SBA Model Form of Limited Partnership Agreement

Clauses Relating to Transfers of Venture Interests

Example 1 (General Partnership or Limited Liability Company Venture)

Section 1.01. Restrictions on Transfer. Except as provided in Section 1.02 [establishing right of first refusal], without the prior written consent of the other Venturer (which may be withheld for any or no reason), no Venturer, nor any assignee or successor in interest of any Venturer, shall (voluntarily or involuntarily) sell, assign, give, pledge, hypothecate, encumber or otherwise transfer its interest in the Venture (including a transfer pursuant to a foreclosure sale of any of the assets of a Venturer), or in any part thereof, or in all or any part of the assets of the Venture, except that a Venturer may sell, assign or otherwise transfer its interest in the Venture to any of its Affiliates without such prior written consent.

Section 1.02. Right of First Refusal, etc.

(a) If a Venturer proposes to sell, assign, or otherwise transfer (a "Proposed Transfer") all of its interest in the Venture to a third party (a "Proposed Purchaser"), such Venturer (the "Proposing Venturer") shall submit a written notice (a "Notice of Proposed Transfer") to the other Venturer (the "Remaining Venturer") describing the material terms and conditions of the Proposed Transfer in reasonable detail, including, without limitation, the proposed purchase price (the "Purchase Price"), the amount and kind of consideration to be paid, and the identity of the Proposed Purchaser. Such material terms and conditions shall be confirmed in writing by the Proposed Purchaser.

(b) The Remaining Venturer shall have the right, exercisable by written notice (the "Notice of Election") to the Proposing Venturer within sixty days of receipt of the Notice of Proposed Transfer, to elect to:

(i) require that the Remaining Venturer's entire interest in the Venture be sold to the Proposed Purchaser on the same terms and conditions specified in the Notice of Proposed Transfer with respect to the Proposing Venturer's interest in the Venture;

(ii) purchase the Proposing Venturer's entire interest in the Venture on the same terms and conditions specified in the Notice of Proposed Transfer;

(iii) neither sell the Remaining Venturer's interest in the Venture nor purchase the Proposing Venturer's interest in the Venture.

The failure to deliver a Notice of Election within the required time period shall be deemed an election by the Remaining Venturer of clause (iii) above.

(c) If the Remaining Venturer elects clause (i) of Section 1.02(b) above, (i) the Proposing Venturer shall promptly, acting in good faith, seek to cause the Proposed Purchaser to purchase both its and the Remaining Venturer's entire interests in the Venture, and (ii) the Proposing Venturer may transfer its interest in the Venture only if the Proposed Purchaser purchases, within sixty days of the Notice of Election, its and the Remaining Venturer's entire interests in the Venture on the terms and conditions specified in the Notice of Proposed Transfer.

(d) If the Remaining Venturer elects clause (ii) of Section 1.02(b) above, the Venturers shall, within thirty days after receipt of the Notice of Election, execute such documents and instruments reasonably acceptable to the Venturers required to consummate the contemplated transaction on the terms and conditions specified in the Notice of Proposed Transfer (subject to Section 1.02(g) below relating to noncash consideration), and the closing of such purchase shall take place as soon as practicable thereafter, but in any case within thirty days following the date on which any government regulatory approvals required for the consummation of the transaction have been obtained or otherwise satisfied. At such closing, the Proposing Venturer shall, and hereby covenants to, transfer its interest in the Venture to the Remaining Venturer free and clear of any and all liens, mortgages, pledges, security interests or other restrictions or encumbrances ("Encumbrances") other than Encumbrances arising out of Venture financing.

(e) If the Remaining Venturer elects clause (iii) of Section 1.02(b) above, the Proposing Venturer may transfer its interest in the Venture within sixty days after receipt of the Notice of Election, but only on the terms and conditions, and only to the Proposed Purchaser, specified in the Notice of Proposed Transfer. The transfer shall be null and void unless, at the time of the transfer, the Proposed Purchaser executes an instrument satisfactory in form and substance to counsel for the Venture in which it agrees to be bound by the terms and conditions of this Agreement.

(f) After the expiration of the time periods for the closing of a purchase or transfer set forth in Sections 1.02(c), (d) and (e) above, no Venture may sell, assign or otherwise transfer its interest in the Venture except by submitting another Notice of Proposed Transfer and following the procedures set forth in this Section 1.02.

(g) In the event the Purchase Price specified in the Notice of Proposed Transfer includes any property other than cash (including, without limitation, notes or other evidences of indebtedness) (collectively, "Noncash Consideration"), such Purchase Price shall be deemed to be the amount of any cash included in the Purchase Price plus the fair market value of such other property. The fair market value of such property (the "Property Value") shall be determined in good faith by the Proposing Venturer and set forth in the Notice of Proposed Transfer. If, within ten days after receipt of the Notice of Proposed Transfer, the Remaining Venturer questions such determination, then the Property Value shall be determined in accordance with the provisions for establishing Fair Market Value (as defined in Section 1.02(h) below). If the Remaining Venturer advises the Proposing Venturer that it questions the Proposing Venturer's determination of Property Value, the sixty day period referred to in Section 1.02(b) shall not commence until the determination of the Property Value. Any consideration to be paid by the Remaining Venturer to the Proposing Venturer pursuant to an election under clause (ii) of Section 1.02(b) shall be, at the option of the Remaining Venturer (x) in cash in an amount equal to the cash and the Property Value (as determined above) included in the Purchase Price, or (y) in the event the Purchase Price includes Noncash Consideration in the form of a debt obligation of the Proposed Purchaser, cash in an amount equal to the cash included in the Purchase Price, plus the Property Value of all property included in the Purchase Price other than the debt obligation of the Proposed Purchaser, plus a debt obligation of the Remaining Venturer equivalent as to face amount, interest rate and other material terms of the debt obligation of the Proposed Purchaser.

(h) "Fair Market Value" of property shall mean the dollar value of such property determined (i) by mutual agreement of the Venturers, or (ii) if the Venturers cannot so agree within twenty days after one Venturer first proposes in writing to the other Venturer that Fair Market Value be determined, by two independent appraisers or investment banks (the "Appraisers"), one selected by each Venturer, provided, that if a Venturer fails to appoint an Appraiser within ten days following the expiration of such twenty day period, Fair Market Value shall be determined by the Appraiser selected by the other Venturer. If two Appraisers are selected, each Appraiser shall submit to the Venturers their respective appraisals within thirty days after their selection. If the discrepancy between the appraisals of the two Appraisers is equal to or greater than 10% of the higher appraisal, then within ten days after receipt of the appraisals, a third Appraiser mutually selected by the Venturers (or if they cannot so select then selected by the first two Appraisers), shall be afforded access to the first two appraisals. The third Appraiser shall choose between the two appraisals, which selection shall constitute a final determination of Fair Market Value and shall be binding upon the Venturers. If the discrepancy between the appraisals of the first two Appraisers is less than 10% of the higher appraisal, then the Fair Market Value shall be the average of the two appraisals. The fees of each of the first two Appraisers shall be borne by the Venturer which selected it and the fees of the third Appraiser, if any, shall be borne equally by the Venturers.

Example 2 (Limited Partnership Joint Venture)

Section 1.01. Transfers of Interests and Withdrawals by General Partner.

(a) The General Partner acknowledges that this Partnership involves a relationship of trust and confidence which is unique to the parties. Accordingly, the General Partner agrees (which agreement, as well as all other provisions of this Agreement, shall be binding on all Persons that may hereafter become a General Partner in the Partnership) that it will not, except as otherwise provided in this Agreement, without the [unanimous] [other vote] consent of the Limited Partners (which consent may be withheld for any reason or no reason): sell, assign, pledge, hypothecate or transfer all or any of its Interest in the Partnership voluntarily or permit such a transfer by operation of law or otherwise, or enter into any agreement expressly restricting the transferability or exercise of control of its Interest in the Partnership, except that the General Partner may transfer its entire (but not less than its entire) Interest herein to a Permitted Transferee (as defined for these purposes in Section 1.01(c)).

(b) The General Partner may not transfer less than all of its Interest under any circumstances, it being intended that the entire Interest now held by the General Partner shall continue at all times hereafter to be held by one person or entity.

(c) As used herein, the term "Permitted Transferee" shall mean with respect to the General Partner, any Affiliate of the General Partner.

(d) Notwithstanding any transfer by the General Partner to a Permitted Transferee in accordance herewith, the original General Partner shall remain jointly and severally liable with such Permitted Transferee as to all obligations arising under this Agreement unless and until it is specifically released therefrom in writing by all of the Limited Partners.

Section 1.02 Transfers of Interests by Limited Partners.

(a) Each Limited Partner agrees (which agreement, as well as all other provisions of this Agreement, shall be binding on all persons or entities that may hereafter become a Limited Partner in the Partnership) that it will not, except as otherwise provided in this Agreement, without the consent of the General Partner (which consent may be withheld for any reason or no reason): sell, assign, pledge, hypothecate or transfer all or any part of its Interest in the Partnership voluntarily or permit such a transfer by operation of law or otherwise, or enter into any agreement expressly restricting the transferability or exercise of control of its Interest in the Partnership, except that a Limited Partner may transfer all or any portion of its Interest herein to a Permitted Transferee (as defined for these purposes in Section 1.02(b)).

(b) As used herein, the term "Permitted Transferee" shall mean, with respect to Limited Partners, any Affiliate of such Limited Partner.

(c) Unless and until the transferee of a Limited Partner has become a substitute Limited Partner under the provisions of Section ____ hereof, the transferee: (1) shall be deemed to be an assignee only of the right of its, his or her transferor to share in the profits, losses and distributions of the Partnership; (2) shall have no right to any information regarding an accounting of the Partnership's transactions, or to inspect the Partnership's books; and (3) may not exercise any rights in respect of the Interest so transferred.

(d) No Limited Partner shall have the right to transfer any interest in the Partnership to any minor or to any person who for any reason lacks the capacity to contract for himself or herself under applicable law. Notwithstanding the foregoing, a Limited Partner may transfer an interest in the Partnership to a duly qualified personal representative of, or a guardian, conservator or a trustee for, a person who would otherwise be a Permitted Transferee under this Section.

Section 1.03. Allocation. Upon the transfer of an Interest in the Partnership, the distributive share of all items of income, gain, loss, deduction or credit associated with that Interest for the taxable year in which the transfer occurs shall be allocated between the transferor and the transferee according to the relative number of days in the year before and after the date the transfer is recognized by the Partnership.

Section 1.04. Specific Performance. If the General Partner or a Limited Partner attempts to sell or otherwise transfer its Interest to any Person other than a Permitted Transferee then, in addition to any other remedies available at law, in equity or under this Agreement, the other Partners shall be entitled to an injunction prohibiting such sale in any court of competent jurisdiction, without furnishing bond or other security or proving special or unique damages. The Partners hereby acknowledge that such injunction remedy is necessary because the Interests in the Partnership are unique, and a breach by the General Partner or any Limited Partner of any obligation not to convey its Interest cannot adequately be compensated by money damages.

Section 1.05. Conditions to Becoming Substituted Limited Partner.

(a) The transferee of the Interest of a Limited Partner may not become a substituted Limited Partner unless the General Partner consents to the substitution. The General Partner may withhold consent to the substitution of the transferee as a substituted Limited Partner in the General Partner's sole discretion;

(b) the admission of a transferee as a substituted Limited Partner shall be further conditioned on the following:

(i) the transferor and transferee Limited Partner shall execute and acknowledge such other instrument or instruments as the General Partner may deem reasonably necessary or appropriate to effectuate such admission;

(ii) the transferee shall provide a written acceptance and adoption of all of the terms and provisions of this Agreement, as the same may have been amended.

Once the foregoing conditions have been satisfied, the General Partner shall cause to be prepared, and all of the Partners shall execute, an amendment to this Agreement which sets forth the respective interests of the continuing and substituting Partners. Upon the execution of such amendment, the substituted Limited Partner shall become a Limited Partner hereunder.

Example 3 (Corporate Joint Venture)

Section 1.01. Transfer Permitted Upon Consent. Any Venturer may sell, transfer, pledge, hypothecate, encumber, dispose of or otherwise transfer any or all of its Shares in the Joint Venture Company to any other person or entity only upon obtaining the consent of every other Venturer; provided, however, that any such transfer shall be null and void unless: (a)(i) such interest is registered under the provisions of the United States Securities Act of 1933 (the "1933 Act"), or is transferred pursuant to an exemption from the registration requirements of the 1933 Act, and (ii) such transfer would not violate any applicable state or other securities laws, rules or regulations; and (b) the person or entity to whom the Shares are transferred executes and delivers to each Venturer and the Joint Venture Company an agreement reasonably satisfactory in form and substance to counsel for the Joint Venture Company acknowledging that the Shares are subject to this Agreement and that he or it shall be personally bound by this Agreement.

Section 1.02. Stock Certificate Legend. Each of the Venturers agree that each certificate representing any Shares shall bear a legend reading substantially as follows:

"The securities represented by this certificate have not been registered under the Securities Act of 1933 or applicable state or other securities laws, rules and regulations, and may not be sold, pledged, hypothecated, encumbered, disposed of or otherwise transferred without compliance with the Securities Act of 1933 or any exemption thereunder and applicable state or other securities laws, rules and regulations. In addition, the securities represented by this certificate are subject to a Stockholders Agreement dated ____ among the Joint Venture Company and its stockholders and may not be sold, pledged, hypothecated, encumbered, disposed of or otherwise transferred except in accordance therewith. A copy of said agreement is on file at the principal executive office of the Joint Venture Company."

Example 4 (Limited Liability Company Venture)

Section 1.01. Transfer of LLC Interests.

(a) The term "transfer," when used in this Article I with respect to an LLC Interest, shall include any sale, assignment, gift, pledge, hypothecation, mortgage, exchange, or other disposition, except that such term shall not include any pledge, mortgage, or hypothecation of or granting of a security interest in an LLC Interest in connection with any financing obtained on behalf of the LLC.

(b) No LLC Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article I. Any transfer or purported transfer of any LLC Interest not made in accordance with this Article I shall be void ab initio.

Section 1.02. Restrictions on Transfers.

(a) No Member may transfer all or any portion of its LLC Interest or its Capital Account without the express written consent of the nontransferring Members which hold a majority of the nontransferred LLC Interests.

(b) Any transferee of an LLC Interest, or any Person who acquires the right to an LLC Interest in connection with any pledge, mortgage, hypothecation or security interest in connection with any financing obtained on behalf of the LLC (a "Pledgee"), shall become a substituted Member upon (i) the express written consent of the nontransferring Member or Members which hold a majority of the nontransferred LLC Interests, in the exercise of their sole and absolute discretion; (ii) the transferee agreeing to be bound by all the terms and conditions of the Certificate of Formation and this Agreement as then in effect; (iii) compliance with applicable federal and state securities laws; and (iv) receipt of any necessary regulatory approvals. Unless and until a transferee is admitted as a substituted Member, the transferee shall have no right to exercise any of the powers, rights, and privileges of a member hereunder. A Member who has transferred its LLC Interest shall cease to be a Member upon transfer of the Member's entire LLC Interest and thereafter shall have no further powers, rights and privileges as a Member hereunder.

(c) The LLC, each Member, the Board of Managers, the President and any other person or persons having business with the LLC need deal only with Members who are admitted as Members or as substituted Members of the LLC, and they shall not be required to deal with any other person by reason of transfer by a Member or by reason of the death of a Member, except as otherwise provided in this Agreement. In the absence of the substitution (as provided herein) of a transferring or deceased Member, any payment to a Member or to the Member's executors or administrators shall acquit the LLC and the Board of Managers of all liability to any other persons who may be interested in such payment by reason of an assignment by, or the death of, such a Member.

(d) Notwithstanding anything in this Article 1, any Member may transfer such Member's economic interest in such Member's LLC Interest to a transferee which, directly or indirectly, controls, is controlled by, or under common control with, such Member; provided, however, such transfer shall give the transferee only the right to receive distributions, income, gain and loss allocable to such Member's LLC Interest to which such Member would otherwise be entitled.

(e) Notwithstanding anything in this Article 1, a Pledgee may become a substitute Member only after the conditions set forth in Section 1.02(b) have been satisfied in full and, prior thereto, any acquisition by a Pledgee of the right to an LLC Interest of any Member shall give such Pledgee only the right to receive distributions, income, gain and loss allocable to such Member's LLC Interest to which such Member would otherwise be entitled.