1
EXHIBIT 3.1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUMMIT PROPERTIES PARTNERSHIP, L.P.
May 23, 2000
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TABLE OF CONTENTS
Page
ARTICLE 1
DEFINED TERMS.............................................................1
ARTICLE 2
ORGANIZATIONAL MATTERS...................................................13
Section 2.1 Formation..................................................13
Section 2.2 Name.......................................................13
Section 2.3 Registered Office and Agent; Principal Office..............13
Section 2.4 Power of Attorney..........................................14
Section 2.5 Term.......................................................15
ARTICLE 3
PURPOSE..................................................................15
Section 3.1 Purpose and Business.......................................15
Section 3.2 Powers.....................................................16
ARTICLE 4
CAPITAL CONTRIBUTIONS....................................................16
Section 4.1 Capital Contributions of the Partners......................16
Section 4.2 Issuances of Additional Partnership Interests..............16
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares........17
Section 4.4 Preemptive Rights..........................................18
ARTICLE 5
DISTRIBUTIONS............................................................18
Section 5.1 Requirement and Characterization of Distributions..........18
Section 5.2 Amounts Withheld...........................................18
Section 5.3 Distributions Upon Liquidation.............................19
ARTICLE 6
ALLOCATIONS..............................................................19
Section 6.1 Allocations For Capital Account Purposes...................19
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS....................................21
Section 7.1 Management.................................................21
Section 7.2 Certificate of Limited Partnership.........................25
Section 7.3 Restrictions on General Partner Authority..................25
(i)
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Section 7.4 Reimbursement of the General Partner and the Company.......26
Section 7.5 Outside Activities of the General Partner..................27
Section 7.6 Contracts with Affiliates..................................27
Section 7.7 Indemnification............................................28
Section 7.8 Liability of the General Partner...........................29
Section 7.9 Other Matters Concerning the General Partner...............30
Section 7.10 Title to Partnership Assets................................30
Section 7.11 Reliance by Third Parties..................................31
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS...............................31
Section 8.1 Limitation of Liability....................................32
Section 8.2 Management of Business.....................................32
Section 8.3 Outside Activities of Limited Partners.....................32
Section 8.4 Return of Capital..........................................32
Section 8.5 Rights of Limited Partners Relating to the Partnership.....33
Section 8.6 Redemption Right...........................................34
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS...................................35
Section 9.1 Records and Accounting.....................................35
Section 9.2 Fiscal Year................................................35
Section 9.3 Reports....................................................35
ARTICLE 10
TAX MATTERS..............................................................36
Section 10.1 Preparation of Tax Returns.................................36
Section 10.2 Tax Elections..............................................36
Section 10.3 Tax Matters Partner........................................37
Section 10.4 Organizational Expenses....................................38
Section 10.5 Withholding................................................38
ARTICLE 11
TRANSFERS AND WITHDRAWALS................................................39
Section 11.1 Transfer...................................................39
Section 11.2 Transfer of the Company's General Partner Interest
and Limited Partner Interest...............................40
Section 11.3 Limited Partners' Rights to Transfer.......................40
Section 11.4 Substituted Limited Partners...............................41
Section 11.5 Assignees..................................................41
Section 11.6 General Provisions.........................................42
(ii)
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ARTICLE 12
ADMISSION OF PARTNERS....................................................43
Section 12.1 Admission of Successor General Partner.....................43
Section 12.2 Admission of Additional Limited Partners...................43
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership........................................44
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION.................................44
Section 13.1 Dissolution................................................44
Section 13.2 Winding Up.................................................45
Section 13.3 Compliance with Timing Requirements of Regulations.........47
Section 13.4 Deemed Distribution and Recontribution.....................47
Section 13.5 Rights of Limited Partners.................................47
Section 13.6 Notice of Dissolution......................................47
Section 13.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership.........................48
Section 13.8 Reasonable Time for Winding-Up.............................48
Section 13.9 Waiver of Partition........................................48
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS.............................48
Section 14.1 Amendments.................................................48
Section 14.2 Meetings of the Partners...................................50
ARTICLE 15
GENERAL PROVISIONS.......................................................51
Section 15.1 Addresses and Notice.......................................51
Section 15.2 Titles and Captions........................................51
Section 15.3 Pronouns and Plurals.......................................51
Section 15.4 Further Action.............................................51
Section 15.5 Binding Effect.............................................51
Section 15.6 Creditors..................................................52
Section 15.7 Waiver.....................................................52
Section 15.8 Counterparts...............................................52
Section 15.9 Applicable Law.............................................52
Section 15.10 Invalidity of Provisions...................................52
Section 15.11 Entire Agreement...........................................52
Section 15.12 Guaranty by the Company....................................52
Section 15.13 Special Provisions Relating to HUD Insured Loans...........53
Section 15.14 Special Provisions Relating to Xxxxxxxx Limited Partners...54
(iii)
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Section 15.15 Incorporation of Certain Lock-Up Provisions................55
ARTICLE 16
CONSOLIDATION, MERGER OR SALE OF ASSETS OF THE COMPANY...................56
Section 16.1 Triggering Events..........................................56
Section 16.2 From and After the Occurrence of a Triggering Event........56
Section 16.3 Additional Issuer Covenants................................62
Section 16.4 Application to Later Transactions..........................63
Section 16.5 Waivers and Amendments.....................................63
(iv)
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EXHIBITS
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Exhibit A- Partners Contributions and Partnership Interests
Exhibit B- Capital Account Maintenance
Exhibit C- Special Allocation Rules
Exhibit D- Value of Contributed Property
Exhibit E- Notice of Redemption
Exhibit F- Certificate of Designations - Series B Cumulative Redeemable
Perpetual Preferred Units
Exhibit G- Certificate of Designations - Series C Cumulative Redeemable
Perpetual Preferred Units
(v)
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SUMMIT PROPERTIES PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF SUMMIT
PROPERTIES PARTNERSHIP, L.P. (this "Agreement"), dated as of May 23, 2000,
is entered into by and among Summit Properties Inc. (the "Company") and the
Persons whose names are set forth on Exhibit A as attached hereto.
WHEREAS, the General Partner formed the Partnership by (i) filing the
Certificate and (ii) entering into an Agreement of Limited Partnership, dated as
of January 29, 1994 with the Limited Partners listed on Exhibit A thereto;
WHEREAS, in accordance with Article 14 of the Agreement, certain
amendments to the Agreement have become effective; and
WHEREAS, the General Partner desires to restate the Agreement
to incorporate all prior amendments thereto, make minor conforming changes and
eliminate certain outdated provisions.
NOW THEREFORE, in accordance with the provisions of Section 2.4 of the
Agreement, the Agreement is hereby restated to reflect all prior
amendments and in accordance with the provisions of Section 14.1(B)(4) minor
conforming changes are hereby made.
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 4.2 hereof and who is shown as such on
the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership taxable year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5);
and (ii) decreased by the items described in Regulations Sections
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1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership taxable year.
"Adjusted Property" means any property, the Carrying Value of which has
been adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is deemed
distributed by, and recontributed to, the Partnership for federal income tax
purposes upon a termination thereof pursuant to Section 708 of the Code, such
property shall thereafter constitute a Contributed Property until the Carrying
Value of such property is further adjusted pursuant to Exhibit B hereof.
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person; (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person; (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests; or
(iv) any officer, director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), and (iii) above.
"Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit D and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit D; (ii) in the case of
any Contributed Property not set forth in Exhibit D and as of the time of its
contribution to the Partnership, the 704(c) Value of such property, reduced by
any liabilities either assumed by the Partnership upon such contribution or to
which such property is subject when contributed; and (iii) in the case of any
property distributed to a Partner by the Partnership, the Partnership's Carrying
Value of such property at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of distribution as determined under Section
752 of the Code and the Regulations thereunder.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"Articles of Incorporation" means the Articles of Incorporation of
Summit Properties Inc. filed in the State of Maryland on January 13, 1994, as
amended and restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
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"Available Cash" means, with respect to any period for which such
calculation is being made, (i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case may
be) for such period (without regard to adjustments resulting from
allocations described in Sections 1.A through 1.E of Exhibit C);
(b) Depreciation and all other noncash charges deducted in
determining Net Income or Net Loss for such period;
(c) the amount of any reduction in the reserves of the
Partnership referred to in clause (ii)(f) below (including, without
limitation, reductions resulting because the General Partner determines
such amounts are no longer necessary);
(d) the excess of proceeds from the sale, exchange,
disposition, or refinancing of Partnership property for such period
over the gain recognized from such sale, exchange, disposition, or
refinancing during such period (excluding Terminating Capital
Transactions); and
(e) all other cash received by the Partnership for such period
that was not included in determining Net Income or Net Loss for such
period;
(ii) less the sum of:
(a) all principal debt payments made by the Partnership during
such period;
(b) capital expenditures made by the Partnership during such
period;
(c) investments made by the Partnership during such period in
any entity (including loans made thereto) to the extent that such
investments are not otherwise described in clause (ii)(a) or (ii)(b);
(d) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period;
(e) any amount included in determining Net Income or Net Loss
for such period that was not received by the Partnership during such
period;
(f) the amount of any increase in reserves during such period
which the General Partner determines to be necessary or appropriate in
its sole and absolute discretion; and
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(g) the amount of any working capital accounts and other cash
or similar balances which the General Partner determines to be
necessary or appropriate, in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1, 4.2, or 4.3 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property, reduced (but not below
zero) by all Depreciation with respect to such Property charged to the Partners'
Capital Accounts following the contribution of or adjustment with respect to
such Property; and (ii) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes, all as of the
time of determination. The Carrying Value of any property shall be adjusted from
time to time in accordance with Exhibit B hereof, and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Cash Amount" means an amount of cash per Partnership Unit equal to the
Value on the Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed on January 29, 1994 in the office of the Delaware
Secretary of State, as amended from time to time in accordance with the terms
hereof and the Act.
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"Certificate of Designations" means any Exhibit attached hereto or any
amendment to this Agreement that sets forth the designations, rights, powers,
duties and preferences of Partners holding any Partnership Interests issued
pursuant to Section 4.2A, which amendment is in the form of a certificate signed
by the General Partner and appended to this agreement. A Certificate of
Designations is not the exclusive manner in which such an amendment may be
effected. The General Partner may adopt a Certificate of Designations without
the consent of the Limited Partners to the extent permitted pursuant to Section
14.1B hereof.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Common Unit" means a Partnership Unit which is designated as a common
unit of limited partnership interest and which has the rights, preferences and
other privileges designated herein in respect of Common Unitholders. The
allocation of Common Units among the Partners shall be set forth on Exhibit A,
as may be amended from time to time.
"Common Unitholder" means a Partner that holds Common Units.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Contributed Property" means each property or other asset, in such form
as may be permitted by the Act (but excluding cash), contributed or deemed
contributed to the Partnership (including deemed contributions to the
Partnership on termination and reconstitution thereof pursuant to Section 708 of
the Code). Once the Carrying Value of a Contributed Property is adjusted
pursuant to Exhibit B hereof, such property shall no longer constitute a
Contributed Property for purposes of Exhibit B hereof, but shall be deemed an
Adjusted Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that the
Company (i) declares or pays a dividend on its outstanding REIT Shares in REIT
Shares or makes a distribution to all holders of its outstanding REIT Shares in
REIT Shares; (ii) subdivides its outstanding REIT Shares; or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
assuming for such purpose that such dividend, distribution, subdivision or
combination has occurred as of such time, and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination. Any adjustment to the Conversion
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Factor shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
"Depreciation" means, for each taxable year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Effective Date" means February 15, 1994 (i.e., the date of closing of
the initial public offering of REIT Shares pursuant to that certain purchase
agreement among the Company and Xxxxxx Xxxxxxx & Co. Incorporated, Prudential
Securities Incorporated, Xxxxxxxx-Xxxxxxxx Company, Inc. and Interstate/Xxxxxxx
Xxxx, as representatives of the underwriters).
"General Partner" means the Company, in its capacity as the general
partner of the Partnership, or its successors as general partner of the
Partnership.
"General Partner Interest" means a Partnership Interest held by the
General Partner, in its capacity as general partner. A General Partner Interest
may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter; (iii) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership; (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking
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liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect; (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner; (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors; (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above; (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties; (f) any
proceeding seeking liquidation, reorganization or other relief of or against
such Partner under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof; (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within ninety (90) days of such appointment; or (h) an
appointment referred to in clause (g) which has been stayed is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of (A) his status as the General Partner, or as a director, trustee or
officer of the Partnership or the General Partner, or (B) his or its
liabilities, pursuant to a loan guarantee or otherwise, for any indebtedness of
the Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken assets subject to); and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the General
Partner may designate from time to time (whether before or after the event
giving rise to potential liability), in its sole and absolute discretion.
"Limited Partner" means the Company and any other Person named as a
Limited Partner in Exhibit A attached hereto, as such Exhibit may be amended
from time to time, or any Substituted Limited Partner or Additional Limited
Partner, in such Person's capacity as a Limited Partner of the Partnership.
"Limited Partner Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled, as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partner Interest may be expressed as a
number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.
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"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit E to this Agreement.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners collectively.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership taxable
year shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
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"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, as it may be amended and restated, and any successor
thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in a Partnership Minimum Gain, for a Partnership
taxable year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall be the same as the record date established by
the Company for a distribution to its shareholders of some of all of its portion
of such distribution.
"Partnership Unit" or "Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2 and
4.3 (and includes any series or class of Preferred Units). The number of
Partnership Units outstanding and (in the case of Common Units) the Percentage
Interest in the Partnership represented by such Units are set forth in Exhibit A
attached hereto, as such Exhibit may be amended from time to time. The ownership
of Partnership Units shall be evidenced by such form of certificate for units as
the General Partner adopts from time to time unless the General Partner
determines that the Partnership Units shall be uncertificated securities.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its percentage interest
as a Common Unitholder determined by dividing the Common Units owned by such
Partner by the total number of Common Units then outstanding and as specified in
Exhibit A attached hereto, as such Exhibit may be amended from time to time.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"Preferred Unit" means a limited partnership interest (of any series),
other than a Common Unit, represented by a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder and which is designated
as a "Preferred Unit" (or as a particular
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class or series of Preferred Units) herein and which has the rights, preferences
and other privileges designated herein (including by way of a Certificate of
Designations) in respect of a Preferred Unitholder. The allocation of Preferred
Units among the Partners shall be set forth on Exhibit A, as may be amended from
time to time.
"Preferred Unitholder" means a Partner that holds Preferred Units (of
any class or series).
"Recapture Income" means any gain recognized by the Partnership upon
the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6 hereof.
"Redemption Right" has the meaning set forth in Section 8.6 hereof.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" means a share of common stock of the Company, par value
$.01 per share.
"REIT Shares Amount" means a number of REIT Shares equal to the product
of the number of Common Units offered for redemption by a Redeeming Partner,
multiplied by the Conversion Factor, provided that in the event the Company
issues to all holders of REIT Shares rights, options, warrants or convertible or
exchangeable securities entitling the shareholders to subscribe for or purchase
REIT Shares, or any other securities or property (collectively, the "rights"),
then the REIT Shares Amount shall also include such rights that a holder of that
number of REIT Shares would be entitled to receive.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
Disparities.
"704(c) Value" of any Contributed Property means the value of such
property as set forth in Exhibit D, or if no value is set forth in Exhibit D,
the fair market value of such property or other consideration at the time of
contribution, as determined by the General
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Partner using such reasonable method of valuation as it may adopt; provided,
however, that the 704(c) Value of any property deemed contributed to the
Partnership for federal income tax purposes upon termination and reconstitution
thereof pursuant to Section 708 of the Code shall be determined in accordance
with Exhibit B hereof. Subject to Exhibit B hereof, the General Partner shall,
in its sole and absolute discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate of the 704(c) Values of Contributed
Properties in a single or integrated transaction among the separate properties
on a basis proportional to their respective fair market values.
"Series B Certificate of Designations" means the Certificate of
Designations attached hereto as Exhibit F setting forth the designations,
rights, powers, duties and preferences of Partners holding Series B Preferred
Units.
"Series B Preferred Unit" means a limited partnership interest
represented by a fractional, undivided share of the Partnership Interests of all
Partners issued hereunder which is designated as an 8.95% Series B Cumulative
Redeemable Perpetual Preferred Unit and which has the rights, preferences and
other privileges designated herein in respect of Series B Preferred Unitholders
and designated in the Certificate of Designations for Series B Preferred Units
attached hereto. The allocation of Series B Preferred Units among the Partners
shall be set forth on Exhibit A, as may be amended from time to time.
"Series B Preferred Unitholder" means a Partner that holds Series B
Preferred Units.
"Series C Certificate of Designations" means the Certificate of
Designations attached hereto as Exhibit G setting forth the designations,
rights, powers, duties and preferences of Partners holding Series C Preferred
Units.
"Series C Preferred Unit" means a limited partnership interest
represented by a fractional, undivided share of the Partnership Interests of all
Partners issued hereunder which is designated as an 8.75% Series C Cumulative
Redeemable Perpetual Preferred Unit and which has the rights, preferences and
other privileges designated herein in respect of Series C Preferred Unitholders
and designated in the Certificate of Designations for Series C Preferred Units
attached hereto. The allocation of Series C Preferred Units among the Partners
shall be set forth on Exhibit A, as may be amended from time to time.
"Series C Preferred Unitholder" means a Partner that holds Series C
Preferred Units.
"Specified Redemption Date" means the tenth (10th) Business Day after
receipt by the Company of a Notice of Redemption; provided that if the Company
combines its outstanding REIT Shares, no Specified Redemption Date shall occur
after the record date of such combination of REIT Shares and prior to the
effective date of such combination.
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"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities; or (ii) the outstanding equity interests, is owed,
directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereof) as of such
date; over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Exhibit B
hereof) as of such date; over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a REIT Share, the average of the daily
market price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market price for each such trading day shall be: (i) if the
REIT Shares are listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System, the closing price on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices on such
day; (ii) if the REIT Shares are not listed or admitted to trading on any
securities exchange or the NASDAQ-National Market System, the last reported sale
price on such day or, if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reliable quotation
source designated by the General Partner; or (iii) if the REIT Shares are not
listed or admitted to trading on any securities exchange or the NASDAQ-National
Market System and no such last reported sale price or closing bid and asked
prices are available, the average of the reported high bid and low asked prices
on such day, as reported by a reliable quotation source designated by the
General Partner, or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than ten (10) days prior to the date in question) for which prices
have been so reported; provided that if there are no bid and asked prices
reported during the ten (10) days prior to the date in question, the Value of
the REIT Shares shall be determined by the General Partner acting in good faith
on the basis of such
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quotations and other information as it considers, in its reasonable judgment,
appropriate. In the event the REIT Shares Amount includes rights that a holder
of REIT Shares would be entitled to receive, then the Value of such rights shall
be determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Formation
Effective as of January 29, 1994, the Partners formed a limited
partnership under and pursuant to the Act. Except as expressly provided herein
to the contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the Act.
The Partnership Interest of each Partner shall be personal property for all
purposes.
Section 2.2 Name
The name of the Partnership shall be Summit Properties Partnership,
L.P. The Partnership's business may be conducted under any other name or names
deemed advisable by the General Partner, including the name of the General
Partner or any Affiliate thereof. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the Partnership's name
where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may
change the name of the Partnership at any time and from time to time and shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State of
Delaware and the name and address of the registered agent for service of process
on the Partnership in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The
principal office of the Partnership shall be 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, or such other place as the General Partner may
from time to time designate by notice to the Limited Partners. The Partnership
may maintain offices at such other place or places within or outside the State
of Delaware as the General Partner deems advisable.
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Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all
certificates, documents and other instruments
(including, without limitation, this Agreement and
the Certificate and all amendments or restatement
thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or
continue the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the Limited Partners have
limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may
or plans to conduct business or own property; (b) all
instruments that the General Partner deems
appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement
in accordance with its terms; (c) all conveyances and
other instruments or documents that the General
Partner or the Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation
of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments
relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other
events described in, Article 11, 12 or 13 hereof or
the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments
relating to the determination of the rights,
preferences and privileges of Partnership Interest;
and
(2) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates
and other instruments appropriate or necessary, in
the sole and absolute discretion of the General
Partner or any Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by
the Partners hereunder or is consistent with the
terms of this agreement or appropriate or necessary,
in the sole discretion of the General Partner or any
Liquidator, to effectuate the terms or intent of this
Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
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B. The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, in recognition of the fact that each of
the Partners will be relying upon the power of the General Partner and any
Liquidator to act as contemplated by this agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
Section 2.5 Term
The term of the Partnership commenced on January 29, 1994 and shall
continue until December 31, 2093, unless, the Partnership is dissolved sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
Company at all times to be classified as a REIT, unless the Company ceases to
qualify as a REIT for reasons other than the conduct of the business of the
Partnership; (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or to own interests in any entity
engaged in any of the foregoing; and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, and without
limiting the Company's right, in its sole discretion, to cease qualifying as a
REIT, the Partners acknowledge the Company's current status as a REIT inures to
the benefit of all of the Partners and not solely the General Partner.
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Section 3.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership; provided, however, that the
Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the Company to continue to qualify as a REIT;
(ii) could subject the Company to any additional taxes under Section 857 or
Section 4981 of the Code; or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the Company or its
securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
At the time of the execution of this Agreement, the Partners have made
the Capital Contributions set forth in Exhibit A to this Agreement. To the
extent the Partnership acquires any property by the merger of any other Person
into the Partnership, Persons who receive Partnership Interests in exchange for
their interests in the Person merging into the Partnership shall become Partners
and shall be deemed to have made Capital Contributions as provided in the
applicable merger agreement and as set forth in Exhibit A, as amended to reflect
such deemed Capital Contributions. The Partners shall own Partnership Units in
the amounts set forth for such Partner in Exhibit A and shall have a Percentage
Interest in the Partnership with respect to Common Units as set forth in Exhibit
A, which Percentage Interest shall be adjusted in Exhibit A from time to time by
the General Partner to the extent necessary to reflect accurately redemptions,
additional Capital Contributions, the issuance of additional Partnership Units
(pursuant to any merger or otherwise), or similar events having an effect on any
Partner's Percentage Interest. The number of Common Units held by the General
Partner, in its capacity as general partner, (equal to one percent (1%) of all
outstanding Common Units from time to time) shall be deemed to be the General
Partner Interest. Except as provided in Sections 4.2 and 10.5, the Partners
shall have no obligation to make any additional Capital Contributions or loans
to the Partnership.
Section 4.2 Issuances of Additional Partnership Interests
A. The General Partner is hereby authorized to cause the Partnership
from time to time to issue to the Partners (including the General Partner) or
other Persons additional Partnership Units or other Partnership Interests in one
or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional
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or other special rights, powers and duties, including rights, powers and duties
senior to Limited Partner Interests, all as shall be determined by the General
Partner in its sole and absolute discretion subject to Delaware law, including,
without limitation, (i) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests; (ii) the right of each such class or series of Partnership Interests
to share in Partnership distributions; and (iii) the rights of each such class
or series of Partnership Interests upon dissolution and liquidation of the
Partnership; provided that no such additional Partnership Units or other
Partnership Interests shall be issued to the Company, as the General Partner or
a Limited Partner, unless either (a)(1) the additional Partnership Interests are
issued in connection with an issuance of REIT Shares or other shares by the
Company, which shares have designations, preferences and other rights such that
the economic interests attributable to such shares are substantially similar to
the designations, preferences and other rights of the additional Partnership
Interests issued to the Company in accordance with this Section 4.2.A, and (2)
the Company shall make a Capital Contribution to the Partnership in an amount
equal to the proceeds raised in connection with such issuance, or (b) the
additional Partnership Interests are issued to all Partners in proportion to
their respective Percentage Interests.
B. The Company shall not issue any additional REIT Shares (other than
REIT Shares issued pursuant to Section 8.6), or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase REIT Shares (collectively "New Securities") other than to all holders
of REIT Shares unless (i) the General Partner shall cause the Partnership to
issue to the Company, Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having designations,
preferences and other rights, all such that the economic interests are
substantially similar to those of the New Securities; and (ii) the Company
contributes to the Partnership the proceeds from the issuance of such New
Securities and from the exercise of rights contained in such New Securities.
Without limiting the foregoing, the Company is expressly authorized to issue New
Securities for less than fair market value, and the General Partner is expressly
authorized to cause the Partnership to issue to the Company corresponding
Partnership Interests, so long as (x) the General Partner concludes in good
faith that such issuance is in the interests of the Company and the Partnership
(for example, and not by way of limitation, the issuance of REIT Shares and
corresponding Units pursuant to an employee stock purchase plan providing for
employee purchases of REIT Shares at a discount from fair market value or
employee stock options that have an exercise price that is less than the fair
market value of the REIT Shares, either at the time of issuance or at the time
of exercise); and (y) the Company contributes all proceeds from such issuance
and exercise to the Partnership.
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares
In connection with any issuance of REIT Shares or New Securities
pursuant to Section 4.2, the Company shall contribute to the Partnership any
proceeds (or a portion thereof) raised in connection with such issuance;
provided that if the proceeds actually received by the Company are less than the
gross proceeds of such issuance as a result of any underwriter's
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discount or other expenses paid or incurred in connection with such issuance,
then the Company shall be deemed to have made a Capital Contribution to the
Partnership in the amount equal to the sum of the net proceeds of such issuance
plus the amount of such underwriter's discount and other expenses paid by the
Company.
Section 4.4 Preemptive Rights
No Person shall have any preemptive, preferential or other similar
purchase right with respect to (i) additional Capital Contributions or loans to
the Partnership; or (ii) the issuance or sale of any Partnership Units or other
Partnership Interests.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
Subject to the rights and preferences of any outstanding class or
series of Preferred Units as set forth in the Certificates of Designations
therefor attached hereto or executed by the General Partner, or as otherwise
provided herein with respect to Partnership Interests other than Common Units,
the General Partner shall distribute at least quarterly an amount equal to one
hundred percent (100%) of Available Cash generated by the Partnership during
such quarter or shorter period to the Common Unitholders who are Partners on the
Partnership Record Date with respect to such quarter or shorter period in
accordance with their respective Percentage Interests on such Partnership Record
Date; provided that in no event may a Partner receive a distribution of
Available Cash with respect to a Common Unit if such Partner is entitled to
receive a distribution out of such Available Cash with respect to a REIT Share
for which such Common Unit has been redeemed or exchanged. The General Partner
shall take such reasonable efforts, as determined by it in its sole and absolute
discretion and consistent with the Company's qualification as a REIT, to
distribute Available Cash to the Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of property
to the Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; provided that the General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the Partners or Assignees shall be treated as amounts
distributed to the Partners or Assignees pursuant to Section 5.1 for all
purposes under this Agreement.
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Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction and any other cash
received or reductions in reserves made after commencement of the liquidation of
the Partnership shall be distributed to the Partners in accordance with Section
13.2
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. Net Income shall be allocated:
(i) first, to the General Partner to the extent of Net
Losses previously allocated to the General Partner
pursuant to Section 6.1B(iii) below for all prior
taxable years exceed Net Income previously allocated
to the General Partner pursuant to this Section
6.1A(i) for all prior taxable years,
(ii) second, to Partners holding Preferred Units to the
extent that Net Losses previously allocated to such
Partners pursuant to Section 6.1B(ii) below for all
prior taxable years exceed Net Income previously
allocated to such Partners pursuant to this Section
6.1A(ii) for all prior taxable years,
(iii) third, to Partners holding Common Units to the extent
that Net Losses previously allocated to such Partners
pursuant to Section 6.1B(i) below for all prior
taxable years exceed Net Income previously allocated
to such Partners pursuant to this Section 6.1A(iii)
for all prior taxable years,
(iv) fourth, to Partners holding Preferred Units in
accordance with the rights of any such class of
Partnership Interests until each such Preferred Unit
has been allocated Net Income equal to the excess of
(x) the cumulative amount of preferred distributions
such Partners are entitled to receive to the last day
of the current taxable year or to the date of
redemption to the extent such Partnership Interests
are redeemed during such taxable year over (y) the
cumulative Net Income allocated to such Partners,
pursuant
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to this Section 6.1A(iv) for all prior taxable years
(and, within each such class, pro rata in proportion
to the respective share of such Units each Partner
holds as of the last day of the period for which such
allocation is being made), and
(v) fifth, with respect to Common Units, pro rata to each
such class in accordance with the terms of such class
(and, within each such class, pro rata in proportion
to each Partner's respective share of such Units as
of the last day of the period for which such
allocation is being made).
B. Net Losses. After giving effect to the special allocations set forth
in Section 1 of Exhibit C attached hereto, Net Losses shall be allocated:
(i) first, with respect to Common Units, pro rata in
proportion to each Partner's respective share of such
Common Units as of the last day of the period for
which such allocation is being made until the
Adjusted Capital Account (ignoring for this purpose
any amounts a Partner is obligated to contribute to
the capital of the Partnership or is deemed obligated
to contribute pursuant to Regulations Section 1.704-
1(b)(2)(ii)(c)(2)) of each Partner with respect to
such Common Units is reduced to zero,
(ii) second, to the Partners holding Preferred Units in
accordance with the rights of such class of Preferred
Units (and, if there is more than one class of such
Preferred Units, then in the reverse order of their
preferences in distributions), until the Adjusted
Capital Account (modified in the same manner as in
the parenthetical in the immediately preceding clause
(i)) of each such Partner with respect to such
Preferred Units is reduced to zero, and
(iii) third, to the General Partner.
To the extent permitted under Section 704 of the Code, solely for
purposes of allocating Net Income or Net Losses in any taxable year (or a
portion thereof) to Partners holding Series B Preferred Units and Series C
Preferred Units pursuant to this Section 6.1, items of Net Income or Net Losses,
as the case may be, shall not include Depreciation with respect to properties
that are "ceiling limited" in respect of Partners holding Series B Preferred
Units or Series C Preferred Units. For purposes of the preceding sentence,
Partnership property shall be considered "ceiling limited" in respect of a
Partner holding Series B Preferred Units or Series C Preferred Units if
Depreciation attributable to such Partnership property which would otherwise be
allocable to such Partner, without regard to this paragraph, exceeds
depreciation determined for federal income tax purposes attributable to such
Partnership property which would otherwise be allocable to such Partner by more
than 5%.
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C. For purposes of Regulations Section 1.752-3(a), the Partners agree
that Nonrecourse Liabilities of the Partnership in excess of the sum of (i) the
amount of Partnership Minimum Gain; and (ii) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in a manner that takes into
account Code Section 704(c) gain, as discussed in Section (3)(a) of Revenue
Ruling 95-41 issued by the IRS.
D. Any gain allocated to the Partners upon the sale or other taxable
disposition of any Partnership asset shall, to the extent possible, after taking
into account other required allocations of gain pursuant to Exhibit C, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners have been allocated any deductions directly or indirectly
giving rise to the treatment of such gains as Recapture Income.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner, and no Limited Partner shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3 hereof, shall have
full power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation,
making prepayments on loans and borrowing money to
permit the Partnership to make distributions to its
Partners in such amounts as will permit the Company
(so long as the Company qualifies as a REIT) to avoid
the payment of any federal income tax (including, for
this purpose, any excise tax pursuant to Section 4981
of the Code) and to make distributions to its
shareholders in amounts sufficient to permit the
Company to maintain REIT status), the assumption or
guarantee of, or other contracting for, indebtedness
and other liabilities, the issuance of evidence of
indebtedness (including the securing of the same by
deed, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the
incurring of any
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obligations it deems necessary for the conduct of the
activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to
governmental or other agencies having jurisdiction
over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets
of the Partnership (including the exercise or grant
of any conversion, option, privilege, or subscription
right or other right available in connection with any
assets at any time held by the Partnership) or the
merger or other combination of the Partnership with
or into another entity (all of the foregoing subject
to any prior approval only to the extent required by
Section 7.3 hereof);
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on
any terms it sees fit, including, without limitation,
the financing of the conduct of the operations of the
Company, the Partnership or any of the Partnership's
Subsidiaries, the lending of funds to other Persons
(including, without limitation, the Subsidiaries of
the Partnership and/or the Company) and the repayment
of obligations of the Partnership and its
Subsidiaries and any other Person in which it has an
equity investment, and the making of capital
contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any
real property or improvements owed by the Partnership
or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the
General Partner considers useful or necessary to the
conduct of the Partnership's operations or the
implementation of the General Partner's powers under
this Agreement, including contracting with
contractors, developers, consultants, accountants,
legal counsel, other professional advisors and other
agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
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(8) holding, managing, investing and reinvesting cash and
other assets of the Partnership;
(9) the collection and receipt of revenues and income of
the Partnership;
(10) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees
of the Partnership (including, without limitation,
employees having titles such as "president," "vice
president," "secretary" and "treasurer" of the
Partnership), and agents, outside attorneys,
accountants, consultants and contractors of the
Partnership, and the determination of their
compensation and other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems
necessary or appropriate;
(12) the formation of, or acquisition of an interest in,
and the contribution of property to, any further
limited or general partnerships, joint ventures or
other relationships that it deems desirable
(including, without limitation, the acquisition of
interests in, and the contributions of property to,
its Subsidiaries and any other Person in which it has
an equity investment from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the
settlement, compromise, submission to arbitration or
any other form of dispute resolution, or abandonment
of, any claim, cause of action, liability, debt or
damages, due or owing to or from the Partnership, the
commencement or defense of suits, legal proceedings,
administrative proceedings, arbitration or other
forms of dispute resolution, and the representation
of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other
forms of dispute resolution, the incurring of legal
expense, and the indemnification of any Person
against liabilities and contingencies to the extent
permitted by law;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its
Subsidiaries or any other Person (including, without
limitation, the contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value of any
Partnership property distributed in kind using such
reasonable method of valuation as the General Partner
may adopt;
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(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited
power of attorney, of any right, including the right
to vote, appurtenant to any asset or investment held
by the Partnership;
(17) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or
in connection with any Subsidiary of the Partnership
or any other Person in which the Partnership has a
direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of any
Person in which the Partnership does not have an
interest pursuant to contractual or other
arrangements with such Person; and
(19) the making, execution and delivery of any and all
deeds, leases, notes, mortgages, deeds of trust,
security agreements, conveyances, contracts,
guarantees, warranties, indemnities, waivers,
releases or legal instruments or agreements in
writing necessary or appropriate, in the judgment of
the General Partner, for the accomplishment of any of
the powers of the General Partner enumerated in this
Agreement.
(20) the issuance of additional Partnership Units, as
appropriate, in connection with Capital Contributions
by Additional Limited Partners and additional Capital
Contributions by Partners pursuant to Article 4
hereof.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement
(except as provided in Section 7.3), the Act or any applicable law, rule or
regulation, to the fullest extent permitted under the Act or other applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.
C. The General Partner may cause the Partnership to establish and
maintain at any and all times working capital accounts and other cash or similar
balances in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.
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D. In exercising its authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner of any action taken by it; provided that, if the
General Partner decides to refinance (directly or indirectly) any outstanding
indebtedness of the Partnership, the General Partner shall use reasonable
efforts to structure such refinancing in a manner that minimizes any adverse tax
consequences therefrom to the Limited Partners, and provided further that, in
deciding whether or not to dispose of any property that represents more than one
percent of the Partnership's total assets, the General Partner shall consider in
good faith the income tax consequences of such disposition for both the General
Partner and the Limited Partners. The General Partner and the Partnership shall
not have liability to a Limited Partner under any circumstances as a result of
an income tax liability incurred by such Limited Partner as a result of an
action (or inaction) by the General Partner taken pursuant to its authority
under this Agreement and in accordance with the terms of Section 7.3.
Section 7.2 Certificate of Limited Partnership
Effective as of January 29, 1994, the General Partner filed the
Certificate with the Secretary of State of Delaware as required by the Act. The
General Partner shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be reasonable and necessary or appropriate for
the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and any other state, or the District of
Columbia, in which the Partnership may elect to do business or own property. To
the extent that such action is determined by the General Partner to be
reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all of the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state, or the District of Columbia, in which the Partnership may
elect to do business or own property. Subject to the terms of Section 8.5.A(4)
hereof, the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate or any amendment thereto to any
Limited Partner.
Section 7.3 Restrictions on General Partner Authority
A. The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written Consent
of Limited Partners holding a majority of the Percentage Interests of the
Limited Partners (including Limited Partner Percentage Interests held by the
Company), or such other percentage of the Limited Partners as may be
specifically provided for under a provision of this Agreement.
B. Except as provided in Article 13 hereof, the General Partner may not
cause the Partnership to engage in a Terminating Capital Transaction (including
by way of merger, consolidation or other combination with any other Person), or
enter into any other similar
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transaction (regardless of its form) that would result in the recognition of
significant taxable gain to Limited Partners (other than the Company), without
the Consent of Limited Partners holding 85% or more of the Percentage Interests
of the Limited Partners (including Limited Partner Percentage Interests held by
the Company).
Section 7.4 Reimbursement of the General Partner and the Company
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments, and allocations to which it may be entitled), the General Partner
shall not be compensated for its services as general partner of the Partnership.
B. The General Partner, shall be reimbursed on a monthly basis, or such
other basis as it may determine in its sole and absolute discretion, for all
expenses that it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership; provided that the amount of any such reimbursement
shall be reduced by any interest earned by the General Partner with respect to
bank accounts or other instruments or accounts held by it on behalf of the
Partnership. Such reimbursement shall be in addition to any reimbursement made
as a result of indemnification pursuant to Section 7.7 hereof.
C. As set forth in Section 4.3, the Company shall be treated as having
made a Capital Contribution in the amount of all expenses that it incurred
relating to the Company's initial public offering of REIT Shares.
D. In the event that the Company shall elect to purchase from its
shareholders REIT Shares for the purpose of delivering such REIT Shares to
satisfy an obligation under any dividend reinvestment program adopted by the
Company, any employee stock purchase plan adopted by the Company, or any similar
obligation or arrangement undertaken by the Company in the future, the purchase
price paid by the Company for such REIT Shares and any other expenses incurred
by the Company in connection with such purchase shall be considered expenses of
the Partnership and shall be reimbursed to the Company, subject to the condition
that: (i) if such REIT Shares subsequently are to be sold by the Company, the
Company shall pay to the Partnership any proceeds received by the Company for
such REIT Shares (provided that a transfer of REIT Shares for Units pursuant to
Section 8.6 would not be considered a sale for such purposes); and (ii) if such
REIT Shares are not retransferred by the Company within 30 days after the
purchase thereof, the Company, as General Partner, shall cause the Partnership
to cancel a number of Partnership Units held by the Company, as a Limited
Partner, equal to the product obtained by multiplying the Conversion Factor by
the number of such REIT Shares.
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Section 7.5 Outside Activities of the General Partner
The General Partner shall not directly or indirectly enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of Partnership Interests and the management of the business of
the Partnership, and such activities as are incidental thereto. The General
Partner and any Affiliates of the General Partner may acquire Limited Partner
Interests and shall be entitled to exercise all rights of a Limited Partner
relating to such Limited Partner Interests.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other Persons in which it has an equity investment and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
B. Except as provided in Section 7.5, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law as
the General Partner, in its sole and absolute discretion, believes are
advisable.
C. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are determined by the General Partner in
good faith to be fair and reasonable.
D. The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt, on behalf of the
Partnership, employee benefit plans, stock option plans, and similar plans
funded by the Partnership for the benefit of employees of the General Partner,
the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them
in respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any Subsidiaries of the Partnership.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, a right of first opportunity arrangement
and other conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General Partner, in
its sole and absolute discretion, believes are advisable.
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Section 7.7 Indemnification
A. To the fullest extent permitted by Delaware law, the Partnership
shall indemnify each Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without limitation,
attorneys fees and other legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership or the Company as set forth in
this Agreement, in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise. Without limitation, the foregoing indemnity
shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or
otherwise for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to), and the General Partner is hereby authorized and empowered, on behalf of
the Partnership, to enter into one or more indemnity agreements consistent with
the provisions of this Section 7.7 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of the
Partnership, and neither the General Partner nor any Limited Partner shall have
any obligation to contribute to the capital of the Partnership, or otherwise
provide funds, to enable the Partnership to fund its obligations under this
Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding shall be paid or reimbursed by the Partnership in advance of the
final disposition of the proceeding.
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity unless otherwise provided in a written agreement pursuant
to which such Indemnitees are indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall
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constitute fines within the meaning of Section 7.7; and actions taken or omitted
by the Indemnitee with respect to an employee benefit plan in the performance of
its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject any of the Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Section 7.7, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
Section 7.8 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its officers and directors shall not be
liable for monetary damages to the Partnership, any Partners or any Assignees
for losses sustained or liabilities incurred as a result of errors in judgment
or of any act or omission if the General Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership and the shareholders of the Company
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (except as otherwise provided herein)
in deciding whether to cause the Partnership to take (or decline to take) any
actions, and that the General Partner shall not be liable for monetary damages
for losses sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, provided that the General Partner
has acted in good faith.
C. Subject to its obligations and duties as General Partner set forth
in Section 7.1.A hereof, the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its
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agents. The General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by the General Partner in
good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's and its officers' and directors' liability
to the Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in acting, or
refraining from acting, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and duly appointed attorneys-in-fact. Each such attorney shall, to the
extent provided by the General Partner in the power of attorney, have full power
and authority to do and perform all and every act and duty which is permitted or
required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the Company to continue to
qualify as a REIT; or (ii) to avoid the Company incurring any taxes under
Section 857 or Section 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner,
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individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine, including
Affiliates of the General Partner. The General Partner hereby declares and
warrants that any Partnership assets for which legal title is held in the name
of the General Partner or any nominee or Affiliate of the General Partner shall
be held by the General Partner for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its best efforts to cause beneficial and record title
to such assets to be vested in the Partnership as soon as reasonably
practicable. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.
Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect; (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership; and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
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ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, agent or trustee of the
General Partner, the Partnership or any of their Affiliates, in their capacity
as such) shall take part in the operation, management or control (within the
meaning of the Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. The transaction of any such business by the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such, shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section 7.6.E hereof
and any other agreements entered into by a Limited Partner or its Affiliates
with the Partnership or any of its Subsidiaries, any Limited Partner (other than
the Company) and any officer, director, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner (other than the Company) shall be entitled to
and may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
that are in direct competition with the Partnership or that are enhanced by the
activities of the Partnership. Neither the Partnership nor any Partners shall
have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee. None of the Limited Partners (other than the
Company) nor any other Person shall have any rights by virtue of this Agreement
or the Partnership relationship established hereby in any business ventures of
any other Person and such Person shall have no obligation pursuant to this
Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section 8.6, no
Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of
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distributions made pursuant to this Agreement or upon termination of the
Partnership as provided herein. Except to the extent provided by Exhibit C
hereof or as otherwise expressly provided in this Agreement, no Limited Partner
or Assignee shall have priority over any other Limited Partner or Assignee,
either as to the return of Capital Contributions or as to profits, losses or
distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. In addition to the other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.C hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense (including such copying and administrative charges as the General
Partner may establish from time to time):
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by the Company pursuant to the
Securities Exchange Act of 1934;
(2) to obtain a copy of the Partnership's federal, state
and local income tax returns for each Partnership
Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each
Partner;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with
executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information regarding the
amount of cash and a description and statement of any
other property or services contributed by each
Partner and which each Partner has agreed to
contribute in the future, and the date on which each
became a Partner.
B. The Partnership shall notify each Limited Partner, upon request, of
the then current Conversion Factor.
C. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner reasonably believes to
be in the nature of trade secrets or other
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information, the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business; or (ii) the Partnership is required by law or by agreements
with an unaffiliated third party to keep confidential.
Section 8.6 Redemption Right
A. Subject to Sections 8.6.B, 8.6.C and 15.15 hereof, each Limited
Partner (other than the Company) shall have the right (the "Redemption Right")
to require the Partnership to redeem on a Specified Redemption Date all or a
portion of the Common Units held by such Limited Partner at a redemption price
equal to and in the form of the Cash Amount to be paid by the Partnership. The
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered
to the Partnership (with a copy to the Company) by the Limited Partner who is
exercising the redemption right (the "Redeeming Partner"); provided, however,
that the Partnership shall not be obligated to satisfy such Redemption Right if
the Company elects to purchase the Common Units subject to the Notice of
Redemption pursuant to Section 8.6.B. A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Common Units or, if such
Limited Partner holds less than one thousand (1,000) Common Units, all of the
Common Units held by such Partner. The Redeeming Partner shall have no right,
with respect to any Common Units so redeemed, to receive any distributions paid
on or after the Specified Redemption Date. The Assignee of any Limited Partner
may exercise the rights of such Limited Partner pursuant to this Section 8.6,
and such Limited Partner shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such Assignee. In
connection with any exercise of such rights by an Assignee on behalf of a
Limited Partner, the Cash Amount shall be paid by the Partnership directly to
such Assignee and not to such Limited Partner.
B. Notwithstanding the provisions of Section 8.6.A, a Limited Partner
that exercises the Redemption Right shall be deemed to have offered to sell the
Common Units described in the Notice of Redemption to the Company, and the
Company may, in its sole and absolute discretion, elect to purchase directly and
acquire such Common Units by paying to the Redeeming Partner either the Cash
Amount or the REIT Shares Amount, as elected by the Company (in its sole and
absolute discretion), on the Specified Redemption Date, whereupon the Company
shall acquire the Common Units offered for redemption by the Redeeming Partner
and shall be treated for all purposes of this Agreement as the owner of such
Common Units. If the Company shall elect to exercise its right to purchase
Common Units under this Section 8.6.B with respect to a Notice of Redemption, it
shall so notify the Redeeming Partner within five Business Days after the
receipt by it of such Notice of Redemption. Unless the Company (in its sole and
absolute discretion) shall exercise its right to purchase Common Units from the
Redeeming Partner pursuant to this Section 8.6.B, the Company shall not have any
obligation to the Redeeming Partner or the Partnership with respect to the
Redeeming Partner's exercise of the Redemption Right. In the event the Company
shall exercise its right to purchase Common Units with respect to the exercise
of a Redemption Right in the manner
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described in the first sentence of this Section 8.6.B, the Partnership shall
have no obligation to pay any amount to the Redeeming Partner with respect to
such Redeeming Partner's exercise of such Redemption Right, and each of the
Redeeming Partner, the Partnership, and the Company shall treat the transaction
between the Company and the Redeeming Partner, for federal income tax purposes,
as a sale of the Redeeming Partner's Common Units to the Company. Each Redeeming
Partner agrees to execute such documents as the Company may reasonably require
in connection with the issuance of REIT Shares upon exercise of the Redemption
Right.
C. Notwithstanding the provisions of Section 8.6.A and Section 8.6.B, a
Partner shall not be entitled to exercise the Redemption Right pursuant to
Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date by the Company pursuant to Section 8.6.B (regardless of whether
or not the Company would in fact exercise its rights under Section 8.6.B) would
be prohibited under the Articles of the Company.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership those records and documents required to be maintained
by the Act and other books and records deemed by the General Partner to be
appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 9.3 hereof. Any records maintained by or on behalf of the Partnership
in the regular course of its business may be kept on, or be in the form of,
punch cards, magnetic tape, photographs, micrographics or any other information
storage device, provided that the records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of
the Partnership shall be maintained, for financial and tax reporting purposes,
on an accrual basis in accordance with generally accepted accounting principles,
or such other basis as the General Partner determines to be necessary or
appropriate.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each
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Limited Partner as of the close of the Partnership Year, an annual report
containing financial statements of the Partnership, or of the Company if such
statements are prepared solely on a consolidated basis with the Company, for
such Partnership Year, presented in accordance with generally accepted
accounting principles, such statements to be audited by a nationally recognized
firm of independent public accountants selected by the General Partner.
B. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall cause to be mailed to each
Limited Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the Company, if such
statements are prepared solely on a consolidated basis with the Company, and
such other information as may be required by applicable law or regulation, or as
the General Partner determines to be appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely filing
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. Notwithstanding the above, in making any such tax election
the General Partner shall take into account the tax consequences to the Limited
Partners resulting from any such election. The General Partner shall make such
tax elections on behalf of the Partnership as the Limited Partners holding a
majority of the Percentage Interests of the Limited Partners (excluding Limited
Partner Interests held by the Company) request, provided that the General
Partner believes that such election is not adverse to the interests of the
General Partner, including its interest in preserving its qualification as a
REIT under the Code. The General Partner intends to elect the so-called
"traditional method" of making Section 704(c) allocations pursuant to
Regulations Section 1.704-3 with respect to property contributed as of the date
hereof. The General Partner shall have the right to seek to revoke any tax
election it makes (including, without limitation, the election under Section 754
of the Code) upon the General Partner's determination, in its sole and absolute
discretion, that such revocation is in the best interests of the Partners.
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Section 10.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6230(e) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address, taxpayer identification number, and
profit interest of each of the Limited Partners and the Assignees; provided,
however, that such information is provided to the Partnership by the Limited
Partners and the Assignees.
B. The tax matters partner is authorized, but not required.
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings
for the adjustment of Partnership items required to
be taken into account by a Partner for income tax
purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"),
and in the settlement agreement the tax matters
partner may expressly state that such agreement shall
bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within
the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the
authority to enter into a settlement agreement on
behalf of such Partner; or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8) of the
Code) or a member of a "notice group" (as defined in
Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item
required to be taken into account by a Partner for
tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition
for readjustment with the Tax Court or the filing of
a complaint for refund with the United States Claims
Court or the District Court of the United States for
the district in which the Partnership's principal
place of business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment
with the IRS and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with
respect to such request;
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(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken account of by a Partner
for tax purposes, or an item affected by such item;
and
(6) to take any other action on behalf of the Partners or
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters partner
in performing its duties as such (including legal and accounting fees and
expenses) shall be borne by the Partnership. Nothing herein shall be construed
to restrict the Partnership from engaging an accounting firm to assist the tax
matters partner in discharging its duties hereunder, so long as the compensation
paid by the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as provided
in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold
from, or pay on behalf of or with respect to, such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited
Partner; or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a
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security interest in such Limited Partner's Partnership Interest to secure such
Limited Partner's obligation to pay to the Partnership any amounts required to
be paid pursuant to this Section 10.5. In the event that a Limited Partner fails
to pay any amounts owed to the Partnership pursuant to this Section 10.5 when
due, the General Partner may, in its sole and absolute discretion, elect to make
the payment to the Partnership on behalf of such defaulting Limited Partner, and
in such event shall be deemed to have loaned such amount to such defaulting
Limited Partner and shall succeed to all rights and remedies of the Partnership
as against such defaulting Limited Partner. Without limitation, in such event
the General Partner shall have the right to receive distributions that would
otherwise be distributable to such defaulting Limited Partner until such time as
such loan, together with all interest thereon, has been paid in full, and any
such distributions so received by the General Partner shall be treated as having
been distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner hereunder shall bear interest at the lesser
of (A) the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal,
plus four (4) percentage points, or (B) the maximum lawful rate of interest on
such obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. The term "transfer," when used in this Article 11 with respect to a
Partnership Unit, shall be deemed to refer to a transaction by which the General
Partner purports to assign all or any part of its General Partner Interest to
another Person or by which a Limited Partner purports to assign all or any part
of its Limited Partner Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise. The term "transfer" when used in this
Article 11 does not include any redemption of Partnership Interests by the
Partnership from a Limited Partner or any acquisition of Partnership Units from
a Limited Partner by the Company pursuant to Section 8.6 or an exchange pursuant
to Section 9 of the Series B Certificate of Designations or Section 9 of the
Series C Certificate of Designations.
B. No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article 11
and Section 15.15. Any transfer or purported transfer of a Partnership Interest
not made in accordance with this Article 11 and Section 15.15 shall be null and
void.
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Section 11.2 Transfer of the Company's General Partner Interest and
Limited Partner Interest
The Company may not transfer any of its General Partner Interest or
withdraw as General Partner, or transfer any of its Limited Partner Interest,
unless Limited Partners holding a majority of the Percentage Interests of the
Limited Partners (other than Limited Partner Interests held by the Company)
consent to such transfer or withdrawal or such transfer is to an entity which is
wholly-owned by the Company and is a Qualified REIT Subsidiary under Section
856(i) of the Code.
Section 11.3 Limited Partners' Rights to Transfer
A. Subject to the provisions of Sections 11.3.C, 11.3.D, 11.3.E, 11.4,
and 15.15 a Limited Partner (other than the Company) may transfer, with or
without the consent of the General Partner, all or any portion of its
Partnership Interest, or any of such Limited Partner's economic rights as a
Limited Partner.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all of the rights of a Limited Partner, but
not more rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer by a Limited Partner
of its Partnership Units if, in the opinion of legal counsel to the Partnership,
such transfer would require filing of a registration statement under the
Securities Act of 1933 or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Units.
D. No transfer by a Limited Partner of its Partnership Units may be
made to any Person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership being treated as an association taxable as a
corporation, or (ii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code.
E. No transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability, without the consent of the General Partner,
in its sole and absolute discretion; provided that as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Cash Amount
any Partnership Units in
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which a security interest is held simultaneously with the time at which such
lender would be deemed to be a partner in the Partnership for purposes of
allocating liabilities to such lender under Section 752 of the Code.
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a transferee
as a Limited Partner in his place. The General Partner shall, however, have the
right to consent to the admission of a transferee of the interest of a Limited
Partner pursuant to this Section 11.4 as a Substituted Limited Partner, which
consent may be given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited Partner
in accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee as a Substituted Limited
Partner, as described in Section 11.4, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be deemed to have had
assigned to it, and shall be entitled to receive distributions from the
Partnership and the share of Net Income, Net Losses, Recapture Income, and any
other items, gain, loss deduction and credit of the Partnership attributable to
the Partnership Units assigned to such transferee, but shall not be deemed to be
a holder of Partnership Units for any other purpose under this Agreement, and
shall not be entitled to vote such Partnership Units in any matter presented to
the Limited Partners for a vote (such Partnership Units being deemed to have
been voted on such matter in the same proportion as all other Partnership Units
held by Limited Partners are voted). In the event any such transferee desires to
make a further assignment of any such Partnership Units, such transferee shall
be subject to all of the provisions of this Article 11 to the same extent and in
the same manner as any Limited Partner desiring to make an assignment of
Partnership Units.
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Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other than as a
result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 or pursuant to redemption of all of its
Partnership Units under Section 8.6 or under Section 9 of the Series B
Certificate of Designations or Section 9 of the Series C Certificate of
Designations.
B. Any Limited Partner who shall transfer all of its Partnership Units
in a transfer permitted pursuant to this Article 11 shall cease to be a Limited
Partner upon the admission of all Assignees of such Partnership Units as
Substitute Limited Partners. Similarly, any Limited Partner who shall transfer
all of its Partnership Units pursuant to a redemption of all of its Partnership
Units under Section 8.6 or under Section 9 of the Series B Certificate of
Designations or Section 9 of the Series C Certificate of Designations shall
cease to be a Limited Partner.
C. Except as otherwise authorized by the General Partner, transfers
pursuant to this Article 11 may only be made on the first day of a fiscal
quarter of the Partnership; provided, however, that a Series B Preferred
Unitholder or Series C Preferred Unitholder, respectively, may make a transfer
to an Affiliate of such Series B Preferred Unitholder or Series C Preferred
Unitholder in accordance with the provisions of Section 11.3A hereof without
regard to such limitation.
D. If any Partnership Interest is transferred or assigned during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or redeemed or transferred pursuant to Section 8.6
or under Section 9 of the Series B Certificate of Designations or Section 9 of
the Series C Certificate of Designations on any day other than the first day of
a Partnership Year, then Net Income, Net Losses, each item thereof and all other
items attributable to such interest for such Partnership Year shall be divided
and allocated between the transferor Partner and the transferee Partner by
taking into account their varying interests during the Partnership Year in
accordance with Section 706(d) of the Code, using the interim closing of the
books method. Solely for purposes of making such allocations, each of such items
for the calendar month in which the transfer or assignment occurs shall be
allocated to the transferee Partner, and none of such items for the calendar
month in which a redemption occurs shall be allocated to the Redeeming Partner.
All distributions of Available Cash attributable to such Partnership Unit with
respect to which the Partnership Record Date or Series B Preferred Unit
Partnership Record Date (as defined in the Series B Certificate of Designations)
or Series C Preferred Unit Partnership Record Date (as defined in the Series C
Certificate of Designations), as the case may be, are before the date of such
transfer, assignment, or redemption shall be made to the transferor Partner or
the Redeeming Partner, as the case may be, and in the case of a transfer or
assignment other than a redemption, all distributions of Available Cash
thereafter attributable to such Partnership Unit shall be made to the transferee
Partner.
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ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner Interest pursuant to Section
11.2 hereof who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring General Partner and such successor
as provided in Section 11.6.D hereof.
Section 12.2 Admission of Additional Limited Partners
A. After the date hereof, a Person who makes a Capital Contribution to
the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner in order to effect such Person's admission as an Additional
Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership on
any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using the interim closing of the books method. Solely for
purposes of making such allocations, each of such item for the calendar month in
which an admission of any Additional Limited Partner occurs shall be allocated
among all of the Partners and Assignees, including such Additional Limited
Partner. All distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such admission shall be
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made solely to Partners and Assignees, other than the Additional Limited
Partner, and all distributions of Available Cash thereafter shall be made to all
of the Partners and Assignees, including such Additional Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, only upon the first to occur of any of the
following (each a "Liquidating Event"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the Act
(other than an event of bankruptcy), unless, within ninety (90) days after such
event of withdrawal a majority in interest of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General Partner;
C. from and after the date of this Agreement through December 31, 2053,
an election to dissolve the Partnership made by the General Partner with the
Consent of Partners holding 85% of the Percentage Interests of the Limited
Partners (including Limited Partner Percentage Interests held by the Company);
D. on or after January 1, 2054, an election to dissolve the Partnership
made by the General Partner, in its sole and absolute discretion;
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E. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
F. the sale of all or substantially all of the assets and properties of
the Partnership; or
G. a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute General Partner.
Section 13.2 Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner, or, in the event there is no remaining General Partner, any
Person elected by a majority in interest of the Limited Partners (the General
Partner or such other Person being referred to herein as the "Liquidator"),
shall be responsible for overseeing the winding up and dissolution of the
Partnership and shall take full account of the Partnership's liabilities and
property and the Partnership property shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom
(which may, to the extent determined by the General Partner, include shares of
common stock in the Company) shall be applied and distributed in the following
order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General
Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other
Partners; and
(4) The balance, if any, to the General Partner and
Limited Partners in accordance with their Capital
Accounts, after giving effect to all contributions,
distributions, and allocations for all periods.
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The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
(1) distributed to a trust established for the benefit of
the General Partner and Limited Partners for the
purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or
obligations of the Partnership or the General Partner
arising out of or in connection with the Partnership.
The assets of any such trust shall be distributed to
the General Partner and Limited Partners from time to
time, in the reasonable discretion of the Liquidator,
in the same proportions as the amount distributed to
such trust by the Partnership would otherwise have
been distributed to the General Partner and Limited
Partners pursuant to this Agreement; or
(2) withheld or escrowed to provide a reasonable reserve
for Partnership liabilities (contingent or otherwise)
and to reflect the unrealized portion of any
installment obligations owed to the Partnership,
provided that such withheld or escrowed amounts shall
be distributed to the General Partner and Limited
Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.
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Section 13.3 Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
If any Partner has a deficit balance in his Capital Account (after giving effect
to all contributions, distributions and allocations for all taxable years,
including the year during which such liquidation occurs), such Partner shall
have no obligation to make any contribution to the capital of the Partnership
with respect to such deficit, and such deficit shall not be considered a debt
owed to the Partnership or to any other Person for any purpose whatsoever.
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the event
the Partnership is considered "liquidated" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts pursuant to Exhibit B hereto, the Partnership shall
be deemed to have distributed the property in kind to the General Partner and
Limited Partners, who shall be deemed to have assumed and taken such property
subject to all Partnership liabilities, all in accordance with their respective
Capital Accounts. Immediately thereafter, the General Partner and Limited
Partners shall be deemed to have recontributed the Partnership property in kind
to the Partnership, which shall be deemed to have assumed and taken such
property subject to all such liabilities.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would,
but for the provisions of an election or objection by one or more Partners
pursuant to Section 13.1, result in a dissolution of the Partnership, the
General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners.
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Section 13.7 Termination of Partnership and Cancellation of Certificate
of Limited Partnership
Upon the completion of the liquidation of the Partnership's assets, as
provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. Amendments to this Agreement may be proposed by the General Partner
or by any Limited Partners (other than the Company) holding twenty percent (20%)
or more of the Partnership Interests. Following such proposal, the General
Partner shall submit any proposed amendment to the Limited Partners. The General
Partner shall seek the written vote of the Partners on the proposed amendment or
shall call a meeting to vote thereon and to transact any other business that it
may deem appropriate. For purposes of obtaining a written vote, the General
Partner may require a response within a reasonable specified time, but not less
than fifteen (15) days, and failure to respond in such time period shall
constitute a vote which is consistent with the General Partner's recommendation
with respect to the proposal. Except as provided in Section 7.3.A, 7.3.B,
13.1.C, 14.1.B, 14.1.C or 14.1.D, a proposed amendment shall be adopted and be
effective as an amendment hereto if it is approved by the General Partner and it
receives the Consent of Partners holding a majority of the Percentage Interests
of the Limited Partners (including Limited Partner Percentage Interests held by
the Company).
B. Notwithstanding Section 14.1.A, the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
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(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General
Partner or any Affiliate of the General Partner for
the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this
Agreement;
(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to
Section 4.2.A hereof;
(4) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited
Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in
this Agreement not inconsistent with law or with
other provisions, or make other changes with respect
to matters arising under this Agreement that will not
be inconsistent with law or with the provisions of
this Agreement;
(5) to satisfy any requirements, conditions, or
guidelines contained in any order, directive,
opinion, ruling or regulation of a federal or state
agency or contained in federal or state law; and
(6) to modify, as required by the Department of Housing
and Urban Development or any successor department,
agency or delegee, Section 15.13 in connection with
the acquisition of any properties subject to loans
held by or insured by The Secretary of Housing and
Urban Development (or any successor department,
agency or delegee) or in obtaining such financing
(for example, by adding additional properties to the
definition of "insured projects" or by conforming the
restrictions contained in Section 15.13 to then
current regulatory requirements).
The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1.B is taken.
C. Notwithstanding Section 14.1.A and 14.1.B hereof, this Agreement
shall not be amended without the Consent of each Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the Partnership
into a General Partner Interest; (ii) modify the limited liability of a Limited
Partner in a manner adverse to such Limited Partner; (iii) alter rights of the
Partner to receive distributions pursuant to Article 5 or Article 13, or the
allocations specified in Article 6 (except as permitted pursuant to Section 4.2
and Section 14.1.B(3) hereof); (iv) alter or modify the Redemption Right and
REIT Shares Amount as set forth in Section 8.6 and the related definitions, in a
manner adverse to such Partner; (v) cause the termination of the Partnership
prior to the time set forth in Sections 2.5 or 13.1; or (vi)
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amend this Section 14.1.C. Further, no amendment may alter the restrictions on
the General Partner's authority set forth in Section 7.3.B without the Consent
specified in that section.
D. Notwithstanding Section 14.1.A or Section 14.1.B hereof, the General
Partner shall not amend Sections 4.2.A, 7.5, 7.6, 11.2 or 14.2 without the
Consent of Limited Partners holding a majority of the Percentage Interests of
the Limited Partners, excluding Limited Partner Interests held by the General
Partner.
Section 14.2 Meetings of the Partners
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners (other than the Company) holding twenty percent (20%) or more
of the Partnership Interests. The request shall state the nature of the business
to be transacted. Notice of any such meeting shall be given to all Partners not
less than seven (7) days nor more than thirty (30) days prior to the date of
such meeting. Partners may vote in person or by proxy at such meeting. Whenever
the vote or Consent of the Partners is permitted or required under this
Agreement, such vote or Consent may be given at a meeting of the Partners or may
be given in accordance with the procedure prescribed in Section 14.1.A hereof.
Except as otherwise expressly provided in this Agreement, the Consent of holders
of a majority of the Percentage Interests held by Limited Partners (including
Limited Partnership Interests held by the Company) shall control.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by a majority of the Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement).
Such consent may be in one instrument or in several instruments, and shall have
the same force and effect as a vote of a majority of the Percentage Interests of
the Partners (or such other percentage as is expressly required by this
Agreement). Such consent shall be filed with the General Partner. An action so
taken shall be deemed to have been taken at a meeting held on the effective date
so certified.
C. Each Limited Partner may authorize any Person or Persons to act for
him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it, such
revocation to be effective upon the Partnership's receipt of written notice of
such revocation from the Limited Partner executing such proxy.
D. Each meeting of the Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate. Without limitation,
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meetings of Partners may be conducted in the same manner as meetings of the
shareholders of the Company and may be held at the same time, and as part of,
meetings of the shareholders of the Company.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other address
of which the Partner shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
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Section 15.6 Creditors
Other than as expressly set forth herein with respect to the
Indemnities, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 Entire Agreement
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto.
Section 15.12 Guaranty by the Company
The Company unconditionally and irrevocably guarantees to the Limited
Partners the performance by the General Partner of the General Partner's
obligations under this Agreement. This guarantee is exclusively for the benefit
of the Limited Partners and shall not extend to the benefit any creditor of the
Partnership.
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Section 15.13 Special Provisions Relating to HUD Insured Loans
So long as the Secretary of Housing and Urban Development, or his
successors or assigns, is the insurer or holder of the deeds of trust on
Foxcroft East Project Number 053-35213-PM, Westbury Park Project Number
053-35485-PM, Sherwood Colony Project Number 053-11077-REF/CON, Eastchester
Ridge Project Number 053-35277-PM, Creekside Project Number 053-353310-PM,
Westbury Place Project Number 054-35523 (collectively, the "insured projects"),
no amendment to this Agreement which results in any of the following shall be of
force or effect without the prior written consent of the Department of Housing
and Urban Development ("HUD"): (1) any amendment which modifies the duration of
this Agreement; (2) any amendment which results in the requirement that a HUD
prior participation certification be obtained for any additional party; (3) any
amendment which in any way affects the deeds of trust or mortgages encumbering
the insured projects or the regulatory agreements related thereto. In the event
of a conflict between this Section and any other Section of this Agreement, this
Section shall control.
The Partnership is authorized to execute notes and deeds of trust or
mortgages in order to secure loans (or acquire properties subject to loans) to
be insured by HUD and to execute related regulatory agreements and other
documents required by HUD in connection with such loans or acquisitions.
Any incoming general partner shall as a condition of receiving an
interest in the Partnership agree to be bound by the notes, deeds of trust or
mortgages, and related regulatory agreements affecting the insured projects and
other documents required in connection with the insured loans to the same extent
and on the same terms as the other general partners.
Notwithstanding any other provisions of this Agreement, upon any
dissolution, no title or right to possession and control of the insured
projects, and no right to collect the rents therefrom shall pass to any person
who is not bound by the then applicable regulatory agreements in a manner
satisfactory to HUD.
Notwithstanding any other provision of this Agreement, the regulatory
agreements affecting the insured projects shall be binding upon the Partnership,
its successors and assigns. The Partnership shall comply in every respect with
the regulatory agreements affecting the insured projects and all applicable
federal, state and local statutes and regulations, including HUD regulations
without limitation.
Notwithstanding any other provision of this Agreement, in the event
that any provision of this Agreement conflicts with any provisions of any then
applicable regulatory agreement relating to an insured project, the provision of
such regulatory agreement shall control.
So long as the Secretary of Housing and Urban Development, or his
successors or assigns, is the insurer or holder of a deed of trust or a mortgage
on any of the insured projects,
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this Partnership shall not be voluntarily dissolved without the prior written
approval of the Secretary of Housing and Urban Development.
Notwithstanding any provision of Article 5 or Article 13 hereof to the
contrary, no distribution of cash generated from the operation or disposition of
any property encumbered by a HUD-insured loan or loan held by HUD will be made
to anyone except in compliance with all HUD rules and regulations regarding the
distribution of "surplus cash" and the requirements of any applicable regulatory
agreement. For purposes hereof, the phrase, "surplus cash" with respect to any
project encumbered by a HUD-insured loan or loan held by HUD means any cash
remaining after
(1) the payment of:
(i) All sums due or currently required to be paid under
the terms of any mortgage or note insured or held by
HUD;
(ii) All amounts required to be deposited in the reserve
fund for replacements;
(iii) All obligations of the project other than the insured
mortgage unless funds for payment are set aside or
deferment of payment has been approved by HUD; and
(2) the segregation of:
(i) An amount equal to the aggregate of all special funds
required to be maintained by the project; and
(ii) All tenant security deposits held.
Section 15.14 Special Provisions Relating to Xxxxxxxx Limited Partners
For purposes of this Section 15.14, the term "Xxxxxxxx Limited
Partners" shall mean and refer to those persons, firms and entities as noted on
Exhibit A attached hereto, together with all Constitutive Partners who are
subsequently admitted as Additional Limited Partners to the Partnership. The
phrase "Constitutive Partners" and any other capitalized term used in this
Section 15.14 which is not defined in this Agreement shall, for purposes of this
Section 15.14 have the meaning attributed to such term in that certain Agreement
to Contribute between the Partnership, the Company and the Owners listed on
Schedule 1 attached thereto and the Xxxxxxxx Partnerships listed on Schedule 2
attached thereto dated as of February 13, 1995, as amended (the "Xxxxxxxx
Contribution Agreement").
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(a) Each Xxxxxxxx Limited Partner has the same Redemption
Rights as all other Limited Partners. In the event such
Redemption Rights are exercised, and the Company elects to
fulfill its obligations by paying the REIT Shares Amount, the
Partnership shall have the right to require such Xxxxxxxx
Limited Partners to deliver a subscriber questionnaire in the
form set forth in Schedule 13 to the Xxxxxxxx Contribution
Agreement.
(b) Except to the extent otherwise required by the Code, the
"traditional method" provided for in Regulation sec.
1.074-3(b) shall apply to all tax allocations governed by Code
sec. 704(c) and all "reverse Section 704(c) allocations" with
respect to the Projects.
(c) Subject to the provisions of Section 3.17 and Section 3.11(b)
of the Xxxxxxxx Contribution Agreement, the Partnership
acknowledges that the Direct Owners intend in the future to
distribute their Partnership Units to their Constitutive
Partners. Upon such distributions, such Constitutive Partners
shall constitute Additional Limited Partners with all rights
attendant thereto and such distributing Direct Owner shall
cease to constitute Limited Partners to the extent such Direct
Owners' Partnership Units are so distributed, in each case
upon such distribution. The Partnership and the Company shall
execute and deliver such documents as may be reasonably
requested by the Direct Owners or such Constitutive Partners
in connection therewith.
(d) All distributions being made to the Xxxxxxxx Limited Partners
for the Partnership's fiscal quarter in which the closing (or
if more than one, then each such closing) under the Xxxxxxxx
Contribution Agreement occurs will be prorated consistently
with the provisions of Section 6.5 of the Xxxxxxxx
Contribution Agreement.
Section 15.15 Incorporation of Certain Lock-Up Provisions
Any agreement (a "Lock-Up Agreement") between the Company and any
Additional Limited Partners relating to the prohibition without the prior
written consent of the Company, during the Lock-Up Period (as defined in the
relevant Lock-Up Agreement) or any similar period set forth in the relevant
Lock-Up Agreement, of any offer, sale, contract for sale, hypothecation, pledge,
redemption, attempt to redeem, grant of an option, right or warrant to purchase
or otherwise dispose of, directly or indirectly, any Partnership Units is deemed
to be incorporated herein by reference.
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ARTICLE 16
CONSOLIDATION, MERGER OR SALE OF ASSETS OF THE COMPANY
Section 16.1 Triggering Events
For the purposes of this Article 16, each of the following events shall
be deemed to be a "Triggering Event": (w) if the Company consolidates with, or
merges into, any other Person, and the Company is not the continuing or
surviving corporation of such consolidation or merger, (x) if any Person
consolidates with, or merges into, the Company, and the Company is the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
REIT Shares are converted into stock or other securities of any other Person or
cash or any other property, (y) if any Person becomes the Beneficial Owner (as
hereinafter defined) of 33.3% or more of the outstanding REIT Shares or (z) if
the Company sells or otherwise transfers (or one or more of its Subsidiaries
sells or otherwise transfers) to any Person or Persons, in one or more
transactions, assets aggregating more than 50% of the value of the assets (based
on either the fair market value of the assets or cash flow generated by the
assets) of the Company or the Partnership. "Beneficial Owner" means any Person
who, together with such Person's Affiliates (as defined in Rule 12b-2 of the
Securities Exchange Act of 1934 as in effect on the date this Article 16 shall
be adopted (including any rules and regulations thereunder) (the "Exchange
Act")) and associates (as defined in Rule 12b-2 of the Exchange Act), (i) would
be considered a "beneficial owner" under Rule 13d-3 of the Exchange Act, other
than (A) as a result of a revocable proxy given in response to a proxy or
consent solicitation made pursuant to, and in accordance with, the Exchange Act
or (B) as would not be reportable by such Person on Schedule 13D under the
Exchange Act, (ii) has entered into any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, owning, voting
(except pursuant to a revocable proxy or consent solicitation made pursuant to,
and in accordance with, the Exchange Act) or disposing of REIT Shares or (iii)
has the right to acquire (whether such right is exercisable immediately or only
after the passage of time or upon the satisfaction of conditions) REIT Shares
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, rights,
warrants or options or otherwise.
Section 16.2 From and After the Occurrence of a Triggering Event
Effective on the date of each Triggering Event, the Redemption Right
shall be adjusted as provided in this Section 16.2.
A. From and after the occurrence of a Triggering Event (each such
occurrence, a "Trigger Occurrence") and until the occurrence, if any, of a
subsequent Triggering Event (in which case a further adjustment shall be made
pursuant to this Section 16.2), each and every reference contained in this
Agreement to a "REIT Share" or "REIT Shares" shall be deemed to be a reference
to a share or shares, respectively (each, a "Replacement Share"; collectively,
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"Replacement Shares"), of: (i) if, as a result of any Triggering Event, all of
the REIT Shares are converted solely into Registered Common Stock (as
hereinafter defined), such Registered Common Stock and (ii) in all other cases,
the common stock, or, if such Person shall have no common stock, the equity
securities or other equity interests having power to control or direct the
management (the "Common Stock") of (a) in the event of a Triggering Event
described in clause (w) or (x) of the first sentence of Section 16.1, (1) the
Person that is the issuer of any securities into which the REIT Shares are
converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer who has the highest Market Capitalization (as hereinafter
defined) and (2) if no securities are so issued, the Person that is the other
party to such merger or consolidation, or if there is more than one such Person,
the Person who has the highest Market Capitalization or (b) in the event of a
Triggering Event described in clause (y) or (z) of the first sentence of Section
16.1, the Person that is the party becoming the Beneficial Owner of the largest
percentage of the outstanding REIT Shares or receiving the largest portion of
the value of assets (with such value determined based on either the fair market
value of the assets or the cash flow generated by the assets) transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions or if the Person becoming the Beneficial
Owner of the largest portion of the REIT Shares or receiving the largest portion
of the assets cannot be determined, whichever Person has the highest Market
Capitalization; provided, however, that in any such case, (1) if the Common
Stock of such Person is not at such time and has not been continuously over the
preceding twelve-month period registered ("Registered Common Stock") under
Section 12 of the Exchange Act, or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person that has Registered
Common Stock outstanding, "Replacement Shares" shall mean shares of the Common
Stock of such other Person; (2) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
a direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Stock
outstanding, "Replacement Shares" shall mean shares of the Common Stock of the
ultimate parent entity of such first-mentioned Person; (3) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and one of such other Persons has Registered Common Stock
outstanding, "Replacement Shares" shall mean shares of the Common Stock of
whichever of such other Persons is the issuer having the highest Market
Capitalization; and (4) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and none of such other Persons
have Registered Common Stock outstanding, "Replacement Shares" shall mean shares
of the Common Stock of whichever ultimate parent entity is the corporation
having the highest aggregate shareholders' equity or, if no such ultimate parent
entity is a corporation, shall be deemed to refer to shares of the Common Stock
of whichever ultimate parent entity is the entity having the greatest net
assets. Any issuer of "Replacement Shares" shall be referred to as an "Issuer".
"Market Capitalization" means the dollar figure equal to the product of the
number of shares of Common Stock issued and outstanding on the date of the
Trigger Occurrence in question, on a fully diluted basis, not held by Affiliates
(as defined under the Exchange Act) multiplied by the
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Average Trading Price (as hereinafter defined). The holders of a majority of the
Common Units held by the Limited Partners (excluding the Common Units held by
the General Partner) may, within 90 days after the occurrence of a Triggering
Event described in clause (y) of the first sentence of Section 16.1, waive, in
writing, the adjustment to the Redemption Right provided for in this Section
16.2; provided, that (i) the Redemption Right shall remain in full force and
effect as provided in Section 8.6, (ii) such election shall be binding on all of
the Limited Partners and (iii) if the adjustment to the Redemption Right has
previously been waived pursuant to this sentence, a new Triggering Event shall
be deemed to occur each time a Person who is the Beneficial Owner of at least
33.3% of the outstanding REIT Shares becomes the Beneficial Owner of an
additional 2% or more of the outstanding REIT Shares.
B. From and after a Trigger Occurrence, the "Conversion Factor" shall
be adjusted by multiplying the "Conversion Factor" existing on the day
immediately prior to such Trigger Occurrence as follows: (i) if the REIT Shares,
as a result of the Trigger Occurrence, have been converted solely into the right
to receive Registered Common Stock, by the number of shares of Registered Common
Stock which the holder of a single REIT Share was entitled to receive as a
result of the Trigger Occurrence or (ii) in all other cases, by a fraction, the
numerator of which shall be the Average Trading Price of a REIT Share as of such
Trigger Occurrence and the denominator of which shall be the Average Trading
Price of a Replacement Share as of such Trigger Occurrence. Following a Trigger
Occurrence, the Conversion Factor shall be further adjusted as set forth in the
definition of "Conversion Factor" contained in Article 1 of this Agreement and
as provided in this Section 16.2.
C. For the purpose of any computation hereunder, the "Average Trading
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such shares for the ten consecutive
trading days immediately prior to the third trading day prior to such date;
provided, however, in the event the Triggering Event occurs as part of a series
of related transactions which also includes a tender offer, the ten trading day
period shall be the ten consecutive trading day period immediately prior to the
day REIT Shares are accepted for payment pursuant to such tender offer;
provided, however, further, if prior to the expiration of such requisite ten
trading day period the issuer announces either (A) a dividend or distribution on
such shares payable in such shares or securities convertible into such shares or
(B) any subdivision, combination or reclassification of such shares, then,
following the ex-dividend date for such dividend or the record date for such
subdivision, as the case may be, the "Average Trading Price" shall be properly
adjusted to take into account such event. The closing price for each day shall
be, if the shares are listed and admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such shares are listed or admitted to trading or, if such shares are
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the high bid price in the over-the-counter
market, as reported by the NASDAQ National Market System or such other system
then in use, or, if on any such date such shares are not quoted by any such
organization, the average of the closing bid and asked prices as
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furnished by a professional market maker making a market in such shares selected
by the holders of a majority of the Common Units held by the Limited Partners
(excluding the Common Units held by the General Partner). If such shares are not
publicly held or not so listed or traded or if, for the ten days prior to such
date, no market maker is making a market in such shares, the Average Trading
Price of such shares on such date shall be deemed to be the fair value of such
shares as determined as set forth in Section 16.2.D. The term "trading day"
shall mean, if such shares are listed or admitted to trading on any national
securities exchange, a day on which the principal national securities exchange
on which such shares are listed or admitted to trading is open for the
transaction of business or, if such shares are not so listed or admitted, a
Business Day.
D. In the event that on the date of a Trigger Occurrence, the shares of
a Person are not publicly held or not so listed or traded or if, for the ten
days prior to such date, no market maker is making a market in the shares of a
Person, the Average Trading Price of the shares of such Person shall be the fair
value of the shares as determined in good faith by the holders of a majority of
the Common Units held by the Limited Partners (excluding the Common Units held
by the General Partner) and by the General Partner, which determination shall be
binding on all of the Limited Partners. If the holders of a majority of the
Common Units held by the Limited Partners (excluding the Common Units held by
the General Partner) and General Partner have not agreed on the fair value of
the shares and executed and delivered between them an agreement setting forth
the same within twenty (20) days after the Trigger Occurrence in question, then
either the General Partner or the holders of a majority of the Common Units held
by the Limited Partners (excluding the Common Units held by the General Partner)
may notify the other that they or it desire to invoke the following arbitration
procedure:
(1) Notice of the holders of a majority of the Common Units
held by the Limited Partners (excluding the Common Units held by the
General Partner) or by the General Partner of such parties' intention
to seek arbitration shall be delivered to the other parties within ten
(10) days, after which all parties shall, in good faith, attempt to
agree on a single arbitrator to determine the fair value of the shares
(the "Arbitrator"). If the holders of a majority of the Common Units
held by the Limited Partners (excluding the Common Units held by the
General Partner) and the General Partner have not agreed on the
Arbitrator within ten (10) days after the giving of the Arbitration
Notice, then either party, on behalf of both, may apply to the local
office of the American Arbitration Association or any organization
which is the successor thereof (the "AAA") for appointment of the
Arbitrator, or, if the AAA shall not then exist or shall fail, refuse
or be unable to act such that the Arbitrator is not appointed by the
AAA within ten (10) days after application therefor, then either party
may apply to any court of competent jurisdiction in the State of North
Carolina (the "Court") for the appointment of the Arbitrator and the
other party shall not raise any question as to the Court's full power
and jurisdiction to entertain the application and make the appointment.
The date on which the Arbitrator is appointed, by the agreement of the
parties, by appointment by the AAA or by appointment by the Court, is
referred to
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herein as the "Appointment Date". If any Arbitrator appointed hereunder
shall be unwilling or unable, for any reason, to serve, or continue to
serve, a replacement arbitrator shall be appointed in the same manner
as the original Arbitrator.
(2) The arbitration shall be conducted in accordance with the
then prevailing commercial arbitration rules of the AAA, modified as
follows:
(i) To the extent that any statute imposes requirements
different than those of the AAA in order for the decision of
the Arbitrator to be enforceable in the courts of the State of
North Carolina, such requirements shall be complied with in
the arbitration.
(ii) The Arbitrator shall be disinterested and impartial,
shall not be affiliated with the Limited Partners, the General
Partner or their Affiliates and shall have at least ten (10)
years experience in the market in which the applicable Person
transacts the majority of its business.
(iii) Before hearing any testimony or receiving any
evidence, the Arbitrator shall be sworn to hear and decide the
controversy faithfully and fairly by an officer authorized to
administer an oath and a written copy thereof shall be
delivered to each of the Limited Partners and the General
Partner.
(iv) Within twenty (20) days after the Appointment Date,
the holders of a majority of the Common Units held by the
Limited Partners (excluding the Common Units held by the
General Partner) and the General Partner shall deliver to the
Arbitrator two (2) copies of their respective written
determinations of the fair value of the shares (each, a
"Determination") together with such affidavits, appraisals,
reports and other written evidence relating thereto as the
submitting party deems appropriate. After the submission of
any Determination, the submitting party may not make any
additions to or deletions from, or otherwise change, such
Determination or the affidavits, appraisals, reports and other
written evidence delivered therewith. If either party fails to
so deliver its Determination within such time period, time
being of the essence with respect thereto, such party shall be
deemed to have irrevocably waived its right to deliver a
Determination and the Arbitrator, without holding a hearing,
shall accept the Determination of the submitting party as the
fair value of the shares. If each party submits a
Determination with respect to the fair value of the shares
within the twenty (20) day period described above, the
Arbitrator shall, promptly after its receipt of the second
Determination, deliver a copy of each party's Determination to
the other party.
(v) Not less than ten (10) days nor more than twenty (20)
days after the earlier to occur of (x) the expiration of the
twenty (20) day period provided for
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in clause (iv) of this subparagraph or (y) the Arbitrator's
receipt of both of the Determinations from the parties (such
earlier date is referred to herein as the "Submission Date")
and upon not less than five (5) days notice to the parties,
the Arbitrator shall hold one or more hearings with respect to
the determination of the fair value of the shares. The
hearings shall be held in the Charlotte metropolitan area of
North Carolina at such location and time as shall be specified
by the Arbitrator. Each of the parties shall be entitled to
present all relevant evidence and to cross-examine witnesses
at the hearings. The Arbitrator shall have the authority to
adjourn any hearing to such later date as the Arbitrator shall
specify, provided that in all events all hearings with respect
to the determination of the fair value of the shares shall be
concluded not later than thirty (30) days after the Submission
Date.
(vi) The Arbitrator shall be instructed, and shall be
empowered only, to select as the fair value of the shares that
one of the Determinations which the Arbitrator believes is the
more accurate determination of the Average Trading Price of
the shares. Without limiting the generality of the foregoing,
in rendering his or her decision, the Arbitrator shall not add
to, subtract from or otherwise modify the provisions of this
Agreement or either of the Determinations.
(vii) The Arbitrator shall render his or her determination
as to the selection of a Determination in a signed and
acknowledged written instrument, original counterparts of
which shall be sent simultaneously to Limited Partners and the
General Partner, within ten (10) days after the conclusion of
the hearing(s) required by clause (v) of this Section.
(3) This provision shall constitute a written agreement to
submit any dispute regarding the determination of the Average Trading
Price of the shares of a Person to arbitration.
(4) The arbitration decision, determined as provided in this
Article, shall be conclusive and binding on the parties, shall
constitute an "award" by the Arbitrator within the meaning of the AAA
rules and applicable law, and judgment may be entered thereon in any
court of competent jurisdiction.
(5) The Common shall pay all fees and expenses relating to the
arbitration (including, without limitation, the reasonable fees and
expenses of one counsel chosen by the holders of a majority of the
Common Units held by the Limited Partners (excluding the Common Units
held by the General Partner) and of experts and witnesses retained or
called by the Limited Partners). The Limited Partners' counsel chosen
as set forth in the preceding sentence shall represent the interests of
all of the
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Limited Partners and the choice of counsel shall be binding on all of
the Limited Partners.
E. From and after a Trigger Occurrence, each and every reference to the
"Company" in Section 8.6 shall be deemed to be a reference to the Issuer of the
Replacement Shares. From and after a Trigger Occurrence, the Issuer shall assume
or unconditionally guaranty the performance of the General Partner's obligations
under this Agreement pursuant to an instrument in form and substance
satisfactory to the holders of a majority of the Common Units held by the
Limited Partners (excluding the Common Units held by the General Partner). From
and after a Trigger Occurrence, the "Average Trading Price" of a REIT Share or a
Replacement Share, as applicable shall be substituted for the "Value" of the
same for the purposes of determining the Cash Amount.
Section 16.3 Additional Issuer Covenants
The General Partner shall (i) not enter into an agreement with
any Person which would result in a Triggering Event unless such agreement
provides for each of the following and (ii) from and after any Trigger
Occurrence, comply with each of the following:
A. If, on the day immediately prior to a Trigger Occurrence, the Issuer
is qualified as a REIT, then, substantially contemporaneously with such Trigger
Occurrence, the General Partner, the Issuer and its Affiliates shall enter into
such mergers, combinations, conveyances or other transactions as shall be
required to cause substantially all of the assets of the General Partner and the
Issuer and its Affiliates to be owned, leased or held directly or indirectly by
a single operating partnership in which each Limited Partner shall hold one
partnership unit having the rights specified by this Agreement for each Unit
held by such Limited Partner immediately prior to such merger, combination,
conveyance or other transaction. The agreement governing the resulting operating
partnership shall be in a form substantially no less favorable to each of the
Limited Partners than is this Agreement.
B. From and after a Trigger Occurrence, the General Partner shall not
take any action (other than (i) paying a dividend or distribution in respect of
all of the Common Units that complies with Articles 5 and 13, (ii) purchasing or
disposing of any real property or other assets provided that any single
disposition of assets does not represent 10% or more of the total gross book
value of the Partnership's assets at the time of such disposition and the
Partnership shall use reasonable efforts to structure any dispositions of assets
to comply with the requirements of Section 1031 of the Code, (iii) financing,
refinancing or other repayment of any indebtedness or entering into or
terminating any guaranty of indebtedness, (iv) issuing any Units to the Company
or the General Partner in connection with a sale of securities by the Company or
the General Partner or selling any Units, including, without limitation, in
connection with a purchase of assets by the Partnership, or (v) redeeming any
Units pursuant to this Agreement), if such action would result in any Limited
Partner realizing a taxable gain, without the prior written consent of the
holders of a majority of the Common Units held by the
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Limited Partners (excluding the Common Units held by the General Partner).
Notwithstanding the previous sentence, if the Issuer or the General Partner, or
both, shall agree, in writing, to indemnify each of the Limited Partners against
any taxes that the Limited Partners might incur a result of an action, or
failure to take action, on the part of the General Partner, such action, or
failure to take action, shall not require the consent of any of the Limited
Partners. Further, if the General Partner is a REIT, the General Partner shall
be permitted to take any action required by the Code or the IRS to allow the
General Partner to remain a REIT without the consent of any of the Limited
Partners.
C. From and after a Trigger Occurrence, in the event a dividend or
distribution consisting of cash or property (other than Replacement Shares) or
both is paid by the Issuer in respect of the Replacement Shares, the General
Partner shall cause the Partnership to distribute, in respect of each Common
Unit, the same amount of cash or property the holder of a Common Unit would have
received had such holder exercised its Redemption Right and received Replacement
Shares prior to such dividend or distribution.
Section 16.4 Application to Later Transactions
This Article 16 shall apply to the initial Triggering Event and shall
continue to apply to each subsequent Triggering Event.
Section 16.5 Waivers and Amendments
A. The provisions of this Article 16 may be waived only upon the
written consent of the holders of a majority of the Common Units held by the
Limited Partners (excluding the Common Units held by the General Partner and its
Affiliates).
B. This Article 16 shall only be amended as provided in Section 14.1.D
of this Agreement and shall be deemed included in such section for all purposes.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
Summit Properties Inc.
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Title: Senior Vice President and General Counsel
[CORPORATE SEAL]
LIMITED PARTNERS:
By: Summit Properties Inc.
as Attorney-in-Fact for the Limited Partners
By: /s/ XXXXXXX X. XXXXXX
----------------------------
Title: Senior Vice President and General Counsel
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LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Summit Properties Partnership, L.P., hereby becomes a party to the
Amended and Restated Agreement of Limited Partnership of Summit Properties
Partnership, L.P. by and among Summit Properties Inc. and such Limited Partners,
dated as of May 23, 2000. The undersigned agrees that this signature page may be
attached to any counterpart of said Agreement of Limited Partnership.
Signature line for Limited Partner _________________________
Address of Limited Partner _________________________
_________________________
_________________________
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Exhibit A
Available at Main Offices of Summit Properties Inc.
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Exhibit B
Capital Account Maintenance
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section 1.704-1(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement; and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.1.A of
the Agreement and Exhibit C hereof, and decreased by (x) the amount of cash or
Agreed Value of all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement; and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1.B of the Agreement and Exhibit C hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made
without regard to any election under Section 754 of
the Code which may be made by the Partnership,
provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership made
pursuant to Section 734 of the Code as a result of
the distribution of property by the Partnership to a
Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital
Accounts) shall be reflected in the Capital Accounts
of the Partners in the manner and subject to the
limitations prescribed in Regulations Section
1.704(b)(2)(iv)(m)(4).
(2) The computation of all items of income, gain, and
deduction shall be made without regard to the fact
that items described in Sections 705(a)(1)(B) or
705(a)(2)(B) of the Code are not includable gross
income or are neither currently deductible nor
capitalized for federal income tax purposes.
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(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be
determined as if the adjusted basis of such property
as of such date of disposition were equal in amount
to the Partnership's Carrying Value with respect to
such property as of such date.
(4) In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in
computing such taxable income or loss, there shall be
taken into account Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Partnership
Asset is adjusted pursuant to Section 1.D hereof, the
amount of any such adjustment shall be taken into
account as gain or loss from the disposition of such
asset.
(6) Any items specifically allocated under Section 2 of
Exhibit C hereof shall not be taken into account.
C. Generally, a transferee (including an Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor; provided, however, that, if the transfer causes a termination of the
Partnership under Section 708(b)(1)(B) of the Code, the Partnership's properties
shall be deemed solely for federal income tax purposes, to have been distributed
in liquidation of the Partnership to the holders of Partnership Units (including
such transferee) and recontributed by such Persons in reconstitution of the
Partnership. In such event, the Carrying values of the Partnership properties
shall be adjusted immediately prior to such deemed distribution pursuant to
Section 1.D(2) hereof. The Capital Accounts of such reconstituted Partnership
shall be maintained in accordance with the principles of this Exhibit B.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section
1.D(2), the Carrying Value of all Partnership assets
shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as of the times of the
adjustments provided in Section 1.D(2) hereof, as if
such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property
and allocated pursuant to Section 6.1 of the
Agreement.
(2) Such adjustments shall be made as of the following
times: (a) immediately prior to the acquisition of an
additional interest in the Partnership by any new or
existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior
to the distribution by the Partnership to a Partner
of more than a de minimis amount of property as
consideration for an interest in the Partnership;
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and (c) immediately prior to the liquidation of the
Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), provided, however, that
adjustments pursuant to clauses (a) and (b) above
shall be made only if the General Partner determines
that such adjustments are necessary or appropriate to
reflect the relative economic interests of the
Partners in the Partnership.
(3) In accordance with Regulations Section
1.704-1(b)(2)(iv)(e), the Carrying Value of
Partnership assets distributed in kind shall be
adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such
Partnership property, as of the time any such asset
is distributed.
(4) In determining Unrealized Gain or Unrealized Loss for
purposes of this Exhibit B, the aggregate cash amount
and fair market value of all Partnership assets
(including cash or cash equivalents) shall be
determined by the General Partner using such
reasonable method of valuation as it may adopt, or in
the case of a liquidating distribution pursuant to
Article 13 of the Agreement, shall be determined and
allocated by the Liquidator using such reasonable
methods of valuation as it may adopt. The General
Partner, or the Liquidator, as the case may be, shall
allocate such aggregate value among the assets of the
Partnership (in such manner as it determines in its
sole and absolute discretion to arrive at a fair
market value for individual properties).
E. The provisions of this Agreement (including this Exhibit B and other
Exhibits to this Agreement) relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-1(b), and shall be interpreted
and applied in a manner consistent with such Regulations. In the event the
General Partner shall determine that it is prudent to modify (i) the manner in
which the Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed; or (ii) the manner in
which items are allocated among the Partners for federal income tax purposes in
order to comply with such Regulations or to comply with Section 704(c) of the
Code, the General Partner may make such modification without regard to Article
14 of the Agreement, provided that it is not likely to have a material effect on
the amounts distributable to any Person pursuant to Article 13 of the Agreement
upon the dissolution of the Partnership. The General Partner also shall (i) make
any adjustments that are necessary or appropriate to maintain equality between
the Capital Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for book purposes, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(q); and (ii) make any
appropriate modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with Regulations Section
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1.704-1(b). In addition, the General Partner may adopt and employ such methods
and procedures for (i) the maintenance of book and tax capital accounts; (ii)
the determination and allocation of adjustments under Sections 704(c), 734 and
743 of the Code; (iii) the determination of Net Income, Net Loss, taxable loss
and items thereof under this Agreement and pursuant to the Code; (iv) the
adoption of reasonable conventions and methods for the valuation of assets and
the determination of tax basis; (v) the allocation of asset value and tax basis;
and (vi) conventions for the determination of cost recovery, depreciation and
amortization deductions, as it determines in its sole discretion are necessary
or appropriate to execute the provisions of this Agreement, to comply with
federal and state tax laws, and are in the best interest of the Partners.
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 7 and 13 of the Agreement.
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Exhibit C
Special Allocation Rules
1. Special Allocation Rules
Notwithstanding any other provision of the Agreement or this Exhibit C,
the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section
6.1 of the Agreement or any other provisions of this Exhibit C, if there is a
net decrease in Partnership Minimum Gain during any Partnership taxable year,
each Partner shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
Solely for purposes of this Section 1.A, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to Section
6.1 of Partner Minimum Gain during such Partnership taxable year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other provision
of Section 6.1 of this Agreement or any other provisions of this Exhibit C
(except Section 1.A hereof), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership taxable year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.702-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(i)(4). This Section 1.B is intended to comply
with the minimum gain chargeback requirement in such Section of the Regulations
and shall be interpreted consistently therewith. Solely for purposes of the
Section 1.B, each Partner's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to Section 6.1 of the Agreement or this
Exhibit with respect to such Partnership taxable year, other than allocations
pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), and after giving
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effect to the allocations required under Sections 1.A and 1.B hereof such
Partner has an Adjusted Capital Account Deficit, items of Partnership income and
gain (consisting of a pro rata portion of each item of Partnership income,
including gross income and gain for the Partnership taxable year) shall be
specifically allocated to such Partner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, its Adjusted Capital
Account Deficit created by such adjustments, allocations or distributions as
quickly as possible.
D. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
taxable year shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio for such Partnership taxable year which would satisfy
such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership taxable year shall be specially allocated to the Partner who
bears the economic risk of loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i).
F. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis, and such item of gain or loss shall be specially allocated
to the Partners in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the
Regulations.
G. Curative Allocations. The allocations set forth in Section 1.A
through 1.F of this Exhibit C (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations under Section 704(b) of the
Code. The Regulatory Allocations may not be consistent with the manner in which
the Partners intend to divide Partnership distributions. Accordingly, the
General Partner is hereby authorized to divide other allocations of income,
gain, deduction and loss among the Partners so as to prevent the Regulatory
Allocations from distorting the manner in which Partnership distributions will
be divided among the Partners. In general, the Partners anticipate that this
will be accomplished by specially allocating other items of income, gain, loss
and deduction among the Partners so that the net amount of the Regulatory
Allocations and such special allocations to each person is zero. However, the
General Partner will have discretion to accomplish this result in any reasonable
manner; provided, however, that no allocation pursuant to this Section 1.G shall
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cause the Partnership to fail to comply with the requirements of Regulations
Sections 1.704-1(b)(2)(ii)(d), -2(e) or -2(i).
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal income
tax purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such
items attributable thereto shall be
allocated among the Partners, consistent
with the principles of Section 704(c) of the
Code and the Regulations thereunder, to take
into account the variation between the
704(c) Value of such property and its
adjusted basis at the time of contribution;
and
(b) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall
be allocated among the Partners in the same
manner as its correlative item of "book"
gain or loss is allocated pursuant to
Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such
items shall
(1) first, be allocated among the Partners
in a manner consistent with the principles
of Section 704(c) of the Code and the
Regulations thereunder to take into account
the Unrealized Gain or Unrealized Loss
attributable to such property and the
allocations thereof pursuant to Exhibit B;
and
(2) second, in the event such property was
originally a Contributed Property, be
allocated among the Partners in a manner
consistent with Section 2.B(1) of this
Exhibit C; and
(b) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall
be allocated among the Partners in the same
manner its correlative item of "book" gain
or loss is
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allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
(3) all other items of income, gain, loss and deduction
shall be allocated among the Partners the same manner
as their correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the Agreement
and Section 1 of the Exhibit C.
C. To the extent that the Treasury Regulations promulgated pursuant to
Section 704(c) of the Code permit the Partnership to utilize alternative methods
to eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall have the authority to elect the method
to be used by the Partnership and such election shall be binding on all
Partners.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 8 and 13 of the Agreement.
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Exhibit D
Available at main offices of Summit Properties Inc.
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Exhibit E
Notice of Redemption
The undersigned Limited Partner hereby irrevocably (i) redeems
__________ Common Units in Summit Properties Partnership, L.P. in accordance
with the terms of the Agreement of Limited Partnership of Summit Properties
Partnership, L.P. and the Redemption Right referred to therein; (ii) surrenders
such Common Units and all right, title and interest therein; and (iii) directs
that the Cash Amount or REIT Shares Amount (as determined by the General
Partner) deliverable upon exercise of the Redemption Right be delivered to the
address specified below, and if REIT Shares are to be delivered, such REIT
Shares be registered or placed in the name(s) and at the address(es) specified
below. The undersigned hereby, represents, warrants, and certifies that the
undersigned (a) has marketable and unencumbered title to such Common Units, free
and clear of the rights or interests of any other person or entity; (b) has the
full right, power, and authority to redeem and surrender such Common Units as
provided herein; and (c) has obtained the consent or approval of all person or
entities, if any, having the right to consent or approve such redemption and
surrender.
Dated:_________________________
Name of Limited Partner:____________________________________
Please Print
____________________________________
(Signature of Limited Partner)
____________________________________
(Street Address)
____________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
____________________________________
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If REIT Shares are to be issued, issue to:
Name:_________________________________
Please insert social security or identifying number:__________________
2
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Exhibit F
SUMMIT PROPERTIES PARTNERSHIP, L.P.
CERTIFICATE OF DESIGNATIONS
(EFFECTIVE AS OF APRIL 29, 1999)
SERIES B CUMULATIVE REDEEMABLE PERPETUAL PREFERRED UNITS
SECTION 1. Definitions. The following terms shall have the
meanings herein below ascribed thereto for purposes of this Certificate of
Designations, and all other capitalized terms used herein shall have the
meanings thereto ascribed in the Agreement (as hereinafter defined):
"Affiliate Parity Placement" shall have the meaning set forth
therefor in Section 7(b) hereof.
"Agreement" shall mean that Amended and Restated Agreement of
Limited Partnership of Summit Properties Partnership, L.P., a Delaware limited
partnership (the "Partnership"), dated as of May 23, 2000, as amended.
"Charter" shall have the meaning set forth therefor in Section
3(d) hereof.
"Contribution Agreement" shall mean that certain Contribution
Agreement, dated as of April 29, 1999, by and among the Company, the
Partnership, Belcrest Realty Corporation and Belair Real Estate Corporation.
"Control" shall mean the power to direct the actions of a
Person, regardless of whether the same shall involve an ownership interest in
such Person.
"Excess Units" shall have the meaning set forth therefor in
Section 9(a)(iii) hereof.
"Exchange Notice" shall have the meaning set forth therefor in
Section 9(b) hereof.
"Exempt Affiliate Parity Placement" shall have the meaning set
forth therefor in Section 7(b) hereof.
"Junior Units" shall have the meaning set forth therefor in
Section 3(d) hereof.
"New Partner Affiliate" shall mean a Person controlling, under
common control with or controlled by a New Partner.
"Parent" shall mean the direct or indirect parent of a New
Partner.
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"Parity Units" shall mean any class or series of Partnership
Interests of the Partnership now or hereafter authorized, issued or outstanding
expressly designated by the Partnership to rank on a parity with Series B
Preferred Units with respect to distributions and rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership
"Partnership Affiliate" shall mean any Person controlled by,
controlling or under common control with the Partnership.
"Priority Return" shall mean, an amount equal to 8.95% per
annum, determined on the basis of a 360-day year of twelve (12) 30-day months
(or actual days for any month which is shorter than a full monthly period),
cumulative to the extent not distributed for any given distribution period
pursuant to Section 3 hereof, of the stated value of $25.00 per Series B
Preferred Unit, commencing on the date of issuance of such Series B Preferred
Unit.
"PTP" shall mean a "publicly traded partnership" within the
meaning of Section 7704 of the Code.
"Series B Exchange Price" shall have the meaning set forth
therefor in Section 9(a)(i) hereof.
"Series B Redemption Price" shall have the meaning set forth
therefor in Section 6(a) hereof.
"Series B Preferred Articles Supplementary" shall have the
meaning set forth therefor in Section 9(a)(i) hereof.
"Series B Preferred Stock" shall have the meaning set forth
therefor in Section 9(a)(i) hereof.
"Series B Preferred Unit Distribution Payment Date" shall have
the meaning set forth therefor in Section 3(a) hereof.
"Series B Preferred Unit Partnership Record Date" shall have
the meaning set forth therefor in Section 3(a) hereof.
"Series B Preferred Units" shall have the meaning set forth
therefor in Section 2 hereof.
SECTION 2. Designation and Number. Pursuant to Section 4.2A of
the Agreement, a series of Partnership Units in the Partnership designated as
the "8.95% Series B Cumulative Redeemable Perpetual Preferred Units" (the
"Series B Preferred Units") is hereby established. The number of Series B
Preferred Units shall be 3,400,000.
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SECTION 3. Distributions. (a) Payment of Distributions.
Subject to the rights of holders of Parity Units and holders of Units ranking
senior to the Series B Preferred Units as to the payment of distributions,
holders of Series B Preferred Units shall be entitled to receive, when, as and
if declared by the Partnership acting through the General Partner, out of
Available Cash, pursuant to Article 5 of the Agreement, cumulative preferential
cash distributions at the rate per annum of 8.95% of the original Capital
Contribution per Series B Preferred Unit. Such distributions shall be
cumulative, shall accrue from the original date of issuance and will be payable:
(i) quarterly in arrears, on the last day (or, if not a Business Day, the next
succeeding Business Day) of each of March, June, September and December of each
year commencing on June 30, 1999 (each, a "Series B Preferred Unit Distribution
Payment Date"), and (ii) in the event of (A) an exchange of Series B Preferred
Units into Series B Preferred Stock, or (B) a redemption of Series B Preferred
Units, on the exchange date or redemption date, as applicable. The amount of the
distribution payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months and for any period shorter than a full quarterly
period for which distributions are computed, the amount of the distribution
payable will be computed on the basis of the actual number of days elapsed in
such period. If any date on which distributions are to be made on the Series B
Preferred Units is not a Business Day, then payment of the distribution to be
made on such date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date. Distributions on the Series B
Preferred Units will be made to the holders of record of the Series B Preferred
Units on the relevant record dates to be fixed by the Partnership acting through
the General Partner, which record dates shall be the twentieth (20th) day of the
calendar month in which the applicable Series B Preferred Unit Distribution
Payment Date falls or on such earlier date designated on at least ten (10) days'
notice by the Board of Directors of the General Partner as the record date for
such distribution that is not more than thirty (30) nor less than ten (10) days
prior to such Series B Preferred Unit Distribution Payment Date (the "Series B
Preferred Unit Partnership Record Date").
(b) Prohibition on Distribution. No distributions on Series B Preferred
Units shall be authorized by the General Partner or paid or set apart for
payment by the Partnership at any such time as the terms and provisions of any
agreement of the Partnership or the Company, including any agreement relating to
their indebtedness, prohibits such authorization, payment or setting apart for
payment or provides that such authorization, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or to the
extent that such authorization or payment shall be restricted or prohibited by
law.
(c) Distributions Cumulative. Notwithstanding the provisions of Section
3(b) hereof, distributions on the Series B Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership, including
any agreement relating to its indebtedness at any time prohibit the current
payment of distributions, whether or not the
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Partnership has earnings, whether or not there are funds legally available for
the payment of such of such distributions and whether or not such distributions
are authorized. Accrued but unpaid distributions on the Series B Preferred Units
will accumulate as of the date on which they first become payable pursuant to
Section 3(a) (without reference to Section 3(b)). Distributions on account of
arrears for any past distribution periods may be declared and paid at any time,
without reference to a regular Series B Preferred Unit Distribution Payment Date
to holders of record of the Series B Preferred Units on the record date fixed by
the Partnership acting through the General Partner, which date shall not exceed
thirty (30) days prior to the payment date. Accumulated and unpaid distributions
will not bear interest.
(d) Priority as to Distributions. (i) So long as any Series B Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest ranking junior as to the payment of
distributions or rights upon a voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership to the Series B Preferred Units (collectively,
"Junior Units"), nor shall any cash or other property be set aside for or
applied to the purchase, redemption or other acquisition for consideration of
any Series B Preferred Units, any Parity Units or any Junior Units, unless, in
each case, all distributions accumulated on all Series B Preferred Units and all
classes and series of outstanding Parity Units have been paid in full. The
foregoing sentence will not prohibit (A) distributions payable solely in Junior
Units, (B) the conversion of Junior Units or Parity Units into Junior Units, or
(C) the redemption of Partnership Interests corresponding to any Series B
Preferred Stock, Parity Preferred Stock or Junior Stock to be purchased by the
Company pursuant to Section 4.5 of the Amended and Restated Articles of
Incorporation of the Company (the "Charter") to preserve the Company's status as
a real estate investment trust, provided that such redemption shall be upon the
same terms as the corresponding purchase pursuant to Article IV of the Charter.
(ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment has not been irrevocably deposited in trust
for payment) upon the Series B Preferred Units, all distributions authorized and
declared on the Series B Preferred Units and all classes or series of
outstanding Parity Units shall be authorized and declared so that the amount of
distributions authorized and declared per Series B Preferred Unit and such other
classes or series of Parity Units shall in all cases bear to each other the same
ratio that accrued and unpaid distributions per Series B Preferred Unit and such
other classes or series of Parity Units (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such class or series of Parity Units do not have cumulative distribution
rights) bear to each other. Any distribution payment made on the Series B
Preferred Units shall first be credited against the earliest accrued but unpaid
distribution due with respect to such Series B Preferred Units which remains
payable.
(e) No Further Rights. Holders of Series B Preferred Units shall not be
entitled to any distributions with respect to such Series B Preferred Units,
whether payable in cash, other property or otherwise, in excess of the full
cumulative distributions described herein (it being
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understood that such holder may have additional rights or claims to the
remaining assets of the Partnership as a result of its ownership of Partnership
Units of other classes or series or its status as General Partner).
SECTION 4. Allocations. The Series B Preferred Units shall be
subject to all of the provisions of Article 6 of the Agreement.
SECTION 5. Liquidation Proceeds. (a) Upon voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership,
distributions on the Series B Preferred Units shall be made in accordance with
Section 13.2 of the Agreement.
(b) Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than thirty (30) and not more than sixty
(60) days prior to the payment date stated therein, to each holder of record of
the Series B Preferred Units at the respective addresses of such holders as the
same shall appear on the transfer records of the Partnership.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series B
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership with respect to such Series B Preferred Units (it being
understood that such holder may have additional rights or claims to the
remaining assets of the Partnership as a result of its ownership of Partnership
Units of other classes or series or its status as General Partner).
(d) Consolidation, Merger or Certain Other Transactions. The voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Company or the Partnership to, or the consolidation or merger
or other business combination of the Partnership or the Company with or into,
any corporation, partnership, limited liability company, trust or other entity
(or of any corporation, partnership, limited liability company, trust or other
entity with or into the Partnership) or a statutory share exchange of the
Company shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Partnership.
SECTION 6. Optional Redemption. (a) Right of Optional
Redemption. (i) Except as otherwise expressly provided in this Section 6, the
Series B Preferred Units may not be redeemed prior to the fifth (5th)
anniversary of the issuance date. On or after such date, the Partnership shall
have the right to redeem the Series B Preferred Units, in whole or in part, at
any time or from time to time, upon not less than thirty (30) nor more than
sixty (60) days' written notice, at a redemption price (the "Series B Redemption
Price"), payable in cash (or cash and such number of shares of Series B
Preferred Stock to which a Partner holding such Series B Preferred Units being
redeemed for other than cash would be entitled if redeemed at
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the Series B Exchange Price then in effect pursuant to Section 9 hereof), equal
to the Capital Account balance of such holder of Series B Preferred Units
attributable to such redeemed Units; provided, however, that no redemption
pursuant to this Section 6 will be permitted if the Series B Redemption Price
does not equal or exceed the original Capital Contribution with respect to such
Units plus the cumulative Priority Return thereon, whether or not declared, to
the redemption date to the extent not previously distributed. If fewer than all
of the outstanding Series B Preferred Units are to be redeemed, the Series B
Preferred Units to be redeemed shall be selected pro rata (as nearly as
practicable without creating fractional Partnership Units).
(ii) In the event that (1) any Series B Preferred Units shall,
at any time, be transferred to any Substituted Limited Partner (other than a New
Partner Affiliate) and (2) the General Partner shall determine in good faith
that such transfer to such Person has caused, would cause, or would likely
cause, the Partnership to be a PTP (taking into account the admission of any
Partners or the transfer of any Units to any other Person under any agreements
of which the General Partner is then aware or contemplating), such transferred
Units shall be subject to the right of the Partnership to redeem such Units, in
whole but not in part, at any time and from time to time, including without
limitation, as of the end of the day immediately preceding the day of the
effectiveness of such transfer, for the Series B Redemption Price of such Units
payable in (y) such number of shares of Series B Preferred Stock to which the
Partner holding such Units being redeemed (excluding Excess Units) would be
entitled if redeemed at the Series B Exchange Price then in effect pursuant to
Section 9 hereof and (z) cash, with respect to any such Units that would be
Excess Units.
(b) Limitation on Redemption. (i) The Redemption Price of the Series B
Preferred Units (other than the portion thereof attributable to accumulated but
unpaid distributions) will be payable solely out of the sale proceeds of capital
stock of the Company that are contributed by the Company to the Partnership as
additional capital contributions, or out of the sale of Partnership Interests,
and from no other source. For purposes of the preceding sentence, "capital
stock" means any equity securities (including Common Stock and Preferred Stock
(as such terms are defined in the Charter)), shares, depository receipts,
participation or other ownership interests (however designated) and any rights
(other than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the
outstanding Series B Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series B Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
(c) Procedures for Redemption. (i) Notice of redemption will be (A)
faxed, and (B) mailed by the Partnership, by certified mail, postage prepaid,
not less than thirty (30) nor more than sixty (60) days prior to the redemption
date, addressed to the respective holders of record holding the Series B
Preferred Units at their respective addresses as they appear on the records
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of the Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series B Preferred Units
except as to any holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall state: (m)
the redemption date, (n) the Redemption Price, (o) the aggregate number of
Series B Preferred Units to be redeemed and, if fewer than all of the
outstanding Series B Preferred Units are to be redeemed, the number of Series B
Preferred Units to be redeemed held by such holder, which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series B Preferred Units the total number of Series B Preferred
Units held by such holder represents) of the aggregate number of Series B
Preferred Units to be redeemed, (p) the place or places where such Series B
Preferred Units are to be surrendered for payment of the Redemption Price, (q)
that distributions on the Series B Preferred Units to be redeemed will cease to
accumulate on such redemption date and (r) that payment of the Redemption Price
will be made upon presentation and surrender of such Series B Preferred Units.
(ii) If the Partnership gives a notice of redemption in
respect of Series B Preferred Units (which notice will be irrevocable) then, by
12:00 noon, New York City time, on the redemption date, the Partnership will
deposit irrevocably in trust for the benefit of the Series B Preferred Units
being redeemed funds sufficient to pay the applicable Redemption Price and will
give irrevocable instructions and authority to pay such Redemption Price to the
holders of the Series B Preferred Units upon surrender of the Series B Preferred
Units by such holders at the place designated in the notice of redemption. If
the Series B Preferred Units are evidenced by a certificate and if fewer than
all Series B Preferred Units evidenced by any certificate are being redeemed, a
new certificate shall be issued upon surrender of the certificate evidencing all
such Series B Preferred Units, evidencing the unredeemed Series B Preferred
Units, without cost to the holder thereof. On and after the date of redemption,
distributions will cease to accumulate on the Series B Preferred Units or
portions thereof called for redemption, unless the Partnership defaults in the
payment or deposit, in accordance with the foregoing, of the Redemption Price.
If any date fixed for redemption of Series B Preferred Units is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Bay (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price is
improperly withheld or refused and not paid by the Partnership, distributions on
such Series B Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
SECTION 7. Voting Rights. (a) General. Partners holding the
Series B Preferred Units will not have any voting rights or right to consent to
any matter requiring the consent or approval of the Limited Partners, except as
set forth in this Section 7. In
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connection with the foregoing, the references in Sections 14.1A and 14.2A of the
Agreement to Partnership Interests shall exclude the Series B Preferred Units.
(b) Certain Voting Rights. So long as any Series B Preferred Units
remain outstanding, the Partnership shall not, without the affirmative vote of
the Partners holding at least two-thirds of the Series B Preferred Units
outstanding at the time: (i) authorize, create, or increase the authorized or
issued amount of any class or series of Partnership Interests ranking prior to
the Series B Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any Partnership
Interests into any such Partnership Interest, or create, authorize or issue any
obligations or security convertible into or evidencing the right to purchase any
such Partnership Interests; (ii) issue any Parity Units to a Partnership
Affiliate, reclassify any Partnership Interest held by a Partnership Affiliate
into any such Parity Unit or issue any obligation or security convertible into
or evidencing the right to purchase any such Parity Unit to a Partnership
Affiliate (any such issuance or reclassification, referred to as an "Affiliate
Parity Placement"); provided, however, that notwithstanding the foregoing
provisions of this clause (ii) the Partnership may effect any Affiliate Parity
Placement to the extent such placement is either (A) in connection with the
issuance by the Company of corresponding preferred stock to persons who are not
Partnership Affiliates or (B) upon terms no more favorable to such Partnership
Affiliates than those that the General Partner, in the good faith determination
of its Board of Directors, would be willing to offer to an unrelated party in an
arm's length transaction (such placement, an "Exempt Affiliate Parity
Placement"); or (iii) either (A) consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety to, any corporation or
other entity or (B) amend, alter or repeal the provisions of the Agreement,
whether by merger, consolidation or otherwise, in each case in a transaction or
manner that would materially and adversely affect the powers, special rights,
preferences, privileges or voting powers of the Series B Preferred Units or the
Partners holding such Units as set forth in the Agreement and this Certificate
of Designations; provided, however, that with respect to the occurrence of a
merger, consolidation or a sale or lease of all of the Partnership's assets as
an entirety, so long as (l) the Partnership is the surviving entity and the
Series B Preferred Units remain outstanding with the terms thereof unchanged, or
(2) the resulting, surviving or transferee entity is a partnership, limited
liability company or other pass-through entity organized under the laws of any
state and substitutes the Series B Preferred Units for other interests in such
entity having substantially the same terms and rights as the Series B Preferred
Units, including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall be deemed not to materially and adversely affect such powers, special
rights, preferences, privileges or voting powers of the Series B Preferred Units
or the Partners holding such Units; and provided further that any increase in
the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests or obligation or security convertible
into or evidencing the right to purchase any such Partnership Interests, in each
case ranking (y) junior to the Series B Preferred Units with respect to payment
of distributions and the distribution of assets upon liquidation, dissolution or
winding-up, or (z) on a parity to the Series B Preferred Units with
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respect to payment of distributions and the distribution of assets upon
liquidation, dissolution or winding-up (other than for Affiliate Parity
Placements that are not Exempt Affiliate Parity Placements) shall be deemed not
to materially and adversely affect such powers, special rights, preferences,
privileges or voting powers of the Series B Preferred Units or the Partners
holding such Units. In the event of any conflict between the provisions of
Article 14 of the Agreement and the provisions of this Section 7, the provisions
of this Section 7 shall control.
SECTION 8. Transfer Restrictions. Notwithstanding anything to
the contrary set forth in Article 11 of the Agreement, in the event any Partner
should desire to effect a transfer of any Series B Preferred Unit and such
proposed transfer of all or any portion of the Series B Preferred Units (A)
would not violate the provisions of Section 11.3D of the Agreement, (B) would
effect a transfer to an entity that is an accredited investor within the meaning
of Regulation D under the Securities Act, (C) (i) in the event that the
Partnership shall satisfy the private placement safe harbor of Treasury
Regulation Section 1.7704-1(h) (taking into account any person treated as a
partner under Treasury Regulation Section 1.7704-1(h) (3)), would not cause the
total number of such persons holding Series B Preferred Units to exceed five (5)
and (ii) for so long as the Partnership is satisfying the safe harbor provisions
of Notice 88-75 (1988-2 C.B. 386), would not cause the aggregate number of
partners holding Series B Preferred Units, determined on a look-through basis
(as provided in such notice) ("Look-Through Partners"), to exceed 20 and (D)
with respect to such proposed transfer, the transferor and transferee, as
applicable, represent to the General Partner in an ownership certificate (the
"Ownership Certificate") in such form as is reasonably acceptable to the General
Partner
(i) in the event that the Partnership is complying with
the safe harbor of Notice 88-75 (1988-2 C.B. 386) at
the time of such proposed transfer, the maximum
number of Look-Through Partners (as hereinafter
defined) in the transferee;
(ii) that such transferee would not cause the Company to
fail to satisfy the requirements of Section 856(a)(6)
and 856(h) of the Code assuming that (A) all Series B
Preferred Units, including those to be transferred to
such transferee, were exchanged for Series B
Preferred Stock (as defined below), (B) there were no
outstanding stock of any other class of the Company
and (C) such determination was made during the last
half of the Company's taxable year;
(iii) in the event that the Partnership is complying with
the safe harbor of Notice 88-75 (1988-2 C.B. 386) at
the time of such proposed transfer, such purported
transferee's undertaking not to allow the number of
Look-Through Partners certified in clause (i) to
increase without the General Partner's prior written
consent;
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(iv) such purported transferee's undertaking not to permit
the fact stated in clause (ii) to become untrue; and
(v) such purported transferee's undertaking to become a
Substituted Limited Partner and to be bound by the
terms of the Partnership Agreement,
the General Partner shall consent to the transfer of such Units to such
transferee and (a) such transferee shall be considered a Substituted Limited
Partner upon receipt by the General Partner of a written agreement of such
transferee to become a Substituted Limited Partner and to be bound by the terms
of the Agreement and (b) the Partnership and the General Partner shall treat
such Substituted Limited Partner as the absolute owner of the Series B Preferred
Units transferred in all respects. Notwithstanding the foregoing, in the event a
proposed transfer to a transferee which is not a New Partner Affiliate would not
effect a transfer to an entity which would satisfy the provisions of Section
542(a)(2) of the Code (as modified by Section 856(h) of the Code), if such
provisions were made applicable to such transferee, then such transferee would
not have the benefits set forth in Section 9(a)(iii) hereof with respect to
"Excess Units;" and further provided such proposed transferee, in order to have
such rights as are set forth in Section 9(a)(iii) with respect to "Excess Units"
shall represent to the General Partner in the aforesaid Ownership Certificate
that such transferee would satisfy the provisions of Section 542(a)(2) of the
Code as so modified, and covenant that it will continue to satisfy such
provisions. For purposes of this Section 8 "transfer" shall have the meaning
thereto attributed in Section 11.1A of the Agreement; provided, however, that
nothing contained in this provision shall prevent the right to pledge any Series
B Preferred Units as such right is set forth in the Contribution Agreement.
SECTION 9. Exchange Rights. (a) Right to Exchange. (i) Series
B Preferred Units will be exchangeable, subject to Section 9(a)(v) hereof (A) in
whole or in part at any time on or after the tenth (10th) anniversary of the
date of issuance, at the option of the holders thereof, for authorized but
previously unissued shares of 8.95% Series B Cumulative Redeemable Perpetual
Preferred Stock of the Company ("Series B Preferred Stock") at an exchange rate
of one share of Series B Preferred Stock for one Series B Preferred Unit,
subject to adjustment as described below (the "Series B Exchange Price"), (B) at
any time, in whole or in part, at the option of the holders of Series B
Preferred Units for Series B Preferred Stock if (y) at any time full
distributions shall not have been timely made on any Series B Preferred Unit
with respect to six (6) prior quarterly distribution periods, whether or not
consecutive (provided that a distribution in respect of Series B Preferred Units
shall be considered timely made if made within two (2) Business Days after the
applicable Series B Preferred Unit Distribution Payment Date if at the time of
such late payment there shall not be any prior quarterly distribution periods in
respect of which full distributions were not timely made or), or (z) upon
receipt by a holder of or holders of Series B Preferred Units of (1) notice from
the General Partner that the General Partner has taken the position that the
Partnership is, or upon the occurrence of a defined event in the immediate
future will be, a PTP and (2) an opinion rendered by an outside nationally
recognized independent counsel familiar with such matters
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addressed to a holder of or holders of Series B Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP, (C) in whole or in part, at
the option of any holder of Series B Preferred Units prior to the tenth (10th)
anniversary of the issuance date and after the third anniversary thereof if such
holder of Series B Preferred Units shall deliver to the General Partner either
(1) a private ruling letter addressed to such Partner or (2) an opinion of
independent counsel reasonably acceptable to the General Partner and based on
the enactment of temporary or final Treasury Regulations or the publication of a
Revenue Ruling, in either case to the effect that an exchange of the Series B
Preferred Units at such earlier time would not cause the Series B Preferred
Units to be considered "stock and securities" within the meaning of Section
351(e) of the Code for purposes of determining whether the holder of such Series
B Preferred Units is an "investment company" under Section 721(b) of the Code if
an exchange were permitted at such earlier date, and (D) in whole but not in
part (regardless of whether held by the New Partners) for Series B Preferred
Stock (but only if the exchange in whole may be accomplished consistently with
the ownership limitations set forth under Article IV of the Charter as
supplemented by Section 7 of those certain Articles Supplementary designating
the Series B Preferred Stock, executed by the Company as of April 29, 1999 (the
"Series B Preferred Articles Supplementary"), taking into account exceptions
thereto and the provisions of Section 9(a)(v) hereof) if at any time, (i) the
Partnership reasonably determines that the assets and income of the Partnership
for a taxable year after 1999 would not satisfy the income and assets tests of
Section 856 of the Code for such taxable year if the Partnership were a real
estate investment trust within the meaning of the Code or (ii) any holder of
Series B Preferred Units shall deliver to the Partnership and the General
Partner an opinion of independent counsel based upon information referred to in
paragraph 4(f)(iii) of the Contribution Agreement or information contained in
the General Partner's publicly filed documents and which opinion is acceptable
to the General Partner in its reasonable discretion to the effect that, based on
the assets and income of the Partnership for a taxable year after 1999, the
Partnership would not satisfy the income and assets tests of Section 856 of the
Code for such taxable year if the Partnership were a real estate investment
trust within the meaning of the Code and that such failure would create a
meaningful risk that a holder of the Series B Preferred Units would fail to
maintain qualification as a real estate investment trust.
(ii) Notwithstanding anything to the contrary set forth in
Section 9(a)(i) hereof, if an Exchange Notice has been delivered to the General
Partner, then the General Partner may, at its option, elect to redeem or cause
the Partnership to redeem all or a portion of the outstanding Series B Preferred
Units for cash in an amount equal to the original Capital Contribution per
Series B Preferred Units to be redeemed and all accrued and unpaid distributions
thereon to the date of redemption. The General Partner may exercise its option
to redeem the Series B Preferred Units for cash pursuant to this Section
9(a)(ii) by giving each holder of record of Series B Preferred Units notice of
its election to redeem for cash, within ten (10) Business Days after receipt of
the Exchange Notice, by (m) fax, and (n) registered mail, postage paid, at the
address of each such holder as it may appear on the records of the Partnership
stating (A) the redemption date, which shall be no later than sixty (60) days
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following the receipt of the Exchange Notice, (B) the redemption price, (C) the
place or places where the Series B Preferred Units are to be surrendered for
payment of the redemption price, (D) that distributions on the Series B
Preferred Units will cease to accrue on such redemption date; (E) that payment
of the redemption price will be made upon presentation and surrender of the
Series B Preferred Units and (F) the aggregate number of Series B Preferred
Units to be redeemed, and if fewer than all of the outstanding Series B
Preferred Units are to be redeemed, the number of Series B Preferred Units to be
redeemed held by such holder, which number shall equal such holder's pro-rata
share (based on the percentage of the aggregate number of outstanding Series B
Preferred Units the total number of Series B Preferred Units held by such holder
represents) of the aggregate number of Series B Preferred Units being redeemed.
(iii) In the event an exchange of all or a portion of Series B
Preferred Units pursuant to Section 9(a)(i) hereof would violate the provisions
on ownership limitation of the Company set forth in Article IV of the Charter as
supplemented by Section 7 of the Series B Preferred Articles Supplementary, the
General Partner shall give written notice thereof to each holder of record of
Series B Preferred Units that delivers an Exchange Notice, within ten (10)
Business Days following receipt of the Exchange Notice, by (m) fax, and (n)
registered mail, postage prepaid, at the address of each such holder set forth
in the records of the Partnership. In such event, each such holder of Series B
Preferred Units shall be entitled to exchange, pursuant to the provisions of
Section 9(b) hereof a number of Series B Preferred Units which would comply with
the provisions on the ownership limitation of the Company set forth in such
Article IV of the Charter as supplemented by Section 7 of the Series B Preferred
Articles Supplementary (taking into account any waiver granted pursuant to the
provisions of subsection (v) below) and any Series B Preferred Units held by a
Partner that are not so exchangeable (the "Excess Units") shall, if the same are
not the result of an exchange permitted solely by virtue of the exchange rights
set forth in Sections 9(a)(i)(A), 9(a)(i)(B)(z) (but only to the extent the
Partnership has become a PTP and (i) the obligations of the holders of Series B
Preferred Units pursuant to Section 8 hereof have been breached or (ii) the
representations of the New Partners in the Contribution Agreement that they are
qualified to be taxable as REITs have been breached and such breach has caused
the number of Look-Through Partners who hold Series B Preferred Units to exceed
20) or 9(a)(i)(C) hereof, be redeemed by the Partnership for cash in an amount
equal to the original Capital Contribution per Excess Unit, plus any accrued and
unpaid distributions thereon, whether or not declared, to the date of
redemption. The written notice of the General Partner shall state (A) the number
of Excess Units held by such holder, (B) the redemption price of the Excess
Units, (C) the date on which such Excess Units shall be redeemed, which date
shall be no later than sixty (60) days following the receipt of the Exchange
Notice, (D) the place or places where such Excess Units are to be surrendered
for payment of the Redemption Price, (E) that distributions on the Excess Units
will cease to accrue on such redemption date, and (F) that payment of the
redemption price will be made upon presentation and surrender of such Excess
Units.
(iv) The redemption of Series B Preferred Units described in
Sections 9(a)(ii) and 9(a)(iii) hereof shall be subject to the provisions of
Sections 6(b)(i) and Section 6(c)(ii)
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hereof; provided, however, that the term "redemption price" in such Section
shall be read to mean the original Capital Contribution per Series B Preferred
Unit being redeemed plus all accrued and unpaid distributions to the redemption
date.
(v) Notwithstanding anything to the contrary set forth
hereinabove, (A) no amount of Series B Preferred Units held by any holder and
tendered for exchange at any time will be exchangeable hereunder for Series B
Preferred Stock to the extent the exchange of such amount of Series B Preferred
Units would cause such holder of such Series B Preferred Units, after giving
effect to such exchange, to violate the limitations set forth in Section 4.2 of
the Charter, as supplemented by Section 7 of the Series B Preferred Articles
Supplementary; provided, however, that the Company will waive such limitation
and the limitations set forth in Section 4.2 of the Charter, as supplemented by
Section 7 of the Series B Preferred Articles Supplementary with respect to any
Partner, if (1) such Partner demonstrates to the Company's reasonable
satisfaction that the exchange of such Series B Preferred Units would not cause
the Company to fail to satisfy the requirements of Section 856(a)(6) and 856(h)
of the Code assuming [a] that there were no outstanding stock of any other class
of the Company and [b] such determination were made during the last half of the
Company's taxable year and (2) such waiver and exchange would not jeopardize the
REIT status of the Company (including, but not limited to, by taking into
account all beneficial and constructive ownership in the Company of such
Partner) or cause it to incur income which would fail to qualify as rents from
real property pursuant to 856(d)(2)(B) of the Code, and (3) such waiver and
exchange is not inconsistent with its fiduciary duties to all of its
shareholders and the Limited Partners, including the holders of the Series B
Preferred Units and the holders of Series B Preferred Stock; provided, however,
that notwithstanding anything to the contrary set forth in the foregoing, and
without limiting the foregoing, if the criteria set forth in the preceding
clauses (1) and (2) are satisfied with respect to a proposed exchange by a New
Partner or New Partner Affiliate, such waiver and exchange shall be deemed to be
not inconsistent with the fiduciary duties set forth above; and (B) at no time
may exchange rights be exercised for fewer than 850,000 Series B Preferred
Units, unless the total number of outstanding Series B Preferred Units not
previously surrendered shall be less than 850,000 at such time, in which case
exchange rights may be exercised for no fewer than all such outstanding Series B
Preferred Units, subject, in any event, to the provisions in the foregoing
clause (A).
(b) Procedure for Exchange. (i) Any exchange shall be exercised
pursuant to a notice of exchange (the "Exchange Notice") delivered to the
General Partner by the holder who is exercising such exchange right, by (y) fax
and (z) by certified mail postage prepaid. Except as otherwise provided in
Sections 9(a)(ii) and 9(a)(iii) hereof, the General Partner and the Partnership
shall effect any exchange of Series B Preferred Units by delivering to each
holder of record of Series B Preferred Units, within ten (10) Business Days
following receipt of the Exchange Notice, (A) certificates representing the
Series B Preferred Stock being issued in exchange for the Series B Preferred
Units of such holder being exchanged and (B) a written notice stating (1) the
exchange date, which may be the date of such written notice or any other date
which is not later than fifteen (15) Business Days following the receipt of the
Exchange
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Notice, (2) the Series B Exchange Price, and (3) that distributions on the
Series B Preferred Units will cease to accrue on such exchange date. As a
condition to the exchange, the General Partner may require the holders of Series
B Preferred Units to make such representations as may be reasonably necessary
for the General Partner to establish that the issuance of Series B Preferred
Stock pursuant to the exchange shall not be required to be registered under the
Securities Act of 1933, as amended, or any state securities laws. Any shares of
Series B Preferred Stock issued pursuant to this Section 9 shall be duly
authorized, validly issued, fully paid and nonassessable, and shall be delivered
free of any pledge, lien, encumbrance or restriction other than those provided
in the Charter, the Bylaws of the Company, the Securities Act of 1933, as
amended and relevant state securities or blue sky laws or created by the
exchanging holder of Series B Preferred Units. Each Series B Preferred Unit
exchanged hereunder for a share of Series B Preferred Stock shall be transferred
to and acquired by the General Partner and shall not be canceled or redeemed
while such share of Series B Preferred Stock is outstanding.
The certificates representing the Series B Preferred Shares
issued upon exchange of the Series B Preferred Units shall contain the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR (B) IF THE
CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES
REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY TO
THE CORPORATION, THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION
5 OF THE ACT AND THE RULES AND REGULATIONS
THEREUNDER.
(ii) In the event of an exchange of Series B Preferred Units
for shares of Series B Preferred Stock, an amount equal to the accrued and
unpaid distributions, whether or not declared, to the date of exchange on any
Series B Preferred Units tendered for exchange shall continue to accrue on such
Series B Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series B Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series B Preferred Unit that was validly exchanged into
Series B Preferred Stock pursuant to this section (other than the General
Partner now holding such Series B Preferred Unit), be entitled to receive a
distribution out of Available Cash with respect to such exchanged Unit, if
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98
such holder, after such exchange, is entitled to receive a distribution from the
Company with respect to the share of Series B Preferred Stock for which such
Series B Preferred Unit was exchanged or redeemed.
(iii) Fractional shares of Series B Preferred Stock shall not
to be issued upon any exchange hereunder but, in lieu thereof, the General
Partner will pay a cash adjustment based upon the fair market value of the
Series B Preferred Stock on the day prior to the exchange date as determined in
good faith by the Board of Directors of the General Partner.
(c) Adjustment of Exchange Price. (i) The Series B Exchange Price is
subject to adjustment upon certain events, including, (a) subdivisions,
combinations and reclassifications of the Series B Preferred Stock, and (b)
distributions to all holders of Series B Preferred Stock of evidences of
indebtedness of the Company or assets (including securities, but excluding
dividends and distributions paid in cash out of equity applicable to Series B
Preferred Stock).
(ii) In case the General Partner shall be a party to any
transaction (including, without limitation, a merger, consolidation, statutory
share exchange, tender offer for all or substantially all of the General
Partner's capital stock or sale of all or substantially all of the General
Partner's assets), in each case as a result of which the Series B Preferred
Stock will be converted into the right to receive shares of capital stock, other
securities or other property (including cash or any combination thereof), each
Series B Preferred Unit will thereafter be exchangeable into the kind and amount
of shares of capital stock and other securities and property receivable
(including cash or any combination thereof) upon the consummation of such
transaction by a Partner holding that number of shares of Series B Preferred
Stock or fraction thereof into which one Series B Preferred Unit was
exchangeable immediately prior to such transaction. The General Partner may not
become a party to any such transaction unless the terms thereof are consistent
with the foregoing. In the event of any conflict between the provisions of this
Section 9(c)(ii) and Sections 7.3 or 14.1 or Article 16 of the Agreement, the
provisions of this Section 9(c)(ii) shall control.
SECTION 10. No Conversion Rights. The holders of the Series B
Preferred Units shall not have any rights to convert such shares into shares of
any other class or series of stock or into any other securities of, or interest
in, the Partnership.
SECTION 11. No Sinking Fund. No sinking fund shall be
established for the retirement or redemption of Series B Preferred Units.
SECTION 12. No Preemptive or Other Rights. The holders of
Series B Preferred Units shall have no preemptive rights, including preemptive
rights with respect to any Units or other Partnership Interest of the
Partnership convertible into or carrying rights or options to purchase any such
Series B Preferred Units and including the provisions of Section 4.4 of the
Agreement.
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Exhibit G
SUMMIT PROPERTIES PARTNERSHIP, L.P.
CERTIFICATE OF DESIGNATIONS
(EFFECTIVE AS OF SEPTEMBER 3, 1999)
SERIES C CUMULATIVE REDEEMABLE PERPETUAL PREFERRED UNITS
SECTION 1. Definitions. The following terms shall have the meanings
herein below ascribed thereto for purposes of this Certificate of Designations,
and all other capitalized terms used herein shall have the meanings thereto
ascribed in the Agreement (as hereinafter defined):
"Affiliate Parity Placement" shall have the meaning set forth therefor
in Section 7(b) hereof.
"Agreement" shall mean that Amended and Restated Agreement of Limited
Partnership of Summit Properties Partnership, L.P., a Delaware limited
partnership (the "Partnership"), dated as of May 23, 2000, as amended.
"Charter" shall have the meaning set forth therefor in Section 3(d)
hereof.
"Class C New Partner Affiliate" shall mean a Person who holds an
interest, directly or indirectly, in the Class C New Partner as of the date
hereof.
"Contribution Agreement" shall mean that certain Contribution
Agreement, dated as of September 3, 1999, by and among the Company, the
Partnership, The Times Mirror Company and the Class C New Partner.
"control" shall mean the power to direct the actions of a Person,
regardless of whether the same shall involve an ownership interest in such
Person.
"Excess Units" shall have the meaning set forth therefor in Section
9(a)(iii) hereof.
"Exchange Notice" shall have the meaning set forth therefor in Section
9(b) hereof.
"Exempt Affiliate Parity Placement" shall have the meaning set forth
therefor in Section 7(b) hereof.
"Junior Units" shall have the meaning set forth therefor in Section
3(d) hereof.
"Parent" shall mean the direct or indirect parent of a Class C New
Partner.
"Parity Units" shall mean any class or series of Partnership Interests
of the Partnership now or hereafter authorized, issued or outstanding expressly
designated by the Partnership to
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rank on a parity with Series C Preferred Units with respect to distributions and
rights upon voluntary or involuntary liquidation, winding-up or dissolution of
the Partnership. Without limiting the foregoing, the Series C Preferred Units
and the Partnership's 8.95% Series B Cumulative Redeemable Perpetual Preferred
Units are hereby expressly designated by the Partnership to rank on a parity
with each other with respect to distributions and rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership.
"Partnership Affiliate" shall mean any Person controlled by,
controlling or under common control with the Partnership.
"Priority Return"shall mean, an amount equal to 8.75% per annum,
determined on the basis of a 360-day year of twelve (12) 30-day months (or
actual days for any month which is shorter than a full monthly period),
cumulative to the extent not distributed for any given distribution period
pursuant to Section 3 hereof, of the stated value of $25.00 per Series C
Preferred Unit, commencing on the date of issuance of such Series C Preferred
Unit.
"PTP" shall mean a "publicly traded partnership" within the meaning of
Section 7704 of the Code.
"Series C Exchange Price" shall have the meaning set forth therefor in
Section 9(a)(i) hereof.
"Series C Redemption Price" shall have the meaning set forth therefor
in Section 6(a) hereof.
"Series C Preferred Articles Supplementary" shall mean those certain
Articles Supplementary designating the Series C Preferred Stock, executed by the
Company as of September 3, 1999.
"Series C Preferred Stock" shall have the meaning set forth therefor in
Section 9(a)(i) hereof.
"Series C Preferred Unit Distribution Payment Date" shall have the
meaning set forth therefor in Section 3(a) hereof.
"Series C Preferred Unit Partnership Record Date" shall have the
meaning set forth therefor in Section 3(a) hereof.
"Series C Preferred Units" shall have the meaning set forth therefor in
Section 2 hereof.
SECTION 2. Designation and Number. Pursuant to Section 4.2A of the
Agreement, a series of Partnership Units in the Partnership designated as the
"8.75% Series C Cumulative
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Redeemable Perpetual Preferred Units" (the "Series C Preferred Units") is hereby
established. The number of Series C Preferred Units shall be 2,200,000.
SECTION 3. Distributions.
(a) Payment of Distributions. The Series C Preferred Units shall rank
on a parity with the Series B Preferred Units with respect to payment of
distributions and the distribution of assets upon liquidation, dissolution or
winding-up. Subject to the rights of holders of Parity Units and holders of
Units ranking senior to the Series C Preferred Units as to the payment of
distributions, holders of Series C Preferred Units shall be entitled to receive,
when, as and if declared by the Partnership acting through the General Partner,
out of Available Cash, pursuant to Article 5 of the Agreement, cumulative
preferential cash distributions at the rate per annum of 8.75% of the original
Capital Contribution per Series C Preferred Unit. Such distributions shall be
cumulative, shall accrue from the original date of issuance and will be payable:
(i) quarterly in arrears, for the first three quarters on the last day (or, if
not a Business Day (as hereinafter defined), the next succeeding Business Day)
of each of March, June and September, and for the last quarter on December 21st
(or if not a Business Day, the next succeeding Business Day), commencing on
September 30, 1999 (each, a "Series C Preferred Unit Distribution Payment
Date"), and (ii) in the event of (A) an exchange of Series C Preferred Units
into Series C Preferred Stock, or (B) a redemption of Series C Preferred Units,
on the exchange date or redemption date, as applicable. The amount of the
distribution payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months and for any period shorter than a full quarterly
period for which distributions are computed, the amount of the distribution
payable will be computed on the basis of the actual number of days elapsed in
such period; provided, however, that for each calendar year (x) the amount of
the distribution for the period November 1 through December 21 shall be computed
on the basis of two 30-day months plus twenty-one (21) days and (y) the amount
of the distribution for the period December 22 through March 31 shall be
computed on the basis of three 30-day months plus nine (9) days. If any date on
which distributions are to be made on the Series C Preferred Units is not a
Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series C Preferred Units will be
made to the holders of record of the Series C Preferred Units on the relevant
record dates to be fixed by the Partnership acting through the General Partner,
which record dates shall be the twentieth (20th) day of the calendar month in
which the applicable Series C Preferred Unit Distribution Payment Date falls or
on such earlier date designated by the Board of Directors of the General Partner
as the record date for such distribution that is not more than thirty (30) days
prior to such Series C Preferred Unit Distribution Payment Date (the "Series C
Preferred Unit Partnership Record Date").
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(b) Prohibition on Distribution. No distributions on Series C Preferred
Units shall be authorized by the General Partner or paid or set apart for
payment by the Partnership at any such time as the terms and provisions of any
agreement of the Partnership or the Company, including any agreement relating to
their indebtedness, prohibits such authorization, payment or setting apart for
payment or provides that such authorization, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or to the
extent that such authorization or payment shall be restricted or prohibited by
law.
(c) Distributions Cumulative. Notwithstanding the provisions of Section
3(b) hereof, distributions on the Series C Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership, including
any agreement relating to its indebtedness, at any time prohibit the current
payment of distributions, whether or not the Partnership has earnings, whether
or not there are funds legally available for the payment of such distributions
and whether or not such distributions are authorized. Accrued but unpaid
distributions on the Series C Preferred Units will accumulate as of the date on
which they first become payable pursuant to Section 3(a) (without reference to
Section 3(b)). Distributions on account of arrears for any past distribution
periods may be declared and paid at any time, without reference to a regular
Series C Preferred Unit Distribution Payment Date to holders of record of the
Series C Preferred Units on the record date fixed by the Partnership acting
through the General Partner, which date shall not exceed thirty (30) days prior
to the payment date. Accumulated and unpaid distributions will not bear
interest.
(d) Priority as to Distributions.
(i) So long as any Series C Preferred Units are outstanding,
no distribution of cash or other property shall be authorized, declared, paid or
set apart for payment on or with respect to any class or series of Partnership
Interest ranking junior as to the payment of distributions or rights upon a
voluntary or involuntary liquidation, dissolution or winding-up of the
Partnership to the Series C Preferred Units (collectively, "Junior Units"), nor
shall any cash or other property (other than capital stock of the General
Partner which corresponds in ranking to the Partnership Interests being
acquired) be set aside for or applied to the purchase, redemption or other
acquisition for consideration of any Series C Preferred Units, any Parity Units
or any Junior Units, unless, in each case, all distributions accumulated on all
Series C Preferred Units and all classes and series of outstanding Parity Units
have been paid in full (or a sum sufficient for such full payment has been
irrevocably deposited in trust for payment). The foregoing sentence will not
prohibit (A) distributions payable solely in Junior Units, (B) the conversion of
Junior Units or Parity Units into Junior Units, or (C) the redemption of
Partnership Interests corresponding to any Series C Preferred Stock, Parity
Preferred Stock or Junior Stock to be purchased by the Company pursuant to
Section 4.5 of the Amended and Restated Articles of Incorporation of the Company
(the "Charter") to preserve the Company's status as a real estate investment
trust, provided that such redemption shall be upon the same terms as the
corresponding purchase pursuant to Article IV of the Charter.
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(ii) At any time when the Partnership is in arrears on the
payment of distributions on the Series C Preferred Units for a prior
distribution period (and a sum sufficient for the full distribution then payable
is not irrevocably deposited in trust for payment), all distributions authorized
and declared on the Series C Preferred Units and all classes or series of
outstanding Parity Units shall be authorized and declared so that the amount of
distributions authorized and declared per Series C Preferred Unit and such other
classes or series of Parity Units shall in all cases bear to each other the same
ratio that accrued and unpaid distributions per Series C Preferred Unit and such
other classes or series of Parity Units (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such class or series of Parity Units do not have cumulative distribution
rights) bear to each other. Any distribution payment made on the Series C
Preferred Units shall first be credited against the earliest accrued but unpaid
distribution due with respect to such Series C Preferred Units which remains
payable.
(e) No Further Rights. Holders of Series C Preferred Units shall not be
entitled to any distributions with respect to such Series C Preferred Units,
whether payable in cash, other property or otherwise, in excess of the full
cumulative distributions described herein (it being understood that such holder
may have additional rights or claims to the remaining assets of the Partnership
as a result of its ownership of Partnership Units of other classes or series or
its status as General Partner).
SECTION 4. Allocations. The Series C Preferred Units shall be subject
to all of the provisions of Article 6 of the Agreement.
SECTION 5. Liquidation Proceeds.
(a) Upon voluntary or involuntary liquidation, dissolution or
winding-up of the Partnership, distributions on the Series C Preferred Units
shall be made in accordance with Section 13.2 of the Agreement.
(b) Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than thirty (30) and not more than sixty
(60) days prior to the payment date stated therein, to each holder of record of
the Series C Preferred Units at the respective addresses of such holders as the
same shall appear on the transfer records of the Partnership.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series C
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership with respect to such Series C Preferred Units (it being
understood that such holder may have additional rights or claims to
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the remaining assets of the Partnership as a result of its ownership of
Partnership Units of other classes or series or its status as General Partner).
(d) Consolidation, Merger or Certain Other Transactions. The voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Company or the Partnership to, or the consolidation or merger
or other business combination of the Partnership or the Company with or into,
any corporation, partnership, limited liability company, trust or other entity
(or of any corporation, partnership, limited liability company, trust or other
entity with or into the Partnership) or a statutory share exchange of the
Company shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Partnership.
SECTION 6. Optional Redemption.
(a) Right of Optional Redemption.
(i) Except as otherwise expressly provided in this Section 6,
the Series C Preferred Units may not be redeemed prior to the fifth (5th)
anniversary of the issuance date. On or after such date, the Partnership shall
have the right to redeem the Series C Preferred Units, in whole or in part, at
any time or from time to time, upon not less than thirty (30) nor more than
sixty (60) days' written notice, at a redemption price (the "Series C Redemption
Price"), payable in cash, equal to the Capital Account balance of such holder of
Series C Preferred Units attributable to such redeemed Units; provided, however,
that no redemption pursuant to this Section 6 will be permitted if the Series C
Redemption Price does not equal or exceed the original Capital Contribution with
respect to such Units plus the cumulative Priority Return thereon, whether or
not declared, to the redemption date to the extent not previously distributed.
If fewer than all of the outstanding Series C Preferred Units are to be
redeemed, the Series C Preferred Units to be redeemed shall be selected pro rata
(as nearly as practicable without creating fractional Partnership Units).
(ii) In the event that (1) any Series C Preferred Units shall,
at any time, be transferred to any Substituted Limited Partner and (2) the
General Partner shall determine in good faith that such transfer to such Person
has caused, would cause, or would likely cause, the Partnership to be a PTP
(taking into account the admission of any Partners or the transfer of any Units
to any other Person under any agreements of which the General Partner is then
aware or contemplating), such transferred Units shall be subject to the right of
the Partnership to redeem such Units, in whole but not in part, at any time and
from time to time, including without limitation, as of the end of the day
immediately preceding the day of the effectiveness of such transfer, for the
Series C Redemption Price of such Units payable in (y) such number of shares of
Series C Preferred Stock to which the Partner holding such Units being redeemed
(excluding Excess Units) would be entitled if redeemed at the Series C Exchange
Price then in effect pursuant to Section 9 hereof and (z) cash, with respect to
any such Units that would be Excess Units.
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(b) Limitation on Redemption.
(i) The Redemption Price of the Series C Preferred Units
(other than the portion thereof attributable to accumulated but unpaid
distributions) will be payable solely out of the sale proceeds of capital stock
of the Company that are contributed by the Company to the Partnership as
additional capital contributions, or out of the sale of Partnership Interests,
and from no other source. For purposes of the preceding sentence, "capital
stock" means any equity securities (including Common Stock and Preferred Stock
(as such terms are defined in the Charter)), shares, depository receipts,
participation or other ownership interests (however designated) and any rights
(other than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the
outstanding Series C Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series C Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
(c) Procedures for Redemption.
(i) Notice of redemption will be (A) faxed, and (B) mailed by
the Partnership, by certified mail, postage prepaid, not less than thirty (30)
nor more than sixty (60) days prior to the redemption date, addressed to the
respective holders of record holding the Series C Preferred Units at their
respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series C Preferred Units except as to any
holder to whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (m) the redemption
date, (n) the Redemption Price, (o) the aggregate number of Series C Preferred
Units to be redeemed and, if fewer than all of the outstanding Series C
Preferred Units are to be redeemed, the number of Series C Preferred Units to be
redeemed held by such holder, which number shall equal such holder's pro rata
share (based on the percentage of the aggregate number of outstanding Series C
Preferred Units the total number of Series C Preferred Units held by such holder
represents) of the aggregate number of Series C Preferred Units to be redeemed,
(p) the place or places where such Series C Preferred Units are to be
surrendered for payment of the Redemption Price, (q) that distributions on the
Series C Preferred Units to be redeemed will cease to accumulate on such
redemption date and (r) that payment of the Redemption Price will be made upon
presentation and surrender of such Series C Preferred Units.
(ii) If the Partnership gives a notice of redemption in
respect of Series C Preferred Units (which notice will be irrevocable) then, by
12:00 noon, New York City time, on the redemption date, the Partnership will
deposit irrevocably in trust for the benefit of the Series C Preferred Units
being redeemed funds sufficient to pay the applicable Redemption Price and will
give irrevocable instructions and authority to pay such Redemption Price to the
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holders of the Series C Preferred Units upon surrender of the Series C Preferred
Units by such holders at the place designated in the notice of redemption. If
the Series C Preferred Units are evidenced by a certificate and if fewer than
all Series C Preferred Units evidenced by any certificate are being redeemed, a
new certificate shall be issued upon surrender of the certificate evidencing all
such Series C Preferred Units, evidencing the unredeemed Series C Preferred
Units, without cost to the holder thereof. On and after the date of redemption,
distributions will cease to accumulate on the Series C Preferred Units or
portions thereof called for redemption, unless the Partnership defaults in the
payment or deposit, in accordance with the foregoing, of the Redemption Price.
If any date fixed for redemption of Series C Preferred Units is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price is
improperly withheld or refused and not paid by the Partnership, distributions on
such Series C Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
SECTION 7. Voting Rights.
(a) General. Partners holding the Series C Preferred Units will not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as set forth in this Section 7. In
connection with the foregoing, the references in Sections 14.1A and 14.2A of the
Agreement to Partnership Interests shall exclude the Series C Preferred Units.
(b) Certain Voting Rights. So long as any Series C Preferred Units
remain outstanding, the Partnership shall not, without the affirmative vote of
the Partners holding at least two-thirds of the Series C Preferred Units
outstanding at the time:
(i) authorize, create, or increase the authorized or issued
amount of any class or series of Partnership Interests ranking
senior to the Series C Preferred Units with respect to payment
of distributions or rights upon liquidation, dissolution or
winding-up or reclassify any Partnership Interests into any
such senior Partnership Interest, or create, authorize or
issue any obligations or security convertible into or
evidencing the right to purchase any such senior Partnership
Interests;
(ii) issue any Parity Units to a Partnership Affiliate,
reclassify any Partnership Interest held by a Partnership
Affiliate into any such Parity Unit or issue any obligation or
security convertible into or evidencing the right to
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purchase any such Parity Unit to a Partnership Affiliate (any
such issuance or reclassification, referred to as an
"Affiliate Parity Placement"); provided, however, that
notwithstanding the foregoing provisions of this clause (ii)
the Partnership may effect any Affiliate Parity Placement to
the extent such placement is either (A) in connection with the
issuance by the Company of corresponding preferred stock to
persons who are not Partnership Affiliates or (B) upon terms
no more favorable to such Partnership Affiliates than those
that the General Partner, in the good faith determination of
its Board of Directors, would be willing to offer to an
unrelated party in an arm's length transaction (such
placement, an "Exempt Affiliate Parity Placement");
(iii) either (A) consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety to,
any corporation or other entity or (B) amend, alter or repeal
the provisions of the Agreement, whether by merger,
consolidation or otherwise, in each case in a transaction or
manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting powers of
the Series C Preferred Units or the Partners holding such
Units as set forth in the Agreement and this Certificate of
Designations; or
(iv) enter into any contract, mortgage, loan or other
agreement that (A) prohibits or restricts a holder of Series C
Preferred Units from exercising any rights it has pursuant to
Section 9 hereof (subject to all remaining terms and
provisions hereof) to effect an exchange of Series C Preferred
Units or (B) expressly prohibits the Company from making an
offering of "capital stock" pursuant to Section 6(b)(i) hereof
which the Company must make in order to satisfy an obligation
to pay for Excess Units pursuant to Section 9 hereof;
provided, however, that the foregoing restriction shall not
apply to any agreement of the Company entered into with an
underwriter in connection with an offering of securities or,
except as otherwise provided herein, any agreement of the
Company entered into in connection with any proposed merger,
consolidation, sale of assets or similar transaction;
provided, however, that with respect to the occurrence of a merger,
consolidation or a sale or lease of all of the Partnership's assets as an
entirety, so long as (l) the Partnership is the surviving entity and the Series
C Preferred Units remain outstanding with the terms thereof unchanged, or (2)
the resulting, surviving or transferee entity is a partnership, limited
liability company or other pass-through entity organized under the laws of any
state and substitutes the Series C Preferred Units for other interests in such
entity having substantially the same terms and rights as the Series C Preferred
Units, including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall be deemed not to materially and adversely affect such powers, special
rights, preferences, privileges or voting powers of the Series C Preferred Units
or the Partners holding such Units;
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provided further that any increase in the amount of Partnership Interests or the
creation or issuance of any other class or series of Partnership Interests or
obligation or security convertible into or evidencing the right to purchase any
such Partnership Interests, in each case ranking (y) junior to the Series C
Preferred Units with respect to payment of distributions and the distribution of
assets upon liquidation, dissolution or winding-up, or (z) on a parity to the
Series C Preferred Units with respect to payment of distributions and the
distribution of assets upon liquidation, dissolution or winding-up (other than
for Affiliate Parity Placements that are not Exempt Affiliate Parity Placements)
shall be deemed not to materially and adversely affect such powers, special
rights, preferences, privileges or voting powers of the Series C Preferred Units
or the Partners holding such Units; and provided further, that any agreement
pursuant to which a transaction that satisfies the conditions in either of the
foregoing two provisos is to be effected shall be deemed not to be an agreement
requiring consent under the foregoing clause (iv).
In addition to the foregoing, so long as any Series C Preferred Stock
or Series C Preferred Units remains outstanding, the Company shall not, without
the affirmative vote of the holders of the Series C Preferred Stock outstanding
and the Series C Preferred Units outstanding at the time, if any, which if the
Series C Preferred Stock and Series C Preferred Units voted together as a single
class would represent two-thirds of the combined outstanding Series C Preferred
Stock and Series C Preferred Units: (i) designate or create, or increase the
authorized or issued amount of, any class or series of shares ranking senior to
the Series C Preferred Stock with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any authorized shares
of the Company into any such shares, or create, authorize or issue any
obligations or security convertible into or evidencing the right to purchase any
such shares; (ii) issue any shares of Parity Stock to a Company Affiliate (as
hereinbelow defined), reclassify any authorized shares of the Company held by a
Company Affiliate into any such shares of Parity Stock or issue any obligation
or security convertible into or evidencing the right to purchase any such shares
of Parity Stock to a Company Affiliate (any such issuance or reclassification,
referred to as a "Company Affiliate Parity Placement"); provided, however, that
notwithstanding the foregoing provisions of this clause (ii) the Company may
effect any Company Affiliate Parity Placement to the extent such placement is
upon terms no more favorable to such Company Affiliate than those that the
Company, in the good faith determination of its Board of Directors, would be
willing to offer to an unrelated party in an arm's length transaction (such
placement, an "Exempt Company Affiliate Parity Placement"); or (iii) either (A)
consolidate, merge into or with, or convey, transfer or lease its assets
substantially as an entirety, to any corporation or other entity, or (B) amend,
alter or repeal the provisions of the Charter (including the Series C Preferred
Articles Supplementary) or Bylaws, whether by merger, consolidation or
otherwise, in each case in a transaction or manner that would materially and
adversely affect the powers, special rights, preferences, privileges or voting
powers of the Series C Preferred Stock or the holders thereof as set forth in
the Series C Preferred Articles Supplementary; provided, however, that with
respect to the occurrence of a merger, consolidation or a sale or lease of all
of the Company's assets as an entirety, so long as (1) the Company is the
surviving entity and the Series C Preferred Stock
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remains outstanding with the terms thereof unchanged, or (2) the resulting,
surviving or transferee entity is organized under the laws of any state and
substitutes the Series C Preferred Stock for other preferred stock or interests
having substantially the same terms and same rights as the Series C Preferred
Stock, including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall be deemed not to materially and adversely affect such powers, special
rights, preferences, privileges or voting powers of the Series C Preferred Stock
or the holders thereof and provided further that any increase in the amount of
authorized Preferred Stock or the creation or issuance of any other class or
series of Preferred Stock or obligation or security convertible into or
evidencing the right to purchase any such Preferred Stock, or any increase in an
amount of authorized shares of each class or series, in each case ranking either
(y) junior to the Series C Preferred Stock with respect to payment of
distributions and the distribution of assets upon liquidation, dissolution or
winding-up, or (z) on a parity with the Series C Preferred Stock with respect to
payment of distributions and the distribution of assets upon liquidation,
dissolution or winding-up (other than for Company Affiliate Parity Placements
that are not Exempt Company Affiliate Parity Placements) shall be deemed not to
materially and adversely affect such powers, special rights, preferences,
privileges or voting powers of the Series C Preferred Stock or the holders
thereof. For purposes hereof (i) "Company Affiliate" shall mean any Person
controlled by, controlling or under common control with the Company; (ii)
"control" means the power to direct the actions of a Person, regardless of
whether the same shall involve an ownership interest in such Person and (iii)
"Person" means a natural person, partnership (whether general or limited),
trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual entity
in its own or representative capacity.
In the event of any conflict between the provisions of Article 14 of
the Agreement and the provisions of this Section 7, the provisions of this
Section 7 shall control.
(c) No General Partner Voting Rights. Notwithstanding anything to the
contrary, in no event shall the General Partner or any Partnership Affiliate
have any voting, consent or approval rights in respect of any Series C Preferred
Units it or they may hold that have been exchanged or redeemed pursuant to
Sections 6 or 9 hereof, and any percentage or portion of outstanding Series C
Preferred Units that may be required hereunder for any vote, consent or approval
of holders thereof shall be determined as if all such Series C Preferred Units
then held by the General Partner or any Partnership Affiliates that have been
exchanged or redeemed pursuant to Sections 6 or 9 hereof were not outstanding.
SECTION 8. Transfer Restrictions. Notwithstanding anything to the
contrary set forth in Article 11 of the Agreement, in the event any Partner
should desire to effect a transfer of any Series C Preferred Units and such
proposed transfer of all or any portion of the Series C Preferred Units
(A) would not violate the provisions of Section 11.3C or 11.3D of the
Agreement,
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(B) would effect a transfer to an accredited investor within the
meaning of Regulation D under the Securities Act,
(C) (i) in the event that the Partnership shall satisfy the private
placement safe harbor of Treasury Regulation Section 1.7704-1(h)
(taking into account any person treated as a partner under Treasury
Regulation Section 1.7704-1(h) (3)), would not cause the total number
of such persons holding Series C Preferred Units to exceed five (5),
(ii) for so long as the Partnership is satisfying the safe harbor
provisions of Notice 88-75 (1988-2 C.B. 386), would not cause the
aggregate number of partners holding Series C Preferred Units,
determined on a look-through basis (as provided in such notice)
("Look-Through Partners"), to exceed 75 and (iii) would either satisfy
the definition of a "block transfer" as defined in Treasury Regulation
Section 1.7704-1(e) as in effect on the date hereof or otherwise
qualify as a transfer not involving trading within the meaning of
Treasury Regulation Section 1.7704-1(e) as in effect on the date hereof
and
(D) with respect to such proposed transfer, the transferor and
transferee, as applicable, represent to the General Partner in an
ownership certificate (the "Ownership Certificate") in such form as is
reasonably acceptable to the General Partner
(i) in the event that the Partnership is complying with
the safe harbor of Notice 88-75 (1988-2 C.B. 386) at
the time of such proposed transfer, the maximum
number of Look-Through Partners (as hereinafter
defined) in the transferee;
(ii) that (A) such transferee would not cause the Company
to fail to satisfy the requirements of Section
856(a)(6) and 856(h) of the Code assuming that (I)
all Series C Preferred Units, including those to be
transferred to such transferee, were exchanged for
Series C Preferred Stock (as defined below), and (II)
such determination was made during the last half of
the Company's taxable year, and
(B) with respect to such transferee's
ownership of such Series C Preferred Stock (I) no
"individual" would be treated as owning more than 50%
of the outstanding shares of Series C Preferred Stock
owned by the transferee and (II) no "individual"
would be treated as owning more than 8% of the value
of the outstanding shares of the Company's Stock (as
defined in the Charter) applying, in each case, the
provisions of Section 542(a)(2) of the Code and
Section 544 of the Code, as modified by Section
856(h) of the Code;
(iii) in the event that the Partnership is complying with
the safe harbor of Notice 88-75 (1988-2 C.B. 386) at
the time of such proposed transfer, such purported
transferee's undertaking not to allow the number of
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Look-Through Partners certified in clause (i) to
increase without the General Partner's prior written
consent;
(iv) such purported transferee's undertaking not to permit
the fact stated in clause (ii) to become untrue; and
(v) such purported transferee's undertaking to become a
Substituted Limited Partner and to be bound by the
terms of the Partnership Agreement,
the General Partner shall consent to the transfer of such Units to such
transferee as of the date of such Ownership Certificate (the "Consent Date") and
(a) such transferee shall be considered a Substituted Limited Partner
upon receipt by the General Partner of a written agreement of such
transferee to become a Substituted Limited Partner and to be bound by
the terms of the Agreement and
(b) the Partnership and the General Partner shall treat such
Substituted Limited Partner as the absolute owner of the Series C
Preferred Units transferred in all respects;
provided, however, that notwithstanding the foregoing, in the event a transfer
to a transferee which is not a Class C New Partner Affiliate effects a transfer
to a person or entity which is not able to satisfy the provisions of clause (ii)
above at the time such transferee exercises any right to cause an exchange of
such Units pursuant to Section 9 hereof and
(A) such transferee has acquired (directly or indirectly) any
additional equity interest in the stock of the Company subsequent to
the Consent Date or
(B) any individual to whom such Series C Preferred Stock would be
attributed (applying the provisions of Section 544 of the Code as
modified by Section 856(h) of the Code) would be deemed to own more of
the Company's stock than such individual was deemed to own on the
Consent Date (applying the provisions of Section 544 of the Code as
modified by Section 856(h) of the Code),
then such transferee shall not have the benefits set forth in Section 9(a)(iii)
hereof with respect to "Excess Units." For purposes of this Section 8 "transfer"
shall have the meaning thereto attributed in Section 11.1A of the Agreement;
provided, however, that nothing contained in this provision shall prevent the
right to pledge any Series C Preferred Units as such right is set forth in the
Contribution Agreement.
SECTION 9. Exchange Rights. (a) Right to Exchange. (i) Series C
Preferred Units will be exchangeable, subject to Section 9(a)(v) hereof
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(A) in whole or in part at any time on or after the tenth (10th)
anniversary of the date of issuance, at the option of the holders
thereof, for authorized but previously unissued shares of 8.75% Series
C Cumulative Redeemable Perpetual Preferred Stock of the Company
("Series C Preferred Stock") at an exchange rate of one share of Series
C Preferred Stock for one Series C Preferred Unit, subject to
adjustment as described below (the "Series C Exchange Price"),
(B) with respect to (y) below, at any time, and with respect to (z)
below, at any time prior to December 31, 2004, in each case, in whole
or in part, at the option of the holders of Series C Preferred Units
for Series C Preferred Stock if
(y) at any time full distributions shall not have been timely
made on any Series C Preferred Unit with respect to six (6)
prior quarterly distribution periods, whether or not
consecutive (provided that a distribution in respect of Series
C Preferred Units shall be considered timely made if made
within two (2) Business Days after the applicable Series C
Preferred Unit Distribution Payment Date if at the time of
such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions
were not timely made), or
(z) upon receipt by a holder of or holders of Series C
Preferred Units of (1) notice from the General Partner that
the General Partner has become aware of facts that will or
will likely cause the Company to become a PTP in such taxable
year and (2) an opinion rendered by an outside nationally
recognized independent counsel familiar with such matters
addressed to a holder of or holders of Series C Preferred
Units, that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be
or likely will be, a PTP,
(C) in whole or in part, at the option of any holder of Series C
Preferred Units prior to the tenth (10th) anniversary of the issuance
date and after the third (3rd) anniversary thereof if such holder of
Series C Preferred Units shall deliver to the General Partner either
(1) a private letter ruling addressed to such Partner or (2) an opinion
of independent counsel reasonably acceptable to the General Partner and
based on the enactment of temporary or final Treasury Regulations or
the publication of a Revenue Ruling, in either case to the effect that
an exchange of the Series C Preferred Units at such earlier time would
not cause the Series C Preferred Units to be considered "stock and
securities" within the meaning of Section 351(e) of the Code for
purposes of determining whether the holder of such Series C Preferred
Units is an "investment company" under Section 721(b) of the Code if an
exchange were permitted at such earlier date, and
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(D) in whole but not in part for Series C Preferred Stock if at any
time, (i) the Class C New Partner concludes based on results or
projected results that there exists (in the reasonable judgment of the
Class C New Partner) an imminent and substantial risk that the Class C
New Partner's interest in the Partnership represents or will represent
more than 18.0% of the total profits of or capital interests in the
Partnership for a taxable year, (ii) the Class C New Partner delivers
to the General Partner an opinion of nationally recognized independent
counsel, reasonably acceptable to the General Partner to the effect
that there is a substantial risk that its interest in the Partnership
does not or will not satisfy the 18.0% limit and (iii) the General
Partner agrees with the conclusions referred to in clauses (i) and (ii)
of this sentence, such agreement not to be unreasonably withheld.
(ii) Notwithstanding anything to the contrary set forth in
Section 9(a)(i) hereof, if an Exchange Notice has been delivered to the General
Partner, then the General Partner may, at its option, elect to redeem or cause
the Partnership to redeem all or a portion of the outstanding Series C Preferred
Units for cash in an amount equal to the original Capital Contribution per
Series C Preferred Unit to be redeemed and all accrued and unpaid distributions
thereon to the date of redemption. The General Partner may exercise its option
to redeem the Series C Preferred Units for cash pursuant to this Section
9(a)(ii) by giving each holder of record of Series C Preferred Units notice of
its election to redeem for cash, within ten (10) Business Days after receipt of
the Exchange Notice, by (m) fax, and (n) registered mail, postage paid, at the
address of each such holder as it may appear on the records of the Partnership
stating (A) the redemption date, which shall be no later than sixty (60) days
following the receipt of the Exchange Notice, (B) the redemption price, (C) the
place or places where the Series C Preferred Units are to be surrendered for
payment of the redemption price, (D) that distributions on the Series C
Preferred Units will cease to accrue on such redemption date; (E) that payment
of the redemption price will be made upon presentation and surrender of the
Series C Preferred Units and (F) the aggregate number of Series C Preferred
Units to be redeemed, and if fewer than all of the outstanding Series C
Preferred Units are to be redeemed, the number of Series C Preferred Units to be
redeemed held by such holder, which number shall equal such holder's pro-rata
share (based on the percentage of the aggregate number of outstanding Series C
Preferred Units the total number of Series C Preferred Units held by such holder
represents) of the aggregate number of Series C Preferred Units being redeemed.
(iii) In the event an exchange on any date (which such date
shall be referred to as the "Exchange Date") of all or a portion of Series C
Preferred Units pursuant to Section 9(a)(i) hereof would violate the Ownership
Limit (as hereinafter defined), after giving effect to the terms of the form of
waiver of ownership limitation attached hereto (the "Waiver"), which Waiver
shall be granted to the Class C New Partners in connection with and not later
than 60 days subsequent to their acquisition of the Series C Preferred Units or
a similar Waiver granted to a transferee of the Class C New Partners pursuant to
Section 8 hereof, the General Partner shall give written notice thereof to each
holder of record of Series C Preferred Units that
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delivers an Exchange Notice, within ten (10) Business Days following receipt of
the Exchange Notice, by (m) fax, and (n) registered mail, postage prepaid, at
the address of each such holder set forth in the records of the Partnership. In
such event, and provided that (A) the General Partner does not elect to waive
provisions on ownership limitation of the Company set forth in Article IV of the
Charter (the "Ownership Limit"), with respect to such holders of Series C
Preferred Units (which such determination shall be made in the sole and absolute
discretion of the General Partner) and (B) each holder of such units represents
to the General Partner that as of the Exchange Date such holder has not (a)
acquired (directly or indirectly) any additional equity interest in the Stock of
the Company subsequent to the date such holder acquired the Series C Preferred
Units (the "Consent Date") and (b) no individual to whom such Series C Preferred
Stock would be attributed (applying the provisions of Section 544 of the Code as
modified by Section 856(h) of the Code) would be deemed to own more of the
Company's Stock than such individual was deemed to own on the Consent Date
(applying the provisions of Section 544 of the Code as modified by Section
856(h) of the Code), each such holder of Series C Preferred Units shall be
entitled to exchange, pursuant to the provisions of Section 9(b) hereof a number
of Series C Preferred Units which would comply with the Ownership Limit (taking
into account any waiver of the Ownership Limit granted by the General Partner).
Any Series C Preferred Units held by a Partner that are not so exchangeable (the
"Excess Units") shall be redeemed by the Partnership for cash in an amount equal
to the original Capital Contribution per Excess Unit, plus any accrued and
unpaid distributions thereon, whether or not declared, to the date of
redemption. Notwithstanding anything to the contrary above in the Agreement, the
Contribution Agreement, or any other agreement among the parties in effect as of
the date hereof, if the General Partner fails to deliver the Waiver to the Class
C New Partners within 60 days of their acquisition of the Class C Preferred
Units pursuant to the Contribution Agreement, then, any Class C Preferred Units
tendered for exchange by any holder pursuant to this Section 9 shall be redeemed
for cash without regard to the limitations of Sections 9(a)(iv) or 6(b)(i). The
written notice of the General Partner shall state (A) the number of Excess Units
held by such holder, (B) the redemption price of the Excess Units, (C) the date
on which such Excess Units shall be redeemed, which date shall be no later than
sixty (60) days following the receipt of the Exchange Notice, (D) the place or
places where such Excess Units are to be surrendered for payment of the
Redemption Price, (E) that distributions on the Excess Units will cease to
accrue on such redemption date, and (F) that payment of the redemption price
will be made upon presentation and surrender of such Excess Units.
(iv) The redemption of Series C Preferred Units described in
Sections 9(a)(ii) and 9(a)(iii) hereof shall be subject to the provisions of
Sections 6(b)(i) and Section 6(c)(ii) hereof; provided, however, that the term
"redemption price" in such Section shall be read to mean the original Capital
Contribution per Series C Preferred Unit being redeemed plus all accrued and
unpaid distributions to the redemption date.
(v) Notwithstanding anything to the contrary set forth
hereinabove, (A) no amount of Series C Preferred Units held by any holder and
tendered for exchange at any time
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will be exchangeable hereunder for Series C Preferred Stock to the extent the
exchange of such amount of Series C Preferred Units would cause such holder of
such Series C Preferred Units, after giving effect to such exchange, to violate
the Ownership Limit, taking into account the Waiver; provided, however, that the
Company may waive the foregoing limitation in its sole and absolute discretion
and (B) at no time may exchange rights be exercised for fewer than 25% of the
amount of Series C Preferred Units issued on the date hereof, unless the total
number of outstanding Series C Preferred Units not previously surrendered shall
be less than 25% of the amount of Series C Preferred Units issued on the date
hereof at such time, in which case exchange rights may be exercised for no fewer
than all such outstanding Series C Preferred Units, subject, in any event, to
the provisions in the foregoing clause (A).
(b) Procedure for Exchange. (i) Any exchange shall be exercised
pursuant to a notice of exchange (the "Exchange Notice") delivered to the
General Partner by the holder who is exercising such exchange right, by (y) fax
and (z) by certified mail postage prepaid. Except as otherwise provided in
Sections 9(a)(ii) and 9(a)(iii) hereof, the General Partner and the Partnership
shall effect any exchange of Series C Preferred Units by delivering to each
holder of record of Series C Preferred Units, within ten (10) Business Days
following receipt of the Exchange Notice, (A) certificates representing the
Series C Preferred Stock being issued in exchange for the Series C Preferred
Units of such holder being exchanged and (B) a written notice stating (1) the
exchange date, which may be the date of such written notice or any other date
which is not later than fifteen (15) Business Days following the receipt of the
Exchange Notice, (2) the Series C Exchange Price, and (3) that distributions on
the Series C Preferred Units will cease to accrue on such exchange date. As a
condition to the exchange, the General Partner may require the holders of Series
C Preferred Units to make such representations as may be reasonably necessary
for the General Partner to establish that the issuance of Series C Preferred
Stock pursuant to the exchange shall not be required to be registered under the
Securities Act of 1933, as amended, or any state securities laws. Any shares of
Series C Preferred Stock issued pursuant to this Section 9 shall be duly
authorized, validly issued, fully paid and nonassessable, and shall be delivered
free of any pledge, lien, encumbrance or restriction other than those provided
in the Charter, the Bylaws of the Company, the Securities Act of 1933, as
amended and relevant state securities or blue sky laws or created by the
exchanging holder of Series C Preferred Units. Each Series C Preferred Unit
exchanged hereunder for a share of Series C Preferred Stock shall be transferred
to and acquired by the General Partner and shall not be canceled or redeemed
while such share of Series C Preferred Stock is outstanding.
The certificates representing the Series C Preferred Shares issued upon
exchange of the Series C Preferred Units shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF EXCEPT (A) PURSUANT TO AN EFFECTIVE
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR (B) IF THE
CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES
REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY TO
THE CORPORATION, THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION
5 OF THE ACT AND THE RULES AND REGULATIONS
THEREUNDER.
(ii) In the event of an exchange of Series C Preferred Units
for shares of Series C Preferred Stock, an amount equal to the accrued and
unpaid distributions, whether or not declared, to the date of exchange on any
Series C Preferred Units tendered for exchange shall continue to accrue on such
Series C Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series C Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series C Preferred Unit that was validly exchanged into
Series C Preferred Stock pursuant to this section (other than the General
Partner now holding such Series C Preferred Unit), be entitled to receive a
distribution out of Available Cash with respect to such exchanged Unit, if such
holder, after such exchange, is entitled to receive a distribution from the
Company with respect to the share of Series C Preferred Stock for which such
Series C Preferred Unit was exchanged or redeemed.
(iii) Fractional shares of Series C Preferred Stock shall not
to be issued upon any exchange hereunder but, in lieu thereof, the General
Partner will pay a cash adjustment based upon the fair market value of the
Series C Preferred Stock on the day prior to the exchange date as determined in
good faith by the Board of Directors of the General Partner.
(c) Adjustment of Exchange Price.
(i) The Series C Exchange Price is subject to adjustment upon
certain events, including, (a) subdivisions, combinations and reclassifications
of the Series C Preferred Stock, and (b) distributions to all holders of Series
C Preferred Stock of evidences of indebtedness of the Company or assets
(including securities, but excluding dividends and distributions paid in cash
out of equity applicable to Series C Preferred Stock).
(ii) In case the General Partner shall be a party to any
transaction (including, without limitation, a merger, consolidation, statutory
share exchange, tender offer for all or substantially all of the General
Partner's capital stock or sale of all or substantially all of the General
Partner's assets), in each case as a result of which the Series C Preferred
Stock will be converted into the right to receive shares of capital stock, other
securities or other property
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(including cash or any combination thereof), each Series C Preferred Unit will
thereafter be exchangeable into the kind and amount of shares of capital stock
and other securities and property receivable (including cash or any combination
thereof) upon the consummation of such transaction by a Partner holding that
number of shares of Series C Preferred Stock or fraction thereof into which one
Series C Preferred Unit was exchangeable immediately prior to such transaction.
The General Partner may not become a party to any such transaction if any shares
of Series C Preferred Stock or any Series C Preferred Units are then outstanding
if the terms thereof are inconsistent with the foregoing. In the event of any
conflict between the provisions of this Section 9(c)(ii) and Sections 7.3 or
14.1 or Article 16 of the Agreement, the provisions of this Section 9(c)(ii)
shall control.
SECTION 10. No Conversion Rights. The holders of the Series C Preferred
Units shall not have any rights to convert such Units into Units of any other
class or series of Units or into any other securities of, or interest in, the
Partnership.
SECTION 11. No Sinking Fund. No sinking fund shall be established for
the retirement or redemption of Series C Preferred Units.
SECTION 12. No Preemptive or Other Rights. The holders of Series C
Preferred Units shall have no preemptive rights, including preemptive rights
with respect to any Units or other Partnership Interest of the Partnership
convertible into or carrying rights or options to purchase any such Series C
Preferred Units and including the provisions of Section 4.4 of the Agreement.
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