any
expenses incurred in connection with an examination of such
holder's personal tax return.
Partnerships generally are treated as separate entities for
purposes of federal tax audits, judicial review of
administrative adjustments by the IRS and tax settlement
proceedings. The tax treatment of partnership items of income,
gain, loss, deduction and credit are determined at the
partnership level in a unified partnership proceeding rather
than in separate proceedings with the partners. Under the 1997
Act, any penalty relating to an adjustment to a partnership
item is determined at the partnership level. The Code provides
for one partner to be designated as the "Tax Matters Partner"
for these purposes. The Partnership Agreement appoints the
General Partner as the Tax Matters Partner.
The Tax Matters Partner will make certain elections on behalf
of the Partnership and holders of Units and can extend the
statute of limitations for assessment of tax deficiencies
against holders of Units with respect to the Partnership
items. The Tax Matters Partner may bind a holder of Units with
less than a 1% profits interest in the Partnership to a
settlement with the IRS, unless such holder elects, by filing
a statement with the IRS, not to give such authority to the
Tax Matters Partner. The Tax Matters Partner may seek judicial
review of a final partnership administrative adjustment. All
the holders of Units would be bound by the court's decision in
the judicial review. If the Tax Matters Partner fails to seek
judicial review, any holder having at least a 1% interest in
the profits of the Partnership or holders of Units having in
the aggregate at least a 5% profits interest may seek such a
review. However, only one action for judicial review will go
forward, and each holder of Units with an interest in the
outcome may participate.
A holder of Units must file a statement with the IRS
identifying the treatment of any item on its federal income
tax return that is inconsistent with the treatment of the item
on the Partnership's return to avoid the requirement that all
items be treated consistently on both returns. A holder of
Units may have to pay substantial penalties if it
intentionally or negligently disregards the consistency
requirement.
Electing Large Partnerships. The 1997 Act provides that
certain partnerships with at least 100 partners may elect to
be treated as an electing large partnership ("ELP") for tax
years ending after December 31, 1997. If Congress makes
further revisions to the law, it is possible that at some
future date the Partnership will make this election to be
taxed as an electing large partnership. However, based on
current law, the Partnership does not intend to make such an
election.
Under the reporting provisions of the 1997 Act, each partner
of an ELP will take into account separately such partner's
share of several designated items, determined at the
partnership level. The ELP procedures provide that any tax
adjustments generally would flow through to the holders of
Units for the year in which the adjustment takes effect, and
the adjustments would not affect prior-year returns of any
holder, except in the case of changes to any holder's
distributive share. In lieu of passing through an adjustment
to the holders of Units, the Partnership may elect to pay an
imputed underpayment. The Partnership, and not the holders of
Units, would be liable for any interest and penalties
resulting from a tax adjustment.
Nominee Reporting. Persons who hold an interest in the
Partnership as a nominee for another person are required to
furnish to the Partnership:
* the name, address and taxpayer identification number of
the beneficial owners and the nominee;
* whether the beneficial owner is (1) a person that is not
a United States person, (2) a foreign government, an
international organization or any wholly-owned agency or
instrumentality of either of the foregoing or (3) a tax-exempt
entity;
* the amount and description of Units held, acquired or
transferred for the beneficial owners; and
* certain information including the dates of acquisitions
and transfers, means of acquisitions and transfers, and
acquisition cost for purchases, as well as the amount of net
proceeds from sales.
S-23
Brokers and financial institutions are required to furnish
additional information, including whether they are a United
States person and certain information on Units they acquire,
hold or transfer for their own account. A Unit holder may have
to pay a penalty of $50 per failure (up to a maximum of
$100,000 per calendar year) for failure to report such
information to the Partnership. The nominee must supply the
beneficial owner of the Units with the information furnished
to the Partnership.
Registration as a Tax Shelter. The Code requires that "tax
shelters" be registered with the Secretary of the Treasury.
The Treasury Regulations interpreting the tax shelter
registration provisions of the Code are extremely broad. The
Partnership may not be subject to the registration requirement
on the basis that (1) it does not constitute a tax shelter, or
(2) it constitutes a projected income investment exempt from
registration.
Accuracy-Related Penalties. An additional tax equal to 20% of
the amount of any portion of an underpayment of tax which is
attributable to one or more of certain listed causes,
including substantial understatements of income tax and
substantial valuation misstatements, is imposed by the Code. A
Unit holder will not have to pay a penalty with respect to any
portion of an underpayment if it is shown that there was a
reasonable cause for such portion and that the taxpayer acted
in good faith with respect to such portion.
A substantial understatement of income tax in any taxable year
exists if the amount of the understatement exceeds the greater
of 10% of the tax required to be shown on the return for the
taxable year or $5,000 ($10,000 for most corporations). The
amount of any understatement subject to penalty generally is
reduced if any portion:
* is attributable to an item with respect to which there
is, or was, "substantial authority" for the position taken on
the return; or
* is attributable to an item for which there was a
reasonable basis for the tax treatment of the items and as to
which the pertinent facts are disclosed on the return.
Certain more stringent rules apply to "tax shelters," which
term includes a partnership if a significant purpose of such
entity is the avoidance or evasion of income tax. This term
does not appear to include the Partnership. If any Partnership
item of income, gain, loss, deduction or credit included in
the distributive shares of Unit holders might result in such
an "understatement" of income for which no "substantial
authority" exists, the Partnership must disclose the pertinent
facts on its return. In addition, the Partnership will make a
reasonable effort to furnish sufficient information for
holders of Units to make adequate disclosure on their returns
to avoid liability for this penalty.
A substantial valuation misstatement exists if the value of
any property (or the adjusted basis of any property) claimed
on a tax return is 200% or more of the amount determined to be
the correct amount of such valuation or adjusted basis. No
penalty is imposed unless the portion of the underpayment
attributable to a substantial valuation misstatement is in
excess of $5,000 ($10,000 for most corporations). If the
valuation claimed on a return is 400% or more than the correct
valuation, the penalty imposed increases to 40%.
STATE, LOCAL AND OTHER TAXES
Holders of Units may have to pay other taxes, such as:
* state and local taxes;
S-24
* unincorporated business taxes;
* estate or inheritance taxes; or
* intangible taxes in the various jurisdictions in which
the Partnership does business or owns property. Unit holders
should consider state and local tax consequences of an
investment in the Partnership.
A holder of Units will likely have to file state income tax
returns and/or pay taxes in most of these states and may be
subject to penalties for failure to do so. Some of the states
may require the Partnership to withhold a percentage of the
distribution to a holder of Units that is not a resident of
the state. Such amounts withheld, if any, which may be greater
or less than a particular holder's income tax liability to the
state, generally do not relieve the non-resident Unit holder
from the obligation to file a state income tax return. Amounts
withheld, if any, will be treated as if distributed to holders
of Units for purposes of determining the amounts distributed
by the Partnership. Based on current law and its estimate of
future partnership operations, the General Partner does not
anticipate withholding any material amount. In addition, an
obligation to file tax returns or to pay taxes may arise in
other states.
The Partnership also may own, directly or indirectly,
interests in several corporations which will be subject to
state income tax on their income.
Each prospective holder of Units should investigate the legal
and tax consequences, under the laws of pertinent states or
localities, of such investment in the Partnership. Further,
each holder of Units must file all required state and local,
as well as federal tax returns. Counsel has not rendered an
opinion on the state and local tax consequences of an
investment in the Partnership.
S-25
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIES
The following summarizes the terms of the debt warrants we may
offer. The debt warrants will be subject to the detailed
provisions of a debt warrant agreement that we will enter into
with a debt warrant agent we select at the time of issue.
GENERAL
We may issue debt warrants evidenced by debt warrant
certificates independently or together with any securities
offered by any prospectus supplement. If we offer debt
warrants, the prospectus supplement will describe the terms of
the warrants, including:
* the offering price, if any;
* the designation, aggregate principal amount and terms of
the debt securities purchasable upon exercise of the warrants;
* if applicable, the designation and terms of the debt
securities with which the debt warrants are issued and the
number of debt warrants issued with each debt security;
* if applicable, the date on and after which the debt
warrants and the related securities will be separately
transferable;
* the principal amount of debt securities purchasable upon
exercise of one debt warrant and the price at which the
principal amount of debt securities may be purchased upon
exercise;
* the dates on which the right to exercise the debt
warrants begins and expires;
* U.S. federal income tax consequences;
* whether the warrants represented by the debt warrant
certificates will be issued in registered or bearer form;
* the currencies in which the offering price and exercise
price are payable; and
* if applicable, any anti-dilution provisions.
You may exchange debt warrant certificates for new debt
warrant certificates of different denominations and may
present debt warrant certificates for registration of transfer
at the corporate trust office of the debt warrant agent, which
will be listed in the prospectus supplement. Warrant holders
do not have any of the rights of holders of debt securities,
except to the extent that the consent of warrant holders may
be required for certain modifications of the terms of an
indenture or form of the debt security, as the case may be,
and the series of debt securities issuable upon exercise of
the debt warrants. In addition, warrant holders are not
entitled to payments of principal of and interest, if any, on
the debt securities.
EXERCISE OF DEBT WARRANTS
You may exercise debt warrants by surrendering the debt
warrant certificate at the corporate trust office of the debt
warrant agent with payment in full of the exercise price. Upon
the exercise of debt warrants, the debt warrant agent will, as
soon as practicable, deliver the debt securities in authorized
denominations in accordance with your instructions and at your
sole cost and risk. If less than all the debt warrants
evidenced by the debt warrant certificate are exercised, the
agent will issue a new debt warrant certificate for the
remaining amount of debt warrants.
S-26
DESCRIPTION OF THE WARRANTS TO PURCHASE UNITS
The following summarizes the terms of unit warrants we may
issue. This description is subject to the detailed provisions
of a warrant agreement that we will enter between us and a
warrant agent we select at the time of issue.
GENERAL
We may issue warrants evidenced by warrant certificates under
the warrant agreement independently or together with any
securities we offer by any prospectus supplement. If we offer
warrants, the prospectus supplement will describe the terms of
the warrants, including:
* the offering price, if any;
* if applicable, the designation and terms of the units
purchasable upon exercise of the unit warrants;
* the number of units purchasable upon exercise of one unit
warrant and the initial price at which the units may be
purchased upon exercise;
* the dates on which the right to exercise the unit
warrants begins and expires;
* U.S. federal income tax consequences;
* call provisions, if any;
* the currencies in which the offering price and exercise
price are payable; and
* if applicable, the anti-dilution provisions of the unit
warrants.
The units we issue upon exercise of the unit warrants will,
when issued in accordance with the unit warrant agreement, be
validly issued, fully paid and non-assessable.
EXERCISE OF UNIT WARRANTS
You may exercise unit warrants by surrendering to the unit
warrant agent the unit warrant certificate, which indicates
your election to exercise all or a portion of the unit
warrants evidenced by the certificate. Surrendered unit
warrant certificates must be accompanied by payment of the
exercise price in the form of cash or a check. The unit
warrant agent will deliver certificates evidencing duly
exercised unit warrants to the transfer agent. Upon receipt of
the certificates, the transfer agent will deliver a
certificate representing the number of units purchased. If you
exercise fewer than all the unit warrants evidenced by any
certificate, the unit warrant agent will deliver a new unit
warrant certificate representing the unexercised unit
warrants.
NO RIGHTS AS UNIT HOLDERS
Holders of unit warrants are not entitled to vote, to consent,
to receive dividends or to receive notice as unit holders with
respect to any meeting of unit holders, or to exercise any
rights whatsoever as unit holders of Alberich, LLLP
DESCRIPTION OF THE UNIT PURCHASE UNITS AND UNIT PURCHASE
CONTRACTS
The following summarizes the general terms of unit purchase
units and unit purchase contracts we may issue. The particular
terms of any unit purchase units or unit purchase contracts we
offer will be described in the prospectus supplement. This
description is subject to the unit purchase contracts, and any
collateral arrangements and depositary arrangements, relating
to the unit purchase contracts or unit purchase units.
S-27
We may issue unit purchase contracts, including contracts
obligating holders to purchase from us, and us to sell to the
holders, a specified number of units at a future date or
dates. We may fix the consideration per unit at the time we
issue the units, or the consideration may be determined by
referring to a specific formula stated in the unit purchase
contracts. We may issue the units separately or as a part of
unit purchase units consisting of a unit purchase contract and
debt securities, or debt obligations of third parties,
including U.S. Treasury securities, which secure the holders'
obligations to purchase the units under the unit purchase
contracts. The unit purchase contracts may require us to make
periodic payments to the holders of the unit purchase units or
vice versa. These payments may be unsecured or prefunded on
some basis. The unit purchase contracts may require holders to
secure their obligations in a specified manner.
S-28
DESCRIPTION OF THE THIRD-PARTY WARRANTS
The following summarizes the terms of third-party warrants we
may issue. This description is subject to the detailed
provisions of a third-party warrant agreement that we will
enter with a third-party warrant agent we will select at the
time of issue.
GENERAL
We may issue third-party warrants evidenced by third-party
warrant certificates independently or together with any
securities offered by any prospectus supplement. If we offer
third-party warrants, the prospectus supplement will describe
the terms of the warrants, including:
* the offering price, if any;
* the designation, aggregate principal amount and terms of
the third-party securities purchasable upon exercise of the
warrants;
* if applicable, the designation and terms of the third-
party securities with which the third-party warrants are
issued and the number of third-party warrants issued with each
such third-party security;
* if applicable, the date on and after which the third-
party warrants and the related third-party securities will be
separately transferable;
* the number or principal amount of third-party securities
purchasable upon exercise of one third-party warrant and the
price at which the principal amount of third-party securities
may be purchased upon exercise;
* the dates on which the right to exercise the third-party
warrants begins and expires;
* U.S. federal income tax consequences;
* whether the warrants represented by the third-party
warrant certificates will be issued in registered or bearer
form;
* the currencies in which the offering price and exercise
price are payable; and
* if applicable, any anti-dilution provisions.
The prospectus supplement will identify the third-party
securities, the third-party issuer and all documents filed by
the third-party issuer pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act since the end of the third-party
issuer's last completed fiscal year for which a Form 10-K
annual report has been filed. It will identify the document or
documents filed under the Exchange Act that contain a
description of the third-party securities being sold. If no
such document or documents exist, the prospectus supplement
will include a description of the third-party securities being
sold. We will offer third-party warrants only with respect to
third-party securities of third-party issuers, or any
successor form, for primary offerings under the rules and
regulations of the SEC. To the extent the Securities Act
requires registration of the third-party securities by the
third-party issuer, we will cause the third-party issuer to
file a third-party registration statement under the Securities
Act. If the exercise of third-party warrants requires the
third-party to have an effective third-party registration
statement at the time of exercise, the exercise will be
subject to the effectiveness of such registration statement.
You may exchange third-party warrant certificates for new
third-party warrant certificates of different denominations
and may, if in registered form, present third-party warrant
certificates for registration of transfer at the corporate
trust office of the third-party warrant agent, which will be
listed in the prospectus
S-29
supplement. Warrant holders do not have any of the rights of
holders of third-party securities, except as may be otherwise
set forth in the prospectus supplement.
EXERCISE OF THIRD-PARTY WARRANTS
You may exercise third-party warrants by surrendering the
third-party warrant certificate at the corporate trust office
of the third-party warrant agent, with payment in full of the
exercise price. Upon the exercise of third-party warrants, the
third-party warrant agent will, as soon as practicable,
deliver the third-party securities in authorized denominations
in accordance with your instructions and at your sole cost and
risk. If less than all the third-party warrants evidenced by
the third-party warrant certificate are exercised, the agent
will issue a new third-party warrant certificate for the
remaining amount of third-party warrants.
S-30
DESCRIPTION OF THE FOREIGN CURRENCY EXCHANGE WARRANTS
GENERAL
The following summarizes the general terms and provisions of
the currency warrants to which any prospectus supplement may
relate. The particular terms of any currency warrants we offer
will be described in the prospectus supplement.
We will issue each of the currency warrants under a separate
currency warrant agreement between us and a bank or trust
company, as currency warrant agent. A single bank or trust
company may act as currency warrant agent for more than one
issue of currency warrants. The currency warrant agent will
act solely as our agent under the applicable currency warrant
agreement and will not assume any obligation or relationship
of agency or trust for or with any currency warrant holders.
The following summary of certain provisions of the currency
warrants and the form of currency warrant agreement are not
complete.
We will have the right to "reopen" any outstanding issue of
currency warrants by issuing additional currency warrants of
such issue. We have not determined the specific circumstances
under which we may decide to reopen an outstanding issue of
currency warrants. Although we would do so only in a manner we
believe would not adversely affect the trading price of the
outstanding currency warrants of an issue, we cannot guarantee
that the reopening of any outstanding issue of currency
warrants will not have a material adverse effect on the
trading price of outstanding currency warrants of such issue.
Each currency warrant will entitle the currency warrant holder
to receive from us the cash settlement value of the warrant,
which will be a cash amount in U.S. dollars. In the case of a
currency put warrant we will determine the amount by referring
to the amount, if any, by which a predetermined exchange rate
of a reference currency as compared to the U.S. dollar or a
predetermined level or range of levels of a currency index, as
applicable (the "Strike Rate"), exceeds the then-current spot
exchange rate of the reference currency as compared to the
U.S. dollar or the then-current level or range of levels of
such currency index (the "Spot Rate") on a date following the
exercise date. In the case of a currency call warrant, we will
determine the amount by referring to the amount, if any, by
which the Spot Rate on the date of exercise exceeds the Strike
Rate. The prospectus supplement for an issue of currency
warrants will state the formula pursuant to which we will
determine the cash settlement value. The Strike Rate may
either be a fixed amount or an amount that varies during the
term of such currency warrants in accordance with a schedule
or formula. Certain currency warrants may entitle the currency
warrant holder to receive from us, upon automatic exercise at
expiration and under any other circumstances specified in the
prospectus supplement, an amount equal to the greater of the
cash settlement value and a minimum expiration value. In
addition, if stated in the prospectus supplement, following an
extraordinary event or exercise limitation event, we may
calculate the cash settlement value of a currency warrant on a
different basis.
We will settle a currency warrant only in U.S. dollars.
Accordingly, a currency warrant will not entitle a currency
warrant holder to sell, deliver, purchase or take delivery of
any non-U.S. currency. We will have no obligation to, nor will
we, purchase or take delivery of or sell or deliver any non-
U.S. currency from or to currency warrant holders pursuant to
the currency warrants.
Unless otherwise specified in the prospectus supplement, the
currency warrants will be automatically exercised upon
expiration. The prospectus supplement also may provide that
the currency warrants will be automatically exercised upon the
occurrence of other events. If they are automatically
exercised, currency warrant holders will receive the cash
settlement value, or if the currency warrants have a minimum
expiration value they will receive the greater of the cash
settlement value and the applicable minimum expiration value.
The minimum expiration value may be either a fixed amount or
an amount that varies during the term of the currency warrants
in accordance with a schedule or formula.
We may cancel the currency warrants upon the occurrence of one
or more extraordinary events described in the prospectus
supplement. We may suspend any exercise of the currency
warrants and postpone the valuation of or payment for such
warrants upon the occurrence of an extraordinary event or
certain other events described in the prospectus supplement.
Upon cancellation, suspension or postponement, the
S-31
affected warrant holders may be entitled to receive only the
applicable cancellation amount or alternative settlement
amount specified in the prospectus supplement. The
cancellation amount or alternative settlement amount may be
either a fixed amount or an amount that varies during the term
of the currency warrants in accordance with a specified
schedule or formula.
The prospectus supplement will state the terms of any currency
warrants we offer, including, as applicable:
* the aggregate amount of such currency warrants;
* the offering price of such currency warrants;
* either (1) the reference currency, which may be a non-
U.S. currency or units of two or more non-U.S. currencies, or
(2) the currency index, which may be compiled and published by
a third party or based on index currencies we select;
* whether the currency warrants are currency put warrants
or currency call warrants;
* the dates on which the right to exercise the currency
warrants begins and expires;
* the manner in which currency warrants may be exercised;
* the minimum number, if any, of currency warrants
exercisable at any one time;
* the maximum number of currency warrants that may be
exercised on any day;
* any provisions permitting a currency warrant holder to
condition an exercise notice on the absence of certain
specified changes in the Spot Rate after the exercise date,
any provisions permitting us to suspend exercise of or to
redeem such currency warrants based on market conditions or
other circumstances and any other special provisions relating
to the exercise of such currency warrants;
* any provisions for the automatic exercise of such
currency warrants;
* any provisions permitting us to suspend the exercise of,
or postpone the valuation of or payment for, the currency
warrants;
* the method of determining the amount payable in
connection with the exercise or cancellation of the currency
warrants;
* the time or times at which we will make payments on
currency warrants;
* the national securities exchange or quotation system on
which the currency warrants will be listed, if at all;
* whether we may issue currency warrants in certificated
form;
* if currency warrants are not issued in book-entry form,
the place or places at which we will pay the cash settlement
value, cancellation amount, if any, alternative settlement
amount, if any, or minimum expiration value, if any, of the
currency warrants;
* U.S. federal income tax consequences;
* procedures for book entry and settlement; and
* procedures for modification.
S-32
ADDITIONAL ISSUANCES OF OTHER CURRENCY WARRANTS
We may issue additional currency warrants that are the same as
or different from any outstanding currency warrants without
the consent of the currency warrant holders.
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITIONS
Unless the prospectus supplement states otherwise, if we merge
or consolidate or sell substantially all our assets, the
successor corporation will assume all our obligations under
the currency warrant agreement and currency warrants. We will
have no further obligation under the currency warrant
agreement and currency warrants.
ENFORCEABILITY OF RIGHTS BY CURRENCY WARRANTHOLDERS
Any currency warrant holder may, without the consent of the
currency warrant agent, enforce on its own behalf its rights
under its currency warrants.
S-33
DESCRIPTION OF THE OTHER WARRANTS
GENERAL
The following summarizes the general terms and provisions of
the other warrants to which any prospectus supplement may
relate. The particular terms of any other warrants we offer
will be described in the prospectus supplement.
We will issue each of the other warrants under a separate
warrant agreement between us and a bank or trust company, as
warrant agent. A single bank or trust company may act as
warrant agent for more than one issue of other warrants. The
warrant agent will act solely as our agent under the
applicable warrant agreement and will not assume any
obligation or relationship of agency or trust for or with any
holders of such other warrants. The following summaries of
certain provisions of the other warrants and the form of other
warrant agreement are not complete. We strongly urge you to
read all the provisions of the other warrants and the other
warrant agreement.
We may have the right to "reopen" any outstanding issue of
other warrants by issuing additional other warrants of such
issue. Although we would do so only in a manner that we
believe would not have a material adverse effect on the
trading price of the outstanding other warrants of such issue,
we cannot guarantee that the reopening of any outstanding
issue of other warrants will not have a material adverse
effect on the trading price of outstanding other warrants of
such issue.
Each other warrant will entitle the warrant holder to receive
from us the cash settlement value of the warrant, which will
be in U.S. dollars. In the case of a put warrant, we will
determine the amount by referring to the amount, if any, by
which a predetermined value of a commodity or a predetermined
level or range of levels of a commodity index, as applicable
(the "Commodity Strike Rate"), exceeds the then-current value
of a commodity or the level of the commodity index, as
applicable (the "Commodity Spot Rate") on a date following the
exercise date. In the case of a call warrant, we will
determine the amount by referring to the amount, if any, by
which the Commodity Spot Rate on the valuation date exceeds
the Commodity Strike Rate. The prospectus supplement for an
issue of other warrants will set forth the formula pursuant to
which the cash settlement value of such other warrants will be
determined. The Commodity Strike Rate may either be a fixed
amount or an amount that varies during the term of the other
warrants in accordance with a schedule or formula.
We will settle the other warrants only in U.S. dollars and,
accordingly, they will not entitle a warrant holder to sell,
deliver, purchase or take delivery of any commodity or non-
U.S. currency to or from us. We will have no obligation to,
nor will we, purchase or take delivery of or sell or deliver
any commodity or non-U.S. currency from or to the warrant
holders pursuant to the other warrants.
The prospectus supplement will state the terms of any other
warrants we offer, including, as applicable:
* the aggregate amount of such other warrants;
* the offering price of such other warrants;
* either (1) the commodity or (2) the commodity index,
which may be compiled and published by a third party or based
on commodity indexes we select;
* whether such other warrants are put warrants or call
warrants;
* the dates on which the right to exercise such other
warrants begins and expires;
* the manner in which such other warrants may be exercised;
* the minimum number, if any, of other warrants exercisable
at any one time;
S-34
* the maximum number of other warrants that may be
exercised on any day;
* any provisions permitting a warrant holder to condition
an exercise notice on the absence of certain specified changes
in the Commodity Spot Rate after the exercise date, any
provisions permitting us to suspend exercise of, or to redeem,
such other warrants based on market conditions or other
circumstances and any other special provisions relating to the
exercise of such other warrants;
* any provisions for the automatic exercise of such other
warrants;
* any provisions permitting us to suspend the exercise of,
or postpone the valuation of or payment for, such other
warrants;
* the method of determining the amount payable in
connection with the exercise or cancellation of such other
warrants;
* the time or times at which we will make payments on such
other warrants;
* the national securities exchange or quotation system on
which such other warrants will be listed, if at all;
* whether we may issue other warrants in certificated form;
* if other warrants are not issued in book-entry form, the
place or places at which we will pay the cash settlement
value, cancellation amount, if any, alternative settlement
amount, if any, and minimum expiration value, if any, of the
other warrants;
* U.S. federal income tax consequences;
* procedures for book entry and settlement; and
* procedures for modification.
ADDITIONAL ISSUANCES OF OTHER WARRANTS; MERGER, CONSOLIDATION,
SALE OR OTHER DISPOSITIONS; ENFORCEABILITY OF RIGHTS BY OTHER
WARRANT HOLDERS
Unless otherwise indicated in the prospectus supplement, the
information provided under "Description of the Foreign
Currency Exchange Warrants -- Additional Issuances of Other
Currency Warrants; -- Merger, Consolidation, Sale or Other
Dispositions" and "-- Enforceability of Rights by Currency
Warrant holders" will apply to the other warrants.
S-35
PLAN OF DISTRIBUTION
We may sell the Securities directly, through agents, or to or
through underwriters or dealers (possibly including our
affiliates). Read the prospectus supplement to find the terms
of the Securities offering, including:
* the names of any underwriters, dealers or agents;
* the offering price;
* underwriting discounts;
* sales agents' commissions;
* any initial public offering price;
* other forms of underwriter or agent compensation;
* discounts, concessions or commissions that underwriters
may pass on to other dealers;
* any exchange on which the Securities may be listed.
We may change the offering price, underwriter discounts or
concessions, or the price to dealers when necessary. Discounts
or commissions received by underwriters or agents and any
profits on the resale of the Securities by them may constitute
underwriting discounts and commissions under the Securities
Act of 1933.
Unless we state otherwise in the prospectus supplement,
underwriters will need to meet certain requirements before
purchasing the Securities. Underwriters may only purchase all
of the Securities. Agents will act on a "best efforts" basis
during their appointment. We will also state the net proceeds
from the sale in the prospectus supplement.
Any brokers or dealers that participate in the distribution of
the Securities may be "underwriters" within the meaning of the
Securities Act for such sales. Profits, commissions, discounts
or concessions received by any such broker or dealer may be
underwriting discounts and commissions under the Securities
Act.
When necessary, we may fix the Securities distribution using
changeable, fixed prices, market prices at the time of sale,
prices related to market prices, or negotiated prices.
We may, through agreements, indemnify underwriters, dealers or
agents who participate in the distribution of the Securities
against certain liabilities including liabilities under the
Securities Act. We may also provide funds for payments such
underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents, and their affiliates may
transact with us and our affiliates in the ordinary course of
their businesses.
S-36
LEGAL MATTERS
Our counsel will issue an opinion for us about the legality of
the Securities and the material federal income tax
considerations regarding the Securities. Any underwriter will
be advised about other issues relating to any offering by
their own legal counsel.
S-37
WHERE YOU CAN FIND MORE INFORMATION
Alberich, LLLP will provide a copy of any document
incorporated by reference in this prospectus and any exhibit
specifically incorporated by reference in those documents at
no cost by request directed to them at the following address
and telephone number:
Alberich, LLLP
1754 Market Drive
Suite 500
Stillwater, MN 55082
(612) 605-8665
S-38
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
We will incur and pay the following costs of this transaction.
All amounts other than the SEC registration fee are estimated.
Description of Expense:
Securities and Exchange Commission registration fee
$ *
Printing
$ *
Legal fees and expenses
$ *
Accounting fees and expenses
$ *
Miscellaneous
$ *
Rating Agencies
$ *
Trustee's Fees & Expenses
$ *
Total
$ *
__________
* To be provided by amendment.
__________
S-39
TABLE OF CONTENTS
PROSPECTUS
PROSPECTUS SUMMARY
P-1
THE PARTNERSHIP
P-2
RISK FACTORS
P-3
USE OF PROCEEDS
P-8
DISTRIBUTION POLICY
P-9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
P-13
DESCRIPTION OF I-UNITS
P-30
MATERIAL TAX CONSIDERATIONS
P-33
ERISA CONSIDERATIONS
P-36
PLAN OF DISTRIBUTION
P-38
WHERE YOU CAN FIND MORE INFORMATION
P-39
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
P-40
PROSPECTUS SUMMARY
You should rely only on the information contained or
incorporated by reference in this prospectus. Alberich, LLLP
has not authorized anyone to provide you with different
information. You should not assume that the information in
this prospectus is accurate as of any date other than the date
on the front cover of this prospectus. The business, financial
condition, results of operations and prospects of Alberich,
LLLP may have changed since those dates. Please carefully
consider and evaluate all of the information provided in this
prospectus, including the risk factors listed and described
under "RISK FACTORS," and the financial statements and the
notes to those statements. In addition to historical
information, this Prospectus includes forward-looking
statements and information that are based on our beliefs,
plans, expectations and assumptions and on information
currently available to us. The words "may," "should,"
"expect," "anticipate," "intend," "plan," "continue,"
"believe," "seek," "estimate," and similar expressions used in
this prospectus that do not relate to historical facts are
intended to identify forward-looking statements. The forward-
looking statements in this prospectus are not guarantees of
future performance and involve certain risks, uncertainties
and assumptions, including but not limited to the risk factors
described under RISK FACTORS." The Company's actual results
may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in
"RISK FACTORS." Many of such factors are beyond the Company's
ability to control or predict. As a result, Alberich, LLLP
future actions, financial condition, and results of operations
could differ materially from those expressed in any forward-
looking statements made by the Company. You should not put
undue reliance on forward-looking statements. We do not intend
to publicly update any forward-looking statements, whether as
a result of new information, future events or otherwise. As
used in this Registration Statement the Company", "we," "us,"
"our" or "Alberich" means Alberich, LLLP.
In addition, Alberich's classification as a partnership for
federal income tax purposes means that generally it does not
pay federal income taxes on its net income. Alberich does,
however, pay taxes on the net income of subsidiaries that are
corporations. Alberich relies on a legal opinion from its
counsel, and not a ruling from the Internal Revenue Service,
as to its proper classification for federal income tax
purposes. If Alberich were to be classified as a corporation
for tax purposes, its tax payment would decrease the amount of
cash available for distribution to its partners.
THE PARTNERSHIP
ALBERICH, LLLP
Alberich is a direct marketer, designer and manufacturer of
embedded computer solutions based upon a wide variety of open
standard bus designs such as VME, CPCI, PCI, PMC, Multibus,
ISA, and special custom buses. The Company's products are
used by original equipment manufacturers ("OEMs"), systems
integrators and end-users in various industries; including
Manufacturing Automation, Business Intelligence, Healthcare,
Oil & Gas Refining/Extraction, Telecommunications,
Environmental Monitoring, and Test and Measurement. Unlike
general purpose computers, embedded computer solutions are i)
incorporated into systems and equipment to provide a single or
a limited number of critical system control functions; ii)
generally integrated into larger automated systems; and iii)
often have extended product life cycles. The Company's
embedded computers are based upon the Intel & AMD x86
architecture and are typically capable of running personal
computer ("PC") compatible operating systems and application
software.
Recently the Company introduced its ALB suite of PC-based
control software modules that run on standard PC platforms
using the Windows operating system. ALB modules provide a
comprehensive set of tools used to create data acquisition and
control systems and to interconnect the large number of legacy
control products commonly found in industrial plants. The
Company's ALB software is designed for compliance with open
industry standards, and the software modules can be mixed and
matched to provide solutions for a variety of industrial
applications. The Data Acquisition and Control market
represents the largest market for Alberich's product
solutions.
The Company is also involved in networking systems of
dissimilar buses using adapters, high-performance networks,
and synergistic software. The Company's family of networking
products is based on a technology known in the computer
industry as "Reflective Memory." Alberich's connectivity
products allow low maintenance, high-speed communication
between PC computers, workstations, computer mainframes and
embedded computers manufactured by a wide variety of
companies.
The Company markets and sells more than 200 different products
worldwide, including application-specific embedded computer
subsystems, board-level modules, control and driver software,
and network products. In addition to offering standard
commercial products, the Company is involved in the
development of custom products for high-volume applications.
Alberich continues to invest heavily in new and enhanced
technology, including software, and has focused its attention
on highly vertical markets to support faster growth, and more
consistent profitability. The Company's business strategy
consists of these key elements:
* Expand the Company's leadership position in its core
board-level products and systems markets.
* Further develop markets for new PC based control software
such as ALB.
* Widen the Company's philosophy and reputation as a
company dedicated to customer support and relations.
* Apply the Company's technology and industry knowledge to
create new solutions for existing and new customers.
* Focus on PC single-board computers and related software
for multiple markets.
* Focus on the communications industry with the Company's
Reflective Memory product line and PC single board computer
product line.
* Expand the Company's new business of offering software
and complimentary hardware products for the Industrial
Automation and Test and Measurement markets.
RISK FACTORS
ALBERICH, LLLP COULD BE TREATED AS A CORPORATION FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES. THE TREATMENT OF ALBERICH,
LLLP AS A CORPORATION WOULD SUBSTANTIALLY REDUCE ANY CASH
DISTRIBUTIONS ON THE COMMON UNITS AND THE VALUE OF I-UNITS.
The anticipated benefit of an investment in our i-units
depends largely on the treatment of Alberich, LLLP as a
partnership for United States federal income tax purposes.
Alberich, LLLP has not requested, and does not plan to
request, a ruling from the Internal Revenue Service on this or
any other matter affecting Alberich, LLLP Current law requires
Alberich, LLLP to derive at least 90% of its annual gross
income from specific activities to continue to be treated as a
partnership for United States federal income tax purposes.
Alberich, LLLP may not find it possible, regardless of its
efforts, to meet this income requirement or may inadvertently
fail to meet this income requirement. Current law may change
so as to cause Alberich, LLLP to be treated as a corporation
for United States federal income tax purposes without regard
to its sources of income or otherwise subject Alberich, LLLP
to entity-level taxation.
If Alberich, LLLP were to be treated as a corporation for
United States federal income tax purposes, it would pay United
States federal income tax on its income at the corporate tax
rate, which is currently a maximum of 35%, and would pay state
income taxes at varying rates. Distributions to us of
additional i-units would generally be taxed as a corporate
distribution. Because a tax would be imposed upon Alberich,
LLLP as a corporation, the cash available for distribution to
common unit holders would be substantially reduced, which
would reduce the values of any i-units distributed quarterly
to us and our i-units distributed quarterly to our i-unit
holders. Treatment of Alberich, LLLP as a corporation would
cause a substantial reduction in the value of our i-units.
FOREIGN CURRENCY RISKS
The Company is exposed to foreign currency fluctuations and
changes in the market value of its investments. In the normal
course of business, the Company employs established policies
and procedures to manage its exposure to fluctuations in
foreign currency values and changes in the market value of its
investments.
The Company's objective in managing its exposure to foreign
currency exchange rate fluctuations is to reduce the impact of
adverse fluctuations in earnings and cash flows associated
with foreign currency exchange rate changes. Accordingly, the
Company utilizes foreign currency option contracts and forward
contracts to hedge its exposure on anticipated transactions
and firm commitments. The principal currencies hedged are the
British pound, Japanese yen, German mark, French franc and
Canadian dollar. The Company monitors its foreign exchange
exposures daily to ensure the overall effectiveness of its
foreign currency hedge positions. However, there can be no
assurance the Company's foreign currency hedging activities
will substantially offset the impact of fluctuations in
currency exchange rates on its results of operations and
financial position.
THE COMPANY MAY NOT BE ABLE TO COMPETE EFFECTIVELY IN ITS
CURRENT OR FUTURE MARKETS
The standard bus embedded computer industry may become
fragmented, and the Company may face competition in its
product markets. Currently the Company's competitors differ
depending on product type, geographic market, and application
type.
THE COMPANY HAS DIVERTED RESEARCH AND DEVELOPMENT RESOURCES
FROM CORE PRODUCTS TO NEW TECHNOLOGIES.
The Company has recently undertaken substantial research and
development efforts outside of its core business with the
intent of increasing its revenue base and growth potential.
This is reflected in the Company's strategy of offering ALB,
embedded PC board products, and Reflective Memory products to
the Industrial Automation markets and other more vertically
integrated markets. In order to implement this strategy, the
Company reduced its research and development investments in
its core business while significantly increasing its
investment in the new products designed to address these more
vertical markets. If the Company is unsuccessful in these new
markets, it will be dependent on its core business to maintain
historical operating results.
SALES OF THE COMPANY'S NEW PRODUCTS MAY NOT MEET THE GROWTH
OBJECTIVES OF THE COMPANY.
Some of the Company's new hardware products will be sold at
lower profit margins, and the Company requires significant
market acceptance of these products to meet the growth
objectives of the Company. While there has been significant
customer interest in these new products there can be no
assurance that these new products will be successful to the
extent necessary to meet Alberich's growth objectives. If
these new products are not successful, the Company's operating
results and financial condition could be materially adversely
affected.
THE COMPANY HAS LIMITED SOFTWARE BUSINESS EXPERIENCE.
The Company has made significant investments in PC based
control software, software such as ALB, with the intention of
marketing software-only products, systems involving such
software, and board-level products involving such software.
The Company's software-only products may not be received well
in the industry because of a number of factors, including the
reputation of the Company as a hardware supplier, competition
from other manufacturers and quality of the software or
software support. The future success of the Company in the
stand-alone software business is subject to all of the risks
inherent in the establishment of a new line of business.
Unforeseen expenses, difficulties, complications and delays in
developing and marketing the software, dependence upon current
management, lack of market acceptance of ALB, or the effects
of competition could prevent the Company from becoming
successful as a software vendor. If ALB is not successful in
the market, it could have a significant impact on the
Company's financial condition and operating results.
THE COMPANY HAS INCREASED ITS DEBT LEVEL AND WORKING CAPITAL
REQUIREMENTS.
The Company's utilization of long-term debt is somewhat higher
than the average company in this industry. A primary reason
for the increase in long-term debt was the need for the
Company to manage its growth. The Company believes its revenue
level will be sufficient to service its long-term debt.
However, if the revenues and profits of the Company
substantially decrease, it will be more difficult for the
Company to service its long-term debt, meet its current
obligations, and continue with its current business plan. As
of December 8, 2005 the Company had sufficient current assets
to liquidate all of its current liabilities.
THE COMPANY'S PRODUCTS MAY BECOME OBSOLETE AND THE COMPANY MAY
BE UNABLE TO RESPOND TO FUTURE MARKET NEEDS.
Most of the Company's products are developed to meet certain
industry standards. These standards continue to develop and
are subject to change. Elimination or obsolescence of all or
some of these standards could affect the design, manufacture,
and sale of the Company's products and require costly redesign
to meet new or emerging standards.
In general, technology in the computer industry, and the
computer bus board industry specifically, is subject to rapid
technological change. The introduction of new technology and
products by others could adversely affect the Company's
business. There is no assurance that future advances in
technology may not make the Company's existing product line
obsolete, resulting in increased competition, and requiring
the Company to undertake costly redesign efforts. There can be
no assurance that the Company will be able to incorporate new
technology into its product lines or redesign its products to
compete effectively.
Moreover, because new products and technologies require
commitments well in advance of sales, decisions with respect
to those commitments must accurately anticipate both future
demand and the technology that will be available to meet that
demand. There can be no assurance that the Company will be
able to successfully anticipate or adapt to future
technological changes, and failure to do so may materially
adversely affect the Company's business, financial condition,
or results of operations.
THE COMPANY MAY EXPERIENCE REDUCED CASH FLOWS AS A RESULT OF
SELLING PRODUCTS WITH SMALLER MARGINS, FLUCTUATIONS IN
OPERATING RESULTS AND INCREASES IN EXPENSES.
The Company is dependent upon the success of its recently
developed ALB software, embedded PC board products and
Reflective Memory products to substantially increase revenue
growth. Embedded PC board products and Reflective Memory
products typically yield smaller margins than the Company's
traditional product mix and the Company's profits could
therefore erode in the future.
In addition, the Company has experienced reduced net cash
flows, attributable to substantial software development,
inventory expansion, purchased technologies associated with PC
single-board computers, the Company's expanded use of internal
products for software development, and fluctuations in the
Company's operating results. Moreover, because of the
Company's high level of current fixed expenses and working
capital requirements, and because the Company believes it
should continue its current business strategy of expending
substantial resources on research and development, Alberich
may experience a negative cash flow position in the future.
THE COMPANY MAY NOT BE ABLE TO SUCCESSFULLY PROTECT ITS
INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION.
The Company's success is, to a significant degree,
attributable to the unique features of its software,
proprietary technology and other confidential information.
Unfortunately, software and information technology industries
have experienced widespread unauthorized reproduction of
software products and other proprietary technology. While the
Company has some patent protection for its hardware products,
the Company's software is not patented, and existing copyright
law offers only limited practical protection. For most of its
intellectual property protection, Alberich relies on a
combination of trade secret laws, copyright protection, common
law intellectual property rights, license agreements,
nondisclosure, and other contractual provisions. The Company
does not, however, sell its software source code, or provide
its customers access to the source code associated with its
software products.
There is no assurance that the Company will be able to protect
its trade secrets or that others will not independently
develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade
secrets. There is no assurance that foreign intellectual
property laws will protect the Company's intellectual property
rights. In addition, the computer industry is characterized by
frequent litigation regarding patent and other intellectual
property rights, and litigation has been, and may in the
future be necessary to enforce the Company's trade secrets or
to defend against claims of infringement. While Alberich
believes that its proprietary rights do not infringe upon the
proprietary rights of others, third parties may assert
infringement claims against the Company in the future and such
assertion could cause the Company to enter into a license
agreement or royalty arrangement with the party asserting the
claim. The Company may also be required to indemnify its
customers for claims made against them. Responding to and
defending any such claims, developing non-infringing
intellectual property or acquiring licenses could have a
material adverse affect on the Company's business, financial
condition or results of operations.
THE COMPANY MAY NOT BE ABLE TO ADEQUATELY FINANCE ITS
CONTINUED GROWTH.
The Company has been growing since 2005. The Company may
experience increased debt, rapid sales growth, high research
and development expenditures, and an increased asset base.
There are certain risks inherent in any growing company
arising from such factors as increased working capital and
capital expenditure requirements. Moreover, the Company's
business strategy calls for substantial continued investment
in new products. The Company also anticipates expanding its
inventory and increasing investments in equipment and other
fixed assets. There is no assurance that the Company will be
successful in obtaining additional long-term debt or equity
financing, or if obtained, there can be no assurance that the
debt or equity financing will be on terms favorable to the
Company or its i-unit holders. The failure of the Company to
obtain additional funds or the obtaining of such funds on
unfavorable terms could adversely affect the financial
performance and prospects of the Company and any equity
investment on unfavorable terms could cause substantial
dilution to the security holders.
THE COMPANY WILL BE REQUIRED TO EXPENSE CERTAIN SOFTWARE
DEVELOPMENT COSTS IF SOFTWARE SALES ARE NOT SUFFICIENT TO
AMORTIZE THE CAPITALIZED SOFTWARE DEVELOPMENT COSTS OVER A
FIVE-YEAR PERIOD.
The Company, in fiscal year 2005, began to capitalize
development costs associated with its ALB software and certain
other software products. The Company will be required to
amortize these costs against future sales of the software
products over a five-year period after the release of the
products.
The Company accounts for these software development costs in
accordance with Statement of Financial Accounting Standards
No. 86, Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed. The Company capitalizes
certain costs incurred in the production of computer software
once technological feasibility of the product to be marketed
has been established. Capitalization of these costs ceases
when the product is considered available for general release
to customers. The establishment of technological feasibility
and the ongoing assessment of recoverability of capitalized
software development costs require considerable judgment by
Alberich. If software sales are not sufficient to amortize the
capitalized costs over the five-year period the Company will
be required to expense those capitalized costs, resulting in
substantial write-offs.
THE COMPANY RELIES ON SUPPLIERS FOR MANY OF ITS ELECTRONIC
COMPONENTS, SOME OF WHICH CAN ONLY BE OBTAINED FROM A SINGLE
SOURCE.
Most of the Company's products contain state-of-the-art
digital electronic components and integrated circuits. The
Company is dependent upon third parties for the continuing
supply of most of these components and all of its integrated
circuits. Some of these components are obtained from a sole
supplier, such as Altus, TriQuint, Intel, AMD, Tundra,
Motorola or a limited number of suppliers, for which
alternative sources would be difficult to locate. The Company
has experienced shortages of integrated circuits and other key
components from time to time, and this could result in delay s
in product deliveries. The Company may also have to terminate
its marketing of certain products, even newly developed
products, when a component supplier terminates its production
of a critical component. Moreover, suppliers may discontinue
or upgrade some of the components incorporated into the
Company's products, which could require the Company to
redesign a product to incorporate newer or alternative
technology. Although the Company believes it maintains good
relationships with its suppliers, and has arranged for an
adequate supply of components to meet its short-term
requirements, any unavailability of components could cause
delayed shipments and lead to customer dissatisfaction. Any
sustained unavailability of components could materially
adversely affect the Company's operating results and financial
condition.
THE COMPANY HAS LIMITED MANUFACTURING FACILITIES AND MUST RELY
ON SUBCONTRACTORS TO COMPLETE SOME OF THE COMPANY'S PRODUCTS.
The Company relies on subcontractors for manufacturing some of
the Company's products. The contractors may experience delays
because of quality problems, backlog, component availability,
financial difficulty, or other situations which could have an
adverse effect on the Company's operating results and customer
relationships. In this event, the Company may be required to
find alternative subcontractors, and there can be no assurance
that the Company could find suitable subcontractors.
THE LOSS OF ONE OR MORE MAJOR CUSTOMERS OR A NUMBER OF SMALLER
CUSTOMERS COULD ADVERSELY AFFECT THE COMPANY'S REVENUES AND
PROFITS.
If a major customer discontinued purchasing products from the
Company, the Company's operating results and financial
condition could be materially adversely affected. The Company
expects that the government could be a significant source of
sales. It is possible that changes in national policy or other
factors could result in reduced defense spending which could
materially adversely affect the operating results and
financial condition of the Company.
LACK OF A PUBLIC MARKET AND CERTAIN TRANSFER RESTRICTIONS.
There presently exists no public market for the securities of
the Company, nor is there any likelihood of one developing in
the near future. A holder of the Company's securities may not
be able to liquidate his or her position when liquidity is
needed and may be required to retain the securities
indefinitely.
THE COMPANY MAY NOT BE ABLE TO MAKE ACQUISITIONS AND THE
COMPANY'S ACQUISITIONS MAY NOT BE SUCCESSFUL.
Part of the Company's strategy for growth includes
acquisitions of complementary technologies or businesses that
would enhance the Company's capabilities or increase the
Company's customer base. The Company's ability to expand
successfully through acquisitions depends on many factors,
including business and management's ability to effectively
integrate and operate acquired companies. The Company may
compete for acquisition opportunities with other companies
that have significantly greater financial and management
resources. There can be no assurance that the Company will be
successful in acquiring or integrating any such technologies
or businesses.
THE COMPANY MAY NOT BE ABLE TO RETAIN AND RECRUIT KEY
EMPLOYEES AND SKILLED PERSONNEL NECESSARY TO MAINTAIN OR GROW
THE BUSINESS.
The Company's success will depend in large part on the
continued services of its key management, and technical
personnel. The loss of the services of one or more of the
Company's key employees or the inability to hire additional
key personnel as needed could have a material adverse effect
on the Company's business, financial condition and results of
operations. There can be no assurance that the Company will be
successful in attracting and retaining needed personnel. The
inability of the Company to hire, train, and retain a
sufficient number of qualified employees could impair the
Company's ability to compete in its markets resulting in a
material adverse effect on the Company's business, financial
condition and results of operations.
USE OF PROCEEDS
We will use the net proceeds from the sale of the Securities,
after transaction and hedging costs, if any, for general
business purposes, including debt repayment, future
acquisitions, capital expenditures and working capital. We may
change the potential uses of the net proceeds in a prospectus
supplement.
DISTRIBUTION POLICY
OUR POLICY REGARDING SHARE DISTRIBUTIONS
We will not make cash distributions to holders of shares
except on our liquidation. Prior to our liquidation, we will
only make distributions to holders of shares in additional
shares or fractions of shares. Each quarter we will calculate
the fraction of a share to be distributed per outstanding
share by dividing the quarterly cash distribution to be made
by Alberich, LLLP on each common unit by the average market
price of a share over the ten consecutive trading days
preceding the date on which the shares begin to trade ex-
dividend under the rules of the principal exchange on which
they may be listed. We expect to issue our quarterly
distributions of shares at approximately the same time as
Alberich, LLLP pays its quarterly distributions of cash to
holders of common units. We will at the same time make a
distribution of an equivalent fraction of a voting share on
our voting shares owned by Alberich, LLLP. When we issue our
quarterly distribution, Alberich, LLLP will simultaneously
issue i-units equal in number to the number of all shares we
distribute.
ALBERICH, LLLP'S DISTRIBUTION POLICY
The principal objective of Alberich, LLLP is to generate cash
from operations and to distribute available cash to its
partners. Available cash generally means, for any calendar
quarter, all cash received by Alberich, LLLP from all sources,
less all of its cash disbursements and net additions to
reserves.
Decisions regarding amounts to be placed in or released from
reserves may have a direct impact on the amount of available
cash. This is because increases and decreases in reserves are
taken into account in computing available cash. We may, in our
reasonable discretion, subject to various limits, including
the approval of the general partner, determine the amounts to
be placed in or released from reserves each quarter.
Holders of i-units will receive any distributions in
additional i-units. The "equivalent cash amount" per i-unit
distribution, as that term is used below, of a distribution
made to us in additional i-units means the cash distribution
made on a common unit at the same time. The "calculated unit
amount," as that term is used below, of a distribution made to
us in additional i-units means a number of i-units calculated
by dividing the equivalent cash amount by the average market
price of a share over the ten consecutive trading days
preceding the date on which the shares begin to trade ex-
dividend under the rules of the principal exchange on which
the shares may be listed. The number of additional i-units to
be distributed to the holder of an i-unit will be the
calculated unit amount. Such distributions of additional i-
units shall be treated as cash distributions for purposes of
determining the percentage of distributions to be made to the
general partner. Alberich, LLLP will not distribute the
equivalent cash amount but will use it in its business.
Distributions by Alberich, LLLP will be characterized either
as distributions of cash from operations or as distributions
of cash from interim capital transactions. This distinction
affects the amount distributed to a holder of common units or
i-units relative to the amount distributed to the general
partner.
Cash from operations generally refers to the cash balance of
Alberich, LLLP on the date it commenced operations, plus all
cash generated by the operations of its business, after
deducting related cash expenditures, reserves, debt service
and various other items.
Cash from interim capital transactions will generally be
generated only by borrowings, sales of debt and equity
securities and sales or other dispositions of assets for cash,
other than inventory, accounts receivable and other current
assets and assets disposed of in the ordinary course of
business.
To avoid the difficulty of trying to determine whether
available cash distributed by Alberich, LLLP is cash from
operations or cash from interim capital transactions, all
available cash distributed by Alberich, LLLP from any source
will be treated as distributions of cash from operations until
the sum of all available cash distributed equals the
cumulative amount of cash from operations actually generated
from the date Alberich, LLLP commenced operations through the
end of the calendar quarter prior to that distribution. Any
distribution of available cash which, when added to the sum of
all prior distributions, is in excess of the cumulative amount
of cash from operations, will be considered a distribution of
cash from interim capital transactions. For the purposes of
calculating the sum of all distributions of available cash,
the total equivalent cash amount of all distributions to i-
unit holders will be included even though the distributions
are made in additional i-units rather than cash.
If cash from interim capital transactions is distributed to
each common unit in an aggregate amount per common unit equal
to the initial common unit price, the distinction between cash
from operations and cash from interim capital transactions
will cease, and both types of available cash will be treated
as cash from operations. Since the inception of Alberich, LLLP
no distributions of cash from interim capital transactions
have been made, and the general partner does not anticipate
that there will be significant amounts of cash from interim
capital transactions distributed.
QUARTERLY DISTRIBUTIONS. The discussion below indicates the
percentages of distributions required to be made to the
general partner and the holders of units. All distributions to
common unit holders and the general partner will be made in
cash. Distributions to i-unit holders will be made in
additional i-units or fractions of i-units. Such distributions
of additional i-units will be treated as cash distributions
for purposes of determining the percentage of distributions to
be made to the general partner. Alberich, LLLP will not
distribute the equivalent cash amount but will use it in its
business, and the equivalent cash amount will be delivered to
the holder of an i-unit by the delivery of the calculated unit
amount of i-units. Distributions of cash from operations for
any quarter will be made:
* first, 98% to the holders of units pro rata and 2% to the
general partner until the holders of units have received a
total of $0.3025 per unit of cash or equivalent cash amount
for that quarter in respect of each unit;
* second, 85% of any available cash then remaining to the
holders of units pro rata and 15% to the general partner until
the holders of units have received a total of $0.3575 per unit
of cash or equivalent cash amount for that quarter in respect
of each unit;
* third, 75% of any available cash then remaining to all
holders of units pro rata and 25% to the general partner until
the holders of units have received a total of $0.4675 per unit
of cash or equivalent cash amount for that quarter in respect
of each unit; and
* fourth, 50% of any available cash then remaining to all
holders of units pro rata, paid to common units in cash and to
i-units in the calculated unit amount of i-units, and 50% to
the general partner.
DISTRIBUTIONS FROM INTERIM CAPITAL TRANSACTIONS. Distributions
on any date by Alberich, LLLP of available cash that
constitutes cash from interim capital transactions will be
distributed 98% to all holders of common units and i-units pro
rata and 2% to the general partner until Alberich, LLLP shall
have distributed in respect of each unit available cash
constituting cash from interim capital transactions in an
aggregate amount per unit equal to the initial common unit
price. Distributions from interim capital transactions to
holders of i-units will be made in additional i-units. Such
distributions of additional i-units will be treated as cash
distributions for purposes of determining the percentage of
distributions to be made to the general partner.
As cash from interim capital transactions is distributed, it
is treated as if it were a repayment of the initial public
offering price of common units. To reflect that repayment, the
first three distribution levels will be adjusted downward by
multiplying each amount by a fraction, the numerator of which
is the unrecovered initial common unit price immediately after
giving effect to that repayment and the denominator of which
is the unrecovered initial common unit price, immediately
prior to giving effect to that repayment. The unrecovered
initial common unit price includes the amount by which the
initial common unit price exceeds the aggregate distribution
of cash from interim capital transactions per common unit.
When payback of the initial common unit price is achieved,
that is, when the unrecovered initial common unit price is
zero, then in effect the first three distribution levels each
will have been reduced to zero. Thereafter all distributions
of available cash from all sources will be treated as if they
were cash from operations and available cash will be
distributed 50% to all holders of common units and i-units pro
rata and 50% to the general partner. The i-unit distribution
will be made in the calculated unit amount of i-units.
ADJUSTMENT OF TARGET DISTRIBUTION LEVELS. The first three
distribution levels will be proportionately adjusted upward or
downward, as appropriate, in the event of any combination or
subdivision of units, whether effected by a distribution
payable in any type of units or otherwise, but not by reason
of the issuance of additional common units or i-units for cash
or property.
In addition, if a distribution is made of available cash
constituting cash from interim capital transactions, the first
three distribution levels will be adjusted downward
proportionately, by multiplying each amount, as the same may
have been previously adjusted, by a fraction, the numerator of
which is the unrecovered initial common unit price immediately
after giving effect to that distribution and the denominator
of which is the unrecovered initial common unit price
immediately prior to that distribution. If and when the
unrecovered initial common unit price is zero, the first three
distribution levels each will have been reduced to zero, and
the general partner's share of distributions of available cash
will increase, in general, to 50% of all distributions of
available cash.
The first three distribution levels may also be adjusted if
legislation is enacted which causes Alberich, LLLP to become
taxable as a corporation or otherwise subjects Alberich, LLLP
to taxation as an entity for federal income tax purposes. In
that event, the first three distribution levels for each
quarter thereafter would be reduced to an amount equal to the
product of:
* each of the first three distribution levels multiplied
by;
* one minus the sum of;
* the maximum marginal federal income tax rate to which
Alberich, LLLP is subject as an entity; plus
* any increase that results from that legislation in the
effective overall state and local income tax rate to which
Alberich, LLLP is subject as an entity for the taxable year in
which that quarter occurs, after taking into account the
benefit of any deduction allowable for federal income tax
purposes for the payment of state and local income taxes.
For example, assuming Alberich, LLLP were not previously
subject to state and local income tax, if Alberich, LLLP were
to become taxable as an entity for federal income tax purposes
and Alberich, LLLP became subject to a maximum marginal
federal, and effective state and local, income tax rate of
38%, then each of the distribution levels would be reduced to
62% of the amount immediately prior to that adjustment.
LIQUIDATION AND DISTRIBUTION OF PROCEEDS
Upon dissolution of Alberich, LLLP, unless Alberich, LLLP is
reconstituted and continued, the liquidator authorized to wind
up the affairs of Alberich, LLLP will, acting with all power
to act on behalf of Alberich, LLLP that the liquidator deems
necessary or desirable in its good faith judgment in
connection therewith, liquidate Alberich, LLLP's assets and
apply the proceeds of the liquidation as follows:
* first towards the payment of all creditors of Alberich,
LLLP and the creation of a reserve for contingent liabilities;
and
* then to all partners in accordance with the positive
balances in their respective capital accounts.
Under some circumstances and subject to various limitations,
the liquidator may defer liquidation or distribution of
Alberich, LLLP's assets for a reasonable period of time and/or
distribute assets to partners in kind if it determines that a
sale would be impractical or would cause undue loss to the
partners.
Generally, any gain will be allocated between the holders of
common units and the general partner in a manner that
approximates their sharing ratios in the various distribution
levels. Any loss or unrealized loss will be allocated to the
general partner and the holders of common units: first, in
proportion to the positive balances in the partners' capital
accounts until all the balances are reduced to zero; and
thereafter, to the general partner. If there is a liquidation
of Alberich, LLLP, it is intended that we will receive
allocations of income and gain, or deduction and loss, in an
amount necessary for the capital account attributable to each
i-unit to be equal to that of a common unit.
In the event of liquidation, the general partner will be
required to purchase all outstanding shares for cash at a
price equal to the greater of the market value per unit of the
common units and the market value per share of our shares.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company designs, develops, manufactures, markets, and
services a broad range of embedded computer products as well
as products for desktop work-stations and industrial
computers. Applications of the Company's products typically
involve dedicated use of computers to perform repetitive tasks
associated with such markets as Data Acquisition and Control,
Business Intelligence, Plant Monitoring, Industrial
Automation, Oil & Gas Refining/Extraction, Telecommunications,
Defense, and Test and Measurement. The Company's product line
includes single-board PC computers, I/O boards and systems,
software, and networks.
While the Company's historical business has typically involved
limited volume, high-gross margin niche markets such as
Business Intelligence, Oil & Gas Refining/Extraction, Power
Plant Monitoring. and Data Acquisition, the Company's new
focus involves vertically integrated markets such as
Telecommunications and Industrial Automation that require high
volume production, but yield lower profit margins.
The Company's sales have reached a magnitude that requires the
Company to focus on larger markets to sustain its growth rate.
The Company is, therefore, more focused on markets that can
contribute significantly to its growth requirements such as
Business Intelligence, Telecommunications, Oil & Gas Refining
and Extraction, Test and Measurement, Industrial Automation,
and Defense. The Company believes that it will be able to
increase unit volumes of its PC computer product line and
networking product line while reducing product costs through
redesign and alliances with large subcontracting
manufacturers.
The Company's most recent focus has been on the introduction
of new products and the subsequent redesign of new products to
reduce product manufacturing costs. The Company believes that
it will be able to increase its market share by offering high
quality products and services, at a low cost.
Recently, the Company leveraged its technological expertise,
and brand recognition in the embedded PC market, to initiate
discussions with a number of potential customers relating to
the development of high-volume, custom products associated
with the Company's embedded bus solutions such as VME, CPCI,
and other proprietary buses. The challenge for the Company is
to select those opportunities that offer the lowest risk and
greatest growth potential while maintaining its standard
commercial off-the-shelf products. The Company believes that
the development of custom products results in closer customer
relationships that are difficult for a competitor to disturb
with price cuts alone. These opportunities may result in
increased research and development spending to capture
potentially large future revenues.
While the Company's gross margins have remained constant,
Alberich, LLLP anticipates some erosion as lower margin
product sales increase as a percentage of total sales. The
Company believes that significant sales of lower margin, high
volume products will benefit the Company, and it is
anticipated that net profits after taxes will rise as
efficiencies of sales associated with this high-volume
business are realized. Because sales of the Company's new
software products benefit from higher margins, if software
sales increase as a percentage of total sales, software sales
should partially offset the effect of lower margin hardware
sales.
The Company's operating results may vary significantly in the
future. The Company is presently experiencing significant
increases in its order growth rate and backlog. Operating
expenses will increase in the short term because the Company
requires employees and equipment to support the projected
growth. A shortfall of revenues could impact the Company's
financial results significantly in a given quarter or for the
fiscal year.
The Company has recently increased its component inventory
levels. While such increases allow for improved response times
to customer purchase orders, the Company faces a greater risk
of inventory obsolescence which could have an adverse effect
on the Company's business and operating results. The Company
also maintains a significant, separate, customer service
inventory to support customer requirements for replacement
equipment associated with warranty returns and products
returned for repair or replacement.
The Company's operating results may also fluctuate as a result
of a number of factors including customer order patterns,
defense spending patterns, product warranty returns, changes
in product mix, increased competition, announcements of new
products by the Company or its competitors, the loss of
certain key employees to other companies including
competitors, and the Company's overall ability to design,
test, and introduce new hardware and software products on a
timely basis.
BUSINESS
THE COMPANY
Alberich, LLLP is a direct marketer, designer and manufacturer
of embedded computer solutions based upon a wide variety of
open standard bus designs such as VME, CPCI, PCI, PMC,
Multibus, ISA, and special custom buses such as the GE 90/30.
The Company's products are used by original equipment
manufacturers ("OEMs"), systems integrators and end-users in
various industries, including Manufacturing Automation,
Business Intelligence, Telecommunications, Oil & Gas
Extraction and Refining, Healthcare, Simulation and Training,
Environmental Monitoring, and Test and Measurement. Unlike
general purpose computers, embedded computer solutions are i)
incorporated into systems and equipment to provide a single or
a limited number of critical system control functions; ii)
generally integrated into larger automated systems; and iii)
often have extended product life cycles. The Company's
embedded computers are based upon the Intel x86 and Pentium
architecture and are typically capable of running PC-
compatible operating systems and application software.
According to an industry publication, BOARD LEVEL EMBEDDED
COMPUTER MARKETS AND TRENDS, the standard bus embedded
computer market is projected to grow. The Company offers a
wide variety of board-level products based on standard buses
such as VMEbus, PCI bus, Compact PCI bus, PMC, Multibus, and
others. The most popular embedded computer standard today is
VMEbus, which is widely used in many markets. According to
BOARD LEVEL EMBEDDED COMPUTER MARKETS AND TRENDS, the VMEbus
embedded computer market is projected to grow substantially.
Recently the Company introduced its ALB suite of PC-based
control software modules that run on standard PC platforms
using the Windows operating system. ALB modules provide a
comprehensive set of tools used to create data acquisition and
control systems and to interconnect the large number of legacy
control products commonly found in industrial plants in
several industries. The Company's ALB software is designed for
compliance with open industry standards, and the software
modules can be mixed and matched to provide solutions for a
variety of industrial applications. The Data Acquisition and
Control market represents the largest market for Alberich's
products.
The Company is also involved in networking systems of
dissimilar buses using adapters, high-performance networks,
and synergistic software. The Company's family of networking
products is based on a technology known in the computer
industry as "Reflective Memory." Alberich's connectivity
products allow low maintenance, high speed communication
between PC computers, workstations, computer mainframes and
embedded computers manufactured by a wide variety of
companies.
The Company is expanding to market and sell more than 200
different products worldwide, including application-specific
embedded computer subsystems, board-level modules, control and
driver software, and network products. In addition to offering
standard commercial products, the Company is involved in the
development of custom products for high-volume applications
where significant revenues are possible.
INDUSTRIAL BACKGROUND
Unlike general-purpose computers, embedded computers are
incorporated into systems and equipment to perform a single or
limited number of complex applications. Embedded computers are
used in such markets as Data Acquisition and Control,
Environmental Monitoring, Oil & Gas Extraction and Refining,
Healthcare, Processes Control, Factory Automation and Defense.
Some applications include Production Testing of Electrical
Components, Fiber Optic Cable Manufacturing, Film
Manufacturing, Automotive Manufacturing and Development, Jet
and Rocket Engine Development, Environmental Monitoring, Steel
and Aluminum Rolling Mill Control, Telecommunications and
Switch Gear, Real- Time Communications and Networking,
Robotics, and Machine Control.
Data acquisition refers to the process of collecting what is
commonly referred to as real-world information phenomena such
as light, pressure, temperature, humidity, force, and flow. A
data acquisition system (which comprises a collection of
measuring instruments, a computer, and control devices) is
used to collect, document, and analyze that information. real-
world information, which is commonly represented by analog
signals, originates from sensors or transducers. The data
acquisition system accepts these signals produced by sensors
and transducers and converts them into a format that the
computer can understand. Data acquisition and control also
involves the collection of digital input data that originates
from switches, relays, lights and other on/off signals. In
addition, computer-controlled digital outputs may be used to
turn on or off lights, relays, switches, valves, conveyor
belts, or on/off functions.
A data acquisition system can be used to gather, monitor,
display, or analyze data. If the system has output
capabilities, it can also accurately control the processes it
is monitoring. The software works in association with the data
acquisition hardware. Without the software, the system's
hardware is considered to be generally ineffective. The
software can be used to control the collection of data, as
well as to display and analyze the data.
The market for data acquisition boards, systems, and software,
according to a recent study from Frost and Sullivan, is
expected to generate just under $700 billion. The primary end-
user markets for data acquisition boards, software, and
systems include Industrial Manufacturing, Oil & Gas Extraction
and Refining, Test and Measurement, Aerospace and Defense,
Medical, Pharmaceutical, and Utilities.
The industrial manufacturing sector is currently the largest
end-user of data acquisition products. The Company believes
that strong trends exist in multiple markets for equipment
based upon open standards and standard PC platforms. The
industry is focused on technology leaders such as Intel, AMD,
and Microsoft, and standard buses. Designs based upon this
technology insure the availability of enhanced equipment and
software migration paths that preserve the customers'
investment in technology. The performance of PC technology has
now improved to the point where many applications that
historically required custom or special equipment can now use
PC technology and embedded standard bus products.
Standard bus solutions include such buses as VME, Compact PCI
("CPCI"), Multibus, PMC, PCI and others. Standard buses are
nonproprietary, which means that the bus technology is
available to any company and product designer. Currently, the
primary standard bus used in PCs and computer workstations is
PCI. Most leading industrial use computer manufacturers
include PCI buses in their machines for enhanced computer
connectivity. CPCI is an embedded computer version of PCI.
CPCI capitalizes on the combination of the Eurocard form
factor, already popularized by VME, and the PCI bus
characteristics. The wide acceptance of the PCI bus in the
desktop market has created an abundance of inexpensive
components. CPCI has certain advantages in applications that
require fast transfers of large amounts of data.
CPCI buses are preferred for single processor applications
with moderate I/O requirements which utilize less than 8
slots. VME, because of its superior bus arbitration and
distributed interrupt handling characteristics, is preferred
for larger applications where processes and I/O are
partitioned across as many as 20 boards in the backplane.
The process controller market is experiencing a major shift to
standards based upon PC technology and open bus architectures.
According to Frost and Sullivan, the total process control
market is expected to generate revenues of $9.57 billion.
Revenues for this market are anticipated to increase to
approximately $15.2 billion. According to this study, the PC-
based control hardware and software segment will likely
demonstrate the strongest growth. The study also indicates
that users are considering their control systems software to
be the value-added element in such systems. The market trend
is shifting from proprietary Programmable Logic Controllers
("PLCs") to more general-purpose computers such as industrial
PCS and embedded computers. This market study complements the
study by Automation Research Corporation ("ARC") which
indicates that PC-based logic control software ("SoftLogic")
within a standard computer environment can perform the exact
same functions as conventional hardware-based proprietary
PLCs. Ability to upgrade the hardware while preserving the
customer's software investment is a key benefit of PC control.
According to ARC in a recent study, the worldwide revenues for
PC-based SoftLogic packages approached nearly $21 million.
With a 70% average annual growth rate projected over the next
few years, this market is slated to reach nearly $300 million
by the year 2007. The Company believes that the market is
significantly larger than the study indicates, and anticipates
substantial revenue opportunities in the next five years.
COMPANY STRATEGY
THE COMPANY'S GROWTH STRATEGY INCLUDES THE FOLLOWING ELEMENTS:
FOCUS ON SINGLE-BOARD COMPUTERS BASED UPON PC TECHNOLOGY. The
Company expects to make major investments in the VMEbus
single-board computer market specializing in PC technology
based upon Intel and AMD micro-computers and Microsoft
software. A decision by Microsoft not to support Motorola's
PowerPC processor with its Windows operating system may reduce
the attractiveness of Motorola's Power PC based products and
help the Company penetrate the market with Intel and AMD
technologies. Alberich, LLLP believes it currently has the
widest line of PC-based single-board computers in the VMEbus
market. The Company has also entered the CPCI market arena
with its PC technology.
INCREASE MARKET SHARE OF REFLECTIVE MEMORY NETWORKS.
Reflective Memory is a high-performance deterministic
networking product that is used in many applications, from
over-the-horizon radar systems and rolling mills, to ship
communications. Reflective Memory is expected to be one of the
Company's fastest growing product lines. The product line now
supports many computer buses such as PCI bus, Compact PCI bus,
VMEbus, PMC, and Multibus. The Reflective Memory advantage
over more traditional networks such as Ethernet, Fast
Ethernet, FDDI, and ATM include its deterministic properties
and very high performance, coupled with little or no software
requirements for its use. The Company expects to make
significant investments in this technology.
INCREASE MARKET SHARE FOR INDUSTRIAL AUTOMATION AND TEST AND
MEASUREMENT MARKETS WITH COMPONENT SOFTWARE (ALB). The
Company has recently developed and is continuing to enhance
its line of software products to increase the sales of its
single-board computers, board-level products, I/O systems, and
stand-alone software sales. The Company continues to focus its
ALB marketing efforts in the Industrial Automation market.
This market is undergoing a substantial shift from the use of
Programmable Logic Controllers to the more open architecture
of PCs. The Company's ALB software components allow a PC to
perform the same functions as a Programmable Logic Controller.
GROW I/O BOARD-LEVEL PRODUCTS BUSINESS. The Company's strategy
for maintaining its leadership position is to continually
enhance and expand its product line. The Company will continue
to support its currently existing board-level product line
with upgraded software, while developing improved I/O
technology for VMEbus and other buses such as Compact PCI.
GROW I/O SYSTEMS BUSINESS. Alberich will focus on I/O systems
business for such markets as Industrial Automation, Business
Intelligence, Test and Measurement, Pharmaceuticals, Oil & Gas
Extraction and Refining, Plant Monitoring, and Simulation and
Training markets. The I/O systems offered by the Company are
comprised of I/O boards, chassis, backplanes, power supplies,
software, and other products that provide customers or Systems
Integrators a building block approach to solve application-
specific problems, and avoid problems associated with I/O
programming. The Company is expanding its I/O systems business
to include CPCI products.
EXPAND INTERNATIONAL MARKETS. Alberich expects to sell
products in more than 48 foreign countries through its line of
international distributors. Alberich plans to grow its
international presence by expanding into more countries while
increasing sales through existing distributors. The Company
anticipates increasing it investments in advertising,
international trade shows, and international offices.
MAINTAIN A HIGH LEVEL OF INVESTMENTS IN ENGINEERING AND
PRODUCT DEVELOPMENT. The Company plans to continue its
relatively high levels of research and development expenses in
order to provide innovative new products and to enhance and
redesign its existing products. The Company is focusing on new
products that may provide substantial growth opportunities in
vertical markets. The Company anticipates adding features,
functions, and additional modules and components to its ALB
software, and expects its significant investments in this
product line to continue. The Company continuously monitors
developing technologies and introduces products as standards
and markets emerge. The Company plans to maintain its annual
investment in Research and Development, as a result, the
Company expects that research and development investments, as
a percentage of revenues, will decrease if future revenues
increase as anticipated.
PRODUCTS
The Company markets, designs and manufactures a wide variety
of board-level products, I/O systems, and software primarily
for embedded computer solutions, as well as communications
products. Some of the Company's products are used for high-
speed communications among embedded computer systems. The
Company's product lines can be partitioned into six primary
groups:
SINGLE-BOARD PC VMEbus CPUs AND PERIPHERALS. This product
line spans the complete line of Intel-based products and
supports a wide variety of operating systems such as Windows,
UNIX, Linux, LynxOS, Windows CE/RTX, VxWorks and QNX. In
addition, the Company manufactures an array of compatible
VMEbus boards such as floppy and hard drive modules. Alberich
manufactures fully functional PC/AT single-board computers
which support off-the-shelf PC/AT software and enable the user
to completely configure an embedded PC/AT computer system with
Alberich products. The Company has recently announced a
variety of single board computers based on CPCI. According to
recent independent market studies and the Company's recent
marketing efforts, CPCI products have the greatest potential
in the telecom market area. The Company's single-board
products are fully supported by the Company's component
software (ALB). See "Component Software ALB below.
GENERAL PURPOSE I/O BOARDS. The Company offers a wide range of
I/O products including VMEbus, Compact PCI, I/O boards, and
boards designed for other standard computer buses. The
Company's I/O product and line includes more than 90 I/O
boards and supporting software drivers based upon a broad line
of operating systems such as VxWorks, QNX Windows, and Windows
NT/RTX. The Company's I/O products are used to perform such
tasks as monitoring temperature, fluid flow, motion,
resistance, strain, revolutions, and the states of many
different conditions such as closed/open status of values or
on/off status of switches.
COMMUNICATIONS PRODUCTS. The Company's communications product
line includes four discrete product categories. The categories
are:
1. General purpose serial I/O products that support a wide
variety of connectivity options associated with peripherals,
intelligent sensors dials, and indicators.
2. Serial I/O communication products used in a wide variety
of military and space applications, including aircraft,
missiles, ground support equipment, and avionics buses which
are used in commercial applications.
3. Bus repeater products which provide a means of expanding
the capacity of a system so that I/O boards may be used or
added to the system without the high cost of using a CPU for
each chassis which may require I/O boards. The Company's bus
repeater products include more than six products which support
the configuration of large I/O systems and the remoting of I/O
boards from the CPU via fiber optics.
4. Reflective Memory products which offer real-time
networking for applications where guaranteed delivery of data
at precise times or time intervals are primary requirements.
The Company's Reflective Memory allows customers to configure
extremely high performance networks.
The Company's Reflective Memory product line supports
networking of most computer systems offered by DEC, Silicon
Graphics, Harris, IBM, Intergraph, Hewlett-Packard, Motorola,
Gateway, DELL, and many others that are designed to support
standard buses. Reflective Memory has application for
networking the same or dissimilar computer systems in a high-
performance, fiber-optic or cable network. One of the most
significant benefits of Reflective Memory is that software is
not required for its operation. However, the Company offers
industry-compatible networking software compliant to
internationally recognized standards such as TCP/IP which is
typically used with other types of networks.
The Company has developed a quad-redundant, fault-tolerant
version of its Reflective Memory and network hubs for Naval
applications involving ship control and weapon systems for
Hughes and Raytheon. This product also has market potential in
many other markets where real-time deterministic
communications, reliability, and fault-tolerant are paramount.
COMPONENT SOFTWARE ALB. The Company's new ALB software product
line is an extensive family of PC software components intended
primarily for applications in the Industrial Automation
industry. The products also have applications in the Test and
Measurement, Business Intelligence, Simulation and Training,
Telecommunications, Oil and Gas Refining and Extraction,
Pharmaceuticals, and other markets. These components provide a
comprehensive set of tools used to create data acquisition and
control systems and to interconnect the large number of legacy
control products commonly found in industrial plants today.
ALB can be used to implement complete plant-wide control or
can be used in conjunction with existing control systems to
augment or supplement those existing systems. ALB' strength
lies in the seamless, cohesive, easy-to-use environment it
provides and the flexibility it gives users to pick and choose
the right components for the application.
ALB components form a comprehensive development and control
environment for PC-compatible computers running Microsoft's
Windows operating system. Control systems run under Windows,
UNIX, Linux and VxWorks. ALB software executes on the PC to
read temperatures, pressures, motor shaft positions, and other
data from the plant and then controls such machines as
conveyors, packaging equipment, and extruders. ALB components
are based upon open standards such as IEC-1131-3 and Microsoft
technologies. IEC-1131-3 is an internationally recognized
software specification that defines and standardizes
programming of control and monitoring systems. ALB adherence
to these open standards allows integration with other standard
off-the-shelf Windows-compatible software products.
ALB component software functions with various third-party I/O
boards and platforms, as well as Alberich's hardware products.
The software is designed for hardware independence and
software operating system independence at the system control
level. ALB supports open architecture and open systems
solutions, ensuring that the customer's investments will be
compatible with future programming environments.
I/O SYSTEMS PRODUCTS. The Company offers a wide range of
systems for the embedded computer market. A system is a
combination of board-level products, coupled with backplanes
(interconnecting boards), power modules, mechanical packaging,
and software. Systems products are configured by the Company
to customer specifications and are delivered to the customer
as an integrated product. Systems products are generally sold
to OEM's, systems integrators, or end-users who install the
equipment, develop software, and add third-party products to
customize such systems for specific applications.
The Company's I/O systems are expected to primarily be used in
applications involving simulation and training for nuclear
plants, defense simulation and training, Test and Measurement,
Data Acquisition and Control, and Environmental Monitoring.
The Company currently offers an expanded range of I/O systems
based upon new hardware and software products which have wider
applications in the Industrial Automation and Test and
Measurement markets, The Company's new ALB software enables
the Company to offer systems-level products for Industrial
Automation which:
1. support the interconnectivity of a wide range of existing
dissimilar I/O systems, thereby opening a closed market,
2. replace antiquated closed proprietary I/O systems with
state-of-the-art open architecture I/O systems which are based
on open standards,
3. enhance the performance and increase the functionality of
antiquated installed I/O systems, allowing customers to
maintain their investment in such equipment, and
4. support the interconnection of the Company's advanced I/O
systems with a broad array of installed I/O systems and new
systems offered by third-party suppliers.
The Company's potential growth in the Test and Measurement I/O
systems market has been significantly enhanced because its ALB
software, when coupled with the Company's equipment and third-
party leading Test and Measurement software enable the Company
to offer state-of-the-art open architecture I/O systems to the
Test and Measurement market. Alberich's potential for
significant growth in the Test and Measurement market has been
increased because of its investment in PC single-board
computers, new ALB component software, and new I/O board
products designed specifically for the Test and Measurement
market.
SPECIAL PRODUCTS. The Company develops, manufactures, and
markets a variety of special products related to: safety
applications in nuclear power plants, supplements to
Alberich's standard products, private label products, and
proprietary bus applications.
The Company typically avoids such special products unless the
business relationship involves significant revenue
opportunities. While special products are normally developed
at the customer's expense, occasionally the Company may share
development expenses for such products or completely
underwrite the project.
CUSTOMERS, APPLICATIONS, AND MARKETS
The following is a brief description of some applications,
customers, and markets, some of which the Company is currently
addressing, and others of which the Company intends to pursue.
There are no assurances that the Company will be successful in
expanding its presence in any of these industries.
Simulation and Training. The Simulation and Training industry
can be partitioned into three primary markets. These markets
include Defense, Power and Utilities, and Transportation. The
Defense market involves the use of the Company's simulation
and training I/O products in aircraft, helicopter and ship
simulators, and trainers. The Company's customers are expected
to be systems integrators such as Reflectone, McDonnell
Douglas, Quintron, Flight Safety International, AAI
Corporation, and others who typically purchase products
designed specifically for the industry. The power utility
industry is expected to use the Company's simulation and
training products for applications in nuclear power plant
simulators and trainers. The Company's customers are expected
to be systems integrators and end-users such as S3
Technologies, Siemens, Atlas, Thomson-CSF, Mitsubishi Heavy
Industries, Georgia Power, Virginia Electric Power, and TVA.
The primary difference in the markets involves the size of the
I/O system. Usual I/O systems for nuclear power plants
typically sell for $500,000 to $1,000,000 per unit, whereas
I/O systems for Defense applications typically sell for
$50,000 to $100,000 per unit.
The Company believes that its success in the I/O Systems
markets will center around its focus on providing a wide
variety of standard bus products and systems that are designed
specifically for the Simulation and Training markets. This
market requires high-density I/O boards with self-test
capability supporting extensive fault detection and isolation
capabilities. The Defense and Power Plant industries have
focused on open architecture solutions and VMEbus is the
leading embedded computer bus standard. The Company believes
that its customers in this market will particularly value its
Intelligent I/O Controllers that were designed specifically
for the Simulation and Training industry. The Company's
simulation and training product line enables a customer to
order systems solutions that obviate the need for detail-level
programming of the Company's equipment.
The Defense Simulation and Training market is undergoing
significant technology changes which will require the Company
to focus on ALB component software solutions for this industry
in the future. The Company expects that its revenues from the
Simulation and Training market will be stagnant for the next
five years without any consideration of ALB software sales.
The Company's Data Acquisition and Control products are
typically used in semiconductor ovens, annunciator systems,
gas turbine monitoring and control, electron particle
acceleration, power train testing, wind tunnel testing, and
emissions monitoring. Alberich's customers for such
applications are expected to include OEMs, systems integrators
and end-users such as Interautomation, Arnold Air Force Base,
Sverdrup, Chrysler, American Power, Ohio Edison, Synchrontron
Radiation Research Center, and others. The Company attributes
its success in this market to its broad array of I/O boards,
open system technology, and the wide acceptance of VMEbus in
the embedded systems market.
The Company's line of Universal Intelligent I/O Controllers
form the core of its data acquisition and control systems. The
I/O controller product line was designed specifically for the
data acquisition and control market and features many benefits
required by OEMs, systems integrators, and end-users. One of
the primary benefits is the I/O controllers' support of the
broadest assortment of VMEbus I/O boards in the industry. This
wide selection of I/O, coupled with effective turnkey I/O
solutions for the industry, is a major benefit, and the prime
reason for the Company's success in this market.
INDUSTRIAL AUTOMATION. Since the 1960's, Industrial Automation
systems have included mechanical devices, meters, and gauges,
as well as data loggers and strip chart recorders. In the
1970's, programmable logic controllers ("PLC's"), special-
purpose, proprietary, stand-alone, industrial computers were
introduced and were primarily used for "discrete"
manufacturing applications such as automobile assembly. PLCs
have traditionally had primitive operator interface panels
incorporating buttons, lights, and indicators. In parallel,
sophisticated Industrial Automation systems called distributed
control systems ("DCS") were also adopted to provide computer
control of large-scale continuous processes such as those
found in oil refineries. DCS's integrated a variety of sensors
and control elements using I/O connections all controlled by a
central computer running proprietary software. Systems were
also configured based on proprietary hardware.
The market is undergoing a significant changes, and customers
are now demanding solutions based upon open hardware
platforms, and nonproprietary standards such as VMEbus and
CPCI; and PC solutions based upon Intel processor technology
and software (such as ALB) based upon Microsoft operating
systems and other Microsoft key technologies.
The Company has entered this market with applications for
several industrial applications such as petrochemical, hydro-
desulphurization, film processing, aluminum rolling mills,
steel rolling mills, fiber-optic cable manufacturing, silicon
wafer manufacturing, pharmaceuticals, and others. The
customers currently utilizing these products in this market
include OEMs and end-users such as the 3M Company, AVX
Corporation, Corning, Eastman Kodak, Bethlehem Steel, Dupont,
Kimberly Clark, Quester, Reynolds Aluminum, Tuscaloosa Steel,
and Xerox.
TELECOMMUNICATIONS. Typical telecommunications systems have
multiple embedded computers working in concert. Potential
applications include voice message systems, routers, fiber
optic cable testers, cell phone switching systems, and
environmental monitors. The Company believes that the
Telecommunications market offers significant sales
opportunities for its VMEbus and CPCI PC single-board
computers and Reflective Memory fiber-optic networks products.
The CPCI bus has been selected as the primary architecture for
the Telecommunications industry; therefore, the Company has
made significant investments in a CPCI product line involving
PC single board computers and Reflective Memory products.
There are no assurances, however, the Company will be
successful in penetrating this market or that its market share
would be significant.
TEST AND MEASUREMENT. Test and measurement generally refers to
the collection and analysis of experimental data. Such
applications typically involve the testing and verification of
the proper operation of products being manufactured.
Instrument systems may also be used to simulate manufacturing
processes or techniques.
Test and Measurement products are used in applications
involving structural testing of aircraft, transmission
testing, airbag sensor testing, flight computer testing,
weapon systems testing, automobile radiator testing, pitch and
roll tables for shaking engines, automobile engine test
stands, rocket engine test stands, and military and commercial
jet engine test stands. Companies that utilize Test and
Measurement products include OEMs, systems integrators, and
end users such as Chrysler, Ford, BMW, Rolls Royce, Bristol,
Deutsche Aerospace Daimler Benz, GM, Pratt & Whitney, Argonne
National Labs, FERMILAB, Harvard University, Duke University,
and Brookhaven National Labs.
The Company has recently developed unique, new, high-accuracy,
state-of-the-art, board-level products for the Test and
Measurement market. The Company believes that the Company's
Test and Measurement market potential has been significantly
enhanced because of its ALB software products, single-board
computer and I/O boards. The Company has also coupled ALB to
National Instruments' LabVIEW software product. National
Instruments is a Test and Measurement market leader with
respect to its human machine interface ("HMI") software and
the Company's ALB product complements National Instruments'
HMI software product.
ROBOTICS. The Company's products are used in a wide range of
robotic applications including hazardous environments in the
nuclear and chemical industries. Applications also involve
large robotic steel hauling trucks, nuclear waste removal, and
rail track repair. Customers in these industries include end-
users such as Fairmont Tamper, Westinghouse, RedZone Robotics,
and Mitsubishi Heavy Industries.
POWER PLANT MONITORING. The Company selected this market as a
potential growth market for its products. The market is highly
project-oriented with very sophisticated systems integrators
within a very narrow market focus. I/O systems in this
industry are typically very large, with such systems selling
in the range of $500,000 to more than $1,000,000. There are
more than 200 nuclear power plants worldwide, most of which
were built 10 to 15 years ago. Each plant must upgrade its
equipment every 10 to 15 years because of parts obsolescence,
system performance enhancements, and regulatory requirements.
In addition, the U. S. Nuclear Regulatory Commission and
similar organizations in other countries are constantly
revising safety standards which require utilities to modernize
their facilities. The Company expects to supply products to
end-users such as Ontario Hydro, River Bend, Virginia Electric
Power, Union Electric, and others.
The Company expects to begin nuclear qualification testing.
Nuclear-qualified equipment involves the qualification of some
of the Company's standard products to meet certain vibration,
radiation, and electrical isolation requirements. Most of the
Company's business in this market does not involve nuclear
qualification testing.
MARKETING, SALES, AND DISTRIBUTION
The Company is a global corporation that expects to distribute
products in more than 48 foreign countries through over 23
distributors and 14 representative organizations worldwide.
The Company expects to sell its products in the United States
through commissioned-based independent sales organizations.
These sales organizations are supported by their own support
staff, as well as the Company's employees.
The Company's products are expected to be sold internationally
through 23 distributors. The Company's representative and
distributor contracts will not allow such organizations to
sell competitive products.
In addition to international distributors and U.S. sales
representatives, the Company is expected to have 29 value-
added resellers ("VARs") who represent the Company. VARs
purchase and resell the Company's products and add value to
the Company's products by including custom software, hardware
or installation and maintenance of the Company's equipment.
The Company intends to attend more than 40 table-top trade
shows per year and more than ten major trade shows per year.
Table-top shows require minimum Company involvement, whereas
the major shows are market related and require significant
planning, staffing, and promotional efforts. The Company also
intends to market its products through publicity received
publications and magazines that publish articles and press
releases.
CUSTOMER SERVICE AND SUPPORT
The Company is dedicated to providing the products, service,
quality, and responsiveness that its customers require. The
Company's core business is expected to be characterized by
repeat business from customers and long-term mutually
beneficial customer relationships. The Company understands
that satisfaction of the customer in all areas of the business
relationship is crucial and the Company will solicit their
feedback.
Users of the Company's products have access to a wide array of
support services. The Company has technical expertise and
resources to support installation, maintenance, and service of
the Company's products. The Company offers its customers
standard classroom instruction, as well as "hands on" training
for all of the Company's hardware and software products. These
courses may be held at the customer's site upon request.
The Company maintains a 24-hour per day phone service to
support its customers. The Company's organizational structure
is expected to include a staff of customer service employees
who offer sales support, warranty servicing, and product
repair. The customer service organization is supported by
dedicated inventory for quick product replacement. In
addition, the customer service organization has equipment
committed exclusively to assist in emulation of customer
problems so that the Company can quickly respond to customer
complaints. Critical customer service inquiries will be
brought to the attention of upper management to ensure that
the Company continues to provide top quality service and
prompt response.
MANUFACTURING
The Company is expected to manufacture approximately 80% of
its products in-house while subcontracting the balance of the
product manufacturing. The Company is designing an in-house
manufacturing capability that includes automated assembly and
testing, and surface mount technology. Product manufacturing
operations at the Company involve: electronic circuit card and
module assembly; I/O systems assembly, configuration, and
testing, cable assembly, the production of technical manuals,
product support documentation, and software duplication on
both CD-ROM and diskette.
The principal steps in the manufacturing process are the
purchase and management of materials, assembly, testing, final
inspection, packing, and shipping. The Company purchases parts
and components for assembly of all its products from a large
number of suppliers through a worldwide sourcing program.
However, certain key components used in the Company's products
are currently available from only one source, and other key
components are available from only a limited number of
sources. The Company expects delays in the receipt of certain
key components, which may result in delays in related product
deliveries. The Company will attempt to manage such risks
through developing alternative sources, engineering efforts
designed to obviate the necessity of certain components, and
through maintaining quality relationships and close personal
contact with each of its suppliers. However, there can be no
assurance that delays in key component and product deliveries
will not occur. The inability to obtain sufficient key
components as required, or to develop alternative sources if
and as required in the future, could result in delays or
reductions in product shipments which, in turn, could have a
material adverse effect on the Company's customer
relationships and operating results.
Engineering refinements to the Company's new hardware and
software products are fairly common. These changes can result
in the disruption of the manufacturing operation and
concurrent delays in delivery dates.
The Company's Quality Assurance program is compliant to the
ISO 9002 specification. The Company's software is compliant to
ISO 9000-3. ISO-9002 is an internationally recognized
"blueprint" for quality systems involving all aspects of
business, not just manufacturing and development.
The Company has plans to team with EGS Corporation, a division
of SAIC, to provide safety-related equipment to the nuclear
power industry. EGS offers specialized support in the areas
associated with procurement and evaluation of safety-related
equipment including addressing issues associated with the
dedication of commercial-grade products for safety-related
use.
A substantial portion of the Company's shipments in any fiscal
period are expected to relate to orders received in that
period. Many of the Company's customers are expected to
require immediate delivery which requires the Company to
maintain substantial raw and finished goods inventory as well
as separate customer service inventory to support quick
warranty and repair service.
RESEARCH AND DEVELOPMENT
The Company has recently undertaken substantial research and
development efforts outside of its traditional business area,
resulting in the introduction of new software control
products, an improved line of computer network solutions and
new embedded PC single board computers.
COMPETITION
The markets for the Company's products are intensely
competitive and are characterized by rapid technological
change and emerging industry standards requiring ongoing
expenditures for research and development and the timely
introduction of new technology and enhancements of existing
technology. The Company's future success will depend, in part,
upon its ability to enhance its current technology and
services, respond effectively to technological changes, sell
additional services to existing client base, introduce new
technologies and meet the increasingly sophisticated needs of
clients. Other companies may develop products or technologies
that may adversely affect the Company's competitive position
or render its technologies or services obsolete. The Company
will compete for customers on the basis of performance,
features, quality, service, reliability, adherence to
standards, availability, development capabilities, price, and
support. The Company's potential competitors vary in the size,
scope and breadth of the products and services they offer;
some of the Company's potential competitors have greater
financial, technological, manufacturing, marketing, sales, and
personnel resources than the Company.
While the Company faces entrenched potential competitors in
the single-board computer market, Alberich believes that it
offers the most complete line of Intel and AMD PC-based
single-board computers in the VMEbus market, and maintains
technological advantages in the CPCI market. The Company
believes that it can become a major supplier of PC processor-
based single-board computers and associated products, although
there is no assurance that it will do so.
GOVERNMENT BUSINESS
The Company expects to focus its marketing efforts on direct
and indirect government business. The Company has plans to be
involved in several government related opportunities and
contracts that could have a significant impact on the
Company's growth. Therefore a significant percentage of the
Company's future revenue could be generated by government-
related business. However, there are no assurances that the
Company's initial government test project will be successful.
PROPRIETARY RIGHTS
The Company's success depends to a significant degree upon its
software proprietary technology and other confidential
information. Unfortunately, software and information
technology industries have experienced widespread unauthorized
reproduction of software products and other proprietary
technology. The majority of the Company's software is not
patented and existing copyright law offers only limited
practical protection. Alberich relies on a combination of
trade secret, copyright, common law intellectual property
rights, license agreements, nondisclosure and other
contractual provisions and technical measures to establish and
protect its proprietary rights in its intellectual property
and confidential information. The Company does not, however,
sell its software source code, or provide its customers access
to the source code associated with its software products.
There is no assurance that the Company will be able to protect
its trade secrets or that others will not independently
develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade
secrets. There is no assurance that foreign intellectual
property laws will protect the Company's intellectual property
rights. In addition, the computer industry is characterized by
frequent litigation regarding patent and other intellectual
property rights, and litigation has been and may in the future
be necessary to enforce the Company's trade secrets, to
determine the validity and scope of the proprietary rights of
others, or to defend against claims of patent infringement.
Litigation with respect to patents or other intellectual
property matters could result in diversion of management and
other resources and could have a material adverse effect on
the Company's business, financial condition, and results of
operations.
Alberich believes that its proprietary rights do not infringe
upon the proprietary rights of third parties. However, third
parties may assert infringement claims against the Company in
the future. The Company may also be required to indemnify its
customers for claims made against them. Responding to and
defending any such claims, developing non-infringing
intellectual property or acquiring licenses may distract the
attention of the Company's management and could have a
material adverse affect on the Company's business, financial
condition or results of operations.
EMPLOYEES
The company is expected to employ in the areas of Sales,
Marketing, General Administration, Production, Quality
Assurance, and Research and Development. None of the Company's
employees are expected to be represented by a collective
bargaining agreement.
PROPERTIES
The Company's headquarters and principal administrative,
engineering, sales, marketing, and manufacturing facilities
are expected to initially contain approximately 10,000 square
feet. The Company also expects to lease additional space when
necessary. The Company believes that these approximations will
be suitable for the Company's projected growth over the next
24 to 36 months.
LEGAL PROCEEDING
The Company expects to be involved from time to time in
litigation in the normal course of its business. The Company
is not aware of any pending or threatened litigation matters
which will have a material adverse affect on the Company.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER
Set forth below is certain information concerning the
directors and executive officers of the general partner. All
directors of the general partner are elected annually by, and
may be removed by the interest holders of the general partner.
All officers serve at the discretion of the board of directors
of the general partner.
Name Age
Aaron R. Lux(6) 28
Position(s) with the company and prior business experience
General Partner, and Lead Director Mr. Lux founded the Company
in 2005, and has served as Lead Director of the Company since
April 2005. From the Company's founding in 2005 to March 2005,
Mr. Lux served as Executive VicePresident. Mr. Lux has served
as a partner of the Company since the Company's founding. Mr.
Lux became Lead Director in May 2005. Prior to co-founding the
Company Mr. Lux served in several directorships at various
companies as well as engineering services for projects valued
up to $100 million.
__________
(1) Member of Executive Committee.
(2) Member of Management Development and Compensation
Committee.
(3) Member of Audit Committee.
(4) Nominating and Corporate Governance Committee.
(5) Ethics and Corporate Responsibility Committee
(6) Lead Director
(7) Term will become effective upon the closing of financial
offering.
__________
Board of Directors Composition and Committees
The Alberich, LLLP. partnership agreement provides for a
classified board of directors consisting of three classes,
which shall be as equal in number as possible. The total
number of authorized directors is to be between 10 and 18,
with the exact size of the board to fixed by resolution of the
board. Immediately following the completion of this offering,
we expect to have 13 directors.
Immediately prior to the completion of this offering, the
board of directors of Alberich, LLLP. will have the following
standing committees: an audit committee, a management
development and compensation committee, a lead director, an
ethics and corporate responsibility committee, an executive
committee and a nominating and corporate governance committee.
Audit Committee. The purpose of the audit committee is to
assist the board of directors in providing oversight of: (1)
the integrity of our financial statements, including the
financial reporting process, system of internal control and
audit process, (2) our compliance with legal and regulatory
requirements, (3) the registered public accountant's
qualifications and independence, (4) the performance of our
internal audit function and registered public accountants and
(5) financial reporting risk assessment and mitigation.
Management Development and Compensation Committee. The
compensation committee's responsibilities include: (1)
determining the compensation of the chief executive officer
and reviewing and approving the compensation of the other
executive officers, (2) approving and evaluating compensation
plans, policies and programs, including incentive compensation
and equity-based plans for employees and officers, (3)
preparing an annual report on executive compensation for
inclusion in our proxy statement or annual report on Form 10-K
(if applicable), in accordance with the rules and regulations
of the Securities and Exchange Commission and (4) reviewing
and making recommendations to the board of directors regarding
director compensation.
Ethics and Corporate Responsibility Committee. The ethics and
corporate responsibility committee duties include: (1)
reviewing and making recommendations regarding the ethical
responsibilities of our employees and consultants under our
administrative policies and procedures, (2) reviewing and
assessing our policies and procedures addressing the
resolution of conflicts of interest involving us, our
employees, officers and directors and addressing any potential
conflict of interest involving us and a director or an
executive officer, (3) reviewing and establishing procedures
for the receipt, retention and treatment of complaints
regarding violation of our policies, procedures and standards
related to ethical conduct and legal compliance and (4)
reviewing and evaluating the effectiveness of our ethics,
compliance and training programs and related administrative
policies.
Executive Committee. The executive committee's charter
provides that, to the extent permitted by Minnesota law, it
shall have and may exercise all powers and authorities of the
board of directors with respect to the following: (1) taking
action on behalf of the board of directors during intervals
between regularly scheduled meetings of the board of directors
if it is impractical to delay action on a matter until the
next regularly scheduled meeting of the board of directors,
(2) overseeing and assisting management in the formulation and
implementation of scientific research policies, (3)
authorizing and approving the offer, issuance or sale of our
units, (4) authorizing the filing of registration statements,
reports and other documents with the Securities and Exchange
Commission and with state securities commissions, (5)
authorizing the calling of the annual meeting of our unit
holders, (6) within certain limits established by the board or
directors, approving the acquisition of the business or assets
of another company, (7) authorizing the preparation and filing
of documentation to effect a merger between us and one or more
subsidiary corporations, (8) reviewing and approving various
financial matters, including matters pertaining to our capital
structure, our financial projections, plans and strategies,
our capital budget and capital budgeting processes, plans and
strategies and our treasury operations, investment strategies,
banking and cash management arrangements and financial risk
management, including our policies and procedures related
thereto and (9) authorizing the opening of bank accounts in
our name, approving the establishment of loans or letters of
credit and guaranteeing the repayment of indebtedness or
contractual performance of our majority-owned subsidiaries.
Nominating and Corporate Governance Committee. The nominating
and corporate governance committee's responsibilities include:
(1) identifying and recommending individuals qualified to
become members of the board of directors, consistent with the
criteria approved by the board of directors; (2) reviewing and
making recommendations regarding the composition and
procedures of the board of directors; (3) developing and
recommending to the board of directors a set of corporate
governance principles; (4) making recommendations regarding
the size, composition and charters of the committees of the
board of directors; (5) reviewing and developing long-range
plans for chief executive officer and management succession
and (6) developing and overseeing an annual self-evaluation
process of the board of directors and its committees.
Lead Director. In the event that our chairman of the board is
not independent, the nominating and corporate governance
committee will nominate an independent director to serve as
our lead director, who is then approved by a majority of the
independent directors. The lead director has the following
principal responsibilities: (1) chairing meetings of the
independent directors in executive session; (2) facilitating
communications between other members of the board and the
chairman of the board and/or the chief executive officer; (3)
acting as a liaison to unit holders who request direct
communication with the board; (4) consulting with the chairman
of the board in the preparation of the agenda for each board
meeting and in determining the need for special meetings of
the board; (5) consulting with the chairman of the board
and/or the chief executive officer on matters relating to
corporate governance and board performance; and (6) acting as
chairman of the board if the chief executive officer serving
in that role is unable to perform those duties.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee will not, at
any time, be one of our officers or employees. None of our
executive officers will serve, or in the past fiscal year has
served, as a member of the board of directors or compensation
committee of any entity that has one or more executive
officers serving on our board of directors or compensation
committee.
Director Compensation
All non-employee directors are paid an annual retainer of $__*
and the chairperson of a committee is paid an additional
annual retainer of $__*, except for the chairperson of the
audit committee who is paid an additional annual retainer of
$__*. The lead director is also paid an additional annual
retainer of $__*. Non-employee directors also receive $__* for
each meeting of the board of directors and $__* for each
meeting of a committee on which they serve and are reimbursed
for expenses incurred while attending meetings or otherwise
performing services as a director. In addition, a unit bonus
of __* units of common units is offered to independent
director nominees as an inducement to join the board of
directors.
__________
* To be provided by amendment.
__________
See Certain Relationships and Related Party Transactions for
information with respect to transactions between us and
certain persons related to or entities in which certain
directors may be deemed to have an interest.
Indemnification
The partnership agreement provides that Alberich, LLLP will
indemnify the general partner, any departing partner and any
person who is or was an officer or director of the general
partner or any departing partner, to the fullest extent
permitted by law. Alberich, LLLP also may indemnify, to the
extent deemed advisable by the general partner, to the fullest
extent permitted by law, any person who is or was an affiliate
of the general partner or any departing partner, any person
who is or was an officer, director, employee, partner, agent
or trustee of the general partner, any departing partner or
any affiliate, or any person who is or was serving at the
request of the general partner or any affiliate of the general
partner or any departing partner as an officer, director,
employee, partner, agent, or trustee of another person
("indemnitee") from and against any and all losses, claims,
damages, liabilities (joint or several), expenses (including,
without limitation, legal fees and expenses), judgments,
fines, penalties, interest, settlement and other amounts
arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or
investigative, in which any indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, by reason
of its status as:
* the general partner, a departing partner or affiliate of
either;
* an officer, director, employee, partner, agent or trustee
of the general partner, any departing partner or affiliate of
either; or
* a person serving at the request of Alberich, LLLP in
another entity in a similar capacity.
In each case the indemnitee must have acted in good faith and
in a manner which the indemnitee believed to be in or not
opposed to the best interests of Alberich, LLLP and, for any
criminal proceeding, had no reasonable cause to believe its
conduct was unlawful. Any indemnification under the
partnership agreement will only be paid out of the assets of
Alberich, LLLP, and the general partner will not be personally
liable for, or have any obligation to contribute or loan funds
or assets to Alberich, LLLP to enable it to effectuate, that
indemnification. Alberich, LLLP is authorized to purchase (or
to reimburse the general partner or its affiliates for the
cost of) insurance, purchased on behalf of the general partner
and other persons as the general partner determines, against
liabilities asserted against and expenses incurred by those
persons in connection with Alberich, LLLP's activities,
whether or not Alberich, LLLP would have the power to
indemnify that person against liabilities under the provisions
described above.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning
each of the Company's directors and executive partners:
Name and Principal Position(s) Salary(1)(3)
Bonus(3) Other Compensation(2)(3)
Aaron R. Lux
General Partner, and Lead Director
__________
(1) Includes amounts paid in lieu of unused comprehensive
leave.
(2) Represents amounts paid or reimbursed by us on behalf of
the Named Executive Officers for airline and memberships,
financial planning, tax preparation services and relocation
expenses.
(3) To be provided by amendment.
__________
PRINCIPAL UNIT HOLDERS
The following table sets forth certain information concerning
each of the Company's directors and executive officers:
Name and Principal Position(s)
Aaron R. Lux
General Partner, and Lead Director
Percentage of units Beneficially Held(1)
2% General Partner Interest
Percentage of Common units
18.4% i-units
73.5% Class A Common Units
6.1% Class B Common Units
__________
(1) In accordance with Securities and Exchange Commission
rules, a person is deemed to have beneficial ownership of any
securities as to which such person, directly or indirectly,
has or i-units voting power or investment power and of any
securities with respect to which such person has the right to
acquire such voting or investment power within 60 days. Except
as otherwise noted in the accompanying footnotes, the named
persons have sole voting and investment power.
(2) Less than one percent.
__________
DESCRIPTION OF I-UNITS
The i-units are a separate class of limited partner interests
in Alberich, LLLP. All the i-units will be owned by us and
will not be publicly traded. A number of the covenants in our
limited liability company agreement and in Alberich's
partnership agreement affect us as the holder of i-units. For
a description of the material covenants, see our partnership
agreement
VOTING RIGHTS
Owners of i-units generally vote together with the common
units and Class B units as a single class and sometimes vote
as a class separate from the holders of common units and Class
B units. The i-units have the same voting rights as the common
units and Class B units voting together as a single class on
the following matters:
* a sale or exchange of all or substantially all of
Alberich's assets;
* the election of a successor general partner in connection
with the removal of the general partner;
* a dissolution or reconstitution of Alberich;
* a merger of Alberich; and
* some amendments to the partnership agreement, including
any amendment that would cause Alberich to be treated as a
corporation for income tax purposes.
The i-units vote separately as a class on the following:
* Amendments to the Alberich partnership agreement that
would have a material adverse effect on the rights or
preferences of the holders of the i-units in relation to the
other classes of units. This kind of an amendment requires the
approval of two-thirds of the outstanding i-units other than
the number of i-units corresponding to the number of shares
owned by Alberich. and its affiliates.
* The approval of the withdrawal of the general partner in
some circumstances or the transfer to a non-affiliate of all
of its interest as a general partner. These matters require
the approval of a majority of the outstanding i-units other
than the number of i-units corresponding to the number of
shares owned by Alberich. and its affiliates.
In all cases, i-units will be voted in proportion to the
affirmative and negative votes, abstentions and non-votes of
owners of our shares.
For further information regarding the voting rights of i-units
and shares of Alberich, see the partnership agreement
DISTRIBUTIONS AND PAYMENTS
The number of i-units distributed to us by Alberich, LLLP is
based upon the amount of cash to be distributed by Alberich,
LLLP to an owner of a common unit. Alberich, LLLP distributes
to us a number of i-units equal to the number of shares
distributed by us.
Typically, if cash is paid to the holders of common units, we,
as the owner of i-units, receive additional i-units or
fractions of i-units instead of cash. The fraction of an i-
unit received per i-unit owned by us is determined as if the
cash payment on the common unit were a cash distribution.
If additional units are distributed to the owners of common
units, as the owner of i-units, we receive an equivalent
amount of units based on the number of i-units that we own.
MERGER, CONSOLIDATION OR SALE OF ASSETS
In the case of any of the following events:
* any consolidation or merger of Alberich, LLLP with or
into another person,
* any consolidation or merger of another person into
Alberich, LLLP, except a consolidation or merger which does
not result in any reclassification, conversion, exchange or
cancellation of the outstanding common units of Alberich,
LLLP, or
* any sale or other disposition of all or substantially all
the properties and assets of Alberich, LLLP,
* if the owners of the common units receive cash in the
transaction, a distribution on each i-unit will be made in
additional i-units or fractions of i-units determined by
dividing the cash received on a common unit by the average
market price of one of our shares determined for a ten
consecutive day trading period ending immediately prior to the
effective date of the transaction, except that in the case of
a liquidation, as the owner of the i-units, we will receive
the distribution provided pursuant to the liquidation
provisions in Alberich, LLLP's partnership agreement.
UNITED STATES FEDERAL INCOME TAX CHARACTERISTICS AND
DISTRIBUTION UPON LIQUIDATION OF ALBERICH, LLLP
The i-units we own generally will not be allocated income,
gain, loss or deduction until such time as there is a
liquidation of Alberich, LLLP. Therefore, we do not anticipate
that we will have material amounts of taxable income resulting
from our ownership of the i-units unless we enter into a sale
or exchange of the i-units or Alberich, LLLP is liquidated.
Upon the liquidation of Alberich, Alberich is generally
obligated to purchase all of our outstanding shares at a price
equal to the higher of the average market price for the shares
or the common units. If Alberich fails to do so, then, as
described below, the value of your shares will depend on the
amount of the liquidating distribution received by us as the
owner of the i-units and the taxes we incur as a result of
that liquidation.
The liquidating distribution per i-unit may be less than the
liquidating distribution received per common unit. The
liquidating distribution for each i-unit and common unit will
depend upon the relative per unit capital accounts of the i-
units and the common units at liquidation. It is anticipated
that over time the capital account per common unit will exceed
the capital account per i-unit because the common units will
be allocated income and gain prior to liquidation, but the i-
units will not. At liquidation, it is intended that each i-
unit will be allocated income and gain in an amount necessary
for the capital account attributable to each i-unit to be
equal to that of a common unit. However, there may not be
sufficient amounts of income and gain at liquidation to cause
the capital account of an i-unit to be increased to that of a
common unit. In that event, the liquidating distribution per
common unit will exceed the liquidating distribution per i-
unit.
As a result of the allocation of income and gain to the i-
units upon a liquidation, we will be required to pay taxes on
that income and gain. Thus, in the event income and gain is
allocated to us, then, because of taxes we pay, shareholders
will receive less than the holders of the common units.
Because of these factors, and if Alberich fails to purchase
our shares as described above, the value of our shares likely
will be lower than the value of the common units upon the
liquidation of Alberich, LLLP.
MODIFICATION OF FIDUCIARY DUTIES OWED TO OUR SHAREHOLDERS AND
TO THE OWNERS OF UNITS
The fiduciary duties owed to you by our board of directors are
prescribed by Minnesota law and our partnership agreement.
Similarly, the fiduciary duties owed to the owners of units of
Alberich by the general partner of Alberich are prescribed by
Minnesota law and its partnership agreement. Minnesota law
provides that Minnesota limited liability limited partnerships
may, in their partnership agreement restrict the fiduciary
duties owed by the board of directors to us and our
shareholders and by the general partner to the limited
partnership and the limited partners.
Our partnership agreement contains various provisions
restricting the fiduciary duties that might otherwise be owed
By becoming one of our unit holders, a unit holder agrees to
be bound by the provisions in our partnership agreement. This
is in accordance with the policy of Minnesota law favoring the
principle of freedom of contract and the enforceability of
limited liability limited partnership agreements. It is not
necessary for a unit holder to sign our partnership agreement
in order for the partnership agreement to be enforceable
against that person.
MATERIAL TAX CONSIDERATIONS
This section is a summary of material United States federal
income tax considerations that may be relevant to prospective
owners of units and, unless otherwise noted in the following
discussion, expresses the opinion of our counsel insofar as it
relates to legal conclusions with respect to United States
federal income tax law. This section is based upon current
provisions of the Internal Revenue Code, existing and proposed
regulations and current administrative rulings and court
decisions, all of which are subject to change. Later changes
in these authorities may cause the tax consequences to vary
substantially from the consequences described below.
Unless the context otherwise requires, references in this
section to us or we are references to Alberich, LLLP.
No attempt has been made in the following discussion to
comment on all United States federal income tax matters
affecting us or the owners of units. Moreover, the discussion
does not address the United States federal income tax
consequences that may be relevant to certain types of
investors subject to specialized tax treatment, such as non-
U.S. persons, financial institutions, insurance companies,
real estate investment trusts, estates, trusts, dealers and
persons entering into hedging transactions. Accordingly, each
prospective owner of units is urged to consult with, and is
urged to depend on, his own tax advisor in analyzing the
United States federal, state, local and foreign tax
consequences particular to him of the ownership or disposition
of units.
All statements as to matters of law and legal conclusions, but
not as to factual matters, contained in this section, unless
otherwise noted, are the opinion of our counsel and are based
on the accuracy of the representations made by us.
No ruling has been or will be requested from the IRS regarding
any matter affecting us or prospective owners of units. Unlike
a ruling, the opinion of our counsel represents only that
firm's best legal judgment and does not bind the IRS or the
courts. Accordingly, the opinions and statements made here may
not be sustained by a court if contested by the IRS. Any
contest of this sort with the IRS may materially and adversely
impact the market for units and the prices at which units
trade. In addition, the cost of any contest with the IRS will
be borne directly or indirectly by us and the owners of units.
Furthermore, the tax treatment of us or of an investment in us
may be significantly modified by future legislative or
administrative changes or court decisions. Any modifications
may or may not be retroactively applied.
U.S. Federal Income Tax Considerations Associated with the
Ownership and Disposition of units
Tax Consequences of Unit Ownership
Distributions of Additional units. Under the terms of our
partnership agreement, except in connection with our
liquidation, we will not make distributions of cash in respect
of units but rather will make distributions of additional
units. Because these distributions of additional units will be
made proportionately to all owners of units, the receipt of
these additional units will not be includable in the gross
income of an owner of units for United States federal income
tax purposes. As each owner of units receives additional
units, he will be required to allocate his basis in his units
in the manner described below. Please read Basis of Units.
Basis of units. An owner's initial tax basis for his units
will be the amount paid for them. As additional units are
distributed to an owner of units, he will be required to
allocate his tax basis in his units equally between the old
units and the new units received. If the old units were
acquired for different prices, and the owner can identify each
separate lot, then the basis of each old lot of units can be
used separately in the allocation to the new units received
with respect to the identified old lot. If an owner of units
cannot identify each lot, then he must use the first-in first-
out tracing approach. a unit holder cannot use the average
cost for all lots for this purpose.
Disposition of units. Gain or loss will be recognized on a
sale or other disposition of units, whether to a third party
or to Alberich, LLLP pursuant to the Alberich, LLLP purchase
provisions or in connection with the liquidation of us, equal
to the difference between the amount realized and the owner's
tax basis for the units sold or otherwise disposed of. An
owner's amount realized will be measured by the sum of the
cash and the fair market value of other property received by
the owner.
Except as noted below, gain or loss recognized by an owner of
units, other than a dealer in securities, on the sale or other
disposition of a unit will generally be taxable as capital
gain or loss. Capital gain recognized by an individual on the
sale of units held more than 12 months will generally be taxed
at a maximum rate of 15%, subject to the discussion below
relating to straddles. Capital gain recognized by a
corporation on the sale of units will generally be taxed at a
maximum rate of 35%. Net capital loss may offset capital gains
and no more than $3,000 of ordinary income, in the case of
individuals, and may only be used to offset capital gains in
the case of corporations.
Capital gain treatment may not result from a sale of units to
Alberich, LLLP pursuant to the Alberich, LLLP purchase
provisions or otherwise if a single unit holder of us or our
unit holders as a group own 50% or more of the units of
Alberich, LLLP In that case, if either we or Alberich, LLLP
has earnings and profits, then the amount received by a seller
of units may be taxed as ordinary income to the extent of his
portion of those earnings and profits, but only if the seller
sells less than all of his units or is a unit holder of
Alberich, LLLP after applying the ownership attribution rules.
For purposes of determining whether capital gains or losses on
the disposition of units are long or short term, subject to
the discussion below relating to straddles, an owner's holding
period begins on his acquisition of units. As additional units
are distributed to him, the holding period of each new unit
received will also include the period for which the owner held
the old units to which the new unit relates.
Because the purchase rights in respect of the units arise as a
result of an agreement other than solely with us, these rights
do not appear to constitute inherent features of the units for
tax purposes. As such, it is possible that the IRS would
assert that units and the related purchase rights constitute a
straddle for United States federal income tax purposes to the
extent that those rights are viewed as resulting in a
substantial diminution of a unit purchaser's risk of loss from
owning his units. In that case, any owner of units who incurs
interest or other carrying charges that are allocable to the
units (as would be the case if the owner finances his
acquisition of units with debt) would have to capitalize those
interest or carrying charges to the basis of the related units
and purchase rights rather than deducting those interest or
carrying charges currently. In addition, the holding period of
the units would be suspended, resulting in short-term capital
gain or loss (generally taxed at ordinary income rates) upon a
taxable disposition even if the units were held for more than
12 months. However, we believe that the purchase rights have
minimal value and do not result in a substantial diminution of
a unit purchaser's risk of loss from owning units. Based on
that, the units and the related purchase rights should not
constitute a straddle for United States federal income tax
purposes and therefore should not result in any suspension of
an owner's holding period or interest and carrying charge
capitalization, although there can be no assurance that the
IRS or the courts would agree with this conclusion.
Investment in Units by Tax-Exempt Investors, Regulated
Investment Companies, and Non-U.S. Persons. Employee benefit
plans and most other organizations exempt from United States
federal income tax, including individual retirement accounts,
known as IRAs, and other retirement plans, are subject to
United States federal income tax on unrelated business taxable
income. Because we will be treated as a corporation for United
States federal income tax purposes, an owner of units will not
report on its United States federal income tax return any of
our items of income, gain, loss and deduction. Therefore, a
tax-exempt investor will not have unrelated business taxable
income attributable to its ownership or sale of units unless
its ownership of the units is debt financed. In general, a
unit would be debt financed if the tax-exempt owner of units
incurs debt to acquire a unit or otherwise incurs or maintains
a debt that would not have been incurred or maintained if that
unit had not been acquired.
A regulated investment company, or mutual fund, is required to
derive at least 90% of its gross income for every taxable year
from qualifying income. As stated above, an owner of units
will not report on its United States federal income tax return
any of our items of income, gain, loss and deduction. Thus,
ownership of units will not result in income which is not
qualifying income to a mutual fund. Furthermore, any gain from
the sale or other disposition of the units, and the associated
purchase rights, will qualify for purposes of that 90% test.
Finally, units, and the associated purchase rights, will
constitute qualifying assets to mutual funds which also must
own at least 50% qualifying assets at the end of each quarter.
Because distributions of additional units will be made
proportionately to all owners of units, the receipt of these
additional units will not be includable in the gross income of
an owner of units for United States federal income tax
purposes. Therefore, no withholding taxes will be imposed on
distributions of additional units to non-resident alien
individuals and foreign corporations, trusts or estates. A
non-United States owner of units generally will not be subject
to United States federal income tax or subject to withholding
on any gain recognized on the sale or other disposition of
units unless:
* the gain is considered effectively connected with the
conduct of a trade or business by the non-United States owner
within the United States and, where a tax treaty applies, is
attributable to a United States
* permanent establishment of that owner (and, in which
case, if the owner is a foreign corporation, it may be subject
to an additional branch profits tax equal to 30% or a lower
rate as may be specified by an applicable income tax treaty);
* the non-United States owner is an individual who holds
the units as a capital asset and is present in the United
States for 183 or more days in the taxable year of the sale or
other disposition and other conditions are met; or
* we are or have been a United States real property holding
corporation, or a USRPHC, for United States federal income tax
purposes.
We believe that we are a USRPHC for United States federal
income tax purposes. Therefore, any gain on the sale or other
disposition of units by a non-United States owner will be
subject to United States federal income tax unless the units
are regularly traded on an established securities market and
the non-United States owner has not actually or constructively
held more than 5% of the units at any time during the shorter
of the five-year period preceding the disposition or that
owner's holding period. Our units currently trade on an
established securities market.
ERISA CONSIDERATIONS
The following is a summary of material considerations arising
under the Employee Retirement Income Security Act of 1974, as
amended, commonly known as ERISA, and the prohibited
transaction provisions of section 4975 of the Internal Revenue
Code that may be relevant to a prospective purchaser of units.
The discussion does not purport to deal with all aspects of
ERISA or section 4975 of the Internal Revenue Code that may be
relevant to particular unit holders in light of their
particular circumstances.
The discussion is based on current provisions of ERISA and the
Internal Revenue Code, existing and currently proposed
regulations under ERISA and the Internal Revenue Code, the
legislative history of ERISA and the Internal Revenue Code,
existing administrative rulings of the Department of Labor
(DOL) and reported judicial decisions. No assurance can be
given that legislative, judicial, or administrative changes
will not affect the accuracy of any statements herein with
respect to transactions entered into or contemplated prior to
the effective date of such changes.
A fiduciary making a decision to invest in the units on behalf
of a prospective purchaser that is an employee benefit plan, a
tax-qualified retirement plan, or an individual retirement
account, commonly called an IRA, is advised to consult its own
legal advisor regarding the specific considerations arising
under ERISA, section 4975 of the Internal Revenue Code, and
state law with respect to the purchase, ownership, sale or
exchange of the units by such plan or IRA.
Each fiduciary of a pension, profit-sharing or other employee
benefit plan subject to Title I of ERISA, known as an ERISA
Plan, should consider carefully whether an investment in the
units is consistent with his fiduciary responsibilities under
ERISA. In particular, the fiduciary requirements of Part 4 of
Title I of ERISA require an ERISA Plan's investments to be (1)
prudent and in the best interests of the ERISA Plan, its
participants, and its beneficiaries, (2) diversified in order
to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so, and (3)
authorized under the terms of the ERISA Plan's governing
documents (provided the documents are consistent with ERISA).
In determining whether an investment in the units is prudent
for purposes of ERISA, the appropriate fiduciary of an ERISA
Plan should consider all of the facts and circumstances,
including whether the investment is reasonably designed, as a
part of the ERISA Plan's portfolio for which the fiduciary has
investment responsibility, to meet the objectives of the ERISA
Plan, taking into consideration the risk of loss and
opportunity for gain (or other return) from the investment,
the diversification, cash flow, and funding requirements of
the ERISA Plan's portfolio.
The fiduciary of an IRA, or of a qualified retirement plan not
subject to Title I of ERISA because it is a governmental or
church plan or because it does not cover common law employees
(a Non-ERISA Plan) should consider that such an IRA or Non-
ERISA Plan may only make investments that are authorized by
the appropriate governing documents and under applicable state
law.
Fiduciaries of ERISA Plans and persons making the investment
decision for an IRA or other Non-ERISA Plan should consider
the application of the prohibited transaction provisions of
ERISA and the Internal Revenue Code in making their investment
decision. A party in interest or disqualified person with
respect to an ERISA Plan or with respect to a Non-ERISA Plan
or IRA subject to Internal Revenue Code section 4975 is
subject to (1) an initial 15% excise tax on the amount
involved in any prohibited transaction involving the assets of
the plan or IRA and (2) an excise tax equal to 100% of the
amount involved if any prohibited transaction is not
corrected. If the disqualified person who engages in the
transaction is the individual on behalf of whom an IRA is
maintained (or his beneficiary), the IRA will lose its tax-
exempt status and its assets will be deemed to have been
distributed to such individual in a taxable distribution (and
no excise tax will be imposed on account of the prohibited
transaction). In addition, a fiduciary that permits an ERISA
Plan to engage in a transaction that the fiduciary knows or
should know is a prohibited transaction may be liable to the
ERISA Plan for any loss the ERISA Plan incurs as a result of
the transaction or for any profits earned by the fiduciary in
the transaction.
The following section discusses certain principles that apply
in determining whether the fiduciary requirements of ERISA and
the prohibited transaction provisions of ERISA and the
Internal Revenue Code apply to an entity because one or more
investors in the equity interests in the entity is an ERISA
Plan or is a Non-ERISA Plan or IRA subject to section 4975 of
the Internal Revenue Code. An ERISA Plan fiduciary also should
consider the relevance of those principles to ERISA's
prohibition on improper delegation of control over or
responsibility for plan assets and ERISA's imposition of co-
fiduciary liability on a fiduciary who participates in,
permits (by action or inaction) the occurrence of, or fails to
remedy a known breach by another fiduciary.
Regulations of the DOL defining plan assets (the Plan Asset
Regulations) generally provide that when an ERISA Plan or Non-
ERISA Plan or IRA acquires a security that is an equity
interest in an entity and the security is neither a publicly-
offered security nor a security issued by an investment
company registered under the Investment Company Act of 1940,
unless one or more exceptions specified in the Plan Asset
Regulations are satisfied, the ERISA or Non-ERISA Plan's or
IRA's assets include both the equity interest and an undivided
interest in each of the underlying assets of the issuer of
such equity interest, and therefore any person who exercises
authority or control respecting the management or disposition
of such underlying assets, and any person who provides
investment advice with respect to such assets for a fee
(direct or indirect), is a fiduciary of the investing plan.
The Plan Asset Regulations define a publicly-offered security
as a security that is freely transferable, part of a class of
securities that is widely held and either part of a class of
securities registered under the Exchange Act, or sold pursuant
to an effective registration statement under the Securities
Act, provided the securities are registered under the Exchange
Act within 120 days after the end of the fiscal year of the
issuer during which the offering occurred. The Plan Asset
Regulations provide that a class of securities is widely held
only if it is a class of securities that is owned by 100 or
more investors independent of the issuer and of one another. A
class of securities will not fail to be widely held because
the number of independent investors falls below 100 subsequent
to the initial public offering as a result of events beyond
the issuer's control. The Plan Asset Regulations provide that
whether a security is freely transferable is a factual
question to be determined on the basis of all relevant facts
and circumstances.
We believe that the units meet the criteria of publicly-
offered securities under the Plan Asset Regulations. We
believe the units are held beneficially by more than 100
independent persons. There are no restrictions, within the
meaning of the Plan Asset Regulations, imposed on the transfer
of units and the units are registered under the Exchange Act.
PLAN OF DISTRIBUTION
We may sell the Securities directly, through agents, or to or
through underwriters or dealers (possibly including our
affiliates). Read the prospectus supplement to find the terms
of the Securities offering, including:
* the names of any underwriters, dealers or agents;
* the offering price;
* underwriting discounts;
* sales agents' commissions;
* any initial public offering price;
* other forms of underwriter or agent compensation;
* discounts, concessions or commissions that underwriters
may pass on to other dealers;
* any exchange on which the Securities may be listed.
We may change the offering price, underwriter discounts or
concessions, or the price to dealers when necessary. Discounts
or commissions received by underwriters or agents and any
profits on the resale of the Securities by them may constitute
underwriting discounts and commissions under the Securities
Act of 1933.
Unless we state otherwise in the prospectus supplement,
underwriters will need to meet certain requirements before
purchasing the Securities. Underwriters may only purchase all
of the Securities. Agents will act on a "best efforts" basis
during their appointment. We will also state the net proceeds
from the sale in the prospectus supplement.
Any brokers or dealers that participate in the distribution of
the Securities may be "underwriters" within the meaning of the
Securities Act for such sales. Profits, commissions, discounts
or concessions received by any such broker or dealer may be
underwriting discounts and commissions under the Securities
Act.
When necessary, we may fix the Securities distribution using
changeable, fixed prices, market prices at the time of sale,
prices related to market prices, or negotiated prices.
We may, through agreements, indemnify underwriters, dealers or
agents who participate in the distribution of the Securities
against certain liabilities including liabilities under the
Securities Act. We may also provide funds for payments such
underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents, and their affiliates may
transact with us and our affiliates in the ordinary course of
their businesses.
WHERE YOU CAN FIND MORE INFORMATION
Alberich, LLLP will provide a copy of any document
incorporated by reference in this prospectus and any exhibit
specifically incorporated by reference in those documents at
no cost by request directed to them at the following address
and telephone number:
Alberich, LLLP
1754 Market Drive
Suite 500
Stillwater, MN 55082
(612) 605-8665
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in this
prospectus by reference include forward-looking statements.
These forward-looking statements are identified as any
statement that does not relate strictly to historical or
current facts. They use words such as "anticipate," "believe,"
"continue," "estimate," "expect," "forecast," "intend," "may,"
"plan," "position," "projection," "strategy" or "will" or the
negative of those terms or other variations of them or by
comparable terminology. In particular, statements, expressed
or implied, concerning future actions, conditions or events or
future operating results or the ability to generate sales,
income or cash flow are forward-looking statements. Forward-
looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. Future actions,
conditions or events and future results of operations may
differ materially from those expressed in these forward-
looking statements. Many of the factors that will determine
these results are beyond our ability or the ability of our
affiliates to control or predict. Specific factors that could
cause actual results to differ from those in the forward-
looking statements include:
* demand for, the supply of, changes in forecast data for,
and price trends related to our business in the United States,
all of which may be affected by economic activity, capital
expenditures, international events, and technological
advances;
* our ability to successfully identify and consummate
strategic acquisitions, make cost saving changes in operations
and integrate acquired assets or businesses into our existing
operations;
* changes in laws or regulations to which we are subject;
* our inability to borrow or otherwise access funds needed
for operations, expansions or capital expenditures that
contain restrictive financial covenants;
* loss of key personnel;
* the effects of competition.
* the condition of the capital markets in the United
States;
* general economic conditions, including rates of inflation
and interest rates.
You should not put undue reliance on any forward-looking
statements. When considering forward-looking statements,
please review the risk factors described under "Risk Factors.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form A-1 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Stillwater, County Washington,
State of Minnesota, on the 8th day of December, 2005.
Alberich, LLLP.
By: /s/ Aaron R. Lux
Aaron R. Lux
Lead Director and General Partner
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Aaron
R. Lux as his true and lawful attorneys-in-fact and agent,
with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this
registration statement (including post-effective amendments or
any abbreviated registration statement and any amendments
thereto filed pursuant to Rule 462(b) under the Securities Act
of 1933, as amended, increasing the number of securities for
which registration is sought), and to file the same, with all
exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, with full power to act
alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as
he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his
or their substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement on Form A-1 has been signed by the
following persons in the capacities and on the dates
indicated:
Signature
/s/ Aaron R. Lux
Aaron R. Lux
Title
Lead Director and General Partner
Date
December 8, 2005
/s
/s/
/s/
EXHIBIT INDEX
**1.1 - Form of Underwriting Agreement (for Units)
**1.2 - Form of Underwriting Agreement (for Debt Securities)
*3.1 - Agreement of Limited Liability Limited Partnership
(Specimen Certificate representing Units filed as Exhibit A
and Exhibit B)
**4.2 - Form of Senior Indenture
**4.3 - Form of Subordinated Indenture
**4.4 - Form of Warrant Provisions
**4.5 - Form of Purchase Contract
**4.6 - Form of Third-Party Warrant Agreement
**4.7 - Form of Debt Securities Warrant Provisions
**4.8 - Form of Warrant Agreement, including form of warrant
relating to the Foreign Currency Exchange Warrants
**4.9 - Form of Warrant Agreement, including form of warrant,
relating to the I-Unit Warrants
- ------------------------
* Filed herewith.
** To be filed by amendment or as an exhibit to a report
pursuant to Section 13(a) or 15(d) of the Exchange Act.
*** To be filed with a Current Report on Form 8-K or a Post-
Effective Amendment to Registration Statement.
**** Incorporated by reference.
AGREEMENT OF LIMITED LIABILITY LIMITED PARTNERSHIP OF
ALBERICH, LLLP
EXHIBIT 3.1
TABLE OF CONTENTS
PARTNERSHIP AGREEMENT
ARTICLE I ORGANIZATIONAL MATTERS
E-1
1.1 Continuation
E-1
1.2 Name
E-1
1.3 Registered Office; Principal Office
E-1
1.4 Power of Attorney
E-1
1.5 Term
E-2
1.6 Possible Restrictions on Transfer
E-2
ARTICLE II DEFINITIONS
E-2
Additional Limited Partner
E-3
Adjusted Capital Account
E-3
Adjusted Property
E-3
Affiliate
E-3
Agreed Allocation
E-3
Agreed Value
E-3
Agreement
E-3
API
E-3
Assignee
E-3
Available Cash
E-4
Average Market Price
E-4
Book-Tax Disparity
E-4
Business Day
E-4
Calculated Unit Amount
E-4
Capital Account
E-4
Capital Additions and Improvements
E-5
Capital Contribution
E-5
Carrying Value
E-5
Cash from Interim Capital Transactions
E-5
Cash from Operations
E-5
Cause
E-6
Certificate
E-6
Certificate of Limited liability limited partnership
E-6
Citizenship Certification
E-6
Class B Unit
E-6
Closing Date
E-6
Closing Price
E-6
Code
E-6
Combined Interest
E-6
Common Unit
E-6
Conflicts and Audit Committee
E-6
Contributed Property
E-7
Curative Allocation
E-7
Current Market Price
E-7
Delegation of Control Agreement
E-7
Departing Partner
E-7
Economic Risk of Loss
E-7
Eligible Citizen
E-7
Equivalent Non-Cash Amount
E-7
Event of Withdrawal
E-7
Exchange Provisions
E-7
Agreement
E-7
First Liquidation Target Amount
E-7
First Target Distribution
E-7
General Partner
E-7
Group
E-7
Holder
E-7
I-Unit
E-7
Incentive Distribution
E-7
Indemnified Persons
E-8
Indemnitee
E-8
Initial Offering
E-8
Initial Unit Price
E-8
Interim Capital Transactions
E-8
Limited Partner
E-8
Liquidation Date
E-8
Liquidator
E-8
Listed Shares
E-8
Maintenance Capital Expenditures
E-8
Mandatory Purchase Event
E-9
Maximum Permitted Delegation
E-9
Mandatory Redemption Notice
E-9
Merger Agreement
E-9
Minimum Quarterly Distribution
E-9
National Securities Exchange
E-9
Net Agreed Value
E-9
Net Income
E-9
Net Loss
E-9
Net Termination Gain
E-9
Net Termination Loss
E-10
Non-citizen Assignees
E-10
Nonrecourse Built-in Gain
E-10
Nonrecourse Deductions
E-10
Nonrecourse Liability
E-10
Notice of Election to Purchase
E-10
Notice of Intent to Convert
E-10
Omnibus Agreement
E-10
Operating Partnership
E-10
Operating Partnership Agreement
E-10
Opinion of Counsel
E-10
Optional Purchase Price
E-10
Original Agreement
E-10
Outstanding
E-10
Partners
E-11
Partner Nonrecourse Debt
E-11
Partner Nonrecourse Debt Minimum Gain
E-11
Partner Nonrecourse Deductions
E-11
Partnership
E-11
Partnership Interest
E-11
Partnership Minimum Gain
E-11
Partnership Securities
E-11
Percentage Interest
E-11
Person
E-11
Pro Rata
E-11
Purchase Date
E-11
Purchase Provisions
E-12
Recapture Income
E-12
Record Date
E-12
Record Holder
E-12
Redeemable Units
E-12
Registration Statement
E-12
Required Allocations
E-12
Residual Gain
E-12
Residual Loss
E-12
Agreement
E-12
Second Liquidation Target Amount
E-12
Second Target Distribution
E-12
Securities Act
E-12
Special Approval
E-12
Substituted Limited Partner
E-12
Surviving Business Entity
E-13
Termination Capital Transactions
E-13
Third Target Distribution
E-13
Trading Day
E-13
Transfer Agent
E-13
Transfer Application
E-13
Underwriter
E-13
Underwriting Agreement
E-13
Unit
E-13
Unpaid MQD
E-13
Unrealized Gain
E-13
Unrealized Loss
E-13
Unrecovered Initial Unit Price
E-13
ARTICLE III PURPOSE
E-13
3.1 Purpose and Business
E-13
3.2 Powers
E-14
ARTICLE IV CAPITAL CONTRIBUTIONS
E-14
4.1 Issuances of Units and Other Securities
E-14
4.2 Limited Preemptive Rights
E-15
4.3 Capital Accounts
E-16
4.4 Interest
E-17
4.5 No Withdrawal
E-17
4.6 Loans from Partners
E-17
4.7 No Fractional Units
E-17
4.8 Splits and Combinations
E-17
4.9 Class B Units
E-18
4.10 I-Units
E-19
ARTICLE V ALLOCATIONS AND DISTRIBUTIONS
E-19
5.1 Allocations for Capital Account Purposes
E-20
5.2 Allocations for Tax Purposes
E-23
5.3 Requirement and Characterization of Distributions
E-25
5.4 Distributions of Cash from Operations
E-25
5.5 Distributions of Cash from Interim Capital Transactions
E-26
5.6 Adjustment of Minimum Quarterly Distribution and Target
Distribution Levels
E-26
5.7 Special Provisions Relating to Units
E-26
ARTICLE VI MANAGEMENT AND OPERATION OF BUSINESS
E-27
6.1 Management
E-27
6.2 Certificate of Limited liability limited partnership
E-29
6.3 Restrictions on General Partner's Authority
E-29
6.4 Reimbursement of the General Partner
E-30
6.5 Outside Activities
E-30
6.6 Loans to and from the General Partner; Contracts with
Affiliates
E-31
6.7 Indemnification
E-32
6.8 Liability of Indemnitee
E-33
6.9 Resolution of Conflicts of Interest
E-34
6.10 Other Matters Concerning the General Partner
E-35
6.11 Title to Partnership Assets
E-35
6.12 Purchase or Sale of Units
E-36
6.13 Registration Rights of ALBERICH, LLLP and its Affiliates
E-36
6.14 Reliance by Third Parties
E-37
6.15 Delegation to ALBERICH, LLLP
E-38
ARTICLE VII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
E-38
7.1 Limitation of Liability
E-38
7.2 Management of Business
E-38
7.3 Outside Activities
E-38
7.4 Return of Capital
E-38
7.5 Rights of Limited Partners Relating to the Partnership
E-39
ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS
E-39
8.1 Books, Records and Accounting
E-39
8.2 Fiscal Year
E-39
8.3 Reports
E-39
ARTICLE IX TAX MATTERS
E-40
9.1 Preparation of Tax Returns
E-40
9.2 Tax Elections
E-40
9.3 Tax Controversies
E-40
9.4 Organizational Expenses
E-40
9.5 Withholding
E-40
9.6 Entity-Level Taxation
E-41
9.7 Entity-Level Arrearage Collections
E-41
9.8 Opinions of Counsel
E-41
ARTICLE X CERTIFICATES
E-41
10.1 Certificates
E-42
10.2 Registration, Registration of Transfer and Exchange
E-42
10.3 Mutilated, Destroyed, Lost or Stolen Certificates
E-42
10.4 Record Holder
E-43
ARTICLE XI TRANSFER OF INTERESTS
E-43
11.1 Transfer
E-43
11.2 Transfer of General Partner's Partnership Interest
E-43
11.3 Transfer of Units
E-44
11.4 Restrictions on Transfers
E-44
11.5 Citizenship Certificates; Non-citizen Assignees
E-44
11.6 Redemption of Interests
E-45
ARTICLE XII ADMISSION OF PARTNERS
E-46
12.1 Admission of Substituted Limited Partners
E-46
12.2 Admission of Successor General Partner
E-46
12.3 Admission of Additional Limited Partners
E-46
12.4 Amendment of Agreement and Certificate of Limited
liability limited partnership E-47
ARTICLE XIII WITHDRAWAL OR REMOVAL OF PARTNERS
E-47
13.1 Withdrawal of the General Partner
E-47
13.2 Removal of the General Partner
E-48
13.3 Interest of Departing Partner and Successor General
Partner
E-48
13.4 Withdrawal of Limited Partners
E-50
ARTICLE XIV DISSOLUTION AND LIQUIDATION
E-50
14.1 Dissolution
E-50
14.2 Continuation of the Business of the Partnership after
Dissolution
E-50
14.3 Liquidation
E-51
14.4 Distributions in Kind
E-51
14.5 Cancellation of Certificate of Limited liability limited
partnership
E-52
14.6 Reasonable Time for Winding Up
E-52
14.7 Return of Capital
E-52
14.8 No Capital Account Restoration
E-52
14.9 Waiver of Partition
E-52
ARTICLE XV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS;
RECORD DATE
E-52
15.1 Amendment to be Adopted Solely by General Partner
E-52
15.2 Amendment Procedures
E-53
15.3 Amendment Requirements
E-53
15.4 Meetings
E-54
15.5 Notice of Meeting
E-54
15.6 Record Date
E-54
15.7 Adjournment
E-55
15.8 Waiver of Notice; Approval of Meeting; Approval of
Minutes
E-55
15.9 Quorum
E-55
15.10 Conduct of Meeting
E-55
15.11 Action Without a Meeting
E-56
15.12 Voting and Other Rights
E-56
ARTICLE XVI MERGER
E-56
16.1 Authority
E-56
16.2 Procedure for Merger or Consolidation
E-56
16.3 Approval by Limited Partners of Merger or Consolidation
E-57
16.4 Certificate of Merger
E-58
16.5 Effect of Merger
E-58
ARTICLE XVII RIGHT TO ACQUIRE UNITS
E-58
17.1 Right to Acquire Common Units and Listed Shares
E-58
ARTICLE XVIII GENERAL PROVISIONS
E-60
18.1 Addresses and Notices
E-60
18.2 References
E-60
18.3 Pronouns and Plurals
E-60
18.4 Further Action
E-60
18.5 Binding Effect
E-60
18.6 Integration
E-60
18.7 Creditors
E-60
18.8 Waiver
E-60
18.9 Counterparts
E-61
18.10 Applicable Law
E-61
18.11 Invalidity of Provisions
E-61
Exhibit A - Form of Certificate Evidencing Common Units
E-61
Exhibit B - Form of Certificate Evidencing Class B Units
E-65
Exhibit C - Form of Certificate Evidencing I-Units
E-70
Exhibit D - Certificate of Registration of a Limited-Liability
Limited Partnership
E-74
AGREEMENT OF LIMITED LIABILITY LIMITED PARTNERSHIP OF
ALBERICH, LLLP
AGREEMENT OF LIMITED LIABILITY LIMITED PARTNERSHIP OF
ALBERICH, LLLP, dated as of June 15, 2005 is entered into by
and among Aaron R. Lux, as the General Partner, and Persons
who become Partners in the Partnership or parties hereto as
provided herein.
NOW, THEREFORE, the General Partner does hereby amend and
restate the Agreement, as amended, to provide, in its
entirety, as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 CONTINUATION. The General Partner and the Limited Partners
hereby continue the Partnership as a limited liability limited
partnership pursuant to the provisions of the Minnesota Law.
Except as expressly provided to the contrary in this
Agreement, the rights and obligations of the Parties and the
administration, dissolution and termination of the Partnership
shall be governed by the Minnesota Law. All Partnership
Interests shall constitute personal property of the owner
thereof for all purposes.
1.2 NAME. The name of the Partnership shall be "Alberich,
LLLP" The Partnership's business may be conducted under any
other name or names deemed necessary or appropriate by the
General Partner. The words "Limited Liability Limited
Partnership," "L.L.L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary
for the purposes of complying with the laws of any
jurisdiction that so requires. The General Partner in its sole
discretion may change the name of the Partnership at any time
and from time to time and shall notify the Limited Partners of
such change in the next regular communication to Limited
Partners.
1.3 REGISTERED OFFICE; PRINCIPAL OFFICE. Unless and until
changed by the General Partner, the registered office of the
Partnership in the State of Minnesota shall be located at 1754
Market Drive Suite 500; Stillwater, MN 55082 and the
registered agent for service of process on the Partnership in
the State of Minnesota at such registered office shall be
Alberich, LLLP. The principal office of the Partnership and
the address of the General Partner shall be 1754 Market Drive
Suite 500; Stillwater, MN 55082, or such other place as the
General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at
such other place or places within or outside the State of
Minnesota as the General Partner deems necessary or
appropriate.
1.4 POWER OF ATTORNEY. (a) Each Limited Partner and each
Assignee hereby constitutes and appoints each of the General
Partner and, if a Liquidator shall have been selected pursuant
to Section 14.3, the Liquidator severally (and any successor
to either thereof by merger, transfer, assignment, election or
otherwise) and each of their authorized officers and
attorneys-in-fact, with full power of substitution, as his
true and lawful agent and attorney-in-fact, with full power
and authority in his name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices all certificates, documents
and other instruments (including, without limitation, this
Agreement and the Certificate of Limited liability limited
partnership and all amendments or restatements thereof) that
the General Partner or the Liquidator deems necessary or
appropriate to form, qualify or continue the existence or
qualification of the Partnership as a limited liability
limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Minnesota and
in all other jurisdictions in which the Partnership may
conduct business or own property; all certificates, documents
and other instruments that the General Partner or the
Liquidator deems necessary or appropriate to reflect, in
accordance with its terms, any amendment, change, modification
or restatement of this Agreement; all certificates, documents
and other instruments (including, without limitation,
conveyances and a certificate of cancellation) that the
General Partner or the Liquidator deems necessary or
appropriate to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement; all
certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Article XI, XII,
XIII or XIV or the Capital Contribution of any Partner; all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any
class or series of Units or other Partnership Securities
issued pursuant to Section 4.1; and all certificates,
documents and other instruments (including, without
limitation, agreements and a certificate of merger) relating
to a merger or consolidation of the Partnership pursuant to
Article XVI; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates,
documents and other instruments necessary or appropriate, in
the sole discretion of the General Partner or the Liquidator,
to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action that is made or given by
the Partners hereunder or is consistent with the terms of this
Agreement or is necessary or appropriate, in the sole
discretion of the General Partner or the Liquidator, to
effectuate the terms or intent of this Agreement; provided,
that when required by Section 15.3 or any other provision of
this Agreement that establishes a percentage of the Limited
Partners or of the Limited Partners of any class or series
required to take any action, the General Partner or the
Liquidator may exercise the power of attorney made in this
Section 1.4(a)(ii) only after the necessary vote, consent or
approval of the Limited Partners or of the Limited Partners of
such class or series, as applicable.
Nothing contained in this Section 1.4 (a) shall be construed
as authorizing the General Partner to amend this Agreement
except in accordance with Article XV or as may be otherwise
expressly provided for in this Agreement.
(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 Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Interest and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and
personal representatives. Each such Limited Partner or
Assignee hereby agrees to be bound by any representation made
by the General Partner or the Liquidator acting in good faith
pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses that
may be available to contest, negate or disaffirm the action of
the General Partner or the Liquidator taken in good faith
under such power of attorney. Each Limited Partner or Assignee
shall execute and deliver to the General Partner or the
Liquidator, within 15 days after receipt of the General
Partner's or the Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the
General Partner or the Liquidator deems necessary to
effectuate this Agreement and the purposes of the Partnership.
1.5 TERM. The Partnership commenced upon the filing of the
Certificate of Limited liability limited partnership in
accordance with the Minnesota Law and shall continue in
existence until the termination of the Partnership in
accordance with the provisions of Article XIV.
1.6 POSSIBLE RESTRICTIONS ON TRANSFER. Notwithstanding
anything to the contrary contained in this Agreement, in the
event of (a) the enactment (or imminent enactment) of any
legislation, (b) the publication of any temporary or final
regulation by the Treasury Department, (c) any ruling by the
Internal Revenue Service or (d) any judicial decision, that,
in any such case, in the Opinion of Counsel, would result in
the taxation of the Partnership as an association taxable as a
corporation or would otherwise result in the Partnership's
being taxed as an entity for federal income tax purposes,
then, the General Partner may impose such restrictions on the
transfer of I-Units or Partnership Interests as may be
required, in the Opinion of Counsel, to prevent the
Partnership for federal income tax purposes from being taxed
as an association taxable as a corporation or otherwise as an
entity, including, without limitation, making any amendments
to this Agreement as the General Partner in its sole
discretion may determine to be necessary or appropriate to
impose such restrictions, provided, that any such amendment to
this Agreement that would result in the delisting or
suspension of trading of any class of I-Units on any National
Securities Exchange on which such class of I-Units is then
traded must be approved by at least two-thirds of the
Outstanding I-Units of such class (excluding the vote in
respect of I-Units held by the General Partner and its
Affiliates).
ARTICLE II
DEFINITIONS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the
terms used in this Agreement.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.3 and
who is shown as such on the books and records of the
Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account
maintained for each Partner as of the end of each fiscal year
of the Partnership, (a) increased by any amounts that such
Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed
obligated to restore under Treasury Regulation Sections 1.704-
2(g) and 1.704-2(i)(5)) and (b) decreased by (i) the amount of
all losses and deductions that, as of the end of such fiscal
year, are reasonably expected to be allocated to such Partner
in subsequent years under Sections 704(e)(2) and 706(d) of the
Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and
(ii) the amount of all distributions that, as of the end of
such fiscal year, are reasonably expected to be made to such
Partner in subsequent years in accordance with the terms of
this Agreement or otherwise to the extent they exceed
offsetting increases to such Partner's Capital Account that
are reasonably expected to occur during (or prior to) the year
in which such distributions are reasonably expected to be made
(other than increases as a result of a minimum gain chargeback
pursuant to Section 5.1(d)(i) or 5.1(d)(ii)). The foregoing
definition of Adjusted Capital Account is intended to comply
with the provisions of Treasury Regulation Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently
therewith. The "Adjusted Capital Account" of a Partner in
respect of a Common Unit, a Class B Unit, an I-Unit or any
other interest in the Partnership shall be the amount which
such Adjusted Capital Account would be if such Common Unit,
Class B Unit, I-Unit or other interest in the Partnership was
the only interest in the Partnership held by a Partner.
"ADJUSTED PROPERTY" means any property the Carrying Value of
which has been adjusted pursuant to Section 4.3(d)(i) or
4.3(d)(ii).
"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. 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.
"AGREED ALLOCATION" means any allocation, other than a
Required Allocation, of an item of income, gain, loss or
deduction pursuant to the provisions of Section 5.1,
including, without limitation, a Curative Allocation (if
appropriate to the context in which the term "Agreed
Allocation" is used).
"AGREED VALUE" of any Contributed Property means the fair
market value of such property at the time of contribution as
determined by the General Partner using such reasonable method
of valuation as it may adopt; and the General Partner shall,
in its sole discretion, use such method as it deems reasonable
and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a
single or integrated transaction among each separate property
on a basis proportional to the fair market value of each
Contributed Property.
"AGREEMENT" means this Agreement of Limited liability limited
partnership of Alberich, LLLP, as it may be amended,
supplemented or restated from time to time.
"API" means a Partnership Interest that was issued pursuant to
the Agreement and in accordance with the Omnibus Agreement,
which Partnership Interest conferred upon the holder thereof
only the rights and obligations specifically provided in the
Agreement and the Omnibus Agreement with respect to APIs (and
no other rights otherwise available to holders of a
Partnership Interest).
"ASSIGNEE" means a Non-citizen Assignee or a Person to whom
one or more Units have been transferred in a manner permitted
under this Agreement and who has executed and delivered a
Transfer Application as required by this Agreement, but who
has not become a Substituted Limited Partner.
"AVAILABLE CASH" means, with respect to any calendar quarter:
(a) the sum of:
(i) all cash receipts of the Partnership during such quarter
from all sources (including, without limitation, distributions
of cash received from the Operating Partnerships and cash
proceeds from Interim Capital Transactions, but excluding cash
proceeds from Termination Capital Transactions); and
(ii) any reduction in reserves with respect to such quarter
from the level at the end of the prior quarter;
(b) less the sum of:
(i) all cash disbursements of the Partnership during such
quarter, including, without limitation, disbursements for
operating expenses, taxes, if any, debt service (including,
without limitation, the payment of principal, premium and
interest), capital expenditures and contributions, if any, to
the Operating Partnerships (but excluding all cash
distributions to Partners); and
(ii) any reserves established with respect to such quarter,
and any increase in reserves established with respect to prior
quarters, in such amounts as the General Partner determines in
its reasonable discretion to be necessary or appropriate (x)
to provide for the proper conduct of the business of the
Partnership or the Operating Partnerships (including, without
limitation, reserves for future capital expenditures) or (y)
to provide funds for distributions with respect to Units in
respect of any one or more of the next four calendar quarters
or (z) because the distribution of such amounts would be
prohibited by applicable law or by any loan agreement,
security agreement, mortgage, debt instrument or other
agreement or obligation to which the Partnership or any of the
Operating Partnerships is a party or by which any of them is
bound or by which any of their assets are subject.
Notwithstanding the foregoing, "Available Cash" with respect
to any calendar quarter (A) shall not include any cash
receipts or reductions in reserves or take into account any
disbursements made or reserves established after the
Liquidation Date and (B) shall include any distributions of
cash (to the extent such distributions are attributable to
transactions and operations during such quarter) received by
the Partnership from the Operating Partnership after the end
of such quarter but on or before the date on which the
Partnership makes its distribution of Available Cash in
respect of such quarter pursuant to Section 5.3. For purposes
of determining "Available Cash," the Equivalent Non-Cash
Amount for all I-Units with respect to any calendar quarter
will be disregarded for purposes of determining "Available
Cash" in future quarters. Taxes paid by the Partnership on
behalf of, or amounts withheld with respect to, all or less
than all of the Partners shall not be considered cash
disbursements of the Partnership that reduce Available Cash,
but the payment or withholding thereof shall be deemed to be a
distribution of Available Cash to such Partners.
Alternatively, in the discretion of the General Partner, such
taxes (if pertaining to all Partners) may be considered to be
cash disbursements of the Partnership which reduce Available
Cash, but the payment or withholding thereof shall not be
deemed to be a distribution of Available Cash to such
Partners.
"AVERAGE MARKET PRICE" has the meaning assigned to such term
in Section 5.7(c).
"BOOK-TAX DISPARITY" means with respect to any item of
Contributed Property or Adjusted Property, as of the date of
any determination, the difference between the Carrying Value
of such Contributed Property or Adjusted Property and the
adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax
Disparities in all of its Contributed Property and Adjusted
Property will be reflected by the difference between such
Partner's Capital Account balance as maintained pursuant to
Section 4.3 and the hypothetical balance of such Partner's
Capital Account computed as if it had been maintained strictly
in accordance with federal income tax accounting principles.
"BUSINESS DAY" means Monday through Friday of each week,
except that a legal holiday recognized as such by the
government of the United States or the states of New York or
Texas shall not be regarded as a Business Day.
"CALCULATED UNIT AMOUNT" has the meaning assigned to such term
in Section 5.7(c).
"CAPITAL ACCOUNT" means the capital account maintained for a
Partner or Assignee pursuant to Section 4.3.
"CAPITAL ADDITIONS AND IMPROVEMENTS" means additions or
improvements whether in the form of the acquisition or
construction of additions or improvements
"CAPITAL CONTRIBUTION" means any cash, cash equivalents or the
Net Agreed Value of Contributed Property that a Partner
contributes to the Partnership pursuant to the Omnibus
Agreement, the Conveyance Agreement or Sections 4.1 or
13.3(c).
"CARRYING VALUE" means (a) with respect to a Contributed
Property, the Agreed Value of such property reduced (but not
below zero) by all depreciation, amortization and cost
recovery deductions charged to the Partners' and Assignees'
Capital Accounts in respect of such Contributed Property, and
(b) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax
purposes, all as of the time of determination. The Carrying
Value of any property shall be adjusted from time to time in
accordance with Section 4.3(d)(i) and 4.3(d)(ii) and to
reflect changes, additions or other adjustments to the
Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General
Partner.
"CASH FROM INTERIM CAPITAL TRANSACTIONS" means, at any date,
such amounts of Available Cash as are deemed to be Cash from
Interim Capital Transactions pursuant to Section 5.3.
"CASH FROM OPERATIONS" means, at the close of any calendar
quarter but prior to the Liquidation Date, on a cumulative
basis, all cash receipts of the Partnership and the Operating
Partnership (including, without limitation, the cash balance
of the Partnership as of the close of business on the Closing
Date (and including in such cash balance proceeds from the
Initial Offering that are next-day funds), cash proceeds from
the sale of APIs and from the exercise of the Underwriters'
over-allotment option granted pursuant to the Underwriting
Agreement (but excluding any cash proceeds from any Interim
Capital Transactions (except to the extent specified in
Section 5.3) and Termination Capital Transactions) during the
period since the Closing Date through such date, less the sum
of
(a) all cash operating expenditures of the Partnership and the
Operating Partnership during such period, including, without
limitation, taxes, if any,
(b) all cash debt service payments of the Partnership and the
Operating Partnership during such period (other than payments
or prepayments of principal and premium required by reason of
loan agreements (including, without limitation, covenants and
default provisions therein) or by lenders, in each case in
connection with sales or other dispositions of assets or made
in connection with refinancings or refundings of indebtedness,
provided, that any payment or prepayment of principal, whether
or not then due, shall be deemed, at the election and in the
discretion of the General Partner to be refunded or refinanced
by any indebtedness incurred or to be incurred by the
Partnership or the Operating Partnership simultaneously with
or within 180 days prior to or after such payment or
prepayment to the extent of the principal amount of such
indebtedness so incurred),
(c) all cash capital expenditures of the Partnership and the
Operating Partnership during such period, including, without
limitation, Maintenance Capital Expenditures, but excluding
(i) cash capital expenditures made in respect of Capital
Additions and Improvements and
(ii) cash expenditures made in payment of transaction expenses
relating to Interim Capital Transactions,
(d) an amount equal to revenues collected as a result of
transportation rate increases that are subject to possible
refund,
(e) any reserves outstanding as of such date that the General
Partner deemed in its reasonable discretion to be necessary or
appropriate to provide for the future cash payment of items of
the type referred to in clauses (a) through (d) of this
sentence and
(f) any reserves that the General Partner deems in its
reasonable discretion to be necessary or appropriate to
provide funds for distributions with respect to Units in
respect of any one or more of the next four calendar quarters,
all as determined on a consolidated basis and after taking
into account the General Partner's interest therein
attributable to its general partner interest in the Operating
Partnership. Where cash capital expenditures are made in part
in respect of Capital Additions and Improvements and in part
for other purposes, the General Partner's good faith
allocation thereof between the portion made for Capital
Additions and Improvements and the portion made for other
purposes shall be conclusive.
"CAUSE" means a court of competent jurisdiction has entered a
final, nonappealable judgment finding the General Partner
liable for actual fraud, gross negligence or willful or wanton
misconduct in its capacity as general partner of the
Partnership.
"CERTIFICATE" means (a) a certificate, substantially in the
form of Exhibit A to this Agreement or in such other forms as
may be adopted by the General Partner in its sole discretion,
issued by the Partnership evidencing ownership of one or more
Common Units,
(b) a certificate, substantially in the form of Exhibit B to
this Agreement or in such other forms as may be adopted by the
General Partner in its sole discretion, issued by the
Partnership evidencing ownership of one or more Class B Units,
(c) a certificate, substantially in the form of Exhibit C to
this Agreement or in such other forms as may be adopted by the
General Partner in its sole discretion, issued by the
Partnership evidencing ownership of one or more I-Units, or
(d) a certificate, in such form as may be adopted by the
General Partner in its sole discretion, issued by the
Partnership evidencing ownership of one or more other Units.
"CERTIFICATE OF LIMITED LIABILITY LIMITED PARTNERSHIP" means
the Certificate of Limited liability limited partnership filed
with the Secretary of State of the State of Minnesota as
referenced in Section 6.2, as such Certificate of Limited
liability limited partnership may be amended, supplemented or
restated from time to time.
"CITIZENSHIP CERTIFICATION" means a properly completed
certificate in such form as may be specified by the General
Partner by which an Assignee or a Limited Partner certifies
that he (and if he is a nominee holding for the account of
another Person, that to the best of his knowledge such other
Person) is an Eligible Citizen.
"CLASS B UNIT" means a Unit representing an interest in the
Partnership as a Limited Partner or Assignee, having the
rights and obligations specified with respect to Class B Units
in this Agreement.
"CLOSING DATE" means the first date on which Common Units are
sold by the Partnership to the Underwriters pursuant to the
provisions of the Underwriting Agreement.
"CLOSING PRICE" has the meaning assigned to such term in
Section 17.1(a).
"CODE" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable
regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a
reference to any corresponding provisions of future law.
"COMBINED INTEREST" has the meaning assigned to such term in
Section 13.3(a).
"COMMON UNIT" means a Unit representing an interest in the
Partnership as a Limited Partner or Assignee, having the
rights and obligations specified with respect to Common Units
in this Agreement.
"CONFLICTS AND AUDIT COMMITTEE" means a committee of the Board
of Directors of the General Partner composed entirely of one
or more directors who are neither officers nor employees of
the General Partner or any of its Affiliates.
"CONTRIBUTED PROPERTY" means each property or other asset, in
such form as may be permitted by the Minnesota Law, but
excluding cash, contributed to the Partnership. Once the
Carrying Value of a Contributed Property is adjusted pursuant
to Section 4.3(d), such property shall no longer constitute a
Contributed Property, but shall be deemed an Adjusted
Property.
"CURATIVE ALLOCATION" means any allocation of an item of
income, gain, deduction, loss or credit pursuant to the
provisions of Section 5.1(d)(x).
"CURRENT MARKET PRICE" has the meaning assigned to such term
in Section 17.1(a), except that if any Units involved are not
listed or admitted to trading on any National Securities
Exchange, such price shall be determined by an independent
investment banking firm or other independent expert selected
by the General Partner.
"MINNESOTA LAW" means the Minnesota Law, as amended,
supplemented or restated from time to time, and any successor
to such statute.
"DELEGATION OF CONTROL AGREEMENT" means the Delegation of
Control Agreement among, the Partnership and the Operating
Partnerships, as amended, supplemented or restated from time
to time.
"DEPARTING PARTNER" means a former general partner, from and
after the effective date of any withdrawal or removal of such
former general partner pursuant to Section 13.1 or 13.2.
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
"ELIGIBLE CITIZEN" means a Person qualified to own interests
in real property in jurisdictions in which the Partnership or
the Operating Partnership does business or proposes to do
business from time to time, and whose status as a Limited
Partner or Assignee does not or would not subject the
Partnership or the Operating Partnership to a substantial risk
of cancellation or forfeiture of any of its properties or any
interest therein.
"EQUIVALENT NON-CASH AMOUNT" has the meaning assigned to such
term in Section 5.7(c).
"EVENT OF WITHDRAWAL" has the meaning assigned to such term in
Section 13.1(a).
"AGREEMENT" has the meaning assigned to such term in the
introduction to this Agreement.
"FIRST LIQUIDATION TARGET AMOUNT" has the meaning assigned to
such term in Section 5.1(c)(i)(D).
"FIRST TARGET DISTRIBUTION" means $0.3025 per Unit, subject to
adjustment in accordance with Sections 5.6 and 9.6.
"GENERAL PARTNER" means Alberich, LLLP and its successors as
general partner of the Partnership, unless the context
otherwise requires.
"GROUP" means a "group" of Persons as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"HOLDER" has the meaning assigned to such term in Section
6.13(a).
"I-UNIT" means a Unit representing an interest in the
Partnership as a Limited Partner or Assignee, having the
rights and obligations specified with respect to I-Units in
this Agreement.
INCENTIVE DISTRIBUTION" means any amount of cash distributed
to the General Partner, in its capacity as general partner of
the Partnership, pursuant to Sections 5.4(c), 5.4(d) or 5.4(e)
that exceeds that amount equal to 1% of the aggregate amount
of cash then being distributed pursuant to such provisions.
"INDEMNIFIED PERSONS" has the meaning assigned to such term in
Section 6.13(c).
"INDEMNITEE" means the General Partner, any Departing Partner,
any Person who is or was an Affiliate of the General Partner
or any Departing Partner, any Person who is or was an officer,
director, employee, partner, agent or trustee of the General
Partner or any Departing Partner or any such Affiliate, or any
Person who is or was serving at the request of the General
Partner or any Departing Partner or any such Affiliate as a
director, officer, employee, partner, agent or trustee of
another Person.
"INITIAL OFFERING" means the initial offering of Common Units
to the public, as described in the Registration Statement (if
applicable).
"INITIAL UNIT PRICE" means $__ per Unit.
"INTERIM CAPITAL TRANSACTIONS" means (a) borrowings,
refinancings or refundings of indebtedness and sales of debt
securities (other than for working capital purposes and other
than for items purchased on open account in the ordinary
course of business) by the Partnership or the Operating
Partnership,
(b) sales of equity interests by the Partnership or the
Operating Partnership and
(c) sales or other voluntary or involuntary dispositions of
any assets of the Partnership or the Operating Partnership
(other than (x) sales or other dispositions of inventory in
the ordinary course of business, (y) sales or other
dispositions of other current assets including, without
limitation, receivables and accounts and (z) sales or other
dispositions of assets as a part of normal retirements or
replacements), in each case prior to the commencement of the
dissolution and liquidation of the Partnership.
"LIMITED PARTNER" means, unless the context otherwise
requires, each initial limited partner, each Substituted
Limited Partner, each Additional Limited Partner and any
Departing Partner upon the change of its status from General
Partner to Limited Partner pursuant to Section 13.3.
"LIQUIDATION DATE" means (a) in the case of an event giving
rise to the dissolution of the Partnership of the type
described in Sections 14.2(a) and
(b), the date on which the applicable time period during which
the holders of Outstanding Units have the right to elect to
reconstitute the Partnership and continue its business has
expired without such an election being made, and
(c) in the case of any other event giving rise to the
dissolution of the Partnership, the date on which such event
occurs.
"LIQUIDATOR" means the General Partner or other Person
approved pursuant to Section 14.3 who performs the functions
described therein.
"LISTED SHARES" means the general partner interests in
ALBERICH, LLLP designated as "Listed Shares."
"MAINTENANCE CAPITAL EXPENDITURES" means cash capital
expenditures made to maintain, up to the level thereof that
existed on the Closing Date, the throughput, deliverable
capacity, terminating capacity, or fractionation capacity
(assuming normal operating conditions, including, without
limitation, down-time and maintenance) of the assets of the
Partnership and the Operating Partnership, taken as a whole,
as such assets existed on the Closing Date and shall,
therefore, not include cash capital expenditures made in
respect of Capital Additions and Improvements. Where cash
capital expenditures are made in part to effectuate the
capacity maintenance level referred to in the immediately
preceding sentence and in part for other purposes, the General
Partner's good faith allocation thereof between the portion
used to maintain such capacity level and the portion used for
other purposes shall be conclusive.
"MANDATORY PURCHASE EVENT" has the meaning assigned to such
term in the Purchase Provisions.
"MAXIMUM PERMITTED DELEGATION" has the meaning assigned to
such term in the Delegation of Control Agreement.
"MANDATORY REDEMPTION NOTICE" has the meaning assigned to such
term in Section 4.9(b).
"MERGER AGREEMENT" has the meaning assigned to such term in
Section 16.1.
"MINIMUM QUARTERLY DISTRIBUTION" means $0.275 per Unit per
calendar quarter, subject to adjustment in accordance with
Sections 5.6 and 9.6.
"NATIONAL SECURITIES EXCHANGE" means an exchange registered
with the Securities and Exchange Commission under Section 6(a)
of the Securities Exchange Act of 1934, as amended,
supplemented or restated from time to time, and any successor
to such statute.
"NET AGREED VALUE" means, (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any
liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when
contributed, and
(b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value
of such property (as adjusted pursuant to Section 4.3(d)(ii))
at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner or Assignee upon
such distribution or to which such property is subject at the
time of the distribution, in either case, as determined under
Section 752 of the Code.
"NET INCOME" means, for any taxable period, the excess, if
any, of the Partnership's items of income and gain (other than
those items attributable to dispositions constituting
Termination Capital Transactions) for such taxable period over
the Partnership's items of loss and deduction (other than
those items attributable to dispositions constituting
Termination Capital Transactions) for such taxable period. The
items included in the calculation of Net Income shall be
determined in accordance with Section 4.3(b) and shall not
include any items specially allocated under Section 5.1(d).
Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected
to a Required Allocation or a Curative Allocation, Net Income
or Net Loss, whichever the case may be, shall be recomputed
without regard to such item.
"NET LOSS" means, for any taxable period, the excess, if any,
of the Partnership's items of loss and deduction (other than
those items attributable to dispositions constituting
Termination Capital Transactions) for such taxable period over
the Partnership's items of income and gain (other than those
items attributable to dispositions constituting Termination
Capital Transactions) for such taxable period. The items
included in the calculation of Net Loss shall be determined in
accordance with Section 4.3(b) and shall not include any items
specially allocated under Section 5.1(d). Once an item of
income, gain, loss or deduction that has been included in the
initial computation of Net Loss is subjected to a Required
Allocation or a Curative Allocation, Net Income, or Net Loss,
whichever the case may be, shall be recomputed without regard
to such item.
"NET TERMINATION GAIN" means, for any taxable period, the sum,
if positive, of all the items of income, gain, loss or
deduction recognized by the Partnership (including, without
limitation, such amounts recognized through the Operating
Partnership) from Termination Capital Transactions occurring
in such taxable period. The items included in the
determination of Net Termination Gain shall be determined in
accordance with Section 4.3(b) and shall not include any items
of income, gain or loss specially allocated under Section
5.1(d). Once an item of income, gain or loss that has been
included in the initial computation of Net Termination Gain is
subjected to a Required Allocation or a Curative Allocation,
Net Termination Gain or Net Termination Loss, whichever the
case may be, shall be recomputed without regard to such item.
"NET TERMINATION LOSS" means, for any taxable period, the sum,
if negative, of all items of income, gain, loss or deduction
recognized by the Partnership (including, without limitation,
such amounts recognized through the Operating Partnership)
from Termination Capital Transactions occurring in such
taxable period. The items included in the determination of Net
Termination Loss shall be determined in accordance with
Section 4.3(b) and shall not include any items of income, gain
or loss specially allocated under Section 5.1(d). Once an item
of gain or loss that has been included in the initial
computation of Net Termination Loss is subjected to a Required
Allocation or a Curative Allocation, Net Termination Gain or
Net Termination Loss, whichever the case may be, shall be
recomputed without regard to such item.
"NON-CITIZEN ASSIGNEES" means a Person who the General Partner
has determined in its sole discretion does not constitute an
Eligible Citizen and as to whose Partnership Interest the
General Partner has become the Substituted Limited Partner,
pursuant to Section 11.5.
"NONRECOURSE BUILT-IN GAIN" means with respect to any
Contributed Properties or Adjusted Properties that are subject
to a mortgage or negative pledge securing a Nonrecourse
Liability, the amount of any taxable gain that would be
allocated to the Partners pursuant to Sections 5.2(b)(i)(A),
5.2(b)(ii)(A) or 5.2(b)(iv) if such properties were disposed
of in a taxable transaction in full satisfaction of such
liabilities and for no other consideration.
"NONRECOURSE DEDUCTIONS" means any and all items of loss,
deduction or expenditures (described in Section 705(a)(2)(B)
of the Code) that, in accordance with the principles of
Treasury Regulation Section 1.704-2(b), are attributable to a
Nonrecourse Liability.
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"NOTICE OF ELECTION TO PURCHASE" has the meaning assigned to
such term in Section 17.1(b).
"NOTICE OF INTENT TO CONVERT" has the meaning assigned to such
term in Section 4.9(b).
"OPERATING PARTNERSHIP" means Alberich, LLLP provided,
however, that unless the context otherwise requires, any
references herein to the term "Operating Partnership" or
"Operating Partnerships" shall also be deemed to include, to
the extent of the Partnership's ownership interest therein,
any partnerships, joint ventures or other entities formed or
acquired by the Partnership in connection with the conduct by
the Partnership of activities permitted by the terms of
Section 3.1.
"OPERATING PARTNERSHIP AGREEMENT" means the Alberich, LLLP
Partnership Agreement; provided, however, that unless the
context otherwise requires, any references to the term
"Operating Partnership Agreement" or "Operating Partnership
Agreements" shall also be deemed to include the partnership or
other governing charter agreement for any partnership, joint
venture or other entity formed or acquired by the Partnership
in connection with the conduct by the Partnership of
activities permitted by the terms of Section 3.1.
"OPINION OF COUNSEL" means a written opinion of counsel
acceptable to the General Partner.
"OPTIONAL PURCHASE PRICE" has the meaning assigned to such
term in Section 17.1.
"ORIGINAL AGREEMENT" has the meaning assigned to such term in
the introduction to this Agreement.
"OUTSTANDING" means, with respect to the Units or other
Partnership Securities, all Units or other Partnership
Securities that are issued by the Partnership and reflected as
outstanding on the Partnership's books and records as of the
date of determination; provided that, if at any time any
Person or Group (other than the General Partner and its
Affiliates) owns beneficially 20% or more of the aggregate
number of Listed Shares and Common Units on a combined basis,
such Common Units so owned and the number of I-Units
corresponding to the Listed Shares so owned shall not be voted
on any matter and shall not be considered to be Outstanding
when sending notices of a meeting of Limited Partners,
calculating required votes, determining the presence of a
quorum or for other similar purposes under this Agreement,
except that such Common Units and I-Units shall be considered
to be Outstanding for purposes of Section 13.1(b)(iv).
"PARTNERS" means the General Partner; the Limited Partners;
and solely for purposes of Articles IV, V and VI and Sections
14.3 and 14.4, the Assignees.
"PARTNER NONRECOURSE DEBT" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set
forth in Treasury Regulation Section 1.704-2(f)(2).
"PARTNER NONRECOURSE DEDUCTIONS" means any and all items of
loss, deduction or expenditure (including, without limitation,
any expenditure described in Section 705(a)(2)(B) of the Code)
that, in accordance with the principles of Treasury Regulation
Section 1.704-2(i), are attributable to a Partner Nonrecourse
Debt.
"PARTNERSHIP" means the limited liability limited partnership
heretofore formed and continued pursuant to this Agreement.
"PARTNERSHIP INTEREST" means an interest in the Partnership,
which shall include general partner interests, Units or other
Partnership Securities, or a combination thereof or interest
therein, as the case may be.
"PARTNERSHIP MINIMUM GAIN" means that amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"PARTNERSHIP SECURITIES" has the meaning assigned to such term
in Section 4.1(b).
"PERCENTAGE INTEREST" means as of the date of such
determination (a) as to the General Partner, 1%,
(b) as to any Limited Partner or Assignee holding Units, the
product of
(i) 99% multiplied by
(ii) the quotient of the number of Units held by such Limited
Partner or Assignee divided by the total number of all Units
then Outstanding, provided, however, that following any
issuance of additional Partnership Securities by the
Partnership in accordance with Sections 4.1, 5.4 or 5.5,
proper adjustment shall be made to the Percentage Interest
represented by each Unit to reflect such issuance, and
(c) as to the holders of additional Partnership Securities
issued by the Partnership in accordance with Sections 4.1, 5.4
or 5.5, the percentage established as a part of such issuance.
"PERSON" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other
entity.
"PRO RATA" means
(a) when modifying Units or any class thereof, apportioned
equally among all designated Units in accordance with their
relative Percentage Interests and
(b) when modifying Partners and Assignees, apportioned among
all designated Partners and Assignees in accordance with their
relative Percentage Interests.
"PURCHASE DATE" means the date determined by the General
Partner as the date for purchase of all Outstanding Units
(other than Units owned by the General Partner and its
Affiliates) pursuant to Article XVII.
"PURCHASE PROVISIONS" means the purchase provisions that are
attached to the Partnership Agreement as Annex B.
"RECAPTURE INCOME" means any gain recognized by the
Partnership (computed without regard to any adjustment
required by Sections 734 or 743 of the Code) upon the
disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents
the recapture of deductions previously taken with respect to
such property or asset.
"RECORD DATE" means the date established by the General
Partner for determining
(a) the identity of the Record Holder entitled to notice of,
or to vote at, any meeting of Limited Partners or entitled to
vote by ballot or give approval of Partnership action in
writing without a meeting or entitled to exercise rights in
respect of any lawful action of Limited Partners or
(b) the identity of Record Holders entitled to receive any
report or distribution.
"RECORD HOLDER" means the Person in whose name a Unit is
registered on the books of the Transfer Agent as of the
opening of business on a particular Business Day.
"REDEEMABLE UNITS means any Units for which a redemption
notice has been given, and has not been withdrawn, under
Section 11.6.
"REGISTRATION STATEMENT" means the Registration Statement, as
it may have been amended or supplemented from time to time,
filed by the Partnership with the Securities and Exchange
Commission under the Securities Act to register the offering
and sale of the Common Units in the Initial Offering.
"REQUIRED ALLOCATIONS" means any allocation (or limitation
imposed on any allocation) of an item of income, gain,
deduction or loss pursuant to
(a) the proviso-clause of Section 5.1(b)(ii) or
(b) Sections 5.1(d)(i), 5.1(d)(ii), 5.1(d)(iv), 5.1(d)(v),
5.1(d)(vi), 5.1(d)(vii) and 5.1(d)(ix), such allocations (or
limitations thereon) being directly or indirectly required by
the Treasury Regulations promulgated under Section 704(b) of
the Code.
"RESIDUAL GAIN" or "RESIDUAL LOSS" means any item of gain or
loss, as the case may be, of the Partnership recognized for
federal income tax purposes resulting from a sale, exchange or
other disposition of a Contributed Property or Adjusted
Property, to the extent such item of gain or loss is not
allocated pursuant to Sections 5.2(b)(i)(A) or 5.2(b)(ii)(A),
respectively, to eliminate Book-Tax Disparities.
"AGREEMENT" has the meaning assigned to such term in the
introduction to this Agreement.
"SECOND LIQUIDATION TARGET AMOUNT" has the meaning assigned to
such term in Section 5.1(c)(i)(E).
"SECOND TARGET DISTRIBUTION" means $0.3575 per Unit, subject
to adjustment in accordance with Sections 5.6 and 9.6.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and any successor to such statute.
"SPECIAL APPROVAL" means approval by a majority of the members
of the Conflicts and Audit Committee.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section
12.1 in place of and with all the rights of a Limited Partner
and who is shown as a Limited Partner on the books and records
of the Partnership.
"SURVIVING BUSINESS ENTITY" has the meaning assigned to such
term in Section 16.2(b).
"TERMINATION CAPITAL TRANSACTIONS" means any sale, transfer or
other disposition of property of the Partnership or the
Operating Partnership occurring upon or incident to the
liquidation and winding up of the Partnership and the
Operating Partnership pursuant to Article XIV.
"THIRD TARGET DISTRIBUTION" means $0.4675 per Unit, subject to
adjustment in accordance with Sections 5.6 and 9.6.
"TRADING DAY" has the meaning assigned to such term in Section
17.1(a).
"TRANSFER AGENT" means such bank, trust company or other
Person (including, without limitation, the General Partner or
one of its Affiliates) as shall be appointed from time to time
by the Partnership to act as registrar and transfer agent for
the Units.
"TRANSFER APPLICATION" means an application and agreement for
transfer of Units in the form set forth on the back of a
Certificate or in a form substantially to the same effect in a
separate instrument.
"UNDERWRITER" means each Person named as an underwriter in
Schedule I to the Underwriting Agreement who purchases Units
pursuant thereto.
"UNIT" means a Partnership Interest of a Limited Partner or
Assignee in the Partnership and shall include, without
limitation, Common Units, Class B Units and I-Units.
"UNPAID MQD" has the meaning assigned to such term in Section
5.1(c)(i)(C).
"UNREALIZED GAIN" attributable to any item of Partnership
property means, as of any date of determination, the excess,
if any, of
(a) the fair market value of such property as of such date (as
determined under Section 4.3(d)) over
(b) the Carrying Value of such property as of such date (prior
to any adjustment to be made pursuant to Section 4.3(d) as of
such date).
"UNREALIZED LOSS" attributable to any item of Partnership
property means, as of any date of determination, the excess,
if any, of
(a) the Carrying Value of such property as of such date (prior
to any adjustment to be made pursuant to Section 4.3(d) as of
such date) over
(b) the fair market value of such property as of such date (as
determined under Section 4.3(d)).
"UNRECOVERED INITIAL UNIT PRICE" means, at any time, with
respect to a Unit, the Initial Unit Price, less the sum of all
distributions theretofore made in respect of a Common Unit
issued in the Initial Offering constituting, and which for
purposes of determining the priority of such distribution is
treated as constituting, Cash from Interim Capital
Transactions and of any distributions of cash (or the Net
Agreed Value of any distributions in kind) in connection with
the dissolution and liquidation of the Partnership theretofore
made in respect of a Common Unit issued in the Initial
Offering.
ARTICLE III
PURPOSE
3.1 PURPOSE AND BUSINESS. The purpose and nature of the
business to be conducted by the Partnership shall be
(a) to serve as a limited partner and, in connection
therewith, to exercise all of the rights and powers conferred
upon the Partnership as a limited partner in this Partnership
Agreement or otherwise,
(b) to engage directly in, or to enter into any partnership,
joint venture or similar arrangement to engage in, any
business activity or project that may lawfully be conducted or
engaged in by a limited liability limited partnership
organized pursuant to the Minnesota Law and
(c) to do anything necessary or appropriate to the foregoing,
including, without limitation, the making of capital
contributions or loans to the Operating Partnership or in
connection with its involvement in the activities referred to
in clause (b) of this sentence. Subject to the other
provisions of this Agreement, the Partnership may engage in
any business activity. The General Partner has no obligation
or duty to the Partnership, the Limited Partners or the
Assignees to propose or approve, and in its sole discretion
may decline to propose or approve, the conduct by the
Partnership of any business.
3.2 POWERS. The Partnership shall be empowered to do any and
all acts and things necessary, appropriate, proper, advisable,
incidental to or convenient for the furtherance and
accomplishment of the purposes and business described in
Section 3.1 and for the protection and benefit of the
Partnership.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 ISSUANCES OF UNITS AND OTHER SECURITIES.
(a) The initial Capital Contributions of the General Partner
and the initial Limited Partners were made in accordance with
Section 4.3 of the Agreement.
(b) The General Partner is hereby authorized to cause the
Partnership to issue, in addition to the Partnership Interests
and Units issued heretofore by the Partnership, such
additional Units, or classes or series thereof, or options,
rights, warrants or appreciation rights relating thereto, or
any other type of equity security that the Partnership may
lawfully issue, or any unsecured or secured debt obligations
of the Partnership convertible into any class or series of
equity securities of the Partnership (collectively,
"Partnership Securities"), for any Partnership purpose, at any
time or from time to time, to the Partners or to other Persons
for such consideration and on such terms and conditions as
shall be established by the General Partner in its sole
discretion, all without the approval of any Limited Partners.
The General Partner shall have sole discretion, subject to the
guidelines set forth in this Section 4.1 and the requirements
of the Minnesota Law, in determining the consideration and
terms and conditions with respect to any future issuance of
Partnership Securities.
(c) Additional Partnership Securities to be issued by the
Partnership pursuant to this Section 4.1 shall be issuable
from time to time in one or more classes, or one or more
series of any of such classes, with such designations,
preferences and relative, participating, optional or other
special rights, powers and duties, including, without
limitation, rights, powers and duties senior to existing
classes and series of Partnership Securities, all as shall be
fixed by the General Partner in the exercise of its sole
discretion, subject to Minnesota law, including, without
limitation,
(i) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of
Partnership Securities;
(ii) the right of each such class or series of Partnership
Securities to share in Partnership distributions;
(iii) the rights of each such class or series of Partnership
Securities upon dissolution and liquidation of the
Partnership;
(iv) whether such class or series of additional Partnership
Securities is redeemable by the Partnership and, if so, the
price at which, and the terms and conditions upon which, such
class or series of additional Partnership Securities may be
redeemed by the Partnership;
(v) whether such class or series of additional Partnership
Securities is issued with the privilege of conversion and, if
so, the rate at which, and the terms and conditions upon
which, such class or series of Partnership Securities may be
converted into any other class or series of Partnership
Securities or other property;
(vi) the terms and conditions upon which each such class or
series of Partnership Securities will be issued, evidenced by
certificates and assigned or transferred; and
(vii) the right, if any, of each such class or series of
Partnership Securities to vote on Partnership matters,
including, without limitation, matters relating to the
relative rights, preferences and privileges of each such class
or series.
(d) Upon the issuance of any Partnership Interests by the
Partnership (other than I-Units or fractions of I-Units
pursuant to Section 5.4, 5.5, or 5.7(e)) or the making of any
other Capital Contributions to the Partnership, the General
Partner shall be required to make additional Capital
Contributions to the Partnership such that the General Partner
shall at all times have a balance in its Capital Account with
respect to its general partner interest equal to 1% of the
total positive Capital Account balances of all Partners.
(e) The General Partner is hereby authorized and directed to
take all actions that it deems necessary or appropriate in
connection with each issuance of Units or other Partnership
Securities pursuant to Section 4.1(b) and to amend this
Agreement in any manner that it deems necessary or appropriate
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 Units or other
Partnership Securities being so issued.
(f) The General Partner is authorized to cause the issuance of
Partnership Securities (other than I-Units) pursuant to any
employee benefit plan for the benefit of employees responsible
for the operations of the Partnership or the Operating
Partnerships maintained or sponsored by the General Partner,
the Partnership, the Operating Partnerships or any Affiliate
of any of them.
(g) The General Partner shall do all things necessary to
comply with the Minnesota Law and is authorized and directed
to do all things it deems to be necessary or advisable in
connection with any future issuance of Partnership Securities,
including, without limitation, compliance with any statute,
rule, regulation or guideline of any federal, state or other
governmental agency or any National Securities Exchange on
which the Units or other Partnership Securities are listed for
trading.
4.2 LIMITED PREEMPTIVE RIGHTS. Except as provided in this
Section 4.2, no Person shall have any preemptive, preferential
or other similar right with respect to
(a) additional Capital Contributions;
(b) issuance or sale of any class or series of Units or other
Partnership Securities, whether unissued, held in the treasury
or hereafter created;
(c) issuance of any obligations, evidences of indebtedness or
other securities of the Partnership convertible into or
exchangeable for, or carrying or accompanied by any rights to
receive, purchase or subscribe to, any such Units or other
Partnership Securities;
(d) issuance of any right of subscription to or right to
receive, or any warrant or option for the purchase of, any
such Units or other Partnership Securities; or
(e) issuance or sale of any other securities that may be
issued or sold by the Partnership. The General Partner shall
have the right, which it may from time to time assign in whole
or in part to any of its Affiliates, to purchase Units or
other Partnership Securities from the Partnership whenever,
and on the same terms that, the Partnership issues Units or
other Partnership Securities to Persons other than the General
Partner and its Affiliates, to the extent necessary to
maintain the Percentage Interests of the General Partner and
its Affiliates equal to that which existed immediately prior
to the issuance of such Units or other Partnership Securities.
4.3 CAPITAL ACCOUNTS. (a) The Partnership shall maintain for
each Partner (or a beneficial owner of Units held by a nominee
in any case in which the nominee has furnished the identity of
such owner to the Partnership in accordance with Section
6031(c) of the Code or any other method acceptable to the
General Partner in its sole discretion) owning a Partnership
Interest a separate Capital Account with respect to such
Partnership Interest in accordance with the rules of Treasury
Regulation Section 1.704-1(b)(2)(iv). Such Capital Account
shall be increased by
(i) the amount of all Capital Contributions made to the
Partnership with respect to such Partnership Interest pursuant
to this Agreement and
(ii) all items of Partnership income and gain (including,
without limitation, income and gain exempt from tax) computed
in accordance with Section 4.3(b) and allocated with respect
to such Partnership Interest pursuant to Section 5.1, and
decreased by (x) the amount of cash or Net Agreed Value of all
actual and deemed distributions of cash or property made with
respect to such Partnership Interest pursuant to this
Agreement and (y) all items of Partnership deduction and loss
computed in accordance with Section 4.3(b) and allocated with
respect to such Partnership Interest pursuant to Section 5.1.
(b) For purposes of computing the amount of any item of
income, gain, loss or deduction to be reflected in the
Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its
determination, recognition and classification for federal
income tax purposes (including, without limitation, any method
of depreciation, cost recovery or amortization used for that
purpose), provided, that:
(i) Solely for purposes of this Section 4.3, the Partnership
shall be treated as owning directly its proportionate share
(as determined by the General Partner based upon the
provisions of the Operating Partnership Agreement) of all
property owned by the Operating Partnership.
(ii) 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, if any, shall, for purposes of Capital Account
maintenance, be treated as an item of deduction at the time
such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 5.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), 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 705(a)(2)(B) of the Code, without
regard to the fact that such items are not includable in gross
income or are neither currently deductible nor capitalized for
federal income tax purposes.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as
if the adjusted basis of such property as of such date of
disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the
date it was acquired by the Partnership were equal to the
Agreed Value of such property. Upon an adjustment pursuant to
Section 4.3(d) to the Carrying Value of any Partnership
property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation,
cost recovery or amortization attributable to such property
shall be determined (A) as if the adjusted basis of such
property were equal to the Carrying Value of such property
immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the
same method and useful life (or, if applicable, the remaining
useful life) as is applied for federal income tax purposes;
provided, however, that, if the asset has a zero adjusted
basis for federal income tax purposes, depreciation, cost
recovery or amortization deductions shall be determined using
any reasonable method that the General Partner may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost recovery property is reduced for federal income tax
purposes pursuant to Section 48(q)(1) or 48(q)(3) of the Code,
the amount of such reduction shall, solely for purposes
hereof, be deemed to be an additional depreciation or cost
recovery deduction in the year such property is placed in
service and shall be allocated among the Partners pursuant to
Section 5.1. Any restoration of such basis pursuant to Section
48(q)(2) of the Code shall, to the extent possible, be
allocated in the same manner to the Partners to whom such
deemed deduction was allocated.
(c) A transferee of a Partnership Interest shall succeed to a
pro rata portion of the Capital Account of the transferor
relating to the Partnership Interest so transferred.
(d)(i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional
Units for cash or Contributed Property or the conversion of
the General Partner's Partnership Interest to Common Units
pursuant to Section 13.3(b), the Capital Account of all
Partners (other than those holding I-Units) and the Carrying
Value of each Partnership property immediately prior to such
issuance shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized
Loss had been recognized on an actual sale of each such
property immediately prior to such issuance and had been
allocated to the Partners at such time pursuant to Section
5.1. In determining such Unrealized Gain or Unrealized Loss,
the aggregate cash amount and fair market value of all
Partnership assets (including, without limitation, cash or
cash equivalents) immediately prior to the issuance of
additional Units shall be determined by the General Partner
using such reasonable method of valuation as it may adopt. The
General Partner shall allocate such aggregate value among the
assets of the Partnership (in such manner as it determines in
its sole discretion to be reasonable) to arrive at a fair
market value for individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other
than a distribution of cash that is not in redemption or
retirement of a Partnership Interest or a distribution of an
additional I-Unit (or fraction thereof) pursuant to Section
5.4, 5.5 or 5.7(e)), the Capital Accounts of all Partners and
the Carrying Value of such Partnership property shall be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as
if such Unrealized Gain or Unrealized Loss had been recognized
in a sale of such property immediately prior to such
distribution for an amount equal to its fair market value, and
had been allocated to the Partners, at such time, pursuant to
Section 5.1. Any Unrealized Gain or Unrealized Loss
attributable to such property shall be allocated in the same
manner as Net Termination Gain or Net Termination Loss
pursuant to Section 5.1(c); provided, however, that, in making
any such allocation, Net Termination Gain or Net Termination
Loss actually realized shall be allocated first. In
determining such Unrealized Gain or Unrealized Loss, the
aggregate cash amount and fair market value of all Partnership
assets (including, without limitation, cash or cash
equivalents) immediately prior to a distribution shall be
determined and allocated by the Liquidator using such
reasonable method of valuation as it may adopt.
(iii) Upon the issuance of I-Units (or fractions thereof)
pursuant to Section 5.4, 5.5 or 5.7(e), the Capital Accounts
of all I-Units Outstanding prior to such issuance shall be
divided equally among all I-Units Outstanding after such
issuance (and any fractional I-Unit shall be allocated a
fractional part of such Capital Accounts).
4.4 INTEREST. No interest shall be paid by the Partnership on
Capital Contributions or on balances in Partners' Capital
Accounts.
4.5 NO WITHDRAWAL. No Partner shall be entitled to withdraw
any part of its Capital Contributions or its Capital Account
or to receive any distribution from the Partnership, except as
provided in Articles V, XIII and XIV.
4.6 LOANS FROM PARTNERS. Loans by a Partner to the Partnership
shall not constitute Capital Contributions. If any Partner
shall advance funds to the Partnership in excess of the
amounts required hereunder to be contributed by it to the
capital of the Partnership, the making of such excess advances
shall not result in any increase in the amount of the Capital
Account of such Partner. The amount of any such excess
advances shall be a debt obligation of the Partnership to such
Partner and shall be payable or collectible only out of the
Partnership assets in accordance with the terms and conditions
upon which such advances are made.
4.7 NO FRACTIONAL UNITS. Except with respect to I-Units, no
fractional Units shall be issued by the Partnership.
4.8 SPLITS AND COMBINATIONS. (a) Subject to Section 4.8(d),
the General Partner may make a Pro Rata distribution of Units
or other Partnership Securities to all Record Holders or may
effect a subdivision or combination of Units or other
Partnership Securities; provided, however, that after any such
distribution, subdivision or combination, each Partner shall
have the same Percentage Interest in the Partnership as before
such distribution, subdivision or combination and the Capital
Accounts of all such classes of distributed, subdivided or
combined Units or other Partnership Securities Outstanding
prior to such distribution, subdivision or combination shall
be divided equally among all such Units or other Partnership
Securities Outstanding after such distribution, subdivision or
combination.
(b) Whenever such a distribution, subdivision or combination
of Units or other Partnership Securities is declared, the
General Partner shall select a Record Date as of which the
distribution, subdivision or combination shall be effective
and shall send notice of the distribution, subdivision or
combination at least 20 days prior to such Record Date to each
Record Holder as of the date not less than 10 days prior to
the date of such notice. The General Partner also may cause a
firm of independent public accountants selected by it to
calculate the number of Units to be held by each Record Holder
after giving effect to such distribution, subdivision or
combination. The General Partner shall be entitled to rely on
any certificate provided by such firm as conclusive evidence
of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or
combination, the General Partner may cause Certificates to be
issued to the Record Holders of Units as of the applicable
Record Date representing the new number of Units held by such
Record Holders, or the General Partner may adopt such other
procedures as it may deem appropriate to reflect such
distribution, subdivision or combination; provided, however,
if any such distribution, subdivision or combination results
in a smaller total number of Units Outstanding, the General
Partner shall require, as a condition to the delivery to a
Record Holder of such new Certificate, the surrender of any
Certificate held by such Record Holder immediately prior to
such Record Date.
(d) Except with respect to I-Units, the Partnership shall not
issue fractional Units upon any distribution, subdivision or
combination of Units. If a distribution, subdivision or
combination of Units would result in the issuance of
fractional Units but for the provisions of Section 4.7 and
this Section 4.8(d), each fractional Unit (other a fractional
I-Unit) shall be rounded to the nearest whole Unit (and a 0.5
Unit shall be rounded to the next higher Unit).
4.9 CLASS B UNITS. (a) Pursuant to Article IV and Section 15.1
of the Agreement, as amended, the General Partner designated
and created a special class of Units designated "Class B
Units" and fixed the designations, preferences and relative,
participating, optional or other special rights, powers and
duties of the holders of the Class B Units as follows:
(b) Each Class B Unit shall be convertible from time to time,
in whole or in part, into one Common Unit from and after such
date as the Partnership has been advised by a
National/International Stock Exchange that the Common Units
issuable upon any such conversion are eligible for listing on
a National/International Stock Exchange (if applicable). The
General Partner shall promptly notify the holders of Class B
Units upon receipt of such advice. Upon written notice to the
General Partner from the holders of at least a majority of the
Outstanding Class B Units (a "Notice of Intent to Convert")
given not earlier than one year after the issuance of the
Class B Units, the General Partner shall use its reasonable
best efforts to cause the Partnership to meet any unfulfilled
requirements of a National/International Stock Exchange for
such listing, including obtaining such approval of the holders
of Common Units as may be required by a National/International
Stock Exchange for the issuance of additional Common Units to
be listed thereon. If, 120 days after the date of the Notice
of Intent to Convert, the Common Units issuable upon such
conversion have not been approved for listing on a
National/International Stock Exchange, then the Partnership
shall give written notice thereof to the holders of the
Outstanding Class B Units, whereupon each holder of
Outstanding Class B Units may, at such holder's election at
any time thereafter, notify the General Partner in writing (a
"Mandatory Redemption Notice") of such holder's election to
cause the Partnership to redeem such holder's Outstanding
Class B Units for cash. All such Outstanding Class B Units
shall be redeemed as of the 60th day following the date of
receipt of such Mandatory Redemption Notice unless, prior to
such 60th day, the General Partner gives written notice to the
holders of all Outstanding Class B Units that it has been
advised by a National/International Stock Exchange that the
Common Units issuable upon a conversion of Class B Units have
been approved for listing on a National/International Stock
Exchange, in which case the Mandatory Redemption Notice shall
be deemed to have been withdrawn.
(c) Before any holder of Class B Units shall be entitled to
receive any redemption payment or to convert such holder's
Class B Units into Common Units, as the case may be, it shall
surrender the Class B Unit Certificates therefor, duly
endorsed, at the office of the General Partner or of any
transfer agent for the Class B Units. In the case of any such
conversion, the Partnership shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of
Class B Units one or more Certificates, registered in the name
of such holder, for the number of Common Units to which such
holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made as of the date of such surrender
of the Class B Units to be converted, and the person entitled
to receive the Common Units issuable upon such conversion
shall be treated for all purposes as the record holder of such
Common Units on said date.
(d) Upon the request of Alberich, LLLP or any of its
Affiliates to register all or any part of the Class B Units
pursuant to Section 6.13, the Class B Units for which
registration is so requested may be redeemed by the
Partnership at its election. The Partnership, at its election,
may exercise its option under this Section 4.9(d) by mailing
written notice thereof to the holders of Class B Units for
which registration is so requested. Such notice shall be given
not later than 15 days after the receipt by the General
Partner of such registration request and shall fix a date for
redemption of such Class B Units not less than 30 nor more
than 60 days after the date of such notice.
(e) Any redemption under Section 4.9(b) or Section 4.9(d)
shall be for a cash redemption price equal to the Current
Market Price per Common Unit as of the date fixed for
redemption multiplied by 0.955.
(f) From and after a redemption date (unless default shall be
made by the Partnership in providing money for the payment of
the redemption price), the Class B Units redeemed shall no
longer be deemed to be Outstanding, and all rights of the
holders thereof as Partners in the Partnership (except the
right to receive from the Partnership the redemption price)
shall cease. Class B Units redeemed pursuant to Section 4.9(b)
or Section 4.9(d) shall be restored to the status of
authorized but unissued Units, without designation as to
class.
(g) Except as otherwise provided in this Agreement, each Class
B Unit shall be identical to a Common Unit, and the holder of
a Class B Unit shall have the rights of a holder of a Common
Unit with respect to, without limitation, Partnership
distributions, voting and allocations of income, gain, loss or
deductions. Except as otherwise provided in this Agreement,
all Units shall vote or consent together as a single class on
all matters submitted for a vote or consent of the Outstanding
Units.
(h) The Certificates evidencing Class B Units shall be
separately identified and shall not bear the same CUSIP number
as the Certificates evidencing Common Units or I-Units.
4.10 I-UNITS. (a) Pursuant to Section 4.1, the General Partner
hereby designates and creates a special class of Units
designated "I-Units" and fixes the designations, preferences
and relative, participating, optional or other special rights,
powers and duties of the holders of the I-Units as follows:
(b) Except as otherwise provided in Section 5.1(c) upon a
Termination Capital Transaction, a holder of an I-Unit will
receive no allocations of income, gain, loss or deductions.
Except for distributions pursuant to Section 14.3(b), any
distributions or payments shall be made to a holder of an I-
Unit in additional I-Units (or fractions thereof) or a
security that has in all material respects the same rights and
privileges as the I-Units, in accordance with Section 5.7.
(c) Except as otherwise provided in this Agreement, each I-
Unit shall have the rights of a holder of a Common Unit with
respect to voting. Except as otherwise provided in this
Agreement, all Units shall vote or consent together as a
single class on all matters submitted for a vote or consent of
the Outstanding Units.
(d) The Certificates evidencing I-Units shall be separately
identified and shall not bear the same CUSIP number as the
Certificates evidencing Common Units or Class B Units.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. For purposes of
maintaining the Capital Accounts and in determining the rights
of the Partners among themselves, the Partnership's items of
income, gain, loss and deduction (computed in accordance with
Section 4.3(b)) shall be allocated among the Partners in each
taxable year (or portion thereof) as provided herein below.
(a) NET INCOME. After giving effect to the special allocations
set forth in Section 5.1(d), Net Income for each taxable
period and all items of income, gain, loss and deduction taken
into account in computing Net Income for such taxable period
shall be allocated as follows:
(i) First, 100% to the General Partner until the aggregate Net
Income allocated to the General Partner pursuant to this
Section 5.1(a)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Losses
allocated to the General Partner pursuant to section
5.1(b)(iii) for all previous taxable years;
(ii) Second, 99% to the Limited Partners holding Common Units
and Class B Units, Pro Rata, and 1% to the General Partner
until the aggregate Net Income allocated to such Partners
pursuant to this Section 5.1(a)(ii) for the current taxable
year and all previous taxable years is equal to the aggregate
Net Losses allocated to such Partners pursuant to Section
5.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, 99% to the Limited Partners
holding Common Units and Class B Units, Pro Rata, and 1% to
the General Partner.
(b) NET LOSSES. After giving effect to the special allocations
set forth in Section 5.1(d), Net Losses for each taxable
period and all items of income, gain, loss and deduction taken
into account in computing Net Losses for such taxable period
shall be allocated as follows:
(i) First, 99% to the Limited Partners holding Common Units
and Class B Units, Pro Rata, and 1% to the General Partner
until the aggregate Net Losses allocated pursuant to this
Section 5.1(b)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Income
allocated to such Partners pursuant to Section 5.1(a)(iii) for
all previous taxable years;
(ii) Second, 99% to the Limited Partners holding Common Units
and Class B Units, Pro Rata, and 1% to the General Partner;
provided, that the Net Losses shall not be allocated pursuant
to this Section 5.1(b)(ii) to the extent that such allocation
would cause any Partner to have a deficit balance in its
Adjusted Capital Account at the end of such taxable year (or
increase any existing deficit balance in its Adjusted Capital
Account);
(iii) Third, the balance, if any, 100% to the General Partner.
(c) NET TERMINATION GAINS AND LOSSES. After giving effect to
the special allocations set forth in Section 5.1(d), all items
of income, gain, loss and deduction taken into account in
computing Net Termination Gain or Net Termination Loss for
such taxable period shall be allocated in the same manner as
such Net Termination Gain or Net Termination Loss is allocated
hereunder. All allocations under this Section 5.1(c) shall be
made after Capital Account balances have been adjusted by all
other allocations provided under this Section 5.1 and after
all distributions of Available Cash provided under Section 5.4
have been made with respect to the taxable period ending on
the date of the Partnership's liquidation pursuant to Section
14.3.
(i) If a Net Termination Gain is recognized (or deemed
recognized pursuant to Section 4.3(d)) from Termination
Capital Transactions, such Net Termination Gain shall be
allocated between the General Partner and the Limited Partners
in the following manner (and the Adjusted Capital Accounts of
the Partners shall be increased by the amount so allocated in
each of the following subclauses, in the order listed, before
an allocation is made pursuant to the next succeeding
subclause);
(A) First, to each Partner having a deficit balance in its
Adjusted Capital Account, in the proportion that such deficit
balance bears to the total deficit balances in the Adjusted
Capital Accounts of all Partners, until each such Partner has
been allocated Net Termination Gain equal to any such deficit
balance in its Adjusted Capital Account;
(B) Second, if the Adjusted Capital Account of an I-Unit is
less than the Adjusted Capital Account of a Common Unit, 99%
to the Limited Partners holding I-Units and 1% to the General
Partner until the Adjusted Capital Account of each I-Unit
equals the Adjusted Capital Account of each Common Unit or, if
the Adjusted Capital Account of an I-Unit is greater than the
Adjusted Capital Account of a Common Unit, 99% to the Limited
Partners holding Common Units and Class B Units and 1% to the
General Partner until the Adjusted Capital Account of each
Common Unit and Class B Unit equals the Adjusted Capital
Account of each I-Unit;
(C) Third, 99% to the Limited Partners holding I-Units, Common
Units and Class B Units, Pro Rata, and 1% to the General
Partner until the Adjusted Capital Account in respect of each
Unit then Outstanding is equal to the sum of (1) the
Unrecovered Initial Unit Price plus (2) the Minimum Quarterly
Distribution for the quarter during which such Net Termination
Gain is recognized, reduced by any distribution pursuant to
Section 5.4(a) with respect to such Unit for such quarter (the
amount determined pursuant to this clause (2) is hereinafter
defined as the "Unpaid MQD");
(D) Fourth, 99% to the Limited Partners holding I-Units,
Common Units and Class B Units, Pro Rata, and 1% to the
General Partner until the Adjusted Capital Account in respect
of each Unit then Outstanding is equal to the sum of (aa) the
Unrecovered Initial Unit Price, plus (bb) the Unpaid MQD, plus
(cc) the excess of
(i) the First Target Distribution less the Minimum Quarterly
Distribution for each quarter of the Partnership's existence
over
(ii) the amount of any distribution of Cash from Operations
that was distributed pursuant to Section 5.4(b) (the sum of
(aa) plus (bb) plus (cc) is hereinafter defined as the "First
Liquidation Target Amount");
(E) Fifth, 85.8673% to the Limited Partners holding I-Units,
Common Units and Class B Units, Pro Rata, and 14.1327% to the
General Partner until the Adjusted Capital Account in respect
of each Unit then Outstanding is equal to the sum of (aa) the
First Liquidation Target Amount, plus (bb) the excess of
(i) the Second Target Distribution less the First Target
Distribution for each quarter of the Partnership's existence
over
(ii) the amount of any distributions of Cash from Operations
that was distributed pursuant to Section 5.4(c) (the sum of
(aa) plus (bb) is hereinafter defined as the "Second
Liquidation Target Amount");
(F) Sixth, 75.7653% to the Limited Partners holding I-Units,
Common Units and Class B Units, Pro Rata, and 24.2347% to the
General Partner until the Adjusted Capital Account in respect
of each Unit then Outstanding is equal to the sum of (aa) the
Second Liquidation Target Amount, plus (bb) the excess of
(i) the Third Target Distribution less the Second Target
Distribution for each quarter of the Partnership's existence
over
(ii) the amount of any distributions of Cash from Operations
that was distributed pursuant to Section 5.4(d); and
(G) Finally, any remaining amount 50.5102% to the Limited
Partners holding I-Units, Common Units and Class B Units, Pro
Rata, and 49.4898% to the General Partner.
(i) If a Net Termination Loss is recognized (or deemed
recognized pursuant to Section 4.3(d)) from Termination
Capital Transactions, such Net Termination Loss shall be
allocated to the Partners in the following manner:
(A) First, if the Adjusted Capital Account of an I-Unit is
less than the Adjusted Capital Account of a Common Unit, 99%
to the Limited Partners holding Common Units and Class B Units
and 1% to the General Partner until the Adjusted Capital
Account of each Common Unit and Class B Unit equals the
Adjusted Capital Account of each I-Unit or, if the Adjusted
Capital Account of an I-Unit is greater than the Adjusted
Capital Account of a Common Unit, 99% to the Limited Partners
holding I-Units and 1% to the General Partner until the
Adjusted Capital Account of each I-Unit equals the Adjusted
Capital Account of each Common Unit;
(B) Second, 100% to the General Partner and the Limited
Partners holding I-Units, Common Units and Class B Units in
proportion to, and to the extent of, the positive balances in
their respective Adjusted Capital Accounts;
(C) Finally, the balance, if any, 100% to the General Partner.
(d) SPECIAL ALLOCATIONS. Notwithstanding any other provision
of this Section 5.1, the following special allocations shall
be made for such taxable period:
(i) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 5.1, if there is a net
decrease in Partnership Minimum Gain during any Partnership
taxable period, each Partner shall be allocated items of
Partnership income and gain for such period (and, if
necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-
2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For
purposes of this Section 5.1(d), each Partner's Adjusted
Capital Account balance shall be determined, and the
allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations
pursuant to this Section 5.1(d) with respect to such taxable
period (other than an allocation pursuant to Sections
5.1(d)(vi) and 5.1(d)(vii)). This Section 5.1(d)(i) is
intended to comply with the Partnership Minimum Gain
chargeback requirement in Treasury Regulation Section 1.704-
2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 5.1
(other than Section 5.1(d)(i)), except as provided in Treasury
Regulation Section 1.704-2(i)(4), if there is a net decrease
in Partner Nonrecourse Debt Minimum Gain during any
Partnership taxable period, any Partner with a share of
Partner Nonrecourse Debt Minimum Gain at the beginning of such
taxable period shall be allocated items of Partnership income
and gain for such period (and, if necessary, subsequent
periods) in the manner and amounts provided in Treasury
Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or
any successor provisions. For purposes of this Section 5.1(d),
each Partner's Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any
other allocations pursuant to this Section 5.1(d), other than
Section 5.1(d)(i) and other than an allocation pursuant to
Sections 5.1(d)(vi) and 5.1(d)(vii), with respect to such
taxable period. This Section 5.1(d)(ii) is intended to comply
with the chargeback of items of income and gain requirement in
Treasury Regulation Section 1.704-2(f)(4) and shall be
interpreted consistently therewith.
(iii) Priority Allocations.
(A) If the amount of cash or the Net Agreed Value of any
property distributed (except cash or property distributed
pursuant to Section 14.3 or 14.4) to any Limited Partner
holding Units with respect to a taxable year is greater (on a
per Unit basis) than the amount of cash or the Net Agreed
Value of property distributed to the other Limited Partners
holding Units other than I-Units (on a per Unit basis), then
(1) each Limited Partner holding Units receiving such greater
cash or property distribution shall be allocated gross income
in an amount equal to the product of (aa) the amount by which
the distribution (on a per Unit basis) to such Limited
Partners holding Units exceeds the distribution (on a per Unit
basis) to the Limited Partner holding Units other than I-Units
receiving the smallest distribution and (bb) the number of
Units owned by the Limited Partners holding Units receiving
the greater distribution; and (2) the General Partner shall be
allocated gross income in an aggregate amount equal to 1/99 of
the sum of the amounts allocated in clause (1) above.
After the application of Section 5.1(d)(iii)(A), all or any
portion of the remaining items of Partnership gross income or
gain for the taxable period, if any, shall be allocated 100%
to the General Partner, until the aggregate amount of such
items allocated to the General Partner pursuant to this
paragraph 5.1(d)(iii)(B) for the current taxable period and
all previous taxable periods is equal to the cumulative amount
of all Incentive Distributions made to the General Partner (or
its assignee) from the Closing Date to a date 45 days after
the end of the current taxable period.
(iv) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulation Sections 1.704-
1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-
1(b)(2)(ii)(d)(6), items of Partnership income and gain shall
be specifically allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the
Treasury regulations promulgated under Section 704(b) of the
Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or
distributions as quickly as possible unless such deficit
balance is otherwise eliminated pursuant to Section 5.1(d)(i)
or (ii).
(v) Gross Income Allocations. In the event any Partner has a
deficit balance in its Adjusted Capital Account at the end of
any Partnership taxable period, such Partner shall be
specially allocated items of Partnership gross income and gain
in the amount of such excess as quickly as possible; provided,
that an allocation pursuant to this Section 5.1(d)(v) shall be
made only if and to the extent that such Partner would have a
deficit balance in its Adjusted Capital Account after all
other allocations provided for in this Section 5.1 have been
tentatively made as if this Section 5.1(d)(v) were not in this
Agreement.
(vi) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in
accordance with their respective Percentage Interests. If the
General Partner determines in its good faith discretion that
the Partnership's Nonrecourse Deductions must be allocated in
a different ratio to satisfy the safe harbor requirements of
the Treasury regulations promulgated under Section 704(b) of
the Code, the General Partner is authorized, upon notice to
the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such requirements.
(vii) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to
the Partner that bears the Economic Risk of Loss with respect
to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with
Treasury Regulation Section 1.704-2(i). If more than one
Partner bears the Economic Risk of Loss with respect to a
Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such
Partners in accordance with the ratios in which they share
such Economic Risk of Loss.
(viii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that
Nonrecourse Liabilities of the Partnership in excess of the
sum of (A) the amount of Partnership Minimum Gain and (B) the
total amount of Nonrecourse Built-in Gain shall be allocated
among the General Partner and the holders of Common Units and
Class B Units in accordance with the allocation of Net Income
set forth in Section 5.1(a)(iii).
(ix) Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken
into account in determining Capital Accounts, the amount of
such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and
such item of gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such
Section of the Treasury regulations.
(x) Curative Allocation.
(A) Notwithstanding any other provision of this Section 5.1,
other than the Required Allocations, the Required Allocations
shall be taken into account in making the Agreed Allocations
so that, to the extent possible, the net amount of items of
income, gain, loss and deduction allocated to each Partner
pursuant to the Required Allocations and the Agreed
Allocations, together, shall be equal to the net amount of
such items that would have been allocated to each such Partner
under the Agreed Allocations had the Required Allocations and
the related Curative Allocation not otherwise been provided in
this Section 5.1. Notwithstanding the preceding sentence,
Required Allocations relating to (1) Nonrecourse Deductions
shall not be taken into account except to the extent that
there has been a decrease in Partnership Minimum Gain and (2)
Partner Nonrecourse Deductions shall not be taken into account
except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. Allocations, pursuant to this
Section 5.1(d)(x)(A) shall only be made with respect to
Required Allocations to the extent the General Partner
reasonably determines that such allocations will otherwise be
inconsistent with the economic agreement among the Partners.
Further, allocations pursuant to this Section 5.1(d)(x)(A)
shall be deferred with respect to allocations pursuant to
clauses (1) and (2) hereof to the extent the General Partner
reasonably determines that such allocations are likely to be
offset by subsequent Required Allocations.
(B) The General Partner shall have reasonable discretion, with
respect to each taxable period, to (1) apply the provisions of
Section 5.1(d)(x)(A) in whatever order is most likely to
minimize the economic distortions that might otherwise result
from the Required Allocations, and (2) divide all allocations
pursuant to Section 5.1(d)(x)(A) among the Partners in a
manner that is likely to minimize such economic distortions.
5.2 ALLOCATIONS FOR TAX PURPOSES. (a) Except as otherwise
provided herein, for federal income tax purposes, each item of
income, gain, loss and deduction shall be allocated among the
Partners in the same manner as its correlative item of "book"
income, gain, loss or deduction is allocated pursuant to
Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property,
items of income, gain, loss, depreciation, amortization and
cost recovery deductions shall be allocated for federal income
tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in
the manner provided under Section 704(c) of the Code that
takes into account the variation between the Agreed Value of
such property and its adjusted basis at the time of
contribution; and (B) except as otherwise provided in Section
5.2(b)(iv), any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated
among the Partners in the same manner as its correlative item
of "book" gain or loss is allocated pursuant to Section 5.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof
pursuant to Section 4.3(d)(i) or (ii), and (2) second, in the
event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with
Section 5.2(b)(i)(A); and (B) except as otherwise provided in
Section 5.2(b)(iv), any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among
the Partners in the same manner as its correlative item of
"book" gain or loss is allocated pursuant to Section 5.1.
(iii) Except as otherwise provided in Section 5.2(b)(iv), all
other items of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as their
correlative item of "book" gain or loss is allocated pursuant
to Section 5.1.
(iv) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B), 5.2(b)(ii)(B) or
5.2(b)(iii) shall be subject to allocation by the General
Partner in a manner designed to eliminate, to the maximum
extent possible, Book-Tax Disparities in a Contributed
Property or Adjusted Property otherwise resulting from the
application of the "ceiling" limitation (under Section 704(c)
of the Code or Section 704(c) principles) to the allocations
provided under Section 5.2(b)(i)(A) or 5.2(b)(ii)(A).
(c) For the proper administration of the Partnership and for
the preservation of uniformity of the Units (or any class or
classes thereof), the General Partner shall have sole
discretion to
(i) adopt such conventions as it deems appropriate in
determining the amount of depreciation, amortization and cost
recovery deductions;
(ii) make special allocations for federal income tax purposes
of income (including, without limitation, gross income) or
deductions; and
(iii) amend the provisions of this Agreement as appropriate
(x) to reflect the proposal or promulgation of Treasury
regulations under Section 704(b) or Section 704(c) of the Code
or (y) otherwise to preserve or achieve uniformity of the
Units (or any class or classes thereof). The General Partner
may adopt such conventions, make such allocations and make
such amendments to this Agreement as provided in this Section
5.2(c) only if such conventions, allocations or amendments
would not have a material adverse effect on the Partners, the
holders of any class or classes of Units issued and
Outstanding or the Partnership, and if such allocations are
consistent with the principles of Section 704 of the Code.
(d) The General Partner in its sole discretion may determine
to depreciate the portion of an adjustment under Section
743(b) of the Code attributable to unrealized appreciation in
any Adjusted Property (to the extent of the unamortized Book-
Tax Disparity) using a predetermined rate derived from the
depreciation method and useful life applied to the
Partnership's common basis of such property, despite the
inconsistency of such approach with Treasury Regulation
Section 1.167(c)-1(a)(6). If the General Partner determines
that such reporting position cannot reasonably be taken, the
General Partner may adopt a depreciation convention under
which all purchasers acquiring Units in the same month would
receive depreciation, based upon the same applicable rate as
if they had purchased a direct interest in the Partnership's
property. If the General Partner chooses not to utilize such
aggregate method, the General Partner may use any other
reasonable depreciation convention to preserve the uniformity
of the intrinsic tax characteristics of any Units that would
not have a material adverse effect on the Limited Partners or
the Record Holders of any class or classes of Units.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the
extent possible, after taking into account other required
allocations of gain pursuant to this Section 5.2, be
characterized as Recapture Income in the same proportions and
to the same extent as such Partners (or their predecessors in
interest) have been allocated any deductions directly or
indirectly giving rise to the treatment of such gains as
Recapture Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes
and allocated to the Partners in accordance with the
provisions hereof shall be determined without regard to any
election under Section 754 of the Code which may be made by
the Partnership; provided, however, that such allocations,
once made shall be adjusted as necessary or appropriate to
take into account those adjustments permitted or required by
Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest of the
General Partner or to transferred Units shall, for federal
income tax purposes, be determined on an annual basis and
prorated on a monthly basis and shall be allocated to the
Partners as of 8:00am EST on the first Business Day of each
month; provided, however, that gain or loss on a sale or other
disposition of any assets of the Partnership other than in the
ordinary course of business shall be allocated to the Partners
as of 8:00am EST on the first Business Day of the month in
which such gain or loss is recognized for federal income tax
purposes. The General Partner may revise, alter or otherwise
modify such methods of allocation as it determines necessary,
to the extent permitted or required by Section 706 of the Code
and the regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited
Partner under the provisions of this Article V shall instead
be made to the beneficial owner of Units held by a nominee in
any case in which the nominee has furnished the identify of
such owner to the Partnership in accordance with Section
6031(c) of the Code or any other method acceptable to the
General Partner in its sole discretion.
5.3 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS. (a)
Within 45 days following the end of each calendar quarter, an
amount equal to 100% of Available Cash with respect to such
quarter shall be distributed in accordance with this Article V
by the Partnership to the Partners, as of the Record Date
selected by the General Partner in its reasonable discretion.
All amounts of Available Cash distributed by the Partnership
on any date from any source shall be deemed to be Cash from
Operations until the sum of all amounts of Available Cash
theretofore distributed by the Partnership to Partners
pursuant to Section 5.4 equals the aggregate amount of all
Cash from Operations generated by the Partnership since the
Closing Date through the close of the immediately preceding
calendar quarter. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as
otherwise provided in Section 5.5, be deemed to be Cash from
Interim Capital Transactions.
(b) Notwithstanding the definitions of Available Cash and Cash
from Operations contained herein, disbursements (including,
without limitation, contributions to the Operating
Partnerships or disbursements on behalf of the Operating
Partnerships) made or reserves established after the end of
any quarter shall be deemed to have been made or established,
for purposes of determining Available Cash and Cash from
Operations, within such quarter if the General Partner so
determines. Notwithstanding the foregoing, in the event of the
dissolution and liquidation of the Partnership, all proceeds
of such liquidation shall be applied and distributed in
accordance with, and subject to the terms and conditions of
Sections 14.3 and 14.4.
5.4 DISTRIBUTIONS OF CASH FROM OPERATIONS. An amount equal to
100% of Available Cash with respect to any calendar quarter
that is deemed to be Cash from Operations pursuant to the
provisions of Section 5.3 or 5.5 shall be distributed in
accordance with Section 5.7(a) as follows, except as otherwise
required by Section 4.1(c) in respect of additional
Partnership Securities issued pursuant thereto:
(a) First, 99% to all Limited Partners, Pro Rata, and 1% to
the General Partner until there has been distributed in
respect of each Unit Outstanding as of the last day of such
quarter an amount equal to the Minimum Quarterly Distribution;
(b) Second, 99% to all Limited Partners, Pro Rata, and 1% to
the General Partner until there has been distributed in
respect of each Unit Outstanding as of the last day of such
quarter an amount equal to the excess of the First Target
Distribution over the Minimum Quarterly Distribution;
(c) Third, 85.8673% to all Limited Partners, Pro Rata, and
14.1327% to the General Partner until there has been
distributed in respect of each Unit Outstanding as of the last
day of such quarter an amount equal to the excess of the
Second Target Distribution over the First Target Distribution:
(d) Fourth, 75.7653% to all Limited Partners, Pro Rata, and
24.2347% to the General Partner until there has been
distributed in respect of each Unit Outstanding as of the last
day of such quarter an amount equal to the excess of the Third
Target Distribution over the Second Target Distribution; and
(e) Thereafter, 50.5102% to all Limited Partners, Pro Rata,
and 49.4898% to the General Partner; provided, however, if the
Minimum Quarterly Distribution, the First Target Distribution,
the Second Target Distribution and the Third Target
Distribution have been reduced to zero pursuant to the second
sentence of Section 5.6, the distributions of Available Cash
that is deemed to be Cash from Operations with respect to any
quarter will be made solely in accordance with Section 5.4(e).
5.5 DISTRIBUTIONS OF CASH FROM INTERIM CAPITAL TRANSACTIONS.
An amount equal to 100% of Available Cash that constitutes
Cash from Interim Capital Transactions shall be distributed in
accordance with Section 5.7(a), unless the provisions of
Section 5.3 require otherwise, 99% to all Limited Partners,
Pro Rata, and 1% to the General Partner until a hypothetical
holder of a Common Unit acquired on the Closing Date has
received with respect to such Common Unit, during the period
since the Closing Date through such date, distributions of
Available Cash that are deemed to be Cash from Interim Capital
Transactions in an aggregate amount equal to the Initial Unit
Price. Thereafter, all Available Cash shall be distributed as
if it were Cash from Operations and shall be distributed in
accordance with Section 5.4.
5.6 ADJUSTMENT OF MINIMUM QUARTERLY DISTRIBUTION AND TARGET
DISTRIBUTION LEVELS. (a) The Minimum Quarterly Distribution,
First Target Distribution, Second Target Distribution and
Third Target Distribution shall be proportionately adjusted in
the event of any distribution, combination or subdivision
(whether effected by a distribution payable in Units or
otherwise) of Units or other Partnership Securities in
accordance with Section 4.8; provided, however, that no such
adjustment shall be made as a result of any distribution of I-
Units or fractions of I-Units pursuant to Section 5.4 or 5.5.
In the event of a distribution of Available Cash that is
deemed to be Cash from Interim Capital Transactions, the
Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution and Third Target Distribution shall
be adjusted proportionately downward to equal the product
obtained by multiplying the otherwise applicable Minimum
Quarterly Distribution, First Target Distribution, Second
Target Distribution and Third Target Distribution, as the case
may be, by a fraction of which the numerator is the
Unrecovered Initial Unit Price of the Common Units immediately
after giving effect to such distribution and of which the
denominator is the Unrecovered Initial Unit Price of the
Common Units immediately prior to giving effect to such
distribution.
(b) The Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target
Distribution shall also be subject to adjustment pursuant to
Section 9.6.
5.7 SPECIAL PROVISIONS RELATING TO UNITS. (a) Except for
distributions pursuant to Section 14.3(b), distributions to
holders of I-Units pursuant to Sections 5.4 and 5.5 will be
made in additional I-Units or fractions of I-Units in
accordance with Section 5.7(b). Distributions to holders of
Common Units, Class B Units and the General Partner pursuant
to Sections 5.4 and 5.5 will be made in cash.
(b) A Holder of an I-Unit will receive distributions pursuant
to Sections 5.4 and 5.5 in additional I-Units or fractions of
I-Units equal to the Calculated Unit Amount. Each fractional
I-Unit that is created as a result of distributions pursuant
to Sections 5.4 and 5.5 shall be equal to and represented by a
fraction that is calculated to six decimal places (without
rounding), and any calculation that would result in a
fractional interest in excess of one-millionth (1/1,000,000)
of an I-Unit shall be disregarded without payment or other
consideration and shall not be accumulated.
(c) As used in this Agreement,
(i) "Equivalent Non-Cash Amount" means, per each I-Unit, an
amount equivalent to the cash distribution made on a Common
Unit in accordance with Sections 5.4 and 5.5;
(ii) "Calculated Unit Amount" means a fraction of an I-Unit
calculated per I-Unit by dividing the Equivalent Non-Cash
Amount by the Average Market Price; and
(iii) "Average Market Price" means the average of the daily
Closing Prices per Listed Share for the ten consecutive
Trading Days prior to the date on which the Listed Shares
begin to trade ex-dividend, but not including that date. For
purposes of this Section 5.7(c), the "date on which the Listed
Shares begin to trade ex-dividend" means the date on which
"ex-dividend" trading commences for a Share Distribution on
the principal National Securities Exchange on which the Listed
Shares are listed or admitted to trading.
(d) At any time during which there are any I-Units
Outstanding, the Partnership will not:
(i) make a distribution on a Common Unit other than in cash,
Common Units or a security that has in all material respects
the same rights and privileges as the Common Units;
(ii) except pursuant to Section 14.3(b), make a distribution
on an I-Unit other than in I-Units or a security that has in
all material respects the same rights and privileges as the I-
Units;
(iii) allow a holder of Common Units to receive any
consideration other than cash or Common Units or a security
that has in all material respects the same rights and
privileges as the Common Units or allow a holder of I-Units to
receive any consideration other than I-Units or a security
that has in all material respects the same rights and
privileges as the I-Units in a
(A) merger in which the Partnership is not the survivor, if
the Limited Partners of the Partnership immediately prior to
the transaction own more than 50% of the residual common
equity securities of the survivor immediately after the
transaction;
(B) merger in which the Partnership is the survivor, if the
Limited Partners of the Partnership immediately prior to the
transaction own more than 50% of the Partnership Interests of
the Limited Partners of the Partnership immediately after the
transaction; or
(C) recapitalization, reorganization or similar transaction;
(iv) be a party to a merger in which it is not the survivor,
sell substantially all of the Partnership's assets to another
Person or enter into similar transactions if
(A) the other person is to be an Affiliate of Alberich, LLLP
after the transaction; and
(B) the transaction will result in the occurrence of a
Mandatory Purchase Event;
(v) make a tender offer for Common Units unless the
consideration
(A) is exclusively cash; and
(B) together with any cash payable in respect of any tender
offer by the Partnership for Common Units concluded within the
preceding 360 days and the aggregate amount of any cash
distributions to all holders of Common Units made within the
preceding 360 days, is less than 12% of the aggregate market
value of all Outstanding Units determined on the Trading Day
immediately preceding the commencement of the tender offer; or
(vi) issue any I-Units to any Person other than Alberich,
LLLP.
(e) In the event of any
(i) consolidation or merger of the Partnership with or into
another Person in accordance with Section 16.1 (other than a
consolidation or merger in which the Partnership is the
Surviving Business Entity and which does not result in any
reclassification, conversion, exchange or cancellation of
Outstanding Common Units) or
(ii) the sale or other disposition to another Person of all or
substantially all of the assets of the Partnership (any of the
foregoing, a "Transaction"), lawful provision shall be made
such that if the holders of Common Units receive cash in the
Transaction, except as provided in Section 14.3(b), a
distribution on each I-Unit will made in additional I-Units or
fractions of I-Units equal to the cash received on a Common
Unit as a result of the Transaction divided by the average of
the daily Closing Prices per Listed Share for the 10
consecutive Trading Days immediately prior to the effective
date of the Transaction.
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 MANAGEMENT.
(a) Subject to Section 6.6(c), the General Partner shall
conduct, direct and manage all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the
Partnership shall be exclusively vested in the General
Partner, and no Limited Partner or Assignee shall have any
management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter
granted to a general partner of a limited liability limited
partnership under applicable law or which are granted to the
General Partner under any provision of this Agreement, the
General Partner, subject to Section 6.3 shall have full power
and authority to do all things and on such terms as it, in its
sole discretion, may deem necessary or appropriate to conduct
the business of the Partnership, to exercise all powers set
forth in Section 3.2 and to effectuate the purposes set forth
in Section 3.1, including, without limitation,
(i) the making of any expenditures, the lending or borrowing
of money, the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of
evidences of indebtedness and the incurring of any other
obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to government or other
agencies having jurisdiction over the business or assets of
the Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the
assets of the Partnership or the merger or other combination
of the Partnership with or into another Person (the matters
described in this clause (iii) being subject, however, to any
prior approval that may be required by Section 6.3);
(iv) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent
with the terms of this Agreement, including, without
limitation, the financing of the conduct of the operations of
the Partnership or the Operating Partnership, the lending of
funds to other Persons (including, without limitation, the
Operating Partnership) and the repayment of obligations of the
Partnership and the Operating Partnership and the making of
capital contributions to the Operating Partnership;
(v) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including,
without limitation, instruments that limit the liability of
the Partnership under contractual arrangements to all or
particular assets of the Partnership, with the other party to
the contract to have no recourse against the General Partner
or its assets other than its interest in the Partnership, even
if same results in the terms of the transaction being less
favorable to the Partnership than would otherwise be the
case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees and agents
(including, without limitation, employees having titles such
as "president," "vice president," "secretary" and "treasurer")
and agents, outside attorneys, accountants, consultants and
contractors and the determination of their compensation and
other terms of employment or hiring;
(viii) the maintenance of such insurance for the benefit of
the Partnership, the Operating Partnership and the Partners
(including, without limitation, the assets of the Operating
Partnership and the Partnership) as it deems necessary or
appropriate;
(ix) the formation of, or acquisition of an interest in, and
the contribution of property to, any further limited or
general partnerships, joint ventures, corporations or other
relationships (including, without limitation, the acquisition
of interests in, and the contributions of property to, the
Operating Partnership from time to time);
(x) the control of any matters affecting the rights and
obligations of the Partnership, including, without limitation,
the bringing and defending of actions at law or in equity and
otherwise engaging in the conduct of litigation and the
incurring of legal expense and the settlement of claims and
litigation;
(xi) the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(xii) the entering into of listing agreements with a
National/International Stock Exchange and any other securities
exchange and the delisting of some or all of the Units from,
or requesting that trading be suspended on, any such exchange
(subject to any prior approval that may be required under
Section 1.6);
(xiii) the purchase, sale or other acquisition or disposition
of Units; and
(xiv) the undertaking of any action in connection with the
Partnership's participation in the Operating Partnership as
the limited partner (including, without limitation,
contributions or loans of funds by the Partnership to the
Operating Partnership).
(b) Notwithstanding any other provision of this Agreement, the
Operating Partnership Agreement, the Minnesota Law or any
applicable law, rule or regulation, each of the Partners and
the Assignees and each other Person who may acquire an
interest in Units hereby agrees that none of the execution,
delivery or performance by the General Partner, the
Partnership, the Operating Partnership or any Affiliate of any
of them of this Agreement or any agreement authorized or
permitted under this Agreement (including, without limitation,
the exercise by the General Partner or any Affiliate of the
General Partner of the rights accorded pursuant to Article
XVII) shall constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the
Limited Partners or the Assignees or any other Persons under
this Agreement or of any duty stated or implied by law or
equity.
6.2 CERTIFICATE OF LIMITED LIABILITY LIMITED PARTNERSHIP. The
General Partner has caused the Certificate of Limited
liability limited partnership to be filed with the Secretary
of State of the State of Minnesota as required by the
Minnesota Law and shall use all reasonable efforts to cause to
be filed such other certificates or documents as may be
determined by the General Partner in its sole discretion to be
reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited
liability limited partnership (or a partnership in which the
limited partners have limited liability) in the State of
Minnesota or any other state in which the Partnership may
elect to do business or own property. To the extent that such
action is determined by the General Partner in its sole
discretion to be reasonable and necessary or appropriate, the
General Partner shall file amendments to and restatements of
the Certificate of Limited liability limited partnership and
do all things to maintain the Partnership as a limited
liability limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the
State of Minnesota or of any other state in which the
Partnership may elect to do business or own property. Subject
to the terms of Section 7.5(a), the General Partner shall not
be required, before or after filing, to deliver or mail a copy
of the Certificate of Limited liability limited partnership,
any qualification document or any amendment thereto to any
Limited Partner or Assignee.
6.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY. (a) The
General Partner may not, without written approval of the
specific act by all of the Outstanding Units or by other
written instrument executed and delivered by all of the
Outstanding Units subsequent to the date of this Agreement,
take any action in contravention of this Agreement, including,
without limitation,
(i) any act that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise
provided in this Agreement;
(ii) possess Partnership property, or assign any rights in
specific Partnership property, for other than a Partnership
purpose;
(iii) admit a Person as a Partner, except as otherwise
provided in this Agreement;
(iv) amend this Agreement in any manner, except as otherwise
provided in this Agreement; or
(v) transfer its interest as general partner of the
Partnership, except as otherwise provided in this Agreement.
(b) Except as provided in Articles XIV and XVI, the General
Partner may not sell, exchange or otherwise dispose of all or
substantially all of the Partnership's assets in a single
transaction or a series of related transactions or approve on
behalf of the Partnership the sale, exchange or other
disposition of all or substantially all of the assets of
Alberich, LLLP, without the approval of at least a majority of
the Outstanding Units; provided, however, that this provision
shall not preclude or limit the General Partner's ability to
mortgage, pledge, hypothecate or grant a security interest in
all or substantially all of the Partnership's assets and shall
not apply to any forced sale of any or all of the
Partnership's assets pursuant to the foreclosure of, or other
realization upon, any such encumbrance. Without the approval
of at least two-thirds of the Outstanding Units, the General
Partner shall not, on behalf of the Partnership,
(i) consent to any amendment to the Alberich, LLLP Partnership
Agreement or, except as expressly permitted by Section 6.9(d),
take any action permitted to be taken by a partner of
Alberich, LLLP, in either case, that would adversely affect
the Partnership as a partner of Alberich, LLLP or
(ii) except as permitted under Section 11.2 and 13.1, elect or
cause the Partnership to elect a successor general partner of
Alberich, LLLP.
(c) Unless approved by the affirmative vote of at least a
majority of each class of Outstanding Units, including a
majority of Common Units (excluding for purposes of such
determination Common Units owned by the General Partner and
its Affiliates), the General Partner shall not take any action
or refuse to take any reasonable action the effect of which,
if taken or not taken, as the case may be, would be to cause
the Partnership or the Operating Partnership to be treated as
an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes; provided
that this Section 6.3(c) shall not be construed to apply to
amendments to this Agreement (which are governed by Article
XV) or mergers or consolidations of the Partnership with any
Person (which are governed by Article XVI).
(d) At all times while serving as the general partner of the
Partnership, the General Partner shall not make any dividend
or distribution on, or repurchase any shares of, its stock or
take any other action within its control if the effect of such
dividend, distribution, repurchase or other action would be to
reduce its net worth below an amount necessary to receive an
Opinion of Counsel that the Partnership will be treated as a
partnership for federal income tax purposes.
6.4 REIMBURSEMENT OF THE GENERAL PARTNER. (a) Except as
provided in this Section 6.4 and elsewhere in this Agreement
or in the Operating Partnership Agreement, the General Partner
shall not be compensated for its services as general partner
of the Partnership or the Operating Partnership.
(b) The General Partner shall be reimbursed on a monthly
basis, or such other basis as the General Partner may
determine in its sole discretion, for
(i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership (including, without
limitation, amounts paid to any Person to perform services for
the Partnership or for the General Partner in the discharge of
its duties to the Partnership), and
(ii) all other necessary or appropriate expenses allocable to
the Partnership or otherwise reasonably incurred by the
General Partner in connection with operating the Partnership's
business (including, without limitation, expenses allocated to
the General Partner by its Affiliates); provided, however,
that the General Partner shall not perform or be reimbursed
for the "Services" to be performed on behalf of the
Partnership by certain Affiliates pursuant to the Omnibus
Agreement (if applicable). The General Partner shall determine
the fees and expenses that are allocable to the Partnership in
any reasonable manner determined by the General Partner in its
sole discretion. Reimbursements pursuant to this Section 6.4
shall be in addition to any reimbursement to the General
Partner as a result of indemnification pursuant to Section
6.7.
(c) The General Partner in its sole discretion and without the
approval of the Limited Partners may propose and adopt on
behalf of the Partnership employee benefit plans (including,
without limitation, plans involving the issuance of Units),
for the benefit of employees of the General Partner, the
Partnership, the Operating Partnership or any Affiliate of any
of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership or the
Operating Partnership.
6.5 OUTSIDE ACTIVITIES.
(a) After the Closing Date, the General Partner, for so long
as it is the general partner of the Partnership,
(i) agrees that its sole business will be to act as the
general partner of the Partnership and the Operating
Partnership and to undertake activities that are ancillary or
related thereto, and
(ii) shall not enter into or conduct any business or incur any
debts or liabilities except in connection with or incidental
to
(A) its performance of the activities required or authorized
by the Operating Partnership Agreement, this Agreement or the
Omnibus Agreement or described in or contemplated by the
Registration Statement and (B) the acquisition, ownership or
disposition of partnership interests in the Partnership and
the Operating Partnership.
(b) Except as described in the Registration Statement, the
Omnibus Agreement or Section 6.5(a), no Indemnitee shall be
expressly or implicitly restricted or proscribed pursuant to
this Agreement, the Operating Partnership Agreement or the
partnership relationship established hereby or thereby from
engaging in other activities for profit, whether in the
businesses engaged in by the Partnership or the Operating
Partnership or anticipated to be engaged in by the
Partnership, the Operating Partnership or otherwise,
including, without limitation, those businesses described in
or contemplated by the Registration Statement. Without
limitation of and subject to the foregoing (but subject to the
limitations set forth in the Omnibus Agreement), each
Indemnitee shall have the right to engage in other businesses
of every type and description and to engage in and possess an
interest in other business ventures of any and every type or
description, independently or with others, including, without
limitation, business interests and activities in direct
competition with the Partnership or the Operating Partnership,
and none of the same shall breach any duty to the Partnership,
the Operating Partnership or any Partners. Neither the
Partnership, the Operating Partnership, any Limited Partner
nor any other Person shall have any rights by virtue of this
Agreement, the Operating Partnership Agreement or the
partnership relationship established hereby or thereby in any
business ventures of any Indemnitee and, except as set forth
in the Omnibus Agreement, such Indemnitees shall have no
obligation to offer any interest in any such business ventures
to the Partnership, the Operating Partnership, any Limited
Partner or any other Person. The General Partner and any other
Persons affiliated with the General Partner may acquire Units
or other Partnership Securities, in addition to those acquired
by any of such Persons on the Closing Date, and shall be
entitled to exercise all rights of an Assignee or Limited
Partner, as applicable, relating to such Units or Partnership
Securities, as the case may be.
(c) Without limitation of Section 6.5(a) and 6.5(b), and
notwithstanding anything to the contrary in this Agreement,
the competitive activities of certain Indemnitees and the
restrictions on the Partnership's activities described in the
Registration Statement and in the Omnibus Agreement (if
applicable) are hereby approved by all Partners, and it shall
not be deemed to be a breach of the General Partner's
fiduciary duty for the General Partner to permit an Indemnitee
to engage in a business opportunity in preference to or to the
exclusion of the Partnership, if such activities are permitted
by this Agreement, the Operating Partnership Agreement or the
Omnibus Agreement.
6.6 LOANS TO AND FROM THE GENERAL PARTNER; CONTRACTS WITH
AFFILIATES. (a) (i) The General Partner or any Affiliate
thereof may lend to the Partnership or the Operating
Partnership, and the Partnership and the Operating Partnership
may borrow, funds needed or desired by the Partnership and the
Operating Partnership for such periods of time as the General
Partner may determine and
(ii) the General Partner or any Affiliate thereof may borrow
from the Partnership or the Operating Partnership, and the
Partnership and the Operating Partnership may lend to the
General Partner or such Affiliate, excess funds of the
Partnership and the Operating Partnership for such periods of
time and in such amounts as the General Partner may determine;
provided, however, that in either such case the lending party
may not charge the borrowing party interest at a rate greater
than the rate that would be charged the borrowing party
(without reference to the leading party's financial abilities
or guarantees) by unrelated lenders on comparable loans. The
borrowing party shall reimburse the lending party for any
costs (other than any additional interest costs) incurred by
the lending party in connection with the borrowing of such
funds. For purposes of this Section 6.6(a) and Section 6.6(b),
the term "Partnership" shall include any Affiliate of the
Partnership that is controlled by the Partnership and the term
"Operating Partnership" shall include any Affiliate of the
Operating Partnership that is controlled by the Operating
Partnership.
(b) The Partnership may lend or contribute to the Operating
Partnership, and the Operating Partnership may borrow, funds
on terms and conditions established in the sole discretion of
the General Partner; provided, however, that the Partnership
may not charge the Operating Partnership interest at a rate
greater than the rate that would be charged to the Operating
Partnership (without reference to the General Partner's
financial abilities or guarantees) by unrelated lenders on
comparable loans. The foregoing authority shall be exercised
by the General Partner in its sole discretion and shall not
create any right or benefit in favor of the Operating
Partnership or any other Persons.
(c) The General Partner may itself, or may enter into an
agreement, including the Delegation of Control Agreement, with
any of its Affiliates to, render services to the Partnership
or to the General Partner in the discharge of its duties as
general partner of the Partnership. Any service rendered to
the Partnership by the General Partner or any of its
Affiliates shall be on terms that are fair and reasonable to
the Partnership; provided, however, that the requirements of
this Section 6.6(c) shall be deemed satisfied as to
(i) any transaction approved by Special Approval,
(ii) any transaction, the terms of which are no less favorable
to the Partnership than those generally being provided to or
available from unrelated third parties, or
(iii) any transaction that, taking into account the totality
of the relationships between the parties involved (including
other transactions that may be particularly favorable or
advantageous to the Partnership), is equitable to the
Partnership. The provisions of Section 6.4 shall apply to the
rendering of services described in this Section 6.6(c).
(d) The Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in
which it is or thereby becomes a participant upon such terms
and subject to such conditions as are consistent with this
Agreement and applicable law.
(e) Neither the General Partner nor any of its Affiliates
shall sell, transfer or convey any property to, or purchase
any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are fair and reasonable
to the Partnership; provided, however, that the requirements
of this Section 6.6(e) shall be deemed to be satisfied as to
(i) any transaction approved by Special Approval,
(ii) any transaction, the terms of which are no less favorable
to the Partnership than those generally being provided to or
available from unrelated third parties, or
(iii) any transaction that, taking into account the totality
of the relationships between the parties involved (including
other transactions that may be particularly favorable or
advantageous to the Partnership), is equitable to the
Partnership.
(f) The General Partner and its Affiliates will have no
obligation to permit the Partnership or the Operating
Partnership to use any facilities or assets of the General
Partner and its Affiliates, except as may be provided in
contracts entered into from time to time specifically dealing
with such use, nor shall there be any obligation on the
General Partner or its Affiliates to enter into such
contracts.
(g) Without limitation of Sections 6.6(a) through 6.6(f), and
notwithstanding anything to the contrary in this Agreement,
the existence of the conflicts of interest described in the
Registration Statement and in the Omnibus Agreement are hereby
approved by all Partners.
6.7 INDEMNIFICATION. (a) To the fullest extent permitted by
law but subject to the limitations expressly provided in this
Agreement, the General Partner, any Departing Partner and any
Person who is or was an officer or director of the General
Partner or any Departing Partner shall be indemnified and held
harmless by the Partnership, and all other Indemnitees may be
indemnified and held harmless by the Partnership, to the
extent deemed advisable by the General Partner, from and
against any and all losses, claims, damages, liabilities,
joint or several, expenses (including, without limitation,
legal fees and expenses), judgments, fines, penalties,
interest, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in which any
Indemnitee may be involved, or is threatened to be involved,
as a party or otherwise, by reason of its status as
(i) the General Partner, a Departing Partner or any of their
Affiliates,
(ii) an officer, director, employee, partner, agent or trustee
of the General Partner, any Departing Partner or any of their
Affiliates or
(iii) a Person serving at the request of the Partnership in
another entity in a similar capacity, provided, that in each
case the Indemnitee acted in good faith and in the manner
which such Indemnitee believed to be in, or not opposed to,
the best interests of the Partnership, and, with respect to
any criminal proceeding, had no reasonable cause to believe
its conduct was unlawful; provided, further, no
indemnification pursuant to this Section 6.7 shall be
available to the General Partner with respect to its
obligations incurred pursuant to the Underwriting Agreement or
the Conveyance Agreement (other than obligations incurred by
the General Partner on behalf of the Partnership or the
Operating Partnerships). 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
create a presumption that the Indemnitee acted in a manner
contrary to that specified above. Any indemnification pursuant
to this Section 6.7 shall be made only out of the assets of
the Partnership, it being agreed that the General Partner
shall not be personally liable for such indemnification and
shall have no obligation to contribute or loan any monies or
property to the Partnership to enable it to effectuate such
indemnification.
(b) To the fullest extent permitted by law, expenses
(including, without limitation, legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to
Section 6.7(a) in defending any claim, demand, action, suit or
proceeding shall, from time to time, be advanced by the
Partnership prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the
Partnership of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that
the Indemnitee is not entitled to be indemnified as authorized
in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be
in addition to any other rights to which an Indemnitee may be
entitled under any agreement, pursuant to any vote of the
holders of Outstanding Units, as a matter of law or otherwise,
both as to actions in the Indemnitee's capacity as
(i) the General Partner, a Departing Partner or an Affiliate
thereof,
(ii) an officer, director, employee, partner, agent or trustee
of the General Partner, any Departing Partner or an Affiliate
thereof or
(iii) a Person serving at the request of the Partnership in
another entity in a similar capacity, and as to actions in any
other capacity, and shall continue as to an Indemnitee who has
ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators
of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse
the General Partner or its Affiliates for the cost of)
insurance, on behalf of the General Partner and such other
Persons as the General Partner shall determine, against any
liability that may be asserted against or expense that may be
incurred by such Person in connection with the Partnership's
activities, regardless of whether the Partnership would have
the power to indemnify such Person against such liability
under the provisions of this Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary
of an employee benefit plan whenever the performance by it of
its duties to the Partnership also imposes duties on, or
otherwise involves services by, it to the plan or participants
or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant
to applicable law shall constitute "fines" within the meaning
of Section 6.7(a); and action taken or omitted by it with
respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan
shall be deemed to be for a purpose which is in, or not
opposed to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification
provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 6.7 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 or the Omnibus
Agreement.
(h) The provisions of this Section 6.7 are for the benefit of
the Indemnitee, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights
for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7
or any provision hereof shall in any manner terminate, reduce
or impair the right of any past, present or future Indemnitee
to be indemnified by the Partnership, nor the obligation of
the Partnership to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 6.7 as in
effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
6.8 LIABILITY OF INDEMNITEES.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages
to the Partnership, the Limited Partners, the Assignees or any
other Persons who have acquired interests in the Units, for
losses sustained or liabilities incurred as a result of any
act or omission if such Indemnitee acted in good faith.
(b) Subject to its obligations and duties as General Partner
set forth in Section 6.1(a), the 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 the General Partner shall not be
responsible for any misconduct or negligence on the part of
any such agent appointed by the General Partner in good faith.
Notwithstanding the preceding sentence, the General Partner
shall be responsible for any misconduct or negligence on the
part of Alberich, LLLP in performing the Maximum Permitted
Delegation.
(c) Any amendment, modification or repeal of this Section 6.8
or any provision hereof shall be prospective only and shall
not in any way affect the limitations on the liability to the
Partnership and the Limited Partners of the General Partner,
its directors, officers and employees under this Section 6.8
as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
6.9 RESOLUTION OF CONFLICTS OF INTEREST.
(a) Unless otherwise expressly provided in this Agreement, the
Operating Partnership Agreement or the Omnibus Agreement,
whenever a potential conflict of interest exists or arises
between the General Partner or any of its Affiliates, on the
one hand, and the Partnership, the Operating Partnership, and
Partner or any Assignee, on the other hand, any resolution or
course of action in respect of such conflict of interest shall
be permitted and deemed approved by all Partners, and shall
not constitute a breach of this Agreement, of the Operating
Partnership Agreement, of any agreement contemplated herein or
therein, or of any duty stated or implied by law or equity, if
the resolution or course of action is or, by operation of this
Agreement is deemed to be, fair and reasonable to the
Partnership. The General Partner shall be authorized but not
required in connection with its resolution of such conflict of
interest to seek Special Approval of a resolution of such
conflict or course of action. Any conflict of interest and any
resolution of such conflict of interest shall be conclusively
deemed fair and reasonable to the Partnership if such conflict
of interest or resolution is
(i) approved by Special Approval,
(ii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third
parties or
(iii) fair to the Partnership, taking into account the
totality of the relationships between the parties involved
(including other transactions that may be particularly
favorable or advantageous to the Partnership). The General
Partner may also adopt a resolution or course of action that
has not received Special Approval. The General Partner
(including the Conflicts and Audit Committee in connection
with Special Approval) shall be authorized in connection with
its determination of what is "fair and reasonable" to the
Partnership and in connection with its resolution of any
conflict of interest to consider
(A) the relative interests of any party to such conflict,
agreement, transaction or situation and the benefits and
burdens relating to such interest;
(B) any customary or accepted industry practices and any
customary or historical dealings with a particular Person;
(C) any applicable generally accepted accounting or
engineering practices or principles; and
(D) such additional factors as the General Partner (including
such Conflicts and Audit Committee) determines in its sole
discretion to be relevant, reasonable or appropriate under the
circumstances. Nothing contained in this Agreement, however,
is intended to nor shall it be construed to require the
General Partner (including such Conflicts and Audit Committee)
to consider the interest of any Person other than the
Partnership. In the absence of bad faith by the General
Partner, the resolution, action or terms so made, taken or
provided by the General Partner with respect to such matter
shall not constitute a breach of this Agreement or any other
agreement contemplated herein or a breach of any standard of
care or duty imposed herein or therein or under the Minnesota
Law or any other law, rule or regulation.
(b) Whenever this Agreement or any other agreement
contemplated hereby provides that the General Partner or any
of its Affiliates is permitted or required to make a decision
(i) in its "sole discretion" or "discretion," that it deems
"necessary or appropriate" or under a grant of similar
authority or latitude, the 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, the Operating Partnership, any Limited Partner or
any Assignee,
(ii) it may make such decision in its sole discretion
(regardless of whether there is a reference to "sole
discretion" or "discretion") unless another express standard
is provided for, or
(iii) in "good faith" or under another express standard, the
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, the Operating Partnership
Agreement, any other agreement contemplated hereby or under
the Minnesota Law or any other law, rule or regulation. In
addition, any actions taken by the General Partner consistent
with the standards of "reasonable discretion" set forth in the
definitions of Available Cash or Cash from Operations shall
not constitute a breach of any duty of the General Partner to
the Partnership or the Limited Partners. The General Partner
shall have no duty, express or implied, to sell or otherwise
dispose of any asset of the Operating Partnership or of the
Partnership, other than in the ordinary course of business. No
borrowing by the Partnership or the Operating Partnership or
the approval thereof by the General Partner shall be deemed to
constitute a breach of any duty of the General Partner to the
Partnership or the Limited Partners by reason of the fact that
the purpose or effect of such borrowing is directly or
indirectly to enable the General Partner to receive or
increase the amount of Incentive Distributions.
(c) Whenever a particular transaction, arrangement or
resolution of a conflict of interest is required under this
Agreement to be "fair and reasonable" to any Person, the fair
and reasonable nature of such transaction, arrangement or
resolution shall be considered in the context of all similar
or related transactions.
(d) The Limited Partners hereby authorize the General Partner,
on behalf of the Partnership as a partner of the Operating
Partnership, to approve of actions by the general partner of
the Operating Partnership similar to those actions permitted
to be taken by the General Partner pursuant to this Section
6.9.
6.10 OTHER MATTERS CONCERNING THE GENERAL PARTNER. (a) The
General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment
bankers and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the
opinion (including, without limitation, an Opinion of Counsel)
of such Persons as to matters that such General Partner
reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such
opinion.
(c) The General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any
of its duly authorized officers and a duly appointed attorney
or attorneys-in-fact. Each such attorney shall, to the extent
provided by the General Partner in the power of attorney, have
full power and authority to do and perform each and every act
and duty that is permitted or required to be done by the
General Partner hereunder.
(d) Any standard of care any duty imposed by this Agreement or
under the Minnesota Law or any applicable law, rule or
regulation shall be modified, waived or limited as required to
permit the General Partner to act under this Agreement or any
other agreement contemplated by this Agreement and to make any
decision pursuant to the authority prescribed in this
Agreement so long as such action is reasonably believed by the
General Partner to be in, or not inconsistent with, the best
interests of the Partnership.
6.11 TITLE TO PARTNERSHIP ASSETS. Title to Partnership assets,
whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as
an entity, and no Partner or Assignee, individually or
collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the
Partnership, the General Partner, one or more of its
Affiliates or one or more nominees, as the General Partner may
determine. The General Partner hereby declares and warrants
that any Partnership assets for which record title is held in
the name of the General Partner or one or more of its
Affiliates or one or more nominees shall be held by the
General Partner or such Affiliate or nominee for the use and
benefit of the Partnership in accordance with the provisions
of this Agreement; provided, however, that the General Partner
shall use its reasonable efforts to cause record title to such
assets (other than those assets in respect of which the
General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as
reasonably practicable; provided that, prior to the withdrawal
or removal of the General Partner or as soon thereafter as
practicable, the General Partner shall use reasonable efforts
to effect the transfer of record title to the Partnership and
prior to any such transfer, will provide for the use of such
assets in a manner satisfactory to the Partnership. All
Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name
in which record title to such Partnership assets is held.
6.12 PURCHASE OR SALE OF UNITS. The General Partner may cause
the Partnership to purchase or otherwise acquire Units. As
long as Units are held by the Partnership or the Operating
Partnership, such Units shall not be considered Outstanding
for any purpose, except as otherwise provided herein. The
General Partner or any Affiliate of the General Partner may
also purchase or otherwise acquire and sell or otherwise
dispose of Units for its own account, subject to the
provisions of Articles XI and XII.
6.13 REGISTRATION RIGHTS OF ALBERICH, LLLP AND ITS AFFILIATES.
(a) If (i) Alberich, LLLP or any Affiliate (including, without
limitation, for purposes of this Section 6.13, any Person that
is an Affiliate at the date hereof notwithstanding that it may
later cease to be an Affiliate) holds Units or other
Partnership Securities that it desires to sell and (ii) Rule
144 of the Securities Act (or any successor rule or regulation
to Rule 144) or another exemption from registration is not
available to enable such holder of Units (the "Holder") to
dispose of the number of Units or other securities it desires
to sell at the time it desires to do so without registration
under the Securities Act, then upon the request of Alberich,
LLLP or any of its Affiliates, the Partnership shall file with
the Securities and Exchange Commission as promptly as
practicable after receiving such request, and use all
reasonable efforts to cause to become effective and remain
effective for a period of not more than six months following
its effective date, a registration statement under the
Securities Act registering the offering and sale of the number
of Units or other securities specified by the Holder;
provided, however, that the Partnership shall not be required
to effect more than three registrations pursuant to this
Section 6.13(a); and provided further, that if the General
Partner or, if at the time a request pursuant to this Section
6.13 is submitted to the Partnership, Alberich, LLLP or its
Affiliate requesting registration is an Affiliate of the
General Partner, the Conflicts and Audit Committee in
connection with Special Approval determines in good faith
judgment that a postponement of the requested registration for
up to six months would be in the best interest of the
Partnership and its Partners due to a pending transaction,
investigation or other event, the filing of such registration
statement or the effectiveness thereof may be deferred for up
to six months, but not thereafter. In connection with any
registration pursuant to the immediately preceding sentence,
the Partnership shall promptly prepare and file (x) such
documents as may be necessary to register or qualify the
securities subject to such registration under the securities
laws of such states as the Holder shall reasonably request;
provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the
Partnership would become subject to general service of process
or to taxation or qualification to do business as a foreign
corporation or partnership doing business in such
jurisdiction, and (y) such documents as may be necessary to
apply for listing or to list the securities subject to such
registration on such National Securities Exchange as the
Holder shall reasonably request, and do any and all other acts
and things that may reasonably be necessary or advisable to
enable the Holder to consummate a public sale of such Units in
such states. Except as set forth in Section 6.13(c), all costs
and expenses of any such registration and offering (other than
the underwriting discounts and commissions) shall be paid by
the Partnership, without reimbursement by the Holder.
(b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an
offering of equity securities of the Partnership for cash
(other than an offering relating solely to an employee benefit
plan), the Partnership shall use all reasonable efforts to
include such number or amount of securities held by the Holder
in such registration statement as the Holder shall request. If
the proposed offering pursuant to this Section 6.13(b) shall
be an underwritten offering, then, in the event that the
managing underwriter of such offering advises the Partnership
and the Holder in writing that in its opinion the inclusion of
all or some of the Holder's securities would adversely and
materially affect the success of the offering, the Partnership
shall include in such offering only that number or amount, if
any, of securities held by the Holder which, in the opinion of
the managing underwriter, will not so adversely and materially
affect the offering. Except as set forth in Section 6.13(c),
all costs and expenses of any such registration and offering
(other than the underwriting discounts and commissions) shall
be paid by the Partnership, without reimbursement by the
Holder.
(c) If underwriters are engaged in connection with any
registration referred to in this Section 6.13, the Partnership
shall provide indemnification, representations, covenants,
opinions and other assurance to the underwriters in form and
substance reasonably satisfactory to such underwriters.
Further, in addition to and not in limitation of the
Partnership's obligations under Section 6.7, the Partnership
shall, to the fullest extent permitted by law, indemnify and
hold harmless the Holder, its officers, directors and each
Person who controls the Holder (within the meaning of the
Securities Act) and any agent thereof (collectively,
"Indemnified Persons") against any losses, claims, demands,
actions, causes of action, assessments, damages, liabilities
(joint or several), costs and expenses (including, without
limitation, interest, penalties and reasonable attorneys' fees
and disbursements), resulting to, imposed upon, or incurred by
the Indemnified Persons, directly or indirectly, under the
Securities Act or otherwise (hereinafter referred to in this
Section 6.13(c) as a "claim" and in the plural as "claims"),
based upon, arising out of, or resulting from any untrue
statement or alleged untrue statement of any material fact
contained in any registration statement under which any Units
were registered under the Securities Act or any state
securities or Blue Sky laws, in any preliminary prospectus (if
used prior to the effective date of such registration
statement), or in any summary or final prospectus or in any
amendment or supplement thereof (if used during the period the
Partnership is required to keep the registration current), or
arising out of, based upon or resulting from the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements made
therein not misleading, provided, however, that the
Partnership shall not be liable to any Indemnified Person to
the extent that any such claim arises out of, is based upon or
results from an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration
statement, such preliminary, summary or final prospectus or
such amendment or supplement, in reliance upon and in
conformity with written information furnished to the
Partnership by or on behalf of such Indemnified Person
specifically for use in the preparation thereof.
(d) The provisions of Sections 6.13(a) and 6.13(b) shall
continue to be applicable with respect to Alberich, LLLP (and
any of Alberich, LLLP's Affiliates) after it ceases to be a
Partner of the Partnership, during a period of two years
subsequent to the effective date of such cessation and for so
long thereafter as is required for the Holder to sell all of
the Units or other securities of the Partnership with respect
to which it has requested during such two-year period that a
registration statement be filed; provided, however, that the
Partnership shall not be required to file successive
registration statements covering the same securities for which
registration was demanded during such two-year period. The
provisions of Section 6.13(c) shall continue in effect
thereafter.
(e) Any request to register Partnership Securities pursuant to
this Section 6.13 shall
(i) specify the Partnership Securities intended to be offered
and sold by the Person making the request,
(ii) express such Person's present intent to offer such shares
for distribution,
(iii) describe the nature or method of the proposed offer and
sale of Partnership Securities, and
(iv) contain the undertaking of such Person to provide all
such information and material and take all action as may be
required in order to permit the Partnership to comply with all
applicable requirements in connection with the registration of
such Partnership Securities.
6.14 RELIANCE BY THIRD PARTIES. Notwithstanding anything to
the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the 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
Partnership, and such Person shall be entitled to deal with
the General Partner as if it were the Partnership's sole party
in interest, both legally and beneficially. Each Limited
Partner hereby waives any and all defenses or other remedies
that may be available against such Person to contest, negate
or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing
with the 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 the General Partner or its
representatives. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the
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.
6.15 DELEGATION TO ALBERICH, LLLP (a) Pursuant to Section
6.6(c) of this Agreement and in accordance with Minnesota Law,
the General Partner shall delegate to Alberich, LLLP, to the
fullest extent permitted under this Agreement and Minnesota
law, all of the General Partner's power and authority to
manage and control the business and affairs of the Partnership
under the terms and conditions of the Delegation of Control
Agreement; provided, however, that such delegation shall not
cause the General Partner to cease to be the sole general
partner of the Partnership; and provided, further, that the
General Partner shall not be relieved of any of its
responsibilities or obligations to the Partnership or the
Limited Partners as a result of such delegation. The General
Partner shall retain all of its Partnership Interest,
Percentage Interest, rights to Incentive Distributions, rights
to allocations of Net Income and Net Losses, rights to
allocations of Net Termination Gains and Net Termination
Losses, and rights to distributions pursuant to Sections 5.3,
5.4, 5.5 and 14.3. The specific terms and conditions of the
delegation to Alberich, LLLP are set forth in the Delegation
of Control Agreement.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, until such date as the Maximum Permitted Delegation
is terminated in accordance with the Delegation of Control
Agreement, the provisions of this Agreement that apply to the
management and control of the Partnership, including Sections
6.4, 6.10 and 6.14, shall apply to Alberich, LLLP to the same
extent as such provisions apply to the General Partner.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, the provisions of Section 6.7 of this Agreement
shall apply to Alberich, LLLP and any Person who is or was a
manager, officer or director of Alberich, LLLP to the same
extent as such provisions apply to the General Partner and any
Person who is or was an officer or director of the General
Partner.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 LIMITATION OF LIABILITY. The Limited Partners and the
Assignees shall have no liability under this Agreement except
as expressly provided in this Agreement or the Minnesota Law.
7.2 MANAGEMENT OF BUSINESS. No Limited Partner or Assignee
(other than the General Partner, any of its Affiliates or any
officer, director, employee, partner, agent or trustee of the
General Partner or any of its Affiliates, in its capacity as
such, if such Person shall also be a Limited Partner or
Assignee) shall participate in the operation, management or
control (within the meaning of the Minnesota Law) 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 the General Partner, any of its Affiliates or any
officer, director, employee, partner, agent or trustee of the
General Partner or any of its Affiliates, in its capacity as
such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this
Agreement.
7.3 OUTSIDE ACTIVITIES. Subject to the provisions of Section
6.5, which shall continue to be applicable to the Persons
referred to therein, regardless of whether such Persons shall
also be Limited Partners or Assignees, any Limited Partner or
Assignee shall be entitled to and may have business interests
and engage in business activities in addition to those
relating to the Partnership, including, without limitation,
business interests and activities in direct competition with
the Partnership or the Operating Partnership. Neither the
Partnership nor any of the other Partners or Assignees shall
have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee.
7.4 RETURN OF CAPITAL. No Limited Partner or Assignee 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. Except to the
extent provided by Article V or as otherwise expressly
provided in this Agreement or in the Omnibus Agreement, no
Limited Partner or Assignee shall have priority over any other
Limited Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses or distributions. Any
such return shall be a compromise to which all Partners and
Assignees agree within the meaning of Minnesota Law.
7.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP.
(a) In addition to other rights provided by this Agreement or
by applicable law, and except as limited by Section 7.5(b),
each Limited Partner shall have the right, for a purpose
reasonably related to such Limited Partner's interest as a
limited partner in the Partnership, upon reasonable demand and
at such Limited Partner's own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for
each year;
(iii) to have furnished to him, upon notification to the
General Partner, a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) to have furnished to him, upon notification to the
General Partner, a copy of this Agreement, the Omnibus
Agreement and the Certificate of Limited liability limited
partnership and all amendments thereto, together with a copy
of the executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate of Limited liability
limited partnership and all amendments thereto have been
executed;
(v) to obtain true and full information regarding the amount
of cash and description and statement of the Agreed Value of
any other Capital Contribution by each Partner and which each
Partner has agreed to contribute in the future, and the date
on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the
General Partner may keep confidential from the Limited
Partners and Assignees, for such period of time as the General
Partner deems reasonable, any information that the General
Partner reasonably believes to be in the nature of trade
secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best
interests of the Partnership or the Operating Partnership or
could damage the Partnership or the Operating Partnership or
that the Partnership or the Operating Partnership is required
by law or by agreements with third parties to keep
confidential (other than agreements with Affiliates the
primary purpose of which is to circumvent the obligations set
forth in this Section 7.5).
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 BOOKS, RECORDS AND ACCOUNTING. The General Partner shall
keep or cause to be kept at the principal office of the
Partnership appropriate books and records with respect to the
Partnership's business, including, without limitation, all
books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be
provided pursuant to Section 7.5(a). Any books and records
maintained by or on behalf of the Partnership in the regular
course of its business, including, without limitation, the
record of the Record Holders and Assignees of Units or other
Partnership Securities, books of account and records of
Partnership proceedings, may be kept on, or be in the form of,
punch cards, magnetic tape, photographs, micrographics or any
other information storage device, provided, that the books and
records so maintained 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 an accrual basis in accordance with generally
accepted accounting principles.
8.2 FISCAL YEAR. The fiscal year of the Partnership shall
begin in August of every year.
8.3 REPORTS. (a) As soon as practicable, but in no event later
than 120 days after the close of each fiscal year of the
Partnership, the General Partner shall cause to be mailed to
each Record Holder of a Unit as of a date selected by the
General Partner in its sole discretion, an annual report
containing financial statements of the Partnership for such
fiscal year of the Partnership, presented in accordance with
generally accepted accounting principles, including a balance
sheet and statements of operations, Partners' equity and cash
flows, such statements to be audited by a firm of independent
public accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days
after the close of each calendar quarter except the last
calendar quarter of each year, the General Partner shall cause
to be mailed to each Record Holder of a Unit, as of a date
selected by the General Partner in its sole discretion, a
report containing unaudited financial statements of the
Partnership and such other information as may be required by
applicable law, regulation or rule of any National Securities
Exchange on which the Units are listed for trading, or as the
General Partner determines to be necessary or appropriate.
ARTICLE IX
TAX MATTERS
9.1 PREPARATION OF TAX RETURNS. The General Partner shall
arrange for the preparation and timely filing of all returns
of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income
tax purposes and shall use all reasonable efforts to furnish,
within 90 days of the close of each taxable year of the
Partnership, the tax information reasonably required by
holders of Outstanding Units for federal and state income tax
reporting purposes. The classification, realization and
recognition of income, gain, losses and deductions and other
items shall be on the accrual method of accounting for federal
income tax purposes. The taxable year of the Partnership shall
begin in August of every year.
9.2 TAX ELECTIONS. Except as otherwise provided herein, the
General Partner shall, in its sole discretion, determine
whether to make any available election pursuant to the Code;
provided, however, that the General Partner shall make the
election under Section 754 of the Code in accordance with
applicable regulations thereunder. The General Partner shall
have the right to seek to revoke any such election (including
without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole
discretion that such revocation is in the best interests of
the Limited Partners and Assignees. For purposes of computing
the adjustments under Section 743(b) of the Code, the General
Partner shall be authorized (but not required) to adopt a
convention whereby the price paid by a transferee of Units
will be deemed to be the lowest quoted trading price of the
Units on any National Securities Exchange on which such Units
are traded during the calendar month in which such transfer is
deemed to occur pursuant to Section 5.2(g) without regard to
the actual price paid by such transferee.
9.3 TAX CONTROVERSIES. Subject to the provisions hereof, the
General Partner is designated 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, without
limitation, resulting administrative and judicial proceedings,
and to expend Partnership funds for professional services and
costs associated therewith. Each Partner and Assignee agrees
to cooperate with the General Partner and to do or refrain
from doing any or all things reasonably required by the
General Partner to conduct such proceedings.
9.4 ORGANIZATIONAL EXPENSES. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the
Partnership ratably over a 60-month period as provided in
Section 709 of the Code.
9.5 WITHHOLDING. Notwithstanding any other provision of this
Agreement, the General Partner is authorized to take any
action that it determines in its sole discretion to be
necessary or appropriate to cause the Partnership and the
Operating Partnership to comply with any withholding
requirements established under the Code or any other federal,
state or local law including, without limitation, pursuant to
Sections 1441, 1442, 1445 and 1446 of the Code. To the extent
that the Partnership is required to withhold and pay over to
any taxing authority any amount resulting from the allocation
or distribution of income to any Partner or Assignee
(including, without limitation, by reason of Section 1446 of
the Code), the amount withheld shall be treated as a
distribution of cash pursuant to Section 5.3 in the amount of
such withholding from such Partner.
9.6 ENTITY-LEVEL TAXATION. If legislation is enacted that
causes the Partnership to become treated as an association
taxable as a corporation or otherwise subjects the Partnership
to entity-level taxation for federal income tax purposes, the
Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution or Third Target Distribution, as
the case may be, shall be equal to the product obtained by
multiplying
(a) the amount thereof by
(b) 1 minus the sum of
(i) the highest effective federal corporate (or other entity,
as applicable) income tax rate for the fiscal year of the
Partnership in which such quarter occurs (expressed as a
percentage) plus
(ii) the effective overall state and local income tax rate
(expressed as a percentage) applicable to the Partnership for
the calendar year next preceding the calendar year in which
such quarter occurs (after taking into account the benefit of
any deduction allowable for federal income tax purposes with
respect to the payment of state and local income taxes), but
only to the extent of the increase in such rates resulting
from such legislation. Such effective overall state and local
income tax rate shall be determined for the calendar year next
preceding the first calendar year during which the Partnership
is taxable for federal income tax purposes as an association
taxable as a corporation or is otherwise subject to entity-
level taxation by determining such rate as if the Partnership
had been subject to such sate and local taxes during such
preceding calendar year.
9.7 ENTITY-LEVEL ARREARAGE COLLECTIONS. If the Partnership or
the Operating Partnership is required by applicable law to
pay, or any revenue authority seizes any asset of the
Partnership or the Operating Partnership with respect to, any
federal, state or local income tax on behalf of, or withhold
such amount with respect to, any Partner or Assignee or any
former Partner or Assignee
(a) the General Partner shall cause the Partnership to pay
such tax on behalf of such Partner or Assignee or former
Partner or Assignee from the funds of the Partnership;
(b) any amount so paid or seized on behalf of, or withheld
with respect to, any Partner or Assignee shall constitute a
distribution out of Available Cash to such Partner or Assignee
pursuant to Section 5.3; and (c) to the extent any such
Partner or Assignee (but not a former Partner or Assignee) is
not then entitled to such distribution under this Agreement,
the General Partner shall be authorized, without the approval
of any Partner or Assignee, to amend this Agreement insofar as
is necessary to maintain the uniformity of intrinsic tax
characteristics as to all Units and to make subsequent
adjustments to distributions in a manner which, in the
reasonable judgment of the General Partner, will make as
little alteration as practicable in the priority and amount of
distributions otherwise applicable under this Agreement, and
will not otherwise alter the distributions to which Partners
and Assignees are entitled under this Agreement. If the
Partnership is permitted (but not required) by applicable law
to pay any such tax on behalf of, or withhold such amount with
respect to, any Partner or Assignee or former Partner or
Assignee, the General Partner shall be authorized (but not
required) to cause the Partnership to pay such tax from the
funds of the Partnership and to take any action consistent
with this Section 9.7. The General Partner shall be authorized
(but not required) to take all necessary or appropriate
actions to collect all or any portion of a deficiency in the
payment of any such tax that relates to prior periods and that
is attributable to Persons who were Limited Partners or
Assignees when such deficiencies arose, from such Persons.
9.8 OPINIONS OF COUNSEL. Notwithstanding any other provision
of this Agreement, if the Partnership is treated as an
association taxable as a corporation at any time or is
otherwise taxable for federal income tax purposes as an entity
at any time and, pursuant to the provisions of this Agreement,
an Opinion of Counsel would otherwise be required to the
effect that an action will not cause the Partnership to become
so treated as an association taxable as a corporation or
otherwise taxable as an entity for federal income tax
purposes, such requirement for an Opinion of Counsel shall be
deemed automatically waived.
ARTICLE X
CERTIFICATES
10.1 CERTIFICATES. Upon the Partnership's issuance of Units to
any Person, the Partnership shall issue one or more
Certificates in the name of such Person evidencing the number
of such Units being so issued. Certificates shall be executed
on behalf of the Partnership by the General Partner. No
Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent.
10.2 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. (a)
The General Partner shall cause to be kept on behalf of the
Partnership a register in which, subject to such reasonable
regulations as it may prescribe and subject to the provisions
of Section 10.2(b), the General Partner will provide for the
registration and transfer of Units. The Transfer Agent is
hereby appointed registrar and transfer agent for the purpose
of registering Units and transfers of such Units as herein
provided. The Partnership shall not recognize transfers of
Certificates representing Units unless same are effected in
the manner described in this Section 10.2. Upon surrender for
registration of transfer of any Units evidenced by a
Certificate, and subject to the provisions of Section 10.2(b),
the General Partner on behalf of the Partnership shall
execute, and the Transfer Agent shall countersign and deliver,
in the name of the holder or the designated transferee or
transferees, as required pursuant to the holder's
instructions, one or more new Certificates evidencing the same
aggregate number of Units as was evidenced by the Certificate
so surrendered.
(b) Except as otherwise provided in Section 11.5, the
Partnership shall not recognize any transfer of Units until
the Certificates evidencing such Units are surrendered for
registration of transfer and such Certificates are accompanied
by a Transfer Application duly executed by the transferee (or
the transferee's attorney-in-fact duly authorized in writing).
No charge shall be imposed by the Partnership for such
transfer, provided, that, as a condition to the issuance of
any new Certificate under this Section 10.2, the General
Partner may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed with
respect thereto.
10.3 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. (a) If
any mutilated Certificate is surrendered to the Transfer
Agent, the General Partner on behalf of the Partnership shall
execute, and upon its request the Transfer Agent shall
countersign and deliver in exchange therefor, a new
Certificate evidencing the same number of Units as the
Certificate so surrendered.
(b) The General Partner on behalf of the Partnership shall
execute, and upon its request the Transfer Agent shall
countersign and deliver a new Certificate in place of any
Certificate previously issued if the Record Holder of the
Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
Partnership has notice that the Certificate has been acquired
by a purchaser for value in good faith and without notice of
an adverse claim;
(iii) if requested by the General Partner, delivers to the
Partnership a bond, in form and substance satisfactory to the
General Partner, with surety or sureties and with fixed or
open penalty as the General Partner may reasonably direct, in
its sole discretion, to indemnify the Partnership, the General
Partner and the Transfer Agent against any claim that may be
made on account of the alleged loss, destruction or theft of
the Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the General Partner.
If a Limited Partner or Assignee fails to notify the
Partnership within a reasonable time after he has notice of
the loss, destruction or theft of a Certificate, and a
transfer of the Units represented by the Certificate is
registered before the Partnership, the General Partner or the
Transfer Agent receives such notification, the Limited Partner
or Assignee shall be precluded from making any claim against
the Partnership, the General Partner or the Transfer Agent for
such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate
under this Section 10.3, the General Partner may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto
and any other expenses (including, without limitation, the
fees and expenses of the Transfer Agent) reasonably connected
therewith.
10.4 RECORD HOLDER. In accordance with Section 10.2(b), the
Partnership shall be entitled to recognize the Record Holder
as the Limited Partner or Assignee with respect to any Units
and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such Units on the
part of any other Person, whether or not the Partnership shall
have actual or other notice thereof, except as otherwise
provided by law or any applicable rule, regulation, guideline
or requirement of any National Securities Exchange on which
the Units are listed for trading. Without limiting the
foregoing, when a Person (such as a broker, dealer, bank,
trust company or clearing corporation or an agent of any of
the foregoing) is acting as nominee, agent or in some other
representative capacity for another Person in acquiring and/or
holding Units, as between the Partnership on the one hand and
such other Person on the other hand, such representative
Person
(a) shall be the Limited Partner or Assignee (as the case may
be) of record and beneficially,
(b) must execute and deliver a Transfer Application and
(c) shall be bound by this Agreement and shall have the rights
and obligations of a Limited Partner or Assignee (as the case
may be) hereunder and as provided for herein.
ARTICLE XI
TRANSFER OF INTERESTS
11.1 TRANSFER. (a) The term "transfer," when used in this
Article XI with respect to a Partnership Interest, shall be
deemed to refer to an appropriate transaction by which the
General Partner assigns its Partnership Interest as General
Partner to another Person or by which the holder of a Unit
assigns such Unit to another Person who is or becomes an
Assignee, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions
set forth in this Article XI. Any transfer or purported
transfer of a Partnership Interest not made in accordance with
this Article XI shall be null and void.
(c) Nothing contained in this Article XI shall be construed to
prevent a disposition by the parent entity of the General
Partner of all of the issued and outstanding capital stock of
the General Partner.
11.2 TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST. (a)
The General Partner may transfer all, but not less than all,
of its Partnership Interest as the General Partner to a single
transferee if, but only if,
(i) a majority of the Outstanding Units (excluding any Common
Units and Class B Units owned by the General Partner and its
Affiliates and excluding the number of I-Units corresponding
to any Listed Shares owned by the General Partner and its
Affiliates) and a majority of the Outstanding I-Units voting
as a separate class (excluding the number of I-Units
corresponding to any Listed Shares owned by the General
Partner and its Affiliates) approve of such transfer and of
the admission of such transferee as General Partner, (ii) the
transferee agrees to assume and be bound by the provisions of
this Agreement and Operating Partnership Agreement and (iii)
the Partnership receives an Opinion of Counsel that such
transfer would not result in the loss of limited liability of
any Limited Partner or of any limited partner of the Operating
Partnership or cause the Partnership or the Operating
Partnership to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal
income tax purposes.
(b) Neither Section 11.2(a) nor any other provision of this
Agreement shall be construed to prevent (and all Partners do
hereby consent to)
(i) the transfer by the General Partner of all of its
Partnership Interest to an Affiliate or
(ii) the transfer by the General Partner of all of its
Partnership Interest upon its merger, consolidation or other
combination into any other Person or the transfer by it of all
or substantially all of its assets to another Person if, in
the case of a transfer described in either clause (i) or (ii)
of this sentence, the rights and duties of the General Partner
with respect to the Partnership Interest so transferred are
assumed by the transferee and the transferee agrees to be
bound by the provisions of this Agreement and the Operating
Partnership Agreement; provided, in either such case, that
such transferee furnishes to the Partnership an Opinion of
Counsel that such merger, consolidation, combination, transfer
or assumption will not result in a loss of limited liability
of any Limited Partner or of any limited partner of the
Operating Partnership or cause the Partnership or the
Operating Partnership to be treated as an association taxable
as a corporation or otherwise be taxed as an entity for
federal income tax purposes. In the case of a transfer
pursuant to this Section 11.2(b), the transferee or successor
(as the case may be) shall be admitted to the Partnership as
the General Partner immediately prior to the transfer of the
Partnership Interest, and the business of the Partnership
shall continue without dissolution.
11.3 TRANSFER OF UNITS. (a) Units may be transferred only in
the manner described in Section 10.2. The transfer of any
Units and the admission of any new Partner shall not
constitute an amendment to this Agreement.
(b) Until admitted as a Substituted Limited Partner pursuant
to Article XII, the Record Holder of a Unit shall be an
Assignee in respect of such Unit. Limited Partners may include
custodians, nominees, or any other individual or entity in its
own or any representative capacity.
(c) Each distribution in respect of Units shall be paid by the
Partnership, directly or through the Transfer Agent or through
any other Person or agent, only to the Record Holders thereof
as of the Record Date set for the distribution. Such payment
shall constitute full payment and satisfaction of the
Partnership's liability in respect of such payment, regardless
of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.
(d) A transferee who has completed and delivered a Transfer
Application shall be deemed to have
(i) requested admission as a Substituted Limited Partner,
(ii) agreed to comply with and be bound by and to have
executed this Agreement,
(iii) represented and warranted that such transferee has the
right, power and authority and, if an individual, the capacity
to enter into this Agreement,
(iv) made the powers of attorney set forth in this Agreement
and
(v) given the consents and approvals and made the waivers
contained in this Agreement.
11.4 RESTRICTIONS ON TRANSFERS. Notwithstanding the other
provisions of this Article XI, no transfer of any Unit or
interest therein of any Limited Partner or Assignee shall be
made if such transfer would
(a) violate the then applicable federal or state securities
laws or rules and regulations of the Securities and Exchange
Commission, any state securities commission or any other
governmental authorities with jurisdiction over such transfer,
(b) result in the taxation of the Partnership as an
association taxable as a corporation or otherwise subject the
Partnership to entity-level taxation for federal income tax
purposes or
(c) affect the Partnership's existence or qualification as a
limited liability limited partnership under the Minnesota Law.
11.5 CITIZENSHIP CERTIFICATES; NON-CITIZEN ASSIGNEES. (a) If
the Partnership or the Operating Partnership is or becomes
subject to any federal, state or local law or regulation that,
in the reasonable determination of the General Partner,
provides for the cancellation or forfeiture of any property in
which the Partnership or the Operating Partnership has an
interest based on the nationality, citizenship or other
related status of a Limited Partner or Assignee, the General
Partner may request any Limited Partner or Assignee to furnish
to the General Partner, within 30 days after receipt of such
request, an executed Citizenship Certification or such other
information concerning his nationality, citizenship or other
related status (or, if the Limited Partner or Assignee is a
nominee holding for the account of another Person, the
nationality, citizenship or other related status of such
Person) as the General Partner may request. If a Limited
Partner or Assignee fails to furnish the General Partner
within the aforementioned 30-day period such Citizenship
Certification or other requested information or if upon
receipt of such Citizenship Certification or other requested
information the General Partner determines, with the advice of
counsel, that a Limited Partner or Assignee is not an Eligible
Citizen, the Units owned by such Limited Partner or Assignee
shall be subject to redemption in accordance with the
provisions of Section 11.6. In addition, the General Partner
may require that the status of any such Limited Partner or
Assignee be changed to that of a Non-citizen Assignee, and,
thereupon, the General Partner shall be substituted for such
Non-citizen Assignee as the Limited Partner in respect of his
Units.
(b) The General Partner shall, in exercising voting rights in
respect of Units held by it on behalf of Non-citizen
Assignees, distribute the votes in the same ratios as the
votes of Limited Partners in respect of Units other than those
of Non-citizen Assignees are cast, either for, against or
abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen
Assignee shall have no right to receive a distribution in kind
pursuant to Section 14.4 but shall be entitled to the cash
equivalent thereof, and the General Partner shall provide cash
in exchange for an assignment of the Non-citizen Assignee's
share of the distribution in kind. Such payment and assignment
shall be treated for Partnership purposes as a purchase by the
General Partner from the Non-citizen Assignee of his
Partnership Interest (representing his right to receive his
share of such distribution in kind).
(d) At any time after he can and does certify that he has
become an Eligible Citizen, a Non-citizen Assignee may, upon
application to the General Partner, request admission as a
Substituted Limited Partner with respect to any Units of such
Non-citizen Assignee not redeemed pursuant to Section 11.6,
and upon his admission pursuant to Section 12.1 the General
Partner shall cease to be deemed to be the Limited Partner in
respect of the Non-citizen Assignee's Units.
11.6 REDEMPTION OF INTERESTS. (a) If at any time a Limited
Partner or Assignee fails to furnish a Citizenship
Certification or other information requested within the 30-day
period specified in Section 11.5(a), or if upon receipt of
such Citizenship Certification or other information the
General Partner determines, with the advice of counsel, that a
Limited Partner or Assignee is not an Eligible Citizen, the
Partnership may, unless the Limited Partner or Assignee
establishes to the satisfaction of the General Partner that
such Limited Partner or Assignee is an Eligible Citizen or has
transferred his Units to a person who furnishes a Citizenship
Certification to the General Partner prior to the date fixed
for redemption as provided below, redeem the Partnership
Interest of such Limited Partner or Assignee as follows:
(i) The General Partner shall not later than the 30th day
before the date fixed for redemption, give notice of
redemption to the Limited Partner or Assignee, at his last
address designated on the records of the Partnership or the
Transfer Agent, by registered or certified mail, postage
prepaid. The notice shall be deemed to have been given when so
mailed. The notice shall specify the Redeemable Units, the
date fixed for redemption, the place of payment, that payment
of the redemption price will be made upon surrender of the
Certificate evidencing the Redeemable Units and that on and
after the date fixed for redemption no further allocations or
distributions to which the Limited Partner or Assignee would
otherwise be entitled in respect of the Redeemable Units will
accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall
be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption)
of Units of the class to be so redeemed multiplied by the
number of Units of each such class included among the
Redeemable Units. The redemption price shall be paid, in the
sole discretion of the General Partner, in cash or by delivery
of a promissory note of the Partnership in the principal
amount of the redemption price, bearing interest at the rate
of 10% annually and payable in three equal annual installments
of principal together with accrued interest, commencing one
year after the redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or
Assignee, at the place specified in the notice of redemption,
of the Certificate evidencing the Redeemable Units, duly
endorsed in blank or accompanied by an assignment duly
executed in blank, the Limited Partner or Assignee or his duly
authorized representative shall be entitled to receive the
payment therefor.
(iv) After the redemption date, Redeemable Units shall no
longer constitute issued and Outstanding Units.
(b) The provisions of this Section 11.6 shall also be
applicable to Units held by a Limited Partner or Assignee as
nominee of a Person determined to be other than an Eligible
Citizen.
(c) Nothing in this Section 11.6 shall prevent the recipient
of a notice of redemption from transferring his Units before
the redemption date if such transfer is otherwise permitted
under this Agreement. Upon receipt of notice of such transfer,
the General Partner shall withdraw the notice of redemption,
provided, the transferee of such Units certifies in the
Transfer Application that he is an Eligible Citizen. If the
transferee fails to make such certification, such redemption
shall be effected from the transferee on the original
redemption date.
ARTICLE XII
ADMISSION OF PARTNERS
12.1 ADMISSION OF SUBSTITUTED LIMITED PARTNERS. By transfer of
a Unit in accordance with Article XI, the transferor shall be
deemed to have given the transferee the right to seek
admission as a Substituted Limited Partner subject to the
conditions of, and in the manner permitted under, this
Agreement. A transferor of a Certificate shall, however, only
have the authority to convey to a purchaser or other
transferee who does not execute and deliver a Transfer
Application
(a) the right to negotiate such Certificate to a purchaser or
other transferee and
(b) the right to transfer the right to request admission as a
Substituted Limited Partner to such purchaser or other
transferee in respect of the transferred Units. Each
transferee of a Unit (including, without limitation, any
nominee holder or an agent acquiring such Unit for the account
of another Person) who executes and delivers a Transfer
Application shall, by virtue of such execution and delivery,
be an Assignee and be deemed to have applied to become a
Substituted Limited Partner with respect to the Units so
transferred to such Person. Such Assignee shall become a
Substituted Limited Partner (x) at such time as the General
Partner consents thereto, which consent may be given or
withheld in the General Partner's sole discretion, and (y)
when any such admission is shown on the books and records of
the Partnership. If such consent is withheld, such transferee
shall be an Assignee. An Assignee shall have an interest in
the Partnership equivalent to that of a Limited Partner with
respect to allocations and distributions, including, without
limitation, liquidating distributions, of the Partnership.
With respect to voting rights attributable to Units that are
held by Assignees, the General Partner shall be deemed to be
the Limited Partner with respect thereto and shall, in
exercising the voting rights in respect of such Units on any
matter, vote such Units at the written direction of the
Assignee who is the Record Holder of such Units. If no such
written direction is received, such Units will not be voted.
An Assignee shall have no other rights of a Limited Partner.
12.2 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor
General Partner approved pursuant to Section 13.1 or 13.2 or
the transferee of or successor to all of the General Partner's
Partnership Interest pursuant to Section 11.2 who is proposed
to be admitted as a successor General Partner shall be
admitted to the Partnership as the General Partner, effective
immediately prior to the withdrawal or removal of the General
Partner pursuant to Section 13.1 or 13.2 or the transfer of
the General Partner's Partnership Interest pursuant to Section
11.2; provided, however, that no such successor shall be
admitted to the Partnership until compliance with the terms of
Section 11.2 has occurred. Any such successor shall carry on
the business of the Partnership and Operating Partnership
without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and
delivering to the Partnership an acceptance of all of the
terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the
admission.
12.3 ADMISSION OF ADDITIONAL LIMITED PARTNERS. (a) A Person
(other than the General Partner or a Substituted Limited
Partner) who makes a Capital Contribution to the Partnership
in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon
furnishing to the General Partner
(i) evidence of acceptance in form satisfactory to the General
Partner of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted
in Section 1.4, and
(ii) such other documents or instructions as may be required
in the discretion of the General Partner to effect such
Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this Section
12.3, no Person shall be admitted as an Additional Limited
Partner without the consent of the General Partner, which
consent may be given or withheld in the General Partner's sole
discretion. The admission of any Person as an Additional
Limited Partner shall become effective on the date upon which
the name of such Person is recorded on the books and records
of the Partnership, following the consent of the General
Partner to such admission.
12.4 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
LIABILITY LIMITED PARTNERSHIP. To effect the admission to the
Partnership of any Partner, the General Partner shall take all
steps necessary and appropriate under the Minnesota Law to
amend the records of the Partnership and, if necessary, to
prepare as soon as practical an amendment of this Agreement
and, if required by law, to prepare and file an amendment to
the Certificate of Limited liability limited partnership and
may for this purpose, among others, exercise the power of
attorney granted pursuant to Section 1.4.
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 WITHDRAWAL OF THE GENERAL PARTNER. (a) The General
Partner shall be deemed to have withdrawn from the Partnership
upon the occurrence of any one of the following events (each
such event herein referred to as an "Event of Withdrawal"):
(i) the General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners
(and it shall be deemed that the General Partner has withdrawn
pursuant to this Section 13.1(a)(i) if the General Partner
voluntarily withdraws as general partner of Alberich, LLLP);
(ii) the General Partner transfers all of its rights as
General Partner pursuant to Section 11.2;
(iii) the General Partner is removed pursuant to Section 13.2;
(iv) the General Partner
(A) makes a general assignment for the benefit of creditors;
(B) files a voluntary bankruptcy petition;
(C) files a petition or answer seeking for itself a
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any law;
(D) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against
the General Partner in a proceeding of the type described in
clauses (A)-(C) of this Section 13.1(a)(iv); or
(E) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the General Partner or of
all or any substantial part of its properties;
(v) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the General Partner
is bankrupt or insolvent, or a final and non-appealable order
for relief is entered by a court with appropriate jurisdiction
against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in
effect; or
(vi) a certificate of dissolution or its equivalent is filed
for the General Partner, or 90 days expire after the date of
notice to the General Partner of revocation of its charter
without a reinstatement of its charter, under the laws of its
state of incorporation.
In no event shall the Maximum Permitted Delegation pursuant to
the terms and conditions of the Delegation of Control
Agreement and this Agreement be deemed an Event of Withdrawal.
If an Event of Withdrawal specified in Section 13.1(a)(iv),
(v) or (vi) occurs, the withdrawing General Partner shall give
notice to the Limited Partners within 30 days after such
occurrence. The Partners hereby agree that only the Events of
Withdrawal described in this Section 13.1 shall result in the
withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership
upon the occurrence of an Event of Withdrawal shall not
constitute a breach of this Agreement under the following
circumstances:
(i) at any time during the period prior to January 1, 2003 the
General Partner voluntarily withdraws by giving at least 90
days' advance notice of its intention to withdraw to the
Limited Partners, provided, that prior to the effective date
of such withdrawal the withdrawal is approved by Limited
Partners holding at least a majority of the Outstanding Units
(excluding for purposes of such determination Common Units and
Class B Units owned by the General Partner and its Affiliates
and excluding the number of I-Units corresponding to any
Listed Shares owned by the General Partner and its Affiliates)
and a majority of the Outstanding I-Units voting as a separate
class (excluding for purposes of such determination the number
of I-Units corresponding to any Listed Shares owned by the
General Partner and its Affiliates) and the General Partner
delivers to the Partnership an Opinion of Counsel ("Withdrawal
Opinion of Counsel") that such withdrawal (following the
selection of the successor General Partner) would not result
in the loss of the limited liability of any Limited Partner or
of the limited partner of the Operating Partnership or cause
the Partnership or the Operating Partnership to be treated as
an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes;
(ii) at any time on or after August 1, 2005, the General
Partner voluntarily withdraws by giving at least 90 days'
advance notice to the Limited Partners, such withdrawal to
take effect on the date specified in such notice;
(iii) at any time that the General Partner ceases to be a
General Partner pursuant to Section 13.1(a)(ii) or is removed
pursuant to Section 13.2; or
(iv) notwithstanding clause (i) of this sentence, at any time
that the General Partner voluntarily withdraws by giving at
least 90 days' advance notice of its intention to withdraw to
the Limited Partners, such withdrawal to take effect on the
date specified in the notice, if at the time such notice is
given one Person and its Affiliates (other than the General
Partner and its Affiliates) own beneficially or of record or
control at least 50% of the aggregate number of Outstanding
Units (other than I-Units) and Listed Shares on a combined
basis. The withdrawal of the General Partner from the
Partnership upon the occurrence of an Event of Withdrawal
shall also constitute the withdrawal of the General Partner as
general partner of the Operating Partnership. If the General
Partner gives a notice of withdrawal pursuant to Section
13.1(a)(i), holders of at least a majority of the Outstanding
Units (excluding for purposes of such determination Units
owned by the General Partner and its Affiliates) may, prior to
the effective date of such withdrawal, elect a successor
General Partner. The Person so elected as successor General
Partner shall automatically become the successor general
partner of the Operating Partnership, as provided in Operating
Partnership Agreement. If, prior to the effective date of the
General Partner's withdrawal, a successor is not selected by
the Limited Partners as provided herein or the Partnership
does not receive a Withdrawal Opinion of Counsel, the
Partnership shall be dissolved in accordance with Section
14.1. Any such successor General Partner shall be subject to
the provisions of Section 12.2.
13.2 REMOVAL OF THE GENERAL PARTNER. The General Partner may
be removed if such removal is approved by Limited Partners
holding at least two-thirds of the Outstanding Units
(excluding for purposes of such determination Common Units and
Class B Units owned by the General Partner and its Affiliates
and excluding the number of I-Units corresponding to any
Listed Shares owned by the General Partner and its
Affiliates). Any such action by such Limited Partners for
removal of the General Partner must also provide for the
election and succession of a new General Partner. Such removal
shall be effective immediately following the admission of the
successor General Partner pursuant to Article XII. The removal
of the General Partner shall also automatically constitute the
removal of the General Partner as general partner of the
Operating Partnership, as provided in the Operating
Partnership Agreement. The Person so elected as successor
General Partner shall automatically become the successor
general partner of the Operating Partnership, as provided in
the Operating Partnership Agreement. The right of the Limited
Partners holding Outstanding Units to remove the General
Partner shall not exist or be exercised unless the Partnership
has received an opinion opining as to the matters covered by a
Withdrawal Opinion of Counsel. Any such successor General
Partner shall be subject to the provisions of Section 12.2.
13.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL
PARTNER. (a) In the event of
(i) withdrawal of the General Partner under circumstances
where such withdrawal does not violate this Agreement or
(ii) removal of the General Partner by the Limited Partners
under circumstances where Cause does not exist, the Departing
Partner shall, at its option exercisable prior to the
effective date of the departure of such Departing Partner,
promptly receive from its successor in exchange for its
Partnership Interest as General Partner an amount in cash
equal to the fair market value of the Departing Partner's
Partnership Interest as General Partner, such amount to be
determined and payable as of the effective date of its
departure. If the General Partner is removed by the Limited
Partners under circumstances where Cause exists or if the
General Partner withdraws under circumstances where such
withdrawal violates this Agreement or the Operating
Partnership Agreement, its successor shall have the option
described in the immediately preceding sentence, and the
Departing Partner shall not have such option. In either case,
if the successor acquires the Departing Partner's Partnership
Interest as the general partner, such successor General
Partner must also acquire at such time the general partner
interest of such Departing Partner as general partner of the
Operating Partnership, for an amount in cash equal to the fair
market value of such interest, determined as of the effective
date of its departure. In either event, the Departing Partner
shall be entitled to receive all reimbursements due such
Departing Partner pursuant to Section 6.4, including, without
limitation, any employee-related liabilities (including,
without limitation, severance liabilities), incurred in
connection with the termination of any employees employed by
the General Partner for the benefit of the Partnership or the
Operating Partnership. Subject to Section 13.3(b), the
Departing Partner shall, as of the effective date of its
departure, cease to share in any allocations or distributions
with respect to its Partnership Interest as the General
Partner and Partnership income, gain, loss, deduction and
credit will be prorated and allocated as set forth in Section
5.2(g).
For purposes of this Section 13.3(a), the fair market value of
the Departing Partner's Partnership Interest as the general
partner of the Partnership herein and the partnership interest
of such Departing Partner as the general partner of the
Operating Partnership (collectively, the "Combined Interest")
shall be determined by agreement between the Departing Partner
and its successor or, failing agreement within 30 days after
the effective date of such Departing Partner's departure, by
an independent investment banking firm or other independent
expert selected by the Departing Partner and its successor,
which, in turn, may rely on other experts and the
determination of which shall be conclusive as to such matter.
If such parties cannot agree upon one independent investment
banking firm or other independent expert within 45 days after
the effective date of such departure, then the Departing
Partner shall designate an independent investment banking firm
or other independent expert, the Departing Partner's successor
shall designate an independent investment banking firm or
other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or
independent expert, which shall determine the fair market
value of the Combined Interest. In making its determination,
such independent investment banking firm or other independent
expert shall consider the then current trading price of Units
on any National Securities Exchange on which Units are then
listed, the value of the Partnership's assets, the rights and
obligations of the General Partner and other factors it may
deem relevant.
(b) If the Combined Interest is not acquired in the manner set
forth in Section 13.3(a), the Departing Partner shall become a
Limited Partner and the Combined Interest shall be converted
into Common Units pursuant to a valuation made by an
investment banking firm or other independent expert selected
pursuant to Section 13.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by
reason of the admission of its successor). Any successor
General Partner shall indemnify the Departing Partner as to
all debts and liabilities of the Partnership arising on or
after the date on which the Departing Partner becomes a
Limited Partner. For purposes of this Agreement, conversion of
the General Partner's Partnership Interest to Common Units
shall be characterized as if the General Partner contributed
its Partnership Interest to the Partnership in exchange for
the newly-issued Common Units.
(c) If the option described in Section 13.3(a) is not
exercised by the party entitled to do so, the successor
General Partner shall, at the effective date of its admission
to the Partnership, contribute to the capital of the
Partnership cash in an amount such that its Capital Account,
after giving effect to such contribution and any adjustments
made to the Capital Accounts of all Partners pursuant to
Section 4.3(d)(i), shall be equal to that percentage of the
Capital Accounts of all Partners that is equal to its
Percentage Interest as the General Partner. In such event,
each successor General Partner shall, subject to the following
sentence, be entitled to such Percentage Interest of all
Partnership allocations and distributions and any other
allocations and distributions to which the Departing Partner
was entitled. In addition, such successor General Partner
shall cause this Agreement to be amended to reflect that, from
and after the date of such successor General Partner's
admission, the successor General Partner's interest in all
Partnership distributions and allocations shall be 1%, and
that of the holders of Outstanding Units shall be 99%.
13.4 WITHDRAWAL OF LIMITED PARTNERS. No Limited Partner shall
have any right to withdraw from the Partnership; provided,
however, that when a transferee of a Limited Partner's Units
becomes a Record Holder, such transferring Limited Partner
shall cease to be a Limited Partner with respect to the Units
so transferred.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
14.1 DISSOLUTION. The Partnership shall not be dissolved by
the admission of Substituted Limited Partners or Additional
Limited Partners or by the admission of a successor General
Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner any successor
General Partner shall continue the business of the
Partnership. The Partnership shall dissolve, and (subject to
Section 14.2) its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided
in Section 13.1(a) (other than Section 13.1(a)(ii)), unless a
successor is elected and an Opinion of Counsel is received as
provided in Section 13.1(b) or 13.2 and such successor is
admitted to the Partnership pursuant to Section 12.2;
(c) an election to dissolve the Partnership by the General
Partner that is approved by at least a majority of the
Outstanding Units (and all Limited Partners hereby expressly
consent that such approval may be effected upon written
consent of said applicable percentage of the Outstanding
Units);
(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Minnesota Law;
or
(e) the sale of all or substantially all of the assets and
properties of the Partnership and the Operating Partnership.
14.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER
DISSOLUTION. Upon
(a) dissolution of the Partnership caused by the withdrawal or
removal of the General Partner and following a failure of all
Partners, within 90 days after the withdrawal or removal of
the General Partner, to agree to continue the business of the
Partnership and appoint a successor General Partner as
provided in Section 13.1 or 13.2, then within an additional 90
days or
(b) dissolution of the Partnership upon an event constituting
an Event of Withdrawal as defined in Section 13.1(a)(iv), (v)
or (vi), then within 180 days thereafter, a majority of the
Outstanding Units may elect to reconstitute the Partnership
and continue its business on the same terms and conditions set
forth in this Agreement by forming a new limited liability
limited partnership on terms identical to those set forth in
this Agreement and having as a general partner a Person
approved by a majority of the Outstanding Units. Upon any such
election by a majority of the Outstanding Units, all Partners
shall be bound thereby and shall be deemed to have approved
same. Unless such an election is made within the applicable
time period as set forth above, the Partnership shall conduct
only activities necessary to wind up its affairs. If such an
election is so made, then:
(i) the reconstituted Partnership shall continue until the end
of the term set forth in Section 1.5 unless earlier dissolved
in accordance with this Article XIV;
(ii) if the successor General Partner is not the former
General Partner, then the interest of the former General
Partner shall be treated thenceforth as the interest of a
Limited Partner and converted into Common Units in the manner
provided in Section 13.3(b); and
(iii) all necessary steps shall be taken to cancel this
Agreement and the Certificate of Limited liability limited
partnership and to enter into and, as necessary, to file a new
partnership agreement and certificate of limited liability
limited partnership, and the successor general partner may for
this purpose exercise the powers of attorney granted the
General Partner pursuant to Section 1.4; provided, that the
right of a majority of Outstanding Units to approve a
successor General Partner and 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 (x) the exercise of the right would not result in
the loss of limited liability of any Limited Partner and (y)
neither the Partnership, the reconstituted limited liability
limited partnership nor the Operating Partnership would be
treated as an association taxable as a corporation or
otherwise be taxable as an entity for federal income tax
purposes upon the exercise of such right to continue.
14.3 LIQUIDATION. Upon dissolution of the Partnership, unless
the Partnership is continued under an election to reconstitute
and continue the Partnership pursuant to Section 14.2, the
General Partner, or in the event the General Partner has been
dissolved or removed, become bankrupt as set forth in Section
13.1 or withdrawn from the Partnership, a liquidator or
liquidating committee approved by a majority of the
Outstanding Units, shall be the Liquidator. The Liquidator (if
other than the General Partner) shall be entitled to receive
such compensation for its services as may be approved by a
majority of the Outstanding Units. The Liquidator shall agree
not to resign at any time without 15 days' prior notice and
(if other than the General Partner) may be removed at any
time, with or without cause, by notice of removal approved by
a majority of the Outstanding Units. Upon dissolution, removal
or resignation of the Liquidator, a successor and substitute
Liquidator (who shall have and succeed to all rights, powers
and duties of the original Liquidator) shall within 30 days
thereafter be approved by a majority of the Outstanding Units.
The right to approve a successor or substitute Liquidator in
the manner provided herein shall be deemed to refer also to
any such successor or substitute Liquidator approved in the
manner herein provided. 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 consent of any of the parties hereto, all of
the powers conferred upon the 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 limitation on sale set forth in
Section 6.3(b)) to the extent necessary or desirable 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) the payment to creditors of the Partnership, including,
without limitation, Partners who are creditors, in the order
of priority provided by law; and the creation of a reserve of
cash or other assets of the Partnership for contingent
liabilities in an amount, if any, determined by the Liquidator
to be appropriate for such purposes; and
(b) to all Partners in accordance with the positive balances
in their respective Capital Accounts, as determined after
taking into account all Capital Account adjustments (other
than those made by reason of this clause) for the taxable year
of the Partnership during which the liquidation of the
Partnership occurs (with the date of such occurrence being
determined pursuant to Treasury Regulation Section 1.704-
1(b)(2)(ii)(g)); and such distribution shall be made by the
end of such taxable year (or, if later, within 90 days after
said date of such occurrence).
14.4 DISTRIBUTIONS IN KIND. Notwithstanding the provisions of
Section 14.3, which require the liquidation of the assets of
the Partnership, but subject to the order of priorities set
forth therein, if prior to or upon 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 absolute discretion, defer for a
reasonable time the liquidation of any assets except those
necessary to satisfy liabilities of the Partnership
(including, without limitation, those to Partners as
creditors) and/or distribute to the Partners or to specific
classes of Partners, in lieu of cash, as tenants in common and
in accordance with the provisions of Section 14.3, undivided
interests in such Partnership assets as the Liquidator deems
not suitable for liquidation. Any such distributions in kind
shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best
interest of the Limited Partners, and shall be subject to such
conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable
and to any agreements governing the 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.
Notwithstanding the above, the Liquidator may not make
distributions in kind unless all of the Listed Shares are
owned by the General Partner and its Affiliates.
14.5 CANCELLATION OF CERTIFICATE OF LIMITED LIABILITY LIMITED
PARTNERSHIP. Upon the completion of the distribution of
Partnership cash and property as provided in Sections 14.3 and
14.4, the Partnership shall be terminated and the Certificate
of Limited liability limited partnership and all
qualifications of the Partnership as a foreign limited
liability limited partnership in jurisdictions other than the
State of Minnesota shall be cancelled and such other actions
as may be necessary to terminate the Partnership shall be
taken.
14.6 REASONABLE TIME FOR WINDING UP. A reasonable time shall
be allowed for the orderly winding up of business and affairs
of the Partnership and the liquidation of its assets pursuant
to Section 14.3 in order to minimize any losses otherwise
attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during
the period of liquidation.
14.7 RETURN OF CAPITAL. The General Partner shall not be
personally liable for, and shall have no obligation to
contribute or loan any monies or property to the Partnership
to enable it to effectuate, 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.
14.8 NO CAPITAL ACCOUNT RESTORATION. No Partner shall have any
obligation to restore any negative balance in its Capital
Account upon liquidation of the Partnership.
14.9 WAIVER OF PARTITION. Each Partner hereby waives any right
to partition of the Partnership property.
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
15.1 AMENDMENT TO BE ADOPTED SOLELY BY GENERAL PARTNER. Each
Limited Partner agrees that the General Partner (pursuant to
its powers of attorney from the Limited Partners and
Assignees), without the approval of any Limited Partner or
Assignee, may amend any provision of this Agreement, and
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, the location of
the principal place of business of the Partnership, the
registered agent of the Partnership or the registered office
of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners
in accordance with this Agreement;
(c) a change that, in the sole discretion of the General
Partner, is reasonable and necessary or appropriate to qualify
or continue the qualification of the Partnership as a limited
liability limited partnership or a partnership in which the
limited partners have limited liability under the laws of any
state or that is necessary or advisable in the opinion of the
General Partner to ensure that the Partnership will not be
treated as an association taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes;
(d) a change
(i) that, in the sole discretion of the General Partner, does
not adversely affect the Limited Partners in any material
respect,
(ii) that is necessary or desirable to satisfy any
requirements, conditions or guidelines contained in any
opinion, directive, order, ruling or regulation of any federal
or state agency or judicial authority or contained in any
federal or state statute (including, without limitation, the
Minnesota Law) or that is necessary or desirable to facilitate
the trading of the Units (including, without limitation, the
division of Outstanding Units into different classes to
facilitate uniformity of tax consequences within such classes
of Units) or comply with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the
Units are or will be listed for trading, compliance with any
of which the General Partner determines in its sole discretion
to be in the best interests of the Partnership and the Limited
Partners or
(iii) that is required to effect the intent of the provisions
of this Agreement or is otherwise contemplated by this
Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel,
to prevent the Partnership or the General Partner or its
directors or officers from in any manner being subjected to
the provisions of the Investment Company Act of 1940, as
amended, the Investment Advisers Act of 1940, as amended, 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;
(f) subject to the terms of Section 4.1, an amendment that the
General Partner determines in its sole discretion to be
necessary or appropriate in connection with the authorization
for issuance of any class or series of Partnership Securities
pursuant to Section 4.1;
(g) any amendment expressly permitted in this Agreement to be
made by the General Partner acting alone;
(h) an amendment effected, necessitated or contemplated by a
Merger Agreement approved in accordance with Section 16.3; or
(i) any other amendments substantially similar to the
foregoing.
15.2 AMENDMENT PROCEDURES. Except as provided in Sections 15.1
and 15.3, all amendments to this Agreement shall be made in
accordance with the following requirements. Amendments to this
Agreement may be proposed only by or with the consent of the
General Partner. Each such proposal shall contain the text of
the proposed amendment. If an amendment is proposed, the
General Partner shall seek the written approval of the
requisite percentage of Outstanding Units or call a meeting of
the Limited Partners to consider and vote on such proposed
amendment. A proposed amendment shall be effective upon its
approval by at least two-thirds of the Outstanding Units
unless a greater or different percentage is required under
this Agreement; provided that if the effect of any amendment
would have a material adverse effect on the rights or
preferences of any class of Outstanding Units in relation to
any other class of Outstanding Units, the affirmative vote of
the holders of at least a two-thirds of the Outstanding Units
of the class so affected shall be required to adopt such
amendment (excluding for purposes of such determination, in
the case of a vote of the holders of the I-Units, the number
of I-Units corresponding to the Listed Shares owned by the
General Partner and its Affiliates). The General Partner shall
notify all Record Holders upon final adoption of any proposed
amendment.
15.3 AMENDMENT REQUIREMENTS. (a) Notwithstanding the
provisions of Sections 15.1 and 15.2, no provision of this
Agreement that establishes a percentage of Outstanding Units
required to take any action shall be amended, altered,
changed, repealed or rescinded in any respect that would have
the effect of reducing such voting requirement unless such
amendment is approved by the written consent or the
affirmative vote of holders of Outstanding Units whose
aggregate Outstanding Units constitute not less than the
voting requirement sought to be reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2,
no amendment to this Agreement may
(i) enlarge the obligations of any Limited Partner without its
consent,
(ii) enlarge the obligations of the General Partner without
its consent, which may be given or withheld in its sole
discretion,
(iii) modify the amounts distributable, reimbursable or
otherwise payable to the General Partner by the Partnership or
the Operating Partnership,
(iv) change Section 14.1(a) or (c),
(v) restrict in any way any action by or rights of the General
Partner as set forth in this Agreement or
(vi) change the term of the Partnership or, except as set
forth in Section 14.1(c), give any Person the right to
dissolve the Partnership.
(c) Except as otherwise provided, and without limitation of
the General Partner's authority to adopt amendments to this
Agreement as contemplated in Section 15.1, the General Partner
may amend the Partnership Agreement without the approval of
holders of Outstanding Units, except that any amendment that
would have a material adverse effect on the rights or
preferences of any class of Outstanding Units in relation to
other classes of Units must be approved by the holders of not
less than two-thirds of the Outstanding Units of the class
affected.
(d) Notwithstanding any other provision of this Agreement,
except for amendments pursuant to Section 6.3 or 15.1, no
amendments shall become effective without the approval of at
least 95% of the Outstanding Units unless the Partnership
obtains an Opinion of Counsel to the effect that
(i) such amendment will not cause the Partnership or the
Operating Partnership to be treated as an association taxable
as a corporation or otherwise taxable as an entity for federal
income tax purposes and
(ii) such amendment will not affect the limited liability of
any Limited Partner or any limited partner of the Operating
Partnership under applicable law.
(e) This Section 15.3 shall only be amended with the approval
of not less than 95% of the Outstanding Units.
15.4 MEETINGS. All acts of Limited Partners to be taken
hereunder shall be taken in the manner provided in this
Article XV. Meetings of the Limited Partners may be called by
the General Partner or by Limited Partners owning 20% or more
of the Outstanding Units of the class for which a meeting is
proposed. Limited Partners shall call a meeting by delivering
to the General Partner one or more requests in writing stating
that the signing Limited Partners wish to call a meeting and
indicating the general or specific purposes for which the
meeting is to be called. Within 60 days after receipt of such
a call from Limited Partners or within such greater time as
may be reasonably necessary for the Partnership to comply with
any statutes, rules, regulations, listing agreements or
similar requirements governing the holding of a meeting or the
solicitation of proxies for use at such a meeting, the General
Partner shall send a notice of the meeting to the Limited
Partners either directly or indirectly through the Transfer
Agent. A meeting shall be held at a time and place determined
by the General Partner on a date not more than 60 days after
the mailing of notice of the meeting. Limited Partners shall
not vote on matters that would cause the Limited Partners to
be deemed to be taking part in the management and control of
the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability under the
Minnesota Law or the law of any other state in which the
Partnership is qualified to do business.
15.5 NOTICE OF MEETING. Notice of a meeting called pursuant to
Section 15.4 shall be given to the Record Holders in writing
by mail or other means of written communication in accordance
with Section 17.1 The notice shall be deemed to have been
given at the time when deposited in the mail or sent by other
means of written communication.
15.6 RECORD DATE. For purposes of determining the Limited
Partners entitled to notice of or to vote at a meeting of the
Limited Partners or to give approvals without a meeting as
provided in Section 15.11, the General Partner may set a
Record Date, which shall not be less than 10 nor more than 60
days before
(a) the date of the meeting (unless such requirement conflicts
with any rule, regulation, guideline or requirement of any
National Securities Exchange on which the Units are listed for
trading, in which case the rule, regulation, guideline or
requirement of such exchange shall govern) or
(b) in the event that approvals are sought without a meeting,
the date by which Limited Partners are requested in writing by
the General Partner to give such approvals.
15.7 ADJOURNMENT. When a meeting is adjourned to another time
or place, notice need not be given of the adjourned meeting
and a new Record Date need not be fixed, if the time and place
thereof are announced at the meeting at which the adjournment
is taken, unless such adjournment shall be for more than 45
days. At the adjourned meeting, the Partnership may transact
any business which might have been transacted at the original
meeting. If the adjournment is for more than 45 days or if a
new Record Date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given in accordance with
this Article XV.
15.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF
MINUTES. The transactions of any meeting of Limited Partners,
however called and noticed, and whenever held, shall be as
valid as if had at a meeting duly held after regular call and
notice, if a quorum is present either in person or by proxy,
and if, either before or after the meeting, each of the
Limited Partners entitled to vote, present in person or by
proxy, signs a written waiver of notice or an approval of the
holding of the meeting or an approval of the minutes thereof.
All waivers and approvals shall be filed with the Partnership
records or made a part of the minutes of the meeting.
Attendance of a Limited Partner at a meeting shall constitute
a waiver of notice of the meeting, except when the Limited
Partner does not approve, at the beginning of the meeting, of
the transaction of any business because the meeting is not
lawfully called or convened; and except that attendance at a
meeting is not a waiver of any right to disapprove the
consideration of matters required to be included in the notice
of the meeting, but not so included, if the disapproval is
expressly made at the meeting.
15.9 QUORUM. Two-thirds of the Outstanding Units of the class
for which a meeting has been called represented in person or
by proxy shall constitute a quorum at a meeting of Limited
Partners of such class unless any such action by the Limited
Partners requires approval by holders of a majority in
interest of such Units, in which case the quorum shall be a
majority (excluding, in either case, if such are to be
excluded from the vote, Outstanding Units owned by the General
Partner and its Affiliates). At any meeting of the Limited
Partners duly called and held in accordance with this
Agreement at which a quorum is present, the act of Limited
Partners holding Outstanding Units that in the aggregate
represent a majority of the Outstanding Units entitled to vote
and be present in person or by proxy at such meeting shall be
deemed to constitute the act of all Limited Partners, unless a
greater or different percentage is required with respect to
such action under the provisions of this Agreement, in which
case the act of the Limited Partners holding Outstanding Units
that in the aggregate represent at least such greater or
different percentage shall be required. The Limited Partners
present at a duly called or held meeting at which a quorum is
present may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than
adjournment) is approved by the required percentage of
Outstanding Units specified in this Agreement. In the absence
of a quorum, any meeting of Limited Partners may be adjourned
from time to time by the affirmative vote of a majority of the
Outstanding Units represented either in person or by proxy,
but no other business may be transacted, except as provided in
Section 15.7.
15.10 CONDUCT OF MEETING. The General Partner shall have full
power and authority concerning the manner of conducting any
meeting of the Limited Partners or solicitation of approvals
in writing, including, without limitation, the determination
of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of Section 15.4, 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 General Partner shall designate a Person to serve as
chairman of any meeting and shall further designate a Person
to take the minutes of any meeting, in either case including,
without limitation, a Partner or a director or officer of the
General Partner. All minutes shall be kept with the records of
the Partnership maintained by the General Partner. The General
Partner may make such other regulations consistent with
applicable law and this Agreement as it may deem advisable
concerning the conduct of any meeting of the Limited Partners
or solicitation of approvals in writing, including, without
limitation, regulations in regard to the appointment of
proxies, the appointment and duties of inspectors of votes and
approvals, the submission and examination of proxies and other
evidence of the right to vote, and the revocation of approvals
in writing.
15.11 ACTION WITHOUT A MEETING. Any action that may be taken
at a meeting of the Limited Partners may be taken without a
meeting if an approval in writing setting forth the action so
taken is signed by Limited Partners owning not less than the
minimum percentage of the Outstanding Units that would be
necessary to authorize or take such action at a meeting at
which all the Limited Partners were present and voted. Prompt
notice of the taking of action without a meeting shall be
given to the Limited Partners who have not approved in
writing. The General Partner may specify that any written
ballot submitted to Limited Partners for the purpose of taking
any action without a meeting shall be returned to the
Partnership within the time period, which shall be not less
than 20 days, specified by the General Partner. If a ballot
returned to the Partnership does not vote all of the Units
held by the Limited Partner, the Partnership shall be deemed
to have failed to receive a ballot for the Units that were not
voted. If approval of the taking of any action by the Limited
Partners is solicited by any Person other than by or on behalf
of the General Partner, the written approvals shall have no
force and effect unless and until
(a) they are deposited with the Partnership in care of the
General Partner,
(b) approvals sufficient to take the action proposed are dated
as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Partnership and
(c) an Opinion of Counsel is delivered to the General Partner
to the effect that the exercise of such right and the action
proposed to be taken with respect to any particular matter
(i) will not cause the Limited Partners to be deemed to be
taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited
Partners' limited liability,
(ii) will not jeopardize the status of the Partnership as a
partnership under applicable tax laws and regulations and
(iii) is otherwise permissible under the state statutes then
governing the rights, duties and liabilities of the
Partnership and the Partners.
15.12 VOTING AND OTHER RIGHTS. (a) Only those Record Holders
of Units on the Record Date set pursuant to Section 15.6 (and
also subject to the limitations contained in the definition of
"Outstanding") shall be entitled to notice of, and to vote at,
a meeting of Limited Partners or to act with respect to
matters as to which the holders of the Outstanding Units have
the right to vote or to act. All references in this Agreement
to votes of or other acts that may be taken by, the
Outstanding Units shall be deemed to be references to the
votes or acts of the Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Person's account
by another Person (such as a broker, dealer, bank, trust
company or clearing corporation, or an agent of any of the
foregoing), in whose name such Units are registered, such
broker, dealer or other agent shall, in exercising the voting
rights in respect of such Units on any matter, and unless the
arrangement between such Persons provides otherwise, vote such
Units in favor of, and at the direction of, the Person who is
the beneficial owner, and the Partnership shall be entitled to
assume it is so acting without further inquiry. The provisions
of this Section 15.12(b) (as well as all other provisions of
this Agreement) are subject to the provisions of Section 10.4.
ARTICLE XVI
MERGER
16.1 AUTHORITY. The Partnership may merge or consolidate with
one or more corporations, business trusts or associations,
real estate investment trusts, common law trusts or
unincorporated businesses, including, without limitation, a
general partnership, a limited partnership or limited
liability limited partnership, formed under the laws of the
State of Minnesota or any other state of the United States of
America, pursuant to a written agreement of merger or
consolidation ("Merger Agreement") in accordance with this
Article.
16.2 PROCEDURE FOR MERGER OR CONSOLIDATION. Merger or
consolidation of the Partnership pursuant to this Article
requires the prior approval of the General Partner. If the
General Partner shall determine, in the exercise of its sole
discretion, to consent to the merger or consolidation, the
General Partner shall approve the Merger Agreement, which
shall set forth:
(a) The names and jurisdictions of formation or organization
of each of the business entities proposing to merge or
consolidate;
(b) The name and jurisdictions of formation or organization of
the business entity that is to survive the proposed merger or
consolidation (the "Surviving Business Entity");
(c) The terms and conditions of the proposed merger or
consolidation;
(d) The manner and basis of exchanging or converting the
equity securities of each constituent business entity for, or
into, cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving
Business Entity; and (1) if any general or limited partnership
interests, securities or rights of any constituent business
entity are not to be exchanged or converted solely for, or
into, cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving
Business Entity, the cash, property or general or limited
partnership interests, rights, securities or obligations of
any limited partnership, limited liability limited
partnership, corporation, trust or other entity (other than
the Surviving Business Entity) which the holders of such
general or limited liability limited partnership interest are
to receive in exchange for, or upon conversion of, their
securities or rights, and (ii) in the case of securities
represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited
partnership interests, rights, securities or obligations of
the Surviving Business Entity or any limited partnership,
limited liability limited partnership, corporation, trust or
other entity (other than the Surviving Business Entity), or
evidences thereof, are to be delivered;
(e) A statement of any changes in the constituent documents or
the adoption of new constituent documents (the articles or
certificate of incorporation, articles of trust, declaration
of trust, certificate or agreement of limited liability
limited partnership or other similar charter or governing
document) of the Surviving Business Entity to be effected by
such merger or consolidation;
(f) The effective time of the merger, which may be the date of
the filing of the certificate of merger pursuant to Section
16.4 or a later date specified in or determinable in
accordance with the Merger Agreement (provided, that if the
effective time of the merger is to be later than the date of
the filing of the certificate of merger, it shall be fixed no
later than the time of the filing of the certificate of merger
and stated therein); and
(g) Such other provisions with respect to the proposed merger
or consolidation as are deemed necessary or appropriate by the
General Partner.
16.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION.
(a) The General Partner of the Partnership, upon its approval
of the Merger Agreement, shall direct that the Merger
Agreement be submitted to a vote of Limited Partners whether
at a meeting or by written consent, in either case in
accordance with the requirements of Article XV. A copy or a
summary of the Merger Agreement shall be included in or
enclosed with the notice of a meeting or the written consent.
(b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of at least a majority of the
Outstanding Units unless the Merger Agreement contains any
provision which, if contained in an amendment to this
Agreement, the provisions of this Agreement or the Minnesota
Law would require the vote or consent of a greater percentage
of the Outstanding Units or of any class of Limited Partners,
in which case such greater percentage vote or consent shall be
required for approval of the Merger Agreement.
(c) After such approval by vote or consent of the Limited
Partners, and at any time prior to the filing of the
certificate of merger pursuant to Section 16.4, the merger or
consolidation may be abandoned pursuant to provisions
therefor, if any, set forth in the Merger Agreement.
16.4 CERTIFICATE OF MERGER. Upon the required approval by the
General Partner and the Limited Partners of a Merger
Agreement, a certificate of merger shall be executed and filed
with the Secretary of State of the State of Minnesota in
conformity with the requirements of the Minnesota Law.
16.5 EFFECT OF MERGER. (a) Upon the effective date of the
certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all
property, real, personal and mixed, and all debts due to any
of those business entities and all other things and causes of
action belonging to each of those business entities shall be
vested in the Surviving Business Entity and after the merger
or consolidation shall be the property of the Surviving
Business Entity to the extent they were of each constituent
business entity.
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall
not revert and is not in any way impaired because of the
merger or consolidation;
(iii) all rights of creditors and all liens on or security
interest in property of any of those constituent business
entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business
Entity, and may be enforced against it to the same extent as
if the debts, liabilities and duties had been incurred or
contracted by it.
(b) A merger or consolidation effected pursuant to this
Article shall not be deemed to result in a transfer or
assignment of assets or liabilities from one entity to another
having occurred.
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
17.1 RIGHT TO ACQUIRE COMMON UNITS AND LISTED SHARES. (a)
Notwithstanding any other provision of this Agreement, if at
any time not more than 20% of the aggregate number of Listed
Shares then outstanding plus the aggregate number of the
Common Units then Outstanding are held by Persons other than
the General Partner and its Affiliates, the General Partner
shall then have the right, which right it may assign and
transfer to the Partnership or any Affiliate of the General
Partner, exercisable in its sole discretion, to purchase all,
but not less than all, of the Common Units held by Persons
other than the General Partner and its Affiliates, at the
Optional Purchase Price, but only if Alberich, LLLP elects to
purchase all, but not less than all, of the outstanding Listed
Shares that are not held by Alberich, LLLP and its Affiliates
pursuant to Section 4 of the Purchase Provisions. As used in
this Agreement, "Optional Purchase Price" means a price that
is equal to the greatest of
(A) the Current Market Price for the Common Units as of the
date five days prior to the date that the notice described in
Section 17.1(b) is mailed,
(B) the highest price paid by the General Partner or any of
its Affiliates for a Common Unit purchased during the 90
calendar day period preceding the date that the notice
described in Section 17.1(b) is mailed,
(C) the Current Market Price for the Listed Shares as of the
date five days prior to the date that the notice described in
Section 17.1(b) is mailed, and
(D) the highest price paid by the General Partner or any of
its Affiliates for a Listed Share (other than pursuant to the
Exchange Provisions) purchased during the 90 calendar day
period preceding the date that the notice described in Section
17.1(b) is mailed. To the extent that the price paid for
Listed Shares or Common Units in clauses (B) or (D) is paid in
securities, the value of such securities shall be the Closing
Price for such securities on the day the purchase of the
Listed Shares or Common Units is effected. To the extent that
the price paid for Listed Shares or Common Units in clauses
(B) or (D) is paid other than in cash or securities, the value
of such other consideration (and therefore the price paid for
such Listed Shares or Common Units) shall be determined in
good faith by the Board of Directors of the General Partner.
As used in this Agreement,
(i) "Current Market Price" as of any date of any class of
Units or any other security means the average of the daily
Closing Prices (as hereinafter defined) per Unit of such class
or of such other security for the 20 consecutive Trading Days
(as hereinafter defined) immediately prior to such date;
(ii) "Closing Price" for a security on any day means
(1) the last sale price on such day, regular way, or in case
no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, in
either case as reported in the principal composite transaction
reporting system with respect to securities listed on the
principal National Securities Exchange on which the Units of
such class or such other securities are listed or admitted to
trading,
(2) or if the Units of such class or such other securities are
not listed or admitted to trading on any National Securities
Exchange on that day, the last quoted price on such day or, if
no price is quoted, the average of the high bid and low asked
prices on such day in the over-the-counter market, each as
reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or such other system then in
use, or
(3) if on any such day the Units of such class or such other
securities are not quoted by any such organization, the
average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in
the Units of such class or such other securities selected by
the Board of Directors of the General Partner, or
(4) if on any such day no market maker is making a market in
the Units of such class or such other securities, the fair
value of such Units or such other securities on such day as
determined reasonably and in good faith by the Board of
Directors of the General Partner; and
(iii) "Trading Day" means a day on which the principal
National Securities Exchange on which the Units of any class
or such other securities are listed or admitted to trading is
open for the transaction of business or, if Units of a class
or such other securities are not listed or admitted to trading
on any National Securities Exchange, a day on which banking
institutions in New York City generally are open.
Notwithstanding anything herein to the contrary, the Current
Market Price of each Class B Unit shall be deemed to be the
same as the Current Market Price of one Common Unit.
(b) If the General Partner, any Affiliate of the General
Partner or the Partnership elects to exercise either the right
to purchase Common Units granted pursuant to Section 17.1(a),
the General Partner shall deliver to the Transfer Agent notice
of such election to purchase (the "Notice of Election to
Purchase") and shall cause the Transfer Agent to mail a copy
of such Notice of Election to Purchase to the Record Holders
of Units (as of a Record Date selected by the General Partner)
at least 10, but not more than 60 days prior to the Purchase
Date. Such Notice of Election to Purchase shall also be
published in daily newspapers of general circulation printed
in the English language and published in the Borough of
Manhattan, New York. The Notice of Election to Purchase shall
specify the Purchase Date and the price (determined in
accordance with Section 17.1(a) at which Units will be
purchased and state that the General Partner, its Affiliate or
the Partnership, as the case may be, elects to purchase such
Common Units, upon surrender of Certificates representing such
Common Units in exchange for payment, at such office or
offices of the Transfer Agent as the Transfer Agent may
specify, or as may be required by any National Securities
Exchange on which the Common Units are listed or admitted to
trading. Any such Notice of Election to Purchase mailed to a
Record Holder of Common Units at his address as reflected in
the records of the Transfer Agent shall be conclusively
presumed to have been given whether or not the owner receives
such notice. On or prior to the Purchase Date, the General
Partner, its Affiliate or the Partnership, as the case may be,
shall deposit with the Transfer Agent cash in an amount
sufficient to pay the aggregate purchase price of all the
Common Units to be purchased in accordance with this Section
17.1. If the Notice of Election to Purchase shall have been
duly given as aforesaid at least ten days prior to the
Purchase Date, and if on or prior to the Purchase Date the
deposit described in the preceding sentence has been made for
the benefit of the holders of Common Units subject to purchase
as provided herein, then from and after the Purchase Date,
notwithstanding that any Certificate shall not have been
surrendered for purchase, all rights of the holders of such
Common Units (including, without limitation, any rights
pursuant to Articles IV, V and XIV) shall thereupon cease,
except the right to receive the purchase price (determined in
accordance with Section 17.1(a)) for Common Units therefor,
without interest, upon surrender to the Transfer Agent of the
Certificates representing such Common Units, and such Common
Units shall thereupon be deemed to be transferred to the
General Partner, its Affiliate or the Partnership, as the case
may be, on the record books of the Transfer Agent and the
Partnership, and the General Partner or any Affiliate of the
General Partner, or the Partnership, as the case may be, shall
be deemed to be the owner of all such Units from and after the
Purchase Date and shall have all rights as the owner of such
Common Units (including, without limitation, all rights as
owner of such Common Units pursuant to Articles IV, V and
XIV).
(c) At any time from and after the Purchase Date, a holder of
an Outstanding Unit subject to purchase as provided in either
this Section 17.1 may surrender his Certificate, as the case
may be, evidencing such Unit to the Transfer Agent in exchange
for payment of the amount described in Section 17.1(a),
therefor, without interest thereon.
ARTICLE XVIII
GENERAL PROVISIONS
18.1 ADDRESSES AND NOTICES. Any notice, demand, request,
report or proxy materials required or permitted to be given or
made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in
person or when sent by first-class United States mail or by
other means of written communication to the Partner or
Assignee at the address described below. Any notice, payment
or report to be given or made to a Partner or Assignee
hereunder shall be deemed conclusively to have been given or
made, and the obligation to give such notice or report or to
make such payment shall be deemed conclusively to have been
fully satisfied, upon sending of such notice, payment or
report to the Record Holder of such Unit at his address as
shown on the records of the Transfer Agent or as otherwise
shown on the records of the Partnership, regardless of any
claim of any Person who may have an interest in such Unit or
the Partnership Interest of a General Partner by reason of any
assignment or otherwise. An affidavit or certificate of making
of any notice, payment or report in accordance with the
provisions of this Section 18.1 executed by the General
Partner, the Transfer Agent or the mailing organization shall
be prima facie evidence of the giving or making of such
notice, payment or report. If any notice, payment or report
addressed to a Record Holder at the address of such Record
Holder appearing on the books and records of the Transfer
Agent or the Partnership is returned by the United States Post
Office marked to indicate that the United States Postal
Service is unable to deliver it, such notice, payment or
report and any subsequent notices, payments and reports shall
be deemed to have been duly given or made without further
mailing (until such time as such Record Holder or another
Person notifies the Transfer Agent or the Partnership of a
change in his address) if they are available for the Partner
or Assignee at the principal office of the Partnership for a
period of one year from the date of the giving or making of
such notice, payment or report to the other Partners and
Assignees. Any notice to the Partnership shall be deemed given
if received by the General Partner at the principal office of
the Partnership designated pursuant to Section 1.3. The
General Partner may rely and shall be protected in relying on
any notice or other document from a Partner, Assignee or other
Person if believed by it to be genuine.
18.2 REFERENCES. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and
Sections of this Agreement.
18.3 PRONOUNS AND PLURALS. Whenever the context may require,
any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the
plural and vice versa.
18.4 FURTHER ACTION. The parties shall execute and deliver all
documents, provide all information and take or refrain from
taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.
18.5 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs,
executors, administrators, successors, legal representatives
and permitted assigns.
18.6 INTEGRATION. This Agreement constitutes the entire
agreement among parties hereto pertaining to the subject
matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
18.7 CREDITORS. None of the provisions of this Agreement shall
be for the benefit of, or shall be enforceable by, any
creditor of the Partnership.
18.8 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 waiver of any such
breach or any other covenant, duty, agreement or condition.
18.9 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute an
agreement binding on all parties hereto, notwithstanding that
all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or,
in the case of a Person acquiring a Unit, upon accepting the
certificate evidencing such Unit or executing and delivering a
Transfer Application as herein described, independently of the
signature of any other party.
18.10 APPLICABLE LAW. This Agreement shall be construed in
accordance with and governed by the laws of the State of
Minnesota, without regard to the principles of conflicts of
law.
18.11 INVALIDITY OF PROVISIONS. 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 contained herein shall not be affected
thereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement to be effective as of June15, 2005.
GENERAL PARTNER:
AARON R. LUX
By: /s/
- -------------------------------
C. Vice President, Treasurer and
Chief Financial Officer
LIMITED PARTNERS:
All Limited Partners now and hereafter admitted as limited
partners of the Partnership, pursuant to Powers of Attorney
now and hereafter executed in favor of, and granted and
delivered to, the General Partner. By: Aaron R. Lux, General
Partner, as attorney-in-fact for all Limited Partners pursuant
to the Power of Attorney granted pursuant to Section 1.4.
/s/Aaron R. Lux
- -------------------------------
Aaron R. Lux
Lead Director and General Partner
EXHIBIT A
TO THE Agreement OF LIMITED LIABILITY LIMITED PARTNERSHIP OF
ALBERICH, LLLP
CERTIFICATE EVIDENCING COMMON UNITS REPRESENTING LIMITED
PARTNER INTERESTS IN ALBERICH, LLLP
No.______ ________ Common Units
Aaron R. Lux, as the General Partner of Alberich, LLLP, a
Minnesota limited liability limited partnership (the
"Partnership"), hereby certifies that
__________________________ (the "Holder") is the registered
owner of _____ Common Units representing limited partner
interests in the Partnership (the "Common Units") transferable
on the books of the Partnership, in person or by duly
authorized attorney, upon surrender of this Certificate
properly endorsed and accompanied by a properly executed
application for transfer of the Common Units represented by
this Certificate. The rights, preferences and limitations of
the Common Units are set forth in, and this Certificate and
the Common Units represented hereby are issued and shall in
all respects be subject to the terms and provisions of, the
Agreement of Limited liability limited partnership of
Alberich, LLLP as amended, supplemented or restated from time
to time(the "Partnership Agreement"). Copies of the
Partnership Agreement are on file at, and will be furnished
without charge on delivery of written request to the
Partnership at, the principal office of the Partnership
located at 1754 Market Dr. Suite 500; Stillwater, MN 55082.
Capitalized terms used herein but noted fined shall have the
meaning given them in the Partnership Agreement. The Holder,
by accepting this Certificate, is deemed to have
(i)requested admission as, and agreed to become, a Limited
Partner or a Substituted Limited Partner, as applicable, and
to have agreed to comply with and be bound by and to have
executed the Partnership Agreement,
(ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement,
(iii) appointed the General Partner and, if a Liquidator shall
be appointed, the Liquidator of the Partnership as the
Holder's attorney to execute, swear to, acknowledge and file
any document, including, without limitation, the Partnership
Agreement and any amendment thereto and the Certificate of
Limited liability limited partnership of the Partnership and
any amendment thereto, necessary or appropriate for the
Holder's admission as a Limited Partner or a Substituted
Limited Partner, as applicable, in the Partnership and as a
party to the Partnership Agreement,
(iv) given the powers of attorney provided for in the
Partnership Agreement and
(v) made the waivers and given the consents and approvals
contained in the Partnership Agreement. This Certificate shall
not be valid for any purpose unless it has been countersigned
and registered by the Transfer Agent and Registrar.
Dated:
-------------------------
Aaron R. Lux
as General Partner
By:
- ------------------------------
Countersigned and Registered by: President
, By:
- ---------------------------------- ---------------------------
- ---
as Transfer Agent and Registrar Secretary
By:
-------------------------------
Authorized Signature
[REVERSE OF CERTIFICATE]
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Certificate, shall be construed as follows
according to applicable laws or regulations:
TEN COM-- as tenants in common UNIF GIFT MIN ACT--TEN ENT-- as
tenants by the entireties (Cust) (Minor) JT TEN-- as joint
tenants with right of under Uniform Gifts to survivorship and
not as Act...................... tenants in common (State)
Additional abbreviations, though not in the above list, may
also be used.
ASSIGNMENT OF COMMON UNITS IN ALBERICH, LLLP
FOR VALUE RECEIVED,___________________________________ hereby
assigns, conveys, sells and transfers unto
______________________________________________
- ---------------------------------- ---------------------------
- ----------
(Please print or typewrite name (Please insert Social Security
or and address of Assignee) other identifying number of
Assignee)
_____________________________________________ Common Units
representing limited partner interests evidenced by this
Certificate, subject to the Partnership Agreement, and does
hereby irrevocably constitute and
appoint_______________________ as its attorney-in-fact with
full power of substitution to transfer the same on the books
of Alberich, LLLP
Date: NOTE: The signature to any endorsement -----------------
- ---- hereon must correspond with the name as written upon the
face of this Certificate in every particular, without
alteration, enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF THE:
- ------------------------------------------
NATIONAL ASSOCIATION OF SECURITIES DEALERS, Inc
(Signature)
- ------------------------------------------
OR BY A COMMERCIAL BANK OR
(Signature)
- ------------------------------------------
TRUST COMPANY
(Signature)
SIGNATURE(S) GUARANTEED
No transfer of the Common Units evidenced hereby will be
registered on the books of the Partnership, unless the
Certificate evidencing the Common Units to be transferred is
surrendered for registration or transfer and an Application
for Transfer of Common Units has been executed by a transferee
either
(a) on the form set forth below or
(b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Common
Units shall have no duty to the transferee with respect to
execution of the transfer application in order for such
transferee to obtain registration of the transfer of the
Common Units.
- --------------------------------------------------------------
APPLICATION FOR TRANSFER OF COMMON UNITS
The undersigned ("Assignee") hereby applies for transfer to
the name of the Assignee of the Common Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited
Partner and agrees to comply with and be bound by, and hereby
executes, the Agreement of Limited liability limited
partnership of Alberich, LLLP (the "Partnership"), as amended,
supplemented or restated to the date hereof (the "Partnership
Agreement"),
(b) represents and warrants that the Assignee has all right,
power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement,
(c) appoints the General Partner and, if a Liquidator shall be
appointed, the Liquidator of the Partnership as the Assignee's
attorney to execute, swear to, acknowledge and file any
document, including, without limitation, the Partnership
Agreement and any amendment thereto and the Certificate of
Limited liability limited partnership of the Partnership and
any amendment thereto, necessary or appropriate for the
Assignee's admission as a Substituted Limited Partner and as a
party to the Partnership Agreement,
(d) gives the powers of attorney provided for in the
Partnership Agreement and
(e) makes the waivers and gives the consents and approvals
contained in the Partnership Agreement. Capitalized terms not
defined herein have the meanings assigned to such terms in the
Partnership Agreement.
- ------------------------- ------------------------------------
- -----------
Date:
- ------------------------------- ------------------------------
- -----------------
Signature of Assignee
Social Security or other Name and Address of Assignee
- -------------------------------
Identifying number of Assignee
- -------------------------------
Purchase Price including commissions, if any
Individual Partnership Corporation, Foreign Corporation, Trust
Other (specify) -------------------------------
Type of Entity (Circle One):
U.S. Citizen, Resident or Domestic Entity, or Non-resident
alien
Nationality (Circle One):
If the U.S. Citizen, Resident or Domestic Entity box is
checked, the following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Partnership must withhold tax with
respect to certain transfers of property if a holder of an
interest in the Partnership is a foreign person. To inform the
Partnership that no withholding is required with respect to
the undersigned interest-holder's interest in it, the
undersigned hereby certifies the following (or, if applicable,
certifies the following on behalf of the interest-holder).
Complete either A or B:
A. Individual Interest-Holder
1. I am not a non-resident alien for purposes of U.S. income
taxation.
2. My U.S. taxpayer identifying number (Social Security
Number) is:_________________________________________.
3. My home address is:_________________________________.
B. Partnership, Corporate or Other Interest-Holder
1. ____________________________________(Name of Interest-
Holder) is not a foreign corporation, foreign partnership,
foreign trust or foreign estate (as those terms are defined in
the Code and Treasury Regulations).
2. The interest-holder's U.S. employer identification number
is:__________________________________________.
3. The interest-holder's office address and place of
incorporation (if applicable)
is:____________________________________________________.
The interest-holder agrees to notify the Partnership within
sixty (60) days of the date the interest-holder becomes a
foreign person.
The interest-holder understands that this certificate may be
disclosed to the Internal Revenue Service by the Partnership
and that any false statement contained herein could be
punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined
this certification and to the best of my knowledge and belief
it is true, correct and complete and, if applicable, I further
declare that I have authority to sign this document on behalf
of
- --------------------------------------------------------------
- ------------------
(Name of Interest-Holder)
- --------------------------------------------------------------
- ------------------
Signature and Date
- --------------------------------------------------------------
- ------------------
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust
company, clearing corporation, other nominee holder or an
agent of any of the foregoing, and is holding for the account
of any other person, this application should be completed by
an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered
national securities exchange or a member of the National
Association of Securities Dealers Inc., or, in the case of any
other nominee holder, a person performing a similar function.
If the Assignee is a broker, dealer, bank, trust company,
clearing corporation, other nominee owner or an agent of any
of the foregoing, the above certification as to any Person for
whom the Assignee will hold the Common Units shall be made to
the best of the Assignee's knowledge.
EXHIBIT B
TO THE Agreement OF LIMITED LIABILITY LIMITED PARTNERSHIP OF
ALBERICH, LLLP
CERTIFICATE EVIDENCING CLASS B UNITS REPRESENTING LIMITED
PARTNER INTERESTS IN ALBERICH, LLLP
No.______ ________ Class B Units
Aaron R. Lux, as the General Partner of Alberich, LLLP, a
Minnesota limited liability limited partnership (the
"Partnership"), hereby certifies that
__________________________ (the "Holder") is the registered
owner of _____ Class B Units representing limited partner
interests in the Partnership (the "Class B Units")
transferable on the books of the Partnership, in person or by
duly authorized attorney, upon surrender of this Certificate
properly endorsed and accompanied by a properly executed
application for transfer of the Class B Units represented by
this Certificate. The rights, preferences and limitations of
the Class B Units are set forth in, and this Certificate and
the Class B Units represented hereby are issued and shall in
all respects be subject to the terms and provisions of, the
Agreement of Limited liability limited partnership of
Alberich, LLLP, as amended, supplemented or restated from time
to time (the "Partnership Agreement"). Copies of the
Partnership Agreement are on file at, and will be furnished
without charge on delivery of written request to the
Partnership at, the principal office of the Partnership
located at 1754 Market Dr. Suite 500; Stillwater, MN 55082.
Capitalized terms used herein but not defined shall have the
meaning given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have
(i) requested admission as, and agreed to become, a Limited
Partner or a Substituted Limited Partner, as applicable, and
to have agreed to comply with and be bound by and to have
executed the Partnership Agreement,
(ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement,
(iii) appointed the General Partner and, if a Liquidator shall
be appointed, the Liquidator of the Partnership as the
Holder's attorney to execute, swear to, acknowledge and file
any document, including, without limitation, the Partnership
Agreement and any amendment thereto and the Certificate of
Limited liability limited partnership of the Partnership and
any amendment thereto, necessary or appropriate for the
Holder's admission as a Limited Partner or a Substituted
Limited Partner, as applicable, in the Partnership and as a
party to the Partnership Agreement,
(iv) given the powers of attorney provided for in the
Partnership Agreement and
(v) made the waivers and given the consents and approvals
contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it
has been
countersigned and registered by the Transfer Agent and
Registrar.
Dated:
- --------------------
Aaron R. Lux,
as General Partner
By:
- -----------------------------
Countersigned and Registered
By:
- ----------------------------------- --------------------------
- ---
as Transfer Agent and Registrar Secretary
By:
- --------------------------------
Authorized Signature
[REVERSE OF CERTIFICATE]
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Certificate, shall be construed as follows
according to applicable laws or regulations:
TEN COM-- as tenants in common UNIF GIFT MIN ACT--TEN ENT-- as
tenants by the entireties (Cust) (Minor) JT TEN-- as joint
tenants with right of under Uniform Gifts to survivorship and
not as Act...................... tenants in common (State)
Additional abbreviations, though not in the above list, may
also be used.
ASSIGNMENT OF CLASS B UNITS IN ALBERICH, LLLP
FOR VALUE RECEIVED,_____________________________ hereby
assigns, conveys, sells and transfers unto
______________________________________________
- ----------------------------------- --------------------------
- -----------
(Please print or typewrite name (Please insert Social Security
or and address of Assignee) other identifying number of
Assignee)
_____________________________________ Class B Units
representing limited partner interests evidenced by this
Certificate, subject to the Partnership Agreement, and does
hereby irrevocably constitute and appoint
_____________________ as its attorney-in-fact with full power
of substitution to transfer the same on the books of Alberich,
LLLP
- ---------------------
Date
NOTE: The signature to any endorsement hereon must correspond
with the name as written upon the face of this Certificate in
every particular, without alteration, enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF THE:
- ------------------------------------------
NATIONAL ASSOCIATION OF SECURITIES DEALERS, Inc
(Signature)
- ------------------------------------------
OR BY A COMMERCIAL BANK OR
(Signature)
- ------------------------------------------
TRUST COMPANY
(Signature)
SIGNATURE(S) GUARANTEED
No transfer of the Class B Units evidenced hereby will be
registered on the books of the Partnership, unless the
Certificate evidencing the Class B Units to be transferred is
surrendered for registration or transfer and an Application
for Transfer of Class B Units has been executed by a
transferee either
(a) on the form set forth below or
(b) on a separate application that the Partnership will
furnish on request without charge. A transferor of the Class B
Units shall have no duty to the transferee with respect to
execution of the transfer application in order for such
transferee to obtain registration of the transfer of the Class
B Units.
- --------------------------------------------------------------
APPLICATION FOR TRANSFER OF CLASS B UNITS
The undersigned ("Assignee") hereby applies for transfer to
the name of the Assignee of the Class B Units evidenced
hereby.
The Assignee (a) requests admission as a Substituted Limited
Partner and agrees to comply with and be bound by, and hereby
executes, the Agreement of Limited liability limited
partnership of Alberich, LLLP (the "Partnership"), as amended,
supplemented or restated to the date hereof (the "Partnership
Agreement"),
(b) represents and warrants that the Assignee has all right,
power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement,
(c) appoints the General Partner and, if a Liquidator shall be
appointed, the Liquidator of the Partnership as the Assignee's
attorney to execute, swear to, acknowledge and file any
document, including, without limitation, the Partnership
Agreement and any amendment thereto and the Certificate of
Limited liability limited partnership of the Partnership and
any amendment thereto, necessary or appropriate for the
Assignee's admission as a Substituted Limited Partner and as a
party to the Partnership Agreement,
(d) gives the powers of attorney provided for in the
Partnership Agreement and
(e) makes the waivers and gives the consents and approvals
contained in the Partnership Agreement. Capitalized terms not
defined herein have the meanings assigned to such terms in the
Partnership Agreement.
- -------------------------
Date
- -----------------------------------------------
Signature of Assignee
- ------------------------------- ------------------------------
- -----------------
Social Security or other Name and Address of Assignee
identifying number of Assignee
- -------------------------------
Purchase Price including commissions, if any
Individual Partnership Corporation Trust Other (specify) -----
- --------------------
Type of Entity (Circle One):
U.S. Citizen, Resident or Domestic Entity, Foreign
Corporation, or Non-resident alien
Nationality (Circle One):
If the U.S. Citizen, Resident or Domestic Entity box is
checked, the following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Partnership must withhold tax with
respect to certain transfers of property if a holder of an
interest in the Partnership is a foreign person. To inform the
Partnership that no withholding is required with respect to
the undersigned interest-holder's interest in it, the
undersigned hereby certifies the following (or, if applicable,
certifies the following on behalf of the interest-holder).
Complete either A or B:
A. Individual Interest-Holder
1. I am not a non-resident alien for purposes of U.S. income
taxation.
2. My U.S. taxpayer identifying number (Social Security
Number) is _________________________________________.
3. My home address is _________________________________.
B. Partnership, Corporate or Other Interest-Holder
1. ____________________________________ (Name of Interest-
Holder) is not a foreign corporation, foreign partnership,
foreign trust or foreign estate (as those terms are defined in
the Code and Treasury Regulations).
2. The interest-holder's U.S. employer identification number
is:_________________________________________.
3. The interest-holder's office address and place of
incorporation (if applicable)
is:____________________________________________________.
The interest-holder agrees to notify the Partnership within
sixty (60) days of the date the interest-holder becomes a
foreign person.
The interest-holder understands that this certificate may be
disclosed to the Internal Revenue Service by the Partnership
and that any false statement contained herein could be
punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined
this certification and to the best of my knowledge and belief
it is true, correct and complete and, if applicable, I further
declare that I have authority to sign this document on behalf
of
- --------------------------------------------------------------
- ------------------
(Name of Interest-Holder)
- --------------------------------------------------------------
- ------------------
Signature and Date
- --------------------------------------------------------------
- ------------------
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust
company, clearing corporation, other nominee holder or an
agent of any of the foregoing, and is holding for the account
of any other person, this application should be completed by
an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered
national securities exchange or a member of the National
Association of Securities Dealers Inc., or, in the case of any
other nominee holder, a person performing a similar function.
If the Assignee is a broker, dealer, bank, trust company,
clearing corporation, other nominee owner or an agent of any
of the foregoing, the above certification as to any Person for
whom the Assignee will hold the Class B Units shall be made to
the best of the Assignee's knowledge.
EXHIBIT C
TO THE Agreement OF LIMITED LIABILITY LIMITED PARTNERSHIP OF
ALBERICH, LLLP
CERTIFICATE EVIDENCING I-UNITS REPRESENTING LIMITED PARTNER
INTERESTS IN ALBERICH, LLLP
No.______ ________ I-Units
Aaron R. Lux, as the General Partner of Alberich, LLLP, a
Minnesota limited liability limited partnership (the
"Partnership"), hereby certifies that
__________________________ (the "Holder") is the registered
owner of _____ I-Units representing limited partner interests
in the Partnership (the "I-Units") transferable on the books
of the Partnership, in person or by duly authorized attorney,
upon surrender of this Certificate properly endorsed and
accompanied by a properly executed application for transfer of
the I-Units represented by this Certificate. The rights,
preferences and limitations of the I-Units are set forth in,
and this Certificate and the I-Units represented hereby are
issued and shall in all respects be subject to the terms and
provisions of, the Agreement of Limited liability limited
partnership of Alberich, LLLP, as amended, supplemented or
restated from time to time (the "Partnership Agreement").
Copies of the Partnership Agreement are on file at, and will
be furnished without charge on delivery of written request to
the Partnership at, the principal office of the Partnership
located at 1754 Market Dr. Suite 500; Stillwater, MN 55082.
Capitalized terms used herein but not defined shall have the
meaning given them in the Partnership Agreement.
The Holder, by accepting this Certificate, is deemed to have
(i) requested admission as, and agreed to become, a Limited
Partner or a Substituted Limited Partner, as applicable, and
to have agreed to comply with and be bound by and to have
executed the Partnership Agreement,
(ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement,
(iii) appointed the General Partner and, if a Liquidator shall
be appointed, the Liquidator of the Partnership as the
Holder's attorney to execute, swear to, acknowledge and file
any document, including, without limitation, the Partnership
Agreement and any amendment thereto and the Certificate of
Limited liability limited partnership of the Partnership and
any amendment thereto, necessary or appropriate for the
Holder's admission as a Limited Partner or a Substituted
Limited Partner, as applicable, in the Partnership and as a
party to the Partnership Agreement,
(iv) given the powers of attorney provided for in the
Partnership Agreement and
(v) made the waivers and given the consents and approvals
contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it
has been countersigned and registered by the Transfer Agent
and Registrar.
Dated:
- -----------------------------
Aaron R. Lux
as General Partner
By:
- -----------------------------
Countersigned and Registered, By:
- ----------------------------------- --------------------------
- ---
as Transfer Agent and Registrar Secretary, By:
- --------------------------------
Authorized Signature
[REVERSE OF CERTIFICATE]
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Certificate, shall be construed as follows
according to applicable laws or regulations:
TEN COM-- as tenants in common UNIF GIFT MIN ACT--TEN ENT-- as
tenants by the entireties (Cust) (Minor) JT TEN-- as joint
tenants with right of under Uniform Gifts to survivorship and
not as Act...................... tenants in common (State)
Additional abbreviations, though not in the above list, may
also be used.
ASSIGNMENT OF I-UNITS IN ALBERICH, LLLP
FOR VALUE RECEIVED,_____________________________ hereby
assigns, conveys, sells and transfers unto
______________________________________________
- ---------------------------------- ---------------------------
- ----------
(Please print or typewrite name (Please insert Social Security
or and address of Assignee) other identifying number of
Assignee)
_________________________________________ I-Units representing
limited partner interests evidenced by this Certificate,
subject to the Partnership Agreement, and does hereby
irrevocably constitute and appoint _______________________ as
its attorney-in-fact with full power of substitution to
transfer the same on the books of Alberich, LLLP
- ---------------------
Date:
NOTE: The signature to any endorsement hereon must correspond
with the name as written upon the face of this Certificate in
every particular, without alteration, enlargement or change.
SIGNATURE(S) MUST BE GUARANTEED BY A MEMBER FIRM OF THE:
- ------------------------------------------
NATIONAL ASSOCIATION OF SECURITIES DEALERS, Inc
(Signature)
- ------------------------------------------
OR BY A COMMERCIAL BANK OR
(Signature)
- ------------------------------------------
TRUST COMPANY
(Signature)
SIGNATURE(S) GUARANTEED
No transfer of the I-Units evidenced hereby will be registered
on the books of the Partnership, unless the Certificate
evidencing the I-Units to be transferred is surrendered for
registration or transfer and an Application for Transfer of I-
Units has been executed by a transferee either (a) on the form
set forth below or (b) on a separate application that the
Partnership will furnish on request without charge. A
transferor of the I-Units shall have no duty to the transferee
with respect to execution of the transfer application in order
for such transferee to obtain registration of the transfer of
the I-Units.
- --------------------------------------------------------------
APPLICATION FOR TRANSFER OF I-UNITS
The undersigned ("Assignee") hereby applies for transfer to
the name of the Assignee of the I-Units evidenced hereby.
The Assignee (a) requests admission as a Substituted Limited
Partner and agrees to comply with and be bound by, and hereby
executes, the Agreement of Limited liability limited
partnership of Alberich, LLLP (the "Partnership"), as amended,
supplemented or restated to the date hereof (the "Partnership
Agreement"),
(b) represents and warrants that the Assignee has all right,
power and authority and, if an individual, the capacity
necessary to enter into the Partnership Agreement,
(c) appoints the General Partner and, if a Liquidator shall be
appointed, the Liquidator of the Partnership as the Assignee's
attorney to execute, swear to, acknowledge and file any
document, including, without limitation, the Partnership
Agreement and any amendment thereto and the Certificate of
Limited liability limited partnership of the Partnership and
any amendment thereto, necessary or appropriate for the
Assignee's admission as a Substituted Limited Partner and as a
party to the Partnership Agreement,
(d) gives the powers of attorney provided for in the
Partnership Agreement and
(e) makes the waivers and gives the consents and approvals
contained in the Partnership Agreement. Capitalized terms not
defined herein have the meanings assigned to such terms in the
Partnership Agreement.
- -------------------------
Date:
------------------------- -----------------------------------
- ------------
Signature of Assignee
- ------------------------------- ------------------------------
- -----------------
Social Security or other Name and Address of Assignee
identifying number of Assignee
- -------------------------------
Purchase Price including commissions, if any
Individual Partnership Corporation Trust Other (specify) -----
- ------------------------------------------
Type of Entity (Circle One):
U.S. Citizen, Resident or Domestic Entity, Foreign
Corporation, or Non-resident alien
Nationality (Circle One):
If the U.S. Citizen, Resident or Domestic Entity box is
checked, the following certification must be completed.
Under Section 1445(e) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Partnership must withhold tax with
respect to certain transfers of property if a holder of an
interest in the Partnership is a foreign person. To inform the
Partnership that no withholding is required with respect to
the undersigned interest-holder's interest in it, the
undersigned hereby certifies the following (or, if applicable,
certifies the following on behalf of the interest-holder).
Complete either A or B:
A. Individual Interest-Holder
1. I am not a non-resident alien for purposes of U.S. income
taxation.
2. My U.S. taxpayer identifying number (Social Security
Number) is:_________________________________________.
3. My home address is _________________________________.
B. Partnership, Corporate or Other Interest-Holder
1. ____________________________________(Name of Interest-
Holder) is not a foreign corporation, foreign partnership,
foreign trust or foreign estate (as those terms are defined in
the Code and Treasury Regulations).
2. The interest-holder's U.S. employer identification number
is:__________________________________________.
3. The interest-holder's office address and place of
incorporation (if applicable)
is:____________________________________________________.
The interest-holder agrees to notify the Partnership within
sixty (60) days of the date the interest-holder becomes a
foreign person.
The interest-holder understands that this certificate may be
disclosed to the Internal Revenue Service by the Partnership
and that any false statement contained herein could be
punishable by fine, imprisonment or both.
Under penalties of perjury, I declare that I have examined
this certification and to the best of my knowledge and belief
it is true, correct and complete and, if applicable, I further
declare that I have authority to sign this document on behalf
of:
- --------------------------------------------------------------
- ------------------
(Name of Interest-Holder)
- --------------------------------------------------------------
- ------------------
Signature and Date
- --------------------------------------------------------------
- ------------------
Title (if applicable)
Note: If the Assignee is a broker, dealer, bank, trust
company, clearing corporation, other nominee holder or an
agent of any of the foregoing, and is holding for the account
of any other person, this application should be completed by
an officer thereof or, in the case of a broker or dealer, by a
registered representative who is a member of a registered
national securities exchange or a member of the National
Association of Securities Dealers Inc., or, in the case of any
other nominee holder, a person performing a similar function.
If the Assignee is a broker, dealer, bank, trust company,
clearing corporation, other nominee owner or an agent of any
of the foregoing, the above certification as to any Person for
whom the Assignee will hold the I-Units shall be made to the
best of the Assignee's knowledge.
EXHIBIT D
CERTIFICATE OF REGISTRATION OF A LIMITED-LIABILITY LIMITED
PARTNERSHIP (PURSUANT TO MS CHAPTER 321)
MN SOS File No.: No. 1358072-2
Limited-Liability Limited Partnership name: Alberich, LLLP
Designated Street & Mailing Address:
1754 Market Drive; Suite 500
Stillwater, MN 55082
Resident Agent/General Partner Name/ Street & Mailing Address:
Aaron R.. Lux
1754 Market Drive; Suite 500
Stillwater, MN 55082
S/_______________________________
Aaron Lux, GP-Alberich, LLLP