EFTA00310572.pdf

SIXTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF SAB CAPITAL PARTNERS, L.P. Dated as of March 1, 2002 425337.28 EFTA00310572  TABLE OF CONTENTS Pum ARTICLE I Defined Terms 1 Sec. 1.01 Defined Terms 1 ARTICLE II General Provisions 12 Sec. 2.01 Formation of the Partnership 12 Sec. 2.02 Partnership Name, Principal Office and Address 12 Sec. 2.03 Fiscal Year 12 Sec. 2.04 Partners; Liability of Limited Partners 12 Sec. 2.05 Purposes of Partnership 13 Sec. 2.06 Assignability of Interest 13 ARTICLE Di Management of Partnership 14 Sec. 3.01 Management Generally 14 Sec. 3.02 Authority of General Partner 14 Sec. 3.03 Reliance by Third Parties 15 Sec. 3.04 Activity of General Partner 15 Sec. 3.05 Exculpation 16 Sec. 3.06 Indemnification 16 Sec. 3.07 Management Fee; Payment of Certain Costs and Expenses 16 Sec. 3.08 General Partner's Discretion 18 Sec. 3.09 Removal of General Partner 18 ARTICLE IV Capital Accounts of Partners and Operation Thereof 19 Sec. 4.01 Capital Contributions 19 Sec. 4.02 Drawdowns; Failure of Contribution by Limited Partner 20 Sec. 4.03 Capital Accounts 21 Sec. 4.04 Allocation of PCA Net Capital Appreciation or Depreciation; Incentive Allocation 22 Sec. 4.05 Amendment of Incentive Allocation 27 Sec. 4.06 Side-Pocket Accounts; Side-Pocket Sub-Accounts; Remaining Side-Pocket Investments 27 Sec. 4.07 Valuation of Assets 30 Sec. 4.08 Liabilities 31 Sec. 4.09 Allocation for Tax Purposes 31 Sec. 4.10 Adjustments to Take Account of Interim Year Events and Capital Account Reallocations 32 425337.28 -1- EFTA00310573 ARTICLE V Withdrawals and Distributions; Death and Disability 32 Sec. 5.01 Withdrawals and Distributions in General 32 Sec. 5.02 Withdrawals 32 Sec. 5.03 Special Withdrawal Right 34 Sec. 5.04 Required Withdrawals 34 Sec. 5.05 Death, Disability, etc. of Limited Partners 34 Sec. 5.06 Distributions 35 Sec. 5.07 Tax Distributions 36 Sec. 5.08 Remaining Side-Pocket Investments 36 Sec. 5.09 Effective Date of Withdrawal 36 Sec. 5.10 Limitations on Withdrawals 36 Sec. 5.11 Conversion of Class A Limited Partners 37 Sec. 5.12 Withdrawals by BHC Limited Partners 37 ARTICLE VI Admission of New Limited Partners 37 Sec. 6.01 New Limited Partners 37 ARTICLE VII Duration and Termination of Partnership 37 Sec. 7.01 Duration 37 Sec. 7.02 Termination 37 ARTICLE VIII Tax Returns; Reports to Partners 38 Sec. 8.01 Independent Auditors 38 Sec. 8.02 Filing of Tax Returns 38 Sec. 8.03 Tax Matters Partner 38 Sec. 8.04 Reports to Current Partners 38 Sec. 8.05 Reports to Partners and Former Partners 39 ARTICLE IX Miscellaneous 39 Sec. 9.01 General 39 Sec. 9.02 Power of Attorney 39 Sec. 9.03 Amendments to Partnership Agreement 40 Sec. 9.04 Non-Voting Interests of BHC Limited Partners 41 Sec. 9.05 Choice of Law 41 Sec. 9.06 Adjustment of Basis of Partnership Property 41 Sec. 9.07 No Third Party Rights 41 Sec. 9.08 Notices 42 Sec. 9.09 Goodwill 42 Sec. 9.10 Headings 42 Sec. 9.11 Pronouns 42 425337.28 _i;- EFTA00310574  SIXTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF SAB CAPITAL PARTNERS, L.P. Dated as of March 1, 2002 THIS SIXTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of SAB Capital Partners, L.P., dated the date first above written, is among SAB Capital Advisors, L.L.C., as general partner, and the undersigned Limited Partners. Capitalized terms used herein shall have the meanings set forth in Article 1. PRELIMINARY STATEMENT WHEREAS, the General Partner and the undersigned Limited Partners entered into the Limited Partnership Agreement of the Partnership on January 4, 1999, as amended by the First Amended and Restated Limited Partnership Agreement of the Partnership, dated April 1, 1999, the Second Amended and Restated Limited Partnership Agreement of the Partnership, dated April 1, 2000, the Third Amended and Restated Limited Partnership Agreement of the Partnership dated July 1, 2000, the Fourth Amended and Restated Limited Partnership Agreement of the Partnership, dated September 1, 2000 and the Fifth Amended and Restated Limited Partnership Agreement of the Partnership, dated August 31, 2001; and WHEREAS, the General Partner and the Limited Partners wish to clarify their agreement with respect to certain matters described in the Agreement. NOW THEREFORE, in consideration of the mutual covenants contained herein, the Agreement is hereby amended and restated in its entirety as follows as of the date first above written: ARTICLE I Defined Terms Sec. 1.01 Defined Terms. For purposes of this Agreement, the following terms shall have the meanings ascribed to them below: "Accounting Period" means the following periods: Each Accounting Period shall commence immediately after the close of the next preceding Accounting 425337.28 EFTA00310575  Period. Each Accounting Period shall close at the close of business on the first to occur of (i) the last day of each fiscal quarter of the Partnership, (ii) the date immediately prior to the effective date of an additional Capital Contribution, (iii) the effective date of any withdrawal pursuant to Article V hereof; (iv) the date immediately prior to the effective date of the establishment of any Side-Pocket Account, (v) the date immediately prior to the effective date of a transfer from a Side-Pocket Account of all or a portion of the Value of the investment held in such Side-Pocket Account or all or a portion of the proceeds thereof to the Primary Capital Account Sub-Accounts of Participating Partners, (vi) the date when the Partnership dissolves or (vii) any other date the General Partner shall determine, but only, in the case of (ii), (iv) and (v), if treating such date as the close of an Accounting Period would result in the PCA Participating Percentage of any Primary Capital Account on the first day of the following Accounting Period differing from such Primary Capital Account's PCA Participating Percentage on the first day of the immediately preceding Accounting Period. "Act" means the Delaware Revised Uniform Limited Partnership Act (6 Del. C. §17-101 et m.), as amended from time to time. "Affiliates" means (i) the Management Company and any of the Management Company's partners, officers, employees or other agents, (ii) the members, officers, employees or other agents of the General Partner, (iii) the members, partners, officers, employees or other agents of any member or partner in the General Partner or the Management Company and (iv) any Person directly or indirectly Controlling, Controlled by or under common Control with the General Partner or the Management Company. "Agreement" means this Limited Partnership Agreement, as amended from time to time. "Amount Eligible for Side-Pocket Investments" means, with respect to each Primary Capital Account Sub-Account at any time, an amount equal to 20% of the sum of (i) the balance of such Primary Capital Account Sub-Account at such time, (ii) with respect to the Primary Capital Account Sub-Accounts of any Primary Capital Account established on or prior to December 31, 1999, the amount, at such time, of any Remaining Capital Commitment with respect to such Primary Capital Account, and (iii) the amount such Primary Capital Account Sub-Account was debited in connection with the funding of all Side-Pocket Investments that continue to be held by the Partnership in Side-Pocket Accounts. If the Carrying Value of any such Side-Pocket Investment has been reduced pursuant to clauses (xXii) or (iii) of the definition of "Carrying Value", the amount specified in clause (iii) of this definition shall be reduced in the same proportion as the reduction in Carrying Value. "Ease Amount" means, with respect to each Limited Partner's Primary Capital Account, the balance in such Primary Capital Account at the beginning of the current Lock-Up Period with respect to such Primary Capital Account plus the Carrying Value at such time of each Related Side-Pocket Sub-Account maintained at such time with respect to such Primary Capital Account. During such Lock-Up Period, the Base 425337.28 -2- EFTA00310576  Amount shall be reduced for distributions (as described in Article V) as of the date of such distributions and increased by the amount of any Capital Contributions made by such Limited Partner credited to such Primary Capital Account, as of the date of such contributions. "BHC Act" means the Bank Holding Company Act of 1956, as amended. "BHC Limited Partner" means any Limited Partner that is, or is an affiliate of; a bank holding company (as defined in Section 2(a) of the BHC Act), or is subject to the provisions of the BHC Act as if it were a bank holding company, and that has provided notice to the General Partner that such Limited Partner should be treated as a BHC Limited Partner. "Business Day" means any day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York, are authorized or required by law or executive other to close. "Capital Commitment" means, with respect to any Partner admitted to the Partnership on or before December 31, 1999, the total amount which such Partner has agreed to contribute to the Partnership (on or before December 31, 1999) pursuant to one or more subscription agreements executed by such Partner. "Capital Contribution" means a contribution to the capital of the Partnership. "Carrying Value" means, at any time, (x) with respect to each Side- Pocket Investment, the aggregate cost of such investment (including expenses relating to the acquisition thereof), adjusted as follows: (i) the Carrying Value shall be decreased by the amount of any Write Down, (ii) if there is realization, Deemed Realization or distribution of a portion (but not all) of such Side-Pocket Investment, its Carrying Value shall thereafter equal the Carrying Value prior to such event multiplied by a fraction, the numerator of which shall be the initial Carrying Value of the retained portion of the Side-Pocket Investment and the denominator of which shall be the initial Carrying Value of the entire Side-Pocket Investment, and (iii) if the Partnership receives a dividend or distribution with respect to such Side-Pocket Investment and the General Partner, in its discretion, deems such dividend or distribution (or any portion thereof) to be a return of capital, the Carrying Value of such investment shall be reduced (but not below zero) by the amount of such deemed return of capital, and (y) with respect to each Side-Pocket Sub-Account, the Carrying Value of the related Side-Pocket Investment multiplied by the Side-Pocket Participating Percentage of such Side-Pocket Sub-Account. "Class A Limited Partner" means each Limited Partner admitted to the Partnership on or prior to March 31, 2000. "Class B Limited Partner" means (i) each Limited Partner admitted to the Partnership on or after April 1, 2000, (ii) each Limited Partner admitted to the Partnership on or prior to March 31, 2000 who elected to be treated as a Class B Limited Partner by notice to the General Partner on or prior to August 15, 2000 and (iii) each 425337.28 -3- EFTA00310577  Class A Limited Partner who elects, at the end of the then-applicable Lock-Up Period with respect to such Limited Partner, to be treated as a Class B Limited Partner beginning immediately after the end of such Lock-Up Period pursuant to the provisions of Sec 5.11 hereof. "Clawback" has the meaning specified in Sec. 4.04(dXiii). "Clawback Reserve Accost" has the meaning specified in Sec. 4.04(d)(iii). "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Concentration Limit" means, with respect to a Primary Capital Account at any time, an amount equal to 25% of the sum of (i) the balance of such Primary Capital Account, (ii) the Carrying Value of all Related Side Pocket Sub-Accounts, and (iii) the amount, at such time, of any Remaining Capital Commitment of the Partner for whom such Primary Capital Account was established. "Consenting Limited Partner" means each Limited Partner admitted to the Partnership before March 1, 2002 who consents to be bound by the provisions of Secs. 4.03(b) and 5.02(b) applicable to Consenting Limited Partners. "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; "Controlling" and "Controlled" have the correlative meanings. "Control Affiliate" of any Person means (i) any Person directly or indirectly owning with the power to vote at least 80% of the outstanding voting securities of the specified Person, (ii) any Person at least 80% of whose outstanding voting securities are directly or indirectly owned with the power to vote by the specified Person and (iii) any Person at least 80% of whose outstanding voting securities are directly or indirectly owned with the power to vote by a Person specified in clause (i). "Deemed Realization" means the determination by the General Partner, in its sole discretion, that an investment should no longer be maintained in a Side-Pocket Account; "Deemed Realized" has the correlative meaning. "Defaulting Partner" has the meaning specified in Sec. 4.02(b). "Excess Allocation" means, with respect to any Limited Partner Primary Capital Account at the end of each fiscal year, the excess, if any, of (i) the aggregate Incentive Allocations made with respect to such Primary Capital Account since the first day of the Lock-Up Period in which such fiscal year is included (adjusted for any Clawbacks) over (ii) the total Incentive Allocations to which the General Partner would be entitled with respect to the aggregate Net Increase with respect to such Primary Capital Account since the first day of such Lock-Up Period if the Incentive Allocation were computed for such period utilizing the sum of the Net Increase (less any Net 425337.28 -4- EFTA00310578  Decrease) with respect to such Primary Capital Account for each fiscal year during such Lock-Up Period. "Excused Partner" means, with respect to any Side-Pocket Investment, any Limited Partner that the General Partner determines, in its sole discretion, will not participate in such Side-Pocket Investment. "Family Entity" of any Person means any trust or estate all of the beneficiaries of which, or any Person all of the owners of which, are members of the Immediate Family of such Person or which are charities. "Follow-Up Investment" means, with respect to a Side-Pocket Investment, the acquisition by the Partnership, subsequent to the date on which such Side-Pocket Investment is made, of additional Securities of the issuer of the Side-Pocket Investment that the General Partner determines shall be maintained in the same Side-Pocket Account as the related Side-Pocket Investment. "General Partner" means SAB Capital Advisors, L.L.C., a Delaware limited liability company, until such time as it is no longer serving as general partner pursuant to Sec. 3.09, and any successor general partner in the Partnership. "GP Tax Distribution" means any Tax Distribution distributable to the General Partner pursuant to Sec. 5.07. "Immediate Family" of an individual means such individual's current spouse, parents-in-law, parents and lineal descendants of either of such parents, and any Family Entity of such Person. "Incentive Allocation" has the meaning set forth in Sec. 4.04(b). "Indemnified Party" means the General Partner, each Affiliate and the legal representatives of any of them. "Limited Partner" means each Person who has executed a Limited Partner Signature Page in the form attached hereto (including each Person admitted as a substituted Limited Partner and each Person admitted as an additional Limited Partner pursuant to Article VI) and, with respect to those provisions of this Agreement concerning a Limited Partner's rights to receive a share of profits or other distributions or the return of a Limited Partner's contribution, any transferee of a Limited Partner's interest in the Partnership (except that a transferee who is not admitted as a Limited Partner shall have only those rights specified by the Act and which are consistent with the terms of this Agreement). "Lock-Up Period" means the following periods: The initial Lock-Up Period, with respect to each Primary Capital Account Sub-Account of a Class A Limited Partner shall begin on the date such Primary Capital Account Sub-Account was established and end on the fourth December 31st thereafter; provided, however, that the initial Lock-Up Period with respect to any such Primary Capital Account Sub-Account 425337.28 -5- EFTA00310579  established as of January 1, or as of the first Business Day of any year shall end on the third December 31st thereafter. Unless such Class A Limited Partner elects to be treated as a Class B Limited Partner at the end of a Lock-Up Period pursuant to the provisions of Sec. 5.11 hereof, each subsequent Lock-Up Period with respect to a particular Primary Capital Account Sub-Account of a Class A Limited Partner shall commence immediately after the end of the preceding Lock-Up Period and shall end on the third December 31st thereafter. The initial Lock-Up Period, with respect to any Primary Capital Account Sub-Account of a Class B Limited Partner shall begin on the date such Primary Capital Account Sub-Account was established and shall end on the second December 31st thereafter; provided, however, that the initial Lock-Up Period with respect to any Primary Capital Account Sub-Account established as of the first Business Day of any year commencing in 2001 shall end on the first December 31m thereafter. Each subsequent Lock-Up Period with respect to a particular Primary Capital Account Sub-Account of a Class B Limited Partner shall commence immediately after the end of the preceding Lock-Up Period and shall end on the first December 31st thereafter. Notwithstanding the foregoing, the General Partner may, after the date hereof, admit additional Limited Partners with Primary Capital Accounts and/or Primary Capital Account Sub-Accounts having different Lock-Up Periods and the General Partner will have the right to amend, without the consent of the Limited Partners, the definition of "Lock-Up Period" (and, to the extent appropriate, other provisions of this Agreement) to reflect such different Lock-Up Periods. "Loss Recovery Account" has the meaning specified in Sec. 4.04(e). "Management Company" means SAB Capital Management, L.P. or such other Affiliate as the General Partner may designate. "Management Fee" has the meaning specified in Sec. 3.07(a). "Managing Member" means Mr. Scott A. Bommer. "Memorandum Account" has the meaning specified in Sec. 4.04(h). "NASD" means the National Association of Securities Dealers, Inc. "Net Decrease" means, with respect to any fiscal year and each Limited Partner Primary Capital Account, the excess, if any, of (iXa) the PCA Net Capital Depreciation, if any, debited to such Limited Partner Primary Capital Account during such fiscal year pursuant to Sec. 4.04(a), p1 Ls (b) the SPA Net Realized Loss with respect to any Related Side-Pocket Sub-Account in such fiscal year, pis (c) the amount of any decrease in the Carrying Value of a Related Side-Pocket Sub-Account as a result of a Write Down during such fiscal year, plm (d) the Management Fees debited to such Limited Partner Primary Capital Account during such fiscal year over (ii)(a) the PCA Net Capital Appreciation, if any, credited to such Limited Partner Primary Capital Account during such fiscal year pursuant to Sec. 4.04(a), p (b) the SPA Net Realized Income with respect to any Related Side-Pocket Sub-Account in such fiscal year. 425337.28 -6- EFTA00310580  "Net Increase" means, with respect to any fiscal year and each Limited Partner Primary Capital Account, the excess, if any, of (iXa) the PCA Net Capital Appreciation, if any, credited to such Limited Partner Primary Capital Account during such fiscal year pursuant to Sec. 4.04(a), piss (b) the SPA Net Realized Income with respect to any Related Side-Pocket Sub-Account in such fiscal year, over (iiXa) the PCA Net Capital Depreciation, if any, debited to such Limited Partner Primary Capital Account during such fiscal year pursuant to Sec. 4.04(a), plus (b) the SPA Net Realized Loss with respect to any Related Side-Pocket Sub-Account in such fiscal year, plan (c) the amount of any decrease in the Carrying Value of a Related Side-Pocket Sub-Account as a result of a Write Down during such fiscal year, plan (d) the Management Fees debited to such Limited Partner Primary Capital Account during such fiscal year. "Notice Date" has the meaning specified in Sec. 5.03. "Oat-Out Election" means an election by a BHC Limited Partner, transmitted by written notice to the General Partner, to no longer be treated as a BHC Limited Partner for purposes of this Agreement. "Other Account" means any fund or account (other than the Partnership) for whom the General Partner or an Affiliate Controlled by the Managing Member serves as general partner or investment manager. "Participating Partner" means, with respect to any Side-Pocket Investment, each Partner who holds a Primary Capital Account Sub-Account which has a Related Side-Pocket Sub-Account with respect thereto. "Partners" means the General Partner and the Limited Partners. "Partnership" means SAB Capital Partners, L.P., a Delaware limited partnership, which shall be governed by, and operated pursuant to the terms and provisions of, this Agreement. "Pass-Thru Partner" has the meaning specified in Sec. 8.03. "PCA Net Capital Appreciation or Depreciation" means, for any Accounting Period, the amount computed as of the last day thereof by which (i) gross revenues during such Accounting Period, including dividends, income, distributions, the proceeds of sales, the Value of investments distributed in kind and Unrealized Gain, exceeds (in the case of PCA Net Capital Appreciation), or is less than (in the case of PCA Net Capital Depreciation), (ii) the total of all expenses during such Accounting Period, the cost of investments sold or distributed in kind during such Accounting Period and Unrealized Loss for such Accounting Period. Income or loss from Side-Pocket Investments and SPA Expenses shall not be included in the foregoing calculation. "PCA Participating Percentage" means, with respect to each Primary Capital Account at any time during an Accounting Period, the percentage determined by dividing the balance of such Primary Capital Account as of the beginning of such 425337.28 -7- EFTA00310581  Accounting Period by the aggregate balances of all Primary Capital Accounts as of the beginning of such Accounting Period. "Person" means any individual, partnership, limited liability company, association, corporation, trust or other entity. "Positive Basis" has the meaning specified in Sec. 4.09. "Positive Basis Partner" has the meaning specified in Sec. 4.09. "Primary Capital Account" means each separate capital account established and maintained with respect to each Partner in accordance with Sec. 4.03, and includes references to all Primary Capital Account Sub-Accounts established and maintained on behalf of such Partner; the Vested Incentive Capital Account and each Clawback Reserve Account shall be deemed a separate Primary Capital Account of the General Partner. "Primary Capital Account Sub-Account" means a memorandum sub- account established and maintained on behalf of each Limited Partner in accordance with Sec. 4.03. "Priority Rate" means the yield on one-year U.S. Treasury securities on the first Business Day of each fiscal year of the Partnership. "Priority Return" means, with respect to each Limited Palmer Primary Capital Account on any date, an amount which would result in the Priority Rate from time to time in effect, compounded annually, having been earned on such Limited Partner Primary Capital Account's Base Amount (as adjusted from time to time) during the period commencing on the first day of the current Lock-Up Period and ending on the measuring date. "Priority Return Deficit" means, with respect to the Primary Capital Account of a withdrawing Limited Partner, the amount by which the Priority Return exceeds the difference between (x) the aggregate Net Increase (less any Net Decrease) with respect to such Primary Capital Account during the final Lock-Up Period with respect to such Primary Capital Account and (y) the aggregate Incentive Allocations (less any Clawback) made with respect thereto during such Lock-Up Period. "Purchase Price" has the meaning set forth in Sec. 4.04(h). "Regulations" means the regulations promulgated and in effect from time to time by the Internal Revenue Service under the Code. "Related Side-Pocket Sub-Account" means, with respect to any Primary Capital Account Sub-Account, each Side-Pocket Sub-Account established and maintained with respect to such Primary Capital Account Sub-Account. 425337.28 -8- EFTA00310582  "Remaining Capital Commitment" of any Partner at any time means the excess, if any, at such time of such Partner's Capital Commitment over its aggregate Capital Contributions made prior to such time. "Remaining Side-Pocket Investment" means, with respect to any Limited Partner which has made a complete withdrawal of a Primary Capital Account, any Side- Pocket Investment which continues to be held (in whole or in part) after the Withdrawal Date with respect to such Primary Capital Account in a Side-Pocket Sub-Account established with respect to such Primary Capital Account. "Remaining Side-Pocket Management Fee" means, with respect to each Side-Pocket Sub-Account with respect to a Remaining Side-Pocket Investment, a quarterly management fee equal to 0.375% of the Carrying Value of such Side-Pocket Sub-Account on the first day of such quarter. "Remaining Side-Pocket Priority Return" means, with respect to each Remaining Side-Pocket Investment and any withdrawn Limited Partner, an amount which would result in the Priority Rate as in effect from time to time, compounded annually, having been earned on the Carrying Value of such Remaining Side-Pocket Investment with respect to such Partner during the period commencing on the day following the Withdrawal Date with respect to such Partner and ending on the date of the sale, Deemed Realization, distribution or other disposition of all or a portion of such Remaining Side-Pocket Investment. "Remaining Side-Pocket Sub-Account" means any Side-Pocket Sub- Account maintained with respect to a Primary Capital Account as of the effective date of the withdrawal of such Primary Capital Account. "RSP Capital Deficiency" has the meaning specified in Sec. 4.06(d)(iii). "RSP Escrow" has the meaning specified in Sec. 4.06(dXiii). "RSP Loss Recovery Account" means a separate memorandum account established with respect to any Limited Partner which has completely withdrawn the balance of a Primary Capital Account, the balance of which at any time shall equal the balance in the Loss Recovery Account with respect to such Primary Capital Account on the date of such withdrawal (disregarding any adjustment pursuant to Sec. 4.04(e)(ii) that would otherwise be made at such time) (x) increased by any SPA Net Realized Loss (and Remaining Side-Pocket Management Fee) previously allocated to such Partner in connection with the Deemed Realization, sale, distribution to Partners or other disposition of all or a portion of any Remaining Side-Pocket Investment that was held in a Remaining Side-Pocket Sub-Account with respect to such Partner and (y) decreased by any SPA Net Realized Income previously allocated to such Partner in connection with such a Deemed Realization, sale, distribution or other disposition. • "Security" or "Securities" means securities and other financial instruments of United States and foreign entities, including, without limitation, capital stock; shares of beneficial interest; partnership interests and similar financial 425337.28 -9- EFTA00310583  instruments; interests in real estate and real estate related assets; bonds, notes, debentures (whether subordinated, convertible or otherwise); commodities; currencies; interest rate, currency, commodity, equity and other derivative products, including, without limitation, (i) futures contracts (and options thereon) relating to stock indices, currencies, United States Government securities and securities of foreign governments, other financial instruments and all other commodities, (ii) swap; options, warrants, caps, collars, floors and forward rate agreements, (iii) spot and forward currency transactions and (iv) agreements relating to or securing such transactions; equipment lease certificates; equipment trust certificates; loans; accounts and notes receivable and payable held by trade or other creditors; trade acceptances; contract and other claims; executory contracts; participations; mutual funds; money market funds; obligations of the United States, any state thereof, foreign governments and instrumentalities of any of them; commercial paper, certificates of deposit; bankers' acceptances; trust receipts; and other obligations and instruments or evidences of indebtedness of whatever kind or nature; in each case, of any Person, corporation, government or other entity whatsoever, whether or not publicly traded or readily marketable. "Side-Pocket Account" means each separate memorandum account established on the books of the Partnership to hold a Side-Pocket Investment and any Follow-Up Investment with respect thereto. "Side-Pocket Investment" means any investment of the Partnership which, as reasonably determined by the General Partner, does not have a readily ascertainable Value or which is designated by the General Partner, in its sole discretion, to be held in a Side-Pocket Account. "Side-Pocket Participating Percentage" means, with respect to each Side- Pocket Account and each Primary Capital Account Sub-Account at the time such Side- Pocket Account is established (other than any Clawback Reserve Account) with respect to the related Side-Pocket Investment, the amount determined by dividing the Unused Amount Eligible for Side-Pocket Investments (immediately prior to the time of the funding of such Side-Pocket Investment) of such Primary Capital Account Sub-Account by the Unused Amount Eligible for Side-Pocket Investments (at such time) of all Primary Capital Account Sub-Accounts (other than any Clawback Reserve Account) of Participating Partners with respect to such Side-Pocket Investment. "Side-Pocket Sub-Account" established with respect to any Primary Capital Account Sub-Account means the separate memorandum sub-account established on the books of the Partnership in accordance with Sec. 4.06 to reflect such Primary Capital Account Sub-Accounts interest in a particular Side-Pocket Account. "SPA Expenses" means, with respect to any Side-Pocket Investment, any expense attributable, as reasonably determined by the General Partner, to such investment. "SPA Net Realized Income or Loss" means, (x) with respect to any Side- Pocket Account for any Accounting Period, the amount (computed as of the last day 425337.28 -10- EFTA00310584  thereof) by which (i) gross revenue, including dividends, income, distributions, the proceeds of the full or partial sale (including a Deemed Realization) of the Side-Pocket Investment held in the Side-Pocket Account or the Value of that portion of such Side- Pocket Investment distributed in kind during the Accounting Period, exceeds in the case of income, or is less than in the case of loss, (ii) the sum of (A) the Carrying Value (or allocable portion thereof) of the Side-Pocket Investment sold (or Deemed Realized) or distributed in kind, and (B) any losses realized with respect to the investment not involving the sale thereof (other than any Write Down thereof), and (y) with respect to any Primary Capital Account, means SPA Net Realized Income or Loss as so determined multiplied by the Side-Pocket Participating Percentage of such Primary Capital Account with respect to such Side-Pocket Investment. "Tax Distribution" means, with respect to each Primary Capital Account of a Partner and each fiscal year, an amount equal to the excess of (i) such Partner's presumed tax liability i.e. the product of the estimated amount (as determined by the General Partner in good faith) of taxable income allocated during such fiscal year to such Primary Capital Account and all Related Side-Pocket Sub-Accounts and the highest maximum marginal federal, state and local income tax rates for individuals residing in New York City after giving effect to any federal deduction for all state and local taxes, and disregarding any limitations on the deductibility of such taxes) with respect to such Primary Capital Account for such fiscal year over (ii) all amounts distributed, if any, from such Primary Capital Account (and Related Side Pocket Sub- Accounts) to such Partner pursuant to any withdrawal from (or distribution with respect to) such Primary Capital Account (and Related Side-Pocket Sub-Accounts) during or effective as of the last day of such fiscal year other than any Tax Distributions with respect to any prior year. "Tax Distribution Notice" has the meaning specified in Sec. 5.07. "Total Capital Account" means, with respect to each Partner, the account established and maintained pursuant to Sec. 4.03. "Unrealized Gain or Loss" means, for any Accounting Period, the sum of (x) with respect to any Securities (not including Side-Pocket Investments) acquired, or disposed of and reacquired, after the end of the preceding Accounting Period, the difference between the Value of such Securities at the end of such Accounting Period and the cost of such Securities upon acquisition or reacquisition and (y) with respect to all other Securities (other than Side-Pocket Investments), the difference between the Value of all such other Securities (not including Side-Pocket Investments) held at the end of such Accounting Period and the Value of such Securities at the end of the preceding Accounting Period. "Unrestricted Partner" has the meaning specified in Sec. 4.04(g). "Unused Amount Eligible for Side-Pocket Investments" means, with respect to each Primary Capital Account, the difference between (x) such Primary Capital Account's Amount Eligible for Side-Pocket Investment and (y) the sum of (i) the 425337.28 EFTA00310585  Carrying Value (disregarding any changes thereto described in clause (i) of the definition thereof) of all Related Side-Pocket Sub-Accounts and (ii) the product obtained by multiplying such Primary Capital Account's PCA Participating Percentage by the Value, at such time, of all investments of the Partnership (other than Side-Pocket Investments) which, due to a legal or contractual restriction, are not freely transferable (as reasonably determined by the General Partner). "Value" means that valuation of Securities determined in accordance with Sec. 4.07(a) hereof. "Vested Incentive Account" has the meaning specified in Sec. 4.04(d)(iii). "Withdrawal Date" has the meaning specified in Sec. 5.02(a). "Write Down" means the reduction, in the discretion of the General Partner, of the Carrying Value of a Side-Pocket Investment to reflect material, long-term impairment of such investment. ARTICLE II General Provisions Sec. 2.01 Formation of the Partnership. The Partnership was formed as a limited partnership under the Act by the filing of the Certificate of Limited Partnership of the Partnership with the Office of the Secretary of State of Delaware on August 25, 1998. The General Partner, for itself and as agent for the Limited Partners, shall make every reasonable effort to assure that all other certificates and documents are properly executed, and shall accomplish all filing, recording, publishing and other acts necessary or appropriate for compliance with all the requirements for the formation of the Partnership as a limited partnership under the Act. Sec. 2.02 Partnership Name, Principal Office and Address. The name of the Partnership is SAB Capital Partners, L.P. Its principal office is located at 650 Madison Avenue, 26th Floor, New York, New York 10022, or at such other location as the General Partner in the future may designate. The General Partner shall promptly notify the Limited Partners of any change in the Partnership's name, principal office or address. Sec. 2.03 Fiscal Year. The fiscal year of the Partnership shall begin on January 1 and end on December 31 of each calendar year. Sec. 2.04 Partners; Liability of Limited Partners. The names of all of the Partners and the amounts of their respective Capital Commitments (in the case of Partners admitted to the Partnership on or prior to December 31, 1999) and Capital Contributions shall be set forth on the books and records of the Partnership. Limited Partners (and former Limited Partners) shall have no liability for any debt or obligation of the Partnership except to the extent of their respective interests in the 425337.28 -12- EFTA00310586 Partnership, nor any obligation to contribute or make payments to the Partnership, except as provided by the Act or pursuant to the terms of this Agreement. As used in this Agreement, the terms "former General Partner," "former Limited Partner" and "former Partner" refer to such Persons or entities as hereafter from time to time cease to be a General Partner, Limited Partner or Partner, respectively, pursuant to the terms and provisions of this Agreement. Sec. 2.05 Purposes of Partnership. The Partnership is organized for the purposes of investing in, holding, selling and otherwise dealing in for its own account Securities and engaging in all activities and transactions as the General Partner may deem necessary or advisable in connection therewith, including, without limitation, to: (a) invest, on margin or otherwise, in Securities and to sell Securities short and cover such sales; (b) possess, transfer, mortgage, pledge or otherwise deal in, and to exercise all rights, powers, privileges and other incidents of ownership or possession with respect to, Securities and other property and funds held or owned by the Partnership; (c) acquire a long position or a short position with respect to any Security and to make purchases or sales increasing, decreasing or liquidating such position or changing from a long position to a short position or from a short position to a long position, without any limitation as to the frequency of the fluctuation in such positions or as to the frequency of the changes in the nature of such positions; (d) maintain for the conduct of Partnership affairs one or more offices, and do such other acts as the General Partner may deem necessary or advisable in connection with the maintenance and administration of the Partnership; (e) lend, with or without security, any of the Securities, funds or other properties of the Partnership and, from time to time without limit as to amount, borrow or raise funds and secure the payment of obligations of the Partnership by mortgage upon, or pledge or hypothecation of, all or any part of the property of the Partnership; (f) engage attorneys, independent accountants, consultants or such other Persons as the General Partner may deem necessary or advisable; (g) enter into custodial arrangements regarding Securities owned benef