Exhibit 99.1
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
COLONIAL REALTY LIMITED PARTNERSHIP
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF COLONIAL REALTY LIMITED PARTNERSHIP ("Agreement"), dated as of
October 19, 1999, is entered into by and among Colonial Properties Trust, an
Alabama real estate investment trust, as the General Partner ("Colonial
Properties" or the "General Partner"), and the Persons whose names are set forth
on Exhibit A as attached hereto who were admitted as limited partners in
accordance with the provisions of the Second Amended and Restated Agreement of
Limited Partnership, dated as of October 27, 1994, and the First Amended and
Restated Agreement of Limited Partnership, dated as of September 29, 1993
(collectively, the "Prior Agreements"), as the Limited Partners, together with
any other Persons who become Partners in the Partnership as provided herein, for
certain limited purposes set forth in this Agreement.
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 continue the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act (6 Del. C. ss. 17-101, et seq.), as amended from time to time
(the "Act"), as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 hereof and who is shown
as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account
maintained for each Partner as of the end of each Partnership 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
1.704-1(b)(2)(ii)(d)(4), l.704-l(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Exhibit B hereof. Once an Adjusted Property
is deemed distributed by, and recontributed to, the Partnership for federal
income tax purposes upon a termination thereof pursuant to Section 708 of the
Code, such property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is further adjusted pursuant to Exhibit B
hereof.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests, or
(iv) any officer, director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), and (iii) above.
"Agreed Value" means (i) in the case of any Contributed
Property set forth in Exhibit D and as of the time of its contribution to the
Partnership, the Agreed Value of such property as set forth in Exhibit D; (ii)
in the case of any Contributed Property not set forth in Exhibit D and as of the
time of its contribution to the Partnership, the 704(c) Value of such property,
reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed, and (iii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the Regulations
thereunder.
"Agreement" means this Third Amended and Restated 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, (i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the
case may be) for such period (without regard to adjustments
resulting from allocations described in Sections 1.A through
1.E of Exhibit C);
(b) Depreciation and all other noncash charges
deducted in determining Net Income or Net Loss for
such period;
(c) the amount of any reduction in the reserves of
the Partnership referred to in clause (ii) (f) below
(including, without limitation, reductions resulting because
the General Partner determines such amounts are no longer
necessary);
(d) the excess of proceeds from the sale, exchange,
disposition, or refinancing of Partnership property for such
period over the gain recognized from such sale, exchange,
disposition, or refinancing during such period (excluding
Terminating Capital Transactions); and
(e) all other cash received by the Partnership for
such period that was not included in determining Net Income or
Net Loss for such period;
(ii) less the sum of:
(a) all principal debt payments made by the
Partnership during such period ;
(b) capital expenditures made by the Partnership
during such period;
(c) investments made by the Partnership during such
period in any entity (including loans made thereto) to the
extent that such investments are not otherwise described in
clause (ii) (a) or (ii)(b);
(d) all other expenditures and payments not
deducted in determining Net Income or Net Loss for such
period;
(e) any amount included in determining Net Income or
Net Loss for such period that was not received by the
Partnership during such period;
(f) the amount of any increase in reserves during
such period which the General Partner determines to be
necessary or appropriate in its sole and absolute discretion;
and
(g) the amount of any working capital accounts and
other cash or similar balances which the General Partner
determines to be necessary or appropriate, in its sole and
absolute discretion.
Notwithstanding the foregoing, Available Cash shall not
include any cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required by law to close.
"Capital Account" means the Capital Account maintained for a
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Partner pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any
cash, cash equivalents or the Agreed Value of Contributed Property which such
Partner contributes or is deemed to contribute to the Partnership pursuant to
Section 4.1, 4.2, or 4.3 hereof.
"Carrying Value" means (i) with respect to a Contributed
Property or Adjusted Property, the 704(c) Value of such property, reduced (but
not below zero) by all Depreciation with respect to such Property charged to the
Partners' Capital Accounts following the contribution of or adjustment with
respect to such Property, and (ii) with respect to any other Partnership
property, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any property shall be
adjusted from time to time in accordance with Exhibit B hereof, and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Cash Amount" means an amount of cash equal to the Value on
the Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed 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" means the Partners who are holders of Class A Units.
"Class A Share" means that portion of Available Cash for a
Distribution Period to be distributed with respect to Class A as determined by
multiplying the amount of Available Cash for such Distribution Period by the
fraction set forth in Section 5.1.B.1 hereof.
"Class A Unit" means any Partnership Unit other than a Class B
Unit, a Preferred Unit, or any other Partnership Unit that is specifically
designated by the General Partner pursuant to Section 4.2 as being another class
of Partnership Units.
"Class B" means the Partners who are holders of Class B Units.
"Class B Share" means that portion of Available Cash for a
Distribution Period to be distributed with respect to Class B as determined by
multiplying the amount of Available Cash for such Distribution Period by the
fraction set forth in Section 5.1.B.2 hereof (as such fraction may be adjusted
in accordance with Section 5.1.B hereof).
"Class B Unit" means a Partnership Unit with such
designations, preferences, rights, powers and duties as are described in or
pursuant to Section 4.2.C.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Common Unit" means a Partnership Unit that is not a Preferred
Unit. The Class A Units and Class B Units, and any other Partnership Units that
may be issued from time to time by the General Partner as set forth in Section
4.2 and designated as Common Units, are Common Units.
"Common Unit Available Cash" has the meaning set forth in
Section 5.1.B.
"Consent" means the consent or approval of a proposed action
by a Partner given in accordance with Section 14.2 hereof.
"Contributed Property" means each property or other asset, in
such form as may be permitted by the Act, but excluding cash, contributed or
deemed contributed to the Partnership (including deemed contributions to the
Partnership on termination and reconstitution thereof pursuant to Section 708 of
the Code). Once the Carrying Value of a Contributed Property is adjusted
pursuant to Exhibit B hereof, such property shall no longer constitute a
Contributed Property for purposes of Exhibit B hereof, but shall be deemed an
Adjusted Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that
the General Partner (i) declares or pays a dividend on its outstanding REIT
Shares in REIT Shares or makes a distribution to all holders of its outstanding
REIT Shares in REIT Shares; (ii) subdivides its outstanding REIT Shares; or
(iii) combines its outstanding REIT Shares into a smaller number of REIT Shares,
the Conversion Factor shall be adjusted by multiplying the Conversion Factor by
a fraction, the numerator of which shall be the number of REIT Shares issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination assuming for such purpose that such dividend, distribution,
subdivision or combination has occurred as of such time, and the denominator of
which shall be the actual number of REIT Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
"Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (ii) all amounts owed by such
Person to banks or other Persons in respect of reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any lien on any property owned by such Person, to the
extent attributable to such Person's interest in such property, even though such
Person has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person which, in accordance with generally accepted
accounting principles, should be capitalized.
"Declaration of Trust" means the Declaration of Trust of the
General Partner filed in the State of Alabama on August 21, 1995, as amended or
restated from time to time.
"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" means any calendar quarter or shorter
period with respect to which a distribution of Available Cash is to be made to
the Partners by the Partnership.
"Effective Date" means the date of closing of the initial
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public offering of shares of the General Partner pursuant to that certain
agreement among the Former General Partner, the Partnership, the General
Partner, and Xxxxxx Brothers Inc., Bear, Xxxxxxx & Co. Inc., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated and The Xxxxxxxx-Xxxxxxxx Company, Inc. as
agents for the underwriters.
"Exercise Percentage" has the meaning set forth in Section
4.4.
"Former General Partner" means Colonial Properties Holding
Company, Inc., an Alabama corporation formed by Colonial Properties as a wholly
owned subsidiary of Colonial Properties to serve as the general partner of the
Partnership. The separate existence of the Former General Partner terminated on
December 31, 1998, when the Former General Partner merged with and into Colonial
Properties, whereupon Colonial Properties became the General Partner.
"General Partner" means Colonial Properties Trust, an Alabama
real estate investment trust, in its capacity as the general partner of the
Partnership, or its successors as general partner of the Partnership, and shall
also be deemed to refer to, where the context so requires, the Former General
Partner, in its capacity as the predecessor to Colonial Properties.
"General Partner Interest" means a Partnership Interest held
by the General Partner that is a general partnership interest. A General Partner
Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person,
such natural Person's spouse and such natural Person's natural or adoptive
parents, descendants, nephews, nieces, brothers, and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him incompetent to manage his Person or his
estate; (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties, (f) any
proceeding seeking liquidation, reorganization or other relief of or against
such Partner under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof, (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within ninety (90) days of such appointment, or (h) an
appointment referred to in clause (g) which has been stayed is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding
by reason of his status as (A) the General Partner, (B) a director or officer of
the Partnership or the General Partner, or (C) a guarantor, pursuant to a loan
guarantee or any other guarantee given to a third party in connection with any
partnership property or loan (other than in connection with the transfer of
properties to the Partnership in connection with the initial public offering of
REIT Shares), including without limitation, environmental indemnities,
reimbursements agreements or guaranties to credit enhancers under bond issues,
undertakings or indemnities to title companies, or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken assets subject to), and (ii) such other
Persons (including Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time (whether before or after the
event giving rise to potential liability), in its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited Partner
in Exhibit A attached hereto, as such Exhibit may be amended from time to time,
or any Substituted Limited Partner or Additional Limited Partner, in such
Person's capacity as a Limited Partner in the Partnership.
"Limited Partner Interest" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Partners and includes any and all benefits to which
the holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement. A Limited Partner Interest may be expressed as
a number of Partnership Units.
"Liquidation Preference Amount" means, with respect to any
Preferred Unit as of any date of determination, the amount (including accrued
and unpaid distributions to the date of determination) payable with respect to
such Preferred Unit (as established by the instrument designating such Preferred
Unit) upon the voluntary or involuntary dissolution or winding up of the
Partnership as a preference over distributions to Partnership Units ranking
junior to such Preferred Unit.
"Liquidator" has the meaning set forth in Section 13.2.
"Management Corporation" means Colonial Properties Services,
Inc.
"Net Income" means, for any taxable period, the excess, if
any, of the Partnership's items of income and gain for such taxable period over
the Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Net Loss" means, for any taxable period, the excess, if any,
of the Partnership's items of loss and deduction for such taxable period over
the Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"Nonrecourse Built-in Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a mortgage or
negative pledge securing a Nonrecourse Liability, the amount of any taxable gain
that would be allocated to the Partners pursuant to Section 2.B of Exhibit C if
such properties were disposed of in a taxable transaction in full satisfaction
of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption
substantially in the form of Exhibit E to this Agreement.
"Original Limited Partner" means a Limited Partner who is a
Partner on the date of this Agreement and who owns one or more Original Limited
Partnership Units on the date action is called for under Section 13.1.
"Original Limited Partnership Unit" means a Partnership Unit
held by an Original Limited Partner on the date of this Agreement and held by
such Original Limited Partner on the date action is called for under Section
18.3.
"Partner" means a 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
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
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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 and continued by this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership representing a Capital Contribution by either a Limited Partner or
the General Partner and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Partnership Interest may be expressed as a
number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in a Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by
the General Partner for the distribution of Available Cash for a Distribution
period 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 of all of its portion of such distribution.
"Partnership Unit" means a fractional undivided share of a
class or series of Partnership Interests. The ownership of Partnership Units
shall be evidenced by such form of certificate as the General Partner may adopt
from time to time on behalf of the Partnership. Without limitation on the
authority of the General Partner as set forth in Section 4.2 hereof (but subject
to the limitations thereof), the General Partner may designate any Partnership
Units, when issued, as Common Units or as Preferred Units, may establish any
other class of Partnership Units, and may designate one or more series of any
class of Partnership Units.
"Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.
"Percentage Interest" means, as to a Partner, with respect to
any class or series of Partnership Units held by such Partner, its interest in
such class or series of Partnership Units as determined by dividing the number
of Partnership Units in such class or series owned by such Partner by the total
number of Partnership Units in such class or series then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time. For purposes of determining the rights and relationships among the
various classes and series of Partnership Units, Preferred Units shall not be
considered to have any share of the aggregate Percentage Interest in the
Partnership unless, and only to the extent, provided otherwise in the instrument
creating such class or series of Preferred Units.
"Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.
"Preferred REIT Share" means a preferred share of beneficial
interest in the General Partner.
"Preferred Unit" means Series A Preferred Units, Series B
Preferred Units and any other Partnership Unit issued from time to time pursuant
to Section 4.2 hereof that is specifically designated by the General Partner at
the time of its issuance as a Preferred Unit. Each class or series of Preferred
Units shall have such designations, preferences, and relative, participating,
optional, or other special rights, powers, and duties, including rights, powers,
and duties senior to the Common Units, all as determined by the General Partner,
subject to compliance with the requirements of Section 4.2 hereof.
"Prior Agreements" mean the Second Amended and Restated
Agreement of Limited Partnership, dated October 27, 1994, which is amended and
restated in its entirety by this Agreement and which amended the First Amended
and Restated Agreement of Limited Partnership, dated as of September 29, 1993.
"Recapture Income" means any gain recognized by the
Partnership upon the disposition of any property or asset of the Partnership,
which gain is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6.A
hereof.
"Redemption Right" shall have the meaning set forth in Section
8.6.A hereof.
"Regulations" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856
of the Code.
"REIT Share" shall mean a common share of beneficial interest
in the General Partner.
"REIT Shares Amount" means a number of REIT Shares equal to
the product of the number of Common Units offered for redemption by a Redeeming
Partner, multiplied by the Conversion Factor; provided that in the event the
General Partner issues to all holders of REIT Shares rights, options, warrants
or convertible or exchangeable securities entitling the shareholders to
subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "rights") and if the Partnership does not issue to all of the
holders of Common Units at such time (other than the General Partner)
corresponding rights to subscribe for or purchase Common Units or other
securities or property corresponding to the securities or property covered by
the rights granted by the General Partner, then the REIT Shares Amount shall
also include such rights that a holder of that number of REIT Shares would be
entitled to receive had it owned such REIT Shares at the time such rights were
issued, provided further that, if the rights issued by the General Partner are
issued pursuant to a shareholder rights plan (or other arrangement having the
same objective and substantially the same effect), then the REIT Shares Amount
shall include such rights only to the extent that (i) the Common Units offered
for redemption were issued other than pursuant to Section 4.4 of this Agreement,
and (ii) such rights have not been exercised by the holders thereof (and have
not otherwise terminated or been redeemed or eliminated).
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"Series A Preferred Unit" has the meaning set forth in Section
4.2.D.
"Series B Preferred Unit" has the meaning set forth in Section
4.2.E.
"704(c) Value" of any Contributed Property means the value of
such property as set forth in Exhibit D or if no value is set forth in Exhibit
D, the fair market value of such property or other consideration at the time of
contribution as determined by the General Partner using such reasonable method
of valuation as it may adopt; provided, however, that the 704(c) Value of any
property deemed contributed to the Partnership for federal income tax purposes
upon termination and reconstitution thereof pursuant to Section 708 of the Code
shall be determined in accordance with Exhibit B hereof. Subject to Exhibit B
hereof, the General Partner shall, in its sole and absolute discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate of the
704(c) Values of Contributed Properties in a single or integrated transaction
among the separate properties on a basis proportional to their respective fair
market values.
"Specified Redemption Date" means the tenth (10th) Business
Day after receipt by the General Partner of a Notice of Redemption; provided
that no Specified Redemption Date shall occur before one (1) year from the date
of this Agreement, provided further that if the General Partner combines its
outstanding REIT Shares, no Specified Redemption Date shall occur after the
record date and prior to the effective date of such combination.
"Subsidiary" means, with respect to any Person, any
corporation, partnership or other entity of which a majority of (i) the voting
power of the voting equity securities or (ii) the outstanding equity interests
is 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.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
fair market value of such property (as determined under Exhibit B hereof) as of
such date, over (ii) the Carrying Value of such property (prior to any
adjustment to be made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B hereof) as of such date, over (ii) the fair market value of such
property (as determined under Exhibit B hereof) as of such date.
"Valuation Date" means the date of receipt by the General
Partner of a Notice of Redemption or, if such date is not a Business Day, the
first Business Day thereafter.
"Value" means, with respect to a REIT Share, the average of
the daily market price for the ten (10) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be: (i) if the REIT Shares are listed or admitted to trading on any securities
exchange or the NASDAQ- National Market System, the closing price, regular way,
on such day, or if not such sale takes place on such day, the average of the
closing bid and asked prices on such day; (ii) if the REIT Shares are not listed
or admitted to trading on any securities exchange or the NASDAQ-National Market
System, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner; or
(iii) if the REIT Shares are not listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System and no such last reported sale
price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than ten (10) days prior to the date
in question) for which prices have been so reported; provided that if there are
no bid and asked prices reported during the ten (10) days prior to the date in
question, the Value of the REIT Shares shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the
event the REIT Shares Amount includes rights that a holder of REIT Shares would
be entitled to receive, then the Value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization and Continuation
The Partnership is a limited partnership organized pursuant to
the provisions of the Act and upon the terms and conditions set forth in the
Prior Agreement. The Partners hereby continue the Partnership and amend and
restate the Prior Agreement in its entirety. Except as expressly provided herein
to the contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the Act.
The Partnership Interest of each Partner shall be personal property for all
purposes.
Section 2.2 Name
The name of the Partnership shall be Colonial Realty Limited
Partnership. The Partnership's business may be conducted under any other name or
names deemed advisable by the General Partner, including the name of the General
Partner or any Affiliate thereof. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the Partnership's name
where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may
change the name of the Partnership at any time and from time to time and shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the
State of Delaware shall be located at 0000 Xxxxxx Xxxx, Xxxxxx xx Xxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, and the registered agent for service of process on
the Partnership in the State of Delaware at such registered office shall be
Corporation Service Company. The principal office of the Partnership shall be
Colonial Plaza, Suite 900, 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 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 States of Delaware and Alabama as
the General Partner deems advisable.
Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee hereby constitutes
and appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all
certificates, documents and other instruments
(including, without limitation, this Agreement and
the Certificate and all amendments or restatements
thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or
continue the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the limited Partners have
limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may
or plans to conduct business or own property; (b) all
instruments that the General Partner deems
appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement
in accordance with its terms; (c) all conveyances and
other instruments or documents that the General
Partner or the Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation
of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments
relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other
events described in, Article 11, 12 or 13 hereof or
the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments
relating to the determination of the rights,
preferences and privileges of Partnership Interests;
and
(2) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates
and other instruments appropriate or necessary, in
the sole and absolute discretion of the General
Partner or any Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by
the Partners hereunder or is consistent with the
terms of this Agreement or appropriate or necessary,
in the sole discretion of the General Partner or any
Liquidator, to effectuate the terms or intent of this
Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
Section 2.5 Term
The term of the Partnership commenced on August 9, 1993, the
date the Certificate was filed in the office of the Secretary of State of
Delaware in accordance with the Act and shall continue until December 31, 2092,
unless, the Partnership is dissolved sooner pursuant to the provisions of
Article l3 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT, unless the General
Partner ceases to qualify as a REIT for reasons other than the conduct of the
business of the Partnership, (ii) to enter into any partnership, joint venture
or other similar arrangement to engage in any of the foregoing or to own
interests in any entity engaged in any of the foregoing, and (iii) to do
anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the General Partner's right, in its sole
discretion, to cease qualifying as a REIT, the Partners acknowledge the General
Partner's current status as a REIT inures to the benefit of all of the Partners
and not solely to the benefit of the General Partner.
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 protecti+on and benefit of the Partnership, provided that the
Partnership shall not take 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 shall have been specifically consented to by the
General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Limited Partners
--------------------------------------------
and the Former General Partner
------------------------------
On the Effective Date, certain of the Limited Partners and the
Former General Partner made the Capital Contributions described in the section
captioned "Formation of the Company" in the final Prospectus dated September 24,
1993 of the General Partner in connection with the initial public offering of
the REIT Shares. To the extent the Partnership acquires any property by the
merger of any other Person into the Partnership, Persons who receive Partnership
Interests in exchange for their interests in the Person merging into the
Partnership shall become Partners and shall be deemed to have made Capital
Contributions as provided in the applicable merger agreement. The Partners shall
own Partnership Units in the amounts set forth for such Partner in Exhibit A and
shall have a Percentage Interest in the Partnership as set forth 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 (pursuant to
any merger or otherwise), or similar events having an effect on a Partner's
Percentage Interest. The Capital Contributions of the Partners shall be at all
times as shown on the books and records of the General Partner. The number of
Partnership Units held by the General Partner equal to one percent (1%) of all
outstanding Partnership Units from time to time shall be deemed to be the
general partner Partner Units and shall be the General Partnership Interest.
Except as provided in Sections 4.2 and 10.5, the Partners shall have no
obligation to make any additional Capital Contributions or loans to the
Partnership.
Section 4.2 Issuances of Additional Partnership Interests
A. The General Partner is hereby authorized to cause the
Partnership from time to time to issue to the Partners (including the General
Partner) or other Persons additional Partnership Units or other Partnership
Interests in one or more classes, or one or more series of any of such classes,
with such designations, preferences and relative, participating, optional or
other special rights, powers and duties, including rights, powers and duties
senior to Limited Partner Interests, all as shall be determined by the General
Partner in its sole and absolute discretion subject to Delaware law, including,
without limitation, (i) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests; (ii) the right of each such class or series of Partnership Interests
to share in Partnership distributions; and (iii) the rights of each such class
or series of Partnership Interests upon dissolution and liquidation of the
Partnership; provided that no such additional Partnership Units or other
Partnership Interests shall be issued to the General Partner unless either
(a)(1) the additional Partnership Interests are issued in connection with an
issuance of additional REIT Shares or Preferred REIT Shares of the General
Partner, which shares have designations, preferences and other rights such that
the economic interests attributable to such shares are substantially similar to
the designations, preferences and other rights of the additional Partnership
Interests issued to the General Partner in accordance with this Section 4.2.A,
and (2) the General Partner shall make a Capital Contribution to the Partnership
in an amount equal to the net proceeds raised in connection with the issuance of
such additional REIT Shares or Preferred REIT Shares of the General Partner, or
(b) the additional Partnership Interests in the applicable class or series are
issued to all Partners in proportion to their respective Percentage Interests in
such class or series.
B. The General Partner shall not issue any additional REIT
Shares or Preferred REIT Shares (other than REIT Shares issued pursuant to
Section 8.6), or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase REIT Shares or
Preferred REIT Shares (collectively "New Securities") other than to all holders
of REIT Shares unless (i) the General Partner shall cause the Partnership to
issue to the 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 similar to those of the New Securities, and (ii) the General
Partner contributes the net proceeds from the issuance of such New Securities
and from the exercise of rights contained in such New Securities to the
Partnership. Without limiting the foregoing, the General Partner is expressly
authorized to issue New Securities for less than fair market value, and the
General Partner is expressly authorized to cause the Partnership to issue to the
General Partner corresponding Partnership Interests, so long as (x) 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 REIT Shares and corresponding Partnership Units pursuant to an
employee stock purchase plan providing for employee purchases of REIT Shares at
a discount from fair market value or employee stock options that have an
exercise price that is less than the fair market value of the REIT Shares,
either at the time of issuance or at the time of exercise), and (y) the General
Partner contributes all proceeds from such issuance and exercise to the
Partnership.
C. Under the authority granted to it by Section 4.2.A, the
General Partner hereby establishes an additional class of Partnership Units
entitled "Class B Units" that is available to be issued in lieu of Class A
Units, at the election of the General Partner, in its sole and absolute
discretion, 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. Except as otherwise provided below and in Section 5.1.B
hereof, each Class B Unit shall have the same designations, rights, preferences,
powers and duties as each Class A Unit:
(1) The amount of Available Cash distributable with
respect to Class B Units shall be determined in
accordance with Section 5.1.B hereof.
(2) 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.B) in which the
Class B Unit was issued, without the requirement for
any action by either the Partnership or the Partner
holding the Class B Unit.
(3) A holder of Class B Units will not have the Redemption
Right under Section 8.6 with respect to its Class B Units.
The Redemption Right for a holder of Class A Units into
which Class B Units have been converted pursuant to clause
(2) above shall be the same as set forth in Section 8.6
except that such Redemption Right shall not be exercisable
for a period of one (1) year following the issuance of such
Class B Units (or such longer or shorter period as may be
set forth in the contribution agreement or amendment to this
Agreement pursuant to which such Class B Units were issued).
(4) A holder of either Class B Units or Class A Units
into which Class B Units have been converted pursuant
to clause (2) above shall be subject to the
restrictions on transfer imposed by Sections 11.3.C
through 11.3.E of this Agreement (in addition to any
other restrictions on transfer as may be set forth in
the contribution agreement or amendment to this
Agreement pursuant to which such Class B Units were
issued).
(5) The General Partner shall cause Class B Units to be
issued by the Partnership only pursuant to an
amendment to this Agreement under the authority
granted to the General Partner by Section 14.1.B.3
hereof, which amendment shall designate that the
newly issued Partnership Units are Class B Units. The
General Partner shall have the right, in its sole and
absolute discretion, subject to Section 4.2.A above,
to determine whether the Partnership should issue
Class A Units, Class B Units (or one or more series
thereof), or another class of Partnership Interests
in connection with a contribution of property, other
assets, or other consideration to the Partnership.
D. Series A Preferred Units. Under the authority granted to it
by Section 4.2.A hereof, the General Partner hereby establishes an additional
class of Partnership Units entitled "Series A Cumulative Redeemable Preferred
Units" (the "Series A Preferred Units"). Series A Preferred Units shall have the
designations, preferences, rights, powers and duties as set forth in Exhibit G
hereto.
E. Series B Preferred Units. Under the authority granted to it
by Section 4.2.A hereof, the General Partner hereby establishes an additional
class of Partnership Units entitled "Series B Cumulative Redeemable Preferred
Units" (the "Series B Preferred Units"). Series B Preferred Units shall have the
designations, preferences, rights, powers and duties as set forth in Exhibit H
hereto.
F. Series 1998 Preferred Units. Under the authority granted to
it by Section 4.2.A hereof, the General Partner hereby establishes an additional
class of Partnership Units entitled "Series 1998 Junior Participating Preferred
Units" (the "Series 1998 Preferred Units"). Series 1998 Preferred Units shall
have the designations, preferences, rights, powers and duties as set forth in
Exhibit I hereto.
Section 4.3 Contribution of Proceeds of Issuance of REIT
Shares
--------------------------------------------
In connection with the issuance of REIT Shares or Preferred
REIT Shares pursuant to Section 4.2, the General Partner shall contribute any
net proceeds raised in connection with such issuance the Partnership; provided
that if the net proceeds actually received by the General Partner are less than
the gross proceeds of such issuance as a result of any underwriter's discount or
other expenses paid or incurred in connection with such issuance, then the
General Partner shall be deemed to have made a Capital Contribution to the
Partnership in the amount equal to the sum of the net proceeds of such issuance
plus the amount of such underwriter's discount and other expenses paid by the
General Partner.
Section 4.4 "Flip-in" Preemptive Rights
If the General Partner acquires any Class A Units using the
proceeds from any exercise of any rights (as defined in the definition of REIT
Shares Amount) issued under a shareholder rights plan (or other arrangement
having the same objective and substantially the same effect), then (a) the
holders of Common Units at such time (other than the General Partner) as a group
shall have the right to acquire, at the same price per Class A Unit paid by the
General Partner, a total number of additional Class A Units equal to the product
of (i) the total number of Common Units held by such holders, multiplied by (ii)
a fraction, the numerator of which is the number of Class A Units issued to the
General Partner as a result of the exercise of such rights and the denominator
of which is the total number of Class A Units held by the General Partner
immediately prior to such issuance (which fraction is referred to as the
"Exercise Percentage"), and (b) each holder of a Class A Unit or Class B Unit at
such time shall have the right to acquire, at the same price per Class A Unit
paid by the General Partner, a number of Class A Units equal to the product of
(iii) the aggregate number of Common Units that such holder holds at such time,
multiplied by (iv) the Exercise Percentage.
Thus, for example, if the General Partner were to acquire
2,000,000 Class A Units at $5 per Unit from the proceeds of the exercise of
outstanding rights issued under a shareholder rights plan at a time when the
General Partner already owned 8,000,000 Class A Units out of a total of
12,000,000 outstanding Common Units (which would represent a 25% increase in the
number of Class A Units held by the General Partner), then the other holders of
Common Units as a group would have the right to purchase a total of 1,000,000
Class A Units at $5 per Class A Unit, and each holder of a Class A Unit or Class
B Unit would be entitled to purchase his proportionate share of such Class A
Units, or .25 Class A Units for each Class A Unit or Class B Unit then held by
such holder.
In the event Partnership Units or Partnership Interests other
than Class A Units (including, without limitation, Series 1998 Preferred Units)
are issued to the General Partner using proceeds of any exercise of rights
issued under a shareholder rights plan (or other arrangement), the holders of
Common Units shall be granted the right to acquire such other Partnership Units
or Partnership Interests at the same price as paid by the General Partner and in
such amounts as would be comparable to their rights had Class A Units been
issued instead. The General Partner shall provide prompt written notice to the
holders of Common Units of its acquisition of Class A Units (or other
Partnership Units or Partnership Interests) using such proceeds and shall
establish in good faith such procedures as it deems appropriate (including,
without limitation, procedures to eliminate the issuance of fractional
Partnership Units if the General Partner deems appropriate) to effectuate the
rights of the holders of Common Units under the preceding provisions of this
Section 4.4. Except to the extent expressly granted by the Partnership pursuant
to this Section 4.4 or 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.
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
A. The General Partner shall distribute at least
quarterly an amount equal to 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 in the following order of priority:
(i) First, to the holders of Preferred Units in such
amount as is required for the Partnership to pay all
distributions with respect to such Preferred Units
due or payable in accordance with the instruments
designating such Preferred Units through the last day
of such quarter or shorter period; such distributions
shall be made to such Partners in such order of
priority and with such preferences as have been
established with respect to such Preferred Units as
of the last day of such calendar quarter or shorter
period; and then
(ii) To the holders of Common Units in proportion to their
respective Percentage Interests in the Common Units
on such Partnership Record Date, subject to the
provisions of Sections 5.1.B and 5.1.C;
provided that in no event may a Partner receive a distribution of
Available Cash with respect to a Partnership Unit if such Partner is
entitled to receive a distribution out of such Available Cash with
respect to a REIT Share for which such Partnership Unit has been
redeemed or exchanged. The General Partner shall take such reasonable
efforts, as determined by it in its sole and absolute discretion and
consistent with its qualification as a REIT, to distribute Available
Cash to the Limited Partners so as to preclude any such distribution or
portion thereof from being treated as part of a sale of property to the
Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; provided that the General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances as a result of any distribution to a Limited Partner
being so treated.
B. 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 pursuant to Section 5.1.A(ii) above after distributions to
all Preferred Units provided for in Section 5.1.A(i) above have been
made ("Common Unit Available Cash") 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 Common
Unit Available Cash (the "Class A Share") determined by
multiplying the amount of Common Unit Available Cash by the
following fraction:
A x Y
------- --------
(A x Y)+(B x X)
2) Class B shall receive that portion of the Common
Unit Available Cash (the "Class B Share") determined by
multiplying the amount of Common Unit 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 REIT Share for which such Class A
Unit has been redeemed or exchanged. The Class B Share 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.
C. In the event that 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 Common Units
for purposes of making the allocation of Common Unit Available Cash for
such Distribution Period among the holders of Common 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 Common
Unit Available Cash determined by multiplying the amount of
Common Unit Available Cash by the following fraction:
B1 x X1
------------------ --------
(A x Y)+(B1 x X1)+(B2 x X2)
2) Series B2 shall receive that portion of the Common
Unit Available Cash determined by multiplying the amount of
Common Unit Available Cash by the following fraction:
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.B.3 remain the same
except that (i) "B1" equals the number of Common Units in
Series B1 outstanding on the Partnership Record Date for such
Distribution Period; (ii) "B2" equals the number of Common
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 Common Units in Series B2 were issued and outstanding.
D. Notwithstanding anything to the contrary contained
herein, in no event shall a Partner receive a distribution of Available
Cash with respect to any Common Unit with respect to any quarter or
shorter period until such time as the Partnership has distributed to
the holders of Preferred Units an amount sufficient to pay all
distributions payable with respect to such Preferred Units through the
last day of such quarter or shorter period, in accordance with the
instruments designating such Preferred Units.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of
any state or local tax law and Section 10.5 hereof with respect to any
allocation, payment or distribution to the 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 and any other
cash received or reductions in reserves made after commencement of the
liquidation of the Partnership shall be distributed to the Partners in
accordance with Section 13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations for Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof); shall
be allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special
----------
of allocations set forth in Section 1 Exhibit C (including Section 1.F
thereof), 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 Section 6.1B(iii)
below exceed Net Income previously allocated to the
General Partner pursuant to this Section 6.1A(i);
(ii) second, to Partners holding
Preferred Units (and if there are Preferred Units
with different priorities in preference in
distribution, then in the order of their preference
in distribution) to the extent that Net Losses
previously allocated to such Partners pursuant to
Section 6.1B(ii) below exceed Net Income previously
allocated to such Partners pursuant to this Section
6.1A(ii);
(iii) third, to Partners holding
Common Units to the extent that Net Losses previously
allocated to such Partners pursuant to Section
6.1.B(i) below exceed Net Income previously allocated
to such Partners pursuant to this Section 6.1A(iii);
(iv) fourth, to Partners holding
Series B Preferred Units until each such Partner has
been allocated Net Income equal to the excess of (x)
the amount of the cumulative Priority Return such
Partner is entitled to the last day of the current
taxable year or to the date of redemption, to the
extent such Series B Preferred Units are redeemed
during such taxable year, over (y) the cumulative Net
Income allocated to such Partners pursuant to this
Section 6.1A(iv) for all prior taxable years; and
(v) fifth, to the Partners in
accordance with their respective Percentage Interests
in Common Units.
B. Net Losses. After giving effect to the special
----------
allocations set forth in Section 1 of Exhibit C
(including Section 1.F thereof), Net Losses shall be
allocated:
(i) first, to the Partners holding
Common Units in accordance with their respective
Percentage Interests in Common Units, until the
Adjusted Capital Account (ignoring for this purpose
any amounts a Partner is obligated to contribute to
the capital of the Partnership or is deemed obligated
to contribute pursuant to Regulations Section
1.704-1(b)(2)(ii)(c)(2)) of each Partner is reduced
to zero;
(ii) second, to Partners holding
Preferred Units in accordance with each such
Partner's respective percentage interests in the
Preferred Units determined under the respective terms
of the Preferred Units (and if there are Preferred
Units with different priorities in preference in
distribution, then in the reverse order of their
preference in distribution), until the Adjusted
Capital Account (modified in the same manner as in
clause (i)) of each such holder is reduced to zero;
and
(iii) third, to the General Partner.
To the extent permitted under Sections 704(b) and 704(c) of
the Code and the Regulations thereunder, solely for purposes of allocating Net
Income or Net Losses in any taxable year (or a portion thereof) to the Partners
holding Series B Preferred Units with respect to such Units pursuant to Section
6.1 hereof, items of Net Income or Net Losses, as the case may be, shall not
include Depreciation with respect to properties that are "ceiling limited" in
respect of holders of Series B Preferred Units. For purposes of the preceding
sentence, Partnership property shall be considered "ceiling limited" in respect
of a holder of Series B Preferred Units if Depreciation attributable to such
Partnership property which would otherwise be allocable to such holder, without
regard to this paragraph, exceeds depreciation determined for federal income tax
purposes attributable to such Partnership property which would otherwise be
allocable to such holder by more than 5%. Notwithstanding the foregoing
sentences in this paragraph, in applying this paragraph, the General Partner
may, in its discretion for administrative ease and convenience, calculate Net
Income or Net Loss in any taxable year (or a portion thereof) allocable to the
Partners holding Series B Preferred Units by excluding Depreciation with respect
to all properties of the Partnership.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this Agreement,
all management powers over the business and affairs the Partnership are and
shall be exclusively vested in the General Partner, and no Limited Partner shall
have any right to participate in or exercise control or management power over
the business and affairs of the Partnership. The General Partner may not be
removed by the Limited Partners with or without cause. In addition to the powers
now or hereafter granted a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to Section 7.3 hereof,
shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership, to exercise all
powers set forth in Section 3.2 hereof and to effectuate the purposes set forth
in Section 3.1 hereof, including, without limitation:
(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation,
making prepayments on loans and borrowing money to
permit the Partnership to make distributions to its
Partners in such amounts as will permit the General
Partner (so long as the General Partner qualifies as
a REIT) to avoid the payment of any federal income
tax (including, for this purpose, any excise tax
pursuant to Section 4981 of the Code) and to make
distributions to the General Partner such that the
General Partner can distribute to its shareholders
amounts 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 deed
to secure debt, mortgage, deed of trust or other lien
or encumbrance on the Partnership's assets) and the
incurring of any obligations it deems necessary for
the conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to
governmental or other agencies having jurisdiction
over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets
of the Partnership (including the exercise or grant
of any conversion, option, privilege, or subscription
right or other right available in connection with any
assets at any time held by the Partnership) or the
merger or other combination of the Partnership with
or into another entity (all of the foregoing subject
to any prior approval only to the extent required by
Section 7.3 hereof);
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on
any terms it sees fit, including, without limitation,
the financing of the conduct of the operations of the
General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to
other Persons (including, without limitation, the
Subsidiaries of the Partnership and/or the General
Partner) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person
in which it has an equity investment, and the making
of capital contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any
real property or improvements owned by the
Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the
General Partner considers useful or necessary to the
conduct of the Partnership's operations or the
implementation of the General Partner's powers under
this Agreement, including contracting with
contractors, developers, consultants, accountants,
legal counsel, other professional advisors and other
agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and
other assets of the Partnership;
(9) the collection and receipt of revenues and income of
the Partnership;
(10) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees
of the Partnership, any division of the Partnership,
or the General Partner (including, without
limitation, employees having titles such as
"president," "vice president," "secretary" and
"treasurer" of the Partnership, any division of the
Partnership, or the General Partner), and agents,
outside attorneys, accountants, consultants and
contractors of the General Partner or the Partnership
or any division of the Partnership, and the
determination of their compensation and other terms
of employment or hiring;
(11) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems
necessary or appropriate;
(12) the formation of, or acquisition of an interest in,
and the contribution of property to, any further
limited or general partnerships, joint ventures or
other relationships that it deems desirable
(including, without limitation, the acquisition of
interests in, and the contributions of property to,
its Subsidiaries and any other Person in which it has
an equity investment from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the
settlement, compromise, submission to arbitration or
any other form of dispute resolution, or abandonment
of, any claim, cause of action, liability, debt or
damages, due or owing to or from the Partnership, the
commencement or defense of suits, legal proceedings,
administrative proceedings, arbitration or other
forms of dispute, resolution, and the representation
of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other
forms of dispute resolution, the incurring of legal
expense, and the indemnification of any Person
against liabilities and contingencies to the extent
permitted by law;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its
Subsidiaries or any other Person (including, without
limitation, the contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value of any
Partnership property distributed in kind using such
reasonable method of valuation as it may adopt;
(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited
power of attorney, any right, including the right to
vote, appurtenant to any asset or investment held by
the Partnership;
(17) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or
in connection with any Subsidiary of the Partnership
or any other Person in which the Partnership has a
direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of any
Person in which the Partnership does not have an
interest pursuant to contractual or other
arrangements with such Person; and
(19) the making, execution and delivery of any and all
deeds, leases, notes, deeds to secure debt,
mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments
or agreements in writing necessary or appropriate in
the judgment of the General Partner for the
accomplishment of any of the powers of the General
Partner enumerated in this Agreement.
B. Each of the Limited Partners agrees that the General
Partner is authorized to execute, deliver and perform the above-mentioned
agreements and transactions on behalf of the Partnership without any further
act, approval or vote of the Partners, notwithstanding any other provision of
this Agreement (except as provided in Section 7.3), the Act or any applicable
law, rule or regulation, to the fullest extent permitted under the Act or other
applicable law. 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. 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 Indemnitees hereunder.
D. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain at any and all times
working capital accounts and other cash or similar balances in such amounts as
the General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
E. In exercising its authority under this Agreement, the
General Partner may, but shall be under no obligation to, take into account the
tax consequences to any Partner of any action taken by it; provided that, if the
General Partner decides to refinance (directly or indirectly) any outstanding
indebtedness of the Partnership, the General Partner shall use reasonable
efforts to structure such refinancing in a manner that minimizes any adverse tax
consequences therefrom to the Limited Partners, and provided further that, in
deciding whether or not to dispose of any property that represents more than one
percent of the Partnership's total assets, the General Partner shall consider in
good faith the income tax consequences of such disposition for both the General
Partners and the Limited Partners. The General Partner and the Partnership shall
not have liability to a Limited Partner under any circumstances as a result of
an income tax liability incurred by such Limited Partner as a result of an
action (or inaction) by the General Partner pursuant to its authority under this
Agreement.
Section 7.2 Certificate of Limited Partnership
The General Partner has previously filed the Certificate with
the Secretary of State of Delaware as required by the Act. The General Partner
shall use all reasonable efforts to cause to be filed such other certificates or
documents as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and any other state, or the District of Columbia, in which the
Partnership may elect to do business or own property. To the extent that such
action is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state or the
District of Columbia in which the Partnership may elect to do business or own
property. Subject to the terms of Section 8.5.A(4) hereof, the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto to any Limited Partner.
Section 7.3 Restrictions on General Partner's Authority
A. The General Partner may not take any action in
contravention of an express prohibition or limitation of this Agreement without
the written Consent of all of the Limited Partners (including Limited Partner
Interests held by the General Partner) (or such lower percentage of the Limited
Partners as may be specifically provided for under a provision of this Agreement
or the Act).
B. Except as provided in Article l3 hereof, the General
Partner may not sell, exchange, transfer or otherwise dispose of all or
substantially all of the Partnership's assets in a single transaction or a
series of related transactions (including by way of merger, consolidation or
other combination with any other Person) without the Consent of holders of
three-fourths (3/4) of the outstanding Common Units held by Limited Partners
(including Common Units held by the General Partner as Limited Partner
Interests).
Section 7.4 Reimbursement of the General Partner
A. Except as provided in this Section 7.4 and elsewhere in
this Agreement (including the provisions of Articles 5 and 6 regarding
distributions, payments, and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
B. The General Partner shall be reimbursed on a monthly basis,
or such other basis as the General Partner may determine in its sole and
absolute discretion, for all expenses that it incurs relating to the ownership
and operation of, or for the benefit of, the Partnership; provided that the
amount of any such reimbursement shall be reduced by any interest earned by the
General Partner with respect to bank accounts or other instruments or accounts
held by it on behalf of the Partnership as permitted in Section 7.5.A. The
Limited Partners acknowledge that, for purposes of this Section 7.4.B, all
expenses of the General Partner are deemed incurred for the benefit of the
Partnership. Such reimbursements shall be in addition to any reimbursement to
the General Partner as a result of indemnification pursuant to Section 7.7
hereof.
C. As set forth in Section 4.3, the General Partner shall be
treated as having made a Capital Contribution in the amount of all expenses that
it incurs relating to any issuance of additional Partnership Interests or REIT
Shares pursuant to Section 4.2 hereof.
D. In the event that the General Partner shall elect to
purchase REIT Shares from its shareholders for the purpose of delivering such
REIT Shares to satisfy an obligation under any dividend reinvestment program
adopted by the General Partner, any employee stock 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 such REIT 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 reimbursed to the General Partner, as the case may be, subject to
the condition that: (i) if such REIT 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 such REIT Shares (provided that a transfer
of REIT Shares for Units pursuant to Section 8.6 would not be considered a sale
for such purposes); and (ii) if such REIT Shares are not retransferred by the
General Partner within 30 days after the purchase thereof, the General Partner
shall cause the Partnership to cancel a number of Class A Units held by the
General Partner equal to the product obtained by multiplying the Conversion
Factor by the number of such REIT Shares.
Section 7.5 Outside Activities of the General Partner
A. 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 a General Partner or Limited Partner
and the management of the business of the Partnership, the ownership of the
stock of the Management Corporation and such activities as are incidental
thereto. The General Partner shall not incur any debts other than that for which
the General Partner may be liable in its capacity as General Partner of the
Partnership and other than a debt incurred by the General Partner pursuant to
Article III of the Declaration of Trust. The assets of the General Partner shall
be limited to Partnership Interests and stock of the Management Corporation. The
General Partner shall not hold any assets other than (i) Partnership Interests
as a General Partner or Limited Partner, (ii) stock of the Management
Corporation, and (iii) other than such bank accounts or similar instruments or
accounts as it deems necessary to carry out its responsibilities contemplated
under this Agreement and its organizational documents. The General Partner and
any Affiliates of the General Partner may acquire Limited Partner Interests and
shall be entitled to exercise all rights of a Limited Partner relating to such
Limited Partner Interests.
B. Except as provided in Section 7.4.D, in the event the
General Partner exercises its rights under Article VI of the Declaration of
Trust to purchase REIT Shares, then the General Partner shall cause the
Partnership to purchase from it that number of Class A Units equal to the
product obtained by multiplying the number of REIT Shares to be purchased by the
General Partner times the Conversion Factor on the same terms and for the same
aggregate price that the General Partner purchased such REIT Shares.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute funds or other
assets to its Subsidiaries, other Persons in which it has an equity investment,
or the Management Corporation and such Persons may borrow funds from the
Partnership, on terms and conditions established in the sole and absolute
discretion of the General Partner. The foregoing authority shall not create any
right or benefit in favor of any Subsidiary or any other Person.
B. Except as provided in Section 7.5.A, the Partnership may
transfer assets to joint ventures, other partnerships, corporations or other
business entities in which it is or thereby becomes a participant upon such
terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion,
believes are advisable.
C. Except as expressly permitted by this Agreement, neither
the General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or
indirectly, except pursuant to transactions that are determined by the General
Partner in good faith to be fair and reasonable and no less favorable to the
Partnership than would be obtained from an unaffiliated third party.
D. The General Partner, in its sole and absolute discretion
and without the approval of the Limited Partners, may propose and adopt on
behalf of the Partnership employee benefit plans, stock option plans, and
similar plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, Subsidiaries of the Partnership or any
Affiliate of any of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership, the General Partner, or any of
the Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, a right of first opportunity
arrangement and other conflict avoidance agreements with various Affiliates of
the Partnership and the General Partner, on such terms as the General Partner,
in its sole and absolute discretion, believes are advisable.
Section 7.7 Indemnification
A. The Partnership shall indemnify each Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorneys fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established 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
guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary
of the Partnership (including without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to) except as set forth in Exhibit F, 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 with respect to the subject
matter of such proceeding. The termination of any proceeding by conviction of an
Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee,
or an entry of an order of probation against an Indemnitee prior to judgment,
creates a rebuttable presumption that such Indemnitee acted in a manner contrary
to that specified in this Section 7.7.A. Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and neither
the General Partner nor any Limited Partner shall have any obligation to
contribute to the capital of the Partnership or otherwise provide funds, to
enable the Partnership to fund its obligations under this Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding may be paid or reimbursed by the Partnership in advance of
the final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity unless otherwise provided in a written
agreement pursuant to which such Indemnities is indemnified.
D. The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of the Indemnitees and such other
Persons as the General Partner shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of Section 7.7; and actions taken or
omitted by the Indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject any of the
Partners to personal liability by reason of the indemnification provisions set
forth in this Agreement.
G. An Indemnitee shall not be denied indemnification in whole
or in part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification, or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.8 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership, any Partners or any Assignees for losses sustained or liabilities
incurred as a result of errors in judgment or of any act or omission if the
General Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership, and its shareholders
collectively, 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. Subject to its obligations and duties as General Partner
set forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by the General Partner in good faith.
D. Any amendment, modification or repeal of this Section 7.8
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 7.8 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture,
or other paper or document believed by it in good faith to be genuine and to
have been signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it, and any act taken or omitted to be taken in reliance upon the opinion of
such Persons as to matters which such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
C. The General Partner shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its duly
authorized officers and 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. 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 to (i) protect the ability of the General
Partner to continue to qualify as a REIT or (ii) avoid the General Partner's
incurring any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner
may determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the property
of the Partnership in its books and records, irrespective of the name in which
legal title to such Partnership assets is held.
Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement,
any Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority, without consent or approval of any
other Partner or Person to encumber, sell or otherwise use in any manner any and
all assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement, including Section 10.5
hereof, or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General
Partner, any of its Affiliates or any officer, director, employee, partner,
agent or trustee of the General Partner, the Partnership or any of their
Affiliates, in their capacity as such) shall take part in the operation,
management or control (within the meaning of the Act) of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. The transaction of any
such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into pursuant to Section
7.6.E hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or a Subsidiary, any Limited Partner (other than
the General Partner) and any officer, director, employee, agent, trustee,
Affiliate or shareholder of any Limited Partner (other than the General Partner)
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities that are in direct competition with the Partnership or
that are enhanced by the activities of the Partnership. Neither the Partnership
nor any Partners shall have any rights by virtue of this Agreement in any
business ventures of any Limited Partner or Assignee. None of the Limited
Partners (other than the 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. Except
to the extent provided by Exhibit C hereof or as permitted by Section 4.2.B, or
otherwise expressly provided in this Agreement, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the
Partnership
A. In addition to other rights provided by this Agreement or
by the Act, and except as limited by Section 8.5.C hereof, each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense (including such copying and administrative charges as the General
Partner may establish from time to time):
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by the General Partner pursuant
to the Securities Exchange Act of 1934;
(2) to obtain a copy of the Partnership's federal, state
and local income tax returns for each Partnership
Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each
Partner;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with
executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information regarding the
amount of cash and a description and statement of any
other property or services contributed by each
Partner and which each Partner has agreed to
contribute in the future, and the date on which each
became a Partner.
B. The Partnership shall notify each Limited Partner
upon request of the then current Conversion Factor.
C. Notwithstanding any other provision of this Section 8.5,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that (i) the General Partner
reasonably believes to be in the nature of trade secrets or other information
the disclosure of which the General Partner in good faith believes is not in the
best interests of the Partnership or could damage the Partnership or its
business or (ii) the Partnership is required by law or by agreements with an
unaffiliated third party to keep confidential.
Section 8.6 Redemption Right
A. Subject to Sections 4.2.C.3 and 8.6.C, on or after the date
one (1) year after the closing of the initial public offering of REIT Shares by
the General Partner, each Limited Partner, other than the General Partner, shall
have the right (the "Redemption Right") to require the Partnership to redeem on
a Specified Redemption Date all or a portion of the Class A Units held by such
Limited Partner at a redemption price equal to and in the form of the Cash
Amount to be paid by the Partnership. The Redemption Right shall be exercised
pursuant to a Notice of Redemption delivered to the Partnership (with a copy to
the General Partner) by the Limited Partner who is exercising the redemption
right (the "Redeeming Partner"). A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Class A Units or, if such
Limited Partner holds less than one thousand (1,000) Class A Units, all of the
Class A Units held by such Limited Partner. 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. 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.
B. Notwithstanding the provisions of Section 8.6.A, the
General Partner may, in its sole and absolute discretion, elect to assume
directly and satisfy a Redemption Right by either paying to the Redeeming
Partner the Cash Amount or issuing to the Redeeming Partner the REIT Shares
Amount, as elected by the General Partner (in its sole and absolute discretion)
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 Class A
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 the
Partnership with respect to the Redeeming Partner's exercise of the Redemption
Right. In the event the General Partner shall exercise its right to satisfy the
Redemption Right in the manner described in the first sentence of this Section
8.6.B, the Partnership shall have no obligation to pay any amount to the
Redeeming Partner with respect to such Redeeming Partner's exercise of the
Redemption Right, and each of the Redeeming Partner, the Partnership, and the
General Partner shall treat the transaction between the General Partner, and the
Redeeming Partner for federal income tax purposes as a sale of the Redeeming
Partner's Class A Units to the General Partner. Each Redeeming Partner agrees to
execute such documents as the General Partner may reasonably require in
connection with the issuance of REIT Shares upon exercise of the Redemption
Right.
C. Notwithstanding the provisions of Section 8.6.A and Section
8.6.B, a Partner shall not be entitled to exercise the Redemption Right pursuant
to Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date by the General Partner pursuant to Section 8.6.B (regardless of
whether or not the General Partner or would in fact exercise its rights under
Section 8.6.B) would be prohibited under the Declaration of Trust. Without
limitation on the preceding sentence, the following restrictions shall apply to
the exercise of a Redemption Right by a Partner: (i) neither a Person who is an
"Excluded Holder" as defined in the Declaration of Trust, nor any Person related
to an "Excluded Holder" by either blood or marriage, nor any Person whose
ownership of REIT Shares would be attributed to an "Excluded Holder" under
Section 318 of the Code, nor any Person who would be considered by reason of the
application of Section 318 of the Code to own REIT Shares actually or
constructively owned by an "Excluded Holder" shall be permitted to exercise the
Redemption Right if (A) after giving effect to such exercise, The Colonial
Company or any direct or indirect Subsidiary of The Colonial Company would be
regarded as a "related party tenant" of the General Partner for purposes of
Section 856(d)(2)(B) of the Code and (B) the total rental income considered
derived by the General Partner from all "related party tenants" could reasonably
be expected to exceed one percent (1%) of the gross income of the General
Partner (as determined for the purposes of Section 856(c)(2) of the Code); and
(ii) neither an "Excluded Holder", nor any Person related to an "Excluded
Holder" by either blood or marriage, nor any Person whose ownership of REIT
Shares would be attributed to an "Excluded Holder" under Section 544(a) of the
Code, nor any Person who would be considered by reason of the application of
Section 544(a) of the Code to own REIT Shares actually or constructively owned
by an "Excluded Holder" shall be permitted to exercise the Redemption Right if,
after giving effect to such exercise (A) any single Person described above would
be considered to own more than 29 percent of the outstanding REIT Shares (as
determined for purposes of Sections 542(a)(2) and 856(a)(6) of the Code); (B)
any two Persons described above would be considered to own more than 34 percent
of the outstanding REIT Shares (as determined for purposes of Sections 542(a)(2)
and 856(a)(6) of the Code); (C) any three Persons described above would be
considered to own more than 39 percent of the outstanding REIT Shares (as
determined for purposes of Sections 542(a)(2) and 856(a)(6) of the Code); or (D)
any four Persons described above would be considered to own more than 44 percent
of the outstanding REIT Shares (as determined for purposes of Sections 542(a)(2)
and 856(a)(6) of the Code).
D. Notwithstanding anything contained in Sections 8.6.A,
8.6.B, or 8.6.C, no Partner shall be entitled to exercise the Redemption Right
pursuant to Section 8.6.A with respect to any Preferred Unit unless (i) such
Preferred Unit has been issued to and is held by a Partner other than the
General Partner, and (ii) the General Partner has expressly granted to such
Partner the right to redeem such Preferred Units pursuant to Section 8.6.A.
E. Preferred Units shall be redeemed, if at all, only in
accordance with such redemption rights or options as are set forth with respect
to such Preferred Units (or class or series thereof) in the instruments
designating such Preferred Units (or class or series thereof).
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the
principal office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 9.3 hereof. Any records maintained by or on behalf of the Partnership
in the regular course of its business may be kept on, or be in the form of,
punch cards, magnetic tape, photographs, micrographics or any other information
storage device, provided that the records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of
the Partnership shall be maintained, for financial and tax reporting purposes,
on an accrual basis in accordance with generally accepted accounting principles,
or such other basis as the General Partner determines to be necessary or
appropriate.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than one
hundred five (105) days after the close of each Partnership Year, the General
Partner shall cause to be mailed to each Limited Partner as of the close of the
Partnership Year, an annual report containing financial statements of the
Partnership, or of the General Partner if such statements are prepared solely on
a consolidated basis with the General Partner, for such Partnership Year,
presented in accordance with generally accepted accounting principles, such
statements to be audited by a nationally recognized firm of independent public
accountants selected by the General Partner.
B. As soon as practicable, but in no event later than one
hundred five (105) days after the close of each calendar quarter (except the
last calendar quarter of each year), the General Partner shall cause to be
mailed to each Limited Partner as of the last day of the calendar quarter, a
report containing unaudited financial statements of the Partnership, or of the
General Partner, if such statements are prepared solely on a consolidated basis
with the General Partner, and such other information as may be required by
applicable law or regulation, or as the General Partner determines to be
appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and
timely filing of all returns of Partnership income, gains, deductions, losses
and other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably required
by Limited Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code; 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 its
sole and absolute discretion that such revocation is in the best interests of
the Partners.
Section 10.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of
the Partnership for federal income tax purposes. Pursuant to Section 6230(e) of
the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification
number, and profit interest of each of the Limited Partners and the Assignees;
provided, however, that such information is provided to the Partnership by the
Limited Partners and the Assignees.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings
for the adjustment of Partnership items required to
be taken into account by a Partner for income tax
purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"),
and in the settlement agreement the tax matters
partner may expressly state that such agreement shall
bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within
the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the
authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8) of the
Code) or a member of a "notice group" (as defined in
Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item
required to be taken into account by a Partner for
tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition
for readjustment with the Tax Court or the filing of
a complaint for refund with the United States Claims
Court or the District Court of the United States for
the district in which the Partnership's principal
place of business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment
with the IRS and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with
respect to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken account 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 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for
its services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any,
incurred by it in organizing the Partnership ratably over a sixty (60) month
period as provided in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Limited Partner any
amount of federal, state, local, or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner. Without limitation, in
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest thereon, has been paid in
full, and any such distributions so received by the General Partner shall be
treated as having been distributed to the defaulting Limited Partner and
immediately paid by the defaulting Limited Partner to the General Partner in
repayment of such loan. Any amounts payable by a Limited Partner hereunder shall
bear interest at the lesser of (A) the base rate on corporate loans at large
United States money center commercial banks, as published from time to time in
the Wall Street Journal, plus four (4) percentage points, or (B) the maximum
lawful rate of interest on such obligation, such interest to accrue from the
date such amount is due (i.e., fifteen (15) days after demand) until such amount
is paid in full. Each Limited Partner shall take such actions as the Partnership
or the General Partner shall request in order to perfect or enforce the security
interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. The term "transfer," when used in this Article 11 with
respect to a Partnership Unit, shall be deemed to refer to a transaction by
which the General Partner purports to assign all or any part of its General
Partner Interest to another Person or by which a Limited Partner purports to
assign all or any part of its Limited Partner Interest to another Person, and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage,
exchange or any other disposition by law or otherwise. The term "transfer" when
used in this Article 11 does not include any redemption of Partnership Units by
a Limited Partner or acquisition of Partnership Units from a Limited Partner by
the General Partner pursuant to Section 8.6.
B. No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void.
Section 11.2 Transfer of General Partner's Partnership
Interest
A. The General Partner may not transfer any of its General
Partner Interest or Limited Partnership Interests or withdraw as General Partner
except as provided in Section 11.2.B or in connection with a transaction
described in Section 11.2.C.
B. The General Partner may transfer Limited Partner Interests
held by it either to the Partnership in accordance with Section 7.5.B hereof or
to a purported holder of REIT Shares in accordance with the provisions of
Section 6.6 of the Declaration of Trust.
C. Except as otherwise provided in Section 11.2.D, the General
Partner shall not engage in any merger, consolidation or other combination with
or into another Person or sale of all or substantially all of its assets, or any
reclassification, or recapitalization or change of outstanding REIT 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") ("Transaction"), unless (i) the Transaction also includes a
merger of the Partnership or sale of substantially all of the assets of the
Partnership which has been approved by the requisite Consent of the Partners
pursuant to Section 7.3 and as a result of which all Limited Partners will
receive for each Common Unit an amount of cash, securities, or other property
equal to the product of the Conversion Factor and the greatest amount of cash,
securities or other property paid to a holder of one REIT Share in consideration
of one REIT Share at any time during the period from and after the date on which
the Transaction is consummated, provided that if, in connection with the
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 REIT
Shares, each holder of Common Units shall receive the greatest amount of cash,
securities, or other property which such holder would have received had it
exercised the Redemption Right and received REIT Shares in exchange for its
Common Units immediately prior to the expiration of such purchase, tender or
exchange offer and had thereupon accepted such purchase, tender or exchange
offer; and (ii) no more than forty-nine percent (49%) of the equity securities
of the acquiring Person in such transaction shall be owned, after consummation
of such Transaction, by the General Partner or Persons who are Affiliates of the
Partnership or the General Partner immediately prior to the date on which the
Transaction is consummated.
D. Notwithstanding Section 11.2.C, the General Partner may
merge with another entity if immediately after such merger substantially all of
the assets of the surviving entity, other than Partnership Units held by the
General Partner (whether such Partnership Units constitute the General Partner
Interest or a Limited Partner Interest), are contributed to the Partnership as a
Capital Contribution in exchange for Partnership Units with a fair market value,
as reasonably determined by the General Partner, equal to the 704(c) Value of
the assets so contributed.
Section 11.3 Limited Partners' Rights to Transfer
A. Subject to the provisions of Sections 11.3.C, 11.3.D,
11.3.E, and 11.4, a Limited 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 economic rights as a Limited Partner.
B. If a Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator or receiver
of such Limited Partner's estate shall have all the rights of a Limited Partner,
but not more rights than those enjoyed by other Limited Partners, for the
purpose of settling or managing the estate and such power as the Incapacitated
Limited Partner possessed to transfer all or any part of his or its interest in
the Partnership. The Incapacity of a Limited Partner, in and of itself, shall
not dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer by a Limited
Partner of its Partnership Units if, in the opinion of legal counsel to the
Partnership, such transfer would require filing of a registration statement
under the Securities Act of 1933 or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Unit.
D. No transfer by a Limited Partner of its Partnership Units
may be made to any Person if (i) in the opinion of legal counsel for the
Partnership, it would result in the Partnership being treated as an association
taxable as a corporation, or (ii) such transfer is effectuated through an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code.
E. No transfer of any Partnership Units may be made to a
lender to the Partnership or any Person who is related (within the meaning of
Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose
loan constitutes a Nonrecourse Liability, without the consent of the General
Partner, in its sole and absolute discretion, provided that as a condition to
such consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Cash Amount or
REIT Shares Amount, at the election of the Partnership, 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. The General Partner's failure or refusal to permit a
transferee of any such interests to become a Substituted Limited Partner shall
not give rise to any cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
C. Upon the admission of a Substituted Limited Partner, the
General Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion,
does not consent to the admission of any permitted transferee 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 deemed to have had assigned to it, and shall be entitled to receive
distributions from the Partnership and the share of Net Income, Net Losses,
Recapture Income, and any other items, gain, loss deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee,
but shall not be deemed to be a holder of Partnership Units for any other
purpose under this Agreement, and shall not be entitled to vote such Partnership
Units in any matter presented to the Limited Partners for a vote (such
Partnership Units being deemed to have been voted on such matter in the same
proportion as all other Partnership Units of the same class or series held by
Limited Partners are voted, to the extent such Partnership Units are entitled to
vote on such matter). In the event any such transferee desires to make a further
assignment of any such Partnership Units, such transferee shall be subject to
all the provisions of this Article 11 to the same extent and in the same manner
as any Limited Partner desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11 or pursuant to redemption
of all of its Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of its
Partnership Units in a transfer permitted pursuant to this Article 11 shall
cease to be a Limited Partner upon the admission of all Assignees of such
Partnership Units as Substitute Limited Partners. Similarly, any Limited Partner
who shall transfer all of its Partnership Units pursuant to a redemption of all
of its Partnership Units under Section 8.6 of this Agreement, Section 4 of
Exhibit I and Section 4 of Exhibit J shall cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on
the first day of a month, unless the General Partner otherwise agrees; provided,
however, that a transfer of Partnership Units pursuant to exercise of rights by
a secured party in connection with a pledge of such Partnership Units may occur
at any time.
D. If any Partnership Interest is transferred or assigned
during any quarterly segment of the Partnership's fiscal year in compliance with
the provisions of this Article 11 or redeemed or transferred pursuant to Section
8.6 of this Agreement, Section 4 of Exhibit G or Section 4 of Exhibit H, or any
day other than the first day of a Partnership Year, then Net Income, Net Losses,
each item thereof and all other items attributable to such interest for such
Partnership Year shall be divided and allocated between the transferor Partner
and the transferee Partner by taking into account their varying interests during
the Partnerships year in accordance with Section 706(d) of the Code, using the
interim closing of the books method. Solely for purposes of making such
allocations, each of such items for the calendar month in which the transfer or
assignment occurs shall be allocated to the transferee Partner, and none of such
items for the calendar month in which a redemption occurs shall be allocated to
the Redeeming Partner. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date or the Series
B Preferred Unit Partnership Record Date, as the case may be, 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.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner Interest pursuant to
Section 11.2 hereof who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as the General Partner, effective
upon such transfer. Any such transferee shall carry on the business of the
Partnership without dissolution. In each case, the admission shall be subject to
the successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership year
shall be allocated between the transferring General Partner and such successor
as provided in Section 11.6.D hereof.
Section 12.2 Admission of Additional Limited Partners
A. A Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner in order to effect such Person's admission as an Additional
Limited Partner.
B. Notwithstanding anything to the contrary in this Section
12.2, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any Person as
an Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items allocable among
Partners and Assignees for such Partnership Year shall be allocated among such
Additional Limited Partner and all other Partners and Assignees by taking into
account their varying interests during the Partnership Year in accordance with
Section 706(d) of the Code, using the interim closing of the books method.
Solely for purposes of making such allocations, each of such item for the
calendar month in which an admission of any Additional Limited Partner occurs
shall be allocated among all 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 of the
Partners and Assignees including such Additional Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership
For the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the Act to
amend the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5
hereof;
B. an event of withdrawal of the General Partner, as defined
in the Act (other than an event of bankruptcy), unless, within ninety (90) days
after such event of withdrawal all the remaining Partners agree in writing to
continue the business of the Partnership and to the appointment, effective as of
the date of withdrawal, of a successor General Partner;
C. from and after the Effective Date through December 31,
2013, an election to dissolve the Partnership made by the General Partner,
unless any Original Limited Partner who holds one or more Original Limited
Partnership Units objects in writing to such dissolution within thirty (30) days
of receiving written notice of such election from the General Partner;
D. from and after January 1, 2014 through December 31, 2043,
an election to dissolve the Partnership made by the General Partner, unless
Original Limited Partners holding at least five percent (5%) of the Original
Limited Partnership Units object in writing to such dissolution within thirty
(30) days of receiving written notice of such election from the General Partner;
E. on or after January 1, 2043 an election to dissolve
the Partnership made by the General Partner, in its
sole and absolute discretion;
F. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
G. the sale of all or substantially all of the assets
and properties of the Partnership; or
H. a final and non-appealable judgment is entered by a court
of competent jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a court
with appropriate jurisdiction against the General Partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute General Partner.
Section 13.2 Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Partnership's business
and affairs. The General Partner, or, in the event there is no remaining General
Partner, any Person elected by a majority in interest of the Limited Partners
(the General Partner or such other Person being referred to herein as the
"Liquidator"), shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and distributed
in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General
Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other
Partners; and
(4) The balance, if any, to the General Partner and
Limited Partners in accordance with their Capital
Accounts, after giving effect to all contributions,
distributions, adjustments, and allocations for all
periods, and subject to the rights of the holders of
Preferred Units to receive a liquidation preference,
with an appropriate adjustment to the Capital
Accounts of such holders entitled to receive a
liquidation preference to reflect the payment of any
such liquidation preference.
Prior to the foregoing distributions, the General Partner shall have made
adjustments to Capital Accounts of the Partners to reflect the fair market value
of the Partnership assets as of the date of the Partnership's liquidation in a
manner consistent with Regulations Section 1.704-1(b)(2)(iv)(f).
The General Partner shall not receive any additional
compensation for any services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof
which require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and
Limited Partners pursuant to this Article l3 may be:
(1) distributed to a trust established for the benefit of
the General Partner and Limited Partners for the
purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General
Partner arising out of or in connection with the
Partnership. The assets of any such trust shall be
distributed to the General Partner and Limited
Partners from time to time, in the reasonable
discretion of Liquidator, in the same proportions as
the amount distributed to such trust by the
Partnership would otherwise have been distributed to
the General Partner and Limited Partners Pursuant to
this Agreement; or
(2) withheld or escrowed to provide a reasonable reserve
for Partnership liabilities (contingent or otherwise)
and to reflect the unrealized portion of any
installment obligations owed to the Partnership,
provided that such withheld or escrowed amounts shall
be distributed to the General Partner and Limited
Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.
Section 13.3 Compliance with Timing Requirements of
Regulations
In the event the Partnership is "liquidated" within the
meaning of Regulations Section 1.704-l(b)(2)(ii)(g), distributions shall be made
pursuant to this Article 13 to the General Partner and Limited Partners who have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in his Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such liquidation occurs),
such Partner shall have no obligation to make any contribution to the capital of
the Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever.
Section 13.4. Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the
event the Partnership is considered liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts pursuant to Exhibit B hereto, the Partnership shall
be deemed to have distributed the property in kind to the General Partner and
Limited Partners, who shall be deemed to have assumed and taken such property
subject to all Partnership liabilities, all in accordance with their respective
Capital Accounts. Immediately thereafter, the General Partner and Limited
Partners shall be deemed to have recontributed the Partnership property in kind
to the Partnership, which shall be deemed to have assumed and taken such
property subject to all such liabilities.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited
Partner shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise provided in
this Agreement, no Limited Partner shall have priority over any other Partner as
to the return of its Capital Contributions, distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs
that would, but 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.
Section 13.7 Termination of Partnership and Cancellation
of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2 hereof, the Partnership shall be
terminated, a certificate of cancellation shall be filed, and all qualifications
of the Partnership as a foreign limited partnership in jurisdictions other than
the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up
of the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the
Partnership property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. Amendments to this Agreement may be proposed by the General
Partner or by any Limited Partners holding twenty percent (20%) or more of the
outstanding Common Units. Following such proposal, the General Partner shall
submit any proposed amendment to the Limited Partners. The General Partner shall
seek the written vote of the Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than fifteen
(15) days, and failure to respond in such time period shall constitute a vote
which is consistent with the General Partner's recommendation with respect to
the proposal. Except as provided in Section 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 outstanding Common Units (including Common Units held
by the General Partner).
B. Notwithstanding Section 14.1.A, the General Partner shall
have the power, without the consent of the Limited Partners, to amend this
Agreement as may be required to facilitate or implement any of the following
purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General
Partner or any Affiliate of the General Partner for
the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this
Agreement;
(3) to set forth the designations, rights, powers,
duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to
Section 4.2.A hereof;
(4) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited
Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in
this Agreement not inconsistent with law or with
other provisions, or make other changes with respect
to matters arising under this Agreement that will not
be inconsistent with law or with the provisions of
this Agreement; and
(5) to satisfy any requirements, conditions, or
guidelines contained in any order, directive,
opinion, ruling or regulation of a federal or state
agency or contained in federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1.B is taken.
C. Notwithstanding Section 14.1.A and 14.1.B hereof, this
Agreement shall not be amended without the Consent of each Partner adversely
affected if such amendment would (i) convert a Limited Partner's interest in the
Partnership into a general partner interest, (ii) modify the limited liability
of a Limited Partner in a manner adverse to such Limited Partner, (iii) alter
rights of the Partner to receive distributions pursuant to Article 5, or the
allocations specified in Article 6 (except as permitted pursuant to Section 4.2
and Section 14.1.B(3) hereof), (iv) alter or modify the Redemption Right and
REIT Shares Amount as set forth in Sections 8.6 and 11.2.B, and the related
definitions, in a manner adverse to such Partner, (v) cause the termination of
the Partnership prior to the time set forth in Sections 2.5 or 13.1, or (vi)
amend this Section 14.1.C. Further, no amendment may alter the restrictions on
the General Partner's authority set forth in Section 7.3 without the Consent
specified in that section.
D. Notwithstanding Section 14.1.A or Section 14.1.B hereof,
the General Partner shall not amend Sections 4.2.A, 7.5, 7.6, 11.2 or 14.2
without the Consent of a majority of the Percentage Interests in Common Units
held by the Limited Partners, excluding Limited Partner Interests held by the
General Partner in Common Units.
Section 14.2 Meetings of the Partners
A. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding twenty percent (20%) or more of the
outstanding Common Units. 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 the Partners is permitted or required under this Agreement,
such vote or Consent may be given at a meeting of the Partners or may be given
in accordance with the procedure prescribed in Section 14.1.A hereof. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests in Common Units held by Limited Partners
(including Limited Partnership Interests held by the General Partner) shall
control.
B. Any action required or permitted to be taken at a meeting
of the Partners may be taken without a meeting if a written consent setting
forth the action so taken is signed by a majority of the Percentage Interests of
the Partners (or such other percentage as is expressly required by this
Agreement). Such consent may be in one instrument or in several instruments, and
shall have the same force and effect as a vote of a majority of the Percentage
Interests of the Partners (or such other percentage as is expressly required by
this Agreement). Such consent shall be filed with the General Partner. An action
so taken shall be deemed to have been taken at a meeting held on the effective
date so certified.
C. Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it, such
revocation to be effective upon the Partnership's receipt of or written notice
such revocation from the Limited Partner executing such proxy.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate. Without limitation, meetings of Partners may be conducted in
the same manner as meetings of the shareholders of the General Partner and may
be held at the same time, and as part of, meetings of the shareholders of the
General Partner.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to
be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class United States mail or by other means of written communication to
the Partner or Assignee at the address set forth in Exhibit A or such other
address of which the Partner shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents,
provide all information and take or refrain from taking action as may be
necessary or appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.
Section 15.6 Creditors
Other than as expressly set forth herein with respect to the
Indemnitees, 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 Entire Agreement
This Agreement contains the entire understanding and agreement
among the Partners with respect to the subject matter hereof and supersedes the
Prior Agreement and any other prior written or oral understandings or agreements
among them with respect thereto.
Section 15.12 HUD Limitations
As long as the Secretary of Housing and Urban Development, or
his successors or assigns ("HUD"), is the insurer or holder of the mortgage
loans (the "HUD Mortgages") relating to the real property consisting of the two
apartment projects known as Pointe West Apartments and Ashford Place Apartments
located at 0000 Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxx and 0000 Xxxxxx Xxxx, Xxxxxx,
Xxxxxxx, respectively (the "Xxxxxxxx Properties"), that are encumbered by the
two Regulatory Agreements for Multi-Family Housing Projects that are recorded in
Book 2179, Page 760 and Book 2617, Page 207 in the Probate Office of Mobile
County, Alabama (the "Regulatory Agreements"), no amendment to the Partnership
Agreement which results in any of the following shall be of force and effect,
without the prior written consent of HUD: (i) any amendment which modifies the
duration of the Partnership Agreement; (ii) any amendment which results in the
requirement that a Form 92530 HUD Prior Participation Certificate be obtained
for any additional party; and (iii) any amendment which in any way impacts or
affects the HUD Mortgages or the
Regulatory Agreements. In addition, as long as HUD is the insurer or holder of
the HUD Mortgages relating to the Xxxxxxxx Properties, upon any dissolution of
the Partnership, no title or right to possession and control of the Xxxxxxxx
Properties, and no right to collect the rents therefrom, shall pass to any
person who is not bound by the terms of the HUD Mortgages or the Regulatory
Agreements in a manner satisfactory to HUD.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GENERAL PARTNER:
Colonial Properties Trust, an Alabama real estate investment
trust
/s/ Xxxxxx X. Xxxxxx, Xx.
---------------------
By: Xxxxxx X. Xxxxxx, Xx.
Title: Chief Financial Officer and Secretary
LIMITED PARTNERS:
By: Colonial Properties Trust
as Attorney-in-Fact for the
Limited Partners
/s/ Xxxxxx X. Xxxxxx, Xx.
---------------------
By: Xxxxxx X. Xxxxxx, Xx.
Title: Chief Financial Officer and Secretary
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINED TERMS.................................................. 1
ARTICLE 2 - ORGANIZATIONAL MATTERS......................................... 11
Section 2.1 Organization and Continuation......................... 11
Section 2.2 Name.................................................. 11
Section 2.3 Registered Office..................................... 11
Section 2.4 Power of Attorney..................................... 11
Section 2.5 Term.................................................. 12
ARTICLE 3 - PURPOSE
Section 3.1 Purpose and Business.................................. 13
Section 3.2 Powers................................................ 13
ARTICLE 4 - CAPITAL CONTRIBUTIONS.......................................... 13
Section 4.1 Capital Contributions of the Partners................. 13
Section 4.2 Issuances of Additional Partnership Interests......... 14
Section 4.3 Contribution of Proceeds of Issuance of REIT Shares... 16
Section 4.4 "Flip-in" Preemptive Rights........................... 16
ARTICLE 5 - DISTRIBUTIONS.................................................. 17
Section 5.1 Requirement and Characterization of Distributions..... 17
Section 5.2 Amounts Withheld...................................... 19
Section 5.3 Distributions Upon Liquidation........................ 19
ARTICLE 6 - ALLOCATIONS .................................................. 19
Section 6.1 Allocations for Capital Account Purposes.............. 19
ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS.......................... 21
Section 7.1 Management............................................ 21
Section 7.2 Certificate of Limited Partnership.................... 24
Section 7.3 Restrictions on General Partner's Authority........... 24
Section 7.4 Reimbursement of the General Partner.................. 24
Section 7.5 Outside Activities of the General Partner............. 25
Section 7.6 Contracts with Affiliates............................. 26
Section 7.7 Indemnification....................................... 26
Section 7.8 Liability of the General Partner...................... 28
Section 7.9 Other Matters Concerning the General Partner.......... 28
Section 7.10 Title to Partnership Assets........................... 29
Section 7.11 Reliance by Third Parties............................. 29
ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS..................... 29
Section 8.1 Limitation of Liability............................... 29
Section 8.2 Management of Business................................ 29
Section 8.3 Outside Activities of Limited Partners................ 30
Section 8.4 Return of Capital..................................... 30
Section 8.5 Rights of Limited Partners Relating to the Partnership 30
Section 8.6 Redemption Right...................................... 31
ARTICLE 9 - BOOKS, RECORDS, ACCOUNTING AND REPORTS......................... 32
Section 9.1 Records and Accounting................................ 32
Section 9.2 Fiscal Year........................................... 33
Section 9.3 Reports............................................... 33
ARTICLE 10 - TAX MATTERS .................................................. 33
Section 10.1 Preparation of Tax Returns............................ 33
Section 10.2 Tax Elections......................................... 33
Section 10.3 Tax Matters Partner................................... 34
Section 10.4 Organizational Expenses............................... 35
Section 10.5 Withholding........................................... 35
ARTICLE 11 - TRANSFERS AND WITHDRAWALS..................................... 36
Section 11.1 Transfer.............................................. 36
Section 11.2 Transfer of General Partner's Partnership Interest.... 36
Section 11.3 Limited Partners' Rights to Transfer.................. 37
Section 11.4 Substituted Limited Partners.......................... 37
Section 11.5 Assignees............................................. 38
Section 11.6 General Provisions.................................... 38
ARTICLE 12 - ADMISSION OF PARTNERS......................................... 39
Section 12.1 Admission of Successor General Partner................ 39
Section 12.2 Admission of Additional Limited Partners.............. 39
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership........................................... 39
ARTICLE 13 - DISSOLUTION, LIQUIDATION AND TERMINATION...................... 40
Section 13.1 Dissolution........................................... 40
Section 13.2 Winding-Up............................................ 40
Section 13.3 Compliance with Timing Requirements of Regulations.... 42
Section 13.4 Deemed Distribution and Recontribution................ 42
Section 13.5 Rights of Limited Partners............................ 42
Section 13.6 Notice of Dissolution................................. 42
Section 13.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership.................... 43
Section 13.8 Reasonable Time for Winding-Up........................ 43
Section 13.9 Waiver of Partition................................... 43
ARTICLE 14 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS.................. 43
Section 14.1 Amendments............................................ 43
Section 14.2 Meetings of the Partners.............................. 44
ARTICLE 15 - GENERAL PROVISIONS............................................ 45
Section 15.1 Addresses and Notice.................................. 45
Section 15.2 Titles and Captions................................... 45
Section 15.3 Pronouns and Plurals.................................. 45
Section 15.4 Further Action........................................ 45
Section 15.5 Binding Effect........................................ 45
Section 15.6 Creditors............................................. 46
Section 15.7 Waiver................................................ 46
Section 15.8 Counterparts.......................................... 46
Section 15.9 Applicable Law........................................ 46
Section 15.10 Invalidity of Provisions.............................. 46
Section 15.11 Entire Agreement...................................... 46
Section 15.12 HUD Limitations....................................... 46
Exhibit A - List of Partners
Exhibit B - Capital Account Maintenance
Exhibit C - Special Allocation Rules
Exhibit D - Value of Contributed Property
Exhibit E - Notice of Redemption of Class A Units
Exhibit F - Guaranteed Debt Not Subject to Indemnity
Exhibit G - Designation of the Preferences, Rights, Voting Powers,
Restrictions, Qualifications and Limitations of the Series
A Preferred Units
Exhibit H - Designation of the Preferences, Rights, Voting Powers,
Restrictions, Qualifications and Limitations of the Series
B Preferred Units
Exhibit I - Designations, Preferences and Other Rights, Powers and Duties
of Series 1998 Preferred Units
