SEAVIEW MEZZANINE FUND LP AGREEMENT OF LIMITED PARTNERSHIP

Exhibit 10.2

Portions of this document have been omitted and separately filed with the Securities and Exchange Commission with a request for confidential treatment. The location of these omissions is marked by [                      ]. Confidential treatment requested by WQN, Inc.

SEAVIEW MEZZANINE FUND LP

AGREEMENT OF LIMITED PARTNERSHIP

Dated as of December 8, 2004

Confidential treatment requested by WQN, Inc.

SEAVIEW MEZZANINE FUND LP

Table of Contents

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SEAVIEW MEZZANINE FUND LP

     AGREEMENT OF LIMITED PARTNERSHIP, dated and effective as of December 8, 2004, among SeaView GP, LLC, a Delaware limited liability company (in its capacity as a general partner of the Partnership) and the Private Limited Partners named in Schedule A attached to this Agreement, as amended from time to time. The parties, in consideration of their mutual agreements stated in this Agreement, agree to become partners and to form a limited partnership under the Act. The purpose of the Partnership is to operate as a small business investment company under the SBIC Act, licensed by SBA for the period and upon the terms and conditions stated in this Agreement. The parties further agree as follows:

ARTICLE I
GENERAL PROVISIONS

Section 1.01. Definitions.

     For the purposes of this Agreement, the following terms have the following meanings:

     (a) “Act” means the Delaware Limited Partnership Act, as may be amended from time to time and as set forth in Del. Code. Ann. tit. 6, chapter 17 (or any successor to such statute).

     (b) “Additional Private Limited Partners” has the meaning stated in Section 5.04.

     (c) “Advisory Board” has the meaning stated in Section 3.11.

     (d) “Affiliate” has the meaning stated in the SBIC Act.

     (e) “Agreement” means this agreement of limited partnership, as amended from time to time. References to this Agreement will be deemed to include all provisions incorporated in this Agreement by reference.

     (f) “Assets” means common and preferred stock (including warrants, rights and other options relating to such stock), notes, bonds, debentures, trust receipts and other obligations, instruments or evidences of indebtedness, and other properties or interests commonly regarded as securities, and in addition, interests in real property, whether improved or unimproved, and interests in personal property of all kinds (tangible or intangible), chooses in action, and cash, bank deposits and so-called “money market instruments”.

     (g) “Assets Under Management” means, as of any specified date, the value of all Assets owned by the Partnership (the value to be determined as provided in this Agreement), including contributions requested and due from Partners and uncalled amounts of Commitments that are included in the Partnership’s Regulatory Capital (as such term is used in the SBIC Act), less the amount of any liabilities of the Partnership, determined in accordance with generally accepted accounting principles, consistently applied.

     (h) “Associate” has the meaning stated in the SBIC Act.

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     (i) “Capital Account” means the account of each Partner that reflects its interest in the Partnership determined in accordance with Section 6.03.

     (j) “Certificate of Limited Partnership” means the certificate of limited partnership with respect to the Partnership filed for record in the office of the Secretary of State of the State of Delaware.

     (k) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder and interpretations thereof promulgated by the Internal Revenue Service, as in effect from time to time.

     (l) “Combined Capital” has the meaning stated in the SBIC Act.

     (m) “Commitments” means the capital contributions to the Partnership that the Partners have made or are obligated to make to the Partnership. The amounts and terms of the Commitments of the General Partner and the Private Limited Partners will be as stated in this Agreement.

     (n) “Commitment Period” means the period commencing on the date on which the Private Limited Partners first make initial contributions to the Partnership, and ending on the fifth anniversary of such date.

     (o) “Control Person” has the meaning stated in the SBIC Act.

     (p) “Cumulative Capital Contribution” means the cumulative contributions to the capital of the Partnership from time to time made by a Private Limited Partner (in no event, exceeding such Private Limited Partner’s Commitment).

     (q) “Debentures” has the meaning stated in the SBIC Act.

     (r) “Designated Party” means any of the General Partner, any Investment Adviser/ Manager, and any partner, member, manager, stockholder, director, officer, employee or Affiliate of the General Partner and any Investment Adviser/ Manager.

     (s) “Distributable Security” has the meaning stated in the SBIC Act.

     (t) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder and interpretations thereof promulgated by the Department of Labor, as in effect from time to time.

     (u) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the regulations thereunder and interpretations thereof promulgated by the Securities and Exchange Commission, as in effect from time to time.

     (v) “Final Admission Date” shall have the meaning set forth in Section 5.04.

     (w) “Fiscal Year” has the meaning stated in Section 9.03.

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     (x) “General Partner” means the general partner or general partners of the Partnership, as set forth in this Agreement, which initially shall be SeaView GP, LLC.

     (y) “Indemnifiable Costs” means all costs, expenses, damages, claims, liabilities, fines and judgments (including the reasonable cost of the defense, and any sums which may be paid with the consent of the Partnership in settlement), incurred in connection with or arising from a claim, action, suit, proceeding or investigation, by or before any court or administrative or legislative body or authority.

     (z) “Initial Closing” shall mean the closing which shall take place, or which has taken place, on December 8, 2004.

     (aa) “Investment Advisers Act” means the Investment Advisers Act of 1940, as amended, and the regulations thereunder and interpretations thereof promulgated by the Securities and Exchange Commission, as in effect from time to time.

     (bb) “Investment Adviser/Manager” has the meaning stated in the SBIC Act.

     (cc) “Investment Company Act” means the Investment Company Act of 1940, as amended, and the regulations thereunder and interpretations thereof promulgated by the Securities and Exchange Commission, as in effect from time to time.

     (dd) “Leverage” has the meaning stated in the SBIC Act.

     (ee) “Leverageable Capital” has the meaning stated in the SBIC Act.

     (ff) “Net Losses” means, with respect to any fiscal period, the excess, if any, of:

     (i) all expenses and losses incurred during the fiscal period by the Partnership from all sources over

     (ii) the aggregate revenue, income and gains realized during the fiscal period by the Partnership from all sources.

     For purposes of determining Net Losses:

     (A) items will be taken into account to the extent that (1) they are includable as items of income, credit, loss or deduction for Federal income tax purposes (including items described in Section 705(a)(2)(B) of the Code, or treated as so described in Treasury Regulation § 1.704-1(b)(2)(iv)(i)) or, (2) in the case of items of income, they constitute income that is exempt from Federal income tax; and

     (B) if any Non-cash Asset is distributed in kind, it will be deemed sold at the value established at the most recent valuation of the Non-cash Asset under this Agreement (or such other valuation date as is required under the SBIC Act) and any unrealized appreciation or depreciation with respect to the Non-cash Asset will be deemed realized and included in the determination of Net Losses.

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     (gg) “Net Profits” means, with respect to any fiscal period, the excess, if any, of:

     (i) the aggregate revenue, income and gains realized during the fiscal period by the Partnership from all sources over

     (ii) all expenses and losses incurred during the fiscal period by the Partnership from all sources.

     For purposes of determining Net Profits:

     (A) items will be taken into account to the extent that (1) they are includable as items of income, credit, loss or deduction for Federal income tax purposes (including items described in Section 705(a)(2)(B) of the Code, or treated as so described in Treasury Regulation § 1.704-1(b)(2)(iv)(i)) or, (2) in the case of items of income, constitute income that is exempt from Federal income tax; and

     (B) if any Non-cash Asset is distributed in kind, it will be deemed sold at the value established at the most recent valuation of the Non-cash Asset under this Agreement (or such other valuation date as is required under the SBIC Act) and any unrealized appreciation or depreciation with respect to the Non-cash Asset will be deemed realized and included in the determination of Net Profits.

     (hh) “Non-cash Asset” means any Asset of the Partnership other than cash.

     (ii) “Optionor” has the meaning set forth in Section 5.11(b)(ii).

     (jj) “Optionees” has the meaning set forth Section 5.11(b)(ii).

     (kk) “Optioned Partnership Interest” has the meaning set forth in Section 5.11(b)(ii).

     (ll) “Option Price” has the meaning set forth in Section 5.11(b)(ii)(A).

     (mm) “Outstanding Leverage” means the total amount of outstanding securities (including, but not limited to, Debentures) issued by the Partnership, which qualify as Leverage and have not been redeemed or repaid as provided in the SBIC Act.

     (nn) “Partners” means the General Partner and the Private Limited Partners.

     (oo) “Partnership” means the limited partnership established by this Agreement.

     (pp) “                      percent (___%) in interest of the Private Limited Partners” means Private Limited Partners whose Capital Accounts represent such percentage of the Capital Accounts of all Private Limited Partners as of the time of determination.

     (qq) “Priority Return” has the meaning set forth in Section 6.03(a)(iii)(B).

     (rr) “Private Limited Partners” means any limited partners of the Partnership.

      (ss) “ Regulatory Capital” has the meaning stated in the SBIC Act.

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     (tt) “Remaining Portion” has the meaning set forth in Section 5.11(b)(ii)(B).

     (uu) “SBA” means the United States Small Business Administration.

     (vv) “SBA Agreements” has the meaning stated in Section 10.12.

     (ww) “SBIC” means a small business investment company licensed under the SBIC Act.

     (xx) “SBIC Act” means the Small Business Investment Act of 1958, as amended, and the rules and regulations thereunder and interpretations thereof promulgated by SBA, as in effect from time to time.

     (yy) “SEC” means the Securities and Exchange Commission.

     (zz) “Securities Act” means the Securities Act of 1933, as amended, and the regulations thereunder and interpretations thereof promulgated by the SEC, as in effect from time to time.

     (aaa) “Special Private Limited Partner” has the meaning stated in Section 4.06 and Section 8.03(c).

Section 1.02. Name.

     (a) The name of the Partnership will be “SeaView Mezzanine Fund LP.”

     (b) Subject to the prior approval of SBA, the General Partner has the power at any time to:

     (i) change the name of the Partnership; and

     (ii) qualify the Partnership to do business under any name when the Partnership’s name is unavailable for use, or may not be used, in a particular jurisdiction.

     (c) The General Partner will give prompt notice of any action taken under this Section to each Partner and SBA.

Section 1.03. Principal Office; Registered Office; and Qualification.

     (a) The principal office of the Partnership will be at 30 Kennedy Plaza, Suite 400, Providence, Rhode Island 02903, or such other place as may from time to time be designated by the General Partner, subject to the approval of SBA.

     (b) The registered office of the Partnership in the State of Delaware will be located at c/o United Corporate Services, Inc., 15 East North Street, in the city of Dover, County of Kent, State of Delaware 19901. The name of the initial registered agent for the Partnership will be United Corporate Services, Inc. The General Partner may from time to time change the registered agent and registered office of the Partnership.

     (c) The General Partner will qualify the Partnership to do business in each jurisdiction where the activities of the Partnership make such qualification necessary.

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     (d) The General Partner will give prompt notice of any action taken under this Section to each Partner and SBA.

Section 1.04. Commencement and Duration.

     (a) The Partnership will commence upon the filing for record of the Certificate of Limited Partnership in the office of the Secretary of State of the State of Delaware.

     (b) The Partnership will be dissolved and wound up at the time and in the manner provided for in Section 8.01 hereof.

Section 1.05. Admission of Partners.

     (a) No person may be admitted as a General Partner or a Private Limited Partner without subscribing and delivering to the Partnership a counterpart of this Agreement, or other written instrument, which sets forth:

     (i) the name and address of the Partner,

     (ii) the Commitment of the Partner, and

     (iii) the agreement of the Partner to be bound by the terms of this Agreement.

     (b) Without the prior approval of SBA, no person may be admitted as:

     (i) a General Partner, or

     (ii) a Private Limited Partner with an ownership interest of ten percent (10%) or more of the Partnership’s capital.

     (c) The General Partner will compile, and amend from time to time as necessary, Schedule A attached to this Agreement, which will list:

     (i) the name and address of the General and each Private Limited Partner, and

     (ii) the Commitment of the General Partner and each Private Limited Partner to the Partnership.

     (d) The addition to the Partnership at any time of one or more Partners will not be a cause for dissolution of the Partnership, and all the Partners will continue to be subject to the provisions of this Agreement in all respects.

Section 1.06. Representations of Partners.

     (a) This Agreement is made with the General Partner in reliance upon the General Partner’s representation to the Partnership and SBA, that:

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     (i) it is duly organized, validly existing and in good standing under the laws of the State of Delaware, and is qualified to do business under the laws of each state where such qualification is required to carry on the business of the Partnership;

     (ii) it has full power and authority to execute and deliver this Agreement and to act as General Partner under this Agreement;

     (iii) this Agreement has been authorized by all necessary actions by it, has been duly executed and delivered by it, and is a legal, valid and binding obligation of it, enforceable according to its terms; and

     (iv) the execution and delivery of this Agreement and the performance of its obligations under this Agreement will not conflict with, or result in any violation of, or default under, any provision of any governing instrument applicable to it, or any agreement or other instrument to which it is a party or by which it or any of its properties is bound, or any provision of law, statute, rule or regulation, or any ruling, writ, order, injunction or decree of any court, administrative agency or governmental body applicable to it.

     (b) This Agreement is made with each Private Limited Partner in reliance upon each Private Limited Partner’s representation to the General Partner, the Partnership and SBA, that:

     (i) it has full power and authority to execute and deliver this Agreement and to act as a Private Limited Partner under this Agreement; this Agreement has been authorized by all necessary actions by it; this Agreement has been duly executed and delivered by it; and this Agreement is a legal, valid and binding obligation of it, enforceable against it according to its terms;

     (ii) the execution and delivery of this Agreement and the performance of its obligations under this Agreement do not require the consent of any third party not previously obtained, and will not conflict with, or result in any violation of, or default under, any provision of any governing instrument applicable to it, or any agreement or other instrument to which it is a party or by which it or any of its properties is bound, or any provision of law, statute, rule or regulation, or any ruling, writ, order, injunction or decree of any court, administrative agency or governmental body applicable to it;

     (iii) if the Private Limited Partner is a bank (as the term is used in the SBIC Act, at 15 U.S.C. § 682(b)), the total amount of such Private Limited Partner’s investments in SBICs, including such Private Limited Partner’s interest in the Partnership, does not exceed five percent (5%) of such Private Limited Partner’s capital and surplus;

     (iv) unless otherwise disclosed to the Partnership in writing, the Private Limited Partner is a citizen or resident of the United States, an entity organized under the laws of the United States or a state within the United States or an entity engaged in a trade or business within the United States;

     (v) unless otherwise disclosed to the Partnership in writing, the Private Limited Partner is not subject to Title I of ERISA;

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     (vi) it is investing in the Partnership for its own account for investment, not for the interest of any other person, not for resale of any such equity interest in the Partnership to any other person and not with a view to or in connection with a sale or distribution, as such term is defined in the Securities Act;

     (vii) it is an “accredited investor” (as such term is defined in Regulation D under the Securities Act), is knowledgeable and experienced in businesses of the sort conducted by the Partnership, and acknowledges that it has had the opportunity to make inquiry of the General Partner and the Investment Adviser concerning the business, investment strategies, prospects, and financial condition of the Partnership and has received answers to its inquiries that it considers fully responsive and satisfactory. Further, it has not relied on the SBA’s review of the Partnership, the General Partner or the Investment Adviser/Manager in deciding whether to invest;

     (viii) it understands that the equity interests in the Partnership have not been registered under the Securities Act and are being sold and transferred to it in a transaction exempt from such registration requirements; that there is no public market for such equity interests; and that such Private Limited Partner may be required to hold such equity interests indefinitely;

     (ix) its overall commitment to investments which are not readily marketable is not disproportionate to its net worth and the investment in equity interests of the Partnership will not cause such overall commitment to become excessive; and

     (x) it understands that an investment in the Partnership involves significant risks, and it has carefully reviewed and is aware of all of the risk factors related to such investment.

     (c) Each Partner who has disclosed to the Partnership in writing that it is not a person described in Section 1.06(b)(iv), agrees to provide the Partnership with any information or documentation necessary to permit the Partnership to fulfill any tax withholding or other obligation relating to the Partner, including but not limited to any documentation necessary to establish the Partner’s eligibility for benefits under any applicable tax treaty.

Section 1.07. Notices With Respect to Representations of Private Limited Partners.

     (a) If any representation made by a Private Limited Partner in Section 1.06(b)(i), (ii) or (iii) ceases to be true, then the Private Limited Partner will promptly provide the Partnership with a correct separate written representation covering the same matters as each such Section.

     (b) The Partnership will give SBA prompt notice of any corrected representation received from any Private Limited Partner under Section 1.07(a).

Section 1.08. Liability of Partners.

     (a) Losses, liabilities and expenses incurred by the Partnership during any fiscal year will be allocated among the Partners in accordance with the procedures for allocating Net Losses as provided in Section 6.03.

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     (b) The General Partner has the liability for the liabilities of the Partnership provided for in the Act and the SBIC Act. The General Partner will not:

     (i) be obligated to restore by way of capital contribution or otherwise any deficits in the respective Capital Accounts of the Private Limited Partners should such deficits occur, or

     (ii) have any greater obligation with respect to any Outstanding Leverage than is required by the SBIC Act or by SBA.

     (c) Except as otherwise provided under the Act and the SBIC Act, no Private Limited Partner will be liable for any loss, liability or expense whatsoever of the Partnership. Notwithstanding the preceding sentence, a Private Limited Partner will remain liable for any portion of such Private Limited Partner’s Commitment not paid to the Partnership only through the Commitment Period.

     (d) If a Private Limited Partner is required to return to the Partnership, for the benefit of creditors of the Partnership, amounts previously distributed to the Private Limited Partner, the obligation of the Private Limited Partner to return any such amount to the Partnership will be the obligation of the Private Limited Partner and not the obligation of the General Partner. No Private Limited Partner will be liable under this Agreement for the obligations under this Agreement of any other Partner.

     (e) Nothing in this Agreement limits any liability of any Partner under any agreement between the Partner and SBA.

ARTICLE II
PURPOSE AND POWERS

Section 2.01. Purpose and Powers.

     (a) The Partnership is organized solely for the purpose of operating as a small business investment company under the SBIC Act and conducting the activities described under Title III of the SBIC Act. The Partnership has the powers and responsibilities, and is subject to the limitations, provided in the SBIC Act. The operations of the Partnership and the actions taken by the Partnership and the Partners will be conducted and taken in compliance with the SBIC Act.

     (b) Subject to Section 2.01(a), the Partnership may make, manage, own and supervise investments of every kind and character in conducting its business as a small business investment company.

     (c) Subject to the provisions of the SBIC Act, the Partnership shall have all powers necessary, suitable or convenient for the accomplishment of the purposes set forth in Section 2.01(a) and Section 2.01(b), alone or with others, as principal or agent, including without limitation the following:

     (i) to engage in any lawful act or activity for which limited partnerships may be organized under the Act.

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Section 2.01. Venture Capital Operating Company.

     At any time that a Private Limited Partner is subject to Title I of ERISA and 25% or more in interest of all Private Limited Partners (as measured by their aggregate Capital Accounts) are “benefit plan investors” (within the meaning of Department of Labor Regulation Section 2510.3101(f)(2), 51 Fed. Reg. 41,282 (November 13, 1986) or any amendment or successor regulation), the Partnership will use its best efforts to ensure that the Partnership qualifies as a “venture capital operating company” (within the meaning of Department of Labor Regulation § 2510.3101(d), 51 Fed. Reg. 41,281 (November 13, 1986) or any amendment or successor regulation).

ARTICLE III
MANAGEMENT

Section 3.01. Authority of General Partner.

     (a) The management and operation of the Partnership and the formulation of investment policy is vested exclusively in the General Partner.

     (b) The acts of the General Partner in carrying on the business of the Partnership will bind the Partnership.

     (c) In the case of any General Partner other than a natural person, at any time that the Partnership is licensed as an SBIC, the General Partner will not allow any person to serve as a general partner, director, officer or manager of the General Partner, unless such person has been approved by SBA.

     (d) So long as the General Partner remains the general partner of the Partnership:

     (i) it will comply with the requirements of the SBIC Act, including, without limitation, 13 C.F.R. § 107.160(a) and (b), as in effect from time to time; and

     (ii) in the case of any General Partner other than a natural person, except as set forth in Section 3.01(d)(iii), it will devote all of its activities to the conduct of the business of the Partnership and will not engage actively in any other business, unless its engagement is related to and in furtherance of the affairs of the Partnership.

     (iii) The General Partner may, however:

     (A) act as the general partner or Investment Adviser/Manager for one or more other SBICs, and

     (B) receive, hold, manage and sell Assets received by it from the Partnership (or other SBIC for which it acts as general partner or Investment Adviser/Manager), or through the exercise or exchange of Assets received by it from the Partnership (or other SBIC for which it acts as general partner or Investment Adviser/Manager).

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Section 3.02. Authority of the Private Limited Partners.

     The Private Limited Partners will take no part in the control of the business of the Partnership, and the Private Limited Partners will not have any authority to act for or on behalf of the Partnership, except as is specifically permitted by this Agreement.

Section 3.03 The Investment Adviser/Manager.

     (a) Subject to the SBIC Act, the General Partner may delegate any part of its authority to an Investment Adviser/Manager.

     (b) Any agreement delegating any part of the authority of the General Partner to an Investment Adviser/Manager will:

     (i) be in writing, executed by the General Partner, the Partnership and the Investment Adviser/Manager,

     (ii) specify the authority so delegated, and

     (iii) expressly require that such delegated authority will be exercised by the Investment Adviser/Manager in conformity with the terms and conditions of such agreement, this Agreement and the SBIC Act.

     (c) Each agreement with an Investment Adviser/Manager under Section 3.03(a) will be binding in accordance with its terms upon the General Partner and any succeeding General Partner.

     (d) Each agreement with an Investment Adviser/Manager, and any material amendment to any such agreement, is subject to the prior approval of SBA.

     (e) The initial Investment Advisor/Manager shall be SeaView Mezzanine Capital Advisers, LLC.

Section 3.04. Restrictions on Other Activities of the General Partner and its Affiliates.

     (a) Except as provided in the SBIC Act and as otherwise specifically provided in this Agreement, no provision of this Agreement will be construed to preclude any (i) Partner, (ii) Investment Adviser/Manager, or (iii) Affiliate, general partner, member, manager or stockholder of any Partner or Investment Adviser/Manager, from engaging in any activity whatsoever or from receiving compensation therefore or profit from any such activity. Such activities may include, without limitation, (A) receiving compensation from issuers of securities for investment banking services, (B) managing investments, (C) participating in investments, brokerage or consulting arrangements or (D) acting as an adviser to or participant in any corporation, partnership, limited liability company, trust or other business person..

Section 3.05. Management Compensation.

     (a) During the five-year period commencing on the Initial Closing, Management Compensation with respect to each year during such period shall be [                      ] of the sum of (i)

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the Partnership’s Regulatory Capital, (ii) any previous permitted distributions under Section 7 hereof, and (iii) an assumed two tiers of Outstanding Leverage on the amounts described in clauses (i) and (ii).

     (b) During the subsequent period following the five-year period described in subsection (a) above, Management Compensation with respect to each year during such subsequent period shall be [                      ] of the Partnership’s Combined Capital as of the start of business on the first day of each such year.

     (c) The Management Compensation shall not be modified in any respect except (i) upon the written approval of 67 2/3% in Interest of the Private Limited Partners and the General Partner, and (ii) with the prior written approval of SBA.

     (d) If the Partnership fails to pay any Management Compensation provided herein, for any reason, the unpaid amount shall continue to be due and payable, or shall become due and payable, at the earliest date on which the payment of such amount or any portion thereof could be made without violation of the SBIC Act. Until paid, the unpaid amount shall accrue interest compounded on a monthly basis at the highest prime rate reported in The Wall Street Journal, from time to time, during the period of non-payment.

     (e) Management Compensation shall be reduced (but not below zero) by the amount of any fees or other amounts paid to the General Partner or Investment Adviser/Manager, as the case may be, which the SBIC Act requires to be deducted from Management Compensation.

     The Partnership will not pay any Management Compensation with respect to any fiscal year in excess of the amount of Management Compensation approved by SBA.

Section 3.06. Payment of Management Compensation

     (a) The Management Compensation may be paid by the Partnership to the General Partner or, at the General Partner’s direction, in whole or in part to an Investment Adviser/Manager.

     (b) Management Compensation shall be paid in advance in four (4) quarterly installments on the first business day of each quarter of each year. During the initial five-year period described in Section 3.05 (a) above, Regulatory Capital shall be calculated as of the start of business on the first day of each quarter. For partial years (such as the final partial year of the Partnership), Management Compensation shall be prorated based on the number of days in such partial years.

Section 3.07 Partnership Expenses.

     (a) The General Partner (or an Investment Adviser/Manager) will pay:

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     (i) the compensation of all professional and other employees of the Partnership, the General Partner or an Investment Adviser/Manager who provide services to the Partnership;

     (ii) the cost of providing support, management and general services to the Partnership (other than the costs paid by the Partnership as provided in Section 3.07(b)), including, without limitation:

     (A) office expenses,

     (B) travel,

     (C) business development,

     (D) office and equipment rental,

     (E) bookkeeping, and

     (F) the development, investigation and monitoring of investments; and

     (iii) all other expenses of the Partnership not authorized to be paid by the Partnership under Section 3.07(b).

     (b) The Partnership will pay the following Partnership expenses:

     (i) all interest and expenses payable by the Partnership on any indebtedness incurred by the Partnership;

     (ii) all amounts payable to SBA under the SBIC Act, and all amounts payable in connection with any Leverage commitment and any Outstanding Leverage;

     (iii) taxes payable by the Partnership to Federal, state, local and other governmental agencies;

     (iv) Management Compensation;

     (v) expenses incurred in the actual or proposed acquisition or disposition of Assets, including without limitation, accounting fees, brokerage fees, legal fees, transfer taxes and costs related to the registration or qualification for sale of Assets;

     (vi) legal, insurance (including any insurance as contemplated in Section 3.08 (m)), accounting and auditing expenses;

     (vii) all expenses incurred by the Partnership in connection with commitments for or issuance of Leverage;

     (viii) fees or dues in connection with the membership of the Partnership in any trade association for small business investment companies or related enterprises; and

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     (ix) fees and expenses incurred in connection with communication with the Private Limited Partners such as printing and mailing costs, and costs associated with periodic meetings of such Private Limited Partners.

      (c)  All Partnership expenses paid by the Partnership will be made against appropriate supporting documentation. The payment by the Partnership of Partnership expenses will be due and payable as billed.

Section 3.08. Valuation of Assets.

     (a) The Partnership will adopt written guidelines for determining the value of its Assets. Assets held by the Partnership will be valued by the General Partner in a manner consistent with the Partnership’s written guidelines and the SBIC Act. The Valuation Guidelines attached to this Agreement as Exhibit I are the Partnership’s written guidelines for valuation.

     (b) To the extent that the SBA or the SBIC Act requires any Asset held by the Partnership to be valued other than as provided in this Agreement, the General Partner will value the Asset in such manner as it determines to be consistent with the SBA or the SBIC Act.

     (c) Assets held by the Partnership will be valued at least annually (or more often, as SBA may require), and will be valued at least semiannually (or more often, as SBA may require) at any time that the Partnership has Outstanding Leverage.

Section 3.09. Standard of Care.

     (a) No Designated Party will be liable to the Partnership or any Partner for any action taken or omitted to be taken by it or any other Partner or other person in good faith and in a manner it reasonably believed to be in or not opposed to the best interests of the Partnership, and, with respect to any criminal action or proceeding, had no reasonable cause to believe its conduct was unlawful.

     (b) Neither any Private Limited Partner, nor any member of any Partnership committee or board who is not an Affiliate of the General Partner, will be liable to the Partnership or any Partner as the result of any decision made in good faith by the Private Limited Partner or member, in its capacity as such.

     (c) Any Designated Party, any Private Limited Partner and any member of a Partnership committee or board, may consult with independent legal counsel selected by it and will be fully protected, and will incur no liability to the Partnership or any Partner, in acting or refraining to act in good faith in reliance upon the opinion or advice of such counsel.

     (d) This Section does not constitute a modification, limitation or waiver of Section 314(b) of the SBIC Act, or a waiver by SBA of any of its rights under Section 314(b).

     (e) In addition to the standards of care stated in this Section, this Agreement may also provide for additional (but not alternative) standards of care that must also be met.

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Section 3.10. Indemnification.

     (a) The Partnership will indemnify and hold harmless, but only to the extent of Assets Under Management (less any Outstanding Leverage not included as a liability in the computation of Assets Under Management), any Designated Party, from any and all Indemnifiable Costs which may be incurred by or asserted against such person or entity, by reason of any action taken or omitted to be taken on behalf of the Partnership and in furtherance of its interests.

     (b) The Partnership will indemnify and hold harmless, but only to the extent of Assets Under Management (less any Outstanding Leverage not included as a liability in the computation of Assets Under Management), the Private Limited Partners, and members of any Partnership committee or board who are not Affiliates of the General Partner or any Investment Adviser/Manager from any and all Indemnifiable Costs which may be incurred by or asserted against such person or entity, by any third party on account of any matter or transaction of the Partnership, which matter or transaction occurred during the time that such person has been a Private Limited Partner or member of any Partnership committee or board.

     (c) The Partnership has power, in the discretion of the General Partner, to agree to indemnify on the same terms and conditions applicable to persons indemnified under Section 3.10(b), any person who is or was serving, under a prior written request from the Partnership, as a consultant to, agent for or representative of the Partnership as a director, manager, officer, employee, agent of or consultant to another corporation, partnership, limited liability company, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by the person in any such capacity, or arising out of the person’s status as such.

     (d) No person may be entitled to claim any indemnity or reimbursement under Section 3.10(a), (b) or (c) in respect of any Indemnifiable Cost that may be incurred by such person which results from the failure of the person to act in accordance with the provisions of this Agreement and the applicable standard of care stated in Section 3.09. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, will not, of itself, preclude a determination that such person acted in accordance with the applicable standard of care stated in Section 3.09.

     (e) To the extent that a person claiming indemnification under Section 3.10(a), (b) or (c) has been successful on the merits in defense of any action, suit or proceeding referred to in Section 3.10(a), (b) or (c) or in defense of any claim, issue or matter in any such action, suit or proceeding, such person must be indemnified with respect to such matter as provided in such Section. Except as provided in the foregoing sentence and as provided in Section 3.10(h) with respect to advance payments, any indemnification under this Section will be paid only upon determination that the person to be indemnified has met the applicable standard of conduct stated in Section 3.09(a) or Section 3.09(b).

     (f) A determination that a person to be indemnified under this Section has met the applicable standard stated in Section 3.09(a) or Section 3.09(b) may be made by (i) the General Partner, with respect to the indemnification of any person other than a person claiming indemnification under Section 3.10(a), (ii) a committee of the Partnership whose members are not affiliated with the General Partner or any Investment Adviser/Manager with respect to

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indemnification of any person indemnified under Section 3.10(a) or (iii) at the election of the General Partner, independent legal counsel selected by the General Partner, with respect to the indemnification of any person indemnified under this Section, in a written opinion.

     (g) In making any determination with respect to indemnification under (f), the General Partner, a committee of the Partnership whose members are not affiliated with the General Partner or any Investment Adviser/Manager or independent legal counsel, as the case may be, is authorized to make the determination on the basis of its evaluation of the records of the General Partner, the Partnership or any Investment Adviser/Manager to the Partnership and of the statements of the party seeking indemnification with respect to the matter in question and is not required to perform any independent investigation in connection with any determination. Any party making any such determination is authorized, however, in its sole discretion, to take such other actions (including engaging counsel) as it deems advisable in making the determination.

     (h) Expenses incurred by any person in respect of any Indemnifiable Cost may be paid by the Partnership before the final disposition of any such claim or action upon receipt of an undertaking by or on behalf of such person to repay such amount unless it is ultimately determined as provided in Section 3.10(e) or (f) that the person is entitled to be indemnified by the Partnership as authorized in this Section.

     (i) The rights provided by this Section will inure to the benefit of the heirs, executors, administrators, successors, and assigns of each person eligible for indemnification under this Agreement.

     (j) The rights to indemnification provided in this Section are the exclusive rights of all Partners to indemnification by the Partnership. No Partner may have any other rights to indemnification from the Partnership or enter into, or make any claim under, any other agreement with the Partnership (whether direct or indirect) providing for indemnification.

     (k) The Partnership may not enter into any agreement with any person (including, without limitation, any Manager and/or Investment Adviser, Partner or any person that is an employee, officer, director, partner or shareholder, or an Affiliate, Associate or Control Person of any Partner) providing for indemnification of any such person (i) except as provided for under this Section, and (ii) unless such agreement provides for a determination with respect to the indemnification as provided under Section 3.10(f).

     (l) The provisions of this Section do not apply to indemnification of any person that is not at the expense (whether in whole or in part) of the Partnership.

     (m) The Partnership may purchase and maintain insurance on its own behalf, or on behalf of any person or entity, with respect to liabilities of the types described in this Section. The Partnership may purchase such insurance regardless of whether the person is acting in a capacity described in this Section or whether the Partnership would have the power to indemnify the person against such liability under the provisions of this Section.

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Section 3.11. Advisory Board.

     The advisory board (the “Advisory Board”) shall be comprised of five (5) representatives, two (2) representatives designated by the Private Limited Partners and three (3) representatives designated by the General Partner, and shall review the business and affairs of the Partnership, including operational issues, ongoing SBA compliance, assets acquired or sold by the Partnership, management of portfolio investments and disposition, and prospective and ongoing investments into portfolio companies (to ensure that such assets and investments comply with the SBIC Act) (the “Partnership Matters”), on an “as needed” basis, but no less than on an annual basis. The Advisory Board shall make r