APPENDIX - SECTION 12.ADMISSION OF ADDITIONAL LIMITED PARTNERS;ASSIGNMENTS OR TRANSFERS OF INTEREST; LIMITED WITHDRAWAL RIGHTS
12.1 Admission of Additional Limited Partners. No additional Limited Partners will be admitted after the Final Closing Date, except as provided in Sections 7.2(f) and 12.2.
12.2 Assignments or Transfers of Interest
(a) Except as otherwise provided in Section 7.2(f), in no event shall all or any part of a Limited Partner's Interest be assigned or transferred unless it is a Permitted Transfer or all of the following conditions are satisfied to the reasonable satisfaction of the General Partner or waived by the General Partner:
(I) The assignor has delivered to the General Partner an opinion of counsel reasonably acceptable to the General Partner that such transfer or assignment would not violate the Securities Act or any blue sky laws (including any investor suitability standards);
(II) Such transfer would not cause the Partnership to lose its status as a partnership for federal income tax purposes or cause the Partnership to become subject to the Investment Company Act of 1940, as amended (see also about safe investments);
(in) Such transfer will not require the General Partner or any of its Affiliates or any Affiliate of the General Partner that is not registered under the Investment Advisers Act of 1940, as amended ("Advisers Act"), or the Partnership, to register as an investment adviser under the Advisers Act;
(iv) Either (A) such transfer would constitute a disregarded transfer for purposes of Treasury Regulation Section 1.7704-1(e) and would not constitute a transfer through an interdealer quotation system for purposes of Treasury Regulation Section 1.7704-l(b)(5) or (B) the transfer is not being made on an established securities market or a secondary market (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code and the Treasury Regulations thereunder;
(v) Such transfer would not cause all or any portion of the assets of the Partnership to constitute "plan assets" under ERISA or the Code or to constitute assets of any ERISA Partner for the purposes of ERISA or to be subject to the provisions of ERISA to substantially the same extent as if owned directly by any ERISA Partner;
(vi) The General Partner receives a notice of assignment signed by both the assignor and assignee, in a form reasonably approved by the General Partner; and
(vn) Such transfer complies with Section 12.3.
(b) Provided the foregoing conditions are met, the assignee may
become a Substituted Limited Partner if and only if:
(I) The General Partner has consented in writing to the substitution (which consent may be unreasonably withheld) except that the General Partner shall be deemed to have consented to the admission of a transferee in a Permitted Transfer;
(II) The assignor and assignee execute, acknowledge and deliver such instruments as the General Partner deems necessary, appropnate or desirable to effect such substitution, including the written acceptance and adoption by the assignee of the provisions of this Agreement and the execution, acknowledgment and delivery to the General Partner of a power of attorney, the substance of which shall be consistent with Section 13; and
(in) The Substituted Limited Partner agrees to bear all expenses and costs of such substitution, including legal fees and filing fees of the Partnership.
(c) An assignee, legal representative or successor in interest of a Limited Partner shall be subject to all of the restnctions upon a Limited Partner provided in this Agreement.
(d) An assignee of an Interest who desires to make a further assignment shall be subject to all of the provisions of this Section transferor Limited Partner in respect of the Interest as to which it was substituted, including the part of the Capital Account of the transferor Limited Partner related to that Interest.
(i) A Non-Voting Interest may become a Voting Interest if it is transferred, in a widely-dispersed transaction or otherwise, to a Person who, following the acquisition of such Interest, holds no greater than 2% of the aggregate Interests outstanding.
12.3 Right of First Refusal.
(a) A Limited Partner may offer to sell, transfer or assign its Units in the Partnership only in their entirety, only for cash or for cash and a promissory note or notes of the buyer, transferee or assignee and only upon the conditions set forth in Section 12.2 and (except as otherwise permitted in Section 12.3(b)) this Section 12.3(a). Before selling, transferring or assigning the Units owned by a Limited Partner, such Limited Partner desiring to make such sale, transfer or assignment (the "Offering Limited Partner") shall, except as provided in Section 12.3(b), first offer to sell its Units (the "Offered Units") to the Partnership at the price and on the terms at which the Offering Limited Partner proposes to transfer the Offered Units. Such offer shall be made in the same manner as provided for the giving of notices in Section 20.2 and in addition to stating the offered pnce and offered terms shall specify the name of the transferee, if any, to whom the Offering Limited Partner proposes to sell, transfer or assign the Offered Units and shall contain all relevant information concerning the proposed transfer. Such offer shall be irrevocable for a period of twenty (20) days from the date on which given (unless such time period is waived in writing by the General Partner). The Partnership may, during such twenty (20)-day period and at its discretion, assign the right to accept such offer to one or more Limited Partners ("Assignee(s)"), who shall have the balance of such twenty (20)-day period to accept such offer. If the Partnership or any Assignee(s) determines to accept the offer to purchase all of the Units, the General Partner shall promptly so notify the Offenng Limited Partner. Thereupon the Partnership or such Assignee(s) shall become bound to buy the Limited Partner that owns and will continue to own beneficially all of the outstanding equity securities or ownership interests of such Limited Partner or to a subsidiary of such corporate parent all of whose outstanding equity securities are beneficially owned and will continue to be beneficially owned by such corporate parent, (iv) by any Limited Partner that is a corporation with 25 or fewer shareholders, without the receipt of value, to any stockholder of such corporation or to any trust or custodian for the benefit or account of any such stockholder, (v) to any individual who becomes a Managing Director, (vi) resulting from the exercise of any right or remedy referred to or provided for in Section 7.2(f), (vn) by a Limited Partner that is acting as a trustee of an employee benefit plan to a co-trustee or successor trustee of such employee benefit plan or (vm) by any Limited Partner to an entity that the General Partner has determined in good faith is an Affiliate of such Limited Partner. Any transfer permitted by this Section 12.3(b) shall be subject to the provisions of Section 12.2.
12.4 ERISA Partners' Transfer Right. If the Partnership no longer complies with the requirements to qualify as a Venture Capital Operating Company or an ERISA Partner delivers an opinion of counsel, reasonably acceptable in form and substance to the General Partner, to the effect that there is a reasonable likelihood that the continued ownership of its Interest (or the indirect ownership interest of any limited partners or members of such ERISA Partner) in the Partnership would violate ERISA or state law, the General Partner may, in its sole discretion, require the ERISA Partner to withdraw from the Partnership or assist such ERISA Partner in locating a transferee of all or part of its Interest in the Partnership and, subject to Section 12.2, will not unreasonably withhold its consent to the transfer by such Partner of all or part of its interest in the Partnership. Such ERISA Partner's interest may be purchased by the Partnership for a pnce equal to the fair market value of the ERISA Partner's interest in the Partnership, as of the date of such withdrawal, determined by the General Partner in good faith pursuant to, and consistent with, the valuation methods and practices set forth in Section 15. The General Partner shall notify all ERISA Partners in writing promptly after it reasonably determines that the Partnership no longer complies with the requirements to qualify as a Venture Capital Operating Company.
12.5 Transfers By Foundation Partners. If a Foundation Partner delivers an opinion of counsel, reasonably acceptable in form and substance to the General Partner, to the effect that, as a result of a change in law occurring after the date of this Agreement, there is a material likelihood that the continued ownership of its interest in the Partnership would subject such Foundation Partner to excise taxes imposed by Subchapter A of Chapter 42 of the Code (other than Sections 4940 and 4942 thereof) or cause a material violation or material breach of the fiduciary duties of such Foundation Partner's trustees under any federal or state law applicable to pnvate foundations or any rule or regulation adopted thereunder by any agency, commission or authority having jurisdiction, the General Partner will assist such Foundation Partner in locating a transferee of all or part of its interest in the Partnership and, subject to Section 12.2, will not unreasonably withhold its consent to the transfer by such Partner of all or part of its interest in the Partnership.
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SECTION 12.ADMISSION OF ADDITIONAL LIMITED PARTNERS