Exhibit 10.2
--------------------------------------------------------------------------------
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
FORTRESS PARTNERS, L.P.
a Delaware limited partnership
----------------------
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP
AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM
AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT
THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
dated as of January 24, 2002
--------------------------------------------------------------------------------
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF FORTRESS PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
FORTRESS PARTNERS, L.P., dated as of January __, 2002, is entered into by and
between Fortress Investment Corp., a Maryland corporation (the "General
Partner"), the Special Limited Partner (as defined below) and the REIT
Subsidiaries (as defined below).
W I T N E S S E T H:
WHEREAS, the General Partner and the Special Limited Partner
(the "Original Partners") entered into the Agreement of Limited Partnership of
Fortress Partners, L.P. (the "Existing Partnership Agreement"), dated as of June
10, 1998, and the REIT Subsidiaries were subsequently admitted to the
Partnership as Limited Partners; and
WHEREAS, the Original Partners and the REIT Subsidiaries have
agreed to amend and restate the terms and conditions contained in the Existing
Partnership Agreement in their entirety as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
I. The Existing Partnership Agreement is hereby modified so
that all of the terms and conditions of the aforesaid Existing Partnership
Agreement shall be restated in their entirety as set forth herein.
II. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and assigns, and
shall be deemed to be effective as of the date hereof.
III. Any reference in any other document executed in
connection with this Agreement or the Existing Partnership Agreement to the
Existing Partnership Agreement shall be deemed to refer to this Agreement.
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.
"Actions" has the meaning set forth in Section 7.7 hereof.
"Additional Funds" has the meaning set forth in Section 4.3.A
hereof.
"Additional Limited Partner" means a Person who is admitted to
the Partnership as a Limited Partner pursuant to Section 4.2 and Section 12.2
hereof and who is shown as such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Partnership Year, after giving effect to the following
adjustments:
(i) decrease such deficit by any amounts that such
Partner is obligated to restore pursuant to this Agreement or by
operation of law upon liquidation of such Partner's Partnership
Interest or is deemed to be obligated to restore pursuant to the
penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) increase such deficit by the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"Adjustment Factor" means 1.0; provided, however, that in the
event that:
(i) the General Partner (a) 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, (b) splits or subdivides its
outstanding REIT Shares or (c) effects a reverse stock split
or otherwise combines its outstanding REIT Shares into a
smaller number of REIT Shares, the Adjustment Factor shall be
adjusted by multiplying the Adjustment Factor previously in
effect by a fraction, (i) the numerator of which shall be the
number of REIT Shares issued and outstanding on the record
date for such dividend, distribution, split, subdivision,
reverse split or combination (assuming for such purposes that
such dividend, distribution, split, subdivision, reverse split
or combination has occurred as of such time) and (ii) 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, split, subdivision, reverse split or
combination;
(ii) the General Partner distributes any rights,
options or warrants to all holders of its REIT Shares to
subscribe for or to purchase or to otherwise acquire REIT
Shares (or other securities or rights convertible into,
exchangeable for or exercisable for REIT Shares) at a price
per share less than the Value of a REIT Share on the record
date for such distribution (each a "Distributed Right"), then
the Adjustment Factor shall be adjusted by multiplying the
Adjustment Factor previously in effect by a fraction (a) the
numerator of which shall be the number of REIT Shares issued
and outstanding on the record date plus the maximum number of
REIT Shares purchasable under such Distributed Rights and (b)
the denominator of which shall be the number of REIT Shares
issued and outstanding on the record date plus a fraction (1)
the numerator of which is the maximum number of REIT Shares
purchasable under such Distributed Rights times the minimum
purchase price per REIT Share under such Distributed Rights
and (2) the denominator of which is the Value of a REIT Share
as of the record date; provided, however, that, if any such
Distributed Rights expire or become no longer exercisable,
then the Adjustment Factor shall be adjusted, effective
retroactive to the date of distribution of the Distributed
Rights, to reflect a reduced maximum number of REIT Shares or
any change in the minimum purchase price for the purposes of
the above fraction; and
(iii) the General Partner shall, by dividend or
otherwise, distribute to all holders of its REIT Shares
evidences of its indebtedness or assets (including securities,
but excluding
2
any dividend or distribution referred to in subsection (i)
above), which evidences of indebtedness or assets relate to
assets not received by the General Partner and/or any Special
Limited Partner pursuant to a pro rata distribution by the
Partnership, then the Adjustment Factor shall be adjusted to
equal the amount determined by multiplying the Adjustment
Factor in effect immediately prior to the close of business on
the date fixed for determination of shareholders entitled to
receive such distribution by a fraction (i) the numerator of
which shall be such Value of a REIT Share on the date fixed
for such determination and (ii) the denominator of which shall
be the Value of a REIT Share on the dates fixed for such
determination less the then fair market value (as determined
by the General Partner, whose determination shall be
conclusive) of the portion of the evidences of indebtedness or
assets so distributed applicable to one REIT Share.
Any adjustments to the Adjustment Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if any,
for such event, provided, however, that any Limited Partner may waive, by
written notice to the General Partner, the effect of any adjustment to the
Adjustment Factor applicable to the Partnership Common Units held by such
Limited Partner, and, thereafter, such adjustment will not be effective as to
such Partnership Common Units. For illustrative purposes, examples of
adjustments to the Adjustment Factor are set forth on Exhibit B attached hereto.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling or controlled by or under common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" means this Amended and Restated Agreement of
Limited Partnership of Fortress Partners, L.P., as it may be amended,
supplemented or restated from time to time.
"Applicable Percentage" has the meaning set forth in Section
8.6.B hereof.
"Appraisal" means, with respect to any assets, the written
opinion of an independent third party experienced in the valuation of similar
assets, selected by the General Partner in good faith. Such opinion may be in
the form of an opinion by such independent third party that the value for such
property or asset as set by the General Partner is fair, from a financial point
of view, to the Partnership.
"Assignee" means a Person to whom one or more Partnership
Common 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 hereof.
"Available Cash" means, with respect to any period for which
such calculation is being made,
(i) the sum, without duplication, of:
(1) the Partnership's Net Income or Net Loss
(as the case may be) for such period,
(2) Depreciation and all other noncash
charges to the extent deducted in determining Net Income or
Net Loss for such period,
3
(3) the amount of any reduction in reserves
of the Partnership referred to in clause (ii)(6) below
(including, without limitation, reductions resulting because
the General Partner determines such amounts are no longer
necessary),
(4) the excess, if any, of the net cash
proceeds from the sale, exchange, disposition, financing or
refinancing of Partnership property for such period over the
gain (or loss, as the case may be) recognized from such sale,
exchange, disposition, financing or refinancing during such
period (excluding Terminating Capital Transactions), and
(5) all other cash received (including
amounts previously accrued as Net Income and amounts of
deferred income) or any net amounts borrowed by the
Partnership for such period that was not included in
determining Net Income or Net Loss for such period;
(ii) less the sum, without duplication, of:
(1) all principal debt payments made during
such period by the Partnership,
(2) capital expenditures made by the
Partnership during such period,
(3) investments in any entity (including
loans made thereto) to the extent that such investments are
not otherwise described in clause (ii)(1) or clause (ii)(2)
above,
(4) all other expenditures and payments not
deducted in determining Net Income or Net Loss for such period
(including amounts paid in respect of expenses previously
accrued),
(5) any amount included in determining Net
Income or Net Loss for such period that was not received by
the Partnership during such period,
(6) the amount of any increase in reserves
(including, without limitation, working capital reserves)
established during such period that the General Partner
determines are necessary or appropriate in its sole and
absolute discretion, and
(7) any amount distributed or paid in
redemption of any Limited Partner Interest or Partnership
Units including, without limitation, any Cash Amount paid.
Notwithstanding the foregoing, Available Cash shall not include (a) any cash
received or reductions in reserves, or take into account any disbursements made,
or reserves established, after dissolution and the commencement of the
liquidation and winding up of the Partnership or (b) any Capital Contributions,
whenever received.
"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.
4
"Capital Account" means, with respect to any Partner, the
Capital Account maintained by the General Partner for such Partner on the
Partnership's books and records in accordance with the following provisions:
(b) To each Partner's Capital Account, there shall be
added such Partner's Capital Contributions, such Partner's distributive share of
Net Income and any items in the nature of income or gain that are specially
allocated pursuant to Section 6.3 hereof, and the principal amount of any
Partnership liabilities assumed by such Partner or that are secured by any
property distributed to such Partner.
(c) From each Partner's Capital Account, there shall
be subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses that are specially allocated pursuant to Section 6.3 hereof,
and the principal amount of any liabilities of such Partner assumed by the
Partnership or that are secured by any property contributed by such Partner to
the Partnership.
(d) In the event any interest in the Partnership is
Transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent that it relates
to the Transferred interest.
(e) In determining the principal amount of any
liability for purposes of subsections (a) and (b) hereof, there shall be taken
into account Code Section 752(c) and any other applicable provisions of the Code
and Regulations.
(f) The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations Sections
1.704-1(b) and 1.704-2, and shall be interpreted and applied in a manner
consistent with such Regulations. If the General Partner shall determine that it
is prudent to modify the manner in which the Capital Accounts are maintained in
order to comply with such Regulations, the General Partner may make such
modification provided that such modification will not have a material effect on
the amounts distributable to any Partner without such Partner's Consent. 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
that unanticipated events might otherwise cause this Agreement not to comply
with Regulations Section 1.704-1(b) or Section 1.704-2.
"Capital Account Deficit" has the meaning set forth in Section
13.2.C hereof.
"Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any Contributed Property
that such Partner contributes to the Partnership pursuant to Section 4.1, 4.2 or
4.3 hereof or is deemed to contribute pursuant to Section 4.4 hereof.
"Cash Amount" means the lesser of (a) an amount of cash equal
to the product of (i) the Value of a REIT Share and (ii) the REIT Shares Amount
determined as of the applicable Valuation Date or (b) in the case of a
Declination followed by an Offering Funding, the Offering Funding Amount.
"Certificate" means the Certificate of Limited Partnership of
the Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.
5
"Charter" means the Amended and Restated Articles of
Incorporation of the General Partner filed with the State Department of
Assessments and Taxation of Maryland, on the Effective Date, as amended,
supplemented or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time or any successor statute thereto, 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.
"Consent" means the consent to, approval of, or vote in favor
of a proposed action by a Partner given in accordance with Article 14 hereof.
"Consent of the Limited Partners" means the Consent of a
Majority in Interest of the Limited Partners, which Consent shall be obtained
prior to the taking of any action for which it is required by this Agreement
and, except as otherwise provided in this Agreement, may be given or withheld by
a Majority in Interest of the Limited Partners.
"Contributed Property" means each item of property or other
asset, in such form as may be permitted by the Act, but excluding cash,
contributed or deemed contributed to the Partnership (or deemed contributed by
the Partnership to a "new" partnership pursuant to Code Section 708).
"Controlled Entity" means, as to any Limited Partner, (a) any
corporation more than fifty percent (50%) of the outstanding voting stock of
which is owned by such Limited Partner or such Limited Partner's Family Members,
(b) any trust, whether or not revocable, of which such Limited Partner or such
Limited Partner's Family Members are the sole beneficiaries, (c) any partnership
of which such Limited Partner is the managing partner and in which such Limited
Partner or such Limited Partner's Family Members hold partnership interests
representing at least twenty-five percent (25%) of such partnership's capital
and profits and (d) any limited liability company of which such Limited Partner
is the manager and in which such Limited Partner or such Limited Partner's
Family Members hold membership interests representing at least twenty-five
percent (25%) of such limited liability company's capital and profits.
"Cut-Off Date" means the fifth (5th) Business Day after the
General Partner's receipt of a Notice of Redemption.
"Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (ii) all amounts owed by such
Person to banks or other Persons in respect of reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any lien on any property owned by such Person, to the
extent attributable to such Person's interest in such property, even though such
Person has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person that, in accordance with generally accepted
accounting principles, should be capitalized.
"Declination" has the meaning set forth in Section 8.6.D
hereof.
"Depreciation" means, for each Partnership Year or other
applicable period, an amount equal to the federal income tax depreciation,
amortization or other cost recovery deduction allowable with respect to an asset
for such year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or period, Depreciation shall be in an amount that bears the same
ratio to such
6
beginning Gross Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period 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 or
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the General
Partner.
"Distributed Right" has the meaning set forth in the
definition of "Adjustment Factor."
"Effective Date" means June 10, 1998.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Family Members" means, as to a Person that is an individual,
such Person's spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters and inter vivos or testamentary trusts of which only such
Person and his spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters are beneficiaries.
"Funding Debt" means any Debt incurred by or on behalf of the
General Partner or any Special Limited Partner for the purpose of providing
funds to the Partnership.
"Funds from Operations" is as defined by the National
Association of Real Estate Investment Trusts ("NAREIT") and means net income
(computed in accordance with GAAP) excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization on real
estate assets, and after adjustments for unconsolidated partnerships and joint
ventures.
"General Partner" means Fortress Investment Corp., a Maryland
corporation, and its successors and assigns, as the general partner of the
Partnership in their capacities as general partner of the Partnership.
"General Partner Interest" means the Partnership Interest held
by the General Partner, which Partnership Interest is an interest as a general
partner under the Act. A General Partner Interest may be expressed as a number
of Partnership Common Units, Partnership Preferred Units or any other
Partnership Units.
"General Partner Loan" has the meaning set forth in Section
4.3.D hereof.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair market value
of such asset as determined by the General Partner and agreed to by the
contributing Partner. In any case in which the General Partner and the
contributing Partner are unable to agree as to the gross fair market value of
any contributed asset or assets, such gross fair market value shall be
determined by Appraisal.
(b) The Gross Asset Values of all Partnership assets
immediately prior to the occurrence of any event described in clause (i), clause
(ii), clause (iii), clause (iv) or clause (v) hereof shall be adjusted to equal
their
7
respective gross fair market values, as determined by the General Partner using
such reasonable method of valuation as it may adopt, as of the following times:
(i) the acquisition of an additional
interest in the Partnership (other than in connection with the
execution of this Agreement but including, without limitation,
acquisitions pursuant to Section 4.2 hereof or contributions or deemed
contributions by the General Partner pursuant to Section 4.2 hereof) by
a new or existing Partner in exchange for more than a de minimis
Capital Contribution, if the General Partner reasonably determines that
such adjustment is necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership;
(ii) the distribution by the Partnership to
a Partner of more than a de minimis amount of Partnership property as
consideration for an interest in the Partnership, if the General
Partner reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the Partners
in the Partnership;
(iii) the liquidation of the Partnership
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
(iv) upon the admission of a successor
General Partner pursuant to Section 12.1 hereof; and
(v) at such other times as the General
Partner shall reasonably determine necessary or advisable in order to
comply with Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of such asset on
the date of distribution as determined by the distributee and the General
Partner provided that, if the distributee is the General Partner or if the
distributee and the General Partner cannot agree on such a determination, such
gross fair market value shall be determined by Appraisal.
(d) The Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subsection (d) to the extent that the General Partner reasonably determines that
an adjustment pursuant to subsection (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subsection (d).
(e) If the Gross Asset Value of a Partnership asset
has been determined or adjusted pursuant to subsection (a), subsection (b) or
subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Losses.
"Holder" means either (a) a Partner or (b) an Assignee, owning
a Partnership Unit, that is treated as a member of the Partnership for federal
income tax purposes.
"Incapacity" or "Incapacitated" means, (i) as to any Partner
who is an individual, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her person or his or her estate; (ii) as to any Partner that is a corporation or
limited liability company, the filing of a certificate of dissolution, or its
equivalent, for the corporation or the revocation of its charter; (iii) as to
any Partner that is a
8
partnership, the dissolution and commencement of winding up of the partnership;
(iv) as to any Partner that is an estate, the distribution by the fiduciary of
the estate's entire interest in the Partnership; (v) as to any trustee of a
trust that 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
liquidation, reorganization or other relief of or against such Partner 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 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) above 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 its status as (A) the General Partner or (B) a director of the
General Partner or an officer or employee of the Partnership or the General
Partner 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.
"Independent Director" has the meaning ascribed thereto in the
Charter.
"Interest" means interest, original issue discount and other
similar payments or amounts paid by the Partnership for the use or forbearance
of money.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"Junior Share" means a share of capital stock of the General
Partner now or hereafter authorized or reclassified that has dividend rights, or
rights upon liquidation, winding up and dissolution, that are inferior or junior
to the REIT Shares.
"Limited Partner" means each of the Special Limited Partner,
the REIT Subsidiaries and any Person named as a Limited Partner in Exhibit A
attached hereto, as such Exhibit A 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 in 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 Limited 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 Common Units, Partnership Preferred Units
or other Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1
hereof.
9
"Liquidator" has the meaning set forth in Section 13.2.A
hereof.
"Majority in Interest of the Limited Partners" means Limited
Partners holding more than fifty percent (50%) of the outstanding Partnership
Common Units held by all Limited Partners.
"Management Agreement" shall mean the Management Agreement,
dated as of the Effective Date, among the General Partner, the Partnership and
the Manager, as such Management Agreement may be amended, modified,
supplemented, replaced or restated, from time to time.
"Manager" shall mean Fortress Investment Group LLC, a Delaware
limited liability company or any affiliate of Fortress Investment Group LLC who
shall succeed to its interest as "manager" under the Management Agreement.
"Net Income" or "Net Loss" means, for each Partnership Year of
the Partnership, an amount equal to the Partnership's taxable income or loss for
such year, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(a) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in computing Net Income
(or Net Loss) pursuant to this definition of "Net Income" or "Net Loss" shall be
added to (or subtracted from, as the case may be) such taxable income (or loss);
(b) Any expenditure of the Partnership described in
Code Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Income (or Net Loss) pursuant to this definition
of "Net Income" or "Net Loss," shall be subtracted from (or added to, as the
case may be) such taxable income (or loss);
(c) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subsection (b) or subsection (c) of
the definition of "Gross Asset Value," the amount of such adjustment shall be
taken into account as gain or loss from the disposition of such asset for
purposes of computing Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization and
other cost recovery deductions that would otherwise be taken into account in
computing such taxable income or loss, there shall be taken into account
Depreciation for such Partnership Year;
(f) To the extent that an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Code Section 734(b) or Code
Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts
as a result of a distribution other than in liquidation of a Partner's interest
in the Partnership, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition of the asset
and shall be taken into account for purposes of computing Net Income or Net
Loss; and
(g) Notwithstanding any other provision of this
definition of "Net Income" or "Net Loss," any item that is specially allocated
pursuant to Section 6.3 hereof shall not be taken into account in computing Net
10
Income or Net Loss. The amounts of the items of Partnership income, gain, loss
or deduction available to be specially allocated pursuant to Section 6.3 hereof
shall be determined by applying rules analogous to those set forth in this
definition of "Net Income" or "Net Loss."
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or Preferred Shares, excluding Preferred Shares, Junior
Shares and grants under the Stock Option Plans, or (ii) any Debt issued by the
General Partner that provides any of the rights described in clause (i).
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership 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 C attached to this Agreement.
"Offering Funding" has the meaning set forth in Section
8.6.D(2) hereof.
"Offering Funding Amount" means the dollar amount equal to (i)
the product of (x) the number of Offering Funding Shares sold in an Offering
Funding and (y) the offering price per share of such Offering Funding Shares in
such Offering Funding, less (ii) the aggregate underwriting discounts and
commissions in such Offering Funding.
"Offering Funding Shares" has the meaning set forth in Section
8.6.D(2) hereof.
"Ownership Limit" means the applicable restriction or
restrictions on ownership of shares of the General Partner imposed under the
Charter.
"Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"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 Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means Fortress Partnership, L.P., the Delaware
limited partnership formed under the Act and pursuant to this Agreement, and any
successor thereto.
"Partnership Common Unit" means a fractional share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2
hereof, but does not include any Partnership Preferred Unit or any other
Partnership Unit specified in a Partnership Unit Designation as being other than
a Partnership Common Unit; provided, however, that the
11
General Partner Interest and the Limited Partner Interests shall have the
differences in rights and privileges as specified in this Agreement. The
ownership of Partnership Common Units may (but need not, in the sole and
absolute discretion of the General Partner) be evidenced by the form of
certificate for Partnership Common Units attached hereto as Exhibit D.
"Partnership Interest" means an ownership interest in the
Partnership held 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 Common Units, Partnership
Preferred Units or other Partnership Units.
"Partnership Junior Unit" means a fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.1 or Section 4.2 or Section 4.3 hereof that has distribution rights,
or rights upon liquidation, winding up and dissolution, that are inferior or
junior to the Partnership Common 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 Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Preferred Unit" means a fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.1 or Section 4.2 or Section 4.3 hereof that has distribution rights,
or rights upon liquidation, winding up and dissolution, that are superior or
prior to the Partnership Common Units.
"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 generally be the same as the record date
established by the General Partner for a distribution to its shareholders of
some or all of its portion of such distribution.
"Partnership Unit" shall mean a Partnership Common Unit, a
Partnership Preferred Unit, a Partnership Junior Unit or any other fractional
share of the Partnership Interests that the General Partner has authorized
pursuant to Section 4.1 or Section 4.2 or Section 4.3 hereof.
"Partnership Unit Designation" shall have the meaning set
forth in Section 4.2 hereof.
"Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.
"Percentage Interest" means, as to each Partner, its interest
in the Partnership Units as determined by dividing the Partnership Units owned
by such Partner by the total number of Partnership Units then outstanding.
"Permitted Transfer" has the meaning set forth in Section
11.3.A hereof.
"Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association, limited liability company or
other entity, including and federal, state or local government or any agency or
subdivision thereof.
"Pledge" has the meaning set forth in Section 11.3.A hereof.
12
"Preferred Share" means a share of capital stock of the
General Partner now or hereafter authorized or reclassified that has dividend
rights, or rights upon liquidation, winding up and dissolution, that are
superior or prior to the REIT Shares.
"Primary Offering Notice" has the meaning set forth in Section
8.6.F(4) hereof.
"Private Placement" means the private placement of REIT Shares
of the General Partner pursuant to exemption from registration under the
Securities Act, as described in the Offering Memorandum dated June 5, 1998.
"Properties" means any assets and property of the Partnership
such as, but not limited to, interests in real property and personal property,
including, without limitation, fee interests, interests in ground leases,
interests in limited liability companies, joint ventures or partnerships,
interests in mortgages, and Debt instruments as the Partnership may hold from
time to time and "Property" shall mean any one such asset or property.
"Qualified REIT Subsidiary" means a qualified REIT subsidiary
of the General Partner within the meaning of Code Section 856(i)(2).
"Qualified Transferee" means an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act.
"Qualifying Party" means (a) the Special Limited Partner, (b)
an Additional Limited Partner, (c) a Family Member, or a lending institution as
the pledgee of a Pledge, who is the transferee in a Permitted Transfer or (d) a
Substituted Limited Partner succeeding to all or part of the Limited Partner
Interest of (i) the Special Limited Partner, (ii) an Additional Limited Partner,
or (iii) a Family Member, or a lending institution who is the pledgee of a
Pledge, who is the transferee in a Permitted Transfer.
"Redemption" has the meaning set forth in Section 8.6.A
hereof.
"Regulations" means the applicable income tax regulations
under the Code, whether such regulations are in proposed, temporary or final
form, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section
6.3.B(viii) hereof.
"REIT" means a real estate investment trust qualifying under
Code Section 856.
"REIT Partner" means (a) a Partner, including, without
limitation, the General Partner, that is, or has made an election to qualify as,
a REIT, (b) any Qualified REIT Subsidiary of any Partner that is, or has made an
election to qualify as, a REIT and (c) any Partner that is a Qualified REIT
Subsidiary of a REIT.
"REIT Payment" has the meaning set forth in Section 15.11
hereof.
"REIT Requirements" has the meaning set forth in Section 5.1
hereof.
"REIT Share" means a share of the General Partner's Common
Shares, par value $.01 per share. Where relevant in this Agreement, "REIT
Shares" includes shares of the General Partner's Common Shares, par value $.01
per share, issued upon conversion of Preferred Shares or Junior Shares.
13
"REIT Shares Amount" means a number of REIT Shares equal to
the product of (a) the number of Tendered Units and (b) the Adjustment Factor;
provided, however, that, in the event that the General Partner issues to all
holders of REIT Shares as of a certain record date rights, options, warrants or
convertible or exchangeable securities entitling the General Partner's
shareholders to subscribe for or purchase REIT Shares, or any other securities
or property (collectively, the "Rights"), with the record date for such Rights
issuance falling within the period starting on the date of the Notice of
Redemption and ending on the day immediately preceding the Specified Redemption
Date, which Rights will not be distributed before the relevant Specified
Redemption Date, then the REIT Shares Amount shall also include such Rights that
a holder of that number of REIT Shares would be entitled to receive, expressed,
where relevant hereunder, in a number of REIT Shares determined by the General
Partner in good faith.
"REIT Subsidiary" means each of Fortress GSA Properties SPE,
Inc. and Fortress GSA Securities SPE, Inc.
"Related Party" means, with respect to any Person, any other
Person whose ownership of shares of the General Partner's capital stock would be
attributed to the first such Person under Code Section 544 (as modified by Code
Section 856(h)(1)(B)).
"Rights" has the meaning set forth in the definition of "REIT
Shares Amount."
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Services Agreement" means any management, development or
advisory agreement with a property and/or asset manager for the provision of
property management, asset management, leasing, development and/or similar
services with respect to the Properties and any agreement for the provision of
services of accountants, legal counsel, appraisers, insurers, brokers, transfer
agents, registrars, developers, financial advisors and other professional
services.
"Single Funding Notice" has the meaning set forth in Section
8.6.D(3) hereof.
"Special Limited Partner" means Fortress Principal Investment
Group LLC, a Delaware limited liability company.
"Specified Redemption Date" means the later of (a) the tenth
(10th) Business Day after the receipt by the General Partner of a Notice of
Redemption or (b) in the case of a Declination followed by an Offering Funding,
the Business Day next following the date of the closing of the Offering Funding;
provided, however, that no Specified Redemption Date shall occur during the
first Twelve-Month Period; provided, further, that the Specified Redemption
Date, as well as the closing of a Redemption, or an acquisition of Tendered
Units by the General Partner pursuant to Section 8.6.B hereof, on any Specified
Redemption Date, may be deferred, in the General Partner's sole and absolute
discretion, for such time (but in any event not more than one hundred fifty
(150) days in the aggregate) as may reasonably be required to effect, as
applicable, (i) an Offering Funding or other necessary funding arrangements,
(ii) compliance with the Securities Act or other law (including, but not limited
to, (a) state "blue sky" or other securities laws and (b) the expiration or
termination of the applicable waiting period, if any, under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and (iii)
satisfaction or waiver of other commercially reasonable and customary closing
conditions and requirements for a transaction of such nature.
14
"Stock Option Plan" means any stock option plan hereafter
adopted by the Partnership or the General Partner.
"Subsidiary" means, with respect to any Person, any other
Person (which is not an individual) of which a majority of (i) the voting power
of the voting equity securities or (ii) the outstanding equity interests is
owned, directly or indirectly, by such Person; provided, however, that, with
respect to the Partnership, "Subsidiary" means solely a partnership or limited
liability company (taxed, for federal income tax purposes, as a partnership and
not as an association or publicly traded partnership taxable as a corporation)
of which the Partnership is a partner or member, as applicable, unless the
General Partner has received an unqualified opinion from independent counsel of
recognized standing, or a ruling from the IRS, that the ownership of shares of
stock of a corporation or other entity will not jeopardize the General Partner's
status as a REIT, in which event the term "Subsidiary" shall include the
corporation or other entity which is the subject of such opinion or ruling.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4 hereof.
"Tax Items" has the meaning set forth in Section 6.4.A hereof.
"Tendered Units" has the meaning set forth in Section 8.6.A
hereof.
"Tendering Party" has the meaning set forth in Section 8.6.A
hereof.
"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.
"Transfer," when used with respect to a Partnership Unit, or
all or any portion of a Partnership Interest, means any sale, assignment,
bequest, conveyance, devise, gift (outright or in trust), Pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law; provided,
however, that when the term is used in Article 11 hereof, "Transfer" does not
include (a) any Redemption of Partnership Common Units by the Partnership, or
acquisition of Tendered Units by the General Partner, pursuant to Section 8.6
hereof or (b) any redemption of Partnership Units pursuant to any Partnership
Unit Designation. The terms "Transferred" and "Transferring" have correlative
meanings.
"Twelve-Month Period" means (a) as to the Special Limited
Partner or any successor-in-interest of the Special Limited Partner that is a
Qualifying Party, a twelve-month period ending on the day before the first (1st)
anniversary of the Effective Date or on the day before a subsequent anniversary
thereof and (b) as to any other Qualifying Party, a twelve-month period ending
on the day before the first (1st) anniversary of such Qualifying Party's
becoming a Holder of Partnership Common Units or on the day before a subsequent
anniversary thereof; provided, however, that the General Partner may, in its
sole and absolute discretion, by written agreement with a Qualifying Party,
shorten or lengthen the first Twelve-Month Period to a period of shorter or
longer than twelve (12) months with respect to a Qualifying Party.
"Unitholder" means the General Partner or any Holder of
Partnership Units.
"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
immediately preceding Business Day.
15
"Value" means, on any Valuation Date with respect to a REIT
Share, the average of the daily Market Prices (as defined below) for ten (10)
consecutive trading days immediately preceding the Valuation Date (except that,
as provided in Section 4.4.C. hereof, the Market Price for the trading day
immediately preceding the date of exercise of a stock option under any Stock
Option Plans shall be substituted for such average of daily market prices for
purposes of Section 4.4 hereof). The term "Market Price" on any date shall mean,
with respect to any class or series of outstanding REIT Shares, the Closing
Price for such REIT Shares on such date. The "Closing Price" on any date shall
mean the last sale price for such REIT Shares, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, for such REIT Shares, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if such REIT Shares are
not listed or admitted to trading on the New York Stock Exchange, as reported on
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which such
REIT Shares are listed or admitted to trading or, if such REIT Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price, or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotation system that may then be
in use or, if such REIT Shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such REIT Shares selected by the Board of
Directors of the General Partner or, in the event that no trading price is
available for such REIT Shares, the fair market value of the REIT Shares, as
determined in good faith by the Board of Directors of the General Partner.
In the event that the REIT Shares Amount includes Rights (as defined in
the definition of "REIT Shares Amount") 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 Organization. The Partnership is a limited
partnership organized pursuant to the provisions of the Act and upon the terms
and subject to the conditions set forth in this Agreement. 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 is "FORTRESS
PARTNERS, 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 Partners of such change in the next regular
communication to the Partners.
Section 2.3 Registered Office and Agent; Principal Office. The
address of the registered office of the Partnership in the State of Delaware is
located at Corporation Service Company, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx
00000, and the registered agent for service of process on the Partnership in the
State of Delaware at such registered office is Corporation Service Company,
0000 Xxxxxx Xxxx, Xxxxxxxxxx Xxxxxxxx, 00000. The principal office
16
of the Partnership is located at One Penn Plaza, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 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.
Section 2.4 Power of Attorney.
A. Each Limited Partner and each Assignee hereby irrevocably
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, seal, 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, supplements or
restatements 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 to the
extent provided by applicable law) in the State of Delaware and in all
other jurisdictions in which the Partnership may conduct business or
own property; (b) all instruments that the General Partner or the
Liquidator 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 conveyances and other
instruments or documents that the General Partner or the Liquidator
deems appropriate or necessary to reflect the distribution or exchange
of assets of the Partnership pursuant to the terms of this Agreement;
(e) all instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events described in,
Article 11, Article 12 or Article 13 hereof or the Capital Contribution
of any Partner; and (f) all certificates, documents and other
instruments relating to the determination of the rights, preferences
and privileges relating to Partnership Interests; and
(2) execute, swear to, 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 the Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action that is
made or given by the Partners hereunder or is consistent with the terms
of this Agreement or appropriate or necessary, in the sole and absolute
discretion of the General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or the Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Limited Partners and Assignees will be relying upon the
power of the General Partner or the 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 or Partnership Interest 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 the Liquidator,
acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the General Partner
17
or the 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 the 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
May 12, 1998, the date that the original Certificate was filed in the office of
the Secretary of State of Delaware in accordance with the Act, and shall
continue until December 31, 2051 unless the Partnership is dissolved sooner
pursuant to the provisions of Article 13 hereof or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business. The purpose and nature of
the Partnership is to conduct any business, enterprise or activity permitted by
or under the Act; provided, however, such business and arrangements and
interests may be limited to and conducted in such a manner as to permit the
General Partner, in the sole and absolute discretion of the General Partner, at
all times to be classified as a REIT. The Partnership shall have all powers
necessary or desirable to accomplish the purposes enumerated. In connection with
the foregoing, the Partnership shall have full power and authority to enter
into, perform and carry out contracts of any kind, to borrow and lend money and
to issue evidence of indebtedness, whether or not secured by mortgage, deed of
trust, pledge or other lien and, directly or indirectly, to acquire and
construct additional Properties necessary, useful or desirable in connection
with its business.
Section 3.2 Powers.
A. The Partnership shall be 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.
B. The Partnership may contribute from time to time
Partnership capital to one or more newly formed entities solely in exchange for
equity interests therein (or in a wholly-owned subsidiary entity thereof).
C. Notwithstanding any other provision in this Agreement, the
General Partner may cause the Partnership not to take, or to refrain from
taking, any action that, in the judgment of the General Partner, in its sole and
absolute discretion, (i) could adversely affect the ability of the General
Partner to continue to qualify as a REIT, (ii) could subject the General Partner
to any additional taxes under Code Section 857 or Code Section 4981 or any other
related or successor provision of the Code, or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
General Partner, its securities or the Partnership, unless such action (or
inaction) under clause (i), clause (ii) or clause (iii) above shall have been
specifically consented to by the General Partner in writing.
Section 3.3 Partnership Only for Partnership Purposes. This
Agreement shall not be deemed to create a company, venture or partnership
between or among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1 hereof. Except as otherwise provided in this Agreement, no Partner
shall have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its Properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall
be responsible or liable for any indebtedness or obligation of another Partner,
and the Partnership shall not be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution
18
and delivery of this Agreement by such Partner, except as to those
responsibilities, liabilities, indebtedness or obligations incurred pursuant to
and as limited by the terms of this Agreement and the Act.
Section 3.4 Representations and Warranties by the Parties.
A. Each Partner (including, without limitation, each
Additional Limited Partner or Substituted Limited Partner as a condition to
becoming an Additional Limited Partner or a Substituted Limited Partner) that is
an individual represents and warrants to each other Partner(s) that (i) the
consummation of the transactions contemplated by this Agreement to be performed
by such Partner will not result in a breach or violation of, or a default under,
any material agreement by which such Partner or any of such Partner's property
is bound, or any statute, regulation, order or other law to which such Partner
is subject, (ii) subject to the last sentence of this Section 3.4.A, such
Partner is neither a "foreign person" within the meaning of Code Section 1445(f)
nor a "foreign partner" within the meaning of Code Section 1446(e), (iii) such
Partner does not own, directly or indirectly, (a) nine and eight tenths percent
(9.8%) or more of the total combined voting power of all classes of stock
entitled to vote, or nine and eight tenths percent (9.8%) or more of the total
number of shares of all classes of stock, of any corporation that is a tenant of
either (I) the General Partner or any Qualified REIT Subsidiary , (II) the
Partnership or (III) any partnership, venture or limited liability company of
which the General Partner, any Qualified REIT Subsidiary or the Partnership is a
member or (b) an interest of nine and eight tenths percent (9.8%) or more in the
assets or net profits of any tenant of either (I) the General Partner or any
Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture, or limited liability company of which the General Partner, any
Qualified REIT Subsidiary or the Partnership is a member and (iv) this Agreement
is binding upon, and enforceable against, such Partner in accordance with its
terms. Notwithstanding anything contained herein to the contrary, in the event
that the representation contained in clause (ii) foregoing would be inaccurate
if given by a Partner, such Partner (w) shall not be required to make and shall
not be deemed to have made such representation, (x) shall deliver to the General
Partner in connection with or prior to its execution of this Agreement written
notice that it may not truthfully make such representation, (y) hereby agrees
that it is subject to, and hereby authorizes the General Partner to withhold,
all withholdings to which such a "foreign person" or "foreign partner", as
applicable, is subject under the Code and (z) hereby agrees to cooperate fully
with the General Partner with respect to such withholdings, including by
effecting the timely completion and delivery to the General Partner of all
internal revenue forms required in connection therewith.
B. Each Partner (including, without limitation, each
Additional Limited Partner or Substituted Limited Partner as a condition to
becoming an Additional Limited Partner or a Substituted Limited Partner) that is
not an individual represents and warrants to each other Partner(s) that (i) all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including, without limitation, that of its
general partner(s), committee(s), trustee(s), beneficiaries, directors and/or
shareholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its partnership or operating agreement, trust agreement, articles, charter or
bylaws, as the case may be, any material agreement by which such Partner or any
of such Partner's properties or any of its partners, members, beneficiaries,
trustees or shareholders, as the case may be, is or are bound, or any statute,
regulation, order or other law to which such Partner or any of its partners,
members, trustees, beneficiaries or shareholders, as the case may be, is or are
subject, (iii) subject to the last sentence of this Section 3.4.B, such Partner
is neither a "foreign person" within the meaning of Code Section 1445(f) nor a
"foreign partner" within the meaning of Code Section 1446(e), (iv) such Partner
does not own, directly or indirectly, (a) nine and eight tenths percent (9.8%)
or more of the total combined voting power of all classes of stock entitled to
vote, or nine and eight tenths percent (9.8%) or more of the total number of
shares of all classes of stock, of any corporation that is a tenant of either
(I) the General Partner, or any Qualified REIT Subsidiary , (II) the Partnership
or (III) any partnership, venture or limited liability company of which the
General Partner, any Qualified REIT Subsidiary or the Partnership is a member or
(b) an interest of nine and eight tenths percent (9.8%) or more in the assets or
net profits of any tenant of either (I) the General Partner or any Qualified
REIT Subsidiary , (II) the Partnership or
19
(III) any partnership, venture or limited liability company for which the
General Partner, any Qualified REIT Subsidiary or the Partnership is a member
and (v) this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms. Notwithstanding anything contained herein to the
contrary, in the event that the representation contained in clause (iii)
foregoing would be inaccurate if given by a Partner, such Partner (w) shall not
be required to make and shall not be deemed to have made such representation,
(x) shall deliver to the General Partner in connection with or prior to its
execution of this Agreement written notice that it may not truthfully make such
representation, (y) hereby agrees that it is subject to, and hereby authorizes
the General Partner to withhold, all withholdings to which such a "foreign
person" or "foreign partner", as applicable, is subject under the Code and (z)
hereby agrees to cooperate fully with the General Partner with respect to such
withholdings, including by effecting the timely completion and delivery to the
General Partner of all internal revenue forms required in connection therewith.
C. Each Partner (including, without limitation, each
Substituted Limited Partner as a condition to becoming a Substituted Limited
Partner) represents, warrants and agrees that it has acquired and continues to
hold its interest in the Partnership for its own account for investment purposes
only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, and not with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Partnership in what
it understands to be a highly speculative and illiquid investment.
D. The representations and warranties contained in Sections
3.4.A, 3.4.B and 3.4.C hereof shall survive the execution and delivery of this
Agreement by each Partner (and, in the case of an Additional Limited Partner or
a Substituted Limited Partner, the admission of such Additional Limited Partner
or Substituted Limited Partner as a Limited Partner in the Partnership) and the
dissolution, liquidation and termination of the Partnership.
E. Each Partner (including, without limitation, each
Substituted Limited Partner as a condition to becoming a Substituted Limited
Partner) hereby acknowledges that no representations as to potential profit,
cash flows, funds from operations or yield, if any, in respect of the
Partnership or the General Partner have been made by any Partner or any employee
or representative or Affiliate of any Partner, and that projections and any
other information, including, without limitation, financial and descriptive
information and documentation, that may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners. The
Partners shall, concurrently with the Private Placement, make Capital
Contributions to the Partnership, whereupon each Partner shall own Partnership
Units in the amount set forth for such Partner on Exhibit A, as the same may be
amended from time to time by the General Partner to the extent necessary to
reflect accurately sales, exchanges or other Transfers, redemptions, Capital
Contributions, the issuance of additional Partnership Units, or similar events
having an effect on a Partner's ownership of Partnership Units. Except as
provided by law or in Section 4.2, 4.3 or 10.4 hereof, the Partners shall have
no obligation or right to make any additional Capital Contributions or loans to
the Partnership.
20
Section 4.2 Issuances of Additional Partnership Interests.
A. General. The General Partner is hereby authorized to cause
the Partnership to issue additional Partnership Interests, in the form of
Partnership Units, for any Partnership purpose, at any time or from time to
time, to the Partners (including the General Partner and the Special Limited
Partner) or to other Persons, and to admit such Persons as Additional Limited
Partners, for such consideration and on such terms and conditions as shall be
established by the General Partner in its sole and absolute discretion, all
without the approval of any Limited Partners. Without limiting the foregoing,
the General Partner is expressly authorized to cause the Partnership to issue
Partnership Units (i) upon the conversion, redemption or exchange of any Debt,
Partnership Units or other securities issued by the Partnership, (ii) for less
than fair market value, so long as the General Partner concludes in good faith
that such issuance is in the best interests of the General Partner and the
Partnership, and (iii) in connection with any merger of any other Person into
the Partnership if the applicable merger agreement provides that Persons are to
receive Partnership Units in exchange for their interests in the Person merging
into the Partnership. Subject to Delaware law, any additional Partnership
Interests may be issued in one or more classes, or one or more series of any of
such classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties as shall be deter mined by
the General Partner, in its sole and absolute discretion without the approval of
any Limited Partner, and set forth in a written document thereafter attached to
and made an exhibit to this Agreement (each, a "Partnership Unit Designation").
Without limiting the generality of the foregoing, the General Partner shall have
authority to specify (a) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests; (b) the right of each such class or series of Partnership Interests
to share in Partnership distributions; (c) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership; (d) the voting rights, if any, of each such class or series of
Partnership Interests; and (e) the conversion, redemption or exchange rights
applicable to each such class or series of Partnership Interests. Upon the
issuance of any additional Partnership Interest, the General Partner shall amend
Exhibit A as appropriate to reflect such issuance.
B. Issuances to the General Partner. No additional Partnership
Units shall be issued to the General Partner unless (i) the additional
Partnership Units are issued to all Partners in proportion to their respective
Percentage Interests with respect to the class of Partnership Units so issued,
(ii) (a) the additional Partnership Units are (x) Partnership Common Units
issued in connection with an issuance of REIT Shares (including an issuance of
REIT Shares in connection with a dividend reinvestment plan), or (y) Partnership
Units (other than Partnership Common Units) issued in connection with an
issuance of Preferred Shares, New Securities or other interests in the General
Partner (other than REIT Shares), which Preferred Shares, New Securities or
other interests have designations, preferences and other rights, terms and
provisions that are substantially the same as the designations, preferences and
other rights, terms and provisions of the additional Partnership Units issued to
the General Partner, and (b) the General Partner contributes to the Partnership
the cash proceeds or other consideration received in connection with the
issuance of such REIT Shares, Preferred Shares, New Securities or other
interests in the General Partner, (iii) the additional Partnership Units are
issued upon the conversion, redemption or exchange of Debt, Partnership Units or
other securities issued by the Partnership, or (iv) the additional Partnership
Units are issued pursuant to Section 4.6 or Section 4.7.
C. No Preemptive Rights. No Person, including, without
limitation, any Partner or Assignee, shall have any preemptive, preferential,
participation or similar right or rights to subscribe for or acquire any
Partnership Interest.
Section 4.3 Additional Funds and Capital Contributions.
A. General. The General Partner may, at any time and from time
to time, determine that the Partnership requires additional funds ("Additional
Funds") for the acquisition or development of additional Properties, for the
redemption of Partnership Units or for such other purposes as the General
Partner may determine in its sole and
21
absolute discretion. Additional Funds may be obtained by the Partnership, at the
election of the General Partner, in any manner provided in, and in accordance
with, the terms of this Section 4.3 without the approval of any Limited
Partners.
B. Additional Capital Contributions. The General Partner, on
behalf of the Partnership, may obtain any Additional Funds by accepting Capital
Contributions from any Partners or other Persons. In connection with any such
Capital Contribution (of cash or property), the General Partner is hereby
authorized to cause the Partnership from time to time to issue additional
Partnership Units (as set forth in Section 4.2 above) in consideration therefor
and the Percentage Interests of the General Partner and the Limited Partners
(including the Special Limited Partner) shall be adjusted to reflect the
issuance of such additional Partnership Units.
C. Loans by Third Parties. The General Partner, on behalf of
the Partnership, may obtain any Additional Funds by causing the Partnership to
incur Debt to any Person upon such terms as the General Partner deter mines
appropriate, including making such Debt convertible, redeemable or exchangeable
for Partnership Units; provided, however, that the Partnership shall not incur
any such Debt if (i) a breach, violation or default of such Debt would be deemed
to occur by virtue of the Transfer of any Partnership Interest, or (ii) such
Debt is recourse to any Partner (unless the Partner otherwise agrees).
D. General Partner Loans. The General Partner, on behalf of
the Partnership, may obtain any Additional Funds by causing the Partnership to
incur Debt with the General Partner (each, a "General Partner Loan") if (i) such
Debt is, to the extent permitted by law, on substantially the same terms and
conditions (including interest rate, repayment schedule, and conversion,
redemption, repurchase and exchange rights) as Funding Debt incurred by the
General Partner, the net proceeds of which are loaned to the Partnership to
provide such Additional Funds, or (ii) such Debt is on terms and conditions no
less favorable to the Partnership than would be available to the Partnership
from any third party; provided, however, that the Partnership shall not incur
any such Debt if (a) a breach, violation or default of such Debt would be deemed
to occur by virtue of the Transfer of any Partnership Interest, or (b) such Debt
is recourse to any Partner (unless the Partner otherwise agrees).
E. Issuance of Securities by the General Partner. The General
Partner shall not issue any additional REIT Shares, Preferred Shares, Junior
Shares or New Securities unless the General Partner contributes the cash
proceeds or other consideration received from the issuance of such additional
REIT Shares, Preferred Shares, Junior Shares or New Securities, as the case may
be, and from the exercise of the rights contained in any such additional New
Securities, to the Partnership in exchange for (x) in the case of an issuance of
REIT Shares, Partnership Common Units, or (y) in the case of an issuance of
Preferred Shares, Junior Shares or New Securities, Partnership Units with
designations, preferences and other rights, terms and provisions that are
substantially the same as the designations, preferences and other rights, terms
and provisions of such Preferred Shares, Junior Shares or New Securities;
provided, however, that notwithstanding the foregoing, the General Partner may
issue REIT Shares, Preferred Shares, Junior Shares or New Securities (a)
pursuant to Section 4.4 or Section 8.6.B hereof, (b) pursuant to a dividend or
distribution (including any stock split) of REIT Shares, Preferred Shares,
Junior Shares or New Securities to all of the holders of REIT Shares, Preferred
Shares, Junior Shares or New Securities, as the case may be, (c) upon a
conversion, redemption or exchange of Preferred Shares, (d) upon a conversion of
Junior Shares into REIT Shares, (e) upon a conversion, redemption, exchange or
exercise of New Securities, or (f) in connection with an acquisition of a
property or other asset to be owned, directly or indirectly, by the General
Partner if the General Partner determines that such acquisition is in the best
interests of the Partnership. In the event of any issuance of additional REIT
Shares, Preferred Shares, Junior Shares or New Securities by the General
Partner, and the contribution to the Partnership, by the General Partner, of the
cash proceeds or other consideration received from such issuance, the
Partnership shall pay the General Partner's expenses associated with such
issuance, including any underwriting discounts or commissions.
Section 4.4 Stock Option Plan.
22
A. Options Granted to Special Limited Partner. If at any time or from
time to time, in connection with the Stock Option Plan, a stock option granted
to the Special Limited Partner, any Affiliate of the Special Limited Partner,
any employee of the Special Limited Partner or any employee of any Affiliate of
the Special Limited Partner is duly exercised:
(1) the General Partner shall, as soon as practicable after
such exercise, make a Capital Contribution to the Partnership in an
amount equal to the exercise price paid to the General Partner by such
exercising party in connection with the exercise of such stock option.
(2) Notwithstanding the amount of the Capital Contribution
actually made pursuant to Section 4.4.A(1) hereof, the General Partner
shall be deemed to have contributed to the Partnership as a Capital
Contribution, in consideration of an additional Limited Partner
Interest (expressed in and as additional Partnership Common Units), an
amount equal to the Value of a REIT Share as of the date of exercise
multiplied by the number of REIT Shares then being issued in connection
with the exercise of such stock option.
(3) An equitable Percentage Interest adjustment shall be made
in which the General Partner shall be treated as having made a cash
contribution equal to the amount described in Section 4.4.A(2) hereof.
B. Options Granted to Independent Directors. If at any time or from
time to time, in connection with the Stock Option Plan, a stock option granted
to an Independent Director is duly exercised:
(1) the General Partner shall, as soon as practicable after
such exercise, make a Capital Contribution to the Partnership in an
amount equal to the exercise price paid to the General Partner by such
exercising party in connection with the exercise of such stock option.
(2) Notwithstanding the amount of the Capital Contribution
actually made pursuant to Section 4.4.B(1) hereof, the General Partner
shall be deemed to have contributed to the Partnership as a Capital
Contribution, in consideration of an additional Limited Partner
Interest (expressed in and as additional Partnership Common Units), an
amount equal to the Value of a REIT Share as of the date of exercise
multiplied by the number of REIT Shares then being issued in connection
with the exercise of such stock option.
(3) An equitable Percentage Interest adjustment shall be made
in which the General Partner shall be treated as having made a cash
contribution equal to the amount described in Section 4.4.B(2) hereof.
C. Special Valuation Rule. For purposes of this Section 4.4, in
determining the Value of a REIT Share, only the trading date immediately
preceding the exercise of the relevant stock option under the Stock Option Plan
shall be considered.
D. Future Stock Incentive Plans. Nothing in this Agreement shall be
construed or applied to preclude or restrain the General Partner from adopting,
modifying or terminating stock incentive plans, in addition to the Stock Option
Plan, for the benefit of employees, directors or other business associates of
the General Partner, the Partnership or any of their Affiliates. The Limited
Partners acknowledge and agree that, in the event that any such plan is adopted,
modified or terminated by the General Partner, amendments to this Section 4.4
may become necessary or advisable and that any approval or consent to any such
amendments requested by the General Partner shall not be unreasonably withheld
or delayed.
23
Section 4.5 No Interest; No Return. No Partner shall be
entitled to interest on its Capital Contribution or on such Partner's Capital
Account. Except as provided herein or by law, no Partner shall have any right to
demand or receive the return of its Capital Contribution from the Partnership.
Section 4.6 Conversion or Redemption of Preferred Shares.
A. Conversion of Preferred Shares. If, at any time, any of the
Preferred Shares are converted into REIT Shares, in whole or in part, then a
number of Partnership Preferred Units equal to the number of Preferred Shares so
converted shall automatically be converted into a number of Partnership Common
Units equal to (i) the number of REIT Shares issued upon such conversion divided
by (ii) the Adjustment Factor then in effect, and the Percentage Interests of
the General Partner and the Limited Partners (including the Special Limited
Partner) shall be adjusted to reflect such conversion.
B. Redemption of Preferred Shares. If, at any time, any
Preferred Shares are redeemed (whether by exercise of a put or call,
automatically or by means of another arrangement) by the General Partner for
cash, the Partnership shall, immediately prior to such redemption of Preferred
Shares, redeem an equal number of Partnership Preferred Units held by the
General Partner, upon the same terms and for the same price per Partnership
Preferred Unit, as such Preferred Shares are redeemed.
Section 4.7 Conversion or Redemption of Junior Shares.
A. Conversion of Junior Shares. If, at any time, any of the
Junior Shares are converted into REIT Shares, in whole or in part, then a number
of Partnership Common Units equal to (i) the number of REIT Shares issued upon
such conversion divided by (ii) the Adjustment Factor then in effect shall be
issued to the General Partner, and the Percentage Interests of the General
Partner and the Limited Partners (including the Special Limited Partner) shall
be adjusted to reflect such conversion.
B. Redemption of Junior Shares. If, at any time, any Junior
Shares are redeemed (whether by exercise of a put or call, automatically or by
means of another arrangement) by the General Partner for cash, the Partnership
shall, immediately prior to such redemption of Junior Shares, redeem an equal
number of Partnership Junior Units held by the General Partner, upon the same
terms and for the same price per Partnership Junior Unit, as such Junior Shares
are redeemed.
Section 4.8 Other Contribution Provisions. In the event that
any Partner is admitted to the Partnership and is given a Capital Account in
exchange for services rendered to the Partnership, unless otherwise determined
by the General Partner in its sole and absolute discretion, such transaction
shall be treated by the Partnership and the affected Partner as if the
Partnership had compensated such partner in cash and such Partner had
contributed the cash to the capital of the Partnership. In addition, with the
consent of the General Partner, one or more Limited Partners (including the
Special Limited Partner) may enter into contribution agreements with the
Partnership which have the effect of providing a guarantee of certain
obligations of the Partnership.
Section 4.9 Not Publicly Traded. The General Partner, on
behalf of the Partnership, shall use its best efforts not to take any action
which would result in the Partnership being a "publicly traded partnership"
under and as such term is defined in Section 7704(b) of the Code.
24
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions.
Subject to the terms of any Partnership Unit Designation, the General Partner
shall cause the Partnership to distribute quarterly, after payments of
distributions pursuant to Section 5.7 hereof, all, or such portion as the
General Partner may in its sole and absolute discretion determine, of Available
Cash generated by the Partnership during such quarter to the Holders of
Partnership Units on such Partnership Record Date with respect to such quarter:
(i) first, with respect to any Partnership Interests that are entitled to any
preference in distribution, in accordance with the rights of such class(es) of
Partnership Interests (and, within such class(es), pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date), and (ii)
second, with respect to any Partnership Interests that are not entitled to any
preference in distribution, in accordance with the rights of such class of
Partnership Interests (and, within such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date). Distributions
payable with respect to any Partnership Units that were not outstanding during
the entire quarterly period in respect of which any distribution is made shall
be prorated based on the portion of such period that such units were
outstanding. The General Partner in its sole and absolute discretion may
distribute to the Unitholders Available Cash on a more frequent basis and
provide for an appropriate Partnership Record Date. The General Partner shall
make such reasonable efforts, as determined by it in its sole and absolute
discretion and consistent with the General Partner's and each REIT Subsidiary's
respective qualification as a REIT, to cause the Partnership to distribute
sufficient amounts to enable the General Partner and each REIT Subsidiary to pay
shareholder dividends that will (a) satisfy the requirements for qualification
as a REIT under the Code and Regulations (the "REIT Requirements") and (b)
except to the extent otherwise determined by the General Partner, avoid any
federal income or excise tax liability of the General Partner and the REIT
Subsidiaries. The General Partner acknowledges that the provisions of the
foregoing sentence, as they relate to the REIT Subsidiaries, were agreed to and
effective as of January 28, 2000, such date being the date on which the REIT
Subsidiaries were admitted to the Partnership as Limited Partners.
Section 5.2 Distributions in Kind. No right is given to any
Unitholder to demand and receive property other than cash as provided in this
Agreement. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind of Partnership assets to the
Unitholders, and such assets shall be distributed in such a fashion as to ensure
that the fair market value is distributed and allocated in accordance with
Articles 5, 6 and 10 hereof.
Section 5.3 Amounts Withheld. All amounts withheld pursuant to
the Code or any provisions of any state or local tax law and Section 10.4 hereof
with respect to any allocation, payment or distribution to any Unitholder shall
be treated as amounts paid or distributed to such Unitholder pursuant to Section
5.1 hereof for all purposes under this Agreement.
Section 5.4 Distributions Upon Liquidation. Notwithstanding
the other provisions of this Article 5, net 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
Unitholders in accordance with Section 13.2 hereof.
Section 5.5 Distributions to Reflect Issuance of Additional
Partnership Units. In the event that the Partnership issues additional
Partnership Units pursuant to the provisions of Article 4 hereof, subject to
Section 7.3.D, the General Partner is hereby authorized to make such revisions
to this Article 5 as it determines are necessary or desirable to reflect the
issuance of such additional Partnership Units, including, without limitation,
making preferential distributions to certain classes of Partnership Units.
25
Section 5.6 Restricted Distributions. Notwithstanding any
provision to the contrary contained in this Agreement, neither the Partnership
nor the General Partner, on behalf of the Partnership, shall make a distribution
to any Unitholder on account of its Partnership Interest or interest in
Partnership Units if such distribution would violate Section 17-607 of the Act
or other applicable law.
Section 5.7 Preferred Distributions. In addition to any and
all distributions to be made pursuant to Section 5.1 hereof, the Special Limited
Partner shall be entitled to receive a preferred distribution from the
Partnership for each fiscal quarter, on a cumulative, but not compounding,
basis, in an amount equal to the product of (A) 25% of the dollar amount by
which (1)(a) the Funds from Operations (before such preferred distribution) of
the General Partner and the Partnership, per REIT Share and per Partnership
Common Unit (based on the weighted average number of REIT Shares and Partnership
Common Units outstanding), plus (b) gains (or losses) from debt restructuring
and gains (or losses) from sales of property per REIT Share and per Partnership
Common Unit (based on the weighted average number of REIT Shares and Partnership
Common Units outstanding), and, commencing as of January 1, 2002, plus (c)
distributions made to the General Partner, directly or indirectly, by Fortress
Investment Fund LLC pursuant to Sections 4.2(a)(iii)(B) and 4.2(a)(iv)(B) of the
Amended and Restated Limited Liability Company Operating Agreement of Fortress
Investment Fund LLC, dated as of March 22, 2000, as amended, exceed (2) an
amount equal to (a) the weighted average of the price per REIT Share at the
initial offering of the General Partner's REIT Shares and the prices per REIT
Share (or Partnership Common Units) at any subsequent offerings by the General
Partner or the Partnership (adjusted for any prior capital dividends or capital
distributions) multiplied by (b) a simple interest rate of ten percent (10%) per
annum (divided by four to adjust for quarterly calculations) multiplied by (B)
the weighted average number of REIT Shares and Partnership Common Units
outstanding during such period. It is intended that the preferred distributions
payable to the Special Limited Partner pursuant to this Section 5.7 shall be
treated as a preferred return of partnership income and not as a guaranteed
payment for services pursuant to Code Section 707(c).
Section 5.8 Right to Purchase Preferred Distributions. Upon
any termination of the Management Agreement, the General Partner shall be
entitled to purchase the right to receive the preferred distributions pursuant
to Section 5.7 from the Special Limited Partner, and in the event the General
Partner elects not to do so the Special Limited Partner shall have the right to
require the General Partner to do so, in each case in accordance with the
provisions of Section 16(b) of the Management Agreement.
ARTICLE 6
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and
Net Loss. Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each Partnership Year of the Partnership as of the end
of each such year. Except as otherwise provided in this Article 6, and subject
to Section 11.6.C hereof, an allocation to a Unitholder of a share of Net Income
or Net Loss shall be treated as an allocation of the same share of each item of
income, gain, loss or deduction that is taken into account in computing Net
Income or Net Loss.
Section 6.2 General Allocations.
A. In General. Subject to the terms of any Partnership Unit
Designation, except as otherwise provided in this Article 6 and subject to
Section 11.6.C hereof, Net Income and Net Loss shall be allocated to each of the
Holders of Partnership Units holding the same class of Partnership Units in
accordance with their respective Percentage Interests in such class at the end
of each Partnership Year, subject in all events to the following provisions of
this Section 6.2(A). Net Income, to the extent thereof, shall be allocated to
each REIT Subsidiary in an amount equal to the greater of (i) $5,150, or (ii)
the amount that would be allocated to such REIT Subsidiary if it owned 2,575
26
Partnership Common Units. Net Loss, to the extent thereof, shall be allocated to
each REIT Subsidiary in an amount equal to the amount that would be allocated to
such REIT Subsidiary if it owned 2,575 Partnership Common Units. The General
Partner acknowledges that the provisions of the foregoing sentence were agreed
to and effective as of January 28, 2000, such date being the date on which the
REIT Subsidiaries were admitted to the Partnership as Limited Partners.
B. Allocations to Reflect Issuance of Additional Partnership
Units. In the event that the Partnership issues additional Partnership Units
pursuant to the provisions of Article 4 hereof, the General Partner is hereby
authorized to make such revisions to this Section 6.2 as it determines are
necessary or desirable to reflect the terms of the issuance of such additional
Partnership Units, including, without limitation, making preferential
allocations to certain classes of Partnership Units.
C. Allocations to Reflect Preferred Distributions. Prior to
any allocation of Net Income or Net Loss pursuant to Section 6.2.A hereof, an
amount of gross income equal to the amount distributed to the Special Limited
Partner pursuant to Section 5.7 hereof shall first be allocated to the Special
Limited Partner.
Section 6.3 Additional Allocation Provisions. Notwithstanding
the foregoing provisions of this Article 6:
A. Special Allocations Regarding Partnership Preferred Units.
If any Partnership Preferred Units are redeemed pursuant to Section 4.6.B hereof
(treating a full liquidation of the General Partner Interest for purposes of
this Section 6.3.A as including a redemption of any then outstanding Partnership
Preferred Units pursuant to Section 4.6.B hereof), for the Partnership Year that
includes such redemption (and, if necessary, for subsequent Partnership Years)
(a) gross income and gain shall be allocated to the General Partner to the
extent that the Redemption Amounts paid or payable with respect to the
Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the
aggregate Capital Contributions (net of liabilities assumed or taken subject to
by the Partnership) per Partnership Preferred Unit allocable to the Partnership
Preferred Units so redeemed (or treated as redeemed) and (b) deductions and
losses shall be allocated to the General Partner to the extent that the
aggregate Capital Contributions (net of liabilities assumed or taken subject to
by the Partnership) per Partnership Preferred Unit allocable to the Partnership
Preferred Units so redeemed (or treated as redeemed) exceeds the Redemption
Amount paid or payable with respect to the Partner ship Preferred Units so
redeemed (or treated as redeemed).
B. Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(f), notwithstanding the
provisions of Section 6.2 hereof, or any other provision of this
Article 6, if there is a net decrease in Partnership Minimum Gain
during any Partnership Year, each Holder of Partnership Common Units
shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to
such Holder'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 Holder pursuant thereto. The
items to be allocated shall be determined in accordance with
Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
6.3.B(i) is intended to qualify as a "minimum gain chargeback" within
the meaning of Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith.
(ii) Partner Minimum Gain Chargeback. Except as
otherwise provided in Regulations Section 1.704-2(i)(4) or in Section
6.3.B(i) hereof, if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership Year,
each Holder
27
of Partnership Common Units who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations Section 1.704-2(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 Holder'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)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated
to each General Partner, Limited Partner and other Holder pursuant
thereto. The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section
6.3.B(ii) is intended to qualify as a "chargeback of partner
nonrecourse debt minimum gain" within the meaning of Regulations
Section 1.704-2(i) and shall be interpreted consistently therewith.
(iii) Nonrecourse Deductions and Partner Nonrecourse
Deductions. Any Nonrecourse Deductions for any Partnership Year shall
be specially allocated to the Holders of Partnership Common Units in
accordance with their Partnership Common Units. Any Partner Nonre-
course Deductions for any Partnership Year shall be specially allocated
to the Holder(s) 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).
(iv) Qualified Income Offset. If any Holder of
Partnership Common Units receives an adjustment, allocation or
distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), items of Partnership income and gain shall be allocated, in
accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such
Holder in an amount and manner sufficient to eliminate, to the extent
required by such Regulations, the Adjusted Capital Account Deficit of
such Holder as quickly as possible, provided that an allocation
pursuant to this Section 6.3.B(iv) shall be made if and only to the
extent that such Holder would have an Adjusted Capital Account Deficit
after all other allocations provided in this Article 6 have been
tentatively made as if this Section 6.3.B(iv) were not in the
Agreement. It is intended that this Section 6.3.B(iv) qualify and be
construed as a "qualified income offset" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(v) Gross Income Allocation. In the event that any
Holder of Partnership Common Units has a deficit Capital Account at the
end of any Partnership Year that is in excess of the sum of (1) the
amount (if any) that such Holder is obligated to restore to the
Partnership upon complete liquidation of such Holder's Partnership
Interest (including, the Holder's interest in outstanding Partnership
Preferred Units and other Partnership Units) and (2) the amount that
such Holder 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), each such Holder shall be specially allocated items of
Partnership income and gain in the amount of such excess to eliminate
such deficit as quickly as possible, provided that an allocation
pursuant to this Section 6.3.B(v) shall be made if and only to the
extent that such Holder would have a deficit Capital Account in excess
of such sum after all other allocations provided in this Article 6 have
been tentatively made as if this Section 6.3.B(v) and Section 6.3.B(iv)
hereof were not in the Agreement.
(vi) Limitation on Allocation of Net Loss. To the
extent that any allocation of Net Loss would cause or increase an
Adjusted Capital Account Deficit as to any Holder of Partnership Common
Units, such allocation of Net Loss shall be reallocated among the other
Holders of
28
Partnership Common Units in accordance with their respective
Partnership Common Units, subject to the limitations of this Section
6.3.B(vi).
(vii) Section 754 Adjustment. To the extent that an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2) (iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining
Capital Accounts as the result of a distribution to a Holder of
Partnership Common Units in complete liquidation of its interest in the
Partnership, 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 gain or loss shall be specially allocated to the Holders in
accordance with their Partnership Common Units in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders
to whom such distribution was made in the event that Regulations
Section 1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocations. The allocations set
forth in Sections 6.3.B(i), (ii), (iii), (iv), (v), (vi) and (vii)
hereof (the "Regulatory Allocations") are intended to comply with
certain regulatory requirements, including the requirements of
Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the
provisions of Section 6.1 hereof, the Regulatory Allocations shall be
taken into account in allocating other items of income, gain, loss and
deduction among the Holders of Partnership Common Units so that to the
extent possible without violating the requirements giving rise to the
Regulatory Allocations, the net amount of such allocations of other
items and the Regulatory Allocations to each Holder of a Partnership
Common Unit shall be equal to the net amount that would have been
allocated to each such Holder if the Regulatory Allocations had not
occurred.
C. Special Allocations Upon Liquidation. Notwithstanding any
provision in this Article 6 to the contrary, in the event that the Partnership
disposes of all or substantially all of its assets in a transaction that will
lead to a liquidation of the Partnership pursuant to Article 13 hereof, then any
Net Income or Net Loss realized in connection with such transaction and
thereafter (and, if necessary, constituent items of income, gain, loss and
deduction) shall be specially allocated among the Partners as required so as to
cause liquidating distributions pursuant to Section 13.2.A(4) hereof to be made
in the same amounts and proportions as would have resulted had such
distributions instead been made pursuant to Article 5 hereof.
D. Allocation of Excess Nonrecourse Liabilities. For purposes
of determining a Holder's proportional share of the "excess nonrecourse
liabilities" of the Partnership within the meaning of Regulations Section
1.752-3(a)(3), each Holder's interest in Partnership profits shall be equal to
such Holder's share of Partnership Common Units.
Section 6.4 Tax Allocations.
A. In General. Except as otherwise provided in this Section
6.4, for income tax purposes under the Code and the Regulations each Partnership
item of income, gain, loss and deduction (collectively, "Tax Items") shall be
allocated among the Holders of Partnership Common Units in the same manner as
its correlative item of "book" income, gain, loss or deduction is allocated
pursuant to Sections 6.2 and 6.3 hereof.
B. Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that is
contributed to the Partnership with a Gross Asset Value that varies from its
basis in the hands of the contributing Partner immediately preceding the date of
contribution shall be allocated among
29
the Holders of Partnership Common Units for income tax purposes pursuant to
Regulations promulgated under Code Section 704(c) so as to take into account
such variation. The Partnership shall account for such variation under any
method approved under Code Section 704(c) and the applicable Regulations as
chosen by the General Partner, including, without limitation, the "remedial
allocation method" as described in Regulations Section 1.704-3(d). In the event
that the Gross Asset Value of any partnership asset is adjusted pursuant to
subsection (b) of the definition of "Gross Asset Value" (provided in Article 1
hereof), subsequent allocations of Tax Items with respect to such asset shall
take account of the variation, if any, between the adjusted basis of such asset
and its Gross Asset Value in the same manner as under Code Section 704(c) and
the applicable Regulations.
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 Partners with or without cause, except with the Consent of the
General Partner. In addition to the powers now or hereafter granted a general
partner of a limited partnership under the Act or that are granted to the
General Partner under any other provision of this Agreement, the General
Partner, subject to the other provisions hereof including Section 7.3, 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 or selling assets to permit the
Partnership to make distributions to its Partners in such amounts as
will permit the General Partner (so long as the General Partner
qualifies as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Code Section
4981) and to make distributions to its shareholders sufficient to
permit the General Partner to maintain REIT status or otherwise to
satisfy the REIT Requirements), the assumption or guarantee of, or
other contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness (including the securing of same by deed to
secure debt, mortgage, deed of trust or other lien or encumbrance on
the Partnership's assets) and the incurring of any obligations that 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, sale, transfer, exchange or
other disposition of any, all or substantially all of the assets of the
Partnership (including, but not limited to, the exercise or grant of
any conversion, option, privilege or subscription right or any other
right available in connection with any assets at any time held by the
Partnership) or the merger, consolidation, reorganization or other
combination of the Partnership with or into another entity;
30
(4) the mortgage, pledge, encumbrance or
hypothecation of any assets of the Partnership, 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 that it sees fit, including, without limitation, the financing of
the operations and activities of the General Partner, the Partnership
or any of the Partnership's Subsidiaries, the lending of funds to other
Persons (including, without limitation, the Partnership's Subsidiaries)
and the repayment of obligations of the Partnership, its Subsidiaries
and any other Person in which the Partnership has an equity investment,
and the making of capital contributions to and equity investments in
the Partnership's Subsidiaries;
(5) the management, operation, leasing, landscaping,
repair, alteration, demolition, replacement or improvement of any
Property, including, without limitation, any Contributed Property, or
other asset of the Partnership or any Subsidiary, whether pursuant to
the Management Agreement or otherwise;
(6) the negotiation, execution and performance of any
contracts, leases, 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 (including, without limitation, the Manager)
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, the holding,
management, investment and reinvestment of cash and other assets of the
Partnership, and the collection and receipt of revenues, rents and
income of the Partnership;
(8) the maintenance of such insurance for the benefit
of the Partnership and the Partners as it deems necessary or
appropriate, including, without limitation, (i) casualty, liability and
other insurance on the Properties of the Partnership and (ii) liability
insurance for the Indemnitees hereunder;
(9) the formation of, or acquisition of an interest
in, and the contribution of property to, any further limited or general
partnerships, limited liability companies, joint ventures or other
relationships that it deems desirable (including, without limitation,
the acquisition of interests in, and the contributions of property to,
any Subsidiary and any other Person in which it has an equity
investment from time to time); provided, however, that, as long as the
General Partner has determined to continue to qualify as a REIT, the
General Partner may not engage in any such formation, acquisition or
contribution that would cause the General Partner to fail to qualify as
a REIT within the meaning of Code Section 856(a);
(10) 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, arbitrations 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;
31
(11) the undertaking of any action in connection with
the Partnership's direct or indirect investment in any Subsidiary or
any other Person (including, without limitation, the contribution or
loan of funds by the Partnership to such Persons);
(12) except as otherwise specifically set forth in
this Agreement, the determination of the fair market value of any
Partnership property distributed in kind using such reasonable method
of valuation as it may adopt; provided that such methods are otherwise
consistent with the requirements of this Agreement;
(13) the enforcement of any rights against any
Partner pursuant to representations, warranties, covenants and
indemnities relating to such Partner's contribution of property or
assets to the Partnership;
(14) 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;
(15) 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;
(16) 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;
(17) the making, execution and delivery of any and
all deeds, leases, notes, deeds to secure debt, 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;
(18) the issuance of additional Partnership Units, as
appropriate and in the General Partner's sole and absolute discretion,
in connection with Capital Contributions by Additional Limited Partners
and additional Capital Contributions by Partners pursuant to Article 4
hereof; and
(19) an election to dissolve the Partnership pursuant
to Section 13.1.C hereof.
B. Each of the Limited Partners agrees that, except as
provided in Section 7.3 hereof, 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, the Act or any 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.
32
C. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain working capital and
other reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.
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 (including the General Partner and the Special
Limited Partner) of any action taken by it. 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 pursuant
to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership. 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 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, the District of Columbia or any other jurisdiction, 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. 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 to the extent provided by applicable
law) in the State of Delaware and any other state, or the District of Columbia
or other jurisdiction, in which the Partnership may elect to do business or own
property.
Section 7.3 Restrictions on General Partner's Authority.
A. The General Partner may not take any action in
contravention of this Agreement, including, without limitation:
(1) taking any action that would make it impossible
to carry on the ordinary business of the Partnership, except as
otherwise provided in this Agreement;
(2) possessing Partnership Property, or assigning any
rights in specific Partnership Property, for other than a Partnership
purpose except as otherwise provided in this Agreement, including,
without limitation, Section 7.10;
(3) admitting a Person as a Partner, except as
otherwise provided in this Agreement;
(4) performing any act that would subject a Limited
Partner to liability as a general partner in any jurisdiction or any
other liability except as provided Section 10.4 hereof or under the
Act; or
(5) entering into any contract, mortgage, loan or
other agreement that prohibits or restricts, or has the effect of
prohibiting or restricting, the ability of (a) the General Partner, or
the Partnership from satisfying its obligations under Section 8.6
hereof in full or (b) a Limited Partner from exercising its rights
under Section 8.6 hereof to effect a Redemption in full, except, in
either case, with the written consent of such Limited Partner affected
by the prohibition or restriction.
33
B. The General Partner shall not, without the prior Consent of
the Limited Partners, undertake, on behalf of the Partnership, any of the
following actions or enter into any transaction that would have the effect of
such transactions:
(1) except as provided in Sections 4.2.A, 5.5, 6.2.B
and 7.3.C hereof, amend, modify or terminate this Agreement other than
to reflect the admission, substitution, termination or withdrawal of
Partners pursuant to Article 11 or Article 12 hereof;
(2) make a general assignment for the benefit of
creditors or appoint or acquiesce in the appointment of a custodian,
receiver or trustee for all or any part of the assets of the
Partnership; or
(3) institute any proceeding for bankruptcy on behalf
of the Partnership.
C. Notwithstanding Section 7.3.B hereof, 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:
(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 or
withdrawal of Partners or the termination of the Partnership in
accordance with this Agreement, and to amend Exhibit A in connection
with such admission, substitution or withdrawal;
(3) 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;
(4) 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;
(5) (a) to reflect such changes as are reasonably
necessary (i) for the General Partner to maintain its status as a REIT
or to satisfy the REIT Requirements; (b) to reflect the Transfer of all
or any part of a Partnership Interest between the General Partner and
any Qualified REIT Subsidiary;
(6) to modify the manner in which Capital Accounts
are computed (but only to the extent set forth in the definition of
"Capital Account" or contemplated by the Code or the Regulations); and
(7) to issue additional Partnership Interests in
accordance with Section 4.2.
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.C is taken.
34
D. Notwithstanding Sections 7.3.B and 7.3.C hereof, this
Agreement shall not be amended, and no action may be taken by the General
Partner, without the Consent of each Partner adversely affected thereby, if such
amendment or action would (i) convert a Limited Partner Interest in the
Partnership into a General Partner Interest (except as a result of the General
Partner acquiring such Partnership Interest), (ii) modify the limited liability
of a Limited Partner, (iii) alter the rights of any Partner to receive the
distributions to which such Partner is entitled, pursuant to Article 5 or
Section 13.2.A(4) hereof, or alter the allocations specified in Article 6 hereof
(except, in any case, as permitted pursuant to Sections 4.2, 5.5, 6.2.B and
7.3.C hereof), (iv) alter or modify the Redemption rights, Cash Amount or REIT
Shares Amount as set forth in Sections 8.6 and 11.2 hereof, or amend or modify
any related definitions, or (v) amend this Section 7.3.D; provided, however,
that the Consent of each Partner adversely affected shall not be required for
any amendment or action that affects all Partners holding the same class or
series of Partnership Units on a uniform or pro rata basis. Further, no
amendment may alter the restrictions on the General Partner's authority set
forth elsewhere in this Section 7.3 without the Consent specified therein. Any
such amendment or action consented to by any Partner shall be effective as to
that Partner, notwithstanding the absence of such consent by any other Partner.
Section 7.4 Reimbursement of the General Partner.
A. The General Partner shall not be compensated for its
services as general partner of the Partnership except as provided in this
Agreement (including the provisions of Articles 5 and 6 hereof regarding
distributions, payments and allocations to which it may be entitled in its
capacity as the General Partner).
B. Subject to Sections 7.4.C and 15.11 hereof, the Partnership
shall be liable for, and shall reimburse the General Partner on a monthly basis,
or such other basis as the General Partner may determine in its sole and
absolute discretion, for all sums expended in connection with the Partnership's
business, including, without limitation, (i) expenses relating to the ownership
of interests in and management and operation of, or for the benefit of, the
Partnership, (ii) compensation of officers and employees, including, without
limitation, payments under future compensation plans of the General Partner that
may provide for stock units, or phantom stock, pursuant to which employees of
the General Partner will receive payments based upon dividends on or the value
of REIT Shares, (iii) director fees and expenses and (iv) all costs and expenses
of the General Partner being a public company, including costs of filings with
the SEC, reports and other distributions to its shareholders; provided, however,
that the amount of any 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 as permitted pursuant to
Section 7.5 hereof. Such reimbursements shall be in addition to any
reimbursement of the General Partner as a result of indemnification pursuant to
Section 7.7 hereof.
C. To the extent practicable, Partnership expenses shall be
billed directly to and paid by the Partnership and, subject to Section 15.11
hereof, reimbursements to the General Partner or any of its Affiliates by the
Partnership pursuant to this Section 7.4 shall be treated as non-income
reimbursements, and not as "guaranteed payments" within the meaning of Code
Section 707(c) or other form of gross income.
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 (a) the ownership, acquisition and
disposition of Partnership Interests as General Partner, (b) the management of
the business of the Partnership, (c) the operation of the General Partner as a
reporting company with a class (or classes) of securities registered under the
Exchange Act, (d) the General Partner's operations as a REIT, (e) the offering,
sale, syndication, private placement or public offering of stock, bonds,
securities or other interests, (f) financing or refinancing of any type related
to the Partnership or its assets or activities, (g) any of the foregoing
activities as they relate to a Subsidiary of the Partnership or of the General
Partner and (h) such activities as are incidental thereto. Nothing contained
herein shall be deemed to prohibit the General Partner from executing guarantees
of Partnership debt for which it would otherwise be liable in its capacity as
General Partner.
35
Subject to Section 7.3.B hereof, the General Partner shall not own any assets or
take title to assets (other than temporarily in connection with an acquisition
prior to contributing such assets to the Partnership) other than interests in
Subsidiaries of the Partnership and the General Partner and Partnership
Interests as the General Partner and other than such cash and cash equivalents,
bank accounts or similar instruments or accounts as the General Partner deems
reasonably necessary, taking into account Section 7.1.D hereof and the
requirements necessary for the General Partner to carry out its responsibilities
contemplated under this Agreement and the Charter and to qualify as a REIT.
Notwithstanding the foregoing, if the General Partner acquires assets in its own
name and owns Property other than through the Partnership, the Partners agree to
negotiate in good faith to amend this Agreement, including, without limitation,
the definition of "Adjustment Factor," to reflect such activities and the direct
ownership of assets by the General Partner. 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 hereof and subject to
Section 3.1 hereof, the Partnership may transfer assets to joint ventures,
limited liability companies, partnerships, corporations, business trusts 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 to be 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 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 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 or any of
the Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, any Services Agreement with
Affiliates of any of the Partnership or the General Partner or the Special
Limited Partner, on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.
Section 7.7 Indemnification.
A. To the fullest extent permitted by applicable law, the
Partnership shall indemnify each Indemnitee from and against any and all losses,
claims, damages, liabilities (whether joint or several), expenses (including,
without limitation, attorney's 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 ("Actions") as
set forth in this Agreement in which such Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise; provided, however, that the
Partnership shall not indemnify an Indemnitee (i) for bad faith, gross
negligence, willful misconduct or a knowing
36
violation of the law or (ii) for any transaction for which such Indemnitee
received an improper personal benefit in violation or breach of any provision of
this Agreement. 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. It is the intention of this Section 7.7.A that the Partnership
indemnify each Indemnitee to the fullest extent permitted by law. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7.A. The termination of any proceeding by conviction
of an Indemnitee or upon a plea of nolo contendere or its equivalent by an
Indemnitee, or an entry of an order of probation against an Indemnitee prior to
judgment, does not create a presumption that such Indemnitee acted in a manner
contrary to that specified in this Section 7.7.A with respect to the subject
matter of such proceeding. 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. To the fullest extent permitted by law, expenses incurred
by an Indemnitee who is a party to a proceeding or otherwise subject to or the
focus of or is involved in any Action shall be paid or reimbursed by the
Partnership as incurred by the Indemnitee in advance of the final disposition of
the Action upon receipt by the Partnership of (i) a written affirmation by the
Indemnitee of the Indemnitee's good faith belief that the standard of conduct
necessary for indemnification by the Partnership as authorized in this Section
7.7.A has been met, and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.
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 and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee unless otherwise
provided in a written agreement with such Indemnitee or in the writing pursuant
to which such Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of any 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. Any liabilities which an Indemnitee incurs as a result of
acting on behalf of the Partnership or the General Partner (whether as a
fiduciary or otherwise) in connection with the operation, administration or
maintenance of an employee benefit plan or any related trust or funding
mechanism (whether such liabilities are in the form of excise taxes assessed by
the IRS, penalties assessed by the Department of Labor, restitutions to such a
plan or trust or other funding mechanism or to a participant or beneficiary of
such plan, trust or other funding mechanism, or otherwise) shall be treated as
liabilities or judgments or fines under this Section 7.7, unless such
liabilities arise as a result of (i) such Indemnitee's bad faith, gross
negligence, intentional misconduct or knowing violation of the law, or (ii) any
transaction in which such Indemnitee received a personal benefit in violation or
breach of any provision of this Agreement or applicable law.
37
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 Indemnitees, 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 limitations on 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.
I. It is the intent of the Partners that any amounts paid by
the Partnership to the General Partner pursuant to this Section 7.7 shall be
treated as "guaranteed payments" within the meaning of Code Section 707(c).
Section 7.8 Liability of the General Partner.
A. Notwithstanding anything to the contrary set forth in this
Agreement, neither the General Partner nor any of its directors or officers
shall be liable or accountable in damages or otherwise to the Partnership, any
Partners or any Assignees for losses sustained, liabilities incurred or benefits
not derived as a result of errors in judgment or mistakes of fact or law or of
any act or omission if the General Partner or such director or officer acted in
good faith.
B. The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the General Partner's shareholders collectively and that the General Partner is
under no obligation to give priority to the separate interests of the Limited
Partners or the General Partner's shareholders (including, without limitation,
the tax consequences to Limited Partners, Assignees or the General Partner's
shareholders) in deciding whether to cause the Partnership to take (or decline
to take) any actions.
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 employees or agents
(subject to the supervision and control of the General Partner). The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it 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.
E. Notwithstanding anything herein to the contrary, except for
fraud, willful misconduct or gross negligence, or pursuant to any express
indemnities given to the Partnership by any Partner pursuant to any other
written instrument, no Partner shall have any personal liability whatsoever, to
the Partnership or to the other Partner(s), for the debts or liabilities of the
Partnership or the Partnership's obligations hereunder, and the full recourse of
the other Partner(s) shall be limited to the interest of that Partner in the
Partnership. To the fullest extent permitted by law, no offi-
38
cer, director or shareholder of the General Partner shall be liable to the
Partnership for money damages except for (i) active and deliberate dishonesty
established by a non-appealable final judgment or (ii) actual receipt of an
improper benefit or profit in money, property or services. Without limitation of
the foregoing, and except for fraud, willful misconduct or gross negligence, or
pursuant to any such express indemnity, no property or assets of any Partner,
other than its interest in the Partnership, shall be subject to levy, execution
or other enforcement procedures for the satisfaction of any judgment (or other
judicial process) in favor of any other Partner(s) and arising out of, or in
connection with, this Agreement. This Agreement is executed by the officers of
the General Partner solely as officers of the same and not in their own
individual capacities.
F. To the extent that, at law or in equity, the General
Partner has duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or the Limited Partners, the General Partner shall not be
liable to the Partnership or to any other Partner for its good faith reliance on
the provisions of this Agreement. The provisions of this Agreement, to the
extent that they restrict the duties and liabilities of the General Partner
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such General Partner.
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 that the 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 a duly appointed attorney or 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 that is permitted or required to be done by the General Partner
hereunder.
D. Notwithstanding any other provision 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 General
Partner to continue to qualify as a REIT, (ii) for the General Partner otherwise
to satisfy the REIT Requirements, (iii) to avoid the General Partner incurring
any taxes under Code Section 857 or Code Section 4981, 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,
individually or collectively with other Partners or Persons, 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. All
Partnership assets shall be recorded
39
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 the 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 it were the Partnership's sole
party in interest, both legally and beneficially. Each Limited Partner hereby
waives any and all defenses or other remedies that 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
expediency 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 in good faith
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.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability. The Limited Partners
shall have no liability under this Agreement (other than for breach thereof)
except as expressly provided in Section 10.4 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, member, employee, partner, agent or trustee of the General Partner,
the Partnership or any of their Affiliates, in their capacity as such) shall
take part in the operations, 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, member, employee, partner, agent,
representative, 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 General
Partner, the Partnership or a Subsidiary (including, without limitation, any
employment agreement), any Limited Partner and any Assignee, officer, director,
employee, agent, trustee, Affiliate, member or shareholder of any Limited
Partner 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 or indirect competition
with the Partnership or that are enhanced by the activities of the Partnership.
Neither the Partnership nor any Partner shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. Subject
to such agreements, none of the Limited Partners 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 (other than the
General Partner, to the extent expressly provided herein), and such Person shall
have no obligation pursuant to this Agreement, subject to Section 7.6.E hereof
and any other agreements entered into by a Limited Partner or its Affiliates
with the General Partner, the
40
Partnership or a Subsidiary, 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 that, 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 rights
of Redemption set forth in Section 8.6 hereof, no Limited Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the
extent of distributions made pursuant to this Agreement or upon termination of
the Partnership as provided herein. Except to the extent provided in Article 6
hereof or 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 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:
(1) to obtain a copy of (i) the most recent annual
and quarterly reports filed with the SEC by the General Partner
pursuant to the Exchange Act and (ii) each report or other written
communication sent to the shareholders of the General Partner;
(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 that each Partner has agreed
to contribute in the future, and the date on which each became a
Partner.
B. The Partnership shall notify any Limited Partner that is a
Qualifying Party, on request, of the then current Adjustment Factor or any
change made to the Adjustment 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
believes to be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is not in the
best interests of the Partnership or the General Partner or (ii) the Partnership
or the General Partner is required by law or by agreements with unaffiliated
third parties to keep confidential.
41
Section 8.6 Redemption Rights of Qualifying Parties.
A. After the applicable Twelve-Month Period, a Qualifying
Party, but no other Limited Partner or Assignee, shall have the right (subject
to the terms and conditions set forth herein) to require the Partnership to
redeem all or a portion of the Partnership Common Units held by such Tendering
Party (such Partnership Common Units being hereafter "Tendered Units") in
exchange (a "Redemption") for the Cash Amount payable on the Specified
Redemption Date. Any Redemption shall be exercised pursuant to a Notice of
Redemption delivered to the General Partner by the Qualifying Party when
exercising the Redemption right (the "Tendering Party"). The Partnership's
obligation to effect a Redemption, however, shall not arise or be binding
against the Partnership (i) until and unless there has been a Declination and
(ii) before the Business Day following the Cut-Off Date. Regardless of the
binding or non- binding nature of a pending Redemption, a Tendering Party shall
have no right to receive distributions with respect to any Tendered Units (other
than the Cash Amount) paid after delivery of the Notice of Redemption, whether
or not the Partnership Record Date for such distribution precedes or coincides
with such delivery of the Notice of Redemption; provided, however, that in the
event that the General Partner on behalf of the Partnership elects to fund the
Cash Amount with the proceeds of an Offering Funding pursuant to Section 8.6.D
hereof, the Tendering Party's right to receive distributions shall not be
suspended as hereinbefore provided and such Tendering Party shall have the right
to receive distributions actually made hereunder prior to the date of the
closing of the Offering Funding whose proceeds are used to pay the Cash Amount.
In the event of a Redemption, the Cash Amount shall be delivered as a certified
check payable to the Tendering Party or, in the General Partner's sole and
absolute discretion, in immediately available funds.
B. Notwithstanding the provisions of Section 8.6.A hereof, on
or before the close of business on the Cut-Off Date, the General Partner may, in
its sole and absolute discretion but subject to the Ownership Limit and the
transfer restrictions and other limitations of the Charter, elect to acquire
some or all (such percentage being referred to as the "Applicable Percentage")
of the Tendered Units from the Tendering Party in exchange for the REIT Shares
Amount calculated based on the portion of Tendered Units it elects to acquire in
exchange for REIT Shares. In making such election, the General Partner shall act
in a fair, equitable and reasonable manner that neither prefers one group or
class of Qualifying Parties over another nor discriminates against a group or
class of Qualifying Parties. If the General Partner so elects, on the Specified
Redemption Date the Tendering Party shall sell such number of the Tendered Units
to the General Partner in exchange for a number of REIT Shares equal to the
product of the REIT Shares Amount and the Applicable Percentage. The Tendering
Party shall submit (i) such information, certification or affidavit as the
General Partner may reasonably require in connection with the application of the
Ownership Limit and other restrictions and limitations of the Charter to any
such acquisition and (ii) such written representations, investment letters,
legal opinions or other instruments necessary, in the General Partner's view, to
effect compliance with the Securities Act. In the event of a purchase of the
Tendered Units by the General Partner pursuant to this Section 8.6.B, the
Tendering Party shall no longer have the right to cause the Partnership to
effect a Redemption of such Tendered Units, and, upon notice to the Tendering
Party by the General Partner, given on or before the close of business on the
Cut-Off Date, that the General Partner has elected to acquire some or all of the
Tendered Units pursuant to this Section 8.6.B, the obligation of the Partnership
to effect a Redemption of the Tendered Units as to which the General Partner's
notice relates shall not accrue or arise. The product of the Applicable
Percentage and the REIT Shares Amount, if applicable, shall be delivered by the
General Partner as duly authorized, validly issued, fully paid and accessible
REIT Shares and, if applicable, Rights, free of any pledge, lien, encumbrance or
restriction, other than the Ownership Limit and other restrictions provided in
the Charter, the Bylaws of the General Partner, the Securities Act and relevant
state securities or "blue sky" laws. Neither any Tendering Party whose Tendered
Units are acquired by the General Partner pursuant to this Section 8.6.B, any
Partner, any Assignee nor any other interested Person shall have any right to
require or cause the General Partner to register, qualify or list any REIT
Shares owned or held by such Person, whether or not such REIT Shares are issued
pursuant to this Section 8.6.B, with the SEC, with any state securities
commissioner, department or agency, under the Securities Act or the Exchange Act
or with any stock exchange; provided, however, that this limitation shall not be
in derogation of any registration or similar rights granted pursuant to any
other written agreement between the General
42
Partner and any such Person. Notwithstanding any delay in such delivery, the
Tendering Party shall be deemed the owner of such REIT Shares and Rights for all
purposes, including, without limitation, rights to vote or consent, receive
dividends, and exercise rights, as of the Specified Redemption Date. REIT Shares
issued upon an acquisition of the Tendered Units by the General Partner pursuant
to this Section 8.6.B may contain such legends regarding restrictions under the
Securities Act and applicable state securities laws as the General Partner in
good faith determines to be necessary or advisable in order to ensure compliance
with such laws. The Special Limited Partner will be granted registration rights
with respect to the REIT Shares Amount, if any, delivered pursuant hereto to the
Special Limited Partner in exchange for Tendered Units.
C. Notwithstanding the provisions of Section 8.6.A and 8.6.B
hereof, the Tendering Parties shall have no rights under this Agreement that
would otherwise be prohibited under the Charter with respect to the Ownership
Limit. To the extent that any attempted Redemption or acquisition of the
Tendered Units by the General Partner pursuant to Section 8.6.B hereof would be
in violation of this Section 8.6.C, it shall be null and void ab initio, and the
Tendering Party shall not acquire any rights or economic interests in REIT
Shares otherwise issuable by the General Partner under Section 8.6.B hereof.
D. In the event that the General Partner declines or fails to
exercise its purchase rights pursuant to Section 8.6.B hereof following receipt
of a Notice of Redemption (a "Declination"):
(1) The General Partner shall give notice of such
Declination to the Tendering Party on or before the close of
business on the Cut-Off Date. The failure of the General
Partner to give notice of such Declination by the close of
business on the Cut-Off Date shall itself constitute a
Declination.
(2) Subject to Section 11.6.D, the General Partner on
behalf of the Partnership may elect to raise funds for the
payment of the Cash Amount either (a) by contribution by the
General Partner of funds from the proceeds of a private
placement or registered public offering (each, an "Offering
Funding") by the General Partner of a number of REIT Shares or
other securities of the REIT ("Offering Funding Shares") equal
to the REIT Shares Amount with respect to the Tendered Units
or (b) from any other sources (including, but not limited to,
the sale of any Property and the incurrence of additional
Debt) available to the Partnership.
(3) Promptly upon the General Partner's receipt of
the Notice of Redemption and the General Partner giving notice
of its Declination, the General Partner shall give notice (a
"Single Funding Notice") to all Qualifying Parties then
holding a Partnership Interest (or an interest therein) and
having Redemption rights pursuant to this Section 8.6 and
require that all such Qualifying Parties elect whether or not
to effect a Redemption of their Partnership Common Units to be
funded through an Offering Funding (if an Offering Funding has
been elected by the General Partner) or otherwise. In the
event that any such Qualifying Party elects to effect such a
Redemption, it shall give notice thereof and of the number of
Partnership Common Units to be made subject thereto in writing
to the General Partner within ten (10) Business Days after
receipt of the Single Funding Notice, and such Qualifying
Party shall be treated as a Tendering Party for all purposes
of this Section 8.6. In the event that a Qualifying Party does
not so elect, it shall be deemed to have waived its right to
effect a Redemption for the current Twelve-Month Period;
provided, however, that the General Partner shall not be
required to acquire Partnership Common Units pursuant to this
Section 8.6.D more than twice within a calendar year.
Any proceeds from an Offering Funding that are in excess of the Cash Amount
shall be for the sole benefit of the General Partner. The General Partner shall
make a Capital Contribution of such amounts to the Partnership for an additional
43
General Partner Interest and/or Limited Partner Interest. Any such contribution
shall entitle the General Partner to an equitable Percentage Interest
adjustment.
E. Notwithstanding the provisions of Section 8.6.B hereof, the
General Partner shall not, under any circumstances, elect to acquire Tendered
Units in exchange for the REIT Shares Amount if such exchange would be
prohibited under the Charter or the REIT provisions of the Code.
F. Notwithstanding anything herein to the contrary (but
subject to Section 8.6.C hereof), with respect to any Redemption (or any tender
of Partnership Common Units for Redemption if the Tendered Units are acquired by
the General Partner pursuant to Section 8.6.B hereof) pursuant to this Section
8.6:
(1) All Partnership Common Units acquired by the
General Partner pursuant to Section 8.6.B hereof shall
automatically, and without further action required, be
converted into and deemed to be a General Partner Interest
comprised of the same number of Partnership Common Units.
(2) Subject to the Ownership Limit, no Tendering
Party may effect a Redemption for less than five hundred (500)
Partnership Common Units or, if such Tendering Party holds (as
a Limited Partner or, economically, as an Assignee) less than
five hundred (500) Partnership Common Units, all of the
Partnership Common Units held by such Tendering Party.
(3) Each Tendering Party (a) may effect a Redemption
only once in each fiscal quarter of a Twelve-Month Period and
(b) may not effect a Redemption during the period after the
Partnership Record Date with respect to a distribution and
before the record date established by the General Partner for
a distribution to its shareholders of some or all of its
portion of such Partnership distribution.
(4) Notwithstanding anything herein to the contrary,
with respect to any Redemption or acquisition of Tendered
Units by the General Partner pursuant to Section 8.6.B hereof,
in the event that the General Partner gives notice to all
Limited Partners (but excluding any Assignees) then owning
Partnership Interests (a "Primary Offering Notice") that the
General Partner desires to effect a primary offering of its
equity securities then, unless the General Partner otherwise
consents, commencement of the actions denoted in Section 8.6.D
hereof as to an Offering Funding, if any, with respect to any
Notice of Redemption thereafter received, whether or not the
Tendering Party is a Limited Partner, may be delayed until the
earlier of (a) the completion of the primary offering or (b)
ninety (90) days following the giving of the Primary Offering
Notice.
(5) Without the Consent of the General Partner, no
Tendering Party may effect a Redemption within ninety (90)
days following the closing of any prior Offering Funding.
(6) The consummation of such Redemption (or an
acquisition of Tendered Units by the General Partner pursuant
to Section 8.6.B hereof, as the case may be) shall be subject
to the expiration or termination of the applicable waiting
period, if any, under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
44
(7) The Tendering Party shall continue to own
(subject, in the case of an Assignee, to the provision of
Section 11.5 hereof) all Partnership Common Units subject to
any Redemption, and be treated as a Limited Partner or an
Assignee, as applicable, with respect to such Partnership
Common Units for all purposes of this Agreement, until such
Partnership Common Units are either paid for by the
Partnership pursuant to Section 8.6.A hereof or transferred to
the General Partner and paid for, by the issuance of the REIT
Shares, pursuant to Section 8.6.B hereof on the Specified
Redemption Date. Until a Specified Redemption Date and an
acquisition of the Tendered Units by the General Partner
pursuant to Section 8.6.B hereof, the Tendering Party shall
have no rights as a shareholder of the General Partner with
respect to the REIT Shares issuable in connection with such
acquisition.
For purposes of determining compliance with the restrictions set forth in this
Section 8.6.F, all Partnership Common Units beneficially owned by a Related
Party of a Tendering Party shall be considered to be owned or held by such
Tendering Party.
G. In connection with an exercise of Redemption rights
pursuant to this Section 8.6, the Tendering Party shall submit the following to
the General Partner, in addition to the Notice of Redemption:
(1) A written affidavit, dated the same date as the
Notice of Redemption, (a) disclosing the actual and
constructive ownership, as determined for purposes of Code
Sections 856(a)(6) and 856(h), of REIT Shares by (i) such
Tendering Party and (ii) any Related Party and (b)
representing that, after giving effect to the Redemption or an
acquisition of the Tendered Units by the General Partner
pursuant to Section 8.6.B hereof, neither the Tendering Party
nor any Related Party will own REIT Shares in excess of the
Ownership Limit;
(2) A written representation that neither the
Tendering Party nor any Related Party has any intention to
acquire any additional REIT Shares prior to the closing of the
Redemption or an acquisition of the Tendered Units by the
General Partner pursuant to Section 8.6.B hereof on the
Specified Redemption Date; and
(3) An undertaking to certify, at and as a condition
to the closing of (i) the Redemption or (ii) the acquisition
of the Tendered Units by the General Partner pursuant to
Section 8.6.B hereof on the Specified Redemption Date, that
either (a) the actual and constructive ownership of REIT
Shares by the Tendering Party and any Related Party remain
unchanged from that disclosed in the affidavit required by
Section 8.6.G(1) or (b) after giving effect to the Redemption
or an acquisition of the Tendered Units by the General Partner
pursuant to Section 8.6.B hereof, neither the Tendering Party
nor any Related Party shall own REIT Shares in violation of
the Ownership Limit.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting.
A. 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
45
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 8.5.A or 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 for, 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.
B. 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 on such other basis as the General
Partner determines to be necessary or appropriate. To the extent permitted by
sound accounting practices and principles, the Partnership and the General
Partner may operate with integrated or consolidated accounting records,
operations and principles.
Section 9.2 Partnership Year. The Partnership 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 Limited Partner, of record as of the
close of the Partnership Year, an annual report containing financial statements
of the Partnership, or of the General Partner if such statements are prepared
solely on a consolidated basis with the General Partner, 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, of record as of the last day of the calendar
quarter, a report containing unaudited financial statements of the Partnership,
or of the General Partner if such statements are prepared solely on a
consolidated basis with the General Partner, and such other information as may
be required by applicable law or regulation or as the General Partner determines
to be appropriate. At the request of any Limited Partner, the General Partner
shall provide access to the books, records and workpapers upon which the reports
required by this Section 9.3 are based, to the extent required by the Act.
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 with respect
to Partnership income, gains, deductions, losses and other items required of the
Partnership for federal and state income tax purposes and shall use all
reasonable effort 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. The Limited Partners shall
promptly provide the General Partner with such information relating to the
Contributed Properties, including tax basis and other relevant information, as
may be reasonably requested by the General Partner from time to time.
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,
including, but not limited to, the election under Code Section 754 and the
election to use the "recurring item" method of accounting provided under
46
Code Section 461(h) with respect to property taxes imposed on the Partnership's
Properties; provided, however, that, if the "recurring item" method of
accounting is elected with respect to such property taxes, the Partnership shall
pay the applicable property taxes prior to the date provided in Code Section
461(h) for purposes of determining economic performance. The General Partner
shall have the right to seek to revoke any such election (including, without
limitation, any election under Code Sections 461(h) and 754) upon the General
Partner's determination in its sole and absolute discretion that such revocation
is in the best interests of the Partners.
Section 10.3 Tax Matters Partner.
A. The General Partner shall be the "tax matters partner" of
the Partnership for federal income tax purposes. 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 in
addition to any reimbursement pursuant to Section 7.4 hereof. 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. At
the request of any Limited Partner, the General Partner agrees to consult with
such Limited Partner with respect to the preparation and filing of any returns
and with respect to any subsequent audit or litigation relating to such returns;
provided, however, that the filing of such returns shall be in the sole and
absolute discretion of the General Partner.
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 Code Section 6231) or a member of a "notice group" (as
defined in Code Section 6223(b)(2));
(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 United States Tax Court or the United States
Claims Court, or the filing of a complaint for refund with 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 at any time 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;
(5) to enter into an agreement with the IRS to extend
the period for assessing any tax that is attributable to any item
required to be taken into account by a Partner for tax purposes, or an
item affected by such item; and
47
(6) to take any other action on behalf of the
Partners 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 hereof shall be fully applicable to the tax matters partner in
its capacity as such.
Section 10.4 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 Code Section
1441, Code Section 1442, Code Section 1445 or Code Section 1446. 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 that 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 that
would, but for such payment, be distributed to the Limited Partner. Each Limited
Partner hereby unconditionally and irrevocably grants to the Partnership a
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 10.4. In the event that a Limited Partner fails
to pay any amounts owed to the Partnership pursuant to this Section 10.4 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 (including, without limitation, the
right to receive distributions). Any amounts payable by a Limited Partner
hereunder shall bear interest at 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 (but not higher than
the maximum lawful rate) 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.
Section 10.5 Organizational Expenses. The Partnership shall
elect to deduct expenses, if any, incurred by it in organizing the Partnership
ratably over a 60 month period as provided in Section 709 of the Code.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.
A. No part of the interest of a Partner shall be subject to
the claims of any creditor, to any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.
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. Any Transfer or purported Transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void ab initio.
48
C. Notwithstanding the other provisions of this Article 11
(other than Section 11.6.D hereof), the Partnership Interests of the General
Partner may be Transferred, in whole or in part, at any time or from time to
time, to any Person that is, at the time of such Transfer, a Qualified REIT
Subsidiary. Any transferee of the entire General Partner Interest pursuant to
this Section 11.1.C shall automatically become, without further action or
Consent of any Limited Partners, the sole general partner of the Partnership,
subject to all the rights, privileges, duties and obligations under this
Agreement and the Act relating to a general partner. Upon any Transfer permitted
by this Section 11.1.C, the transferor Partner shall be relieved of all its
obligations under this Agreement. The provisions of Section 11.2.B (other than
the last sentence thereof), 11.3, 11.4.A and 11.5 hereof shall not apply to any
Transfer permitted by this Section 11.1.C.
D. No Transfer of any Partnership Interest 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 redeem or exchange for the REIT Shares
Amount any Partnership Units in which a security interest is held by such lender
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 11.2 Transfer of General Partner's Partnership
Interest.
A. The General Partner may not Transfer any of its General
Partner Interest or withdraw from the Partnership except as provided in Sections
11.1.C, 11.2.B and 11.2.C hereof.
B. Except as set forth in Section 11.2.C below, the General
Partner shall not withdraw from the Partnership and shall not Transfer all or
any portion of its interest in the Partnership (whether by sale, disposition,
statutory merger or consolidation, liquidation or otherwise) without the
Consent of the Limited Partners, which Consent may be given or withheld in the
sole and absolute discretion of the Limited Partners. Upon any Transfer of such
a Partnership Interest pursuant to the Consent of the Limited Partners and
otherwise in accordance with the provisions of this Section 11.2.B, the
transferee shall become a successor General Partner for all purposes herein, and
shall be vested with the powers and rights of the transferor General Partner,
and shall be liable for all obligations and responsible for all duties of the
General Partner, once such transferee has executed such instruments as may be
necessary to effectuate such admission and to confirm the agreement of such
transferee to be bound by all the terms and provisions of this Agreement with
respect to the Partnership Interest so acquired. It is a condition to any
Transfer otherwise permitted hereunder that the transferee assumes, by operation
of law or express agreement, all of the obligations of the transferor General
Partner under this Agreement with respect to such Transferred Partnership
Interest, and such Transfer shall relieve the transferor General Partner of its
obligations under this Agreement without the Consent of the Limited Partners. In
the event that the General Partner withdraws from the Partnership, in violation
of this Agreement or otherwise, or otherwise dissolves or terminates, or upon
the bankruptcy of the General Partner, a Majority in Interest of the Limited
Partners may elect to continue the Partnership business by selecting a successor
General Partner in accordance with the Act.
C. The General Partner may merge with another entity if (i) in
connection therewith the Limited Partners receive property with a value equal in
value to the amount such Partners would have received had the exercised the
Redemption Rights immediately prior to such merger or (ii) immediately after
such merger substantially all of the assets of the surviving entity, other than
the General Partner Interest held by the General Partner, are contributed to the
Partnership as a Capital Contribution in exchange for Partnership Units.
Section 11.3 Limited Partners' Rights to Transfer.
49
A. General. Prior to the end of the first Twelve-Month Period,
no Limited Partner shall Transfer all or any portion of its Partnership Interest
to any transferee without the Consent of the General Partner, which Consent may
be withheld in its sole and absolute discretion; provided, however, that any
Limited Partner may, at any time, without the consent of the General Partner,
(i) Transfer all or part of its Partnership Interest to any Family Member, any
Controlled Entity or any Affiliate, provided that the transferee is, in any such
case, a Qualified Transferee, or (ii) pledge (a "Pledge") all or any portion of
its Partnership Interest to a lending institution, that is not an Affiliate of
such Limited Partner, as collateral or security for a bona fide loan or other
extension of credit, and Transfer such pledged Partnership Interest to such
lending institution in connection with the exercise of remedies under such loan
or extension or credit (any Transfer or Pledge permitted by this proviso is
hereinafter referred to as a "Permitted Transfer"). After such first
Twelve-Month Period, each Limited Partner, and each transferee of Partnership
Units or Assignee pursuant to a Permitted Transfer, shall have the right to
Transfer all or any portion of its Partnership Interest to any Person, subject
to the provisions of Section 11.6 hereof and the satisfaction of each of the
following conditions (except in the case of a Transfer pursuant to clauses (i)
or (ii) above):
(1) Qualified Transferee. Any Transfer of a
Partnership Interest shall be made only to a single Qualified
Transferee; provided, however, that, for such purposes, all Qualified
Transferees that are Affiliates, or that comprise investment accounts
or funds managed by a single Qualified Transferee and its Affiliates,
shall be considered together to be a single Qualified Transferee;
provided, further, that each Transfer meeting the minimum Transfer
restriction of Section 11.3.A(2) hereof may be to a separate Qualified
Transferee.
(2) Minimum Transfer Restriction. Any Transferring
Partner must Transfer not less than the lesser of (i) the greater of
five hundred (500) Partnership Units or one-third (1/3) of the number
of Partnership Units owned by such Partner as of the Effective Date or
(ii) all of the remaining Partnership Units owned by such Transferring
Partner; provided, however, that, for purposes of determining
compliance with the foregoing restriction, all Partnership Units owned
by Affiliates of a Limited Partner shall be considered to be owned by
such Limited Partner.
(3) Exception for Permitted Transfers. The conditions
of Sections 11.3.A(1) and 11.3.A(2) hereof shall not apply in the case
of a Permitted Transfer.
It is a condition to any Transfer otherwise permitted hereunder (whether or not
such Transfer is effected during or after the first Twelve-Month Period) that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such Transferred Partnership Interest, and no such Transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under
this Agreement without the approval of the General Partner, in its sole and
absolute discretion. Notwithstanding the foregoing, any transferee of any
Transferred Partnership Interest shall be subject to any and all ownership
limitations (including, without limitation, the Ownership Limit) contained in
the Charter that may limit or restrict such transferee's ability to exercise its
Redemption rights, including, without limitation, the Ownership Limit. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take
subject to the obligations of the transferor hereunder. Unless admitted as a
Substituted Limited Partner, no transferee, whether by a voluntary Transfer, by
operation of law or otherwise, shall have any rights hereunder, other than the
rights of an Assignee as provided in Section 11.5 hereof.
B. Incapacity. 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 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
50
estate, and such power as the Incapacitated Limited Partner possessed to
Transfer all or any part of its interest in the Partnership. The Incapacity of a
Limited Partner, in and of itself, shall not dissolve or terminate the
Partnership.
C. Opinion of Counsel. In connection with any proposed
Transfer of a Limited Partner Interest, the General Partner shall have the right
to receive an opinion of counsel reasonably satisfactory to it to the effect
that the proposed Transfer may be effected without registration under the
Securities Act and will not otherwise violate any federal or state securities
laws or regulations applicable to the Partnership or the Partnership Interests
Transferred. If, in the opinion of such counsel, such Transfer would require the
filing of a registration statement under the Securities Act or would otherwise
violate any federal or state securities laws or regulations applicable to the
Partnership or the Partnership Units, the General Partner may prohibit any
Transfer otherwise permitted under this Section 11.3 by a Limited Partner of
Partnership Interests.
D. Adverse Tax Consequences. No Transfer by a Limited Partner
of its Partnership Interests (including any Redemption, any other acquisition of
Partnership Units by the Partnership or the General Partner) may be made to or
by 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 would result in a termination of the Partnership under Code
Section 708, or (ii) such Transfer would be effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Code Section 7704.
Section 11.4 Substituted Limited Partners.
A. No Limited Partner shall have the right to substitute a
transferee (including transferees pursuant to Transfers permitted by Section
11.3 hereof) as a Limited Partner in its place. A transferee of the interest of
a Limited Partner may be admitted as a Substituted Limited Partner only with the
Consent of the General Partner, which Consent may be given or withheld by the
General Partner in its sole and absolute discretion. The failure or refusal by
the General Partner 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 the General Partner. Subject to the foregoing, an Assignee
shall not be admitted as a Substituted Limited Partner until and unless it
furnishes to the General Partner (i) evidence of acceptance, in form and
substance satisfactory to the General Partner, of all the terms, conditions and
applicable obligations of this Agreement, (ii) a counterpart signature page to
this Agreement executed by such Assignee and (iii) such other documents and
instruments as may be required or advisable, in the sole and absolute discretion
of the General Partner, to effect such Assignee's admission as a Substituted
Limited 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 and number of
Partnership Units of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address and number of Partnership Units 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 under Section 11.3 hereof as a Substituted Limited Partner, as
described in Section 11.4 hereof, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be entitled to all
the rights of an assignee of a limited partnership interest under the Act,
including the right to receive distributions from the Partnership and the share
of Net Income, Net Losses and other items of income, gain, loss, deduction and
credit of the Partnership attributable to the Partnership Units assigned to such
transferee and the rights
51
to Transfer the Partnership Units provided in this Article 11, 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 effect a Consent or vote or effect a
Redemption with respect to such Partnership Units on any matter presented to the
Limited Partners for approval (such right to Consent or vote or effect a
Redemption, to the extent provided in this Agreement or under the Act, fully
remaining with the transferor Limited Partner). In the event that any such
transferee desires to make a further assignment of any such Partnership Units,
such transferee shall be subject to all 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.
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, with respect to which the
transferee becomes a Substituted Limited Partner, or pursuant to a redemption
(or acquisition by the General Partner) of all of its Partnership Units pursuant
to a Redemption under Section 8.6 hereof and/or pursuant to any Partnership Unit
Designation.
B. Any Limited Partner who shall Transfer all of its
Partnership Units in a Transfer (i) permitted pursuant to this Article 11 where
such transferee was admitted as a Substituted Limited Partner, (ii) pursuant to
the exercise of its rights to effect a redemption of all of its Partnership
Units pursuant to a Redemption under Section 8.6 hereof and/or pursuant to any
Partnership Unit Designation or (iii) to the General Partner, whether or not
pursuant to Section 8.6.B hereof, shall cease to be a Limited Partner.
C. If any Partnership Unit is Transferred in compliance with
the provisions of this Article 11, or is redeemed by the Partnership, or
acquired by the General Partner pursuant to Section 8.6 hereof, on any day other
than the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items of income, gain, loss, deduction and credit
attributable to such Partnership Unit for such Partnership Year shall be
allocated to the transferor Partner or the Tendering Party, as the case may be,
and, in the case of a Transfer or assignment other than a Redemption, to the
transferee Partner, by taking into account their varying interests during the
Partnership Year in accordance with Code Section 706(d), using the "interim
closing of the books" method or another permissible method selected by the
General Partner. Solely for purposes of making such allocations, each of such
items for the calendar month in which a Transfer occurs shall be allocated to
the transferee Partner and none of such items for the calendar month in which a
Transfer or a Redemption occurs shall be allocated to the transferor Partner or
the Tendering Party, as the case may be, if such Transfer occurs on or before
the fifteenth (15th) day of the month, otherwise such items shall be allocated
to the transferor. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date is before the
date of such Transfer, assignment or Redemption shall be made to the transferor
Partner or the Tendering Party, as the case may be, and, in the case of a
Transfer other than a Redemption, all distributions of Available Cash thereafter
attributable to such Partnership Unit shall be made to the transferee Partner.
D. In addition to any other restrictions on Transfer herein
contained, in no event may any Transfer or assignment of a Partnership Interest
by any Partner (including any Redemption, any acquisition of Partnership Units
by the General Partner or any other acquisition of Partnership Units by the
Partnership) be made (i) to any person or entity who lacks the legal right,
power or capacity to own a Partnership Interest; (ii) in violation of applicable
law; (iii) of any component portion of a Partnership Interest, such as the
Capital Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) in the event that such Transfer would
cause the General Partner to cease to comply with the REIT Requirements; (v) if
such Transfer would, in the opinion of counsel to the Partnership or the General
Partner, cause a termination of the Partnership for federal or state income tax
purposes (except as a result of the Redemption (or acquisition by the General
Partner) of all Partnership Common Units held by all Limited Partners); (vi) if
such Transfer would, in the opinion of legal counsel to the Partnership, cause
the Partnership
52
to cease to be classified as a partnership for federal income tax purposes
(except as a result of the Redemption (or acquisition by the General Partner) of
all Partnership Common Units held by all Limited Partners); (vii) if such
Transfer would cause the Partnership to become, with respect to any employee
benefit plan subject to Title I of ERISA, a "party-in-interest" (as defined in
ERISA Section 3(14)) or a "disqualified person" (as defined in Code Section
4975(c)); (viii) if such Transfer would, in the opinion of legal counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.2-101; (ix) if such Transfer requires the registration of such
Partnership Interest pursuant to any applicable federal or state securities
laws; (x) if such Transfer causes the Partnership to become a "publicly traded
partnership," as such term is defined in Code Section 469(k)(2) or Code 7704(b);
(xi) if such Transfer would cause the Partnership to have more than five hundred
(500) partners (including as partners those persons indirectly owning an
interest in the Partnership through a partnership, limited liability company,
subchapter S corporation or grantor trust); (xii) if such Transfer causes the
Partnership (as opposed to the General Partner) to become a reporting company
under the Exchange Act; or (xiii) if such Transfer subjects the Partnership to
regulation under the Investment Company Act of 1940, the Investment Advisors Act
of 1940 or ERISA, each as amended.
E. Transfers pursuant to this Article 11 may only be made on
the first day of a fiscal quarter of the Partnership, unless the General Partner
otherwise agrees.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner. A
successor to all of the General Partner's 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
immediately prior to such Transfer. Any such successor 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.
Section 12.2 Admission of Additional Limited Partners.
A. After the admission to the Partnership of the Special
Limited Partner on the date hereof, a Person (other than an existing Partner)
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
and substance 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, (ii) a counterpart signature page to
this Agreement executed by such Person and (iii) such other documents or
instruments as may be required in the sole and absolute 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 of income, gain, loss,
53
deduction and credit allocable among Partners and Assignees for such Partnership
Year shall be allocated pro rata 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 Code Section 706(d), using the
"interim closing of the books" method or another permissible method selected by
the General Partner. Solely for purposes of making such allocations, each of
such items for the calendar month in which an admission of any Additional
Limited Partner occurs shall be allocated among all the Partners and Assignees
including such Additional Limited Partner, in accordance with the principles
described in Section 11.6.C hereof. All distributions of Available Cash with
respect to which the Partnership Record Date is before the date of such
admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions of Available Cash thereafter
shall be made to all 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.
Section 12.4 Admission of Initial Limited Partners. The
Persons listed on Exhibit A as limited partners of the Partnership shall be
admitted to the Partnership as Limited Partners upon their execution and
delivery of this Agreement.
Section 12.5 Limit on Number of Partners. Unless otherwise
permitted by the General Partner, no Person shall be admitted to the Partnership
as an Additional Limited Partner if the effect of such admission would be to
cause the Partnership to have a number of Partners (including as Partners for
this purpose those Persons indirectly owning an interest in the Partnership
through another partnership, a limited liability company, a subchapter S
corporation or a grantor trust) that would cause the Partnership to become a
reporting company under the Exchange Act.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution. The Partnership shall not be
dissolved by the admission of 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 without dissolution. However, the
Partnership shall dissolve, and its affairs shall be wound up, 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, as defined in the Act (including,
without limitation, bankruptcy), of the sole General Partner unless, within
ninety (90) days after the withdrawal, a "majority in interest" (as such phrase
is used in Section 17-801(3) of the Act) of the remaining Partners agree in
writing, in their sole and absolute discretion, to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor General Partner:
C. an election to dissolve the Partnership made by the General
Partner in its sole and absolute discretion, with or without the Consent of the
Limited Partners;
54
D. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
E. the occurrence of a Terminating Capital Transaction; or
F. the Redemption (or acquisition by the General Partner) of
all Partnership Units other than Partnership Units held by the 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. After the occurrence of a Liquidating Event, 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 that there is no remaining General Partner or the General Partner
has dissolved, become bankrupt within the meaning of the Act or ceased to
operate, 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 stock in the General Partner) shall be applied and distributed
in the following order:
(1) First, to the satisfaction of all of the
Partnership's debts and liabilities to creditors other than the
Partners and their Assignees (whether by payment or the making of
reasonable provision for payment thereof);
(2) Second, to the satisfaction of all of the
Partnership's debts and liabilities to the General Partner (whether by
payment or the making of reasonable provision for payment thereof),
including, but not limited to, amounts due as reimbursements under
Section 7.4 hereof;
(3) Third, to the satisfaction of all of the
Partnership's debts and liabilities to the other Partners and any
Assignees (whether by payment or the making of reasonable provision for
payment thereof);
(4) Fourth, to the payment of any unpaid preferred
distributions to the Special Limited Partner; and
(5) Subject to the terms of any Partnership Unit
Designation, the balance, if any, to the General Partner, the Limited
Partners and any Assignees in accordance with and in proportion to
their positive Capital Account balances, after giving effect to all
contributions, distributions and allocations for all periods.
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
that 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
55
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 event that 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 Partners and Assignees that have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, positive Capital
Account balances. If the General Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such liquidation occurs)
(a "Capital Account Deficit"), the General Partner shall make a contribution to
the capital of the Partnership equal to the amount of such deficit. No Partner
other than the General Partner shall be required to make any contribution to the
capital of the Partnership with respect to a Capital Account Deficit, if any, of
such Partner, and such Capital Account Deficit shall not be considered a debt
owed to the Partnership or any other person for any purpose whatsoever. In the
sole and absolute discretion of the General Partner or the Liquidator, a pro
rata portion of the distributions that would otherwise be made to the Partners
pursuant to this Article 13 may be:
1. distributed to a trust established for the benefit
of the General Partner and the Limited Partners for the purpose of liquidating
Partnership assets, collecting amounts owed to the Partnership, and paying any
contingent or unforeseen liabilities or obligations of the Partnership or of the
General Partner arising out of or in connection with the Partnership and/or
Partnership activities. The assets of any such trust shall be distributed to the
General Partner and the Limited Partners, from time to time, in the reasonable
discretion of the General Partner, in the same proportions and amounts as would
otherwise have been distributed to the General Partner and the 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 hereof as soon as practicable.
Section 13.3 Deemed Distribution and Recontribution.
Notwithstanding any other provision of this Article 13, in the event that the
Partnership is 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 the Partnership shall be deemed to have
distributed the Property in kind to the Partners and the Assignees, who shall be
deemed to have contributed all of its assets and liabilities to a new
partnership in exchange for an interest in the new partnership; and, immediately
thereafter, distributed interests in the new partnership to the Partners in
accordance with their respective Capital Accounts in liquidation of the
Partnership, and the new partnership is deemed to continue the business of the
Partnership. Nothing in this Section 13.3 shall be deemed to have constituted
any Assignee as a Substituted Limited Partner without compliance with the
provisions of Section 11.4 hereof.
Section 13.4 Rights of Limited Partners. Except as otherwise
provided in this Agreement, (a) each Limited Partner shall look solely to the
assets of the Partnership for the return of its Capital Contribution, (b) no
Limited Partner shall have the right or power to demand or receive property
other than cash from the Partnership and (c) no
56
Limited Partner shall have priority over any other Limited Partner as to the
return of its Capital Contributions, distributions or allocations.
Section 13.5 Notice of Dissolution. In the event that a
Liquidating Event occurs or an event occurs that would, but for an election or
objection by one or more Partners pursuant to Section 13.1 hereof, 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 and, in
the General Partner's sole and absolute discretion or as required by the Act, to
all other parties with whom the Partnership regularly conducts business (as
determined in the sole and absolute discretion of the General Partner), and the
General Partner may, or, if required by the Act, shall, publish notice thereof
in a newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the sole and absolute discretion
of the General Partner).
Section 13.6 Cancellation of Certificate of Limited
Partnership. Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be
terminated, a certificate of cancellation shall be filed with the State of
Delaware, all qualifications of the Partnership as a foreign limited partnership
or association in jurisdictions other than the State of Delaware shall be
cancelled, and such other actions as may be necessary to terminate the
Partnership shall be taken.
Section 13.7 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.
ARTICLE 14
PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS
Section 14.1 Procedures for Actions and Consents of Partners.
The actions requiring consent or approval of Limited Partners pursuant to this
Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable
law, are subject to the procedures set forth in this Article 14.
Section 14.2 Amendments. Amendments to this Agreement may be
proposed by the General Partner or by a Majority in Interest of the Limited
Partners. Following such proposal, the General Partner shall submit any proposed
amendment to the Limited Partners. The General Partner shall seek the written
consent of the Limited Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that the General
Partner may deem appropriate. For purposes of obtaining a written consent, 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 consent that is consistent with the General Partner's
recommendation with respect to the proposal; provided, however, that an action
shall become effective at such time as requisite consents are received even if
prior to such specified time.
Section 14.3 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 a Majority in Interest of the Limited Partners. The call 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
57
meeting. Whenever the vote or Consent of Partners is permitted or required under
this Agreement, such vote or Consent may be given at a meeting of Partners or
may be given in accordance with the procedure prescribed in Section 14.3.B
hereof.
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 for the action in question). 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 it 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 its
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 (or there is
receipt of a proxy authorizing a later date). 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 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 in its sole and absolute discretion. Without limitation,
meetings of Partners may be conducted in the same manner as meetings of the
General Partner's shareholders and may be held at the same time as, and as part
of, the meetings of the General Partner's shareholders.
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 (including by telecopy, facsimile, or commercial
courier service) 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" or "Sections" are to Articles and Sections
of this Agreement.
Section 15.3 Pronouns and Plurals. Whenever the context may
require, any pronouns 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.
58
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.
Section 15.6 Waiver.
A. 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.
B. The restrictions, conditions and other limitations on the
rights and benefits of the Limited Partners contained in this Agreement, and the
duties, covenants and other requirements of performance or notice by the Limited
Partners, are for the benefit of the Partnership and, except for an obligation
to pay money to the Partnership, may be waived or relinquished by the General
Partner, in its sole and absolute discretion, on behalf of the Partnership in
one or more instances from time to time and at any time; provided, however, that
any such waiver or relinquishment may not be made if it would have the effect of
(i) creating liability for any other Limited Partner, (ii) causing the
Partnership to cease to qualify as a limited partnership, (iii) reducing the
amount of cash otherwise distributable to the Limited Partners, (iv) resulting
in the classification of the Partnership as an association or publicly traded
partnership taxable as a corporation or (v) violating the Securities Act, the
Exchange Act or any state "blue sky" or other securities laws; provided,
further, that any waiver relating to compliance with the Ownership Limit or
other restrictions in the Charter shall be made and shall be effective only as
provided in the Charter.
Section 15.7 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all 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 15.8 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. In the event of
a conflict between any provision of this Agreement and any non-mandatory
provision of the Act, the provisions of this Agreement shall control and take
precedence.
Section 15.9 Entire Agreement. This Agreement contains all of
the understandings and agreements between and among the Partners with respect
to the subject matter of this Agreement and the rights, interests and
obligations of the Partners with respect to the Partnership.
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 Limitation to Preserve REIT Status.
Notwithstanding anything else in this Agreement, to the extent that the amount
paid, credited, distributed or reimbursed by the Partnership to any REIT Partner
or its officers, directors, employees or agents, whether as a reimbursement,
fee, expense or indemnity (a "REIT Payment"), would constitute gross income to
the REIT Partner for purposes of Code Section 856(c)(2) or Code Section
856(c)(3), then, notwithstanding any other provision of this Agreement, the
amount of such REIT Payments, as selected by the General Partner in its
discretion from among items of potential distribution, reimbursement, fees,
expenses and indemnities, shall be reduced for any Partnership Year so that the
REIT Payments, as so reduced, for or with respect to such REIT Partner shall not
exceed the lesser of:
59
(i) an amount equal to the excess, if any, of (a)
four and nine-tenths percent (4.9%) of the REIT Partner's total gross
income (but excluding the amount of any REIT Payments) for the
Partnership Year that is described in subsections (A) through (H) of
Code Section 856(c)(2) over (b) the amount of gross income (within the
meaning of Code Section 856(c)(2)) derived by the REIT Partner from
sources other than those described in subsections (A) through (H) of
Code Section 856(c)(2) (but not including the amount of any REIT
Payments); or
(ii) an amount equal to the excess, if any, of (a)
twenty-four percent (24%) of the REIT Partner's total gross income (but
excluding the amount of any REIT Payments) for the Partnership Year
that is described in subsections (A) through (I) of Code Section
856(c)(3) over (b) the amount of gross income (within the meaning of
Code Section 856(c)(3)) derived by the REIT Partner from sources other
than those described in subsections (A) through (I) of Code Section
856(c)(3) (but not including the amount of any REIT Payments);
provided, however, that REIT Payments in excess of the amounts set forth in
clauses (i) and (ii) above may be made if the General Partner, as a condition
precedent, obtains an opinion of tax counsel that the receipt of such excess
amounts shall not adversely affect the REIT Partner's ability to qualify as a
REIT. To the extent that REIT Payments may not be made in a Partnership Year as
a consequence of the limitations set forth in this Section 15.11, such REIT
Payments shall carry over and shall be treated as arising in the following
Partnership Year. The purpose of the limitations contained in this Section 15.11
is to prevent any REIT Partner from failing to qualify as a REIT under the Code
by reason of such REIT Partner's share of items, including distributions,
reimbursements, fees, expenses or indemnities, receivable directly or indirectly
from the Partnership, and this Section 15.11 shall be interpreted and applied to
effectuate such purpose.
Section 15.12 No Partition. No Partner nor any
successor-in-interest to a Partner shall have the right while this Agreement
remains in effect to have any property of the Partnership partitioned, or to
file a complaint or institute any proceeding at law or in equity to have such
property of the Partnership partitioned, and each Partner, on behalf of itself
and its successors and assigns hereby waives any such right. It is the intention
of the Partners that the rights of the parties hereto and their
successors-in-interest to Partnership property, as among themselves, shall be
governed by the terms of this Agreement, and that the rights of the Partners and
their successors-in-interest shall be subject to the limitations and
restrictions as set forth in this Agreement.
Section 15.13 No Third-Party Rights Created Hereby. The
provisions of this Agreement are solely for the purpose of defining the
interests of the Partners, inter se; and no other person, firm or entity (i.e.,
a party who is not a signatory hereto or a permitted successor to such signatory
hereto) shall have any right, power, title or interest by way of subrogation or
otherwise, in and to the rights, powers, title and provisions of this Agreement.
No creditor or other third party having dealings with the Partnership (other
than as expressly set forth herein with respect to Indemnitees) shall have the
right to enforce the right or obligation of any Partner to make Capital
Contributions or loans to the Partnership or to pursue any other right or remedy
hereunder or at law or in equity. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may any such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or any of
the Partners.
Section 15.14 No Rights as Stockholders. Nothing contained in
this Agreement shall be construed as conferring upon the Holders of Partnership
Units any rights whatsoever as stockholders of the General Partner, including
without limitation any right to receive dividends or other distributions made to
stockholders of the General
60
Partner or to vote or to consent or receive notice as stockholders in respect of
any meeting of stockholders for the election of directors of the General Partner
or any other matter.
[the next page is the signature page]
61
IN WITNESS WHEREOF, this Agreement has been executed as of the
date first written above.
GENERAL PARTNER:
FORTRESS INVESTMENT CORP., a Maryland corporation
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Secretary
LIMITED PARTNERS:
FORTRESS PRINCIPAL INVESTMENT GROUP, LLC, a
Delaware limited liability company
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer and Secretary
FORTRESS GSA PROPERTIES SPE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer and Secretary
FORTRESS GSA SECURITIES SPE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer and Secretary
AS OF JANUARY __, 2002
* Admission and Units held effective as of June 10, 1998
** Admission and Units held effective as of January 28, 2000
EXHIBIT A
PARTNERS AND PARTNERSHIP UNITS
NAME AND ADDRESS OF PARTNERS PARTNERSHIP UNITS (TYPE AND AMOUNT)
-------------------------------------------------- -------------------------------------------------
GENERAL PARTNER:
FORTRESS INVESTMENT CORP.* 20,353,450 Partnership Common Xxxxx
0000 Xxxxxx of the Americas
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
SPECIAL LIMITED PARTNER:
FORTRESS PRINCIPAL INVESTMENT 5 Partnership Common Units
GROUP LLC*
1301 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
LIMITED PARTNERS:
FORTRESS GSA PROPERTIES SPE, INC.** 1 Partnership Preferred Unit having those rights
1301 Avenue of the Americas specified in Sections 5.1 and 6.2(A)
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
FORTRESS GSA SECURITIES SPE, INC.** 1 Partnership Preferred Unit having those rights
1301 Avenue of the Americas specified in Sections 5.1 and 6.2(A)
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
A-1
Name and Address of Partners Partnership Units (Type and Amount)
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
A-2
Name and Address of Partners Partnership Units (Type and Amount)
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
A-3
Name and Address of Partners Partnership Units (Type and Amount)
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
A-4
Name and Address of Partners Partnership Units (Type and Amount)
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
A-5
Name and Address of Partners Partnership Units (Type and Amount)
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
A-6
Name and Address of Partners Partnership Units (Type and Amount)
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
A-7
Name and Address of Partners Partnership Units (Type and Amount)
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
-------------------------------------------- --------------------------------------------
TOTALS 20,353,455 Partnership Common Units
-------------------------------------------- --------------------------------------------
A-8
Exhibit B
EXAMPLES REGARDING ADJUSTMENT FACTOR
For purposes of the following examples, it is assumed that (a)
the Adjustment Factor in effect on December 30, 1997 is 1.0 and (b) on January
1, 1998 (the "Partnership Record Date" for purposes of these examples), prior to
the events described in the examples, there are 100 REIT Shares issued and
outstanding.
Example 1
On the Partnership Record Date, the General Partner declares a
dividend on its outstanding REIT Shares in REIT Shares. The amount of the
dividend is one REIT Share paid in respect of each REIT Share owned. Pursuant to
Paragraph (i) of the definition of "Adjustment Factor," the Adjustment Factor
shall be adjusted on the Partnership Record Date, effective immediately after
the stock dividend is declared, as follows:
1.0 * 200 OVER 100 = 2.0
Accordingly, the Adjustment Factor after the stock dividend is
declared is 2.0.
Example 2
On the Partnership Record Date, the General Partner
distributes options to purchase REIT Shares to all holders of its REIT Shares.
The amount of the distribution is one option to acquire one REIT Share in
respect of each REIT Share owned. The strike price is $4.00 a share. The Value
of a REIT Share on the Partnership Record Date is $5.00 per share. Pursuant to
Paragraph (ii) of the definition of "Adjustment Factor," the Adjustment Factor
shall be adjusted on the Partnership Record Date, effective immediately after
the options are distributed, as follows:
1.0*{(100+100)} OVER {(100+{100*$4.00} OVER {$5.00})}=1.1111
Accordingly, the Adjustment Factor after the options are
distributed is 1.1111. If the options expire or become no longer exercisable,
then the retroactive adjustment specified in Paragraph (ii) of the definition of
"Adjustment Factor" shall apply.
Example 3
On the Partnership Record Date, the General Partner
distributes assets to all holders of its REIT Shares. The amount of the
distribution is one asset with a fair market value (as determined by the General
Partner) of $1.00 in respect of each REIT Share owned. It is also assumed that
the assets do not relate to assets received by the General Partner pursuant to a
pro rata distribution by the Partnership. The Value of a REIT Share on the
Partnership Record Date
B-1
is $5.00 a share. Pursuant to Paragraph (iii) of the definition of
"Adjustment Factor," the Adjustment Factor shall be adjusted on the Partnership
Record Date, effective immediately after the assets are distributed, as follows:
1.0*{$5.00} OVER {$5.00 - $1.00} = 1.25
Accordingly, the Adjustment Factor after the assets are distributed is 1.25.
B-2
Exhibit C
NOTICE OF REDEMPTION
To: Fortress Investment Corp.
c/o
The undersigned Limited Partner or Assignee hereby irrevocably
tenders for Redemption _______ Partnership Common Units in Fortress
Partners, L.P. in accordance with the terms of the Agreement of Limited
Partnership of Fortress Partners, L.P., dated as of , 1998 as amended (the
"Agreement"), and the Redemption rights referred to therein. The
undersigned Limited Partner or Assignee:
(a) undertakes (i) to surrender such Partnership Common Units
and any certificate therefor at the closing of the Redemption and (ii)
to furnish to the General Partner, prior to the Specified Redemption
Date, the documentation, instruments and information required under
Section 8.6.G of the Agreement;
(b) directs that the certified check representing the Cash
Amount, or the REIT Shares Amount, as applicable, deliverable upon the
closing of such Redemption be delivered to the address specified below;
(c) represents, warrants, certifies and agrees that:
(i) the undersigned Limited Partner or Assignee is a
Qualifying Party,
(ii) the undersigned Limited Partner or Assignee has,
and at the closing of the Redemption will have, good,
marketable and unencumbered title to such Partnership Common
Units, free and clear of the rights or interests of any other
person or entity,
(iii) the undersigned Limited Partner or Assignee
has, and at the closing of the Redemption will have, the full
right, power and authority to tender and surrender such
Partnership Common Units as provided herein, and
(iv) the undersigned Limited Partner or Assignee has
obtained the consent or approval of all persons and entities,
if any, having the right to consent to or approve such tender
and surrender; and
(d) acknowledges that he will continue to own such Partnership
Common Units until and unless either (1) such Partnership Common Units are
acquired by the General Partner pursuant to Section 8.6.B of the Agreement or
(2) such redemption transaction closes.
C-1
All capitalized terms used herein and not otherwise defined
shall have the same meaning ascribed to them respectively in the Agreement.
Dated: Name of Limited Partner or Assignee:
-------------------------------
--------------------------------------------
--------------------------------------------
(Signature of Limited Partner or Assignee)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
--------------------------------------------
Issue Check Payable to:
--------------------------------------------
Please insert social security
or identifying number:
--------------------------------------------
C-2
Exhibit D
FORM OF UNIT CERTIFICATE
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE LIMITED
PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF FORTRESS
PARTNERS, L.P., DATED AS OF , 1998 A COPY OF WHICH MAY BE OBTAINED FROM
FORTRESS INVESTMENT CORP., THE GENERAL PARTNER, AT ITS PRINCIPAL EXECUTIVE
OFFICE.
Certificate Number ________
FORTRESS PARTNERS, L.P.
FORMED UNDER THE LAWS OF THE STATE OF DELAWARE
This certifies that ____________________________________________________________
is the owner of ________________________________________________________________
FULLY PAID PARTNERSHIP COMMON UNITS
OF
FORTRESS PARTNERS, L.P.,
transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed. This
Certificate and the Partnership Common Units represented hereby are issued and
shall be held subject to all of the provisions of the Agreement of Limited
Partnership, as the same may be amended and/or supplemented from time to time.
IN WITNESS WHEREOF, the undersigned has signed this Certificate.
Dated:
By________________________________
D-1
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINED TERMS............................................................................................ 1
ARTICLE 2
ORGANIZATIONAL MATTERS................................................................................... 16
Section 2.1 Organization.............................................................. 16
Section 2.2 Name...................................................................... 16
Section 2.3 Registered Office and Agent; Principal Office............................. 16
Section 2.4 Power of Attorney......................................................... 17
Section 2.5 Term...................................................................... 18
ARTICLE 3
PURPOSE.................................................................................................. 18
Section 3.1 Purpose and Business...................................................... 18
Section 3.2 Powers.................................................................... 18
Section 3.3 Partnership Only for Partnership Purposes................................. 18
Section 3.4 Representations and Warranties by the Parties............................. 19
ARTICLE 4
CAPITAL CONTRIBUTIONS.................................................................................... 20
Section 4.1 Capital Contributions of the Partners..................................... 20
Section 4.2 Issuances of Additional Partnership Interests............................. 21
Section 4.3 Additional Funds and Capital Contributions................................ 21
Section 4.4 Stock Option Plan......................................................... 22
Section 4.5 No Interest; No Return.................................................... 24
Section 4.6 Conversion or Redemption of Preferred Shares............................. 24
Section 4.7 Conversion or Redemption of Junior Shares................................. 24
Section 4.8 Other Contribution Provisions............................................. 24
Section 4.9 Not Publicly Traded....................................................... 24
ARTICLE 5
DISTRIBUTIONS............................................................................................ 25
Section 5.1 Requirement and Characterization of Distributions......................... 25
Section 5.2 Distributions in Kind..................................................... 25
Section 5.3 Amounts Withheld.......................................................... 25
Section 5.4 Distributions Upon Liquidation............................................ 25
Section 5.5 Distributions to Reflect Issuance of Additional Partnership Units......... 25
Section 5.6 Restricted Distributions.................................................. 26
Section 5.7 Preferred Distributions................................................... 26
Section 5.8 Right to Purchase Preferred Distributions................................. 26
i
Page
----
ARTICLE 6
ALLOCATIONS.............................................................................................. 26
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss............... 26
Section 6.2 General Allocations....................................................... 26
Section 6.3 Additional Allocation Provisions.......................................... 27
Section 6.4 Tax Allocations........................................................... 29
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS.................................................................... 30
Section 7.1 Management................................................................ 30
Section 7.2 Certificate of Limited Partnership........................................ 33
Section 7.3 Restrictions on General Partner's Authority............................... 33
Section 7.4 Reimbursement of the General Partner...................................... 35
Section 7.5 Outside Activities of the General Partner................................. 35
Section 7.6 Contracts with Affiliates................................................. 36
Section 7.7 Indemnification........................................................... 36
Section 7.8 Liability of the General Partner.......................................... 38
Section 7.9 Other Matters Concerning the General Partner.............................. 39
Section 7.10 Title to Partnership Assets.............................................. 39
Section 7.11 Reliance by Third Parties................................................ 40
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................................................... 40
Section 8.1 Limitation of Liability................................................... 40
Section 8.2 Management of Business.................................................... 40
Section 8.3 Outside Activities of Limited Partners.................................... 40
Section 8.4 Return of Capital......................................................... 41
Section 8.5 Rights of Limited Partners Relating to the Partnership.................... 41
Section 8.6 Redemption Rights of Qualifying Parties................................. 42
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS................................................................... 45
Section 9.1 Records and Accounting.................................................... 45
Section 9.2 Partnership Year.......................................................... 46
Section 9.3 Reports................................................................... 46
ARTICLE 10
TAX MATTERS.............................................................................................. 46
Section 10.1 Preparation of Tax Returns............................................... 46
Section 10.2 Tax Elections............................................................ 46
Section 10.3 Tax Matters Partner...................................................... 47
Section 10.4 Withholding.............................................................. 48
Section 10.5 Organizational Expenses.................................................. 48
ARTICLE 11
TRANSFERS AND WITHDRAWALS................................................................................ 48
ii
Page
----
Section 11.1 Transfer................................................................. 48
Section 11.2 Transfer of General Partner's Partnership Interest....................... 49
Section 11.3 Limited Partners' Rights to Transfer..................................... 49
Section 11.4 Substituted Limited Partners............................................. 51
Section 11.5 Assignees................................................................ 51
Section 11.6 General Provisions....................................................... 52
ARTICLE 12
ADMISSION OF PARTNERS.................................................................................... 53
Section 12.1 Admission of Successor General Partner................................... 53
Section 12.2 Admission of Additional Limited Partners................................. 53
Section 12.3 Amendment of Agreement and Certificate................................... 54
Section 12.4 Admission of Initial Limited Partners.................................... 54
Section 12.5 Limit on Number of Partners.............................................. 54
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION................................................................. 54
Section 13.1 Dissolution.............................................................. 54
Section 13.2 Winding Up............................................................... 55
Section 13.3 Deemed Distribution and Recontribution................................... 56
Section 13.4 Rights of Limited Partners............................................... 56
Section 13.5 Notice of Dissolution.................................................... 57
Section 13.6 Cancellation of Certificate of Limited Partnership....................... 57
Section 13.7 Reasonable Time for Winding-Up........................................... 57
ARTICLE 14
PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS........................................................................ 57
Section 14.1 Procedures for Actions and Consents of Partners.......................... 57
Section 14.2 Amendments............................................................... 57
Section 14.3 Meetings of the Partners................................................. 57
ARTICLE 15
GENERAL PROVISIONS....................................................................................... 58
Section 15.1 Addresses and Notice..................................................... 58
Section 15.2 Titles and Captions...................................................... 58
Section 15.3 Pronouns and Plurals..................................................... 58
Section 15.4 Further Action........................................................... 58
Section 15.5 Binding Effect........................................................... 59
Section 15.6 Waiver................................................................... 59
Section 15.7 Counterparts............................................................. 59
iii
Page
----
Section 15.8 Applicable Law........................................................... 59
Section 15.9 Entire Agreement......................................................... 59
Section 15.10 Invalidity of Provisions................................................ 59
Section 15.11 Limitation to Preserve REIT Status...................................... 59
Section 15.12 No Partition............................................................ 60
Section 15.13 No Third-Party Rights Created Hereby.................................... 60
Section 15.14 No Rights as Stockholders............................................... 60
Exhibit A
PARTNERS AND PARTNERSHIP UNITS........................................................................... A-1
Exhibit B
EXAMPLES REGARDING ADJUSTMENT FACTOR..................................................................... X-0
Xxxxxxx X
XXXXXX XX XXXXXXXXXX..................................................................................... X-0
Xxxxxxx X
FORM OF UNIT CERTIFICATE................................................................................. D-1
iv
