EXHIBIT 10.1
_____________
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LASALLE HOTEL OPERATING PARTNERSHIP, L.P.
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Dated as of April 29, 1998
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINED TERMS
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 ORGANIZATION . . . . . . . . . . . . . . . . . . . . . 19
Section 2.2 NAME . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE. . . . . 19
Section 2.4 TERM . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
PURPOSE
Section 3.1 PURPOSE AND BUSINESS . . . . . . . . . . . . . . . . . 20
Section 3.2 POWERS . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP INTERESTS
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS. . . . . . . . . 21
Section 4.2 ISSUANCES OF PARTNERSHIP INTERESTS . . . . . . . . . . 21
Section 4.3 NO PREEMPTIVE RIGHTS . . . . . . . . . . . . . . . . . 23
Section 4.4 OTHER CONTRIBUTION PROVISIONS. . . . . . . . . . . . . 23
Section 4.5 NO INTEREST ON CAPITAL . . . . . . . . . . . . . . . . 23
ARTICLE V
DISTRIBUTIONS
Section 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS. . . 23
Section 5.2 AMOUNTS WITHHELD . . . . . . . . . . . . . . . . . . . 26
Section 5.3 DISTRIBUTIONS UPON LIQUIDATION . . . . . . . . . . . . 26
Section 5.4 REVISIONS TO REFLECT ISSUANCE OF PARTNERSHIP
INTERESTS. . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI
ALLOCATIONS
Section 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES . . . . . . . 27
Section 6.2 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF
PARTNERSHIP INTERESTS . . . . . . . . . . . . . 28
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP . . . . . . . . . . 33
Section 7.3 TITLE TO PARTNERSHIP ASSETS. . . . . . . . . . . . . . 33
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER . . . . . . . . . 34
Section 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER; RELATIONSHIP
OF SHARES TO PARTNERSHIP UNITS; FUNDING DEBT. . 35
Section 7.6 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . 37
Section 7.7 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . 38
Section 7.8 LIABILITY OF THE GENERAL PARTNER . . . . . . . . . . . 40
Section 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER . . . . . 40
Section 7.10 RELIANCE BY THIRD PARTIES . . . . . . . . . . . . . . 42
Section 7.11 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY . . . . . 43
Section 7.12 LOANS BY THIRD PARTIES. . . . . . . . . . . . . . . . 43
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . 43
Section 8.2 MANAGEMENT OF BUSINESS . . . . . . . . . . . . . . . . 44
Section 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS . . . . . . . . 44
Section 8.4 RETURN OF CAPITAL. . . . . . . . . . . . . . . . . . . 44
Section 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP 45
Section 8.6 REDEMPTION RIGHT . . . . . . . . . . . . . . . . . . . 46
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 RECORDS AND ACCOUNTING . . . . . . . . . . . . . . . . 49
Section 9.2 FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . 49
Section 9.3 REPORTS. . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE X
TAX MATTERS
Section 10.1 PREPARATION OF TAX RETURNS. . . . . . . . . . . . . . 50
Section 10.2 TAX ELECTIONS . . . . . . . . . . . . . . . . . . . . 50
Section 10.3 TAX MATTERS PARTNER . . . . . . . . . . . . . . . . . 50
Section 10.4 ORGANIZATIONAL EXPENSES . . . . . . . . . . . . . . . 51
Section 10.5 WITHHOLDING . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 TRANSFER. . . . . . . . . . . . . . . . . . . . . . . 52
Section 11.2 TRANSFERS OF PARTNERSHIP INTERESTS OF GENERAL
PARTNER. . . . . . . . . . . . . . . . . . . 53
Section 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER. . . . . . . . . 54
Section 11.4 SUBSTITUTED LIMITED PARTNERS. . . . . . . . . . . . . 56
Section 11.5 ASSIGNEES . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.6 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . 57
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 ADMISSION OF A SUCCESSOR GENERAL PARTNER. . . . . . . 59
Section 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS. . . . . . . 59
Section 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP. . . . . . . . . . . . . . . . . 60
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 DISSOLUTION . . . . . . . . . . . . . . . . . . . . . 60
Section 13.2 WINDING UP. . . . . . . . . . . . . . . . . . . . . . 61
Section 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS. . 62
Section 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION. . . . . . . . 63
Section 13.5 RIGHTS OF LIMITED PARTNERS. . . . . . . . . . . . . . 63
Section 13.6 NOTICE OF DISSOLUTION . . . . . . . . . . . . . . . . 63
Section 13.7 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP. . 64
Section 13.8 REASONABLE TIME FOR WINDING UP. . . . . . . . . . . . 64
Section 13.9 WAIVER OF PARTITION . . . . . . . . . . . . . . . . . 64
Section 13.10 LIABILITY OF LIQUIDATOR. . . . . . . . . . . . . . . 64
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . 64
Section 14.2 MEETINGS OF THE PARTNERS. . . . . . . . . . . . . . . 66
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICE. . . . . . . . . . . . . . . . . 67
Section 15.2 TITLES AND CAPTIONS . . . . . . . . . . . . . . . . . 67
Section 15.3 PRONOUNS AND PLURALS. . . . . . . . . . . . . . . . . 67
Section 15.4 FURTHER ACTION. . . . . . . . . . . . . . . . . . . . 67
Section 15.5 BINDING EFFECT. . . . . . . . . . . . . . . . . . . . 67
Section 15.6 CREDITORS . . . . . . . . . . . . . . . . . . . . . . 68
Section 15.7 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . 68
Section 15.8 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . 68
Section 15.9 APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . 68
Section 15.10 INVALIDITY OF PROVISIONS . . . . . . . . . . . . . . 68
Section 15.11 POWER OF ATTORNEY. . . . . . . . . . . . . . . . . . 68
Section 15.12 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . 70
Section 15.13 NO RIGHTS AS SHAREHOLDERS. . . . . . . . . . . . . . 70
Section 15.14 LIMITATION TO PRESERVE REIT STATUS . . . . . . . . . 70
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF REDEMPTION
EXHIBIT E
VALUE OF CONTRIBUTED PROPERTY
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LASALLE HOTEL OPERATING PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
of April 29, 1998, is entered into by and among LaSalle Hotel Properties, a
Maryland real estate investment trust, as the General Partner, and the
Persons whose names are set forth on Exhibit A hereto as Limited Partners,
together with any other Persons who become Partners in the Partnership as
provided herein.
WHEREAS, the Partnership was formed as a limited partnership on
January 13, 1998 under the Delaware Revised Uniform Limited Partnership
Act, as amended from time to time.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby
agree to amend and restated this agreement as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1)
and 1.704-2(i)(5) and (ii) decreased by the items described in Regulations
Sections 1.704-l(b)(2) (ii)(d)(4), 1.704-l(b) (2)(ii)(d)(5) and
1.704-l(b)(2)(ii) (d) (6). The foregoing definition of Adjusted Capital
Account is intended to comply with the provisions of Regulations Section
1.704-l(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital
Account as of the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which
has been adjusted pursuant to Exhibit B.
"Adjustment Date" has the meaning set forth in Section 4.2.B.
"Advisor" means LaSalle Hotel Advisors, Inc., a Maryland corporation,
as Advisor to the General Partner pursuant to the Advisory Agreement.
"Advisory Agreement" means the Agreement dated April 23, 1998 between
the Advisor and the General Partner.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control
with such Person, (ii) any Person owning or controlling ten percent (10%)
or more of the outstanding voting interests of such Person, (iii) any
Person of which such Person owns or controls ten percent (10%) or more of
the voting interests or (iv) any officer, director, general partner or
trustee of such Person or any Person referred to in clauses (i), (ii), and
(iii) above. For purposes of this definition, "control," when used with
respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreed Value" means (i) in the case of any Contributed Property
contributed to the Partnership as part of or in connection with the
Consolidation, the amount set forth on Exhibit E as the Agreed Value of
such Property; (ii) in the case of any other Contributed Property, the
704(c) Value of such property as of the time of its contribution to the
Partnership, reduced by any liabilities either assumed by the Partnership
upon such contribution or to which such property is subject when
contributed; and (iii) in the case of any property distributed to a Partner
by the Partnership, the Partnership's Carrying Value of such property at
the time such property is distributed, reduced by any indebtedness either
assumed by such Partner upon such distribution or to which such property is
subject at the time of distribution as determined under Section 752 of the
Code and the regulations thereunder.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has
not become a Substituted Limited Partner, and who has the rights set forth
in Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from
whatever source (excluding the proceeds of any Capital Contribution) plus
the amount of any reduction (including, without limitation, a reduction
resulting because the General Partner determines such amounts are no longer
necessary) in reserves of the Partnership, which reserves are referred to
in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made with
the proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures (including capital expenditures)
made by the Partnership during such period,
(iii) investments in any entity (including loans made
thereto) to the extent that such investments are permitted under this
Agreement and are not otherwise described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established during
such period which the General Partner determines is necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax
purposes as of such date. A Partner's share of the Partnership's Book-Tax
Disparities in all of its Contributed Property and Adjusted Property will
be reflected by the difference between such Partner's Capital Account
balance as maintained pursuant to Exhibit B and the hypothetical balance of
such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required
by law to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such
Partner contributes or is deemed to contribute to the Partnership pursuant
to Section 4.1 or 4.2.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or
Adjusted Property, as the case may be, charged to the Partners' Capital
Accounts and (ii) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes, all as of
the time of determination. The Carrying Value of any property shall be
adjusted from time to time in accordance with Exhibit B, and to reflect
changes, additions (including capital improvements thereto) or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on the
Valuation Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Delaware Secretary of State,
as amended from time to time in accordance with the terms hereof and the
Act.
"Class A" has the meaning set forth in Section 5.1.C.
"Class A Share" has the meaning set forth in Section 5.1.C.
"Class A Unit" means any Partnership Unit that is not specifically
designated by the General Partner as being of another specified class of
Partnership Units.
"Class B" has the meaning set forth in Section 5.1.C.
"Class B Share" has the meaning set forth in Section 5.1.C.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision
of future law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2.
"Consent of the Outside Limited Partners" means the Consent of
Limited Partners (excluding for this purpose any Limited Partnership
Interests held by the General Partner, or any other Person of which the
General Partner owns or controls more than fifty percent (50%) of the
voting interests and any Person directly or indirectly owning or
controlling more than fifty percent (50%) of the outstanding voting
interests of the General Partner) holding Percentage Interests that are
greater than fifty percent (50%) of the aggregate Percentage Interest of
all Limited Partners who are not excluded for the purposes hereof.
"Consolidation" means (i) the transactions whereby the Partnership
will acquire interests in certain hotel properties owned by the Target
Entities by way of merger or exchange of a Target Entity's interest for
Operating Partnership Units.
"Contributed Property" means each property or other asset contributed
to the Partnership, in such form as may be permitted by the Act, but
excluding cash contributed or deemed contributed to the Partnership. Once
the Carrying Value of a Contributed Property is adjusted pursuant to
Exhibit B, such property shall no longer constitute a Contributed Property
for purposes of Exhibit B, but shall be deemed an Adjusted Property for
such purposes.
"Conversion Factor" means 1.0; provided that, if the General Partner
(i) declares or pays a dividend on its outstanding Shares in Shares or
makes a distribution to all holders of its outstanding Shares in Shares,
(ii) subdivides its outstanding Shares or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be
adjusted by multiplying the Conversion Factor by a fraction, the numerator
of which shall be the number of Shares issued and outstanding on the record
date for such dividend, distribution, subdivision or combination (assuming
for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time) and the denominator of which
shall be the actual number of Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination; and provided further that if an
entity shall cease to be the General Partner (the "Predecessor General
Partner") and another entity shall become the General Partner (the
"Successor General Partner"), the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which is
the Value of one Share of the Predecessor General Partner, determined as of
the date when the Successor General Partner becomes the general partner of
the Partnership, and the denominator of which is the Value of one Share of
the Successor General Partner, determined as of that same date. (For
purposes of the second proviso in the preceding sentence, if any
shareholders of the Predecessor General Partner will receive consideration
in connection with the transaction in which the Successor General Partner
becomes the General Partner, the numerator in the fraction described above
for determining the adjustment to the Conversion Factor (that is, the Value
of one Share of the Predecessor General Partner) shall be the sum of the
greatest amount of cash and the fair market value (as determined in good
faith by the General Partner) of any securities and other consideration
that the holder of one Share in the Predecessor General Partner could have
received in such transaction (determined without regard to any provisions
governing fractional shares).) Any adjustment to the Conversion Factor
shall become effective immediately after the effective date of the event
retroactive to the record date, if any, for the event giving rise thereto,
it being intended that (x) adjustments to the Conversion Factor are to be
made to avoid unintended dilution or anti-dilution as a result of
transactions in which Shares are issued, redeemed or exchanged without a
corresponding issuance, redemption or exchange of Partnership Units and (y)
if a Specified Redemption Date shall fall between the record date and the
effective date of any event of the type described above, that the
Conversion Factor applicable to such redemption shall be adjusted to take
into account such event.
"Convertible Funding Debt" has the meaning set forth in Section
7.5.F.
"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) obligations of such Person incurred in connection
with entering into a lease which, in accordance with generally accepted
accounting principles, should be capitalized.
"Declaration of Trust" means the Declaration of Trust of LaSalle
Hotel Properties filed in the State of Maryland on January 15, 1998, as
amended or restated from time to time.
"Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interest of such class multiplied by the applicable Partner's
Percentage Interest of such class.
"Deemed Value of the Partnership Interest" means, as of any date with
respect to any class of Partnership Interests, (a) if the common shares of
beneficial interest (or other comparable equity interests) of the General
Partner are Publicly Traded (i) the total number of shares of beneficial
interest (or other comparable equity interest) of the General Partner
corresponding to such class of Partnership Interest (as provided for in
Section 4.2.B) issued and outstanding as of the close of business on such
date (excluding any treasury shares) multiplied by the Value of a share of
such beneficial interest (or other comparable equity interest) on such date
divided by (ii) the Percentage Interest of the General Partner in such
class of Partnership Interests on such date, and (b) otherwise, the
aggregate Value of such class of Partnership Interests determined as set
forth in the fourth and fifth sentences of the definition of Value.
"Depreciation" means, for each fiscal year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year, except that if
the Carrying Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such
beginning Carrying Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such year bears to such
beginning adjusted tax basis; provided, however, that if the federal income
tax depreciation, amortization, or other cost recovery deduction for such
year is zero, Depreciation shall be determined with reference to such
beginning Carrying Value using any reasonable method selected by the
General Partner.
"Distribution Period" has the meaning set forth in Section 5.1.C.
"Effective Date" means the date of the closing of the Consolidation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plan" means an "employee benefit plan" as that term is defined
in 29 U.S.C. Section 1002(3), and which is not exempt from regulation
under ERISA by virtue of 29 U.S.C. Section 1003(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Funding Debt" means the incurrence of any Debt by or on behalf of
the General Partner Entity for the purpose of providing funds to the
Partnership.
"General Partner" means LaSalle Hotel Properties or its successor as
general partner.
"General Partnership Interest" means a Partnership Interest held by a
General Partner that is a general partnership interest. A General
Partnership Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parents, descendants, nephews, nieces, brothers,
and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her
Person or estate, (ii) as to any corporation which is a Partner, the filing
of a certificate of dissolution, or its equivalent, for the corporation or
the revocation of its charter, (iii) as to any partnership or limited
liability company which is a Partner, the dissolution and commencement of
winding up of the partnership or limited liability company, (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the
estate's entire interest in the Partnership, (v) as to any trustee of a
trust which is a Partner, the termination of the trust (but not the
substitution of a new trustee) or (vi) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner
shall be deemed to have occurred when (a) the Partner commences a voluntary
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect, (b)
the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar
law now or hereafter in effect has been entered against the Partner, (c)
the Partner executes and delivers a general assignment for the benefit of
the Partner's creditors, (d) the Partner files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the Partner in any proceeding of the nature described in
clause (b) above, (e) the Partner seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator for the Partner or for all
or any substantial part of the Partner's properties, (f) any proceeding
seeking liquidation, reorganization or other relief 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 of liquidator has not been vacated or stayed within
ninety (90) days of such appointment or (h) an appointment referred to in
clause (g) 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, (B) a Limited Partner, or
(C) a trustee, director or officer of the Partnership, or the General
Partner and (ii) such other Persons (including Affiliates of the General
Partner, a Limited Partner or the Partnership) as the General Partner may
designate from time to time (whether before or after the event giving rise
to potential liability), in its sole and absolute discretion.
"Limited Partner" means the General Partner, in its capacity as a
Limited Partner in the Partnership, or any Person named as a Limited
Partner in Exhibit A, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such
Person's capacity as a Limited Partner in the Partnership.
"Limited Partnership 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
Partnership Interest may be expressed as a number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.A.
"Net Income" means, for any taxable period, the excess, if any, of
the Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The
items included in the calculation of Net Income shall be determined in
accordance with Exhibit B. If an item of income, gain, loss or deduction
that has been included in the initial computation of Net Income is
subjected to the special allocation rules in Exhibit C, Net Income or the
resulting Net Loss, whichever the case may be, shall be recomputed without
regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance
with Exhibit B. If an item of income, gain, loss or deduction that has
been included in the initial computation of Net Loss is subjected to the
special allocation rules in Exhibit C, Net Loss or the resulting Net
Income, whichever the case may be, shall be recomputed without regard to
such item.
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase shares of beneficial interest (or other comparable equity
interest) of the General Partner, excluding grants under any Share Option
Plan, or (ii) any Debt issued by the General Partner that provides any of
the rights described in clause (i).
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or
negative pledge securing a Nonrecourse Liability, the amount of any taxable
gain that would be allocated to the Partners pursuant to Section 2.B of
Exhibit C if such properties were disposed of in a taxable transaction in
full satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership 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-l(a)(2).
"Notice of Redemption" means a Notice of Redemption substantially in
the form of Exhibit D.
"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 the limited partnership formed under the Act upon
the terms and conditions set forth in this Agreement, or any successor to
such limited partnership.
"Partnership Interest" means a Limited Partnership Interest or the
General Partnership Interest and includes any and all benefits to which the
holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the
terms and provisions of this Agreement. A Partnership Interest may be
expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well
as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner either (i) for the distribution of Available Cash pursuant
to Section 5.1 hereof, which record date shall be the same as the record
date established by the General Partner for a distribution to its
shareholders of some or all of its portion of such distribution, or (ii) if
applicable, for determining the Partners entitled to vote on or consent to
any proposed action for which the consent or approval of the Partners is
sought pursuant to Section 14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and
4.2, and includes Class A Units, Class B Units and any other classes or
series of Partnership Units established after the date hereof. The number
of Partnership Units outstanding and the Percentage Interests in the
Partnership represented by such Partnership Units are set forth in Exhibit
A, as such Exhibit may be amended from time to time.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class of
Partnership Interests, its interest in such class, determined by dividing
the Partnership Units of such class owned by such Partner by the total
number of Partnership Units of such class then outstanding as specified in
Exhibit A, as such exhibit may be amended from time to time, multiplied by
the aggregate Percentage Interest allocable to such class of Partnership
Interests. If the Partnership shall at any time have outstanding more than
one class of Partnership Interests, the Percentage Interest attributable to
each class of Partnership Interests shall be determined as set forth in
Section 4.2.B.
"Person" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability
company, unincorporated organization, custodian, nominee or any other
individual or entity in its own or any representative capacity.
"Predecessor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Publicly Traded" means listed or admitted to trading on the New York
Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market, or any
successor to any of the foregoing.
"Qualified REIT Subsidiary" means any Subsidiary of the General
Partner that is a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.
"Qualified Transferee" means an "Accredited Investor" as defined in
Rule 501 promulgated under the Securities Act.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or
Section 743 of the Code) upon the disposition of any property or asset of
the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to
such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6.A.
"Redemption Amount" means either the Cash Amount or the Shares
Amount, as determined by the General Partner, in its sole and absolute
discretion, provided that if the Shares are not Publicly Traded at the time
a Redeeming Partner exercises its Redemption Right, the Redemption Amount
shall be paid only in the form of the Cash Amount unless the Redeeming
Partner, in its sole and absolute discretion, consents to payment of the
Redemption Amount in the form of the Shares Amount. A Redeeming Partner
shall have no right, without the General Partner's consent, in its sole and
absolute discretion, to receive the Redemption Amount in the form of the
Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A.
"Regulation" or "Regulations" means the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to
time (including corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Requirements" has the meaning set forth in Section 5.1.A.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of
Contributed Property or Adjusted Property, to the extent such item of gain
or loss is not allocated pursuant to Section 2.X.x(a) or 2.B.2(a) of
Exhibit C to eliminate Book-Tax Disparities.
"Safe Harbor" has the meaning set forth in Section 11.6.F.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" of any Contributed Property means the fair market
value of such property at the time of contribution as determined by the
General Partner using such reasonable method of valuation as they may
adopt, provided, however, subject to Exhibit B, the General Partner shall,
in their sole and absolute discretion, use such method as they deem
reasonable and appropriate to allocate the aggregate of the 704(c) Value of
Contributed Properties in a single or integrated transaction among each
separate property on a basis proportional to its fair market values. The
704(c) Values of the Contributed Properties contributed to the Partnership
as part of or in connection with the Consolidation are set forth on Exhibit
E.
"Share" means a share of beneficial interest (or other comparable
equity interest) of the General Partner. Shares may be issued in one or
more classes or series in accordance with the terms of the Declaration of
Trust (or, if the General Partner is not the General Partner, the
organizational documents of the General Partner). If there is more than
one class or series of Shares, the term "Shares" shall, as the context
requires, be deemed to refer to the class or series of Shares that
correspond to the class or series of Partnership Interests for which the
reference to Shares is made. When used with reference to Class A Units,
the term "Shares" refers to common shares of beneficial interest (or other
comparable equity interest) of the General Partner.
"Shares Amount" means a number of Shares equal to the product of the
number of Partnership Units offered for redemption by a Redeeming Partner
times the Conversion Factor, provided that, if the General Partner issues
to all holders of Shares rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"),
then the Shares Amount shall also include such rights that a holder of that
number of Shares would be entitled to receive.
"Share Option Plan" means any equity incentive plan of the General
Partner, the Partnership and/or any Affiliate of the Partnership.
"Specified Redemption Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Redemption; provided that, if
the Shares are not Publicly Traded, the Specified Redemption Date means the
thirtieth Business Day after receipt by the General Partner of a Notice of
Redemption.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, trust, partnership or joint venture, or other
entity 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.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Successor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Target Entities" shall mean the limited partnership, corporations,
limited liability companies listed on Exhibit A.
"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership for cash in a
single or a related series of transactions (including by way of merger)
that, taken together, result in the sale or other disposition of all or
substantially all of the assets of the Partnership for cash.
"Termination Transaction" has the meaning set forth in Section
11.2.B.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B) as of such
date, over (ii) the Carrying Value of such property (prior to any
adjustment to be made pursuant to Exhibit B) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made
pursuant to Exhibit B) as of such date, over (ii) the fair market value of
such property (as determined under Exhibit B) as of such date.
"Valuation Date" means the date of receipt by the General Partner of
a Notice of Redemption or, if such date is not a Business Day, the first
Business Day thereafter.
"Value" means, with respect to any outstanding Shares of the General
Partner that are Publicly Traded, the average of the daily market price for
the ten consecutive trading days immediately preceding the date with
respect to which value must be determined. The market price for each such
trading day shall be the closing price, regular way, on such day, or if no
such sale takes place on such day, the average of the closing bid and asked
prices on such day. If the outstanding Shares of the General Partner are
Publicly Traded and the Shares Amount includes rights that a holder of
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. If the Shares of the General Partner are not
Publicly Traded, the Value of the Shares Amount per Partnership Unit
offered for redemption (which will be the Cash Amount per Partnership Unit
offered for redemption payable pursuant to Section 8.6.A) means the amount
that a holder of one Partnership Unit would receive if each of the assets
of the Partnership were to be sold for its fair market value on the
Specified Redemption Date, the Partnership were to pay all of its
outstanding liabilities, and the remaining proceeds were to be distributed
to the Partners in accordance with the terms of this Agreement. Such Value
shall be determined by the General Partner, acting in good faith and based
upon a commercially reasonable estimate of the amount that would be
realized by the Partnership if each asset of the Partnership (and each
asset of each partnership, limited liability company, trust, joint venture
or other entity in which the Partnership owns a direct or indirect
interest) were sold to an unrelated purchaser in an arms' length
transaction where neither the purchaser nor the seller were under economic
compulsion to enter into the transaction (without regard to any discount in
value as a result of the Partnership's minority interest in any property or
any illiquidity of the Partnership's interest in any property). In
connection with determining the Deemed Value of the Partnership Interest
for purposes of determining the number of additional Partnership Units
issuable upon a Capital Contribution funded by an underwritten public
offering or an arm's length private placement of shares of beneficial
interest (or other comparable equity interest) of the General Partner, the
Value of such shares shall be the public offering or arm's length private
placement price per share of such class of beneficial interest (or other
comparable equity interest) sold.
ARTICLE II
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 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 LaSalle Hotel Operating Partnership,
L.P. The Partnership's business may be conducted under any other name or
names deemed advisable by the General Partner, including the name of any 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
their sole and absolute discretion may change the name of the Partnership
at any time and from time to time and shall notify the Limited Partners of
such change in the next regular communication to the Limited Partners.
Section 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The address of the registered office of the Partnership in the State
of Delaware shall be located at Corporation Trust Center, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxxxxx 00000, and the
registered agent for service of process on the Partnership in the State of
Delaware at such registered office shall be The Corporation Trust Company.
The principal office of the Partnership shall be 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 TERM
The term of the Partnership shall commence on January __, 1998 and
shall continue until December 31, 2098, unless it is dissolved sooner
pursuant to the provisions of Article XIII or as otherwise provided by law.
ARTICLE III
PURPOSE
Section 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted
by a limited partnership organized pursuant to the Act; provided, however,
that such permit the General Partner at all times to be classified as a
REIT, unless the General Partner ceases to qualify or is not qualified as a
REIT for any reason or reasons not related to the business conducted by the
Partnership, (ii) to enter into any corporation, partnership, joint
venture, trust, limited liability company or other similar arrangement to
engage in any of the foregoing or the ownership of interests in any entity
engaged, directly or indirectly, in any of the foregoing and (iii) to do
anything necessary or incidental to the foregoing. In connection with the
foregoing, the Partners acknowledge that the status of the General Partner
as a REIT inures to the benefit of all the Partners and not solely to the
General Partner or its Affiliates.
Section 3.2 POWERS
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for
the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Partnership, including,
without limitation, full power and authority, directly or through its
ownership interest in other entities, to enter into, perform and carry out
contracts of any kind, borrow money and issue evidences of indebtedness,
whether or not secured by mortgage, deed of trust, pledge or other lien,
acquire, own, manage, improve and develop real property, and lease, sell,
transfer and dispose of real property, provided, however, that the
Partnership shall not take, or refrain from taking, any action which, in
the judgment of the General Partner, in its sole and absolute discretion,
(i) could adversely affect the ability of the General Partner to continue
to qualify as a REIT, (ii) could subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code or (iii)
could violate any law or regulation of any governmental body or agency
having jurisdiction over the General Partner or its securities, unless such
action (or inaction) shall have been specifically consented to by the
General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
At the time of the execution of this Agreement, the Partners shall
make or shall have made the Capital Contributions as set forth in Exhibit
A. The Partners shall own Partnership Units in the amounts set forth in
Exhibit A and shall have a Percentage Interest in the Partnership as set
forth in Exhibit A, which Percentage Interest shall be adjusted in Exhibit
A from time to time by the General Partner to the extent necessary to
reflect accurately redemptions, Capital Contributions, the issuance of
additional Partnership Units or similar events having an effect on a
Partner's Percentage Interest. To the extent the Partnership is acquiring
any property by the merger of any other Person into the Partnership,
Persons who receive Partnership Interests in exchange for their interests
in the Person merging into the Partnership shall become Partners and shall
be deemed to have made Capital Contributions as provided in the applicable
merger agreement and as set forth in Exhibit A. A number of Partnership
Units held by the General Partner equal to one percent (1%) of all
outstanding Partnership Units (as of the closing date of the Consolidation)
shall be deemed to be the General Partner Partnership Units and shall be
the General Partnership Interest of such General Partner. All other
Partnership Units held by the General Partner shall be deemed to be Limited
Partnership Interests and shall be held by the General Partner in their
capacity as Limited Partners in the Partnership. Except as provided in
Sections 7.5 and 10.5 hereof, the Partners shall have no obligation to make
any additional Capital Contributions or provide any additional funding to
the Partnership (whether in the form of loans, repayments of loans or
otherwise). No Partner shall have any obligation to restore any deficit
that may exist in its Capital Account, either upon a liquidation of the
Partnership or otherwise.
Section 4.2 ISSUANCES OF PARTNERSHIP INTERESTS
A. General. The General Partner is hereby authorized to cause the
Partnership from time to time to issue to Partners (including the General
Partner and its Affiliates) or other Persons (including, without
limitation, in connection with the contribution of property to the
Partnership) Partnership Units or other Partnership Interests in one or
more classes, or in one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties, including rights, powers and duties
senior to Limited Partnership Interests, all as shall be determined,
subject to applicable Delaware law, by the General Partner in its sole and
absolute discretion, including, without limitation, (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such
class or series of Partnership Interests, (ii) the right of each such class
or series of Partnership Interests to share in Partnership distributions
and (iii) the rights of each such class or series of Partnership Interests
upon dissolution and liquidation of the Partnership, provided that, no such
Partnership Units or other Partnership Interests shall be issued to the
General Partner unless either (a) the Partnership Interests are issued in
connection with the grant, award or issuance of Shares or other equity
interests in the General Partner having designations, preferences and other
rights such that the economic interests attributable to such Shares or
other equity interests are substantially similar to the designations,
preferences and other rights (except voting rights) of the Partnership
Interests issued to the General Partner in accordance with this Section
4.2.A or (b) the additional Partnership Interests are issued to all
Partners holding Partnership Interests in the same class (if more than one
class is outstanding) in proportion to their respective Percentage
Interests in such class. If the Partnership issues Partnership Interests
pursuant to this Section 4.2.A, the General Partner shall make such
revisions to this Agreement (including but not limited to the revisions
described in Section 5.4, Section 6.2 and Section 8.6) as it deems
necessary to reflect the issuance of such Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional
Capital Contributions in exchange for Partnership Units and if the
Partnership shall have outstanding more than one class of Partnership
Interests, the Percentage Interest related thereto shall be equal to a
fraction, the numerator of which is equal to the amount of cash, if any,
plus the Agreed Value of Contributed Property, if any, contributed with
respect to such additional Partnership Units and the denominator of which
is equal to the sum of (i) the Deemed Value of the Partnership Interests
for all outstanding classes (computed as of the Business Day immediately
preceding the date on which the additional Capital Contributions are made
(an "Adjustment Date")) plus (ii) the aggregate amount of additional
Capital Contributions contributed to the Partnership on such Adjustment
Date in respect of such additional Partnership Units. The Percentage
Interest of each other Partner holding Partnership Interests not making a
full pro rata Capital Contribution shall be adjusted to a fraction the
numerator of which is equal to the sum of (i) the Deemed Partnership
Interest Value of such Limited Partner (computed as of the Business Day
immediately preceding the Adjustment Date) plus (ii) the amount of
additional Capital Contributions (such amount being equal to the amount of
cash, if any, plus the Agreed Value of Contributed Property, if any, so
contributed), if any, made by such Partner to the Partnership in respect of
such Partnership Interest as of such Adjustment Date and the denominator of
which is equal to the sum of (i) the Deemed Value of the Partnership
Interests of all outstanding classes (computed as of the Business Day
immediately preceding such Adjustment Date) plus (ii) the aggregate amount
of the additional Capital Contributions contributed to the Partnership on
such Adjustment Date in respect of such additional Partnership Interests.
For purposes of calculating a Partner's Percentage Interest pursuant to
this Section 4.2.B, cash Capital Contributions by the General Partner will
be deemed to equal the cash contributed by such General Partner plus (a) in
the case of cash contributions funded by an offering of any equity
interests in or other securities of the General Partner, the offering costs
attributable to the cash contributed to the Partnership, and (b) in the
case of Partnership Units issued pursuant to Section 7.5.E, an amount equal
to the difference between the Value of the Shares sold pursuant to any
Share Option Plan and the net proceeds of such sale.
C. Classes of Partnership Units. From and after the Effective
Date, subject to Section 4.2.A above, the Partnership shall have two
classes of Partnership Units entitled "Class A Units" and "Class B Units."
Either Class A Units or Class B Units, at the election of the General
Partner, in its sole and absolute discretion, may be issued to newly
admitted Partners in exchange for the contribution by such Partners of
cash, real estate partnership interests, stock, notes or other assets or
consideration; provided, that all Partnership Units issued to Partners in
connection with the Consolidation shall be Class A Units; and, provided
further, that any Partnership Unit that is not specifically designated by
the General Partner as being of a particular class shall be deemed to be a
Class A Unit. Each Class B Unit shall be converted automatically into a
Class A Unit on the day immediately following the Partnership Record Date
for the Distribution Period (as defined in Section 5.1.C) in which such
Class B Unit was issued, without the requirement for any action by either
the Partnership or the Partner holding the Class B Unit.
Section 4.3 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership pursuant to
another agreement, no Person shall have any preemptive, preferential or
other similar right with respect to (i) additional Capital Contributions or
loans to the Partnership or (ii) issuance or sale of any Partnership Units
or other Partnership Interests.
Section 4.4 OTHER CONTRIBUTION PROVISIONS
If any Partner is admitted to the Partnership and is given a Capital
Account in exchange for services rendered to the Partnership, such
transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such Partner in cash, and the Partner
had contributed such cash to the capital of the Partnership.
Section 4.5 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital Contributions
or its Capital Account.
ARTICLE V
DISTRIBUTIONS
Section 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. General. The General Partner shall distribute at least quarterly
an amount equal to one hundred percent (100%) of Available Cash generated
by the Partnership during such quarter or shorter period to the Partners
who are Partners on the Partnership Record Date with respect to such
quarter or shorter period as provided in Sections 5.1.B, 5.1.C and 5.1.D.
Notwithstanding anything to the contrary contained herein, in no event may
a Partner receive a distribution of Available Cash with respect to a
Partnership Unit for a quarter or shorter period if such Partner is
entitled to receive a distribution with respect to a Share for which such
Partnership Unit has been redeemed or exchanged. Unless otherwise
expressly provided for herein or in an agreement at the time a new class of
Partnership Interests is created in accordance with Article IV hereof, no
Partnership Interest shall be entitled to a distribution in preference to
any other Partnership Interest. The General Partner shall make such
reasonable efforts, as determined by them in their sole and absolute
discretion and consistent with the qualification of the General Partner as
a REIT, to distribute Available Cash (a) to Limited Partners so as to
preclude any such distribution or portion thereof from being treated as
part of a sale of property of the Partnership by a Limited Partner under
Section 707 of the Code or the Regulations thereunder; provided that, the
General Partner and the Partnership shall not have liability to a Limited
Partner under any circumstances as a result of any distribution to a
Limited Partner being so treated, and (b) to the General Partner in an
amount sufficient to enable the General Partner to pay shareholder
dividends that will (1) satisfy the requirements for qualification as a
REIT under the Code and the Regulations (the "REIT Requirements") of, and
(2) avoid any federal income or excise tax liability for, the General
Partner.
B. Method. (i) Each holder of Partnership Interests that is
entitled to any preference in distribution shall be entitled to a
distribution in accordance with the rights of any such class of Partnership
Interests (and, within such class, pro rata in proportion to the respective
Percentage Interests on such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining after the
payment of any preference in distribution in accordance with the foregoing
clause (i), with respect to Partnership Interests that are not entitled to
any preference in distribution, pro rata to each such class in accordance
with the terms of such class (and, within each such class, pro rata in
proportion to the respective Percentage Interests on such Partnership
Record Date).
C. Distributions When Class B Units Are Outstanding. If for any
quarter or shorter period with respect to which a distribution is to be
made (a "Distribution Period") Class B Units are outstanding on the
Partnership Record Date for such Distribution Period, the General Partner
shall allocate the Available Cash with respect to such Distribution Period
available for distribution with respect to the Class A Units and Class B
Units collectively between the Partners who are holders of Class A Units
("Class A") and the Partners who are holders of Class B Units ("Class B")
as follows:
(1) Class A shall receive that portion of
the Available Cash (the "Class A Share") determined by multiplying the
amount of Available Cash by the following fraction:
A x Y
_______________
(A x Y)+(B x X)
(2) Class B shall receive that portion of the
Available Cash (the "Class B Share") determined by multiplying the amount
of Available Cash by the following fraction:
B x X
_______________
(A x Y)+(B x X)
(3) For purposes of the foregoing formulas
(i) "A" equals the number of Class A Units outstanding on the Partnership
Record Date for such Distribution Period; (ii) "B" equals the number of
Class B Units outstanding on the Partnership Record Date for such
Distribution Period; (iii) "Y" equals the number of days in the
Distribution Period; and (iv) "X" equals the number of days in the
Distribution Period for which the Class B Units were issued and
outstanding.
The Class A Share shall be distributed among Partners holding Class A
Units on the Partnership Record Date for the Distribution Period in
accordance with the number of Class A Units held by each Partner on such
Partnership Record Date; provided that in no event may a Partner receive a
distribution of Available Cash with respect to a Class A Unit if a Partner
is entitled to receive a distribution out of such Available Cash with
respect to a Share for which such Class A Unit has been redeemed or
exchanged. The Class B Shares shall be distributed among the Partners
holding Class B Units on the Partnership Record Date for the Distribution
Period in accordance with the number of Class B Units held by each Partner
on such Partnership Record Date. In no event shall any Class B Units be
entitled to receive any distribution of Available Cash for any Distribution
Period ending prior to the date on which such Class B Units are issued.
D. Distributions When Class B Units Have Been Issued on Different
Dates. If Class B Units which have been issued on different dates are
outstanding on the Partnership Record Date for any Distribution Period,
then the Class B Units issued on each particular date shall be treated as a
separate series of Partnership Units for purposes of making the allocation
of Available Cash for such Distribution Period among the holders of
Partnership Units (and the formula for making such allocation, and the
definitions of variables used therein, shall be modified accordingly).
Thus, for example, if two series of Class B Units are outstanding on the
Partnership Record Date for any Distribution Period, the allocation formula
for each series, "Series B1" and "Series B2" would be as follows:
(1) Series B1 shall receive that portion of
the Available Cash determined by multiplying the amount of Available Cash
by the following fractions:
B1 x X1
___________________________
(A x Y)+(B1 x X1)+(B2 x X2)
(2) Series B2 shall receive that portion of
the Available Cash determined by multiplying the amount of Available Cash
by the following fractions:
B2 x X2
___________________________
(A x Y)+(B1 x X1)+(B2 x X2)
(3) For purposes of the foregoing formulas
the definitions set forth in Section 5.1.C.3 remain the same except that
(i) "B1" equals the number of Partnership Units in Series B1 outstanding on
the Partnership Record Date for such Distribution Period; (ii) "B2" equals
the number of Partnership Units in Series B2 outstanding on the Partnership
Record Date for such Distribution Period; (iii) "X1" equals the number of
days in the Distribution Period for which the Partnership Units in Series
B1 were issued and outstanding, and (iv) "X2" equals the number of days in
the Distribution Period for which the Partnership Units in Series B2 were
issued and outstanding.
E. Minimum Distributions if Shares Not Publicly Traded. In
addition (and without regard to the amount of Available Cash), if the
Shares of the General Partner are not Publicly Traded, the General Partner
shall make cash distributions with respect to the Class A Units at least
annually for each taxable year of the Partnership beginning prior to the
fifteenth (15th) anniversary of the Effective Date in an aggregate amount
with respect to each such taxable year at least equal to 95% of the
Partnership's taxable income for such year allocable to the Class A Units,
with such distributions to be made not later than 60 days after the end of
such year.
Section 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 for all purposes
under this Agreement.
Section 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction shall be distributed
to the Partners, in accordance with Section 13.2.
Section 5.4 REVISIONS TO REFLECT ISSUANCE OF PARTNERSHIP
INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof,
the General Partner shall make such revisions to this Article V and Exhibit
A as it deems necessary to reflect the issuance of such additional
Partnership Interests without the requirements for any other consents or
approvals.
ARTICLE VI
ALLOCATIONS
Section 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of
income, gain, loss and deduction (computed in accordance with Exhibit B)
shall be allocated among the Partners in each taxable year (or portion
thereof) as provided herein below.
A. Net Income. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Income shall be allocated (i) first,
to the General Partner to the extent that Net Losses previously allocated
to the General Partner pursuant to the last sentence of Section 6.1.B
exceed Net Income previously allocated to the General Partner pursuant to
this clause (i) of Section 6.1.A, (ii) second, to the holders of any
Partnership Interests that are entitled to any preference in distribution
in accordance with the rights of any such class of Partnership Interests
until each such Partnership Interest has been allocated, on a cumulative
basis pursuant to this clause (ii), Net Income equal to the amount of
distributions received which are attributable to the preference of such
class of Partnership Interests (and, within such class, pro rata in
proportion to the respective Percentage Interests as of the last day of the
period for which such allocation is being made) and (iii) third, with
respect to Partnership Interests that are not entitled to any preference in
the allocation of Net Income, pro rata to each such class in accordance
with the terms of such class (and, within such class, pro rata in
proportion to the respective Percentage Interests as of the last day of the
period for which such allocation is being made).
B. Net Losses. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Losses shall be allocated (i) first,
to the holders of any Partnership Interests that are entitled to any
preference in distribution in accordance with the rights of any such class
of Partnership Interests to the extent that any prior allocations of Net
Income to such class of Partnership Interests pursuant to Section 6.1.A(ii)
exceed, on a cumulative basis, distributions with respect to such
Partnership Interests pursuant to clause (i) of Section 5.1.B (and, within
such class, pro rata in proportion to the respective Percentage Interests
as of the last day of the period for which such allocation is being made)
and (ii) second, with respect to classes of Partnership Interests that are
not entitled to any preference in distribution, pro rata to each such class
in accordance with the terms of such class (and, within such class, pro
rata in proportion to the respective Percentage Interests as of the last
day of the period for which such allocation is being made); provided that
Net Losses shall not be allocated to any Limited Partner pursuant to this
Section 6.1.B to the extent that such allocation would cause such Limited
Partner to have an Adjusted Capital Account Deficit (or increase any
existing Adjusted Capital Account Deficit) at the end of such taxable year
(or portion thereof). All Net Losses in excess of the limitations set
forth in this Section 6.1 B shall be allocated to the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of Regulation
Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (i) the amount of Partnership Minimum
Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
D. Recapture Income. Any gain allocated to the Partners upon the
sale or other taxable disposition of any Partnership asset shall, to the
extent possible after taking into account other required allocations of
gain pursuant to Exhibit C, be characterized as Recapture Income in the
same proportions and to the same extent as such Partners have been
allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.
Section 6.2 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF
PARTNERSHIP INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof,
the General Partner shall make such revisions to this Article VI and
Exhibit A as it deems necessary to reflect the terms of the issuance of
such Partnership Interests, including making preferential allocations to
classes of Partnership Interests that are entitled thereto. Such revisions
shall not require the consent or approval of any other Partner.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 MANAGEMENT
X. Xxxxxx of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and
affairs of the Partnership are and shall be exclusively vested in the
General Partner, and no Limited Partner shall have any right to participate
in or exercise control or management power over the business and affairs of
the Partnership. The General Partner may not be removed by the Limited
Partners with or without cause. In addition to the powers now or hereafter
granted a general partner of a limited partnership under applicable law or
which are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to Section 7.11, 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 and to effectuate the purposes set forth in Section 3.1,
including, without limitation:
(1) the making of any expenditures, the lending
or borrowing of money (including, without limitation, making prepayments on
loans and borrowing money to permit the Partnership to make distributions
to its Partners in such amounts as are required under Section 5.1.E or will
permit the General Partner (so long as the General Partner qualifies as
REIT) to avoid the payment of any federal income tax (including, for this
purpose, any excise tax pursuant to Section 4981 of the Code) and to make
distributions to its shareholders sufficient to permit the General Partner
to maintain REIT status), 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 mortgage, deed
of trust or other lien or encumbrance on the Partnership's assets) and the
incurring of any obligations the General Partner deems necessary for the
conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership (including the exercise or grant of any conversion, option,
privilege or subscription right or other right available in connection with
any assets at any time held by the Partnership) or the merger or other
combination of the Partnership with or into another entity on such terms as
the General Partner deems proper;
(4) the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose consistent
with the terms of this Agreement and on any terms it sees fit, including,
without limitation, the financing of the conduct of the operations of the
General Partner, the Partnership or any of the Partnership's Subsidiaries,
the lending of funds to other Persons (including, without limitation, the
General Partner, its Subsidiaries and the Partnership's Subsidiaries) and
the repayment of obligations of the Partnership and its Subsidiaries and
any other Person in which the Partnership has an equity investment and the
making of capital contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any real property or
improvements owned by the Partnership or any Subsidiary of the Partnership
or any Person in which the Partnership has made a direct or indirect equity
investment;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the Partnership's
operations or the implementation of the General Partner's powers under this
Agreement, including contracting with contractors, developers, consultants,
accountants, legal counsel, other professional advisors and other agents
and the payment of their expenses and compensation out of the Partnership's
assets;
(7) the mortgage, pledge, encumbrance or hypothecation
of any assets of the Partnership, and the use of the assets of the
Partnership (including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it sees fit,
including, without limitation, the financing of the conduct or the
operations of the General Partner or the Partnership, the lending of funds
to other Persons (including, without limitation, any Subsidiaries of the
Partnership) and the repayment of obligations of the Partnership, any of
its Subsidiaries and any other Person in which it has an equity investment;
(8) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(9) the holding, managing, investing and reinvesting of
cash and other assets of the Partnership;
(10) the collection and receipt of revenues and income
of the Partnership;
(11) the selection, designation of powers, authority and
duties and the dismissal of employees of the Partnership (including,
without limitation, employees having titles such as "president," "vice
president," "secretary" and "treasurer") and agents, outside attorneys,
accountants, consultants and contractors of the Partnership and the
determination of their compensation and other terms of employment or
hiring;
(12) the maintenance of such insurance for the benefit
of the Partnership and the Partners as it deems necessary or appropriate;
(13) the formation of, or acquisition of an interest
(including non-voting interests in entities controlled by Affiliates of the
Partnership or third parties) in, and the contribution of property to, any
further limited or general partnerships, joint ventures, limited liability
companies or other relationships that it deems desirable (including,
without limitation, the acquisition of interests in, and the contributions
of funds or property to, or making of loans to, its Subsidiaries and any
other Person in which it has an equity investment from time to time, or the
incurrence of indebtedness on behalf of such Persons or the guarantee of
the obligations of such Persons); provided that, as long as the General
Partner has determined to continue to qualify as a REIT, the Partnership
may not engage in any such formation, acquisition or contribution that
would cause the General Partner to fail to qualify as a REIT;
(14) 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, 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;
(15) the determination of the fair market value of any
Partnership property distributed in kind, using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of attorney, of
any right, including the right to vote, appurtenant to any assets or
investment held by the Partnership;
(17) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or in connection with any
Subsidiary of the Partnership or any other Person in which the Partnership
has a direct or indirect interest, individually or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of any Person in which the
Partnership does not have any interest pursuant to contractual or other
arrangements with such Person;
(19) the making, executing and delivering 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 other 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; and
(20) the distribution of cash to acquire Partnership
Units held by a Limited Partner in connection with a Limited Partner's
exercise of its Redemption Right under Section 8.6; and
(21) the amendment and restatement of Exhibit A to
reflect accurately at all times the Capital Contributions and Percentage
Interests of the Partners as the same are adjusted from time to time to the
extent necessary to reflect redemptions, Capital Contributions, the
issuance of Partnership Units, the admission of any Additional Limited
Partner or any Substituted Limited Partner or otherwise, which amendment
and restatement, notwithstanding anything in this Agreement to the
contrary, shall not be deemed an amendment of this Agreement, as long as
the matter or event being reflected in Exhibit A otherwise is authorized by
this Agreement.
B. No Approval by Limited Partners. Except as provided in Section
7.11, each of the Limited Partners and the other General Partner agrees
that the General Partner is authorized to execute, deliver and perform the
above-mentioned agreements and transactions on behalf of the Partnership
without any further act, approval or vote of the Partners, notwithstanding
any other provision of this Agreement, the Act or any applicable law, rule
or regulation, to the full extent permitted under the Act or other
applicable law. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under
this Agreement shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited
Partners or any other Persons under this Agreement or of any duty stated or
implied by law or equity.
C. Insurance. At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain (i)
casualty, liability and other insurance on the properties of the
Partnership and (ii) liability insurance for the Indemnities hereunder and
(iii) such other insurance as the General Partner, in its sole and absolute
discretion, determines to be necessary.
D. Working Capital and Other Reserves. At all times from and
after the date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time, including upon liquidation of the Partnership
under Section 13.
E. No Obligations to Consider Tax Consequences of Limited
Partners. In exercising their 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) of any action
taken (or not taken) by any of them. The General Partner and the
Partnership shall not have liability to a Limited Partner for monetary
damages or otherwise for losses sustained, liabilities incurred or benefits
not derived by such Limited Partner in connection with such decisions,
provided that the General Partner have acted in good faith and pursuant to
their authority under this Agreement.
Section 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner have previously filed the Certificate of Limited
Partnership with the Secretary of State of Delaware. 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 of Limited Partnership 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 other jurisdiction in which the Partnership may elect to do
business or own property. Subject to the terms of Section 8.5.A(4), the
General Partner shall not be required, before or after filing, to deliver
or mail a copy of the Certificate of Limited Partnership 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) in the State of Delaware and any other state, the District of
Columbia or other jurisdiction in which the Partnership may elect to do
business or own property.
Section 7.3 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 Partners, individually or collectively,
shall have any ownership interest in such Partnership assets or any portion
thereof. Title to any or all of the Partnership assets may be held in the
name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General
Partner. The General Partner hereby declare and warrant 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
that General Partner for the use and benefit of the Partnership in
accordance with the provisions of this Agreement. All Partnership assets
shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
Section 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. No Compensation. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles V and VI
regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for their services
as general partners of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership shall
be responsible for and shall pay all expenses relating to the Partnership's
organization, the ownership of its assets and its operations. The General
Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses
related to the operations of the General Partner and to the management and
administration of any Subsidiaries of the General Partner or the
Partnership or Affiliates of the Partnership, such as auditing expenses and
filing fees and expenses incurred on behalf of the foregoing by the Advisor
on behalf of the General Partner pursuant to the terms of the Advisory
Agreement); provided that, the amount of any such reimbursement shall be
reduced by (i) 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 in Section 7.5.A (which interest is considered to
belong to the Partnership and shall be paid over to the Partnership to the
extent not applied to reimburse the General Partner for expenses
hereunder); and (ii) any amount derived by the General Partner from any
investments permitted in Section 7.5.A. The General Partner shall
determine in good faith the amount of expenses incurred by it related to
the ownership and operation of, or for the benefit of, the Partnership. If
certain expenses are incurred for the benefit of the Partnership and other
entities (including the General Partner), such expenses will be allocated
to the Partnership and such other entities in such a manner as the General
Partner in its sole and absolute discretion deems fair and reasonable.
Such reimbursements shall be in addition to any reimbursement to the
General Partner pursuant to Section 10.3.C and as a result of
indemnification pursuant to Section 7.7. All payments and reimbursements
hereunder shall be characterized for federal income tax purposes as
expenses of the Partnership incurred on its behalf, and not as expenses of
the General Partner.
C. Partnership Interest Issuance Expenses. The General Partner
shall also be reimbursed for all expenses it incurs relating to any
issuance of Partnership Interests, Shares, Debt of the Partnership or the
General Partner or rights, options, warrants or convertible or exchangeable
securities pursuant to Article IV (including, without limitation, all
costs, expenses, damages and other payments resulting from or arising in
connection with litigation related to any of the foregoing), all of which
expenses are considered by the Partners to constitute expenses of, and for
the benefit of, the Partnership.
D. Purchases of Shares by the General Partner. If the General
Partner exercises its rights under the Declaration of Trust to purchase
Shares or otherwise elects to purchase from its shareholders Shares in
connection with a share repurchase or similar program or for the purpose of
delivering such Shares to satisfy an obligation under any dividend
reinvestment or equity purchase program adopted by the General Partner, any
employee equity purchase plan adopted by the General Partner or any similar
obligation or arrangement undertaken by the General Partner in the future,
the purchase price paid by the General Partner for those Shares and any
other expenses incurred by the General Partner in connection with such
purchase shall be considered expenses of the Partnership and shall be
reimbursable to the General Partner, subject to the conditions that: (i) if
those Shares subsequently are to be sold by the General Partner, the
General Partner shall pay to the Partnership any proceeds received by the
General Partner for those Shares (provided that a transfer of Shares for
Partnership Units pursuant to Section 8.6 would not be considered a sale
for such purposes); and (ii) if such Shares are not retransferred by the
General Partner within thirty (30) days after the purchase thereof, the
General Partner shall cause the Partnership to cancel a number of
Partnership Units (rounded to the nearest whole Partnership Unit) held by
the General Partner equal to the product attained by multiplying the number
of those Shares by a fraction, the numerator of which is one and the
denominator of which is the Conversion Factor.
E. Reimbursement not a Distribution. If and to the extent any
reimbursement made pursuant to this Section 7.4 is determined for federal
income tax purposes not to constitute a payment of expenses of the
Partnership, the amount so determined shall constitute a guaranteed payment
with respect to capital within the meaning of Section 707(c) of the Code,
shall be treated consistently therewith by the Partnership and all Partners
and shall not be treated as a distribution for purposes of computing the
Partners' Capital Accounts.
Section 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER;
RELATIONSHIP OF SHARES TO PARTNERSHIP UNITS; FUNDING DEBT
A. General. Without the Consent of the Outside Limited Partners,
the General Partner shall not, directly or indirectly, enter into or
conduct any business other than in connection with the ownership,
acquisition and disposition of Partnership Interests as the General Partner
or Limited Partner and the management of the business of the Partnership
and such activities as are incidental thereto. Without the Consent of the
Outside Limited Partners, the assets of the General Partner shall be
limited to Partnership Interests and permitted debt obligations of the
Partnership (as contemplated by Section 7.5.F), so that Shares and
Partnership Units are completely fungible except as otherwise specifically
provided herein, provided, that the General Partner shall be permitted to
hold such bank accounts or similar instruments or accounts in its name as
it deems necessary to carry out its responsibilities and purposes as
contemplated under this Agreement and its organizational documents
(provided that accounts held on behalf of the Partnership to permit the
General Partner to carry out its responsibilities under this Agreement
shall be considered to belong to the Partnership and the interest earned
thereon shall, subject to Section 7.4.B, be applied for the benefit of the
Partnership); and, provided further, that the General Partner shall be
permitted to acquire, directly or through a Qualified REIT Subsidiary or
limited liability company, up to a one percent (1%) interest in any
partnership or limited liability company at least ninety-nine percent (99%)
of the equity of which is owned, directly or indirectly, by the
Partnership. The General Partner and any of its Affiliates may acquire
Limited Partnership Interests and shall be entitled to exercise all rights
of a Limited Partner relating to such Limited Partnership Interests.
B. Repurchase of Shares. If the General Partner exercises its
rights under the Declaration of Trust to purchase Shares or otherwise
elects to purchase from its shareholders Shares in connection with a share
repurchase or similar program or for the purpose of delivering such shares
to satisfy an obligation under any dividend reinvestment or share purchase
program adopted by the General Partner, any employee share purchase plan
adopted by the General Partner or any similar obligation or arrangement
undertaken by the General Partner in the future, then the General Partner
shall cause the Partnership to purchase from the General Partner that
number of Partnership Units of the appropriate class equal to the product
obtained by multiplying the number of Shares purchased by the General
Partner times a fraction, the numerator of which is one and the denominator
of which is the Conversion Factor, on the same terms and for the same
aggregate price that the General Partner purchased such Shares.
C. Forfeiture of Shares. If the Partnership or the General
Partner acquires Shares as a result of the forfeiture of such Shares under
a restricted or similar share plan, then the General Partner shall cause
the Partnership to cancel that number of Partnership Units equal to the
number of Shares so acquired, and, if the Partnership acquired such Shares,
it shall transfer such Shares to the General Partner for cancellation.
D. Issuances of Shares. After the Effective Date, the General
Partner shall not grant, award, or issue any additional Shares (other than
Shares issued pursuant to Section 8.6 hereof or pursuant to a dividend or
distribution (including any share split) of Shares to all of its
shareholders), other equity securities of the General Partner, New
Securities or Convertible Funding Debt unless (i) the General Partner shall
cause, pursuant to Section 4.2.A hereof, the Partnership to issue to the
General Partner Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having
designations, preferences and other rights, all such that the economic
interests are substantially the same as those of such additional Shares,
other equity securities, New Securities or Convertible Funding Debt, as the
case may be, and (ii) the General Partner transfers to the Partnership, as
an additional Capital Contribution, the proceeds from the grant, award, or
issuance of such additional Shares, other equity securities, New Securities
or Convertible Funding Debt, as the case may be, or from the exercise of
rights contained in such additional Shares, other equity securities, New
Securities or Convertible Funding Debt, as the case may be. Without
limiting the foregoing, the General Partner is expressly authorized to
issue additional Shares, other equity securities, New Securities or
Convertible Funding Debt, as the case may be, for less than fair market
value, and the General Partner is expressly authorized, pursuant to Section
4.2.A hereof, to cause the Partnership to issue to the General Partner
corresponding Partnership Interests, as long as (a) the General Partner
concludes in good faith that such issuance is in the interests of the
General Partner and the Partnership (for example, and not by way of
limitation, the issuance of Shares and corresponding Partnership Units
pursuant to a share purchase plan providing for purchases of Shares, either
by employees or shareholders, at a discount from fair market value or
pursuant to employee share options that have an exercise price that is less
than the fair market value of the Shares, either at the time of issuance or
at the time of exercise) and (b) the General Partner transfers all proceeds
from any such issuance or exercise to the Partnership as an additional
Capital Contribution.
E. Share Option Plan. If at any time or from time to time, the
General Partner sells Shares pursuant to any Share Option Plan, the General
Partner shall transfer the net proceeds of the sale of such Shares to the
Partnership as an additional Capital Contribution in exchange for an amount
of additional Partnership Units equal to the number of Shares so sold
divided by the Conversion Factor.
F. Funding Debt. The General Partner may incur a Funding Debt,
including, without limitation, a Funding Debt that is convertible into
Shares or otherwise constitutes a class of New Securities ("Convertible
Funding Debt"), subject to the condition that the General Partner lend to
the Partnership the net proceeds of such Funding Debt; provided, that
Convertible Funding Debt shall be issued pursuant to Section 7.5.D above;
and, provided further, that the General Partner shall not be obligated to
lend the net proceeds of any Funding Debt to the Partnership in a manner
that would be inconsistent with the General Partner's ability to remain
qualified as a REIT. If the General Partner enters into any Funding Debt,
the loan to the Partnership shall be on comparable terms and conditions,
including interest rate, repayment schedule and costs and expenses, as are
applicable with respect to or incurred in connection with such Funding
Debt.
Section 7.6 TRANSACTIONS WITH AFFILIATES
A. Transactions with Certain Affiliates. Except as expressly
permitted by this Agreement, the Partnership shall not, directly or
indirectly, sell, transfer or convey any property to, or purchase any
property from, or borrow funds from, or lend funds to, any Partner or any
Affiliate of the Partnership that is not also a Subsidiary of the
Partnership, except pursuant to transactions that are on terms that are
fair and reasonable and no less favorable to the Partnership than would be
obtained from an unaffiliated third party.
B. Conflict Avoidance. The General Partner is expressly
authorized to enter into, in the name and on behalf of the Partnership, a
right of first opportunity arrangement and other conflict avoidance
agreements with various Affiliates of the Partnership and General Partner
on such terms as the General Partner, in its sole and absolute discretion,
believes is advisable.
C. Benefit Plans Sponsored by the Partnership. 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, the Advisor or any Affiliate of any of them.
Section 7.7 INDEMNIFICATION
A. General. The Partnership shall indemnify each Indemnitee to
the fullest extent provided by the Act from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including,
without limitation, attorneys fees and other legal fees and expenses),
judgments, fines, settlements and other amounts arising from or in
connection with any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, incurred by the
Indemnitee and relating to the Partnership or the General Partner or the
operation of, or the ownership of property by, any of them as set forth in
this Agreement in which any such Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, unless it is
established by a final determination of a court of competent jurisdiction
that: (i) the act or omission of the Indemnitee was material to the matter
giving rise to the proceeding and either was committed in bad faith or was
the result of active and deliberate dishonesty, (ii) the Indemnitee
actually received an improper personal benefit in money, property or
services or (iii) in the case of any criminal proceeding, the Indemnitee
had reasonable cause to believe that the act or omission was unlawful.
Without limitation, the foregoing indemnity shall extend to any liability
of any Indemnitee, pursuant to a loan guarantee, contractual obligation for
any indebtedness or other obligation 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. 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 or upon a
plea of nolo contendere or its equivalent, or an entry of an order of
probation prior to judgment, creates a rebuttable presumption that the
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 any insurance proceeds from the liability
policy covering the General Partner and any Indemnitee, 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. Advancement of Expenses. Reasonable expenses expected to be
incurred by an Indemnitee shall be paid or reimbursed by the Partnership in
advance of the final disposition of any and all claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative made
or threatened against an Indemnitee 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. No Limitation of Rights. The indemnification provided by this
Section 7.7 shall be in addition to any other rights to which an Indemnitee
or any other Person may be entitled under any agreement, pursuant to any
vote of the Partners, as a matter of law or otherwise, and shall continue
as to an Indemnitee who has ceased to serve in such capacity unless
otherwise provided in a written agreement pursuant to which such Indemnitee
is indemnified.
D. Insurance. The Partnership may purchase and maintain insurance
on behalf of the Indemnities 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. Benefit Plan Fiduciary. For purposes of this Section 7.7, (i)
excise taxes assessed on an Indemnitee, of for which the Indemnitee is
otherwise found liable, with respect to an ERISA Plan pursuant to
applicable law shall constitute fines within the meaning of this Section
7.7 and (iii) actions taken or omitted by the Indemnitee with respect to an
ERISA Plan in the performance of its duties for a purpose reasonably
believed by it to be in the interest of the participants and beneficiaries
of such ERISA Plan shall be deemed to be for a purpose which is not opposed
to the best interests of the Partnership.
F. No Personal Liability for Limited Partners. 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. Interested Transactions. 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. Benefit. The provisions of this Section 7.7 are for the
benefit of the Indemnities, their employees, officers, directors, trustees,
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 limitation 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 related 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. Indemnification Payments Not Distributions. If and to the
extent any payments to the General Partner pursuant to this Section 7.7
constitute gross income to the General Partner (as opposed to the repayment
of advances made on behalf of the Partnership), such amounts shall
constitute guaranteed payments within the meaning of Section 707(c) of the
Code, shall be treated consistently therewith by the Partnership and all
Partners, and shall not be treated as distributions for purposes of
computing the Partners' Capital Accounts.
J. Exception to Indemnification. Notwithstanding anything to the
contrary in this Agreement, the General Partner shall not be entitled to
indemnification hereunder for any loss, claim, damage, liability or expense
for which such General Partner is obligated to indemnify the Partnership
under any other agreement between such General Partner and the Partnership.
Section 7.8 LIABILITY OF THE GENERAL PARTNER
A. GENERAL. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN
THIS AGREEMENT, NO GENERAL PARTNER SHALL BE LIABLE FOR MONETARY DAMAGES 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 unless that
General Partner acted in bad faith and the act or omission was material to
the matter giving rise to the loss, liability or benefit not derived.
B. No Obligation to Consider Separate Interests of Limited
Partners or Shareholders. The Limited Partners expressly acknowledge that
the General Partner is acting on behalf of the Partnership, that the
General Partner is under no obligation to consider the separate interests
of the Limited Partners (including, without limitation, the tax
consequences to Limited Partners or Assignees) in deciding whether to cause
the Partnership to take (or decline to take) any actions, and that the
General Partner shall not be liable for monetary damages for losses
sustained, liabilities incurred or benefits not derived by Limited Partners
in connection with such decisions, provided that the General Partner has
acted in good faith.
C. Actions of Agents. Subject to its obligations and duties as
General Partner set forth in Section 7.1.A, the General Partner may
exercise any of the powers granted to it by this Agreement and perform any
of the duties imposed upon them hereunder either directly or by or through
their agents. The General Partner shall not be responsible for any
misconduct or negligence on the part of any such agent appointed by the
General Partner in good faith.
D. Effect of Amendment. Notwithstanding any other provision
contained herein, 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 liability to the
Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
Section 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER
A. Reliance on Documents. 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. Reliance on Advisors. The General Partner may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers and other consultants and advisers selected by them, and any act
taken or omitted to be taken in reliance upon the opinion of such Persons
as to matters which 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. Action Through Agents. 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 which is permitted or required
to be done by the General Partner hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of the
General Partner. Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or
omission is necessary or advisable in order (i) to protect the ability of
the General Partner to continue to qualify as a REIT or (ii) to allow the
General Partner to avoid incurring any liability for taxes under Section
857 or 4981 of the Code, is expressly authorized under this Agreement and
is deemed approved by all of the Limited Partners.
E. Actions to Maintain REOC Status. If and so long as the
Partnership Interests of "benefit plan investors" is "significant" (as such
terms, or terms succeeding thereto with the same objective, are used in 29
C.F.R. Section 2510.3-101(f) (such regulation or successor regulation being
known as the "Plan Assets Regulation")), or if the General Partner receives
written notice from another General Partner requesting that the affairs of
the Partnership be conducted in compliance with the exception for a real
estate operating company ("REOC") as provided in the Plan Assets
Regulation, then the General Partner shall use its best efforts to conduct
the affairs of the Partnership as a REOC and so that the assets of the
Partnership will not be "plan assets" (as such term is defined in the Plan
Assets Regulations) of any ERISA Partner.
(i) If the General Partner, pursuant to this Section 7.9.E,
intends to conduct the affairs of the Partnership as a REOC, the General
Partner shall promptly deliver to each ERISA Partner and to any requesting
General Partner an opinion of counsel reasonably acceptable to each such
ERISA Partner or requesting General Partner with respect to the "initial
valuation date" and each "annual valuation period" (as those terms, or
terms succeeding thereto with the same objective, are defined in the Plan
Assets Regulation). Such opinion of counsel shall state, (A) as to the
opinion respecting the "initial valuation date," that the Partnership shall
qualify or be qualified as a REOC for the period beginning on such "initial
valuation date" and ending on the last day of the first "annual
valuation period," and (B) as to each annual opinion respecting each
"annual valuation period," that the Partnership shall qualify or be
qualified as a REOC for the 12-month period following the last day of such
"annual valuation period." Each opinion referred to in the prior two
sentences may rely upon, among other things, a certificate of the General
Partner as to the exercise of management rights with respect to one or more
investments during the appropriate period and as to a description of such
investments, and such counsel opinion also shall state whether the
Partnership has included in a certification to opinion counsel a statement
to the effect that on such "initial valuation date" or during such "annual
valuation period" at least 50 percent of Partnership assets (other than
short-term investments pending long-term commitment or distribution to
investors), valued at cost, were invested in real estate investments as
described in the Plan Assets Regulation.
(ii) If the opinion described in this subsection is not
provided in the affirmative, or if any ERISA Partner or a requesting
General Partner shall obtain and deliver to the General Partner an opinion
of counsel to such ERISA Partner or requesting General Partner (which
opinion shall be reasonably satisfactory to the General Partner) that there
is a reasonable probability that either (A) the Partnership was or will not
be a REOC for any period in which either participation by benefit plan
investors in the Partnership is significant or a requesting General Partner
is an investor, or (B) the assets of the Partnership were or will be "plan
assets" of ERISA Plan investors, then the General Partner is hereby
authorized and empowered to take such actions as it deems necessary and
appropriate to mitigate, prevent, or cure such adverse consequences
resulting to the ERISA Plan investors or requesting General Partner,
including modifying the manner in which the Partnership conducts its
business, or requiring each ERISA Partner (on a pro rata basis unless
otherwise consented to by all ERISA Partners) to transfer all or a portion
of its interest at a price not less than the fair value of such interest or
portion thereof. Such calculation of fair value of an interest or of any
Partnership asset shall be made by the General Partner.
Section 7.10 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority, without consent or approval
of any other Partner or Person, to encumber, sell or otherwise use in any
manner any and all assets of the Partnership, to enter into any contracts
on behalf of the Partnership and to take any and all actions on behalf of
the Partnership, and such Person shall be entitled to deal with the General
Partner as if the General Partner were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby
waives any and all defenses or other remedies which may be available
against such Person to contest, negate or disaffirm any action of the
General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated
to ascertain that the terms of this Agreement have been complied with or to
inquire into the necessity or expedience of any act or action of the
General Partner or its representatives. Each and every certificate,
document or other instrument executed on behalf of the Partnership by the
General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that
(i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and
delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.
Section 7.11 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
A. Consent Required. The General Partner may not take any action
in contravention of an express prohibition or limitation of this Agreement
without the written Consent of (i) all Partners adversely affected or (ii)
such lower percentage of the Limited Partnership Interests as may be
specifically provided for under a provision of this Agreement or the Act.
B. Sale of All Assets of the Partnership. Except as provided in
Article XIII, the General Partner may not, directly or indirectly, cause
the Partnership to sell, exchange, transfer or otherwise dispose of all or
substantially all of the Partnership's assets in a single transaction or
series of related transactions (including by way of merger (including a
triangular merger), consolidation or other combination with any other
Persons) (i) if such merger, sale or other transaction is in connection
with a Termination Transaction permitted under Section 11.2.B hereof,
without the Consent of the Partners holding at least a majority of the then
outstanding Partnership Units (including any Partnership Units held by the
General Partner), or (ii) otherwise, without the Consent of the Outside
Limited Partners.
Section 7.12 LOANS BY THIRD PARTIES
The Partnership may incur Debt, or enter into similar credit,
guarantee, financing or refinancing arrangements for any purpose
(including, without limitation, in connection with any acquisition of
property) with any Person that is not the General Partner upon such terms
as the General Partner determines appropriate; provided that, the
Partnership shall not incur any Debt that is recourse to the General
Partner, except to the extent otherwise agreed to by such General Partner
in its sole discretion.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5, or
under the Act.
Section 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the General Partner or the
Advisor, any of their Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner or the Advisor, the
Partnership or any of their Affiliates, in their capacity as such) shall
take part in the operation, management or control (within the meaning of
the Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise
bind the Partnership. The transaction of any such business by the General
Partner or the Advisor, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner or the Advisor,
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 Section 7.5 hereof, and subject to any agreements entered
into pursuant to Section 7.6.C hereof and to any other agreements entered
into by a Limited Partner or its Affiliates with the Partnership or a
Subsidiary, any Limited Partner (other than the General Partner) and any
officer, director, employee, agent, trustee, Affiliate 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 in direct or
indirect competition with the Partnership. Neither the Partnership nor any
Partners shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner or Assignee. None of the Limited Partners
(other than the General Partner) 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 to offer any interest in any
such business ventures to the Partnership, any Limited Partner or any such
other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person,
could be taken by such Person.
Section 8.4 RETURN OF CAPITAL
Except pursuant to the right of redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent of distributions made pursuant
to this Agreement or upon termination of the Partnership as provided
herein. No Limited Partner or Assignee shall have priority over any other
Limited Partner or Assignee either as to the return of Capital
Contributions (except as permitted by Section 4.2.A) or, except to the
extent provided by Exhibit C or as permitted by Sections 4.2.A, 5.1.B(i),
6.1.A(ii) and 6.1.B(i), or otherwise expressly provided in this Agreement,
as to profits, losses, distributions or credits.
Section 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE
PARTNERSHIP
A. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.D, 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 the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by the General
Partner pursuant to the Exchange Act;
(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 of
Limited Partnership and all amendments thereto, together with executed
copies of all powers of attorney pursuant to which this Agreement, the
Certificate of Limited Partnership and all amendments thereto have been
executed; and
(5) to obtain true and full information regarding the amount
of cash and a description and statement of any other property or services
contributed by each Partner and which each Partner has agreed to contribute
in the future, and the date on which each became a Partner.
B. Notice of Conversion Factor. The Partnership shall notify each
Limited Partner upon request of the then current Conversion Factor and any
changes that have been made thereto.
C. Notice of Extraordinary Transaction of the General Partner.
The General Partner shall not make any extraordinary distributions of cash
or property to its shareholders or effect a merger (including, without
limitation, a triangular merger), a sale of all or substantially all of its
assets or any other similar extraordinary transaction without notifying the
Limited Partners of its intention to make such distribution or effect such
merger, sale or other extraordinary transaction at least twenty (20)
Business Days prior to the record date to determine shareholders eligible
to receive such distribution or to vote upon the approval of such merger,
sale or other extraordinary transaction (or, if no such record date is
applicable, at least twenty (20) business days before consummation of such
merger, sale or other extraordinary transaction). This provision for such
notice shall not be deemed (i) to permit any transaction that otherwise is
prohibited by this Agreement or requires a Consent of the Partners or (ii)
to require a Consent of the Limited Partners to a transaction that does not
otherwise require Consent under this Agreement. Each Limited Partner
agrees, as a condition to the receipt of the notice pursuant hereto, to
keep confidential the information set forth therein until such time as the
General Partner has made public disclosure thereof and to use such
information during such period of confidentiality solely for purposes of
determining whether to exercise the Redemption Right; provided, however,
that a Limited Partner may disclose such information to its attorney,
accountant and/or financial advisor for purposes of obtaining advice with
respect to such exercise so long as such attorney, accountant and/or
financial advisor agrees to receive and hold such information subject to
this confidentiality requirement.
D. Confidentiality. 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 determine in its
sole and absolute discretion to be reasonable, any information that (i) the
General Partner reasonably believes to be in the nature of trade secrets or
other information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage
the Partnership or its business or (ii) the Partnership is required by law
or by agreements with unaffiliated third parties to keep confidential.
Section 8.6 REDEMPTION RIGHT
A. General. (i) Subject to Section 8.6.C, at any time on or after
the first anniversary date of the issuance of a Partnership Unit to a
Limited Partner pursuant to Article IV hereof (which one-year period shall
commence upon the issuance of such Partnership Unit regardless of whether
such Partnership Unit is designated upon issuance as a Class A Unit, a
Class B Unit or otherwise and shall include the period of time from the
date such Partnership Unit is issued to such Limited Partner as other than
a Class A Unit until the date such Partnership Unit is converted
automatically to a Class A Unit pursuant to Section 4.2.C hereof), or on or
after such date prior to the expiration of such one-year period as the
General Partner, in its sole and absolute discretion, designates with
respect to any or all Class A Units then outstanding, the holder of a
Partnership Unit (if other than the General Partner or any Subsidiary of
the General Partner) shall have the right (the "Redemption Right") to
require the Partnership to redeem such Partnership Unit, with such
redemption to occur on the Specified Redemption Date and at a redemption
price equal to and in the form of the Cash Amount to be paid by the
Partnership. Any such Redemption Right shall be exercised pursuant to a
Notice of Redemption delivered to the Partnership (with a copy to the
General Partner) by the Limited Partner who is exercising the Redemption
Right (the "Redeeming Partner"). A Limited Partner may exercise the
Redemption Right from time to time, without limitation as to frequency,
with respect to part or all of the Units that is owns, as selected by the
Limited Partner, provided that a Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Partnership Units
unless such Redeeming Partner then holds less than one thousand (1,000)
Partnership Units, in which event the Redeeming Partner must exercise the
Redemption Right for all of the Partnership Units held by such Redeeming
Partner.
(ii) The Redeeming Partner shall have no right with respect to
any Partnership Units so redeemed to receive any distributions paid after
the Specified Redemption Date with respect to such Partnership Units.
(iii) The Assignee of any Limited Partner may exercise
the rights of such Limited Partner pursuant to this Section 8.6, and such
Limited Partner shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such Limited
Partner's Assignee. In connection with any exercise of such rights by such
Assignee on behalf of such Limited Partner, the Cash Amount shall be paid
by the Partnership directly to such Assignee and not to such Limited
Partner.
(iv) If the General Partner provides notice to the Limited
Partners, pursuant to Section 8.5.C hereof, the Redemption Right shall be
exercisable, without regard to whether the Partnership Units have been
outstanding for any specified period, during the period commencing on the
date on which the General Partner provides such notice and ending on the
record date to determine shareholders eligible to receive such distribution
or to vote upon the approval of such merger, sale or other extraordinary
transaction (or, if no such record date is applicable, at least twenty (20)
business days before the consummation of such merger, sale or other
extraordinary transaction). If this subparagraph (iv) applies, the
Specified Redemption Date is the date on which the Partnership and the
General Partner receive notice of exercise of the Redemption Right, rather
than ten (10) Business Days after receipt of the notice of redemption.
B. General Partner Assumption of Right. (i) If a Limited Partner
has delivered a Notice of Redemption, the General Partner may, in its sole
and absolute discretion (subject to the limitations on ownership and
transfer of Shares set forth in the Declaration of Trust), elect to assume
directly and satisfy a Redemption Right by paying to the Redeeming Partner
either the Cash Amount or the Shares Amount, as the General Partner
determines in its sole and absolute discretion (provided that payment of
the Redemption Amount in the form of Shares shall be in Shares registered
for resale under Section 12 of the Exchange Act and listed for trading on
the exchange or national market on which the Shares are Publicly Traded,
and provided further that, if the Shares are not Publicly Traded at the
time a Redeeming Partner exercises its Redemption Right, the Redemption
Amount shall be paid only in the form of the Cash Amount unless the
Redeeming Partner, in its sole and absolute discretion, consents to payment
of the Redemption Amount in the form of the Shares Amount), on the
Specified Redemption Date, whereupon the General Partner shall acquire the
Partnership Units offered for redemption by the Redeeming Partner and shall
be treated for all purposes of this Agreement as the owner of such
Partnership Units. Unless the General Partner, in its sole and absolute
discretion, shall exercise its right to assume directly and satisfy the
Redemption Right, the General Partner shall not have any obligation to the
Redeeming Partner or to the Partnership with respect to the Redeeming
Partner's exercise of the Redemption Right. If the General Partner shall
exercise its right to satisfy the Redemption Right in the manner described
in the first sentence of this Section 8.6B and shall fully perform its
obligations in connection therewith, the Partnership shall have no right or
obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner's exercise of the Redemption Right, and each of the
Redeeming Partner, the Partnership and the General Partner shall, for
federal income tax purposes, treat the transaction between the General
Partner and the Redeeming Partner as a sale of the Redeeming Partner's
Partnership Units to the General Partner. Nothing contained in this
Section 8.6.B shall imply any right of the General Partner to require any
Limited Partner to exercise the Redemption Right afforded to such Limited
Partner pursuant to Section 8.6.A.
(v) If the General Partner determines to pay the Redeeming
Partner the Redemption Amount in the form of Shares, the total number of
Shares to be paid to the Redeeming Partner in exchange for the Redeeming
Partner's Partnership Units shall be the applicable Shares Amount. If this
amount is not a whole number of Shares, the Redeeming Partner shall be paid
(i) that number of Shares which equals the nearest whole number less than
such amount plus (ii) an amount of cash which the General Partner
determines, in its reasonable discretion, to represent the fair value of
the remaining fractional Share which would otherwise be payable to the
Redeeming Partner.
(vi) Each Redeeming Partner agrees to execute such documents
as the General Partner may reasonably require in connection with the
issuance of Shares upon exercise of the Redemption Right.
C. Exceptions to Exercise of Redemption Right. Notwithstanding
the provisions of Sections 8.6.A and 8.6.B, a Partner shall not be entitled
to exercise the Redemption Right pursuant to Section 8.6.A if (but only as
long as) the delivery of Shares to such Partner on the Specified Redemption
Date (i) would be prohibited under the Declaration of Trust or (ii) would
be prohibited under applicable federal or state securities laws or
regulations (in each case regardless of whether the General Partner would
in fact assume and satisfy the Redemption Right).
D. No Liens on Partnership Units Delivered for Redemption. Each
Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered for redemption shall be delivered to the
Partnership or the General Partner, as the case may be, free and clear of
all liens, and, notwithstanding anything contained herein to the contrary,
neither the General Partner nor the Partnership shall be under any
obligation to acquire Partnership Units which are or may be subject to any
liens. Each Limited Partner further agrees that, if any state or local
property transfer tax is payable as a result of the transfer of its
Partnership Units to the Partnership or the General Partner, such Limited
Partner shall assume and pay such transfer tax.
E. Additional Partnership Interests. If the Partnership issues
Partnership Interests to any Additional Limited Partner pursuant to Article
IV, the General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such Partnership
Interests (including setting forth any restrictions on the exercise of the
Redemption Right with respect to such Partnership Interests).
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including, without limitation, all books and
records necessary to provide to the Limited Partners any information, lists
and copies of documents required to be provided pursuant to Section 9.3.
Any records maintained by or on behalf of the Partnership in the regular
course of its business may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, micrographics or any other information storage
device, provided that the records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books
of the Partnership shall be maintained, for financial and tax reporting
purposes, on an accrual basis in accordance with generally accepted
accounting principles.
Section 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 REPORTS
A. Annual Reports. As soon as practicable, but in no event later
than the date on which the General Partner mails its annual report to its
shareholders, the General Partner shall cause to be mailed to each Limited
Partner an annual report, as of the close of the most recently ended
Partnership Year, containing financial statements of the Partnership, or of
the General Partner if such statements are prepared solely on a
consolidated basis with the Partnership, 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. Quarterly Reports. If and to the extent that the General
Partner mails quarterly reports to its shareholders, as soon as
practicable, but in no event later than the date on such reports are
mailed, the General Partner shall cause to be mailed to each Limited
Partner a report containing unaudited financial statements, as of the last
day of such calendar quarter, of the Partnership, or of the General Partner
if such statements are prepared solely on a consolidated basis with the
Partnership, and such other information as may be required by applicable
law or regulation, or as the General Partner determines to be appropriate.
ARTICLE X
TAX MATTERS
Section 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and
other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety
(90) days of the close of each taxable year, the tax information reasonably
required by Limited Partners for federal and state income tax reporting
purposes.
Section 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the code, provided, however, that the General Partner
shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder. The General Partner shall have the
right to seek to revoke any such election (including, without limitation,
the election under Section 754 of the Code) upon the General Partner's
determination in their sole and absolute discretion that such revocation is
in the best interests of the Partners.
Section 10.3 TAX MATTERS PARTNER
A. General. The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. Pursuant to
Section 6223(c)(3) of the Code, upon receipt of notice from the IRS of the
beginning of an administrative proceeding with respect to the Partnership,
the tax matters partner shall furnish the IRS with the name, address, tax
payer identification number and profit interest of each of the Limited
Partners and any Assignees, provided, however, that such information is
provided to the Partnership by the Limited Partners.
X. Xxxxxx. The tax matters partner is authorized, but not
required:
(1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner for income
tax purposes (such administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to as "judicial
review"), and in the settlement agreement the tax matters partner may
expressly state that such agreement shall bind all Partners, except that
such settlement agreement shall not bind any Partner (i) who (within the
time prescribed pursuant to the Code and Regulations) files a statement
with the IRS providing that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf of such Partner or
(ii) who is a "notice partner" (as defined in Section 6231(a)(8) of the
Code) or a member of a "notice group" (as defined in Section 6223(b)(2) of
the Code);
(2) if a notice of a final administrative adjustment at the
Partnership level of any item required to be taken into account by a
Partner for tax purposes (a "final adjustment") is mailed to the tax
matters partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax Court or
the filing of a complaint for refund with the United States Claims Court or
the District Court of the United States for the district in which the
Partnership's principal place of business is located;
(3) to intervene in any action brought by any other Partner
for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with
the IRS 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 which 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
(6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review proceeding
to the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of
the tax matters partner and the provisions relating to indemnification of
the General Partner set forth in Section 7.7 shall be fully applicable to
the tax matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred
by the tax matters partner in performing its duties as such (including
legal and accounting fees and expenses) shall be borne by the Partnership.
Nothing herein shall be construed to restrict the Partnership from engaging
an accounting firm and/or law firm to assist the tax matters partner in
discharging its duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.
Section 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.
Section 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount
of federal, state, local, or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect
to any amount distributable or allocable to such Limited Partner pursuant
to this Agreement, including, without limitation, any taxes required to be
withheld or paid by the Partnership pursuant to Section 1441, 1442, 1445,
or 1446 of the Code. Any amount paid on behalf of or with respect to a
Limited Partner shall constitute a loan by the Partnership to such Limited
Partner, which loan shall be repaid by such Limited Partner within fifteen
(15) days after notice from the General Partner that such payment must be
made unless (i) the Partnership withholds such payment from a distribution
which would otherwise be made to the Limited Partner or (ii) the General
Partner determines, in its sole and absolute discretion, that such payment
may be satisfied out of the available funds of the Partnership which would,
but for such payment, be distributed to the Limited Partner. Any amounts
withheld pursuant to the foregoing clauses (i) or (ii) shall be treated as
having been distributed to such Limited Partner. Each Limited Partner
hereby unconditionally and irrevocably grants to the Partnership a security
interest in such Limited Partner's Partnership Interest to secure such
Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. If a Limited Partner fails to
pay any amounts owed to the Partnership pursuant to this Section 10.5 when
due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to
such defaulting Limited Partner and shall succeed to all rights and
remedies of the Partnership as against such defaulting Limited Partner
(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 under
the laws of the State of Illinois) 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 to perfect or enforce the security interest created
hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 TRANSFER
A. Definition. The term "transfer," when used in this Article XI
with respect to a Partnership Interest or a Partnership Unit, shall be
deemed to refer to a transaction by which the General Partner purports to
assign all or any part of its General Partnership Interest to another
Person or by which a Limited Partner purports to assign all or any part of
its Limited Partnership Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or
any other disposition by law or otherwise. The term "transfer" when used
in this Article XI does not include any redemption or repurchase of
Partnership Units by the Partnership from a Partner or acquisition of
Partnership Units from a Limited Partner by the General Partner pursuant to
Section 8.6 or otherwise. No part of the interest of a Limited Partner
shall be subject to the claims of any creditor, 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. General. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set
forth in this Article XI. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article XI shall be
null and void.
Section 11.2 TRANSFERS OF PARTNERSHIP INTERESTS OF GENERAL
PARTNER
A. Except for transfers of Partnership Units to the Partnership as
provided in Section 7.5 or Section 8.6, the General Partner may not
transfer any of its Partnership Interest (including both its General
Partnership Interest and its Limited Partnership Interest) except in
connection with a transaction described in Section 11.2.B or as otherwise
expressly permitted under this Agreement, nor shall the General Partner
withdraw as the General Partner except in connection with a transaction
described in Section 11.2.B. The General Partner may not transfer any of
its Partnership Interests or withdraw as the General Partner except (i) in
connection with a transaction described in Section 11.2.B, (ii) as set
forth in Section 8.3 or Section 8.6 or (iii) as otherwise set forth in this
Agreement.
B. The General Partner shall not engage in any merger (including a
triangular merger), consolidation or other combination with or into another
person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of outstanding Shares (other
than a change in par value, or from par value to no par value, or as a
result of a subdivision or combination as described in the definition of
"Conversion Factor") ("Termination Transaction"), unless the Termination
Transaction has been approved by the Consent of the Partners holding at
least a majority of the then outstanding Partnership Units (including any
Partnership Units held by the General Partner) and in connection with which
all Limited Partners either will receive, or will have the right to elect
to receive, for each Partnership Unit an amount of cash, securities, or
other property equal to the product of the Conversion Factor multiplied by
the greatest amount of cash, securities or other property paid to a holder
of Shares corresponding to such Partnership Unit in consideration of one
such Share at any time during the period from and after the date on which
the Termination Transaction is consummated; provided that, if, in
connection with the Termination Transaction, a purchase, tender or exchange
offer shall have been made to and accepted by the holders of more than
fifty percent (50%) of the outstanding Shares, each holder of Partnership
Units shall receive, or shall have the right to elect to receive without
any right of Consent set forth above in this subsection B, the greatest
amount of cash, securities, or other property which such holder would have
received had it exercised the Redemption Right and received Shares in
exchange for its Partnership Units immediately prior to the expiration of
such purchase, tender or exchange offer and had thereupon accepted such
purchase, tender or exchange offer.
Section 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. General. Subject to the provisions of Sections 11.3.C, 11.3.D,
11.3.E, 11.4 and 11.6, a Limited Partner (other than the General Partner)
may transfer with or without the consent of the General Partner, all or any
portion of its Partnership Interest, or any of such Limited Partner's
rights as a Limited Partner, provided that prior written notice of such
proposed transfer is delivered to the General Partner. Notwithstanding the
foregoing, any Limited Partner may, at any time, without the consent of the
General Partner, (i) transfer all or any portion of its Partnership
Interest to the General Partner, (ii) transfer all or any portion of its
Partnership Interest to an Affiliate, another original Limited Partner or
to an Immediate Family member, subject to the provisions of Section 11.6,
(iii) transfer all or any portion of its Partnership Interest to a trust
for the benefit of a charitable beneficiary or to a charitable foundation,
subject to the provisions of Section 11.6, and (iv) subject to the
provisions of Section 11.6, pledge (a "Pledge") all or any portion of its
Partnership Interest to a lending institution, which 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. Each Limited Partner or Assignee
(resulting from a transfer made pursuant to clauses (i) - (iv) of the
proviso of the preceding sentence) shall have the right to transfer all or
any portion of its Partnership Interest, subject to the provisions of
Section 11.6 and the satisfaction of each of the following conditions (in
addition to the right of each such Limited Partner or Assignee to continue
to make any such transfer permitted by clauses (i) - (iv) of such proviso
without satisfying either of the following conditions):
(a) GENERAL PARTNER RIGHT OF FIRST REFUSAL. The transferring
Partner shall give written notice of the proposed transfer to the General
Partner, which notice shall state (i) the identity of the proposed
transferee, and (ii) the amount and type of consideration proposed to be
received for the transferred Partnership Units. The General Partner shall
have ten (10) days upon which to give the transferring Partner notice of
its election to acquire the Partnership Units on the proposed terms. If it
so elects, it shall purchase the Partnership Units on such terms within ten
(10) days after giving notice of such election. If it does not so elect,
the transferring Partner may transfer such Partnership Units to a third
party, on economic terms no more favorable to the transferee than the
proposed terms, subject to the other condition of this Section 11.3.
(b) QUALIFIED TRANSFEREE. Any transfer of a Partnership Interest
shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted hereunder
(excluding Pledges of a Partnership Interest, but including any transfer of
the pledged Partnership Interest, whether to the secured party or
otherwise, pursuant to the secured party's exercise of its remedies under
such Pledge or the related loan or extension of credit) 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 reasonable discretion. Notwithstanding the foregoing, any
transferee of any transferred Partnership Interest shall be subject to any
and all ownership limitations contained in the Declaration of Trust. 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 Substitute Limited Partner, no transferee, whether by a
voluntary transfer, by operation of law or otherwise, shall have rights
hereunder, other than the rights of an Assignee as provided in Section
11.5.
B. Incapacitated Limited Partners. 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 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. No Transfers Violating Securities Laws. The General Partner
may prohibit any transfer of Partnership Units by a Limited Partner unless
it receives a written opinion of legal counsel (which opinion and counsel
shall be reasonably satisfactory to the Partnership) to such Limited
Partner that such transfer would not require filing of a registration
statement under the Securities Act or would not otherwise violate any
federal, or state securities laws or regulations applicable to the
Partnership or the Partnership Unit or, at the option of the Partnership,
an opinion of legal counsel to the Partnership to the same effect.
D. No Transfers Affecting Tax Status of Partnership. No transfer
of Partnership Units by a Limited Partner (including a redemption or
exchange pursuant to Section 8.6) may be made to any Person if (i) in the
opinion of legal counsel for the Partnership, it would result in the
Partnership being treated as an association taxable as a corporation for
federal income tax purposes or would result in a termination of the
Partnership for federal income tax purposes (except as a result of the
redemption or exchange for Shares of all Partnership Units held by all
Limited Partners other than the General Partner or any Subsidiary of either
the General Partner or pursuant to a transaction expressly permitted under
Section 7.11.B or Section 11.2), (ii) in the opinion of legal counsel for
the Partnership, it would adversely affect the ability of the General
Partner to continue to qualify as a REIT or would subject the General
Partner to any additional taxes under Section 857 or Section 4981 of the
Code or (iii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code.
E. No Transfers to Holders of Nonrecourse Liabilities. No Pledge
or transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability unless (i) the General Partner is
provided notice thereof and (ii) the lender enters into an arrangement with
the Partnership and the General Partner to exchange or redeem for the
Redemption Amount any Partnership Units in which a security interest is
held simultaneously with the time at which such lender would be deemed to
be a partner in the Partnership for purposes of allocating liabilities to
such lender under Section 752 of the Code.
Section 11.4 SUBSTITUTED LIMITED PARTNERS
A. Consent of General Partner. No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in its place. The
General Partner shall, however, have the right to consent to the admission
of a transferee of the interest of a Limited Partner pursuant to this
Section 11.4 as a Substituted Limited Partner, which consent may be, given
or withheld by the General Partner in its sole and absolute discretion.
The General Partner's failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to
any cause of action against the Partnership or any Partner. The General
Partner hereby grants its consent to the admission as a Substituted Limited
Partner to any bona fide financial institution that loans money or
otherwise extends credit to a holder of Units and thereafter becomes the
owner of such Units pursuant to the exercise by such financial institution
of its rights under a Pledge of such Units granted in connection with such
loan or extension of credit.
B. Rights of Substituted Limited Partner. A transferee who has
been admitted as a Substituted Limited Partner in accordance with this
Article XI shall have all the rights and powers and be subject to all the
restrictions and liabilities of a Limited Partner under this Agreement.
The admission of any transferee as a Substituted Limited Partner shall be
conditioned upon the transferee executing and delivering to the Partnership
an acceptance of all the terms and conditions of this Agreement (including,
without limitation, the provisions of Section 15.11) and such other
documents or instruments as may be required to effect the admission.
C. Amendment of Exhibit A. Upon the admission of a Substituted
Limited Partner, the General Partner shall amend Exhibit A to reflect the
name, address, Capital Account, number of Partnership Units, and Percentage
Interest of such Substituted Limited Partner and to eliminate or adjust, if
necessary, the name, address, Capital Account and Percentage Interest and
interest of the predecessor of such Substituted Limited Partner.
Section 11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as
a Substituted Limited Partner, as described in Section 11.4, such
transferee shall be considered an Assignee for purposes of this Agreement.
An Assignee shall be 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,
gain, loss and Recapture Income attributable to the Partnership Units
assigned to such transferee, and shall have the rights granted to the
Limited Partners under Section 8.6, but shall not be deemed to be a holder
of Partnership Units for any other purpose under this Agreement, and shall
not be entitled to vote such Partnership Units in any matter presented to
the Limited Partners for a vote (such Partnership Units being deemed to
have been voted on such matter in the same proportion as all other
Partnership Units held by Limited Partners are voted). If 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 XI 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. Withdrawal of Limited Partner. 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
XI or pursuant to redemption of all of its Partnership Units under Section
8.6.
B. Termination of Status as Limited Partner. Any Limited Partner
who shall transfer all of its Partnership Units in a transfer permitted
pursuant to this Article XI or pursuant to redemption of all of its
Partnership Units under Section 8.6 shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI may
only be made upon three business days prior notice, unless the General
Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred during
any quarterly segment of the Partnership's fiscal year in compliance with
the provisions of this Article XI or redeemed or transferred pursuant to
Section 8.6, Net Income, Net Losses, each item thereof and all other items
attributable to such interest for such fiscal year shall be divided and
allocated between the transferor Partner and the transferee Partner by
taking into account their varying interests during the fiscal year in
accordance with Section 706(d) of the Code, using the interim closing of
the books method (unless the General Partner, in its sole and absolute
discretion, elects to adopt a daily, weekly, or a monthly proration period,
in which event Net Income, Net Losses, each item thereof and all other
items attributable to such interest for such fiscal year shall be prorated
based upon the applicable method selected by the General Partner). Solely
for purposes of making such allocations, each of such items for the
calendar month in which the transfer or redemption occurs shall be
allocated to the Person who is a Partner as of midnight on the last day of
said month. All distributions of Available Cash attributable to any
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 Redeeming Partner, as the case may be, and,
in the case of a transfer or assignment other than a redemption, all
distributions of Available Cash thereafter attributable to such Partnership
Unit shall be made to the transferee Partner.
E. Additional Restrictions. In addition to any other restrictions
on transfer herein contained, including without limitation the provisions
of this Article XI, in no event may any transfer or assignment of a
Partnership Interest by any Partner (including pursuant to Section 8.6) be
made without the express consent of the General Partner, in its sole and
absolute discretion, (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) if in the opinion
of legal counsel to the Partnership such transfer would cause a termination
of the Partnership for federal or state income tax purposes (except as a
result of the redemption or exchange for Shares of all Partnership Units
held by all Limited Partners or pursuant to a transaction expressly
permitted under Section 7.11.B or Section 11.2); (v) if in the opinion of
counsel to the Partnership, such transfer would cause the Partnership to
cease to be classified as a partnership for federal income tax purposes
(except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners or pursuant to a transaction
expressly permitted under Section 7.11.B or Section 11.2)7 (vi) if such
transfer would cause the Partnership Interests of "benefit plan investors"
to become "significant," as those terms are used in Section 7.9.E., or
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
Section 3(14) of ERISA) or a "disqualified person" (as defined in Section
4975(c) of the Code); (vii) if such transfer would, in the opinion of
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 2510.1-101t (viii) if such transfer
requires the registration of such Partnership Interest pursuant to any
applicable federal or state securities laws; (ix) if such transfer is
effectuated through an "established securities market" or a "secondary
market" (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code or such transfer causes the Partnership to become
a "publicly traded partnership," as such term is defined in Section
469(k)(2) or Section 7704(b) of the Code (provided that this clause (ix)
shall not be the basis for limiting or restricting in any manner the
exercise of the Redemption Right under Section 8.6 unless, and only to the
extent that, outside tax counsel provides to the General Partner an opinion
to the effect that, in the absence of such limitation or restriction, there
is a significant risk that the Partnership will be treated as a "publicly
traded partnership" and, by reason thereof, taxable as a corporation); (x)
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; (xi) such transfer could adversely affect the
ability of the General Partner to remain qualified as a REIT; or (xii) if
in the opinion of legal counsel for the transferring Partner (which opinion
and counsel shall be reasonably satisfactory to the Partnership) or legal
counsel for the Partnership, such transfer would adversely affect the
ability of the General Partner to continue to qualify as a REIT or subject
the General Partner to any additional taxes under Section 857 or section
4981 of the Code.
F. Avoidance of "Publicly Traded Partnership" Status. The General
Partner shall monitor the transfers of interests in the Partnership to
determine (i) if such interests are being traded on an "established
securities market" or a "secondary market (or the substantial equivalent
thereof) n within the meaning of Section 7704 of the Code and (ii) whether
additional transfers of interests would result in the Partnership being
unable to qualify for at least one of the "safe harbors" set forth in
Regulations Section 1.7704-1 (or such other guidance subsequently published
by the IRS setting forth safe harbors under which interests will not be
treated as "readily tradable on a secondary market (or the substantial
equivalent thereof) n within the meaning of Section 7704 of the Code) (the
"Safe Harbors"). The General Partner shall take all steps reasonably
necessary or appropriate to prevent any trading of interests or any
recognition by the Partnership of transfers made on such markets and,
except as otherwise provided herein, to insure that at least one of the
Safe Harbors is met, provided, however, that the foregoing shall not
authorize the General Partner to limit or restrict in any manner the right
of any holder of a Partnership Unit to exercise the Redemption Right in
accordance with the terms of Section 8.6 unless, and only to the extent
that, outside tax counsel provides to the General Partner an opinion to the
effect that, in the absence of such limitation or restriction, there is a
significant risk that the Partnership will be treated as a "publicly traded
partnership" and, by reason thereof, taxable as a corporation.
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 ADMISSION OF A SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's General Partnership
Interest pursuant to Section 11.2 who is proposed to be admitted as a
successor General Partner shall be admitted to the Partnership as the
General Partner, effective upon such transfer. Any such transferee shall
carry on the business of the Partnership without dissolution. In each
case, the admission shall be subject to such 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. General. No Person shall be admitted as an Additional Limited
Partner without the consent of the General Partner, which consent shall be
given or withheld in the General Partner's sole and absolute discretion. A
Person who makes a Capital Contribution to the Partnership in accordance
with this Agreement, including without limitation, under Section 4.1, or
who exercises an option to receive Partnership Units shall be admitted to
the Partnership as an Additional Limited Partner only with the consent of
the General Partner and only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all
of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 15.11 and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner to effect such Person's admission as an Additional Limited
Partner. 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.
B. Allocations to Additional Limited Partners. If any Additional
Limited Partner is admitted to the Partnership on any day other than the
first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items allocable among Partners and Assignees for such
Partnership Year shall be allocated among such Additional Limited Partner
and all other Partners and Assignees by taking into account their varying
interests during the Partnership Year in accordance with Section 706(d) of
the Code, using the interim closing of the books method (unless the General
Partner, in its sole and absolute discretion, elects to adopt a daily,
weekly or monthly proration method, in which event Net Income, Net Losses,
and each item thereof would be prorated based upon the applicable period
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.
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 of Limited Partnership and may for this purpose exercise
the power of attorney granted pursuant to Section 15.11 hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the
admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the withdrawal of the General Partner, any successor
General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, upon the
first to occur of any of the following ("Liquidating Events"):
(i) the expiration of its term as provided in Section 2.4
hereof;
(ii) an event of withdrawal of the General Partner, as defined
in the Act (other than an event of bankruptcy), unless (1) there is at
least one other General Partner, in which case the remaining General
Partner shall continue the business of the Partnership, or (2) within
ninety (90) days after the withdrawal a "majority in interest" (as defined
below) of the remaining Partners Consent in writing to continue the
business of the Partnership and to the appointment, effective as of the
date of withdrawal, of a substitute General Partner;
(iii) through December 31, 2048, an election to dissolve
the Partnership made by the General Partner with the consent of Limited
Partners who hold ninety percent (90%) of the outstanding Units held by
Limited Partners (including Units held by the General Partner);
(iv) an election to dissolve the Partnership made by the
General Partner, in its sole and absolute discretion after December 31,
2046;
(v) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(vi) the sale of all or substantially all of the assets and
properties of the Partnership for cash or for marketable securities; or
(vii) a final and non-appealable judgment is entered by a
court of competent jurisdiction ruling that the General Partner is bankrupt
or insolvent, or a final and non-appealable order for relief is entered by
a court with appropriate jurisdiction against the General Partner, in each
case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect, unless prior to or at the time of the entry of such
order or judgment a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of a date prior to the
date of such order or judgment, of a substitute General Partner.
As used herein, a "majority in interest" shall refer to Partners
(excluding the General Partner) who hold more than fifty percent (50%) of
the outstanding Percentage Interests not held by the General Partner.
Section 13.2 WINDING UP
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors and Partners. No Partner shall take any action
that is inconsistent with, or not necessary to or appropriate for, the
winding up of the Partnership's business and affairs. The General Partner
(or, if there is no remaining General Partner, any Person elected by a
majority in interest of the Limited Partners (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 equity or other securities of the General Partner or any other
entity) shall be applied and distributed in the following orders:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the Limited Partners; and
(4) The balance, if any, to the Partners in accordance with
their Capital Accounts, 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 XIII.
B. Deferred Liquidation. Notwithstanding the provisions of
Section 13.2.A which require liquidation of the assets of the Partnership,
but subject to the order of priorities set forth therein, if prior to or
upon dissolution of the Partnership the Liquidator determines that an
immediate sale of part or all of the Partnership's assets would be
impractical or would cause undue loss to the Partners, the Liquidator may,
in its sole and absolute discretion, defer for a reasonable time the
liquidation of any assets except those necessary to satisfy liabilities of
the Partnership (including to those Partners as creditors) or distribute to
the Partners, in lieu of cash, as tenants in common and in accordance with
the provisions of Section 13.2.A, 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.
Section 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
Subject to Section 13.4, if the Partnership is "liquidated" within
the meaning of Regulations Section 1.704-l(b)(2)(ii)(g), distributions
shall be made under this Article XIII to the General Partner and Limited
Partners who have positive Capital Accounts in compliance with Regulations
Section 1.704-l(b)(2)(ii)(b)(2). If any 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), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt
owed to the Partnership or to any other Person for any purpose whatsoever.
In the discretion of the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and
Limited Partners pursuant to this Article XIII may be: (A) distributed to a
trust established for the benefit of the General Partner and Limited
Partners for the purposes of liquidating Partnership assets, collecting
amounts owed to the Partnership and paying any contingent or unforeseen
liabilities or obligations of the Partnership or of the General Partner
arising out of or in connection with the Partnership (in which case the
assets of any such trust shall be distributed to the General Partner and
Limited Partners from time to time, in the reasonable discretion of the
General Partner, in the same proportions as the amount distributed to such
trust by the Partnership would otherwise have been distributed to the
General Partner and Limited Partners pursuant to this Agreement); or (B)
withheld 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 amounts shall be distributed to the General Partner and Limited
Partners as soon as practicable.
Section 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article XIII, if the
Partnership is deemed liquidated within the meaning of Regulations Section
1.704-l(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's
liabilities shall not be paid or discharged and the Partnership's affairs
shall not be wound up. Instead, for federal income tax purposes and for
purposes of maintaining Capital Accounts pursuant to Exhibit B, the
Partnership shall be deemed to have distributed its assets in kind to the
General Partner and Limited Partners, who shall be deemed to have assumed
and taken such assets subject to all Partnership liabilities, all in
accordance with their respective Capital Accounts. Immediately thereafter,
the General Partner and Limited Partners shall be deemed to have
recontributed the Partnership assets in kind to the Partnership, which
shall be deemed to have assumed and taken such assets subject to all such
liabilities.
Section 13.5 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise
expressly provided in this Agreement, no Limited Partner shall have
priority over any other Limited Partner as to the return of its Capital
Contributions, distributions, or allocations.
Section 13.6 NOTICE OF DISSOLUTION
If a Liquidating Event occurs or an event occurs that would, but for
provisions of an election or objection by one or more Partners pursuant to
Section 13.1, result in a dissolution of the Partnership, the General
Partner shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of
the General Partner).
Section 13.7 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2, the Partnership shall be terminated
and the Certificate of Limited Partnership and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than
the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
Section 13.8 REASONABLE TIME FOR WINDING UP
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2, to minimize any losses otherwise attendant upon
such winding-up, and the provisions of this Agreement shall remain in
effect among the Partners during the period of liquidation.
Section 13.9 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
Section 13.10 LIABILITY OF LIQUIDATOR
The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may
be indemnified pursuant to Section 7.7.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 AMENDMENTS
A. General. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding twenty-five percent
(25%) or more of the Partnership Interests. Following such proposal
(except an amendment pursuant to Section 14.1.B), the General Partner shall
submit any proposed amendment to the Limited Partners. The General Partner
shall seek the written vote of the Partners on the proposed amendment or
shall call a meeting to vote thereon and to transact any other business
that it may deem appropriate. For purposes of obtaining a written vote,
the General Partner may require a response within a reasonable specified
time, but not less than fifteen (15) days, and failure to respond in such
time period shall constitute a vote which is consistent with the General
Partner's recommendation with respect to the proposal. Except as provided
in Section 14.1.B, 14.1.C or 14.1.D, a proposed amendment shall be adopted
and be effective as an amendment hereto if it is approved by the General
Partner and it receives the Consent of Partners holding a majority of the
Percentage Interests of the Limited Partners (including Limited Partnership
Interests held by the General Partner).
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A or 14.1.C, 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, termination, or
withdrawal of Partners in accordance with this Agreement (which may be
effected through the replacement of Exhibit A with an amended Exhibit A);
(3) to set forth the designations, rights, powers, duties, and
preferences of the holders of any additional Partnership Interests issued
pursuant to Article IV;
(4) to reflect a change that 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 of this Agreement, 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; and
(5) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a federal,
state or local agency or contained in federal, state or local law.
The General Partner shall notify the Limited Partners when any action
under this Section 14.1.B is taken in the next regular communication to the
Limited Partners.
C. Amendments Requiring Limited Partner Approval (Excluding General
Partner). Notwithstanding Section 14.1.A, without the Consent of the Outside
Limited Partners, the General Partner shall not amend Section 4.2.A, Section
5.1.E, Section 7.1.A (second sentence only), Section 7.5, Section 7.6, Section
7.8, Section 7.11.B, Section 11.2, Section 13.1 (other than Section 13.1(iii)
which can be amended only with a Consent of 90% of the Partnership Units
(including Partnership Units held by the General Partner), the last sentence
of Section 11.4 (provided that no such amendment shall in any event adversely
affect the rights of any lender who made a loan or who extended credit and
received in connection therewith a Pledge of Units prior to the date such
amendment is adopted unless, and only to the extent such lender consents
thereto, this Section 14.1.C or Section 14.2.
D. Other Amendments Requiring Certain Limited Partner Approval.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended with respect to any Partner adversely affected without
the Consent of such Partner adversely affected if such amendment would (i)
convert a Limited Partner's interest in the Partnership into a general
partner's interest, (ii) modify the limited liability of a Limited Partner,
(iii) amend Section 7.11.A, (iv) amend Article V or Article VI (except as
permitted pursuant to Sections 4.2, 5.1.E, 5.4, 6.2 and 14.1(B)(3)), (v) amend
Section 8.6 or any defined terms set forth in Article I that relate to the
Redemption Right (except as permitted in Section 8.6.E), or (vi) amend this
Section 14.1.D. Moreover, this Agreement may be amended by the General
Partner to provide that certain Limited Partners have the obligation, upon
liquidation of their interests in the Partnership (within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g)), to restore to the Partnership the
amounts of their negative Capital Account balances, if any, for the benefit of
creditors of the Partnership or Partners with positive Capital Account
balances or both, together with any necessary corresponding amendments
(including corresponding amendments to Sections 6.1.A, 6.1.B and Exhibit C),
with the consent of only such Limited Partners and of any other Limited
Partners already subject to such a restoration obligation whose restoration
obligation may be affected by such amendment. This Section 14.1.D does not
require unanimous consent of all Partners adversely affected unless the
amendment is to be effective against all Partners adversely affected.
Section 14.2 MEETINGS OF THE PARTNERS
A. General. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a
written request by Limited Partners holding twenty-five percent (25%) or more
of the Partnership Interests. 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 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 14.1.A.
Except as otherwise expressly provided in this Agreement, the Consent of
holders of a majority of the Percentage Interests held by Limited Partners
(including Limited Partnership Interests held by the General Partner) shall
control.
B. Actions Without a Meeting. Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as a vote of a
majority of the Percentage Interests of the Partners (or such other percentage
as is expressly required by this Agreement). Such consent shall be filed with
the General Partner. An action so taken shall be deemed to have been taken at
a meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or Persons
to act for him by proxy on all matters in which a Limited Partner is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner
or 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. 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 thereof.
D. Conduct of Meeting. 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 deem appropriate.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other
address as the Partners 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",
"Sections" and "Exhibits" are to Articles, Sections and Exhibits of this
Agreement.
Section 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 CREDITORS
Other than as expressly set forth herein with regard to any Indemnitee,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
Section 15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
Section 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto.
Section 15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
Section 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 POWER OF ATTORNEY
A. General. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the Certificate
of Limited Partnership and all amendments or restatements thereof) that the
General Partner or any Liquidator deems appropriate or necessary to form,
qualify or continue the
existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and in all other jurisdictions in which
the Partnership may conduct business or own property, (b) all instruments that
the General Partner or any Liquidator deem 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 any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a
certificate of cancellation, (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to, or other
events described in, Article XI, XII or XIII hereof or the Capital
Contribution of any Partner and (e) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Partnership 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
any Liquidator, to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action which is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or appropriate or
necessary, in the sole discretion of the General Partner or any Liquidator, to
effectuate the terms or intent of this Agreement.
Nothing contained in this Section 15.11 shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement
except in accordance with Article XIV hereof or as may be otherwise expressly
provided for in this Agreement.
B. Irrevocable Nature. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Partners will be relying upon the
power of the General Partner or any Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership,
and it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be
bound by any representation made by the General Partner or any Liquidator,
acting in good faith pursuant to such power of attorney, and each such Limited
Partner or Assignee hereby waives any and all defenses which may be available
to contest, negate or disaffirm the action of the General Partner or any
Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
Liquidator's request therefor, such further designation, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case
may be, deems necessary to effectuate this Agreement and the purposes of the
Partnership.
Section 15.12 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes any prior
written oral understandings or agreements among them with respect thereto.
Section 15.13 NO RIGHTS AS SHAREHOLDERS
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as partners or
shareholders of any of the General Partner, including, without limitation, any
right to receive dividends or other distributions made to shareholders of the
General Partner or partners of the other General Partner or to vote or to
consent or receive notice as (i) shareholders in respect to any meeting of
shareholders for the election of trustees of the General Partner or partners
of the other General Partner or any other matter or (ii) partners in respect
to any meeting of partners of the other General Partner or any other matter.
Section 15.14 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the General Partner or
any of their officers, directors, trustees, employees or agents pursuant to
Section 7.4 or Section 7.7 would constitute gross income to the General
Partner for purposes of Section 856(c)(2) or 856(c)(3) of the Code (a "General
Partner Payment") then, notwithstanding any other provision of this Agreement,
the amount of such General Partner Payment for any fiscal year shall not
exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) 4.20% of the
General Partner's total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described in
subsections (A) though (H) of Section 856(c)(2) of the Code over (b) the
amount of gross income (within the meaning of Section 856(c)(2) of the Code)
derived by the General Partner from sources other than those described in
subsections (A) through (H) of Section 856(c)(2) of the Code (but not
including the amount of any General Partner Payments); or
(ii) an amount equal to the excess, if any of (a) 25% of the
General Partner's total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described in
subsections (A) through (I) of Section 856(c)(3) of the Code over (b) the
amount of gross income (within the meaning of Section 856(c)(3) of the Code)
derived by the General Partner from sources other than those described in
subsections (A) through (I) of Section 856(c)(3) of the Code (but not
including the amount of any General Partner Payments); provided, however, that
General Partner Payments in excess of the amounts set forth in subparagraphs
(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 would not adversely affect the General Partner's ability to qualify as
a REIT. To the extent General Partner Payments may not be made in a year due
to the foregoing limitations, such General Partner Payments shall carry over
and be treated as arising in the following year, provided, however, that such
amounts shall not carry over for more than five years, and if not paid within
such five year period, shall expire, provided further, that (i) as General
Partner Payments are made, such payments shall be applied first to carry over
amounts outstanding, if any, and (ii) with respect to carry over amounts for
more than one Partnership Year, such payments shall be applied to the earliest
Partnership Year first.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
General Partner:
LaSalle Hotel Properties
By: /s/ XXX X. XXXXX
Name: Xxx X. Xxxxx
Title: President
LIMITED PARTNERS:
** By: LaSalle Hotel Properties, as
Attorney-in-Fact for the Limited Partners
By: /s/ XXX X. XXXXX
Name: Xxx X. Xxxxx
Title: President
___**__ LaSalle Plaza Park Limited Partnership
___**__ LaSalle Seaview L.P.
___**__ LaSalle LRP Bloomington Limited Partnership
___**__ LaSalle LRP Dallas Hotel Limited Partnership
___**__ LaSalle LRP New Orleans Hotel Limited
Partnership
___**__ LaSalle LRP Key West Hotel Investors Limited
Partnership
___**__ LaSalle Le Montrose Limited Partnership
___**__ LaSalle Sabal Plaza Limited Partnership
___**__ LaSalle Omaha Hotel Investors Limited
Partnership
___**__ SRP Seaview, L.P.
___**__ RAD Bloom, L.P.
___**__ Dallas Mer Hotel, L.P.
___**__ New Orleans Hospitality, L.P.
___**__ Key West Property, L.P.
___**__ NEB Hotel, L.P.
___**__ Crosstown Asset Corp. I
___**__ Outrigger Lodging Services
___**__ Radisson Group, Inc,
___**__ Beachside Hospitality, Inc.
