Exhibit 10.1
FORM OF
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXXXX PROPERTIES, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
of ___________, 2003, is entered into by and among Xxxxxxx Properties, Inc., a
Maryland corporation (the "Company"), as the General Partner and the Persons
whose names are set forth on Exhibit A attached hereto, as the Limited Partners,
together with any other Persons who become Partners in the Partnership as
provided herein.
WHEREAS, the limited partnership was formed on June 26, 2002 and an
original agreement of limited partnership was entered into between the Company,
as general partner, and Xxxxxx X. Xxxxxxx III, as limited partner;
WHEREAS, the Company proposes to effect a public offering of its
common stock and to contribute the net proceeds from the public offering to the
Partnership, to cause the Partnership to acquire direct and indirect interests
in certain office properties and other assets, and to cause the Partnership to
enter into certain financing transactions;
WHEREAS, the Partnership will issue Partnership Interests to the
Company and other persons in connection with the foregoing transactions;
WHEREAS, upon the completion of the foregoing transactions, the
Partnership shall return the original capital contributions made by the Company
and Xx. Xxxxxxx, and any ongoing interest in the Partnership of the Company and
Xx. Xxxxxxx shall be based on their respective contributions as contemplated
below;
WHEREAS, by virtue of their respective execution of this Agreement
the Company and Xx. Xxxxxxx hereby consent to the amendment and restatement of
the original agreement of limited partnership;
NOW, THEREFORE, BE IT RESOLVED, that for good and adequate
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1.
DEFINED TERMS
Section 1.1 Definitions.
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 Maryland Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Funds" shall have the meaning set forth in Section
4.3.A.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 and who is shown as
such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) decrease such deficit by any amounts which such Partner is
obligated to restore pursuant to this Agreement or is deemed
to be obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of
Regulations Sections 1.704-2(i)(5) and 1.704-2(g); and
(ii) increase such deficit by the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjustment Date" means, with respect to any Capital Contribution,
the close of business on the Business Day last preceding the date of the Capital
Contribution, provided, that if such Capital Contribution is being made by the
General Partner in respect of the proceeds from the issuance of REIT Shares (or
the issuance of the General Partner's securities exercisable for, convertible
into or exchangeable for REIT Shares), then the Adjustment Date shall be as of
the close of business on the Business Day last preceding the date of the
issuance of such securities.
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under common control with such
Person. Control of any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit A and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit A; (ii) in the case of
any Contributed Property not set forth in Exhibit A and as of the time of its
contribution to the Partnership, the fair market value of such property or other
consideration as determined by the General Partner, 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 fair market value of such
property as determined by the General Partner at the time such property is
distributed, reduced by any liabilities either assumed by such Partner upon such
distribution or to which such property is subject at the time of the
distribution as determined under Section 752 of the Code and the Regulations
thereunder.
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"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended, modified, supplemented or restated from time
to time.
"Appraisal" means with respect to any assets, the opinion of an
independent third party experienced in the valuation of similar assets, selected
by the General Partner in good faith; such opinion may be in the form of an
opinion by such independent third party that the value for such property or
asset as set by the General Partner is fair, from a financial point of view, to
the Partnership.
"Assignee" means a Person to whom one or more Partnership 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,
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 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 the net proceeds from the sale, exchange,
disposition, or refinancing of Partnership property for such period
over the gain (or loss, as the case may be) recognized from any such
sale, exchange, disposition, or refinancing during such period
(excluding 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), 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 during such period by the
Partnership,
b. capital expenditures made by the Partnership during such
period,
c. investments in any entity (including loans made thereto) to
the extent that such investments are not otherwise described in
clauses (ii)(a) or (b),
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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 established during
such period which the General Partner determines are 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.
"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 be closed.
"Capital Account" means, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:
(a) To each Partner's Capital Account there shall be added such
Partner's Capital Contributions, such Partner's share of Net Income and any
items in the nature of income or gain which are specially allocated pursuant to
Section 6.3, and the amount of any Partnership liabilities assumed by such
Partner or which are secured by any property distributed to such Partner.
(b) From each Partner's Capital Account there shall be subtracted
the amount of cash and the Gross Asset Value of any property distributed to such
Partner pursuant to any provision of this Agreement, such Partner's distributive
share of Net Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 6.3, and the amount of any liabilities
of such Partner assumed by the Partnership or which are secured by any property
contributed by such Partner to the Partnership (except to the extent already
reflected in the amount of such Partner's Capital Contribution).
(c) In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement (which does not result in a
termination of the Partnership for federal income tax purposes), the transferee
shall succeed to the Capital Account of the transferor to the extent it relates
to the transferred interest.
(d) In determining the amount of any liability for purposes of
subsections (a) and (b) hereof, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
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(e) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such modification, provided that
it is not likely to have a material effect on the amounts distributable to any
Person pursuant to Article 13 of this Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.
"Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Partnership by such Partner (net of any liabilities
assumed by the Partnership relating to such property and any liability to which
such property is subject).
"Cash Amount" means, with respect to any Partnership Units subject
to a Redemption, an amount of cash equal to the Deemed Partnership Interest
Value attributable to such Partnership Units.
"Certificate" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Maryland State Department of
Assessments and Taxation on June 26, 2002, as amended from time to time in
accordance with the terms and the Act.
"Charter" means the Articles of Incorporation of the General Partner
filed with the Maryland State Department of Assessments and Taxation on June 26,
2002, as amended or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time or any successor statute thereto. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Consent" means the consent to, approval of, or vote on a proposed
action by a Partner given in accordance with Article 14.
"Consent of the Limited Partners" means the Consent of a Majority in
Interest of the Limited Partners, which Consent shall be obtained prior to the
taking of any action for which it is required by this Agreement and may be given
or withheld by a Majority in Interest of the Limited Partners, unless otherwise
expressly provided herein, in their sole and absolute discretion.
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"Consent of the Partners" means the Consent of Partners holding
Percentage Interests that in the aggregate are equal to or greater than fifty
percent (50%) of the aggregate Percentage Interests of all Partners, which
consent shall be obtained prior to the taking of any action for which it is
required by this Agreement and may be given or withhold by such Partners, in
their sole and absolute discretion.
"Constructively Own" means ownership under the constructive
ownership rules described in Exhibit C.
"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 (or, to the extent provided in applicable
Regulations, deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code).
"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, guarantees 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.
"Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interests of such class multiplied by the applicable Partner's
Percentage Interest of such class.
"Deemed Value of the Partnership Interests" means, as of any date
with respect to any class or series of Partnership Interests, (i) the total
number of Partnership Units of the General Partner in such class or series of
Partnership Interests (as provided for in Sections 4.1 and 4.3.B) issued and
outstanding as of the close of business on such date multiplied by the Fair
Market Value determined as of such date of a share of capital stock of the
General Partner which corresponds to such class or series of Partnership
Interests, as adjusted (x) pursuant to Section 7.5 (in the event the General
Partner acquires material assets, other than on behalf of the Partnership) and
(y) for stock dividends and distributions, stock splits and subdivisions,
reverse stock splits and combinations, distribution of warrants or options and
distributions of evidences of indebtedness or assets not received by the General
Partner pursuant to a pro rata distribution by the Partnership; (ii) divided by
the Percentage Interest of the General Partner in such class or series of
Partnership Interests on such date; provided, that if no outstanding shares of
capital stock of the General Partner correspond to a class of series of
Partnership Interests, the Deemed Value of the Partnership Interests with
respect to such class or series shall be equal to an amount reasonably
determined by the General Partner.
"Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for
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such year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; provided, however, that
if the federal income tax depreciation, amortization or other cost recovery
deduction for such year is zero, Depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable method selected by the
General Partner.
"Effective Date" means the date of closing of the initial public
offering of REIT Shares upon which date contributions set forth on Exhibit A
shall become effective.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Fair Market Value" means, with respect to any share of capital
stock of the General Partner, the average of the daily market price for the ten
(10) consecutive trading days immediately preceding the date with respect to
which "Fair Market Value" must be determined hereunder or, if such date is not a
Business Day, the immediately preceding Business Day. The market price for each
such trading day shall be: (i) if such shares are listed or admitted to trading
on any securities exchange or the Nasdaq National Market, the closing price,
regular way, on such day, or if no such sale takes place on such day, the
average of the closing bid and asked prices on such day, (ii) if such shares are
not listed or admitted to trading on any securities exchange or the Nasdaq
National Market, 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 such shares are not listed or admitted to trading on any securities
exchange or the Nasdaq National Market 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 Fair Market Value of such 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 for such shares includes rights that a holder of
such shares would be entitled to receive, then the Fair Market 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; and provided, further that, in connection with
determining the Deemed Value of the Partnership Interests for purposes of
determining the number of additional Partnership Units issuable upon a Capital
Contribution funded by an underwritten public offering of shares of capital
stock of the General Partner, the Fair Market Value of such shares shall be the
public offering price per share of such class of capital stock sold.
Notwithstanding the foregoing, the General Partner in its reasonable discretion
may use a different "Fair Market Value" for purposes of making the
determinations under subparagraph (b) of the definition of "Gross Asset Value"
and Section 4.3.C in connection with the contribution of Property to the
Partnership by a third party, provided
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such value shall be based upon the value per REIT Share (or per Partnership
Unit) agreed upon by the General Partner and such third party for purposes of
such contribution.
"General Partner" means the Company or its successor as general
partner of the Partnership.
"General Partner Interest" means a Partnership Interest held by the
General Partner. A General Partner Interest may be expressed as a number of
Partnership Units.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset,
as determined by the contributing Partner and the General Partner (as set forth
on Exhibit A attached hereto, as such Exhibit may be amended from time to time);
provided, that if the contributing Partner is the General Partner then, except
with respect to the General Partner's initial Capital Contribution which shall
be determined as set forth on Exhibit A, the determination of the fair market
value of the contributed asset shall be determined (i) by the price paid by the
General Partner if the asset is acquired by the General Partner
contemporaneously with its contribution to the Partnership, (ii) by Appraisal,
if otherwise acquired by the General Partner, (iii) by the amount of cash if the
asset is cash, and (iv) as reasonably determined by the General Partner if the
asset is REIT Shares or other shares of capital stock of the Company.
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined by
the General Partner using such reasonable method of valuation as it may adopt,
provided, however, that for such purpose, the net value of all of the
Partnership assets, in the aggregate, shall be equal to the Deemed Value of the
Partnership Interests of all classes of Partnership Interests then outstanding,
regardless of the method of valuation adopted by the General Partner,
immediately prior to the times listed below:
(i) the acquisition of an additional interest in the Partnership
by a new or existing Partner in exchange for more than a de
minimis Capital Contribution, if the General Partner
reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership;
(ii) the distribution by the Partnership to a Partner of more than
a de minimis amount of Partnership property as consideration
for an interest in the Partnership if the General Partner
reasonably determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership;
(iii) the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); and
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(iv) at such other times as the General Partner shall reasonably
determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Partnership asset distributed to a
Partner shall be the gross fair market value of such asset on the date of
distribution as determined by the distributee and the General Partner, or if the
distributee and the General Partner cannot agree on such a determination, by
Appraisal.
(d) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to
the extent that the General Partner reasonably determines that an adjustment
pursuant to subparagraph (b) is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subparagraph (a), (b) or (d), such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income and Net Losses.
"Holder" means either the Partner or Assignee owning a Partnership
Unit.
"Immediate Family" means, with respect to any natural Person, such
natural Person's estate or heirs or current spouse or former spouse, parents,
parents-in-law, children (whether natural, adopted or by marriage), siblings and
grandchildren and any trust or estate, all of the beneficiaries of which consist
of such Person or such Person's spouse, or former spouse, parents,
parents-in-law, children, siblings or grandchildren.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him or her incompetent to manage his or her Person or
his or her 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
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of a petition filed against the Partner in any proceeding of the nature
described in clause (b) above, (e) the Partner seeks, consents to or acquiesces
in the appointment of a trustee, receiver or liquidator for the Partner or for
all or any substantial part of the Partner's properties, (f) any proceeding
seeking liquidation, reorganization or other relief under any bankruptcy,
insolvency or other similar law now or hereafter in effect has not been
dismissed within 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 90 days of such appointment, or
(h) an appointment referred to in clause (g) is not vacated within 90 days after
the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of his or her status as (A) the General Partner or (B) a director or
officer, employee or agent of the Partnership or the General Partner, and (ii)
such other Persons (including Affiliates of the General Partner or the
Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole and
absolute discretion.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"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 representing a fractional part of the Partnership Interests of all
Limited Partners and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Limited Partner Interest may be expressed as a number of
Partnership Units.
"Liquidating Event" shall have the meaning set forth in Section
13.1.
"Liquidator" shall have the meaning set forth in Section 13.2.A.
"Majority in Interest of the Limited Partners" means Limited
Partners (other than any Limited Partner fifty percent (50%) or more of whose
equity is owned, directly or indirectly, by the General Partner) holding in the
aggregate Percentage Interests that are greater than fifty percent (50%) of the
aggregate Percentage Interests of all Limited Partners (other than any Limited
Partner fifty percent (50%) or more of whose equity is owned, directly or
indirectly, by the General Partner).
"Net Income" or "Net Loss" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
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(a) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Net Income or Net Loss
pursuant to this definition of Net Income or Net Loss shall be added to such
taxable income or loss;
(b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income or Net Loss pursuant to this definition of Net Income or
Net Loss shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Income or Net Loss;
(d) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year;
(f) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this definition of Net
Income or Net Loss, any items which are specially allocated pursuant to Section
6.3 shall not be taken into account in computing Net Income or Net Loss. The
amounts of the items of Partnership income, gain, loss, or deduction available
to be specially allocated pursuant to Section 6.3 shall be determined by
applying rules analogous to those set forth in this definition of Net Income or
Net Loss.
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or other shares of capital stock of the General Partner,
excluding in each case, grants under any Stock Plan, or (ii) any Debt issued by
the General Partner that provides any of the rights described in clause (i).
"Nonrecourse Deductions" shall have 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).
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"Nonrecourse Liability" shall have 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 B to this Agreement.
"Option Agreement Effective Date" means the date the Partnership
acquires an Option Interest pursuant to the respective Option Agreement in
exchange for Partnership Units.
"Option Agreements" means those certain option agreements by and
between the Partnership and Affiliates of Xxxxxx X. Xxxxxxx III, whereby such
entities granted the Partnership an option to acquire the Option Interests.
"Option Interests" means those certain properties or interests in
entities which own certain real property.
"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" shall have the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means, an ownership interest in the
Partnership of 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. There may be
one or more classes or series of Partnership Interests as provided in Section
4.3. A Partnership Interest may be expressed as a number of Partnership Units.
Unless otherwise expressly provided for by the General Partner at the time of
the original issuance of any Partnership Interests, all Partnership Interests
(whether of a Limited Partner or a General Partner) shall be of the same class
or series.
"Partnership Minimum Gain" shall have 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
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or decrease in Partnership Minimum Gain, for a Partnership Year shall be
determined in accordance with the rules of Regulations Section 1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
which record date shall be the same as the record date established by the
General Partner for a distribution to its stockholders of some or all of its
portion of such distribution.
"Partnership Unit" means, with respect to any class of Partnership
Interest, a fractional, undivided share of such class of Partnership Interest
issued pursuant to Sections 4.1 and 4.3. The ownership of Partnership Units may
be evidenced by a certificate for units substantially in the form of Exhibit D
hereto or as the General Partner may determine with respect to any class of
Partnership Units issued from time to time under Section 4.1 and 4.3.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class or
series of Partnership Interests, its interest in such class or series as
determined by dividing the Partnership Units of such class or series owned by
such Partner by the total number of Partnership Units of such class then
outstanding as specified in Exhibit A attached hereto, as such Exhibit may be
amended from time to time. If the Partnership issues more than one class or
series of Partnership Interests, the interest in the Partnership among the
classes or series of Partnership Interests shall be determined as set forth in
the amendment to the Partnership Agreement setting forth the rights and
privileges of such additional classes or series of Partnership Interest, if any,
as contemplated by Section 4.3.C.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"Plan Asset Regulation" means the regulations promulgated by the
United States Department of Labor in Title 29, Code of Federal Regulations, Part
2510, Section 101.3, and any successor regulations thereto.
"Pledge" shall have the meaning set forth in Section 11.3.A.
"Properties" means such interests in real property and personal
property including without limitation, fee interests, interests in ground
leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Partnership may hold from time to time.
"Qualified REIT Subsidiary" means any Subsidiary of the General
Partner that is a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.
"Qualified Transferee" means an "Accredited Investor" as such term
is defined in Rule 501 promulgated under the Securities Act.
"Redemption" shall have the meaning set forth in Section 8.6.A.
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"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).
"Regulatory Allocations" shall have the meaning set forth in Section
6.3.A(viii).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Requirements" shall have the meaning set forth in Section 5.1.
"REIT Share" means a share of common stock of the General Partner.
"REIT Shares Amount" means, as of any date, an aggregate number of
REIT Shares equal to the number of Tendered Units, as adjusted (x) pursuant to
Section 7.5 (in the event the General Partner acquires material assets, other
than on behalf of the Partnership) and (y) for stock dividends and
distributions, stock splits and subdivisions, reverse stock splits and
combinations, distributions of rights, warrants or options, and distributions of
evidences of indebtedness or assets relating to assets not received by the
General Partner pursuant to a pro rata distribution by the Partnership.
"ROFO Agreement Effective Date" means the date the Partnership
acquires the ROFO Interest pursuant to the ROFO Agreement in exchange for
Partnership Units.
"ROFO Agreement" means that certain Right of First Offer Agreements
by and between the Partnership and Affiliates of Xxxxxx X. Xxxxxxx III,
whereby such entities granted the Partnership the right to acquire the ROFO
Interests.
"ROFO Interests" means those certain properties or interests in
entities which own certain real property described in the ROFO Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder and any successor statute thereto.
"Securities Exchange Act" means the Securities Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder and any successor statute thereto.
"Specified Redemption Date" means the day of receipt by the General
Partner of a Notice of Redemption.
"Stock Plan" means any stock incentive, stock option, stock
ownership or employee benefits plan of the General Partner.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other entity of which a
majority of (i) the voting power of the voting equity securities or (ii) the
outstanding equity interests is owned, directly or indirectly, by such Person.
"Subsidiary Partnership" means any partnership or limited liability
company that is a Subsidiary of the Partnership.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Surviving Partnership" shall have the meaning set forth in Section
11.2.B(2).
"Tax Items" shall have the meaning set forth in Section 6.4.A.
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"Tenant" means any tenant from which the General Partner derives
rent either directly or indirectly through partnerships, including the
Partnership.
"Tendered Units" shall have the meaning set forth in Section 8.6.A.
"Tendering Partner" shall have the meaning set forth in Section
8.6.A.
"Termination Transaction" shall have the meaning set forth in
Section 11.2.B.
Section 1.2 Rules of Construction
Unless otherwise indicated, all referenced herein to "REIT," "REIT
Requirements," "REIT Shares" and "REIT Shares Amount" with respect to the
General Partner shall apply only with reference to the Company.
ARTICLE 2.
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership formed pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein, the rights and obligations of
the Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal
property for all purposes.
Section 2.2 Name
The name of the Partnership is Xxxxxxx Properties, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The name and address of the registered office and registered agent
of the Partnership in the State of Maryland are Xxxxx X. Xxxxx, Xx., care of
Xxxxxxx, Xxxxxxx and Xxxxxx, LLP, 1800 Mercantile Bank & Trust Bldg., 0 Xxxxxxx
Xxxxx, Xxxxxxxxx, XX 00000. The address of the principal office of the
Partnership in the State of Maryland is c/x Xxxxxxx, Xxxxxxx and Xxxxxx, LLP at
such address. The principal office of the Partnership is located at 000 Xxxx
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or such other place as
the General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Maryland as the General Partner deems advisable.
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Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee 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 Maryland and
in all other jurisdictions in which the Partnership may conduct business or own
property; (b) all instruments that the General Partner or any Liquidator 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 any Liquidator
deems appropriate or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation; (d) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Articles 11, 12 or 13 or the Capital Contribution of
any Partner; and (e) all certificates, documents and other instruments relating
to the determination of the rights, preferences and privileges of Partnership
Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or necessary,
in the sole and absolute discretion of the General Partner or any Liquidator, to
make, evidence, give, confirm or ratify any vote, consent, approval, agreement
or other action which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or appropriate or necessary, in the
sole discretion of the General Partner or any Liquidator, to effectuate the
terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
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,
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taken in good faith under such power of attorney. Each Limited Partner or
Assignee shall execute and deliver to the General Partner or any Liquidator,
within 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 June 26, 2002 and shall
continue until December 31, 2102 unless it is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.
ARTICLE 3.
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT for federal income tax
purposes, 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
business described in the foregoing clause (i) or to own interests in any entity
engaged, directly or indirectly, in any such business 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 that the General Partner's
current status as a REIT inures to the benefit of all the Partners and not
solely 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 protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided, however, notwithstanding anything to the contrary in this Agreement,
the Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the General Partner to continue to qualify as a
REIT, (ii) could subject the General Partner to any 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 any such action (or inaction) under (i), (ii) or (iii) shall
have been specifically consented to by the General Partner in writing.
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Section 3.3 Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes
specified in Section 3.1, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1. Except as otherwise provided in this Agreement, no Partner shall
have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall be
responsible or liable for any indebtedness or obligation of another Partner, nor
shall the Partnership be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.
Section 3.4 Representations and Warranties by the Parties
A. Each Partner that is an individual represents and warrants to each
other Partner that (i) such Partner has the legal capacity to enter into this
Agreement and perform such Partner's obligations hereunder, (ii) the
consummation of the transactions contemplated by this Agreement to be performed
by such Partner will not result in a breach or violation of, or a default under,
any agreement by which such Partner or any of such Partner's property is or are
bound, or any statute, regulation, order or other law to which such Partner is
subject, (iii) such Partner is a "United States person" within the meaning of
Section 7701(a)(30) of the Code, and (iv) this Agreement is binding upon, and
enforceable against, such Partner in accordance with its terms.
B. Each Partner that is not an individual represents and warrants to each
other Partner that (i) its execution and delivery of this Agreement and all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including without limitation, that of its
general partner(s), committee(s), trustee(s), beneficiaries, directors and/or
stockholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its certificate of limited partnership, partnership agreement, trust agreement,
limited liability company operating agreement, charter or bylaws, as the case
may be, any agreement by which such Partner or any of such Partner's properties
or any of its partners, beneficiaries, trustees or stockholders, as the case may
be, is or are bound, or any statute, regulation, order or other law to which
such Partner or any of its partners, trustees, beneficiaries or stockholders, as
the case may be, is or are subject, (iii) such Partner is a "United States
person" within the meaning of Section 7701(a)(30) of the Code and (iv) this
Agreement is binding upon, and enforceable against, such Partner in accordance
with its terms.
C. Each Partner represents, warrants, and agrees that it has acquired and
continues to hold its interest in the Partnership for its own account for
investment only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, nor with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants
18
that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment. Each Partner
represents, warrants and agrees that such Partner is an "accredited investor"
(as such term is defined in Rule 501(a) of Regulation D under the Securities
Act).
D. Each Partner acknowledges that (i) the Partnership Units (and any REIT
Shares that might be exchanged therefor) have not been registered under the
Securities Act and may not be transferred unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available (it being understood that the Partnership has no intention of so
registering the Partnership Units), (ii) a restrictive legend in the form set
froth in Exhibit D shall be placed on the certificates representing the
Partnership Units, and (iii) a notation shall be made in the appropriate records
of the Partnership indicating that the Partnership Units are subject to
restrictions on transfer.
E. Each Partner further represents, warrants, covenants and agrees as
follows:
(1) Except as provided in Exhibit E, at any time such Partner
actually or Constructively Owns a 25% or greater capital interest or profits
interest in the Partnership, it does not and will not, without the prior written
consent of the General Partner, actually own or Constructively Own (a) with
respect to any Tenant that is a corporation, any stock of such Tenant, and (b)
with respect to any Tenant that is not a corporation, any interests in either
the assets or net profits of such Tenant.
(2) Except as provided in Exhibit F, at any time such Partner
actually or Constructively Owns a 25% or greater capital interest or profits
interest in the Partnership, it does not, and agrees that it will not without
the prior written consent of the General Partner, actually own or Constructively
Own, any stock in the General Partner, other than any REIT Shares or other
shares of capital stock of the General Partner such Partner may acquire (a) as a
result of an exchange of Tendered Units pursuant to Section 8.6 or (b) upon the
exercise of options granted or delivery of REIT Shares pursuant to any Stock
Plan, in each case subject to the ownership limitations set forth in the General
Partner's Charter.
(3) Upon request of the General Partner, it will disclose to the
General Partner the amount of REIT Shares or other shares of capital stock of
the General Partner that it actually owns or Constructively Owns.
(4) It understands that if, for any reason, (a) the representations,
warranties or agreements set forth in E(1) or (2) above are violated, or (b) the
Partnership's actual or Constructive Ownership of REIT Shares or other shares of
capital stock of the General Partner violates the limitations set forth in the
Charter, then (x) some or all of the Redemption rights of the Partners may
become non-exercisable, and (y) some or all of the REIT Shares owned by the
Partners may be automatically transferred to a trust for the benefit of a
charitable beneficiary, as provided in the Charter.
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(5) Without the consent of the General Partner, which may be given
or withheld in its sole discretion, no Partner shall take any action that would
cause the Partnership at any time to have more than 100 partners (including as
partners those persons indirectly owning an interest in the Partnership through
a partnership, limited liability company, S corporation or grantor trust (such
entity, a "flow through entity"), but only if substantially all of the value of
such person's interest in the flow through entity is attributable to the flow
through entity's interest (direct or indirect) in the Partnership).
F. The representations and warranties contained in Sections 3.4 shall
survive the execution and delivery of this Agreement by each Partner and the
dissolution and wind up of the Partnership.
G. Each Partner hereby acknowledges that no representations as to
potential profit, cash flows, funds from operations or yield, if any, in respect
of the Partnership or the General Partner have been made by any Partner or any
employee or representative or Affiliate of any Partner, and that projections and
any other information, including, without limitation, financial and descriptive
information and documentation, which may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.
Section 3.5 Certain ERISA Matters
Each Partner acknowledges that the Partnership is intended to
qualify as a "real estate operating company" (as such term is defined in the
Plan Asset Regulation). The General Partner may structure the investments in,
relationships with and conduct with respect to Properties and any other assets
of the Partnership so that the Partnership will be a "real estate operating
company" (as such term is defined in the Plan Asset Regulation).
ARTICLE 4.
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
At the time of their respective execution of this Agreement, the
Partners shall make or shall have made Capital Contributions as set forth in
Exhibit A to this Agreement. The Partners shall own Partnership Units of the
class or series and in the amounts set forth in Exhibit A and shall have a
Percentage Interest in the Partnership as set forth in Exhibit A, which
Percentage Interest shall be adjusted in Exhibit A from time to time by the
General Partner to the extent necessary to reflect accurately exchanges,
redemptions, Capital Contributions, the issuance of additional Partnership Units
or similar events having an effect on a Partner's Percentage Interest. Except as
required by law, as otherwise provided in Sections 4.3, 4.4 and 10.5, or as
otherwise agreed to by a Partner and the Partnership, no Partner shall be
required or permitted to make any additional Capital Contributions or loans to
the Partnership. Unless otherwise specified by the General Partner at the time
of the creation of any class of Partnership Interests, the corresponding class
or series of capital stock for any Partnership Units issued shall be REIT
Shares.
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Section 4.2 Loans by Third Parties
Subject to Section 4.3, the Partnership may incur Debt, or enter
into other similar credit, guarantee, financing or refinancing arrangements for
any purpose (including, without limitation, in connection with any further
acquisition of Properties) with any Person that is not the General Partner upon
such terms as the General Partner determines appropriate; provided that, the
Partnership shall not incur any Debt that is recourse to the General Partner,
except to the extent otherwise agreed to by the General Partner in its sole
discretion.
Section 4.3 Additional Funding and Capital Contributions
A. General. The General Partner may, at any time and from time to time
determine that the Partnership requires additional funds ("Additional Funds")
for the acquisition of additional Properties or for such other Partnership
purposes as the General Partner may determine. Additional Funds may be raised by
the Partnership, at the election of the General Partner, in any manner provided
in, and in accordance with, the terms of this Section 4.3. No Person shall have
any preemptive, preferential or similar right or rights to subscribe for or
acquire any Partnership Interest, except as set forth in this Section 4.3.
B. Issuance of Additional Partnership Interests. The General Partner, in
its sole and absolute discretion, may raise all or any portion of the Additional
Funds by accepting additional Capital Contributions. In connection therewith,
the General Partner is hereby authorized to cause the Partnership from time to
time to issue to Partners (including the General Partner) or other Persons
(including, without limitation, in connection with the contribution of property
to the Partnership) 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 then
existing Limited Partner Interests, all as shall be determined by the General
Partner in its sole and absolute discretion subject to Maryland law, including
without limitation, (i) the allocations of items of Partnership income, gain,
loss, deduction, and credit to such class or series of Partnership Interests;
(ii) the right of each such class or series of Partnership Interests to share in
Partnership distributions; (iii) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the Partnership; and
(iv) the right to vote, including, without limitation, the Limited Partner
approval rights set forth in Section 11.2.A; 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 the grant, award, or issuance of shares of the General Partner
pursuant to Section 4.3.C below, which shares have designations, preferences,
and other rights (except voting 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 4.3.B, 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 such issuance, or (b) the
additional Partnership Interests are issued to all Partners holding Partnership
Interests in the same class in proportion to their respective Percentage
Interests in such class. In the event that the Partnership issues additional
Partnership Interests pursuant to this Section 4.3.B, the General Partner shall
make such revisions to this Agreement (including but not limited to the
revisions described in Section 5.4, Section 6.2.C,
21
and Section 8.6) as it determines are necessary to reflect the issuance of such
additional Partnership Interests.
C. Issuance of REIT Shares or Other Securities by the General Partner.
The General Partner shall not issue any additional REIT Shares
(other than REIT Shares issued pursuant to Section 8.6 or pursuant to a dividend
or distribution (including any stock split) of REIT Shares to all of its
stockholders), other shares of capital stock of the General Partner or New
Securities 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 thereof are
substantially similar to those of the REIT Shares, other shares of capital stock
of the General Partner or New Securities issued by the General Partner and (ii)
the General Partner shall make a Capital Contribution of the net proceeds from
the issuance of such additional REIT Shares, other shares of capital stock or
New Securities, as the case may be, and from the exercise of the rights
contained in such additional New Securities, as the case may be. Without
limiting the foregoing, the General Partner is expressly authorized to issue
REIT Shares, other shares of capital stock of the General Partner or New
Securities for no tangible value or 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 of Partnership Interests is
in the interests of the Partnership; and (y) the General Partner contributes all
proceeds, if any, from such issuance and exercise to the Partnership.
In connection with the General Partner's initial public offering of
REIT Shares, any other issuance of REIT Shares, other capital stock of the
General Partner or New Securities, the General Partner shall contribute to the
Partnership, any net proceeds raised in connection with such issuance; 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 (which discount and expense shall be treated as an expense for
the benefit of the Partnership for purposes of Section 7.4). In the case of
issuances of REIT Shares, other capital stock of the General Partner or New
Securities pursuant to any Stock Plan at a discount from fair market value or
for no value, the amount of such discount representing compensation to the
employee, as determined by the General Partner, shall be treated as an expense
for the benefit of the Partnership for purposes of Section 7.4 and, as a result,
the General Partner shall be deemed to have made a Capital Contribution to the
Partnership in an amount equal to the sum of any net proceeds of such issuance
plus the amount of such expense.
D. Percentage Interest Adjustments in the Case of Capital Contributions
for Partnership Units. Upon the acceptance of additional Capital Contributions
in exchange for any class or series of Partnership Units, the Percentage
Interest in such class or series of Partnership Units shall be equal to a
fraction, the numerator of which is equal to the amount of cash and the Agreed
Value of the Property contributed as of the Business Day immediately preceding
the date on which the additional Capital Contributions are made (an "Adjustment
Date") and the
22
denominator of which is equal to the sum of (i) the Deemed Value of the
Partnership Interests of such class or series (computed as of the Business Day
immediately preceding the Adjustment Date) and (ii) the aggregate Agreed Value
of additional Capital Contributions contributed by all Partners and/or third
parties to the Partnership on such Adjustment Date in such class or series of
Partnership Interests. The Percentage Interest of each other Partner holding
Partnership Interests of such class or series not making a full pro rata Capital
Contribution shall be adjusted to equal a fraction, the numerator of which is
equal to the sum of (i) the Deemed Partnership Interest Value of such Limited
Partner in respect of such class or series (computed as of the Business Day
immediately preceding the Adjustment Date) and (ii) the Agreed Value of
additional Capital Contributions, if any, made by such Partner to the
Partnership in such class or series of Partnership Interests as of such
Adjustment Date, and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests of such class or series (computed as
of the Business Day immediately preceding the Adjustment Date), plus (ii) the
aggregate Agreed Value of additional Capital Contributions contributed by all
Partners and/or third parties to the Partnership on such Adjustment Date in such
class or series. Provided, however, solely for purposes of calculating a
Partner's Percentage Interest pursuant to this Section 4.3.D, (i) in the case of
cash Capital Contributions by the General Partner funded by an offering of REIT
Shares or other shares of capital stock of the General Partner and (ii) in the
case of the contribution of properties by the General Partner which were
acquired by the General Partner in exchange for REIT Shares or other shares of
capital stock of the General Partner immediately prior to such contribution, the
General Partner shall be issued a number of Partnership Units equal and
corresponding to the number of such shares issued by the General Partner in
exchange for such cash or Properties, the Partnership Units held by the other
Partners shall not be adjusted, and the Partners' Percentage Interests shall be
adjusted accordingly. The General Partner shall promptly give each Partner
written notice of its Percentage Interest, as adjusted.
Section 4.4 Other Contribution Provisions
In the event that any Partner is admitted to the Partnership and is
given (or is treated as having received) a Capital Account in exchange for
services rendered to the Partnership, such transaction shall be treated by the
Partnership and the affected Partner as if the Partnership had compensated such
Partner in cash, and the Partner had contributed such cash to the capital of the
Partnership. In addition, with the consent of the General Partner, in its sole
discretion, one or more Limited Partners may enter into agreements with the
Partnership, in the form of a guarantee or contribution agreement, which have
the effect of providing a guarantee of certain obligations of the Partnership.
Section 4.5 No Preemptive Rights
Except to the extent expressly granted by the Partnership pursuant
to another agreement, no Person shall have any preemptive, preferential or other
similar right with respect to (i) additional Capital Contributions or loans to
the Partnership or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
23
ARTICLE 5.
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
The General Partner shall cause the Partnership to distribute
quarterly all, or such portion as the General Partner may in its discretion
determine, of Available Cash generated by the Partnership to the Partners who
are Partners on the applicable record date with respect to such distribution,
(1) first, with respect to any class or series of Partnership Interests that are
entitled to any preference in distributions, in accordance with the rights of
such class or series of Partnership Interests (and within such class or series,
pro rata in proportion to the respective Percentage Interests on the applicable
record date), and (2) second, with respect to any class or series of Partnership
Interests that are not entitled to any preference in distributions, pro rata to
each such class or series in accordance with the terms of such class or series
to the Partners who are Partners of such class or series on the Partnership
Record Date with respect to such distribution (and within each such class or
series, pro rata in proportion to the respective Percentage Interests on such
Partnership Record Date). Unless otherwise expressly provided for herein or in
an agreement, if any, entered into in connection with the creation of a new
class or series of Partnership Interests created in accordance with Article 4,
no Partnership Interest shall be entitled to a distribution in preference to any
other Partnership Interest. 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 cause the Partnership to distribute
sufficient amounts to enable the General Partner, for so long as the General
Partner has determined to qualify as a REIT, to pay stockholder dividends that
will (a) satisfy the requirements for qualifying as a REIT under the Code and
Regulations ("REIT Requirements"), and (b) except to the extent otherwise
determined by the General Partner, avoid any federal income or excise tax
liability of the General Partner.
Section 5.2 Distributions in Kind
No right is given to any Partner to demand and receive property
other than cash. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in-kind to the Partners of Partnership
assets, and such assets shall be distributed in such a fashion as to ensure that
the fair market value is distributed and allocated in accordance with Articles
5, 6 and 10.
Section 5.3 Distributions Upon Liquidation
Notwithstanding Section 5.1, proceeds from a Liquidating Event shall
be distributed to the Partners in accordance with Section 13.2.
Section 5.4 Distributions to Reflect Issuance of Additional Partnership
Interests
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Section 4.3.B or 4.3.C, the General Partner shall make such revisions to this
Article 5 as it determines are necessary to reflect the issuance of such
additional Partnership Interests. In the absence of any agreement to the
contrary, an Additional Limited Partner shall be entitled to the distributions
set forth in
24
Section 5.1 (without regard to this Section 5.4) with respect to the period
during which the closing of its contribution to the Partnership occurs,
multiplied by a fraction the numerator of which is the number of days from and
after the date of such closing through the end of the applicable period, and the
denominator of which is the total number of days in such period.
ARTICLE 6.
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss
Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each fiscal year of the Partnership as of the end of
each such year. Subject to the other provisions of this Article 6, an allocation
to a Partner of a share of Net Income or Net Loss shall be treated as an
allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.
Section 6.2 General Allocations
A. Allocation of Net Income and Net Losses.
(1) Net Income. Except as otherwise provided in Section 6.3, Net
Income for any Partnership Year shall be allocated to the Partners in the
following manner and order of priority:
(a) First, to the General Partner in an amount equal to the
remainder, if any, of the cumulative Net Losses allocated to the General Partner
pursuant to Section 6.2.A.2(c) for all prior Partnership Years minus the
cumulative Net Income allocated to the General Partner pursuant to this Section
6.2.A.(1)(a) for all prior Partnership Years;
(b) Second, to each Limited Partner in an amount equal to the
remainder, if any, of the cumulative Net Losses allocated to each such Limited
Partner pursuant to Section 6.2.A.2(b) for all prior Partnership Years minus the
cumulative Net Income allocated to such Limited Partner pursuant to this Section
6.2.A.(1)(b) for all prior Partnership Years;
(c) Third, to the General Partner and the Limited Partners in
an amount equal to the remainder, if any, of the cumulative Net Losses allocated
to each such Partner pursuant to Section 6.2.A.2(a) for all prior Partnership
Years minus the cumulative Net Income allocated to each Partner pursuant to this
Section 6.2.A.(1)(c) for all prior Partnership Years;
(d) Fourth, to each of the Partners in accordance with their
respective Percentage Interests.
To the extent the allocations of Net Income set forth above in any
paragraph of this Section 6.2.A.(1) are not sufficient to entirely satisfy the
allocation set forth in such paragraph, such allocation shall be made in
proportion to the total amount that would have been allocated pursuant to such
paragraph without regard to such shortfall.
25
(2) Net Losses. Except as otherwise provided in Section 6.3, Net
Losses for any Partnership Year shall be allocated to the Partners in the
following manner and order of priority:
(a) First, to the General Partner and the Limited Partners in
accordance with their respective Percentage Interests (to the extent consistent
with this Section 6.2.A(2)(a)) 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 such Partner is zero;
(b) Second, to the Limited Partners to the extent of, and in
proportion to, the positive balance (if any) in their Adjusted Capital Accounts;
and
(c) Third, to the General Partner.
B. Allocations to Reflect Issuance of Additional Partnership Interests. In
the event that the Partnership issues additional Partnership Interests to the
General Partner, a Limited Partner or any Additional Limited Partner pursuant to
Section 4.3, the General Partner shall make such revisions to this Section 6.2
as it determines are necessary to reflect the terms of the issuance of such
additional Partnership Interests, including making preferential allocations to
certain classes of Partnership Interests in accordance with any method selected
by the General Partner.
Section 6.3 Additional Allocation Provisions
Notwithstanding the foregoing provisions of this Article 6:
A. Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2,
or any other provision of this Article 6, if there is a net decrease in
Partnership Minimum Gain during any fiscal year, each Holder shall be specially
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Holder's share of the net decrease
in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Holder pursuant thereto. The
items to be allocated shall be determined in accordance with Regulations
Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.A(i) is intended to
qualify as a "minimum gain chargeback" within the meaning of Regulation Section
1.704-2(f) which shall be controlling in the event of a conflict between such
Regulation and this Section 6.3.A(i).
(ii) Partner Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(i)(4), and notwithstanding the
provisions of Section 6.2, or any other provision of this Article 6 (except
Section 6.3.A(i)), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any fiscal year, each Holder
who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially
26
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Holder's share of the net decrease
in Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Holder pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.A(ii) is intended to qualify
as a "chargeback of partner nonrecourse debt minimum gain" within the meaning of
Regulation Section 1.704-2(i) which shall be controlling in the event of a
conflict between such Regulation and this Section 6.3.A(ii).
(iii) Nonrecourse Deductions and Partner Nonrecourse
Deductions. Any Nonrecourse Deductions for any fiscal year shall be specially
allocated to the Holders in accordance with their respective Percentage
Interests. Any Partner Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Holder(s) who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable, in accordance with Regulations Sections
1.704-2(b)(4) and 1.704-2(i).
(iv) Qualified Income Offset. If any Holder unexpectedly
receives an adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
gain shall be allocated, in accordance with Regulations Section
1.704-1(b)(2)(ii)(d), to the Holder in an amount and manner sufficient to
eliminate, to the extent required by such Regulations, the Adjusted Capital
Account Deficit of the Holder as quickly as possible provided that an allocation
pursuant to this Section 6.3.A(iv) shall be made if and only to the extent that
such Holder would have an Adjusted Capital Account Deficit after all other
allocations provided in this Article 6 have been tentatively made as if this
Section 6.3.A(iv) were not in this Agreement. It is intended that this Section
6.3.A(iv) qualify and be construed as a "qualified income offset" within the
meaning of Regulations 1.704-1(b)(2)(ii)(d), which shall be controlling in the
event of a conflict between such Regulations and this Section 6.3.A(iv).
(v) Gross Income Allocation. In the event any Holder has a
deficit Capital Account at the end of any fiscal year which is in excess of the
sum of (1) the amount (if any) such Holder is obligated to restore to the
Partnership, and (2) the amount such Holder is deemed to be obligated to restore
pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such
Holder shall be specially allocated items of Partnership income and gain in the
amount of such excess as quickly as possible, provided, that an allocation
pursuant to this Section 6.3.A(v) shall be made if and only to the extent that
such Holder would have a deficit Capital Account in excess of such sum after all
other allocations provided in this Article 6 have been tentatively made as if
this Section 6.3.A(v) and Section 6.3.A(iv) were not in this Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent any
allocation of Net Loss would cause or increase an Adjusted Capital Account
Deficit as to any Holder, such allocation of Net Loss shall be reallocated among
the other Holders in accordance with their respective Percentage Interests,
subject to the limitations of this Section 6.3.A(vi).
27
(vii) Section 754 Adjustment. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b)
or Code Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as the result of a
distribution to a Holder in complete liquidation of his interest in the
Partnership, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Holders in accordance with their interests in the
Partnership in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2)
applies, or to the Holders to whom such distribution was made in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocation. The allocations set forth in
Sections 6.3.A(i), (ii), (iii), (iv), (v), (vi), and (vii) (the "Regulatory
Allocations") are intended to comply with certain regulatory requirements,
including the requirements of Regulations Sections 1.704-1(b) and 1.704-2.
Notwithstanding the provisions of Sections 6.1 and 6.2, the Regulatory
Allocations shall be taken into account in allocating other items of income,
gain, loss and deduction among the Holders so that, to the extent possible, the
net amount of such allocations of other items and the Regulatory Allocations to
each Holder shall be equal to the net amount that would have been allocated to
each such Holder if the Regulatory Allocations had not occurred.
B. For purposes of determining a Holder's proportional share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Holder's interest in Partnership profits
shall be such Holder's Percentage Interest.
Section 6.4 Tax Allocations
A. In General. Except as otherwise provided in this Section 6.4, for
income tax purposes each item of income, gain, loss and deduction (collectively,
"Tax Items") shall be allocated among the Holders in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to Sections 6.2 and 6.3.
B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding
Section 6.4.A, Tax Items with respect to Partnership property that is
contributed to the Partnership by a Partner shall be shared among the Holders
for income tax purposes pursuant to Regulations promulgated under Section 704(c)
of the Code, so as to take into account the variation, if any, between the basis
of the property to the Partnership and its initial Gross Asset Value. With
respect to Partnership property that is contributed to the Partnership in
connection with the General Partner's initial public offering or pursuant to the
Partnership's exercise of rights under any Option Agreement, such variation
between basis and initial Gross Asset Value shall be taken into account under
the "traditional method" as described in Regulations Section 1.704-3(b). With
respect to other properties contributed to the Partnership, the Partnership
shall account for such variation under any method consistent with Section 704(c)
of the Code and the applicable regulations as chosen by the General Partner. In
the event the Gross Asset Value of any Partnership asset is adjusted pursuant to
subparagraph (b) of the definition of Gross Asset Value (provided in Article 1),
subsequent allocations of Tax Items with respect to such asset shall take
account of the variation, if any, between the adjusted basis of such asset and
its Gross Asset
28
Value in the same manner as under Section 704(c) of the Code and the applicable
regulations consistent with the requirements of Regulations Section
1.704-1(b)(2)(iv)(g) using any method approved under Section 704(c) of the Code
and the applicable regulations as chosen by the General Partner, provided,
however, that the "traditional method" as described in Regulations Section
1.704-3(b) shall be used with respect to Partnership Property that is
contributed to the Partnership in connection with the General Partner's initial
public offering or pursuant to the Partnership's exercise of rights under any
Option Agreement or ROFO Agreement.
ARTICLE 7.
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner, and no Limited Partner shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to the other provisions hereof
including Sections 7.3 and 11.2, shall have full power and authority to do all
things deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 and to effectuate
the purposes set forth in Section 3.1, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on loans and borrowing
money to permit the Partnership to make distributions to its Partners in such
amounts as will permit the General Partner (so long as the General Partner has
determined to qualify as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section 4981 of the
Code) and to make distributions to its stockholders sufficient to permit the
General Partner to maintain REIT status), the assumption or guarantee of, or
other contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by mortgage, deed of
trust or other lien or encumbrance on the Partnership's assets) and the
incurring of any obligations 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, the registration of any class of
securities of the Partnership under the Securities Exchange Act of 1934, as
amended, and the listing of any debt securities of the Partnership on any
exchange;
(3) subject to the provisions of Section 11.2, the acquisition,
disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any
assets of the Partnership or the merger or other combination of the Partnership
with or into another entity;
29
(4) the acquisition, disposition, mortgage, pledge, encumbrance or
hypothecation of any assets of the Partnership, and the use of the assets of the
Partnership (including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it sees fit,
including, without limitation, the financing of the conduct or the operations of
the General Partner or the Partnership, the lending of funds to other Persons
(including, without limitation, the General Partner or any Subsidiaries of the
Partnership) and the repayment of obligations of the Partnership, any of its
Subsidiaries and any other Person in which it has an equity investment, 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,
leases, conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's operations or the
implementation of the General Partner's powers under this Agreement, including
contracting with contractors, developers, consultants, accountants, legal
counsel, other professional advisors and other agents 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) the establishment of one or more divisions of the Partnership,
the selection and dismissal of employees of the Partnership (including, without
limitation, employees having titles such as "president," "vice president,"
"secretary" and "treasurer"), and agents, outside attorneys, accountants,
consultants and contractors of the Partnership, the determination of their
compensation and other terms of employment or hiring, including waivers of
conflicts of interest and the payment of their expenses and compensation out of
the Partnership's assets;
(9) the maintenance of such insurance for the benefit of the
Partnership and the Partners and directors and officers of the Partnership or
the General Partner as it deems necessary or appropriate;
(10) 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 any Subsidiary and any other Person in which it has an equity investment from
time to time); provided, that, as long as the General Partner has determined to
continue to qualify as a REIT, the Partnership may not engage in any such
formation, acquisition or contribution that could cause the General Partner to
fail to qualify as a REIT;
(11) 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,
30
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;
(12) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Person (including, without
limitation, contributing or loaning Partnership funds to, incurring indebtedness
on behalf of, or guarantying the obligations of any such Persons);
(13) subject to the other provisions in this Agreement, the
determination of the fair market value of any Partnership property distributed
in kind using such reasonable method of valuation as it may adopt, provided,
that such methods are otherwise consistent with requirements of this Agreement;
(14) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements owned
by the Partnership or any Subsidiary of the Partnership or any Person in which
the Partnership has made a direct or indirect equity investment;
(15) holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(16) the collection and receipt of revenues and income of the
Partnership;
(17) the exercise, directly or indirectly through any
attorney-in-fact acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any asset or investment held
by the Partnership;
(18) 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;
(19) 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;
(20) 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;
(21) the issuance of additional Partnership interests, as
appropriate, in connection with the contribution of Additional Funds pursuant to
Section 4.3;
31
(22) the distribution of cash to acquire Partnership Units held by a
Limited Partner in connection with a Limited Partner's exercise of its
Redemption Right under Section 8.6 hereof; and
(23) the amendment and restatement of Exhibit A hereto to reflect
accurately at all times the Capital Contributions and Percentage Interests of
the Partners as the same are adjusted from time to time to the extent necessary
to reflect redemptions, Capital Contributions, the issuance of Partnership
Units, the admission of any Additional Limited Partner or any Substituted
Limited Partner or otherwise, which amendment and restatement, notwithstanding
anything in this Agreement to the contrary, shall not be deemed an amendment to
this Agreement, as long as the matter or event being reflected in Exhibit A
hereto otherwise is authorized by 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 provisions of this Agreement
(except as provided in Section 7.3 or 11.2), the Act or any applicable law, rule
or regulation to the fullest extent permitted under the Act or other applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the General Partner may
cause the Partnership to obtain and maintain (i) casualty, liability and other
insurance on the properties of the Partnership and (ii) liability insurance for
the Indemnities hereunder.
D. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain working capital reserves in such
amounts as the General Partner, in its sole and absolute discretion, deems
appropriate and reasonable from time to time.
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 (including the General Partner) of any action taken (or not
taken) by the General Partner. The General Partner and the Partnership shall not
have liability to a Partner under this Agreement 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.
F. Except as otherwise provided herein, to the extent the duties of the
General Partner require expenditures of funds to be paid to third parties, the
General Partner shall not have any obligations hereunder except to the extent
that Partnership funds are reasonably available to it for the performance of
such duties, and nothing herein contained shall be deemed to authorize or
require the General Partner, in its capacity as such, to expend its individual
funds for payment to third parties or to undertake any individual liability or
obligation on behalf of the Partnership.
32
Section 7.2 Certificate of Limited Partnership
To the extent that such action is determined by the General Partner
to be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Maryland
and each other state, the District of Columbia or other jurisdiction, in which
the Partnership may elect to do business or own property. Subject to the terms
of Section 8.5.A(4), the General Partner shall not be required, before or after
filing, to deliver or mail a copy of the Certificate or any amendment thereto to
any Limited Partner. The General Partner shall use all reasonable efforts to
cause to be filed such other certificates or documents as may be reasonable and
necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Maryland, any other state, or
the District of Columbia or other jurisdiction, in which the Partnership may
elect to do business or own property.
Section 7.3 Restrictions on General Partner's Authority
A. The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written Consent
of the Limited Partners and may not (i) perform any act that would subject a
Limited Partner to liability as a general partner in any jurisdiction or any
other liability except as provided herein or under the Act; or (ii) enter into
any contract, mortgage, loan or other agreement that prohibits or restricts, or
has the effect of prohibiting or restricting, the ability of a Limited Partner
to exercise its rights to a Redemption in full, except in each case with the
written consent of such Limited Partner.
B. The General Partner shall not, without the prior consent of the
Partners holding Percentage Interests that in the aggregate are greater than
66-2/3% of the aggregate Percentage Interests of all the Partners (in addition
to any Consent of the Limited Partners required by any other provision hereof),
or except as provided in Section 7.3.C, amend, modify or terminate this
Agreement.
C. Notwithstanding Section 7.3.B, the General Partner shall have the
exclusive power 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 issuance of additional Partnership Interests
pursuant to Sections 4.3.B, 5.4 and 6.2B. or the admission, substitution,
termination, or withdrawal of Partners in accordance with this Agreement;
(3) to reflect a change that is of an inconsequential nature and
does not adversely affect the Limited Partners in any material respect, or to
cure any ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions,
33
or make other changes with respect to matters arising under this Agreement that
will not be inconsistent with law or with the provisions of this Agreement;
(4) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling or regulation of a federal or state
agency or contained in federal or state law;
(5) to reflect such changes as are reasonably necessary for the
General Partner to maintain its status as a REIT, including changes which may be
necessitated due to a change in applicable law (or an authoritative
interpretation thereof) or a ruling of the IRS; and
(6) to modify, as set forth in the definition of "Capital Account,"
the manner in which Capital Accounts are computed.
The General Partner will provide notice to the Limited Partners when
any action under this Section 7.3.C is taken.
D. Notwithstanding Sections 7.3.B and 7.3.C, this Agreement shall not be
amended with respect to any Partner adversely affected, and no action may be
taken by the General Partner, without the Consent of such Partner adversely
affected if such amendment or action would (i) convert a Limited Partner's
interest in the Partnership into a general partner's interest (except as the
result of the General Partner acquiring such interest), (ii) modify the limited
liability of a Limited Partner, (iii) alter rights of the Partner to receive
distributions pursuant to Article 5 or Section 13.2.A(4), or the allocations
specified in Article 6 (except as permitted pursuant to Sections 4.3, 5.4, 6.2.B
and Section 7.3.C(3)), (iv) materially alter or modify the rights to a
Redemption or the REIT Shares Amount as set forth in Section 8.6, and related
definitions hereof, or (v) amend this Section 7.3.D. Further, no amendment may
alter the restrictions on the General Partner's authority set forth elsewhere in
this Section 7.3 or in Section 11.2.B without the Consent specified in such
section. This Section 7.3D does not require unanimous consent of all Partners
adversely affected unless the amendment is to be effective against all partners
adversely affected.
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 Partnership shall be responsible for and shall pay all expenses
relating to the Partnership's and the General Partner's organization, the
ownership of its assets and its operations. The General Partner is hereby
authorized to pay compensation for accounting, administrative, legal, technical,
management and other services rendered to the Partnership. Except to the extent
provided in this Agreement, the General Partner and its Affiliates 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 the General
Partner and its Affiliates incur relating to the ownership and operation of, or
for the benefit of, the Partnership (including, without limitation,
administrative expenses); provided, that the amount of any such
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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. The Partners acknowledge that all such expenses of
the General Partner are deemed to be for the benefit of the Partnership. Such
reimbursement shall be in addition to any reimbursement made as a result of
indemnification pursuant to Section 7.7 hereof. In the event that certain
expenses are incurred for the benefit of the Partnership and other entities
(including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and reasonable. All payments and
reimbursements hereunder shall be characterized for federal income tax purposes
as expenses of the Partnership incurred on its behalf, and not as expenses of
the General Partner.
C. If the General Partner shall elect to purchase from its stockholders
REIT Shares 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 or for the purpose of retiring such REIT Shares, 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 advanced to the General Partner or
reimbursed to the General Partner, subject to the condition that: (i) if such
REIT Shares subsequently are sold by the General Partner, the General Partner
shall pay to the Partnership any proceeds received by the General Partner for
such REIT Shares (which sales proceeds shall include the amount of dividends
reinvested under any dividend reinvestment or similar program; provided, that a
transfer of REIT Shares for Partnership 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 thirty (30) days after the purchase
thereof, or the General Partner otherwise determines not to retransfer such REIT
Shares, the General Partner, shall cause the Partnership to redeem a number of
Partnership Units held by the General Partner equal to the number of such REIT
Shares, as adjusted (x) pursuant to Section 7.5 (in the event the General
Partner acquires material assets, other than on behalf of the Partnership) and
(y) for stock dividends and distributions, stock splits and subdivisions,
reverse stock splits and combinations, distributions of rights, warrants or
options, and distributions of evidences of indebtedness or assets relating to
assets not received by the General Partner pursuant to a pro rata distribution
by the Partnership (in which case such advancement or reimbursement of expenses
shall be treated as having been made as a distribution in redemption of such
number of Partnership Units held by the General Partner).
D. 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 the General Partner's offering of REIT Shares, other shares of
capital stock of the General Partner or New Securities.
E. If and to the extent any reimbursements to the General Partner pursuant
to this Section 7.4 constitute gross income of the General Partner (as opposed
to the repayment of advances made by the General Partner on behalf of the
Partnership), such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.
35
Section 7.5 Outside Activities of the General Partner
A. Except in connection with a transaction authorized in Section 11.2,
without the Consent of the Limited Partners, the General Partner shall not,
directly or indirectly, enter into or conduct any business, other than in
connection with the ownership, acquisition and disposition of Partnership
Interests as a General Partner and the management of the business of the
Partnership, its operation as a public reporting company with a class (or
classes) of securities registered under the Exchange Act, its operation as a
REIT and such activities as are incidental to the same. Without the Consent of
the Limited Partners, the General Partner shall not, directly or indirectly,
participate in or otherwise acquire any interest in any real or personal
property, except its General Partner Interest, its minority interest in any
Subsidiary Partnership(s) (held directly or indirectly through a Qualified REIT
Subsidiary or limited liability company) that the General Partner holds in order
to maintain such Subsidiary Partnership's status as a partnership, and such bank
accounts, similar instruments or other short-term investments as it deems
necessary to carry out its responsibilities contemplated under this Agreement
and the Charter. In the event the General Partner desires to contribute cash to
any Subsidiary Partnership to acquire or maintain an interest of 1% or less in
the capital of such partnership, the General Partner may acquire or maintain an
interest of 1% or less in the capital of such partnership, and the General
Partner may acquire such cash from the Partnership as a loan or in exchange for
a reduction in the General Partner's Partnership Units, in an amount equal to
the amount of such cash divided by the Fair Market Value of a REIT Share on the
day such cash is received by the General Partner. Notwithstanding the foregoing,
the General Partner may acquire Properties in exchange for REIT Shares, to the
extent such Properties are immediately contributed by the General Partner to the
Partnership, pursuant to the terms described in Section 4.3.D. Any Limited
Partner Interests acquired by the General Partner, whether pursuant to exercise
by a Limited Partner of its right of Redemption, or otherwise, shall be
automatically converted into a General Partner Interest comprised of an
identical number of Partnership Units with the same rights, priorities and
preferences as the class or series so acquired. If, at any time, the General
Partner acquires material assets (other than on behalf of the Partnership) the
definition of "REIT Shares Amount" and the definition of "Deemed Value of
Partnership Interests" shall be adjusted, as reasonably determined by the
General Partner, to reflect the relative Fair Market Value of a share of capital
stock of the General Partner relative to the Deemed Partnership Interest Value
of the related Partnership Unit. The General Partner's General Partner Interest
in the Partnership, its minority interest in any Subsidiary Partnership(s) (held
directly or indirectly through a Qualified REIT Subsidiary) that the General
Partner holds in order to maintain such Subsidiary Partnership's status as a
partnership, and interests in such short-term liquid investments, bank accounts
or similar instruments as the General Partner deems necessary to carry out its
responsibilities contemplated under this Agreement and the Charter are interests
which the General Partner is permitted to acquire and hold for purposes of this
Section 7.5.A.
B. In the event the General Partner exercises its rights under the Charter
to purchase REIT Shares, other capital stock of the General Partner or New
Securities, as the case may be, then the General Partner shall cause the
Partnership to purchase from it a number of Partnership Units equal to the
number of REIT Shares, other capital stock of the General Partner or New
Securities, as the case may be, so purchased on the same terms that the General
Partner purchased such REIT Shares, other capital stock of the General Partner
or New Securities, as the case may be.
36
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute to Persons in which it has an
equity investment, and such Persons may borrow funds from the Partnership, on
terms and conditions established in the sole and absolute discretion of the
General Partner. The foregoing authority shall not create any right or benefit
in favor of any 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 discretion deems advisable.
C. The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans funded by the Partnership for the benefit of
employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner,
or any of the Partnership's Subsidiaries. The General Partner also is expressly
authorized to cause the Partnership to issue to it Partnership Units
corresponding to REIT Shares issued by the General Partner pursuant to any Stock
Plan or any similar or successor plan and to repurchase such Partnership Units
from the General Partner to the extent necessary to permit the General Partner
to repurchase such REIT Shares in accordance with such plan.
D. 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.
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. To the fullest extent permitted by law, the Partnership shall indemnify
an Indemnitee from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including 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 any 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, fraud 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
37
loan guaranty or otherwise, for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
subject to), and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnity agreements
consistent with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7.A. The termination of any proceeding by conviction
or upon a plea of nolo contendere or its equivalent, or any entry of an order of
probation prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this Section 7.7.A.
Any indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitee, and neither the General Partner
nor any Limited Partner shall have any obligation to contribute to the capital
of the Partnership or otherwise provide funds to enable the Partnership to fund
its obligations under this Section 7.7, except to the extent otherwise expressly
agreed to by such Partner and the Partnership.
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 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 Indemnitee 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
38
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 the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
I. If and to the extent any reimbursements to the General Partner pursuant
to this Section 7.7 constitute gross income of the General Partner (as opposed
to the repayment of advances made by the General Partner on behalf of the
Partnership) such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.
J. Any indemnification hereunder is subject to, and limited by, the
provisions of Section 10-107 of the Act.
K. In the event the Partnership is made a party to any litigation or
otherwise incurs any loss or expense as a result of or in connection with any
Partner's personal obligations or liabilities unrelated to Partnership business,
such Partner shall indemnify and reimburse the Partnership for all such loss and
expense incurred, including legal fees, and the Partnership interest of such
Partner may be charged therefor. The liability of a Partner under this Section
7.7.K shall not be limited to such Partner's Partnership Interest, but shall be
enforceable against such Partner personally.
Section 7.8 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this Agreement,
none of the General Partner nor any of its officers, directors, agents or
employees shall be liable or accountable in damages or otherwise to the
Partnership, any Partners or any Assignees, or their successors or assigns, for
losses sustained, liabilities incurred or benefits not derived as a result of
errors in judgment or mistakes of fact or law or any act or omission if the
General Partner acted in good faith.
39
B. The Limited Partners expressly acknowledge that the General Partner is
acting for the benefit of the Partnership, the Limited Partners and the General
Partner's stockholders collectively. The General Partner is under no obligation
to give priority to the separate interests of the Limited Partners or the
General Partner's stockholders (including, without limitation, the tax
consequences to Limited Partners or Assignees or to stockholders) in deciding
whether to cause the Partnership to take (or decline to take) any actions. If
there is a conflict between the interests of the stockholders of the General
Partner on one hand and the Limited Partners on the other, the General Partner
shall endeavor in good faith to resolve the conflict in a manner not adverse to
either the stockholders of the General Partner or the Limited Partners;
provided, however, that for so long as the General Partner, owns a controlling
interest in the Partnership, any such conflict that cannot be resolved in a
manner not adverse to either the stockholders of the General Partner or the
Limited Partners shall be resolved in favor of the stockholders. The General
Partner shall not be liable under this Agreement to the Partnership or to any
Partner 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, 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 it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability of the General Partner and any of its officers,
directors, agents and employee'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 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 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
40
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 any
non-mandatory provision of the Act, any action of the General Partner on behalf
of the Partnership or any decision of the General Partner to refrain from acting
on behalf of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order (i) to protect the ability
of the General Partner, for so long as the General Partner has determined to
qualify as a REIT, to continue to qualify as a REIT or (ii) to avoid the General
Partner 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 Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby 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 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 such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies 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
41
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 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 operations, management or control
(within the meaning of the Act) of the Partnership's business transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, 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 by a Limited Partner or its
Affiliates with the General Partner, Partnership or a Subsidiary, any Limited
Partner and any officer, director, employee, agent, trustee, Affiliate or
stockholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct 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. Subject
to such agreements, none of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the
Limited Partners benefiting from the business conducted by the General Partner,
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 rights of Redemption set forth in Section
8.6, no Limited Partner shall be entitled to the withdrawal or return of his or
her Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
as expressly set forth herein, no Limited Partner or Assignee shall have
priority over any other Limited Partner or Assignee either as to the return of
42
Capital Contributions, or otherwise expressly provided in this Agreement, or as
to profits, losses, distributions or credits.
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, 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 expense:
(1) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by the General Partner
pursuant to the Securities Exchange Act, and each communication sent to the
stockholders of the General Partner;
(2) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers of attorney
pursuant to which this Agreement, the Certificate and all amendments thereto
have been executed; and
(5) to obtain true and full information regarding the amount of cash
and a description and statement of any other property or services contributed by
each Partner and 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 in writing of any
adjustment made in the calculation of the REIT Shares Amount within a reasonable
time after the date such change becomes effective.
C. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner believes to be in the
nature of trade secrets or other information the disclosure of which the General
Partner in good faith believes is not in the best interests of the Partnership
or (ii) the Partnership or the General Partner is required by law or by
agreements with unaffiliated third parties to keep confidential.
Section 8.6 Redemption Rights
A. On or after the date fourteen (14) months after (i) the Effective Date,
with respect to the Partnership Units acquired on or contemporaneously with the
Effective Date, or (ii) the respective Option Agreement Effective Date, with
respect to the Partnership Units received pursuant to Option Agreements, or
(iii) the ROFO Agreement Effective Date, with respect to the Partnership Units
received pursuant to the ROFO Agreement, or on or after such later date as
expressly provided in an agreement entered into between the Partnership and any
Limited Partner, each Limited Partner
43
shall have the right (subject to the terms and conditions set forth herein and
in any other such agreement, as applicable) to require the Partnership to redeem
all or a portion of the Partnership Units held by such Limited Partner (such
Partnership Units being hereafter referred to as "Tendered Units") in exchange
for the Cash Amount (a "Redemption"); provided that the terms of such
Partnership Units do not provide that such Partnership Units are not entitled to
a right of Redemption. Unless otherwise expressly provided in this Agreement or
in a separate agreement entered into between the Partnership and the holders of
such Partnership Units, all Partnership Units shall be entitled to a right of
Redemption hereunder. The Tendering Partner shall have no right, with respect to
any Partnership Units so redeemed, to receive any distributions paid on or after
the Specified Redemption Date. Any Redemption shall be exercised pursuant to a
Notice of Redemption delivered to the General Partner by the Limited Partner who
is exercising the right (the "Tendering Partner"). The Cash Amount shall be
payable to the Tendering Partner within ten (10) days of the Specified
Redemption Date.
B. Notwithstanding Section 8.6.A above, if a Limited Partner has delivered
to the General Partner a Notice of Redemption then the General Partner may, in
its sole and absolute discretion, (subject to the limitations on ownership and
transfer of REIT Shares set forth in the Charter) elect to acquire some or all
of the Tendered Units from the Tendering Partner in exchange for the REIT Shares
Amount (as of the Specified Redemption Date) and, if the General Partner so
elects, the Tendering Partner shall sell the Tendered Units to the General
Partner in exchange for the REIT Shares Amount. In such event, the Tendering
Partner shall have no right to cause the Partnership to redeem such Tendered
Units. The General Partner shall promptly give such Tendering Partner written
notice of its election, and the Tendering Partner may elect to withdraw its
redemption request at any time prior to the acceptance of the cash or REIT
Shares Amount by such Tendering Partner.
C. The REIT Shares Amount, if applicable, shall be delivered as duly
authorized, validly issued, fully paid and nonassessable REIT Shares and, if
applicable, free of any pledge, lien, encumbrance or restriction, other than
those provided in the Charter, the Bylaws of the General Partner, the Securities
Act, relevant state securities or blue sky laws and any applicable registration
rights agreement with respect to such REIT Shares entered into by the Tendering
Partner. Notwithstanding any delay in such delivery (but subject to Section
8.6.E), the Tendering Partner shall be deemed the owner of such REIT Shares for
all purposes, including without limitation, rights to vote or consent, and
receive dividends, as of the Specified Redemption Date. In addition, the REIT
Shares for which the Partnership Units might be exchanged shall also bear a
legend which generally provides the following:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER
FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST ("REIT") UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY
PROVIDED IN THE CORPORATION'S ARTICLES OF AMENDMENT AND RESTATEMENT, (i) NO
PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION'S COMMON
STOCK IN EXCESS OF 9.8% (BY VALUE OR BY NUMBER OF SHARES, WHICHEVER IS MORE
RESTRICTIVE) OF THE
44
OUTSTANDING COMMON STOCK OF THE CORPORATION; (ii) NO PERSON MAY BENEFICIALLY OR
CONSTRUCTIVELY OWN SHARES OF COMMON STOCK THAT WOULD RESULT IN THE CORPORATION
BEING "CLOSELY HELD" UNDER SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE THE
CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (iii) NO PERSON MAY TRANSFER
SHARES OF COMMON STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE
CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY
OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES
OF COMMON STOCK IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY
THE CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE
VIOLATED, THE SHARES OF COMMON STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY
TRANSFERRED TO THE TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE
BENEFICIARIES. IN ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND
CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE
BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY
VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF
CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED
ABOVE MAY BE VOID AB INITIO. ALL TERMS IN THIS LEGEND THAT ARE DEFINED IN THE
ARTICLES OF AMENDMENT AND RESTATEMENT OF THE CORPORATION SHALL HAVE THE MEANINGS
ASCRIBED TO THEM IN THE ARTICLES OF AMENDMENT AND RESTATEMENT OF THE
CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH,
INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH
HOLDER OF SHARES OF COMMON STOCK ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR
SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL
OFFICE.
D. Each Limited Partner covenants and agrees with the General Partner that
all Tendered Units shall be delivered to the General Partner free and clear of
all liens, claims and encumbrances whatsoever and should any such liens, claims
and/or encumbrances exist or arise with respect to such Tendered Units, the
General Partner shall be under no obligation to acquire the same. Each Limited
Partner further agrees that, in the event any state or local property transfer
tax is payable as a result of the transfer of its Tendered Units to the General
Partner (or its designee), such Limited Partner shall assume and pay such
transfer tax.
E. Notwithstanding the provisions of Section 8.6.A, 8.6.B, 8.6.C or any
other provision of this Agreement, a Limited Partner (i) shall not be entitled
to effect a Redemption for cash or an exchange for REIT Shares to the extent the
ownership or right to acquire REIT Shares pursuant to such exchange by such
Partner on the Specified Redemption Date could cause such Partner or any other
Person to violate the restrictions on ownership and transfer of REIT Shares set
forth in the Charter and (ii) shall have no rights under this Agreement to
acquire REIT Shares which would otherwise be prohibited under the Charter. To
the extent any attempted Redemption or exchange for REIT Shares would be in
violation of this Section 8.6.E, it shall be null and void ab initio and such
Limited Partner shall not acquire any rights or economic interest
45
in the cash otherwise payable upon such Redemption or the REIT Shares otherwise
issuable upon such exchange.
F. Notwithstanding anything herein to the contrary (but subject to Section
8.6.E), with respect to any Redemption or exchange for REIT Shares pursuant to
this Section 8.6:
(1) All Partnership Units acquired by the General Partner pursuant
thereto shall automatically, and without further action required, be converted
into and deemed to be General Partner Interests comprised of the same number and
class of Partnership Units.
(2) Without the consent of the General Partner, each Limited Partner
may not effect a Redemption for less than 1,000 Partnership Units or, if the
Limited Partner holds less than 1,000 Partnership Units, all of the Partnership
Units held by such Limited Partner.
(3) Without the consent of the General Partner, each Limited Partner
may not effect a Redemption during the period after the Partnership Record Date
with respect to a distribution and before the record date established by the
General Partner for a distribution to its stockholders of some or all of its
portion of such distribution.
(4) The consummation of any Redemption or exchange for REIT Shares
shall be subject to the expiration or termination of the applicable waiting
period, if any, under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
(5) Each Tendering Partner shall continue to own all Partnership
Units subject to any Redemption or exchange for REIT Shares, and be treated as a
Limited Partner with respect to such Partnership Units for all purposes of this
Agreement, until such Partnership Units are transferred to the General Partner
and paid for or exchanged on the Specified Redemption Date. Until a Specified
Redemption Date, the Tendering Partner shall have no rights as a stockholder of
the General Partner with respect to such Tendering Partner's Partnership Units.
G. In the event that the Partnership issues additional Partnership
Interests to any Additional Limited Partner pursuant to Section 4.3.B, the
General Partner shall make such revisions to this Section 8.6 as it determines
are necessary to reflect the issuance of such additional Partnership Interests.
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 appropriate books and records with respect to the
Partnership's business, including without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of any information storage device,
provided, that the records so maintained are convertible into clearly legible
written form within a reasonable period of time.
46
The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than 105 days after the
close of each Partnership Year, or such earlier date as they are filed with the
Securities and Exchange Commission, 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 45 days after the
close of each calendar quarter (except the last calendar quarter of each year),
or such earlier date as they are filed with the Securities and Exchange
Commission, 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 applicable law
or regulation, or as the General Partner determines to be appropriate.
Section 9.4 Nondisclosure of Certain Information
Notwithstanding the provisions of Sections 9.1 and 9.3, the General
Partner may keep confidential from the Limited Partners any information that the
General Partner believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interest of the Partnership or which the Partnership is
required by law or by agreements with unaffiliated third parties to keep
confidential.
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 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. Each Limited Partner shall
promptly provide the General Partner with any information reasonably requested
by the General Partner relating to any Contributed Property contributed
(directly or indirectly) by such Limited Partner to the Partnership.
47
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code, including the election under Section 754 of the
Code. The General Partner shall have the right to seek to revoke any such
election (including without limitation, any election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is 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 6223(c) 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 and profit interest of each of the
Limited Partners and Assignees; provided, however, that such information is
provided to the Partnership by the Limited Partners and 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 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 United States Claims
Court, or the filing of a complaint for refund with the District Court of the
United States for the district in which the Partnership's principal place of
business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the IRS
at any time and, if any part of such request is not allowed by the IRS, to file
an appropriate pleading (petition or complaint) for judicial review with respect
to such request;
(5) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to be taken into
account by a Partner for tax purposes, or an item affected by such item; and
48
(6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review proceeding to
the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 shall be fully applicable to the tax matters
partner in its capacity as such.
C. 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) 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 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
receivable of the Partnership from such Limited Partner, which receivable shall
be paid by such Limited Partner within 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. Any amounts payable by a Limited Partner hereunder shall bear
interest at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal,
plus two percentage points (but not higher than the maximum lawful rate) from
the date such amount is due (i.e., 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.
49
ARTICLE 11.
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. The term "transfer," when used in this Article 11 with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner purports to assign its General Partner Interest to another
Person or by which a Limited Partner purports to assign its Limited Partner
Interest to another Person, and includes a sale, assignment, gift (outright or
in trust), 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 or exchange for REIT Shares pursuant to
Section 8.6 except as otherwise provided herein. No part of the interest of a
Limited Partner shall be subject to the claims of any creditor, any spouse for
alimony or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered except as may be specifically provided for
in this Agreement or consented to by the General Partner.
B. No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article 11.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void ab initio unless
otherwise consented by the General Partner in its sole and absolute discretion.
Section 11.2 Transfer of General Partner's Partnership Interest
A. Except in connection with a Termination Transaction permitted under
Section 11.2.B, the General Partner shall not withdraw from the Partnership and
shall not transfer all or any portion of its interest in the Partnership
(whether by sale, statutory merger or consolidation, liquidation or otherwise)
without the Consent of the Limited Partners, which may be given or withheld by
each Limited Partner in its sole and absolute discretion, and only upon the
admission of a successor General Partner pursuant to Section 12.1. Upon any
transfer of a Partnership Interest in accordance with the provisions of this
Section 11.2, the transferee shall become a Substitute General Partner for all
purposes herein, and shall be vested with the powers and rights of the
transferor General Partner, and shall be liable for all obligations and
responsible for all duties of the General Partner, once such transferee has
executed such instruments as may be necessary to effectuate such admission and
to confirm the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired. It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes, by operation of law or express agreement, all of the
obligations of the transferor General Partner under this Agreement with respect
to such transferred Partnership Interest, and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor General Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor General Partner of
its obligations under this Agreement without the Consent of the Limited
Partners, in their reasonable discretion. In the event the General Partner
withdraws from the Partnership, in violation of this Agreement or otherwise, or
otherwise dissolves or terminates, or upon the Incapacity of the General
Partner,
50
all of the remaining Partners may elect to continue the Partnership business by
selecting a Substitute General Partner in accordance with the Act.
B. The General Partner shall not engage in any merger, consolidation or
other combination with or into another person, sale of all or substantially all
of its assets or any reclassification, recapitalization or change of its
outstanding equity interests ("Termination Transaction") unless (1) the
Termination Transaction has been approved by a Consent of the Partners and (2)
either clause (a) or (b) below is satisfied:
(a) in connection with such Termination Transaction all
Limited Partners either will receive, or will have the right to elect to
receive, for each Partnership Unit an amount of cash, securities, or other
property equal to the product of the REIT Shares Amount 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 commencing upon
and continuing after the date on which the Termination Transaction is
consummated; provided, that, if, in connection with the Termination Transaction,
a purchase, tender or exchange offer shall have been made to and accepted by the
holders of more than fifty percent (50%) of the outstanding REIT Shares, each
holder of Partnership Units shall receive, or shall have the right to elect to
receive, the greatest amount of cash, securities, or other property which such
holder would have received had it exercised its right to Redemption (as set
forth in Section 8.6) and received REIT Shares in exchange for its Partnership
Units immediately prior to the expiration of such purchase, tender or exchange
offer and had thereupon accepted such purchase, tender or exchange offer and
then such Termination Transaction shall have been consummated; or
(b) the following conditions are met: (i) substantially all of
the assets directly or indirectly owned by the surviving entity are held
directly or indirectly by the Partnership or another limited partnership or
limited liability company which is the survivor of a merger, consolidation or
combination of assets with the Partnership (in each case, the "Surviving
Partnership"); (ii) the holders of Partnership Units own a percentage interest
of the Surviving Partnership based on the relative fair market value of the net
assets of the Partnership and the other net assets of the Surviving Partnership
immediately prior to the consummation of such transaction; (iii) the rights,
preferences and privileges of such holders in the Surviving Partnership are at
least as favorable as those in effect immediately prior to the consummation of
such transaction and as those applicable to any other limited partners or
non-managing members of the Surviving Partnership; and (iv) such rights of the
Limited Partners include at least one of the following: (a) the right to redeem
their interests in the Surviving Partnership for the consideration available to
such persons pursuant to Section 11.2.B(2)(a); or (b) the right to redeem their
Partnership Units for cash on terms equivalent to those in effect with respect
to their Partnership Units immediately prior to the consummation of such
transaction, or, if the ultimate controlling person of the Surviving Partnership
has publicly traded common equity securities, such common equity securities,
with an exchange ratio based on the determination of relative fair market value
of such securities and the REIT Shares.
Section 11.3 Limited Partners' Rights to Transfer
A. Prior to the fourteen (14) months after the closing of the initial
public offering of REIT Shares, no Limited Partner shall transfer all or any
portion of its Partnership Interest to any
51
transferee without the consent of the General Partner, which consent may be
withheld in its sole and absolute discretion; provided, however, that any
Limited Partner may, at any time (whether prior to or after such fourteen (14)
month period), without the consent of the General Partner, (i) transfer all or
any portion of its Partnership Interest to the General Partner, (ii) transfer
all or any portion of its Partnership Interest to an Affiliate, another original
Limited Partner or to an Immediate Family Member, subject to the provisions of
Section 11.6, (iii) transfer all or any portion of its Partnership Interest to a
trust for the benefit of a charitable beneficiary or to a charitable foundation,
subject to the provisions of Section 11.6, and (iv) subject to the provisions of
Section 11.6, pledge (a "Pledge") all or any portion of its Partnership Interest
to a lending institution, which is not an Affiliate of such Limited Partner, as
collateral or security for a bona fide loan or other extension of credit, and
transfer such pledged Partnership Interest to such lending institution in
connection with the exercise of remedies under such loan or extension or credit,
and the transfer of such pledged Partnership Interest by the lender to any
transferee. After such fourteen (14) month anniversary, each Limited Partner or
Assignee (resulting from a transfer made pursuant to clauses (i)-(iv) of the
proviso of the preceding sentence) shall have the right to transfer all or any
portion of its Partnership Interest, subject to the provisions of Section 11.6
and the satisfaction of each of the following conditions (in addition to the
right of each such Limited Partner or Assignee to continue to make any such
transfer permitted by clauses (i)-(iv) of such proviso without satisfying either
of the following conditions):
(1) General Partner Right of First Refusal. The transferring Partner
shall give written notice of the proposed transfer to the General Partner, which
notice shall state (i) the identity of the proposed transferee, and (ii) the
amount and type of consideration proposed to be received for the transferred
Partnership Units. The General Partner shall have ten (10) days upon which to
give the transferring Partner notice of its election to acquire the Partnership
Units on the proposed terms. If it so elects, it shall purchase the Partnership
Units on such terms within ten (10) days after giving notice of such election.
If it does not so elect, the transferring Partner may transfer such Partnership
Units to a third party, on economic terms no more favorable to the transferee
than the proposed terms, subject to the other conditions of this Section 11.3.
(2) Qualified Transferee. Any transfer of a Partnership Interest
shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such transferred Partnership Interest and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor corporation by
operation of law) shall relieve the transferor Partner of its obligations under
this Agreement without the approval of the General Partner, in its reasonable
discretion. Notwithstanding the foregoing, any transferee of any transferred
Partnership Interest shall be subject to any and all ownership limitations
contained in the Charter and to the representations in Section 3.4.D. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take
subject to the obligations of the transferor hereunder. Unless admitted as a
Substitute Limited Partner, no transferee, whether by a voluntary transfer, by
operation of law or otherwise, shall have any rights hereunder, other than the
rights of an Assignee as provided in Section 11.5.
52
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 otherwise permitted under
Section 11.3 by a Limited Partner of his or her Partnership Units if, in the
opinion of legal counsel to the Partnership, such transfer would require the
filing of a registration statement under the Securities Act by the Partnership
or would otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Unit.
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a transferee as a
Limited Partner in his or her place (including any transferee permitted by
Section 11.3). The General Partner shall, however, have the right to consent to
the admission of a transferee of the interest of a Limited Partner pursuant to
this Section 11.4 as a Substituted Limited Partner, which consent may be given
or withheld by the General Partner in its sole and absolute discretion. The
General Partner's failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any
cause of action against the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement. The admission of any transferee as a Substituted Limited Partner
shall be subject to the transferee executing and delivering to the Partnership
an acceptance of all of the terms and conditions of this Agreement (including
without limitation, the provisions of Section 2.4 and such other documents or
instruments as may be required to effect the admission), each in form and
substance satisfactory to the General Partner) and the acknowledgment by such
transferee that each of the representations and warranties set forth in Section
3.4 are true and correct with respect to such transferee as of the date of the
transfer of the Partnership Interest to such transferee and will continue to be
true to the extent required by such representations and warranties.
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
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the
53
share of Net Income, Net Losses, gain and loss attributable to the Partnership
Units assigned to such transferee, the rights to transfer the Partnership Units
provided in this Article 11, the right of Redemption provided in Section 8.6,
but shall not be deemed to be a holder of Partnership Units for any other
purpose under this Agreement, and shall not be entitled to effect a Consent with
respect to such Partnership Units on any matter presented to the Limited
Partners for approval (such Consent remaining with the transferor Limited
Partner). 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.
Notwithstanding anything contained in this Agreement to the contrary, as a
condition to becoming an Assignee, any prospective Assignee must first execute
and deliver to the Partnership an acknowledgment that each of the
representations and warranties set forth in Section 3.4 are true and correct
with respect to such prospective Assignee as of the date of the prospective
assignment of the Partnership Interest to such prospective Assignee and will
continue to be true to the extent required by such representations or
warranties.
Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other than as a
result of (i) a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 and the transferee(s) of such
Partnership Units being admitted to the Partnership as a Substituted Limited
Partner or (ii) pursuant to the exercise of its right of Redemption of all of
such Limited Partner's Partnership Units under Section 8.6; provided that after
such transfer, exchange or redemption such Limited Partner owns no Partnership
Units.
B. Any Limited Partner who shall transfer all of such Limited Partner's
Partnership Units in a transfer permitted pursuant to this Article 11 where such
transferee was admitted as a Substituted Limited Partner or pursuant to the
exercise of its rights of Redemption of all of such Limited Partner's
Partnership Units under Section 8.6 shall cease to be a Limited Partner;
provided that after such transfer, exchange or redemption such Limited Partner
owns no Partnership Units.
C. Transfers pursuant to this Article 11 may only be made on the first day
of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.
D. If any Partnership Interest is transferred, assigned or redeemed during
any quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or transferred or redeemed pursuant to Section
8.6, on any day other than the first day of a Partnership Year, then Net Income,
Net Losses, each item thereof and all other items attributable to such
Partnership Interest for such fiscal year shall be divided and allocated between
the transferor Partner and the transferee Partner by taking into account their
varying interests during the fiscal year using a method selected by the General
Partner that is in accordance with Section 706(d) of the Code. All distributions
of Available Cash with respect to which the Partnership Record Date is before
the date of such transfer, assignment, exchange or redemption shall be made to
the transferor Partner, and all distributions of Available Cash thereafter, in
the case of a transfer or assignment other than a redemption, shall be made to
the transferee Partner.
54
E. In addition to any other restrictions on transfer herein contained,
including without limitation the provisions of this Article 11 and Section 2.6,
in no event may any transfer or assignment of a Partnership Interest by any
Partner (including pursuant to a Redemption or exchange for REIT Shares pursuant
to Section 8.6) be made (i) to any person or entity who lacks the legal right,
power or capacity to own a Partnership Interest; (ii) in violation of applicable
law; (iii) except with the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, of any component portion of a
Partnership Interest, such as the Capital Account, or rights to distributions,
separate and apart from all other components of a Partnership Interest; (iv)
except with the consent of the General Partner, which may be given or withheld
in its sole and absolute discretion, if in the opinion of legal counsel to the
Partnership such transfer could cause a termination of the Partnership for
federal or state income tax purposes (except as a result of the Redemption or
exchange for REIT Shares of all Partnership Units held by all Limited Partners
or pursuant to a transaction expressly permitted under Section 11.2); (v) if in
the opinion of counsel to the Partnership such transfer could cause the
Partnership to cease to be classified as a partnership for federal income tax
purposes (except as a result of the Redemption or exchange for REIT Shares of
all Partnership Units held by all Limited Partners); (vi) if such transfer would
cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of ERISA, a "party-in-interest" (as defined in Section 3(14)
of ERISA) or a "disqualified person" (as defined in Section 4975(c) of the
Code); (vii) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.2-101; (viii) if such transfer requires the registration of such
Partnership Interest pursuant to any applicable federal or state securities
laws; (ix) except with the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, if such transfer (1) could be
treated as effectuated through an "established securities market" or a
"secondary market" (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code, (2) could cause the Partnership to become a "Publicly
Traded Partnership," as such term is defined in Sections 469(k)(2) or 7704(b) of
the Code or (3) could cause the Partnership to fail one or more of the Safe
Harbors (as defined below); (x) if such transfer subjects the Partnership to be
regulated under the Investment Company Act of 1940, the Investment Advisors Act
of 1940 or the Employee Retirement Income Security Act of 1974, each as amended;
(xi) except with the consent of the General Partner, which may be given or
withheld in its sole discretion, if the transferee or assignee of such
Partnership Interest is unable to make the representations set forth in Section
3.4.C; (xii) if such transfer is 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, except with the consent of the General Partner, which may
be given or withheld in its sole and absolute discretion; and provided, that, as
a condition to granting such consent the lender may be required to enter into an
arrangement with the Partnership and the General Partner to redeem or exchange
for the REIT Shares Amount any Partnership Units in which a security interest is
held 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; or (xiii) if in the opinion of legal counsel for
the Partnership such transfer could adversely affect the ability of the General
Partner to continue to qualify as a REIT or, except with the consent of the
General Partner, which may be given or withheld in its sole and absolute
discretion, subject the General Partner to any additional taxes under Section
857 or Section 4981 of the Code.
55
F. The General Partner shall monitor the transfers of interests in the
Partnership to determine (i) if such interests are being traded on an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code and (ii)
whether such transfers of interests would result in the Partnership being unable
to qualify for the "safe harbors" set forth in Regulations Section 1.7704-1 (or
such other guidance subsequently published by the IRS setting forth safe harbors
under which interests will not be treated as "readily tradable on a secondary
market (or the substantial equivalent thereof)" within the meaning of Section
7704 of the Code) (the "Safe Harbors"). The General Partner shall have the
authority (but shall not be required) to take any steps it determines are
necessary or appropriate in its sole and absolute discretion to prevent any
trading of interests which could cause the Partnership to become a "publicly
traded partnership," or any recognition by the Partnership of such transfers, or
to insure that one or more of the Safe Harbors is met.
ARTICLE 12.
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 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 Article 11.
Section 12.2 Admission of Additional Limited Partners
A. After the admission to the Partnership of the initial Limited Partners
on the date hereof, a Person who makes a Capital Contribution to the Partnership
in accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 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 receipt of the Capital Contribution in respect of such Limited
Partner and the consent of the General Partner to such admission. If any
Additional Limited Partner is admitted
56
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 Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year using a method selected by
the General Partner that is in accordance with Section 706(d) of the Code. 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 (other than in its capacity
as an Assignee) and, except as otherwise agreed to by the Additional Limited
Partners and the General Partner, all distributions of Available Cash thereafter
shall be made to all 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.
ARTICLE 13.
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner
(selected as described in Section 13.1.B below) 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 (each a "Liquidating
Event"):
A. the expiration of its term as provided in Section 2.5;
B. an event of withdrawal of the General Partner, as defined in the Act,
unless, within 90 days after the withdrawal, all of the remaining Partners agree
in writing, in their sole and absolute discretion, to continue the business of
the Partnership and to the appointment, effective as of the date of withdrawal,
of a substitute General Partner;
C. subject to compliance with Section 11.2 an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;
D. entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act;
57
E. 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;
F. the Incapacity of the General Partner, unless all of the remaining
Partners in their sole and absolute discretion 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 Incapacity, of a substitute General Partner;
G. the Redemption or exchange for REIT Shares of all Partnership Units
(other than those of the General Partner) pursuant to this Agreement; 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
"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 positive Capital Account balances, determined after
taking into account all Capital Account adjustments for all prior periods and
the Partnership taxable year during which the liquidation occurs (other than
those made as a result of the liquidating distribution set forth in this Section
13.2.A(4)).
58
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.
B. Notwithstanding the provisions of Section 13.2.A which require
liquidation of the assets of the Partnership, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the Partnership
the Liquidator determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) 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, undivided interests in such
Partnership assets as the Liquidator deems not suitable for liquidation. Any
such distributions in-kind shall be made only if, in the good faith judgment of
the Liquidator, such distributions in-kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
Section 13.3 Capital Contribution Obligation
If any Partner has a deficit balance in his or her Capital Account
(after giving effect to all contributions, distributions and allocations for the
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 at any time shall not
be considered a debt owed to the Partnership or to any other Person for any
purpose whatsoever, except to the extent otherwise expressly agreed to by such
Partner and the Partnership.
Section 13.4 Compliance with Timing Requirements of Regulations
In the discretion of the Liquidator or the General Partner, a pro
rata portion of the distributions that would otherwise be made to the General
Partner and Limited Partners pursuant to this Article 13 may be:
(1) distributed to a trust established for the benefit of the
General Partner and Limited Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or 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 the Liquidator or the General
Partner, in the same proportions and 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
59
distributed to the General Partner and Limited Partners in the manner and
priority set forth in Section 13.2.A as soon as practicable.
Section 13.5 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the event
the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have contributed all of its assets
and liabilities to a new partnership in exchange a for an interest in the new
partnership. Immediately thereafter, the Partnership shall be deemed to
distribute interests in the new partnership to the General Partner and Limited
Partners in proportion to their respective interests in the Partnership in
liquidation of the Partnership.
Section 13.6 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 his Capital
Contribution and shall have no right or power to demand or receive property from
the General Partner.
Section 13.7 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that
would, but for provisions of Section 13.1, result in a dissolution of the
Partnership, the General Partner shall, within 30 days thereafter, provide
written notice thereof to each of the Partners and to all other parties with
whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).
Section 13.8 Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2, the Partnership shall be terminated and
the Certificate and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Maryland shall be cancelled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
Section 13.9 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, 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.
60
Section 13.10 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14.
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
Section 14.1 Amendments
A. The actions requiring consent or approval of the Partners or of the
Limited Partners pursuant to this Agreement, including Section 7.3, or otherwise
pursuant to applicable law, are subject to the procedures in this Article 14.
B. Amendments to this Agreement requiring the consent or approval of
Limited Partners may be proposed by the General Partner or by Limited Partners
holding twenty-five percent (25%) or more of the Partnership Interests held by
Limited Partners. The General Partner shall seek the written consent of the
Limited Partners on the proposed amendment or shall call a meeting to vote
thereon and to transact any other business that it may deem appropriate. For
purposes of obtaining a written consent, the General Partner may require a
response within a reasonable specified time, but not less than 15 days, and
failure to respond in such time period shall constitute a consent which is
consistent with the General Partner's recommendation (if so recommended) with
respect to the proposal; provided, that, an action shall become effective at
such time as requisite consents are received even if prior to such specified
time.
Section 14.2 Action by 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-five percent (25%)or more of the Partnership
Interests held by Limited Partners. The notice 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 days nor more than 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 Limited Partners or of the Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in Section
14.1.
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 the percentage as is expressly required by this
Agreement for the action in question. Such consent may be in one instrument or
in several instruments, and shall have the same force and effect as a vote of
the Percentage Interests of the Partners (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
61
by the Limited Partner or his attorney-in-fact. No proxy shall be valid after
the expiration of 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.
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.
E. On matters on which Limited Partners are entitled to vote, each Limited
Partner shall have a vote equal to the number of Partnership Units held.
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
as the Partners shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" 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.
62
Section 15.6 Creditors
Other than as expressly set forth herein with respect to
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 any 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 in accordance with and governed by
the laws of the State of Maryland, without regard to the principles of conflicts
of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 Entire Agreement
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto.
Section 15.12 No Rights as Stockholders
Nothing contained in this Agreement shall be construed as conferring
upon the holders of Partnership Units any rights whatsoever as stockholders of
the General Partner, including without limitation any right to receive dividends
or other distributions made to stockholders of the General Partner or to vote or
to consent or to receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the General Partner or any other
matter.
63
IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Agreement of Limited Partnership as of the date first written above.
XXXXXXX PROPERTIES, L.P.
By: Xxxxxxx Properties, Inc.,
a Maryland corporation
Its General Partner
By: _______________________________
Xxxxxx X. Xxxxx
Chief Financial Officer
LIMITED PARTNERS:
__________________________________________
Xxxxxx X. Xxxxxxx III
Xxxxxxx Partners, Inc.
a California corporation
By: ____________________________________
Xxxxxx X. Xxxxxxx III
Title:
Xxxxxxx Partners SCS, Inc.
a California corporation
By: ____________________________________
Xxxxxx X. Xxxxxxx III
Title:
Xxxxxxx Partners BGHS, LLC
a California limited liability company
By: ____________________________________
Xxxxxx X. Xxxxxxx III
Title:
S-1
Xxxxxxx Partners Pasadena Gen Par, Inc.
a Delaware corporation
By: ____________________________________
Xxxxxx X. Xxxxxxx III
Title:
Xxxxxxx Partners Development, Ltd.
a California limited partnership
By: ________________________________
Xxxxxx X. Xxxxxxx III
Title:
Xxxxxxx Partners WFC Holdings, LLC
a Delaware limited liability company
By: ________________________________
Xxxxxx X. Xxxxxxx III
Title:
Xxxxxxx Partners-Investments, LLC a
California limited liability company
(formerly known as Xxxxxxx/Xxxxxx
Investments, a California limited
partnership)
By: ________________________________
Xxxxxx X. Xxxxxxx III
Title:
S-2
Xxxxxxx Partners - Master Investments,
LLC a California limited liability
company (formerly known as Xxxxxxx/Xxxxxx
Partners-Master Investments, a
California limited partnership)
By: Xxxxxxx Partners, Inc.
Its: Managing Member
By: _______________________________
Xxxxxx X. Xxxxxxx III
Title:
Philadelphia Plaza-Phase II
a Pennsylvania general partnership
By: Xxxxxxx Xxxxxx Partners -
Commerce Square II, Ltd., a
California limited partnership
Its: Partner
By: Xxxxxx Partners Inc.,
a California corporation
Its: General Partner
By: ________________________
Xxxxx X. Xxxxxx
Title: President
__________________________________________
Xxxxxx X. Xxxxxxx
__________________________________________
Xxxxxxx X. Xxxxxx
__________________________________________
Xxxxxxx Xxxxxx Xxxxx
S-3
EXHIBIT A
PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS
AGREED VALUE
OF
NAME AND ADDRESS GROSS ASSET CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
OF PARTNER VALUE CONTRIBUTIONS PROPERTY* CONTRIBUTIONS UNITS INTEREST
---------- ----- ------------- --------- ------------- ----- --------
General Partner
Xxxxxxx Properties, Inc. $ - $
Limited Partners
Xxxxxx X. Xxxxxxx III $ - $
Xxxxxxx Partners, Inc. $ - $
Xxxxxxx Partners SCS, Inc. $ - $
Xxxxxxx Partners BGHS, LLC $ - $
Xxxxxxx Partners Pasadena
Gen Par, Inc. $ - $
Xxxxxxx Partners
Development, Ltd. $ - $
Xxxxxxx Partners WFC
Holdings, LLC $ - $
Xxxxxxx
Partners-Investments, LLC $ - $
Xxxxxxx Partners - Master
Investments, LLC $ - $
Philadelphia Plaza-Phase II $ - $
Xxxxxx X. Xxxxxxx $ - $
Xxxxxxx X. Xxxxxx $ - $
Xxxxxxx Xxxxxx Xxxxx $ - $
* Net of Debt (if any)
A-1
EXHIBIT B
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) transfers ____________
Limited Partnership Units in Xxxxxxx Properties, L.P. in accordance with the
terms of the Limited Partnership Agreement of Xxxxxxx Properties, L.P. and the
rights of Redemption referred to therein, (ii) surrenders such Limited
Partnership Units and all right, title and interest therein, and (iii) directs
that the cash (or, if applicable, REIT Shares) deliverable upon Redemption or
exchange be delivered to the address specified below, and if applicable, that
such REIT Shares be registered or placed in the name(s) and at the address(es)
specified below.
Dated:_____________________________
Name of Limited Partner:
______________________________
(Signature of Limited Partner)
______________________________
(Street Address)
______________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
______________________________
Issue REIT Shares to:
Please insert social security or identifying number:
Name:
B-1
EXHIBIT C
CONSTRUCTIVE OWNERSHIP DEFINITION
The term "Constructively Owns" means ownership determined through
the application of the constructive ownership rules of Section 318 of the Code,
as modified by Section 856(d)(5) of the Code. Generally, these rules provide the
following:
a. an individual is considered as owning the Ownership Interest that
is owned, actually or constructively, by or for his spouse, his children, his
grandchildren, and his parents;
b. an Ownership Interest that is owned, actually or constructively,
by or for a partnership, limited liability company or estate is considered as
owned proportionately by its partners or beneficiaries;
c. an Ownership Interest that is owned, actually or constructively,
by or for a trust is considered as owned by its beneficiaries in proportion to
the actuarial interest of such beneficiaries (provided, however, that in the
case of a "grantor trust" the Ownership Interest will be considered as owned by
the grantors);
d. if ten (10) percent or more in value of the stock in a
corporation is owned, actually or constructively, by or for any person, such
person shall be considered as owning the Ownership Interest that is owned,
actually or constructively, by or for such corporation in that proportion which
the value of the stock which such person so owns bears to the value of all the
stock in such corporation;
e. an Ownership Interest that is owned, actually or constructively,
by or for a partner or member which actually or constructively owns a 25% or
greater capital interest or profits interest in a partnership or limited
liability company, or by or to or for a beneficiary of an estate or trust shall
be considered as owned by the partnership, limited liability company, estate, or
trust (or, in the case of a grantor trust, the grantors);
f. if ten (10) percent or more in value of the stock in a
corporation is owned, actually or constructively, by or for any person, such
corporation shall be considered as owning the Ownership Interest that is owned,
actually or constructively, by or for such person;
g. if any person has an option to acquire an Ownership Interest
(including an option to acquire an option or any one of a series of such
options), such Ownership Interest shall be considered as owned by such person;
h. an Ownership Interest that is constructively owned by a person by
reason of the application of the rules described in paragraphs (a) through (g)
above shall, for purposes of applying paragraphs (a) through (g), be considered
as actually owned by such person provided, however, that (i) an Ownership
Interest constructively owned by an individual by reason of paragraph (a) shall
not be considered as owned by him for purposes of again applying paragraph (a)
in order to make another the constructive owner of such Ownership Interest, (ii)
an Ownership Interest constructively owned by a partnership, estate, trust, or
corporation by reason
C-1
of the application of paragraphs (e) or (f) shall not be considered as owned by
it for purposes of applying paragraphs (b), (c), or (d) in order to make another
the constructive owner of such Ownership Interest, (iii) if an Ownership
Interest may be considered as owned by an individual under paragraphs (a) or
(g), it shall be considered as owned by him under paragraph (g), and (iv) for
purposes of the above described rules, an S corporation shall be treated as a
partnership and any stockholder of the S corporation shall be treated as a
partner of such partnership except that this rule shall not apply for purposes
of determining whether stock in the S corporation is constructively owned by any
person.
i. For purposes of the above summary of the constructive ownership
rules, the term "Ownership Interest" means the ownership of stock with respect
to a corporation and, with respect to any other type of entity, the ownership of
an interest in either its assets or net profits.
C-2
EXHIBIT D
FORM OF PARTNERSHIP UNIT CERTIFICATE
CERTIFICATE FOR PARTNERSHIP UNITS OF
XXXXXXX PROPERTIES, L.P.
No. ____________ ____________ UNITS
Xxxxxxx Partners, Inc., as the General Partner of Xxxxxxx
Properties, L.P., a Maryland limited partnership (the "Operating Partnership"),
hereby certifies that ____________________ is a Limited Partner of the Operating
Partnership whose Partnership Interests therein, as set forth in the Amended and
Restated Agreement of Limited Partnership of Xxxxxxx Properties, L.P., (the
"Partnership Agreement"), under which the Operating Partnership is existing and
as filed in the office of the Maryland State Department of Assessments and
Taxation (copies of which are on file at the Operating Partnership's principal
office at 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 90013),
represent _______ units of limited partnership interest in the Operating
Partnership.
THE UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT AS OF
______________, 2003 AS IT MAY BE AMENDED FROM TIME TO TIME (A COPY OF WHICH IS
ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN SUCH
AGREEMENT, THE UNITS EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE GENERAL PARTNER AN
OPINION OF COUNSEL SATISFACTORY TO THE GENERAL PARTNER, TO THE EFFECT THAT THE
PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS.
DATED: _______________, ____.
XXXXXXX PROPERTIES, INC.
General Partner of
Xxxxxxx Properties, L.P.
ATTEST:
By: ______________________ By:______________________________
D-1
EXHIBIT E
SCHEDULE OF PARTNERS' OWNERSHIP
WITH RESPECT TO TENANTS
E-1
EXHIBIT F
SCHEDULE OF REIT SHARES
ACTUALLY OR CONSTRUCTIVELY OWNED BY LIMITED PARTNERS
OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE
F-1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXXXX PROPERTIES, L.P.
TABLE OF CONTENTS
PAGE
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ARTICLE 1. DEFINED TERMS ......................................................................... 1
Section 1.1 Definitions ......................................................... 1
Section 1.2 Rules of Construction ............................................... 15
ARTICLE 2. ORGANIZATIONAL MATTERS ................................................................ 15
Section 2.1 Organization ........................................................ 15
Section 2.2 Name ................................................................ 15
Section 2.3 Registered Office and Agent; Principal Office ....................... 15
Section 2.4 Power of Attorney ................................................... 15
Section 2.5 Term ................................................................ 17
ARTICLE 3. PURPOSE ............................................................................... 17
Section 3.1 Purpose and Business ................................................ 17
Section 3.2 Powers .............................................................. 17
Section 3.3 Partnership Only for Purposes Specified ............................. 17
Section 3.4 Representations and Warranties by the Parties ....................... 18
Section 3.5 Certain ERISA Matters ............................................... 20
ARTICLE 4. CAPITAL CONTRIBUTIONS ................................................................. 20
Section 4.1 Capital Contributions of the Partners ............................... 20
Section 4.2 Loans by Third Parties .............................................. 20
Section 4.3 Additional Funding and Capital Contributions ........................ 21
Section 4.4 Other Contribution Provisions ....................................... 23
Section 4.5 No Preemptive Rights ................................................ 23
ARTICLE 5. DISTRIBUTIONS ......................................................................... 23
Section 5.1 Requirement and Characterization of Distributions ................... 23
Section 5.2 Distributions in Kind ............................................... 24
Section 5.3 Distributions Upon Liquidation ...................................... 24
Section 5.4 Distributions to Reflect Issuance of Additional Partnership Interests 24
ARTICLE 6. ALLOCATIONS ........................................................................... 25
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss ......... 25
Section 6.2 General Allocations ................................................. 25
Section 6.3 Additional Allocation Provisions .................................... 26
Section 6.4 Tax Allocations ..................................................... 28
ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS ................................................. 29
Section 7.1 Management .......................................................... 29
Section 7.2 Certificate of Limited Partnership .................................. 32
Section 7.3 Restrictions on General Partner's Authority ......................... 33
Section 7.4 Reimbursement of the General Partner ................................ 34
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Section 7.5 Outside Activities of the General Partner ........................... 36
Section 7.6 Contracts with Affiliates ........................................... 37
Section 7.7 Indemnification ..................................................... 37
Section 7.8 Liability of the General Partner .................................... 39
Section 7.9 Other Matters Concerning the General Partner ........................ 40
Section 7.10 Title to Partnership Assets ......................................... 41
Section 7.11 Reliance by Third Parties ........................................... 41
ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS ............................................ 42
Section 8.1 Limitation of Liability ............................................. 42
Section 8.2 Management of Business .............................................. 42
Section 8.3 Outside Activities of Limited Partners .............................. 42
Section 8.4 Return of Capital ................................................... 42
Section 8.5 Rights of Limited Partners Relating to the Partnership .............. 43
Section 8.6 Redemption Rights ................................................... 43
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS ................................................ 46
Section 9.1 Records and Accounting .............................................. 46
Section 9.2 Fiscal Year ......................................................... 47
Section 9.3 Reports ............................................................. 47
Section 9.4 Nondisclosure of Certain Information ................................ 47
ARTICLE 10. TAX MATTERS .......................................................................... 47
Section 10.1 Preparation of Tax Returns .......................................... 47
Section 10.2 Tax Elections ....................................................... 48
Section 10.3 Tax Matters Partner ................................................. 48
Section 10.4 Organizational Expenses ............................................. 49
Section 10.5 Withholding ......................................................... 49
ARTICLE 11. TRANSFERS AND WITHDRAWALS ............................................................ 50
Section 11.1 Transfer ............................................................ 50
Section 11.2 Transfer of General Partner's Partnership Interest .................. 50
Section 11.3 Limited Partners' Rights to Transfer ................................ 51
Section 11.4 Substituted Limited Partners ........................................ 53
Section 11.5 Assignees ........................................................... 53
Section 11.6 General Provisions .................................................. 54
ARTICLE 12. ADMISSION OF PARTNERS ................................................................ 56
Section 12.1 Admission of Successor General Partner .............................. 56
Section 12.2 Admission of Additional Limited Partners ............................ 56
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership ....... 57
ARTICLE 13. DISSOLUTION AND LIQUIDATION .......................................................... 57
Section 13.1 Dissolution ......................................................... 57
Section 13.2 Winding Up .......................................................... 58
Section 13.3 Capital Contribution Obligation ..................................... 59
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Section 13.4 Compliance with Timing Requirements of Regulations .................. 59
Section 13.5 Deemed Distribution and Recontribution .............................. 60
Section 13.6 Rights of Limited Partners .......................................... 60
Section 13.7 Notice of Dissolution ............................................... 60
Section 13.8 Cancellation of Certificate of Limited Partnership .................. 60
Section 13.9 Reasonable Time for Winding-Up ...................................... 60
Section 13.10 Waiver of Partition ................................................. 61
ARTICLE 14. AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS ......................................... 61
Section 14.1 Amendments .......................................................... 61
Section 14.2 Action by the Partners .............................................. 61
ARTICLE 15. GENERAL PROVISIONS ................................................................... 62
Section 15.1 Addresses and Notice ................................................ 62
Section 15.2 Titles and Captions ................................................. 62
Section 15.3 Pronouns and Plurals ................................................ 62
Section 15.4 Further Action ...................................................... 62
Section 15.5 Binding Effect ...................................................... 62
Section 15.6 Creditors ........................................................... 63
Section 15.7 Waiver .............................................................. 63
Section 15.8 Counterparts ........................................................ 63
Section 15.9 Applicable Law ...................................................... 63
Section 15.10 Invalidity of Provisions ............................................ 63
Section 15.11 Entire Agreement .................................................... 63
Section 15.12 No Rights as Stockholders ........................................... 63
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