1
EXHIBIT 10.1
_________________________________________
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
_________________________________________
Dated as of _________, 1997
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TABLE OF CONTENTS
ARTICLE I DEFINED TERMS ................................................ 1
ARTICLE II ORGANIZATIONAL MATTERS ...................................... 14
Section 2.1 Organization ............................................ 14
Section 2.2 Name .................................................... 14
Section 2.3 Registered Office and Agent; Principal Office ........... 15
Section 2.4 Term .................................................... 15
ARTICLE III PURPOSE .................................................... 15
Section 3.1 Purpose and Business .................................... 15
Section 3.2 Powers .................................................. 15
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP INTERESTS 16
Section 4.1 Capital Contributions of the Partners ................... 16
Section 4.2 Issuances of Partnership Interests ...................... 16
Section 4.3 No Preemptive Rights .................................... 18
Section 4.4 Other Contribution Provisions ........................... 18
Section 4.5 No Interest on Capital .................................. 18
ARTICLE V DISTRIBUTIONS ................................................ 19
Section 5.1 Requirement and Characterization of Distributions ....... 19
Section 5.2 Amounts Withheld ........................................ 22
Section 5.3 Distributions Upon Liquidation .......................... 22
Section 5.4 Revisions to Reflect Issuance of Partnership Interests .. 22
ARTICLE VI ALLOCATIONS ................................................. 22
Section 6.1 Allocations For Capital Account Purposes ................ 22
Section 6.2 Revisions to Allocations to Reflect Issuance of Partnership
Interests.................................................... 24
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS ...................... 24
Section 7.1 Management .............................................. 24
Section 7.2 Certificate of Limited Partnership ...................... 28
Section 7.3 Title to Partnership Assets ............................. 29
Section 7.4 Reimbursement of the General Partners ................... 29
Section 7.5 Outside Activities of the General Partners; Relationship of
Shares to Partnership Units; Funding Debt..................... 31
Section 7.6 Transactions with Affiliates ............................. 33
Section 7.7 Indemnification .......................................... 33
Section 7.8 Liability of the General Partners ........................ 35
Section 7.9 Other Matters Concerning the General Partners ............ 36
Section 7.10 Reliance by Third Parties ............................... 38
Section 7.11 Restrictions on General Partners' Authority ............. 38
Section 7.12 Loans by Third Parties .................................. 39
Section 7.13 Actions of the General Partners ......................... 40
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS ................. 40
Section 8.1 Limitation of Liability .................................. 40
Section 8.2 Management of Business ................................... 40
Section 8.3 Outside Activities of Limited Partners ................... 40
Section 8.4 Return of Capital ........................................ 41
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Section 8.5 Rights of Limited Partners Relating to the Partnership ... 41
Section 8.6 Redemption Right ......................................... 42
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS ....................... 45
Section 9.1 Records and Accounting ................................... 45
Section 9.2 Fiscal Year .............................................. 45
Section 9.3 Reports .................................................. 46
ARTICLE X TAX MATTERS ................................................... 46
Section 10.1 Preparation of Tax Returns .............................. 46
Section 10.2 Tax Elections ........................................... 46
Section 10.3 Tax Matters Partner ..................................... 47
Section 10.4 Organizational Expenses ................................. 48
Section 10.5 Withholding ............................................. 48
ARTICLE XI TRANSFERS AND WITHDRAWALS .................................... 49
Section 11.1 Transfer ................................................ 49
Section 11.2 Transfers of Partnership Interests of General Partners .. 49
Section 11.3 Limited Partners' Rights to Transfer .................... 50
Section 11.4 Substituted Limited Partners ............................ 53
Section 11.5 Assignees ............................................... 53
Section 11.6 General Provisions ...................................... 54
ARTICLE XII ADMISSION OF PARTNERS ....................................... 56
Section 12.1 Admission of a 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 XIII DISSOLUTION AND LIQUIDATION ................................ 57
Section 13.1 Dissolution ............................................. 57
Section 13.2 Winding Up .............................................. 58
Section 13.3 Compliance with Timing Requirements of Regulations ...... 59
Section 13.4 Deemed Distribution and Recontribution .................. 60
Section 13.5 Rights of Limited Partners .............................. 60
Section 13.6 Notice of Dissolution ................................... 60
Section 13.7 Cancellation of Certificate of Limited Partnership ...... 61
Section 13.8 Reasonable Time for Winding Up .......................... 61
Section 13.9 Waiver of Partition ..................................... 61
Section 13.10 Liability of Liquidator ................................ 61
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS ................ 61
Section 14.1 Amendments .............................................. 61
Section 14.2 Meetings of the Partners ................................ 63
ARTICLE XV GENERAL PROVISIONS ........................................... 64
Section 15.1 Addresses and Notice .................................... 64
Section 15.2 Titles and Captions ..................................... 64
Section 15.3 Pronouns and Plurals .................................... 64
Section 15.4 Further Action .......................................... 64
Section 15.5 Binding Effect .......................................... 64
Section 15.6 Creditors ............................................... 65
Section 15.7 Waiver .................................................. 65
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Section 15.8 Counterparts ............................................ 65
Section 15.9 Applicable Law .......................................... 65
Section 15.10 Invalidity of Provisions ............................... 65
Section 15.11 Power of Attorney ...................................... 65
Section 15.12 Entire Agreement ....................................... 67
Section 15.13 No Rights as Shareholders .............................. 67
Section 15.14 Limitation to Preserve REIT Status ..................... 67
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EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF REDEMPTION
EXHIBIT E
VALUE OF CONTRIBUTED PROPERTY
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AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of _______________, 1997,
is entered into by and among Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity
Partners Limited Partnership and Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity
Partners Limited Partnership II, each an Illinois limited partnership, and
Equity Office Properties Trust, a Maryland real estate investment trust, as the
General Partners, and the Persons whose names are set forth on Exhibit A hereto
as Limited Partners, together with any other Persons who become Partners in the
Partnership as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree to form the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 12.2 hereof and who is shown as such on
the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner, the
deficit balance, if any, in such Partner's Adjusted Capital Account as of the
end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B.
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"Adjustment Date" has the meaning set forth in Section 4.2.B.
"Affiliate" means, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person,
(ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreed Value" means (i) in the case of any Contributed Property
contributed to the Partnership as part of or in connection with the
Consolidation, the amount set forth on Exhibit E as the Agreed Value of such
Property; (ii) in the case of any other Contributed Property, the 704(c) Value
of such property as of the time of its contribution to the Partnership, reduced
by any liabilities either assumed by the Partnership upon such contribution or
to which such property is subject when contributed; and (iii) in the case of
any property distributed to a Partner by the Partnership, the Partnership's
Carrying Value of such property at the time such property is distributed,
reduced by any indebtedness either assumed by such Partner upon such
distribution or to which such property is subject at the time of distribution
as determined under Section 752 of the Code and the regulations thereunder.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have been
transferred in a manner permitted under this Agreement, but who has not become
a Substituted Limited Partner, and who has the rights set forth in Section
11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from whatever
source (excluding the proceeds of any Capital Contribution) plus the amount of
any reduction (including, without limitation, a reduction resulting because the
Managing General Partner determines such amounts are no longer necessary) in
reserves of the Partnership, which reserves are referred to in clause (b)(iv)
below;
(b) less the sum of the following (except to the extent made with the
proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made during such
period by the Partnership,
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(ii) all cash expenditures (including capital expenditures) made by
the Partnership during such period,
(iii) investments in any entity (including loans made thereto) to the
extent that such investments are permitted under this Agreement and are not
otherwise described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established during such
period which the Managing General Partner determines is necessary or appropriate
in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all
of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained
pursuant to Exhibit B and the hypothetical balance of such Partner's Capital
Account computed as if it had been maintained strictly in accordance with
federal income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Chicago, Illinois are authorized or required by law
to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B.
"Capital Contribution" means, with respect to any Partner, any cash, cash
equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 or 4.2.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and
(ii) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B, and to reflect changes, additions (including capital
improvements thereto) or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate
by the Managing General Partner.
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"Cash Amount" means an amount of cash equal to the Value on the Valuation
Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating to the
Partnership filed in the office of the Delaware Secretary of State, as amended
from time to time in accordance with the terms hereof and the Act.
"Class A" has the meaning set forth in Section 5.1.C.
"Class A Share" has the meaning set forth in Section 5.1.C.
"Class A Unit" means any Partnership Unit that is not specifically
designated by the Managing General Partner as being of another specified class
of Partnership Units.
"Class B" has the meaning set forth in Section 5.1.C.
"Class B Share" has the meaning set forth in Section 5.1.C.
"Class B Unit" means a Partnership Unit that is specifically designated by
the Managing General Partner as being a Class B Unit.
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder.
Any reference herein to a specific section or sections of the Code shall be
deemed to include a reference to any corresponding provision of future law.
"Consent" means the consent or approval of a proposed action by a Partner
given in accordance with Section 14.2.
"Consent of the Outside Limited Partners" means the Consent of Limited
Partners (excluding for this purpose any Limited Partnership Interests held by
the Managing General Partner, any of the Opportunity Partnerships, any other
Person of which the Managing General Partner owns or controls more than fifty
percent (50%) of the voting interests and any Person directly or indirectly
owning or controlling more than fifty percent (50%) of the outstanding voting
interests of the Managing General Partner) holding Percentage Interests that
are greater than fifty percent (50%) of the aggregate Percentage Interest of
all Limited Partners who are not excluded for the purposes hereof.
"Consolidation" means (i) the transactions whereby the Partnership will
acquire interests in certain office properties owned by the Opportunity
Partnerships and certain asset management and property management businesses
which provide services to those properties and to other office properties, in
exchange for Partnership Units, and (ii) the merger of the ZML Investors, Inc.,
ZML Investors II, Inc., Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity Partners III
Trust and Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity Partners IV Trust with and
into Equity Office Holdings Trust, all as described in a Joint Proxy
Statement/Offering Memorandum dated March __, 1997.
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"Contributed Property" means each property or other asset contributed to
the Partnership, in such form as may be permitted by the Act, but excluding
cash contributed or deemed contributed to the Partnership. Once the Carrying
Value of a Contributed Property is adjusted pursuant to Exhibit B, such
property shall no longer constitute a Contributed Property for purposes of
Exhibit B, but shall be deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0; provided that, if the General Partner
Entity (i) declares or pays a dividend on its outstanding Shares in Shares or
makes a distribution to all holders of its outstanding Shares in Shares, (ii)
subdivides its outstanding Shares or (iii) combines its outstanding Shares into
a smaller number of Shares, the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which shall
be the number of Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time) and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination; and provided
further that if an entity shall cease to be the General Partner Entity (the
"Predecessor Entity") and another entity shall become the General Partner
Entity (the "Successor Entity"), the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which is the
Value of one Share of the Predecessor Entity, determined as of the date when the
Successor Entity becomes the General Partner Entity, and the denominator of
which is the Value of one Share of the Successor Entity, determined as of
that same date. (For purposes of the second proviso in the preceding sentence,
if any shareholders of the Predecessor Entity will receive consideration in
connection with the transaction in which the Successor Entity becomes the
General Partner Entity, the numerator in the fraction described above for
determining the adjustment to the Conversion Factor (that is, the Value of one
Share of the Predecessor Entity) shall be the sum of the greatest amount of cash
and the fair market value (as determined in good faith by the Managing General
Partner) of any securities and other consideration that the holder of one Share
in the Predecessor Entity could have received in such transaction (determined
without regard to any provisions governing fractional shares).) Any adjustment
to the Conversion Factor shall become effective immediately after the effective
date of the event retroactive to the record date, if any, for the event giving
rise thereto, it being intended that (x) adjustments to the Conversion Factor
are to be made to avoid unintended dilution or anti-dilution as a result of
transactions in which Shares are issued, redeemed or exchanged without a
corresponding issuance, redemption or exchange of Partnership Units and (y) if a
Specified Redemption Date shall fall between the record date and the effective
date of any event of the type described above, that the Conversion Factor
applicable to such redemption shall be adjusted to take into account such event.
"Convertible Funding Debt" has the meaning set forth in Section 7.5.F.
"Debt" means, as to any Person, as of any date of determination, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other
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similar instruments guaranteeing payment or other performance of obligations by
such Person, (iii) all indebtedness for borrowed money or for the deferred
purchase price of property or services secured by any lien on any property owned
by such Person, to the extent attributable to such Person's interest in such
property, even though such Person has not assumed or become liable for the
payment thereof, and (iv) obligations of such Person incurred in connection with
entering into a lease which, in accordance with generally accepted accounting
principles, should be capitalized.
"Declaration of Trust" means the Declaration of Trust of Equity Office
Properties Trust filed in the State of Maryland on October __1996, as amended
or restated from time to time.
"Deemed Partnership Interest Value" means, as of any date with respect to
any class of Partnership Interests, the Deemed Value of the Partnership
Interest of such class multiplied by the applicable Partner's Percentage
Interest of such class.
"Deemed Value of the Partnership Interest" means, as of any date with
respect to any class of Partnership Interests, (a) if the common shares of
beneficial interest (or other comparable equity interests) of the General
Partner Entity are Publicly Traded (i) the total number of shares of beneficial
interest (or other comparable equity interest) of the General Partner Entity
corresponding to such class of Partnership Interest (as provided for in Section
4.2.B) issued and outstanding as of the close of business on such date
(excluding any treasury shares) multiplied by the Value of a share of such
beneficial interest (or other comparable equity interest) on such date divided
by (ii) the Percentage Interest of the Managing General Partner in such class
of Partnership Interests on such date, and (b) otherwise, the aggregate Value
of such class of Partnership Interests determined as set forth in the fourth
and fifth sentences of the definition of Value.
"Depreciation" means, for each fiscal year, an amount equal to the federal
income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be
an amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the Managing General Partner.
"Distribution Period" has the meaning set forth in Section 5.1.C.
"Effective Date" means the date of the closing of the Consolidation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ERISA Plan" means an "employee benefit plan" as that term is defined in
29 U.S.C. Section 1002(3), and which is not exempt from regulation under ERISA
by virtue of 29 U.S.C. Section 1003(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Funding Debt" means the incurrence of any Debt by or on behalf of the
General Partner Entity for the purpose of providing funds to the Partnership.
"General Partner" means Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity
Partners Limited Partnership, Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity
Partners Limited Partnership II, or the Managing General Partner or any of
their successors as a general partner of the Partnership, and "General
Partners" means the Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity Partners Limited
Partnership, Xxxx/Xxxxxxx Xxxxx Real Estate Opportunity Partners Limited
Partnership II, and the Managing General Partner or their successors as
general partners.
"General Partner Entity" means the Managing General Partner; provided,
however, that if (i) the common shares of beneficial interest (or other
comparable equity interests) of the Managing General Partner are at any time
not Publicly Traded and (ii) the common shares of beneficial interest (or other
comparable equity interests) of an entity that owns, directly or indirectly,
fifty percent (50%) or more of the common shares of beneficial interest (or
other comparable equity interests) of the Managing General Partner are Publicly
Traded, the term "General Partner Entity" shall refer to such entity whose
common shares of beneficial interest (or other comparable equity securities)
are Publicly Traded. If both requirements set forth in clauses (i) and (ii)
above are not satisfied, then the term "General Partner Entity" shall mean the
Managing General Partner.
"General Partnership Interest" means a Partnership Interest held by a
General Partner that is a general partnership interest. A General Partnership
Interest may be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the internal
revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such natural
Person's spouse, parents, descendants, nephews, nieces, brothers, and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating such Partner incompetent to manage his or her Person or estate,
(ii) as to any corporation which is a Partner, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter, (iii) as to any partnership or limited liability company which is a
Partner, the dissolution and commencement of winding up of the partnership or
limited liability company, (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate's entire interest in the
Partnership, (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee) or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of
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this definition, bankruptcy of a Partner shall be deemed to have occurred when
(a) the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar
law now or hereafter in effect, (b) the Partner is adjudged as bankrupt or
insolvent, or a final and nonappealable order for relief under any bankruptcy,
insolvency or similar law now or hereafter in effect has been entered against
the Partner, (c) the Partner executes and delivers a general assignment for the
benefit of the Partner's creditors, (d) the Partner files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against the Partner in any proceeding of the nature described in clause
(b) above, (e) the Partner seeks, consents to or acquiesces in the appointment
of a trustee, receiver or liquidator for the Partner or for all or any
substantial part of the Partner's properties, (f) any proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (g) the appointment
without the Partner's consent or acquiescence of a trustee, receiver of
liquidator has not been vacated or stayed within ninety (90) days of such
appointment or (h) an appointment referred to in clause (g) is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by reason
of its status as (A) a General Partner, (B) a Limited Partner, or (C) a
trustee, director or officer of the Partnership, or any General Partner and
(ii) such other Persons (including Affiliates of any General Partner, a Limited
Partner or the Partnership) as the Managing General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited Partner in Exhibit
A, as such Exhibit may be amended from time to time, or any Substituted Limited
Partner or Additional Limited Partner, in such Person's capacity as a Limited
Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Limited Partners and includes any and all benefits to which
the holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the
terms and provisions of this Agreement. A Limited Partnership Interest may be
expressed as a number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.A.
"Managing General Partner" means Equity Office Properties Trust, a
Maryland real estate investment trust, or its successors, as managing general
partner of the Partnership.
"Managing General Partner Payment" has the meaning set forth in Section
15.14 hereof.
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"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance
with Exhibit B. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Exhibit C, Net Income or the resulting Net Loss, whichever
the case may be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C, Net Loss or the resulting Net Income, whichever
the case may be, shall be recomputed without regard to such item.
"New Securities" means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase shares of
beneficial interest (or other comparable equity interest) of the Managing
General Partner, excluding grants under any Share Option Plan, or (ii) any Debt
issued by the Managing General Partner that provides any of the rights
described in clause (i).
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption substantially in the
form of Exhibit D.
"Opportunity Partnerships" means, Xxxx/Xxxxxxx Xxxxx Real Estate
Opportunity Partners Limited Partnership, Xxxx/Xxxxxxx Xxxxx Real Estate
Opportunity Partners Limited Partnership II, Xxxx/Xxxxxxx Xxxxx Real Estate
Opportunity Partners Limited Partnership III, and Xxxx/Xxxxxxx Xxxxx Real
Estate Opportunity Partners Limited Partnership IV.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partners and the Limited Partners.
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"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership Year shall be
determined in accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act upon the
terms and conditions set forth in this Agreement, or any successor to such
limited partnership.
"Partnership Interest" means a Limited Partnership Interest or a General
Partnership Interest and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Partnership Interest may be expressed as a
number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
Managing General Partner either (i) for the distribution of Available Cash
pursuant to Section 5.1 hereof, which record date shall be the same as the
record date established by the General Partner Entity for a distribution to its
shareholders of some or all of its portion of such distribution, or (ii) if
applicable, for determining the Partners entitled to vote on or consent to any
proposed action for which the consent or approval of the Partners is sought
pursuant to Section 14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1 and 4.2, and includes
Class A Units, Class B Units and any other classes or series of Partnership
Units established after the date hereof. The number of Partnership Units
outstanding and the Percentage Interests in the Partnership represented by such
Partnership Units are set forth in Exhibit A, as such Exhibit may be amended
from time to time.
"Partnership Year" means the fiscal year of the Partnership, which shall
be the calendar year.
"Percentage Interest" means, as to a Partner holding a class of
Partnership Interests, its interest in such class, determined by dividing the
Partnership Units of such
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16
class owned by such Partner by the total number of Partnership Units of such
class then outstanding as specified in Exhibit A, as such exhibit may be
amended from time to time, multiplied by the aggregate Percentage Interest
allocable to such class of Partnership Interests. If the Partnership shall at
any time have outstanding more than one class of Partnership Interests, the
Percentage Interest attributable to each class of Partnership Interests shall be
determined as set forth in Section 4.2.B.
"Person" means a natural person, partnership (whether general or limited),
trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.
"Predecessor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Publicly Traded" means listed or admitted to trading on the New York
Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market, or any
successor to any of the foregoing.
"Qualified REIT Subsidiary" means any Subsidiary of the Managing General
Partner that is a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.
"Qualified Transferee" means an "Accredited Investor" as defined in Rule
501 promulgated under the Securities Act.
"Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or Section 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6.A.
"Redemption Amount" means either the Cash Amount or the Shares Amount, as
determined by the Managing General Partner, in its sole and absolute
discretion; provided that if the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall
be paid only in the form of the Cash Amount unless the Redeeming Partner, in
its sole and absolute discretion, consents to payment of the Redemption Amount
in the form of the Shares Amount. A Redeeming Partner shall have no right,
without the Managing General Partner's consent, in its sole and absolute
discretion, to receive the Redemption Amount in the form of the Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A.
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17
"Regulation" or "Regulations" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the Code.
"REIT Requirements" has the meaning set forth in Section 5.1.A.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
Disparities.
"Safe Harbor" has the meaning set forth in Section 11.6.F.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" of any Contributed Property means the fair market value of
such property at the time of contribution as determined by the General Partners
using such reasonable method of valuation as they may adopt; provided, however,
subject to Exhibit B, the General Partners shall, in their sole and absolute
discretion, use such method as they deem reasonable and appropriate to allocate
the aggregate of the 704(c) Value of Contributed Properties in a single or
integrated transaction among each separate property on a basis proportional to
its fair market values. The 704(c) Values of the Contributed Properties
contributed to the Partnership as part of or in connection with the
Consolidation are set forth on Exhibit E.
"Share" means a share of beneficial interest (or other comparable equity
interest) of the General Partner Entity. Shares may be issued in one or more
classes or series in accordance with the terms of the Declaration of Trust (or,
if the Managing General Partner is not the General Partner Entity, the
organizational documents of the General Partner Entity). If there is more than
one class or series of Shares, the term "Shares" shall, as the context
requires, be deemed to refer to the class or series of Shares that correspond
to the class or series of Partnership Interests for which the reference to
Shares is made. When used with reference to Class A Units, the term "Shares"
refers to common shares of beneficial interest (or other comparable equity
interest) of the General Partner Entity.
"Shares Amount" means a number of Shares equal to the product of the
number of Partnership Units offered for redemption by a Redeeming Partner times
the Conversion Factor; provided that, if the General Partner Entity issues to
all holders of Shares rights, options, warrants or convertible or exchangeable
securities entitling such holders to subscribe for or purchase Shares or any
other securities or property (collectively, the "rights"), then the Shares
Amount shall also include such rights that a holder of that number of Shares
would be entitled to receive.
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18
"Share Option Plan" means any equity incentive plan of the Managing
General Partner, the Partnership and/or any Affiliate of the Partnership.
"Specified Redemption Date" means the tenth Business Day after receipt by
the Managing General Partner of a Notice of Redemption; provided that, if the
Shares are not Publicly Traded, the Specified Redemption Date means the
thirtieth Business Day after receipt by the Managing General Partner of a
Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, trust, partnership or joint venture, or other entity of
which a majority of (i) the voting power of the voting equity securities or
(ii) the outstanding equity interests is owned, directly or indirectly, by such
Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4.
"Successor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Terminating Capital Transaction" means any sale or other disposition of
all or substantially all of the assets of the Partnership for cash 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 for
cash.
"Termination Transaction" has the meaning set forth in Section 11.2.B.
"Unrealized Gain" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (i) the fair market
value of such property (as determined under Exhibit B) as of such date, over
(ii) the Carrying Value of such property (prior to any adjustment to be made
pursuant to Exhibit B) as of such date.
"Unrealized Loss" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (i) the Carrying Value
of such property (prior to any adjustment to be made pursuant to Exhibit B) as
of such date, over (ii) the fair market value of such property (as determined
under Exhibit B) as of such date.
"Valuation Date" means the date of receipt by the Managing General Partner
of a Notice of Redemption or, if such date is not a Business Day, the first
Business Day thereafter.
"Value" means, with respect to any outstanding Shares of the General
Partner Entity that are Publicly Traded, the average of the daily market price
for the ten consecutive trading days immediately preceding the date with
respect to which value must be determined. The market price for each such
trading day shall be the closing price, regular way, on such day, or if no such
sale takes place on such day, the average of the closing bid and asked prices
on such day. If the outstanding Shares of the General Partner Entity are
Publicly Traded and the Shares Amount includes rights that a holder of Shares
would be entitled to receive, then the Value of such rights shall be determined
by the
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Managing General Partner acting in good faith on the basis of such quotations
and other information as it considers, in its reasonable judgment, appropriate.
If the Shares of the General Partner Entity are not Publicly Traded, the Value
of the Shares Amount per Partnership Unit offered for redemption (which will be
the Cash Amount per Partnership Unit offered for redemption payable
pursuant to Section 8.6.A) means the amount that a holder of one Partnership
Unit would receive if each of the assets of the Partnership were to be sold for
its fair market value on the Specified Redemption Date, the Partnership were to
pay all of its outstanding liabilities, and the remaining proceeds were to be
distributed to the Partners in accordance with the terms of this Agreement.
Such Value shall be determined by the Managing General Partner, acting in good
faith and based upon a commercially reasonable estimate of the amount that would
be realized by the Partnership if each asset of the Partnership (and each asset
of each partnership, limited liability company, trust, joint venture or other
entity in which the Partnership owns a direct or indirect interest) were sold to
an unrelated purchaser in an arms' length transaction where neither the
purchaser nor the seller were under economic compulsion to enter into the
transaction (without regard to any discount in value as a result of the
Partnership's minority interest in any property or any illiquidity of the
Partnership's interest in any property). In connection with determining the
Deemed Value of the Partnership Interest for purposes of determining the number
of additional Partnership Units issuable upon a Capital Contribution funded by
an underwritten public offering or an arm's length private placement of shares
of beneficial interest (or other comparable equity interest) of the Managing
General Partner, the Value of such shares shall be the public offering or arm's
length private placement price per share of such class of beneficial interest
(or other comparable equity interest) sold.
ARTICLE II
ORGANIZATIONAL MATTERS
SECTION 2.1 ORGANIZATION
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
SECTION 2.2 NAME
The name of the Partnership is EOP Operating Limited Partnership. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partners, including the name of any of the General
Partners 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 Partners in their sole and absolute discretion
may change the name of the Partnership at any time and from
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time to time and shall notify the Limited Partners of such change in the next
regular communication to the Limited Partners.
SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The address of the registered office of the Partnership in the State of
Delaware shall be located at Corporation Trust Center, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxxxxx 00000, and the registered agent for
service of process on the Partnership in the State of Delaware at such
registered office shall be Corporation Trust Company. The principal office of
the Partnership shall be Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, or such other place as the General Partners may from time to
time designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware
as the General Partners deem advisable.
SECTION 2.4 TERM
The term of the Partnership shall commence on , 1997 and shall
continue until December 31, 2095, unless it is dissolved sooner pursuant to the
provisions of Article XIII or as otherwise provided by law.
ARTICLE III
PURPOSE
SECTION 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the Partnership
is (i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act; provided, however, that such
permit the General Partner Entity at all times to be classified as a REIT,
unless the General Partner Entity ceases to qualify or is not qualified as a
REIT for any reason or reasons not related to the business conducted by the
Partnership, (ii) to enter into any corporation, partnership, joint venture,
trust, limited liability company or other similar arrangement to engage in any
of the foregoing or the ownership of interests in any entity engaged, directly
or indirectly, in any of the foregoing and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, the Partners
acknowledge that the status of the General Partner Entity as a REIT inures to
the benefit of all the Partners and not solely to the General Partner Entity or
its Affiliates.
SECTION 3.2 POWERS
The Partnership is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described herein and for the
protection and benefit of the Partnership, including, without limitation, full
power and authority, directly
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or through its ownership interest in other entities, to enter into, perform and
carry out contracts of any kind, borrow money and issue evidences of
indebtedness, whether or not secured by mortgage, deed of trust, pledge or other
lien, acquire, own, manage, improve and develop real property, and lease, sell,
transfer and dispose of real property; provided, however, that the Partnership
shall not take, or refrain from taking, any action which, in the judgment of the
Managing General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the General Partner Entity to continue to
qualify as a REIT, (ii) could subject the General Partner Entity to any
additional taxes under Section 857 or Section 4981 of the Code or (iii) could
violate any law or regulation of any governmental body or agency having
jurisdiction over any General Partner or its securities, unless such action (or
inaction) shall have been specifically consented to by the General Partner in
writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
At the time of the execution of this Agreement, the Partners shall make or
shall have made the Capital Contributions as set forth in Exhibit A. The
Partners shall own Partnership Units in the amounts set forth in Exhibit A and
shall have a Percentage Interest in the Partnership as set forth in Exhibit A,
which Percentage Interest shall be adjusted in Exhibit A from time to time by
the Managing General Partner to the extent necessary to reflect accurately
redemptions, Capital Contributions, the issuance of additional Partnership
Units or similar events having an effect on a Partner's Percentage Interest.
To the extent the Partnership is acquiring any property by the merger of any
other Person into the Partnership, Persons who receive Partnership Interests in
exchange for their interests in the Person merging into the Partnership shall
become Partners and shall be deemed to have made Capital Contributions as
provided in the applicable merger agreement and as set forth in Exhibit A. A
number of Partnership Units held by each of the General Partners equal to one
percent (1%) of all outstanding Partnership Units (as of the closing date of
the Consolidation) shall be deemed to be the General Partner Partnership Units
and shall be the General Partnership Interest of such General Partner. All
other Partnership Units held by the General Partners shall be deemed to be
Limited Partnership Interests and shall be held by the General Partners in
their capacity as Limited Partners in the Partnership. Except as provided in
Sections 7.5 and 10.5 hereof, the Partners shall have no obligation to make any
additional apital Contributions or provide any additional funding to the
Partnership (whether in the form of loans, repayments of loans or otherwise).
No Partner shall have any obligation to restore any deficit that may exist in
its Capital Account, either upon a liquidation of the Partnership or otherwise.
SECTION 4.2 ISSUANCES OF PARTNERSHIP INTERESTS
A. General. The Managing General Partner is hereby authorized to cause
the Partnership from time to time to issue to Partners (including the Managing
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General Partner and its Affiliates) or other Persons (including, without
limitation, in connection with the contribution of property to the Partnership)
Partnership Units or other Partnership Interests in one or more classes, or in
one or more series of any of such classes, with such designations, preferences
and relative, participating, optional or other special rights, powers and
duties, including rights, powers and duties senior to Limited Partnership
Interests, all as shall be determined, subject to applicable Delaware law, by
the Managing General Partner in its sole and absolute discretion, including,
without limitation, (i) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests, (ii) the right of each such class or series of Partnership Interests
to share in Partnership distributions and (iii) the rights of each such class
or series of Partnership Interests upon dissolution and liquidation of the
Partnership; provided that, no such Partnership Units or other Partnership
Interests shall be issued to the Managing General Partner unless either (a) the
Partnership Interests are issued in connection with the grant, award or
issuance of Shares or other equity interests in the Managing General Partner
having designations, preferences and other rights such that the economic
interests attributable to such Shares or other equity interests are
substantially similar to the designations, preferences and other rights (except
voting rights) of the Partnership Interests issued to the Managing General
Partner in accordance with this Section 4.2.A or (b) the additional Partnership
Interests are issued to all Partners holding Partnership Interests in the same
class in proportion to their respective Percentage Interests in such class. If
the Partnership issues Partnership Interests pursuant to this Section 4.2.A,
the Managing General Partner shall make such revisions to this Agreement
(including but not limited to the revisions described in Section 5.4, Section
6.2 and Section 8.6) as it deems necessary to reflect the issuance of such
Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital Contributions
for Partnership Units. Upon the acceptance of additional Capital Contributions
in exchange for Partnership Units and if the Partnership shall have outstanding
more than one class of Partnership Interests, the Percentage Interest related
thereto shall be equal to a fraction, the numerator of which is equal to the
amount of cash, if any, plus the Agreed Value of Contributed Property, if any,
contributed with respect to such additional Partnership Units and the
denominator of which is equal to the sum of (i) the Deemed Value of the
Partnership Interests for all outstanding classes (computed as of the Business
Day immediately preceding the date on which the additional Capital
Contributions are made (an "Adjustment Date")) plus (ii) the aggregate amount
of additional Capital Contributions contributed to the Partnership on such
Adjustment Date in respect of such additional Partnership Units. The
Percentage Interest of each other Partner holding Partnership Interests not
making a full pro rata Capital Contribution shall be adjusted to a fraction the
numerator of which is equal to the sum of (i) the Deemed Partnership Interest
Value of such Limited Partner (computed as of the Business Day immediately
preceding the Adjustment Date) plus (ii) the amount of additional Capital
Contributions (such amount being equal to the amount of cash, if any, plus the
Agreed Value of Contributed Property, if any, so contributed), if any, made by
such Partner to the Partnership in respect of such Partnership Interest as of
such Adjustment Date and the denominator of which is equal to the sum of (i)
the Deemed Value of the Partnership Interestss of all outstanding classes
(computed as of the Business Day immediately
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preceding such Adjustment Date)
plus (ii) the aggregate amount of the additional Capital Contributions
contributed to the Partnership on such Adjustment Date in respect of such
additional Partnership Interests. For purposes of calculating a Partner's
Percentage Interest pursuant to this Section 4.2.B, cash Capital Contributions
by a General Partner will be deemed to equal the cash contributed by such
General Partner plus (a) in the case of cash contributions funded by an
offering of any equity interests in or other securities of the Managing General
Partner, the offering costs attributable to the cash contributed to the
Partnership, and (b) in the case of Partnership Units issued pursuant to
Section 7.5.E, an amount equal to the difference between the Value of the
Shares sold pursuant to any Share Option Plan and the net proceeds of such
sale.
C. Classes of Partnership Units. From and after the Effective Date,
subject to Section 4.2.A above, the Partnership shall have two classes of
Partnership Units entitled "Class A Units" and "Class B Units." Either Class A
Units or Class B Units, at the election of the Managing General Partner, in its
sole and absolute discretion, may be issued to newly admitted Partners in
exchange for the contribution by such Partners of cash, real estate partnership
interests, stock, notes or other assets or consideration; provided, that all
Partnership Units issued to Partners in connection with the Consolidation shall
be Class A Units; and, provided further, that any Partnership Unit that is not
specifically designated by the General Partner as being of a particular class
shall be deemed to be a Class A Unit. Each Class B Unit shall be converted
automatically into a Class A Unit on the day immediately following the
Partnership Record Date for the Distribution Period (as defined in Section
5.1.C) in which such Class B Unit was issued, without the requirement for any
action by either the Partnership or the Partner holding the Class B Unit.
SECTION 4.3 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership pursuant to
another agreement, no Person shall have any preemptive, preferential or other
similar right with respect to (i) additional Capital Contributions or loans to
the Partnership or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
SECTION 4.4 OTHER CONTRIBUTION PROVISIONS
If any Partner is admitted to the Partnership and is given a Capital
Account in exchange for services rendered to the Partnership, such transaction
shall be treated by the Partnership and the affected Partner as if the
Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership.
SECTION 4.5 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital Contributions or
its Capital Account.
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ARTICLE V
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. General. The General Partners shall distribute at least quarterly an
amount equal to one hundred percent (100%) of Available Cash generated by the
Partnership during such quarter or shorter period to the Partners who are
Partners on the Partnership Record Date with respect to such quarter or shorter
period as provided in Sections 5.1.B, 5.1.C and 5.1.D. Notwithstanding anything
to the contrary contained herein, in no event may a Partner receive a
distribution of Available Cash with respect to a Partnership Unit for a quarter
or shorter period if such Partner is entitled to receive a distribution with
respect to a Share for which such Partnership Unit has been redeemed or
exchanged. Unless otherwise expressly provided for herein or in an agreement at
the time a new class of Partnership Interests is created in accordance with
Article IV hereof, no Partnership Interest shall be entitled to a distribution
in preference to any other Partnership Interest. The General Partners shall make
such reasonable efforts, as determined by them in their sole and absolute
discretion and consistent with the qualification of the General Partner Entity
as a REIT, to distribute Available Cash (a) to Limited Partners so as to
preclude any such distribution or portion thereof from being treated as part of
a sale of property of the Partnership by a Limited Partner under Section 707 of
the Code or the Regulations thereunder; provided that, the General Partners and
the Partnership shall not have liability to a Limited Partner under any
circumstances as a result of any distribution to a Limited Partner being so
treated, and (b) to the General Partners in an amount sufficient to enable the
General Partner Entity to pay shareholder dividends that will (1) satisfy the
requirements for qualification as a REIT under the Code and the Regulations (the
"REIT Requirements") of, and (2) avoid any federal income or excise tax
liability for, the General Partner Entity.
B. Method. (i) Each holder of Partnership Interests that is entitled to
any preference in distribution shall be entitled to a distribution in
accordance with the rights of any such class of Partnership Interests (and,
within such class, pro rata in proportion to the respective Percentage
Interests on such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining after the payment of
any preference in distribution in accordance with the foregoing clause (i),
with respect to Partnership Interests that are not entitled to any preference
in distribution, pro rata to each such class in accordance with the terms of
such class (and, within each such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date).
C. Distributions When Class B Units Are Outstanding. If for any quarter
or shorter period with respect to which a distribution is to be made (a
"Distribution Period") Class B Units are outstanding on the Partnership Record
Date for such Distribution Period, the General Partners shall allocate the
Available Cash with respect to such Distribution Period available for
distribution with respect to the Class A Units and Class B Units collectively
between the Partners who are holders of Class A Units ("Class A") and the
Partners who are holders of Class B Units ("Class B") as follows:
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(1) Class A shall receive that
portion of the Available Cash (the "Class
A Share") determined by multiplying the
amount of Available Cash by the following
fraction:
A x Y
---------------
(A x Y)+(B x X)
(2) Class B shall receive that
portion of the Available Cash (the "Class
B Share") determined by multiplying the
amount of Available Cash by the following
fraction:
B x X
---------------
(A x Y)+(B x X)
(3) For purposes of the foregoing
formulas, (i) "A" equals the number of
Class A Units outstanding on the
Partnership Record Date for such
Distribution Period; (ii) "B" equals the
number of Class B Units outstanding on the
Partnership Record Date for such
Distribution Period; (iii) "Y" equals the
number of days in the Distribution Period;
and (iv) "X" equals the number of days in
the Distribution Period for which the
Class B Units were issued and outstanding.
The Class A Share shall be distributed among Partners holding Class A
Units on the Partnership Record Date for the Distribution Period in accordance
with the number of Class A Units held by each Partner on such Partnership
Record Date; provided that, in no event may a Partner receive a distribution of
Available Cash with respect to a Class A Unit if a Partner is entitled to
receive a distribution out of such Available Cash with respect to a Share for
which such Class A Unit has been redeemed or exchanged. The Class B Shares
shall be distributed among the Partners holding Class B Units on the
Partnership Record Date for the Distribution Period in accordance with the
number of Class B Units held by each Partner on such Partnership Record Date.
In no event shall
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any Class B Units be entitled to receive any distribution of Available Cash for
any Distribution Period ending prior to the date on which such Class B Units are
issued.
D. Distributions When Class B Units Have Been Issued on Different Dates.
If Class B Units which have been issued on different dates are outstanding on
the Partnership Record Date for any Distribution Period, then the Class B Units
issued on each particular date shall be treated as a separate series of
Partnership Units for purposes of making the allocation of Available Cash for
such Distribution Period among the holders of Partnership Units (and the
formula for making such allocation, and the definitions of variables used
therein, shall be modified accordingly). Thus, for example, if two series of
Class B Units are outstanding on the Partnership Record Date for any
Distribution Period, the allocation formula for each series, "Series B1" and
"Series B2" would be as follows:
(1) Series B1 shall receive that
portion of the Available Cash determined
by multiplying the amount of Available
Cash by the following fraction:
B1 x X1
---------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(2) Series B2 shall receive that
portion of the Available Cash determined
by multiplying the amount of Available
Cash by the following fraction:
B2 x X2
---------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(3) For purposes of the foregoing
formulas the definitions set forth in
Section 5.1.C.3 remain the same except
that (i) "B1" equals the number of
Partnership Units in Series B1 outstanding
on the Partnership Record Date for such
Distribution Period; (ii) "B2" equals the
number of Partnership Units in Series B2
outstanding on the Partnership Record Date
for such Distribution Period;
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(iii) "X1" equals the number of days in the
Distribution Period for which the Partnership
Units in Series B1 were issued and outstanding;
and (iv) "X2" equals the number of days in the
Distribution Period for which the Partnership
Units in Series B2 were issued and outstanding.
E. Minimum Distributions if Shares Not Publicly Traded. In addition (and
without regard to the amount of Available Cash), if the Shares of the General
Partner Entity are not Publicly Traded, the Managing General Partner shall make
cash distributions with respect to the Class A Units at least annually for each
taxable year of the Partnership beginning prior to the fifteenth (15th)
anniversary of the Effective Date in an aggregate amount with respect to each
such taxable year at least equal to 95% of the Partnership's taxable income for
such year allocable to the Class A Units, with such distributions to be made
not later than 60 days after the end of such year.
SECTION 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of any state
or local tax law and Section 10.5 with respect to any allocation, payment or
distribution to the General Partners, the Limited Partners or Assignees shall
be treated as amounts distributed to the General Partners, Limited Partners or
Assignees pursuant to Section 5.1 for all purposes under this Agreement.
SECTION 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction shall be distributed to
the Partners in accordance with Section 13.2.
SECTION 5.4 REVISIONS TO REFLECT ISSUANCE OF PARTNERSHIP INTERESTS
If the Partnership issues Partnership Interests to the General Partners or
any Additional Limited Partner pursuant to Article IV hereof, the Managing
General Partner shall make such revisions to this Article V and Exhibit A as it
deems necessary to reflect the issuance of such additional Partnership
Interests without the requirements for any other consents or approvals.
ARTICLE VI
ALLOCATIONS
SECTION 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
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A. Net Income. After giving effect to the special allocations set forth
in Section 1 of Exhibit C, Net Income shall be allocated (i) first, to the
General Partners to the extent that Net Losses previously allocated to the
General Partners pursuant to the last sentence of Section 6.1.B exceed Net
Income previously allocated to the General Partners pursuant to this clause (i)
of Section 6.1.A, (ii) second, to the holders of any Partnership Interests that
are entitled to any preference in distribution in accordance with the rights of
any such class of Partnership Interests until each such Partnership Interest
has been allocated, on a cumulative basis pursuant to this clause (ii), Net
Income equal to the amount of distributions received which are attributable to
the preference of such class of Partnership Interests (and, within such class,
pro rata in proportion to the respective Percentage Interests as of the last
day of the period for which such allocation is being made) and (iii) third,
with respect to Partnership Interests that are not entitled to any preference
in the allocation of Net Income, pro rata to each such class in accordance with
the terms of such class (and, within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of the period for which such
allocation is being made).
B. Net Losses. After giving effect to the special allocations set forth
in Section 1 of Exhibit C, Net Losses shall be allocated (i) first, to the
holders of any Partnership Interests that are entitled to any preference in
distribution in accordance with the rights of any such class of Partnership
Interests to the extent that any prior allocations of Net Income to such class
of Partnership Interests pursuant to Section 6.1.A(ii) exceed, on a cumulative
basis, distributions with respect to such Partnership Interests pursuant to
clause (i) of Section 5.1.B (and, within such class, pro rata in proportion to
the respective Percentage Interests as of the last day of the period for which
such allocation is being made) and (ii) second, with respect to classes of
Partnership Interests that are not entitled to any preference in distribution,
pro rata to each such class in accordance with the terms of such class (and,
within such class, pro rata in proportion to the respective Percentage
Interests as of the last day of the period for which such allocation is being
made); provided that Net Losses shall not be allocated to any Limited Partner
pursuant to this Section 6.1.B to the extent that such allocation would cause
such Limited Partner to have an Adjusted Capital Account Deficit (or increase
any existing Adjusted Capital Account Deficit) at the end of such taxable year
(or portion thereof). All Net Losses in excess of the limitations set forth in
this Section 6.1.B shall be allocated to the General Partners.
C. Allocation of Nonrecourse Debt. For purposes of Regulation Section
1.752-3(a), the Partners agree that Nonrecourse Liabilities of the Partnership
in excess of the sum of (i) the amount of Partnership Minimum Gain and (ii) the
total amount of Nonrecourse Built-in Gain shall be allocated among the Partners
in accordance with their respective Percentage Interests.
D. Recapture Income. Any gain allocated to the Partners upon the sale or
other taxable disposition of any Partnership asset shall, to the extent
possible after taking into account other required allocations of gain pursuant
to Exhibit C, be characterized as Recapture Income in the same proportions and
to the same extent as such Partners have been allocated any deductions directly
or indirectly giving rise to the treatment of such gains as Recapture Income.
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SECTION 6.2 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF PARTNERSHIP
INTERESTS
If the Partnership issues Partnership Interests to the General Partners or
any Additional Limited Partner pursuant to Article IV hereof, the Managing
General Partner shall make such revisions to this Article VI and Exhibit A as
it deems necessary to reflect the terms of the issuance of such Partnership
Interests, including making preferential allocations to classes of Partnership
Interests that are entitled thereto. Such revisions shall not require the
consent or approval of any other Partner.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT
X. Xxxxxx of General Partners. 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 Partners, 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
Partners 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 Partners
under any other provision of this Agreement, the Managing General Partner,
subject to Section 7.11, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of the Partnership,
to exercise all powers set forth in Section 3.2 and to effectuate the purposes
set forth in Section 3.1, including, without limitation:
(1) the making of any expenditures, the lending or borrowing
of money (including, without limitation, making
prepayments on loans and borrowing money to permit the
Partnership to make distributions to its Partners in
such amounts as are required under Section 5.1.E or will
permit the General Partner Entity (so long as the
General Partner Entity qualifies as REIT) to avoid the
payment of any federal income tax (including, for this
purpose, any excise tax pursuant to Section 4981 of the
Code) and to make distributions to its shareholders
sufficient to permit the General Partner Entity to
maintain REIT status), the assumption or guarantee of,
or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness
(including the securing of same by mortgage, deed of
trust or other lien or encumbrance on the Partnership's
assets) and the incurring of any obligations the General
Partner Entity deems necessary for the conduct of the
activities of the Partnership;
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(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental
or other agencies having jurisdiction over the business
or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of
the assets of the Partnership (including the exercise or
grant of any conversion, option, privilege or
subscription right or other right available in
connection with any assets at any time held by the
Partnership) or the merger or other combination of the
Partnership with or into another entity on such terms as
the Managing General Partner deems proper;
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any
terms it sees fit, including, without limitation, the
financing of the conduct of the operations of the
General Partners, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to
other Persons (including, without limitation, the
Managing General Partner, its Subsidiaries and the
Partnership's Subsidiaries) and the repayment of
obligations of the Partnership and its Subsidiaries and
any other Person in which the Partnership has an equity
investment and the making of capital contributions to
its Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real
property or improvements owned by the Partnership or any
Subsidiary of the Partnership or any Person in which the
Partnership has made a direct or indirect equity
investment;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the
Managing General Partner considers useful or necessary
to the conduct of the Partnership's operations or the
implementation of the Managing General Partner's powers
under this Agreement, including contracting with
contractors, developers, consultants, accountants, legal
counsel, other professional advisors and other agents
and the payment of their expenses and compensation out
of the Partnership's assets;
(7) the mortgage, pledge, encumbrance or hypothecation of
any assets of the Partnership, and the use of the assets
of the Partnership (including, without limitation, cash
on hand) for any purpose consistent with the terms of
this Agreement and on any terms it sees fit, including,
without limitation, the
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financing of the conduct or the operations of the Gener
Partners or the Partnership, the lending of funds to
other Persons (including, without limitation, any
Subsidiaries of the Partnership) and the repayment of
obligations of the Partnership, any of its Subsidiaries
and any other Person in which it has an equity
investment;
(8) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(9) the holding, managing, investing and reinvesting of cash
and other assets of the Partnership;
(10) the collection and receipt of revenues and income of the
Partnership;
(11) the selection, designation of powers, authority and
duties and the dismal of employees of the Partnership
(including, without limitation, employees having titles
such as "president," "vice president," "secretary" and
"treasurer") and agents, outside attorneys, accountants,
consultants and contractors of the Partnership and the
determination of their compensation and other terms of
employment or hiring;
(12) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
(13) the formation of, or acquisition of an interest
(including non-voting interests in entities controlled
by Affiliates of the Partnership or third parties) in,
and the contribution of property to, any further limited
or general partnerships, joint ventures, limited
liability companies or other relationships that it deems
desirable (including, without limitation, the
acquisition of interests in, and the contributions of
funds or property to, or making of loans to, its
Subsidiaries and any other Person in which it has an
equity investment from time to time, or the incurrence
of indebtedness on behalf of such Persons or the
guarantee of the obligations of such Persons); provided
that, as long as the Managing General Partner has
determined to continue to qualify as a REIT, the
Partnership may not engage in any such formation,
acquisition or contribution that would cause the
Managing General Partner to fail to qualify as a REIT;
(14) the control of any matters affecting the rights and
obligations of the Partnership, including the
settlement, compromise, submission to arbitration or any
other form of dispute
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resolution or abandonment of any claim, cause of action,
liability, debt or damages due or owing to or from the
Partnership, the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitrations or
other forms of dispute resolution, the representation of
the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms
of dispute resolution, the incurring of legal expense and
the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(15) the determination of the fair market value of any
Partnership property distributed in kind, using such
reasonable method of valuation as the Managing General
Partner may adopt;
(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power
of attorney, of any right, including the right to vote,
appurtenant to any assets or investment held by the
Partnership;
(17) the exercise of any of the powers of the General Partners
enumerated in this Agreement on behalf of or in
connection with any Subsidiary of the Partnership or any
other Person in which the Partnership has a direct or
indirect interest, individually or jointly with any such
Subsidiary or other Person;
(18) the exercise of any of the powers of the General Partners
enumerated in this Agreement on behalf of any Person in
which the Partnership does not have any interest pursuant
to contractual or other arrangements with such Person;
(19) the making, executing and delivering of any and all
deeds, leases, notes, deeds to secure debt, mortgages,
deeds of trust, security agreements, conveyances,
contracts, guarantees, warranties, indemnities, waivers,
releases or other legal instruments or agreements in
writing necessary or appropriate in the judgment of the
Managing General Partner for the accomplishment of any of
the powers of the General Partners enumerated in this
Agreement; and
(20) the distribution of cash to acquire Partnership Units
held by a Limited Partner in connection with a Limited
Partner's exercise of its Redemption Right under Section
8.6; and
(21) the amendment and restatement of Exhibit A to reflect
accurately at all times the Capital Contributions and
Percentage Interests of the Partners as the same are
adjusted
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from time to time to the extent necessary to reflect
redemptions, Capital Contributions, the issuance of
Partnership Units, the admission of any Additional
Limited Partner or any Substituted Limited Partner or
otherwise, which amendment and restatement,
notwithstanding anything in this Agreement to the
contrary, shall not be deemed an amendment of this
Agreement, as long as the matter or event being
reflected in Exhibit A otherwise is authorized by this
Agreement.
B. No Approval by Limited Partners. Except as provided in Section 7.11,
each of the Limited Partners and the other General Partners agrees that the
Managing General Partner is authorized to execute, deliver and perform the
above-mentioned agreements and transactions on behalf of the Partnership
without any further act, approval or vote of the Partners, notwithstanding any
other provision of this Agreement, the Act or any applicable law, rule or
regulation, to the full extent permitted under the Act or other applicable law.
The execution, delivery or performance by the Managing General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the Managing General Partner of any
duty that the Managing General Partner may owe the Partnership or the Limited
Partners or any other Persons under this Agreement or of any duty stated or
implied by law or equity.
C. Insurance. At all times from and after the date hereof, the Managing
General Partner may cause the Partnership to obtain and maintain (i) casualty,
liability and other insurance on the properties of the Partnership and (ii)
liability insurance for the Indemnitees hereunder and (iii) such other
insurance as the Managing General Partner, in its sole and absolute discretion,
determines to be necessary.
D. Working Capital and Other Reserves. At all times from and after the
date hereof, the Managing General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the Managing
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time, including upon liquidation of the Partnership
under Section 13.
E. No Obligations to Consider Tax Consequences of Limited Partners. In
exercising their authority under this Agreement, the General Partners may, but
shall be under no obligation to, take into account the tax consequences to any
Partner (including the General Partners) of any action taken (or not taken) by
any of them. The General Partners and the Partnership shall not have liability
to a Limited Partner for monetary damages or otherwise for losses sustained,
liabilities incurred or benefits not derived by such Limited Partner in
connection with such decisions, provided that the General Partners have acted
in good faith and pursuant to their authority under this Agreement.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partners have previously filed the Certificate with the
Secretary of State of Delaware. To the extent that such action is determined
by the General Partners
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to be reasonable and necessary or appropriate, the General Partners shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state, the District of Columbia or 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 Partners 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 Managing General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, the District of Columbia or other jurisdiction in which the
Partnership may elect to do business or own property.
SECTION 7.3 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partners, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, any
General Partner or one or more nominees, as the Managing General Partner may
determine, including Affiliates of the General Partners. The General Partners
hereby declare and warrant that any Partnership assets for which legal title is
held in the name of any General Partner or any nominee or Affiliate of the
General Partners shall be held by that General Partner for the use and benefit
of the Partnership in accordance with the provisions of this Agreement. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNERS
A. No Compensation. Except as provided in this Section 7.4 and elsewhere
in this Agreement (including the provisions of Articles V and VI regarding
distributions, payments and allocations to which it may be entitled), the
General Partners shall not be compensated for their services as general
partners of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership shall be
responsible for and shall pay all expenses relating to the Partnership's
organization, the ownership of its assets and its operations. The Managing
General Partner shall be reimbursed on a monthly basis, or such other basis as
the Managing General Partner may determine in its sole and absolute discretion,
for all expenses it incurs relating to the ownership and operation of, or for
the benefit of, the Partnership (including, without limitation, expenses
related to the operations of the General Partners and to the management and
administration of any Subsidiaries of the Managing General Partner or the
Partnership or Affiliates of the Partnership, such as auditing expenses and
filing fees); provided that, the amount of any such reimbursement shall be
reduced by (i) any interest earned by the Managing General Partner with respect
to bank accounts or other
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instruments or accounts held by it on behalf of the Partnership as permitted in
Section 7.5.A (which interest is considered to belong to the Partnership and
shall be paid over to the Partnership to the extent not applied to reimburse the
Managing General Partner for expenses hereunder); and (ii) any amount derived by
the Managing General Partner from any investments permitted in Section 7.5.A.
The Managing General Partner shall determine in good faith the amount of
expenses incurred by it related to the ownership and operation of, or for the
benefit of, the Partnership. If certain expenses are incurred for the benefit
of the Partnership and other entities (including the Managing General
Partner), such expenses will be allocated to the Partnership and such other
entities in such a manner as the Managing General Partner in its sole and
absolute discretion deems fair and reasonable. Such reimbursements shall be in
addition to any reimbursement to the Managing General Partner pursuant to
Section 10.3.C and as a result of indemnification pursuant to Section 7.7. All
payments and reimbursements hereunder shall be characterized for federal income
tax purposes as expenses of the Partnership incurred on its behalf, and not as
expenses of the Managing General Partner.
C. Partnership Interest Issuance Expenses. The Managing General Partner
shall also be reimbursed for all expenses it incurs relating to any issuance of
Partnership Interests, Shares, Debt of the Partnership or the Managing General
Partner or rights, options, warrants or convertible or exchangeable securities
pursuant to Article IV (including, without limitation, all costs, expenses,
damages and other payments resulting from or arising in connection with
litigation related to any of the foregoing), all of which expenses are
considered by the Partners to constitute expenses of, and for the benefit of,
the Partnership.
D. Purchases of Shares by the Managing General Partner. If the Managing
General Partner exercises its rights under the Declaration of Trust to purchase
Shares or otherwise elects to purchase from its shareholders Shares in
connection with a share repurchase or similar program or for the purpose of
delivering such Shares to satisfy an obligation under any dividend reinvestment
or equity purchase program adopted by the Managing General Partner, any
employee equity purchase plan adopted by the Managing General Partner or any
similar obligation or arrangement undertaken by the Managing General Partner in
the future, the purchase price paid by the Managing General Partner for those
Shares and any other expenses incurred by the Managing General Partner in
connection with such purchase shall be considered expenses of the Partnership
and shall be reimbursable to the Managing General Partner, subject to the
conditions that: (i) if those Shares subsequently are to be sold by the
Managing General Partner, the Managing General Partner shall pay to the
Partnership any proceeds received by the Managing General Partner for those
Shares (provided that a transfer of Shares for Partnership Units pursuant to
Section 8.6 would not be considered a sale for such purposes); and (ii) if such
Shares are not retransferred by the Managing General Partner within thirty (30)
days after the purchase thereof, the Managing General Partner shall cause the
Partnership to cancel a number of Partnership Units (rounded to the nearest
whole Partnership Unit) held by the Managing General Partner equal to the
product attained by multiplying the number of those Shares by a fraction, the
numerator of which is one and the denominator of which is the Conversion
Factor.
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E. Reimbursement not a Distribution. If and to the extent any
reimbursement made pursuant to this Section 7.4 is determined for federal
income tax purposes not to constitute a payment of expenses of the Partnership,
the amount so determined shall constitute a guaranteed payment with respect to
capital within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners and shall not be
treated as a distribution for purposes of computing the Partners' Capital
Accounts.
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNERS; RELATIONSHIP OF SHARES
TO PARTNERSHIP UNITS; FUNDING DEBT
A. General. Without the Consent of the Outside Limited Partners, the
General Partners shall not, directly or indirectly, enter into or conduct any
business other than in connection with the ownership, acquisition and
disposition of Partnership Interests as a General Partner or Limited Partner
and the management of the business of the Partnership and such activities as
are incidental thereto. Without the Consent of the Outside Limited Partners,
the assets of the Managing General Partner shall be limited to Partnership
Interests and permitted debt obligations of the Partnership (as contemplated by
Section 7.5.F), so that Shares and Partnership Units are completely fungible
except as otherwise specifically provided herein; provided, that the Managing
General Partner shall be permitted to hold such bank accounts or similar
instruments or accounts in its name as it deems necessary to carry out its
responsibilities and purposes as contemplated under this Agreement and its
organizational documents (provided that accounts held on behalf of the
Partnership to permit the Managing General Partner to carry out its
responsibilities under this Agreement shall be considered to belong to the
Partnership and the interest earned thereon shall, subject to Section 7.4.B, be
applied for the benefit of the Partnership); and, provided further, that the
General Partners shall be permitted to acquire, directly or through a Qualified
REIT Subsidiary or limited liability company, up to a one percent (1%) interest
in any partnership or limited liability company at least ninety-nine percent
(99%) of the equity of which is owned, directly or indirectly, by the
Partnership. The Managing General Partner and any of its Affiliates may
acquire Limited Partnership Interests and shall be entitled to exercise all
rights of a Limited Partner relating to such Limited Partnership Interests.
B. Repurchase of Shares. If the Managing General Partner exercises its
rights under the Declaration of Trust to purchase Shares or otherwise elects to
purchase from its shareholders Shares in connection with a share repurchase or
similar program or for the purpose of delivering such shares to satisfy an
obligation under any dividend reinvestment or share purchase program adopted by
the Managing General Partner, any employee share purchase plan adopted by the
Managing General Partner or any similar obligation or arrangement undertaken by
the Managing General Partner in the future, then the Managing General Partner
shall cause the Partnership to purchase from the Managing General Partner that
number of Partnership Units of the appropriate class equal to the product
obtained by multiplying the number of Shares purchased by the Managing General
Partner times a fraction, the numerator of which is one and the denominator of
which is the Conversion Factor, on the same terms and for the same aggregate
price that the Managing General Partner purchased such Shares.
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C. Forfeiture of Shares. If the Partnership or the Managing General
Partner acquires Shares as a result of the forfeiture of such Shares under a
restricted or similar share plan, then the Managing General Partner shall cause
the Partnership to cancel that number of Partnership Units equal to the number
of Shares so acquired, and, if the Partnership acquired such Shares, it shall
transfer such Shares to the Managing General Partner for cancellation.
D. Issuances of Shares. After the Effective Date, the Managing General
Partner shall not grant, award, or issue any additional Shares (other than
Shares issued pursuant to Section 8.6 hereof or pursuant to a dividend or
distribution (including any share split) of Shares to all of its shareholders),
other equity securities of the Managing General Partner, New Securities or
Convertible Funding Debt unless (i) the Managing General Partner shall cause,
pursuant to Section 4.2.A hereof, the Partnership to issue to the Managing
General Partner Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having designations,
preferences and other rights, all such that the economic interests are
substantially the same as those of such additional Shares, other equity
securities, New Securities or Convertible Funding Debt, as the case may be, and
(ii) the Managing General Partner transfers to the Partnership, as an
additional Capital Contribution, the proceeds from the grant, award, or
issuance of such additional Shares, other equity securities, New Securities or
Convertible Funding Debt, as the case may be, or from the exercise of rights
contained in such additional Shares, other equity securities, New Securities or
Convertible Funding Debt, as the case may be. Without limiting the foregoing,
the Managing General Partner is expressly authorized to issue additional
Shares, other equity securities, New Securities or Convertible Funding Debt, as
the case may be, for less than fair market value, and the Managing General
Partner is expressly authorized, pursuant to Section 4.2.A hereof, to cause the
Partnership to issue to the Managing General Partner corresponding Partnership
Interests, as long as (a) the Managing General Partner concludes in good faith
that such issuance is in the interests of the Managing General Partner and the
Partnership (for example, and not by way of limitation, the issuance of Shares
and corresponding Partnership Units pursuant to a share purchase plan providing
for purchases of Shares, either by employees or shareholders, at a discount
from fair market value or pursuant to employee share options that have an
exercise price that is less than the fair market value of the Shares, either at
the time of issuance or at the time of exercise) and (b) the Managing General
Partner transfers all proceeds from any such issuance or exercise to the
Partnership as an additional Capital Contribution.
E. Share Option Plan. If at any time or from time to time, the Managing
General Partner sells Shares pursuant to any Share Option Plan, the Managing
General Partner shall transfer the net proceeds of the sale of such Shares to
the Partnership as an additional Capital Contribution in exchange for an amount
of additional Partnership Units equal to the number of Shares so sold divided
by the Conversion Factor.
F. Funding Debt. The Managing General Partner may incur a Funding Debt,
including, without limitation, a Funding Debt that is convertible into Shares
or otherwise constitutes a class of New Securities ("Convertible Funding
Debt"), subject to the condition that the Managing General Partner lend to the
Partnership the net proceeds of such Funding Debt; provided, that Convertible
Funding Debt shall be issued pursuant to
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Section 7.5.D above; and, provided further, that the Managing General Partner
shall not be obligated to lend the net proceeds of any Funding Debt to the
Partnership in a manner that would be inconsistent with the Managing General
Partner's ability to remain qualified as a REIT. If the Managing General
Partner enters into any Funding Debt, the loan to the Partnership shall be on
comparable terms and conditions, including interest rate, repayment schedule and
costs and expenses, as are applicable with respect to or incurred in connection
with such Funding Debt.
SECTION 7.6 TRANSACTIONS WITH AFFILIATES
A. Transactions with Certain Affiliates. Except as expressly permitted by
this Agreement, the Partnership shall not, directly or indirectly, sell,
transfer or convey any property to, or purchase any property from, or borrow
funds from, or lend funds to, any Partner or any Affiliate of the Partnership
that is not also a Subsidiary of the Partnership, except pursuant to
transactions that are on terms that are fair and reasonable and no less
favorable to the Partnership than would be obtained from an unaffiliated third
party.
B. Conflict Avoidance. The General Partners are expressly authorized to
enter into, in the name and on behalf of the Partnership, a right of first
opportunity arrangement and other conflict avoidance agreements with various
Affiliates of the Partnership and General Partners on such terms as the General
Partners, in their sole and absolute discretion, believe are advisable.
C. Benefit Plans Sponsored by the Partnership. The Managing 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
Managing General Partner, the Partnership, Subsidiaries of the Partnership or
any Affiliate of any of them.
SECTION 7.7 INDEMNIFICATION
A. General. The Partnership shall indemnify each Indemnitee to the
fullest extent provided by the Act from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without
limitation, attorneys fees and other legal fees and expenses), judgments,
fines, settlements and other amounts arising from or in connection with any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, incurred by the Indemnitee and relating to the
Partnership or the General Partners or the operation of, or the ownership of
property by, any of them as set forth in this Agreement in which any such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established by a final determination of a court of
competent jurisdiction that: (i) the act or omission of the Indemnitee was
material to the matter giving rise to the proceeding and either was committed
in bad faith or was the result of active and deliberate dishonesty, (ii) the
Indemnitee actually received an improper personal benefit in money, property or
services or (iii) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was unlawful. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guarantee, contractual
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obligation for any indebtedness or other obligation or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership
(including, without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken subject to), and the
Managing General Partner is hereby authorized and empowered, on behalf of the
Partnership, to enter into one or more indemnity agreements consistent with the
provisions of this Section 7.7 in favor of any Indemnitee having or potentially
having liability for any such indebtedness. The termination of any proceeding
by judgment, order or settlement does not create a presumption that the
Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.7.A. The termination of any proceeding by conviction or upon a plea
of nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption that the Indemnitee acted
in a manner contrary to that specified in this Section 7.7.A with respect to
the subject matter of such proceeding. Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and any
insurance proceeds from the liability policy covering the General Partners and
any Indemnitee, and neither a General Partner nor any Limited Partner shall
have any obligation to contribute to the capital of the Partnership or
otherwise provide funds to enable the Partnership to fund its obligations under
this Section 7.7.
B. Advancement of Expenses. Reasonable expenses expected to be incurred
by an Indemnitee shall be paid or reimbursed by the Partnership in advance of
the final disposition of any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative made or
threatened against an Indemnitee upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief
that the standard of conduct necessary for indemnification by the Partnership
as authorized in this Section 7.7.A has been met and (ii) a written undertaking
by or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. No Limitation of Rights. The indemnification provided by this Section
7.7 shall be in addition to any other rights to which an Indemnitee or any
other Person may be entitled under any agreement, pursuant to any vote of the
Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided
in a written agreement pursuant to which such Indemnitee is indemnified.
D. Insurance. The Partnership may purchase and maintain insurance on
behalf of the Indemnitees and such other Persons as the Managing General
Partner shall determine against any liability that may be asserted against or
expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7, (i) excise
taxes assessed on an Indemnitee, of for which the Indemnitee is otherwise found
liable, with respect to an ERISA Plan pursuant to applicable law shall
constitute fines within the meaning of this Section 7.7 and (iii) actions taken
or omitted by the Indemnitee with respect to an ERISA Plan in the performance
of its duties for a purpose reasonably believed
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by it to be in the interest of the participants and beneficiaries of such ERISA
Plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Partnership.
F. No Personal Liability for Limited Partners. In no event may an
Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
H. Benefit. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their employees, officers, directors, trustees, heirs, successors,
assigns and administrators and shall not be deemed to create any rights for the
benefit of any other Persons. Any amendment, modification or repeal of this
Section 7.7, or any provision hereof, shall be prospective only and shall not
in any way affect the limitation on the Partnership's liability to any
Indemnitee under this Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
related to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
I. Indemnification Payments Not Distributions. If and to the extent any
payments to the General Partners pursuant to this Section 7.7 constitute gross
income to the General Partners (as opposed to the repayment of advances made on
behalf of the Partnership), such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.
J. Exception to Indemnification. Notwithstanding anything to the contrary
in this Agreement, a General Partner shall not be entitled to indemnification
hereunder for any loss, claim, damage, liability or expense for which such
General Partner is obligated to indemnify the Partnership under any other
agreement between such General Partner and the Partnership.
SECTION 7.8 LIABILITY OF THE GENERAL PARTNERS
A. General. Notwithstanding anything to the contrary set forth in this
Agreement, no General Partner shall be liable for monetary damages to the
Partnership, any Partners or any Assignees for losses sustained, liabilities
incurred or benefits not derived as a result of errors in judgment or mistakes
of fact or law or of any act or omission unless that General Partner acted in
bad faith and the act or omission was material to the matter giving rise to the
loss, liability or benefit not derived.
B. No Obligation to Consider Separate Interests of Limited Partners or
Shareholders. The Limited Partners expressly acknowledge that the General
Partners are acting on behalf of the Partnership, that the General Partners are
under no obligation to
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consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners or Assignees) in deciding
whether to cause the Partnership to take (or decline to take) any actions, and
that the General Partners shall not be liable for monetary damages for losses
sustained, liabilities incurred or benefits not derived by Limited Partners in
connection with such decisions, provided that the General Partners have acted in
good faith.
C. Actions of Agents. Subject to their obligations and duties as General
Partners set forth in Section 7.1.A, the General Partners may exercise any of
the powers granted to them by this Agreement and perform any of the duties
imposed upon them hereunder either directly or by or through their agents. The
General Partners shall not be responsible for any misconduct or negligence on
the part of any such agent appointed by a General Partner in good faith.
D. Effect of Amendment. Notwithstanding any other provision contained
herein, any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on a General Partner's liability to the Partnership and the Limited
Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
SECTION 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNERS
A. Reliance on Documents. A General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture or other paper or document believed by it in good faith to be genuine
and to have been signed or presented by the proper party or parties.
B. Reliance on Advisors. The General Partners may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers
and other consultants and advisers selected by them, and any act taken or
omitted to be taken in reliance upon the opinion of such Persons as to matters
which the General Partners reasonably believe to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
C. Action Through Agents. The General Partners shall have the right, in
respect of any of their powers or obligations hereunder, to act through any of
their duly authorized officers and a duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided by the
General Partners 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 Partners hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of the General
Partner Entity. Notwithstanding any other provisions of this Agreement or the
Act, any
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action of the General Partners on behalf of the Partnership or any decision of a
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 Entity to continue to
qualify as a REIT or (ii) to allow the General Partner Entity to avoid incurring
any liability for taxes under Section 857 or 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
E. Actions to Maintain REOC Status. If and so long as the Partnership
Interests of "benefit plan investors" is "significant" (as such terms, or terms
succeeding thereto with the same objective, are used in 29 C.F.R. Section
2510.3-101(f) (such regulation or successor regulation being known as the "Plan
Assets Regulation")), or if the Managing General Partner receives written
notice from another General Partner requesting that the affairs of the
Partnership be conducted in compliance with the exception for a real estate
operating company ("REOC") as provided in the Plan Assets Regulation, then the
Managing General Partner shall use its best efforts to conduct the affairs of
the Partnership as a REOC and so that the assets of the Partnership will not be
"plan assets" (as such term is defined in the Plan Assets Regulations) of any
ERISA Partner.
(i) If the Managing General Partner, pursuant to this Section 7.10.E,
intends to conduct the affairs of the Partnership as a REOC, the Managing
General Partner shall promptly deliver to each ERISA Partner and to any
requesting General Partner an opinion of counsel reasonably acceptable to each
such ERISA Partner or requesting General Partner with respect to the "initial
valuation date" and each "annual valuation period" (as those terms, or terms
succeeding thereto with the same objective, are defined in the Plan Assets
Regulation). Such opinion of counsel shall state, (A) as to the opinion
respecting the "initial valuation date," that the Partnership shall qualify or
qualified as a REOC for the period beginning on such "initial valuation date"
and ending on the last day of the first "annual valuation period," and (B) as to
each annual opinion respecting each "annual valuation period," that the
Partnership shall qualify or qualified as a REOC for the 12-month period
following the last day of such "annual valuation period." Each opinion referred
to in the prior two sentences may rely upon, among other things, a certificate
of the Managing General Partner as to the exercise of management rights with
respect to one or more investments during the appropriate period and as to a
description of such investments, and such counsel opinion also shall state
whether the Partnership has included in a certification to opinion counsel a
statement to the effect that on such "initial valuation date" or during such
"annual valuation period" at least 50 percent of Partnership assets (other than
short-term investments pending long-term commitment or distribution to
investors), valued at cost, were invested in real estate investments as
described in the Plan Assets Regulation.
(ii) If the opinion described in this subsection is not provided in
the affirmative, or if any ERISA Partner or a requesting General Partner shall
obtain and deliver to the Managing General Partner an opinion of counsel to such
ERISA Partner or requesting General Partner (which opinion shall be reasonably
satisfactory to the Managing General Partner) that there is a reasonable
probability that either (A) the Partnership was or will not be a REOC for any
period in which either participation by benefit plan investors in the
Partnership is significant or a requesting General Partner is
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an investor, or (B) the assets of the Partnership were or will be "plan assets"
of ERISA Plan investors, then the Managing General Partner is hereby authorized
and empowered to take such actions as it deems necessary and appropriate to
mitigate, prevent, or cure such adverse consequences resulting to the ERISA Plan
investors or requesting General Partner, including modifying the manner in which
the Partnership conducts its business, or requiring each ERISA Partner (on a pro
rata basis unless otherwise consented to by all ERISA Partners) to transfer
all or a portion of its interest at a price not less than the fair value of such
interest or portion thereof. Such calculation of fair value of an interest or
of any Partnership asset shall be made by the Managing General Partner.
SECTION 7.10 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the Managing
General Partner has full power and authority, without consent or approval of
any other Partner or Person, to encumber, sell or otherwise use in any manner
any and all assets of the Partnership, to enter into any contracts on behalf of
the Partnership and to take any and all actions on behalf of the Partnership,
and such Person shall be entitled to deal with the Managing General Partner as
if the Managing General Partner were the Partnership's sole party in interest,
both legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the Managing General Partner in
connection with any such dealing. In no event shall any Person dealing with
the Managing 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 Managing General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the Managing General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution
and delivery of such certificate, document or instrument, this Agreement was in
full force and effect, (ii) the Person executing and delivering such
certificate, document or instrument was duly authorized and empowered to do so
for and on behalf of the Partnership, and (iii) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
SECTION 7.11 RESTRICTIONS ON GENERAL PARTNERS' AUTHORITY
A. Consent Required. The General Partners may not take any action in
contravention of an express prohibition or limitation of this Agreement without
the written Consent of (i) all Partners adversely affected or (ii) such lower
percentage of the Limited Partnership Interests as may be specifically provided
for under a provision of this Agreement or the Act.
B. Sale of All Assets of the Partnership. Except as provided in Article
XIII, the General Partners may not, directly or indirectly, cause the
Partnership to sell, exchange, transfer or otherwise dispose of all or
substantially all of the Partnership's assets in a single transaction or a
series of related transactions (including by way of
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merger (including a triangular merger), consolidation or other combination with
any other Persons) (i) if such merger, sale or other transaction is in
connection with a Termination Transaction permitted under Section 11.2.B hereof,
without the Consent of the Partners holding at least a majority of the then
outstanding Partnership Units (including any Partnership Units held by the
General Partners), or (ii) otherwise, without the Consent of the Outside Limited
Partners.
C. Communications Act Investor . Unless otherwise approved in writing by
each affected Communications Act Investor (hereinafter defined), the General
Partners may not, directly or indirectly, cause the Partnership to invest in
any Property or otherwise take any action that (i) would result in the
Communications Act Investor being placed in a position whereby it would have or
be deemed to have the right to act for any third party in selecting or dealing
with any interexchange carrier (which, for purposes hereof, shall include
satellite telecommunication service) in providing long distance service between
local access and transport areas which originates in any State within the
region in which the affected Communications Act Investor (or the operating
company affiliate thereof) provides wireline telephone local exchange service,
(but in no event shall the foregoing be deemed to prohibit the Partnership from
contracting with a third party to perform such functions on a discretionary
basis as part of its property management duties where such activity is a
necessary adjunct to an investment and such activities, in the aggregate, are
not significant in relation to the Partnership's business activities taken as a
whole), or (ii) would cause a significant percentage of the Partnership's gross
income from any Property to be attributable to either the provision or resale
of long distance service between local access and transport areas which
originates in any State within the region in which the affected Communications
Act Investor (or the operating company affiliate thereof) provides wireline
telephone local exchange service, or the manufacture of telecommunications,
customer premises or related equipment. In addition, the Partnership will not
engage in any telecommunications activities other than those that may be
ancillary to the ownership or operation of its investments or make an
investment in a cable television system that would violate the cable-telephone
cross-ownership restriction in the Communications Act of 1934, as amended, with
regard to the local exchange service area of a Communications Act Investor (or
the operating company affiliate thereof). Notwithstanding the foregoing, the
Partnership is not precluded from engaging in any telecommunications business
or cable business unless such business is found to place the Communications Act
Investor in violation of law. The Managing General Partner shall have a period
of 120 days following a finding by a court or regulatory body that such a
violation exists to use its reasonable best efforts to prevent or eliminate
such violation, including, but not limited to, correction of the condition
giving rise to the violation, amendment to this Agreement or sale of the
relevant property or the interest of the Communications Act Investor therein.
A "Communications Act Investor" is a Partner or shareholder of the Managing
General Partner that has notified the Managing General Partner that it is
subject to the Communications Act of 1934, as amended.
SECTION 7.12 LOANS BY THIRD PARTIES
The Partnership may incur Debt, or enter into similar credit, guarantee,
financing or refinancing arrangements for any purpose (including, without
limitation, in
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connection with any acquisition of property) with any Person that is not a
General Partner upon such terms as the Managing General Partner determines
appropriate; provided that, the Partnership shall not incur any Debt that is
recourse to a General Partner, except to the extent otherwise agreed to by such
General Partner in its sole discretion.
SECTION 7.13 ACTIONS OF THE GENERAL PARTNERS
Any act (including, without limitation, execution of any document),
determination or judgment required by this Agreement to be performed or made by
the General Partners (as opposed to by the Managing General Partner acting
alone), may be performed or made by the Managing General Partner, provided it
has obtained the consent of a majority in number of all of the General Partners
(including the Managing General Partner).
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement except
as expressly provided in this Agreement, including Section 10.5, or under the
Act.
SECTION 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the General Partners, any of
their Affiliates or any officer, director, employee, partner, agent or trustee
of a General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by a
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of a 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 Section 7.5 hereof, and subject to any agreements entered into
pursuant to Section 7.6.C hereof and to any other agreements entered into by a
Limited Partner or its Affiliates with the Partnership or a Subsidiary, any
Limited Partner (other than a General Partner) and any officer, director,
employee, agent, trustee, Affiliate or shareholder of any Limited Partner shall
be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities in direct or indirect competition with the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee. None of the
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Limited Partners (other than the General Partners) nor any other Person shall
have any rights by virtue of this Agreement or thepartnership relationship
established hereby in any business ventures of any other Person (other than the
Managing General Partner to the extent expressly provided herein), and such
Person shall have no obligation pursuant to this Agreement to offer any interest
in any such business ventures to the Partnership, any Limited Partner or any
such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could be
taken by such Person.
SECTION 8.4 RETURN OF CAPITAL
Except pursuant to the right of redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. No Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions (except as permitted
by Section 4.2.A) or, except to the extent provided by Exhibit C or as permitted
by Sections 4.2.A, 5.1.B(i), 6.1.A(ii) and 6.1.B(i), or otherwise expressly
provided in this Agreement, as to profits, losses, distributions or credits.
SECTION 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP
A. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.D, each Limited
Partner shall have the right, for a purpose reasonably related to such Limited
Partner's interest as a limited partner in the Partnership, upon written demand
with a statement of the purpose of such demand and at such Limited Partner's own
expense:
(1) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission
by the General Partner Entity pursuant to the Exchange
Act;
(2) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate
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
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has agreed to contribute in the future, and the date on
which each became a Partner.
B. Notice of Conversion Factor. The Partnership shall notify each
Limited Partner upon request of the then current Conversion Factor and any
changes that have been made thereto.
C. Notice of Extraordinary Transaction of the General Partner Entity.
The General Partner Entity shall not make any extraordinary distributions of
cash or property to its shareholders or effect a merger (including, without
limitation, a triangular merger), a sale of all or substantially all of its
assets or any other similar extraordinary transaction without notifying the
Limited Partners of its intention to make such distribution or effect such
merger, sale or other extraordinary transaction at least twenty (20) Business
Days prior to the record date to determine shareholders eligible to receive such
distribution or to vote upon the approval of such merger, sale or other
extraordinary transaction (or, if no such record date is applicable, at least
twenty (20) business days before consummation of such merger, sale or other
extraordinary transaction). This provision for such notice shall not be deemed
(i) to permit any transaction that otherwise is prohibited by this Agreement or
requires a Consent of the Partners or (ii) to require a Consent of the Limited
Partners to a transaction that does not otherwise require Consent under this
Agreement. Each Limited Partner agrees, as a condition to the receipt of the
notice pursuant hereto, to keep confidential the information set forth therein
until such time as the General Partner Entity has made public disclosure thereof
and to use such information during such period of confidentiality solely for
purposes of determining whether to exercise the Redemption Right; provided,
however, that a Limited Partner may disclose such information to its attorney,
accountant and/or financial advisor for purposes of obtaining advice with
respect to such exercise so long as such attorney, accountant and/or financial
advisor agrees to receive and hold such information subject to this
confidentiality requirement.
D. Confidentiality. Notwithstanding any other provision of this
Section 8.5, the General Partners may keep confidential from the Limited
Partners, for such period of time as the General Partners determine in their
sole and absolute discretion to be reasonable, any information that (i) the
General Partners reasonably believe to be in the nature of trade secrets or
other information the disclosure of which the General Partners in good faith
believe is not in the best interests of the Partnership or could damage the
Partnership or its business or (ii) the Partnership is required by law or by
agreements with unaffiliated third parties to keep confidential.
SECTION 8.6 REDEMPTION RIGHT
A. General. (i) Subject to Section 8.6.C, at any time on or after
the first anniversary date of the issuance of a Partnership Unit to a Limited
Partner pursuant to Article IV hereof (which one-year period shall commence upon
the issuance of such Partnership Unit regardless of whether such Partnership
Unit is designated upon issuance as a Class A Unit, a Class B Unit or otherwise
and shall include the period of time from the date such Partnership Unit is
issued to such Limited Partner as other than a Class A Unit
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until the date such Partnership Unit is converted automatically to a Class A
Unit pursuant to Section 4.2.C hereof), or on or after such date prior to the
expiration of such one-year period as the Managing General Partner, in its sole
and absolute discretion, designates with respect to any or all Class A Units
then outstanding, the holder of a Partnership Unit (if other than the Managing
General Partner or the General Partner Entity or any Subsidiary of either the
Managing General Partner or the General Partner Entity) shall have the right
(the "Redemption Right") to require the Partnership to redeem such Partnership
Unit, with such redemption to occur on the Specified Redemption Date and at a
redemption price equal to and in the form of the Cash Amount to be paid by the
Partnership; provided, however, that solely with respect to Partnership Units
issued to the Opportunity Partnerships in the Consolidation and ultimately
distributed by the Opportunity Partnerships to their respective limited
partners, the Redemption Right only shall be exercisable commencing on or after
the second anniversary date of the issuance of such Partnership Units. Any
such Redemption Right shall be exercised pursuant to a Notice of Redemption
delivered to the Partnership (with a copy to the Managing General Partner) by
the Limited Partner who is exercising the Redemption Right (the "Redeeming
Partner"). A Limited Partner may exercise the Redemption Right from time to
time, without limitation as to frequency, with respect to part or all of the
Units that is owns, as selected by the Limited Partner, provided that a Limited
Partner may not exercise the Redemption Right for less than one thousand
(1,000) Partnership Units unless such Redeeming Partner then holds less than
one thousand (1,000) Partnership Units, in which event the Redeeming Partner
must exercise the Redemption Right for all of the Partnership Units held by
such Redeeming Partner.
(ii) The Redeeming Partner shall have no right with respect to
any Partnership Units so redeemed to receive any distributions paid after the
Specified Redemption Date with respect to such Partnership Units.
(iii) The Assignee of any Limited Partner may exercise the rights
of such Limited Partner pursuant to this Section 8.6, and such Limited Partner
shall be deemed to have assigned such rights to such Assignee and shall be bound
by the exercise of such rights by such Limited Partner's Assignee. In
connection with any exercise of such rights by such Assignee on behalf of such
Limited Partner, the Cash Amount shall be paid by the Partnership directly to
such Assignee and not to such Limited Partner.
(iv) If the Managing General Partner provides notice to the
Limited Partners, pursuant to Section 8.5.C hereof, the Redemption Right shall
be exercisable, without regard to whether the Partnership Units have been
outstanding for any specified period, during the period commencing on the date
on which the Managing General Partner provides such notice and ending on the
record date to determine shareholders eligible to receive such distribution or
to vote upon the approval of such merger, sale or other extraordinary
transaction (or, if no such record date is applicable, at least twenty (20)
business days before the consummation of such merger, sale or other
extraordinary transaction). If this subparagraph (iv) applies, the Specified
Redemption Date is the date on which the Partnership and the Managing General
Partner receive notice of exercise of the Redemption Right, rather than ten (10)
Business Days after receipt of the notice of redemption.
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B. Managing General Partner Assumption of Right. (i) If a Limited
Partner has delivered a Notice of Redemption, the Managing General Partner may,
in its sole and absolute discretion (subject to the limitations on ownership and
transfer of Shares set forth in the Declaration of Trust), elect to assume
directly and satisfy a Redemption Right by paying to the Redeeming Partner
either the Cash Amount or the Shares Amount, as the Managing General Partner
determines in its sole and absolute discretion (provided that payment of the
Redemption Amount in the form of Shares shall be in Shares registered for resale
under Section 12 of the Exchange Act and listed for trading on the exchange or
national market on which the Shares are Publicly Traded, and provided further
that, if the Shares are not Publicly Traded at the time a Redeeming Partner
exercises its Redemption Right, the Redemption Amount shall be paid only in the
form of the Cash Amount unless the Redeeming Partner, in its sole and absolute
discretion, consents to payment of the Redemption Amount in the form of the
Shares Amount), on the Specified Redemption Date, whereupon the Managing General
Partner shall acquire the Partnership Units offered for redemption by the
Redeeming Partner and shall be treated for all purposes of this Agreement as the
owner of such Partnership Units. Unless the Managing General Partner, in its
sole and absolute discretion, shall exercise its right to assume directly and
satisfy the Redemption Right, the Managing General Partner shall not have any
obligation to the Redeeming Partner or to the Partnership with respect to the
Redeeming Partner's exercise of the Redemption Right. If the Managing General
Partner shall exercise its right to satisfy the Redemption Right in the manner
described in the first sentence of this Section 8.6B and shall fully perform its
obligations in connection therewith, the Partnership shall have no right or
obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner's exercise of the Redemption Right, and each of the Redeeming
Partner, the Partnership and the Managing General Partner shall, for federal
income tax purposes, treat the transaction between the General Partner and the
Redeeming Partner as a sale of the Redeeming Partner's Partnership Units to the
Managing General Partner. Nothing contained in this Section 8.6.B shall imply
any right of the Managing General Partner to require any Limited Partner to
exercise the Redemption Right afforded to such Limited Partner pursuant to
Section 8.6.A.
(ii) If the Managing General Partner determines to pay the
Redeeming Partner the Redemption Amount in the form of Shares, the total number
of Shares to be paid to the Redeeming Partner in exchange for the Redeeming
Partner's Partnership Units shall be the applicable Shares Amount. If this
amount is not a whole number of Shares, the Redeeming Partner shall be paid (i)
that number of Shares which equals the nearest whole number less than such
amount plus (ii) an amount of cash which the Managing General Partner
determines, in its reasonable discretion, to represent the fair value of the
remaining fractional Share which would otherwise be payable to the Redeeming
Partner.
(iii) Each Redeeming Partner agrees to execute such documents as
the Managing General Partner may reasonably require in connection with the
issuance of Shares upon exercise of the Redemption Right.
C. Exceptions to Exercise of Redemption Right. Notwithstanding the
provisions of Sections 8.6.A and 8.6.B, a Partner shall not be entitled to
exercise the Redemption Right pursuant to Section 8.6.A if (but only as long as)
the delivery of Shares
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to such Partner on the Specified Redemption Date (i) would be prohibited under
the Declaration of Trust or (ii) would be prohibited under applicable federal or
state securities laws or regulations (in each case regardless of whether the
Managing General Partner would in fact assume and satisfy the Redemption Right).
D. No Liens on Partnership Units Delivered for Redemption. Each
Limited Partner covenants and agrees with the Managing General Partner that all
Partnership Units delivered for redemption shall be delivered to the Partnership
or the Managing General Partner, as the case may be, free and clear of all
liens, and, notwithstanding anything contained herein to the contrary, neither
the Managing General Partner nor the Partnership shall be under any obligation
to acquire Partnership Units which are or may be subject to any liens. Each
Limited Partner further agrees that, if any state or local property transfer tax
is payable as a result of the transfer of its Partnership Units to the
Partnership or the Managing General Partner, such Limited Partner shall assume
and pay such transfer tax.
E. Additional Partnership Interests. If the Partnership issues
Partnership Interests to any Additional Limited Partner pursuant to Article IV,
the Managing General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such Partnership Interests
(including setting forth any restrictions on the exercise of the Redemption
Right with respect to such Partnership Interests).
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 9.1 RECORDS AND ACCOUNTING
The Managing General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including, without limitation, all books and
records necessary to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Section 9.3. Any
records maintained by or on behalf of the Partnership in the regular course of
its business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
SECTION 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
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SECTION 9.3 REPORTS
A. Annual Reports. As soon as practicable, but in no event later than
the date on which the General Partner Entity mails its annual report to its
shareholders, the General Partner Entity shall cause to be mailed to each
Limited Partner an annual report, as of the close of the most recently ended
Partnership Year, containing financial statements of the Partnership, or of the
General Partner Entity if such statements are prepared solely on a consolidated
basis with the Partnership, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner Entity.
B. Quarterly Reports. If and to the extent that the General Partner
Entity mails quarterly reports to its shareholders, as soon as practicable, but
in no event later than the date on such reports are mailed, the General Partner
Entity shall cause to be mailed to each Limited Partner a report containing
unaudited financial statements, as of the last day of such calendar quarter, of
the Partnership, or of the General Partner Entity if such statements are
prepared solely on a consolidated basis with the Partnership, and such other
information as may be required by applicable law or regulation, or as the
Managing General Partner determines to be appropriate.
ARTICLE X
TAX MATTERS
SECTION 10.1 PREPARATION OF TAX RETURNS
The General Partners shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
SECTION 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partners shall, in
their sole and absolute discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partners
shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder. The General Partners shall have the right to
seek to revoke any such election (including, without limitation, the election
under Section 754 of the Code) upon the General Partners' determination in their
sole and absolute discretion that such revocation is in the best interests of
the Partners.
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SECTION 10.3 TAX MATTERS PARTNER
A. General. The Managing General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. Pursuant to
Section 6223(c)(3) of the Code, upon receipt of notice from the IRS of the
beginning of an administrative proceeding with respect to the Partnership, the
tax matters partner shall furnish the IRS with the name, address, tax payer
identification number and profit interest of each of the Limited Partners and
any Assignees; provided, however, that such information is provided to the
Partnership by the Limited Partners.
X. Xxxxxx. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken into
account by a Partner for income tax purposes (such
administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to as
"judicial review"), and in the settlement agreement the
tax matters partner may expressly state that such
agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (i) who
(within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the authority
to enter into a settlement agreement on behalf of such
Partner or (ii) who is a "notice partner" (as defined in
Section 6231(a)(8) of the Code) or a member of a "notice
group" (as defined in Section 6223(b)(2) of the Code);
(2) if a notice of a final administrative adjustment at the
Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final
adjustment") is mailed to the tax matters partner, to
seek judicial review of such final adjustment, including
the filing of a petition for readjustment with the Tax
Court or the filing of a complaint for refund with the
United States Claims Court or the District Court of the
United States for the district in which the Partnership's
principal place of business is located;
(3) to intervene in any action brought by any other Partner
for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is
not allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with respect
to such request;
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(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to any
item required to be taken into account by a Partner for
tax purposes, or an item affected by such item; and
(6) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial
review proceeding to the extent permitted by applicable
law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the Managing
General Partner set forth in Section 7.7 shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
and/or law firm to assist the tax matters partner in discharging its duties
hereunder, so long as the compensation paid by the Partnership for such services
is reasonable.
SECTION 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as provided
in Section 709 of the Code.
SECTION 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the Managing General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within fifteen (15) days after notice from the
Managing 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 Managing 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
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Limited Partner. Each Limited Partner hereby unconditionally and irrevocably
grants to the Partnership a security interest in such Limited Partner's
Partnership Interest to secure such Limited Partner's obligation to pay to the
Partnership any amounts required to be paid pursuant to this Section 10.5. If a
Limited Partner fails to pay any amounts owed to the Partnership pursuant to
this Section 10.5 when due, the Managing General Partner may, in its sole and
absolute discretion, elect to make the payment to the Partnership on behalf of
such defaulting Limited Partner, and in such event shall be deemed to have
loaned such amount to such defaulting Limited Partner and shall succeed to all
rights and remedies of the Partnership as against such defaulting Limited
Partner (including, without limitation, the right to receive distributions).
Any amounts payable by a Limited Partner hereunder shall bear interest at the
base rate on corporate loans at large United States money center commercial
banks, as published from time to time in the Wall Street Journal, plus four (4)
percentage points (but not higher than the maximum lawful rate under the laws of
the State of Illinois) from the date such amount is due (i.e., fifteen (15) days
after demand) until such amount is paid in full. Each Limited Partner shall
take such actions as the Partnership or the Managing General Partner shall
request to perfect or enforce the security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER
A. Definition. The term "transfer," when used in this Article XI with
respect to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which a General Partner purports to assign all or any
part of its General Partnership Interest to another Person or by which a Limited
Partner purports to assign all or any part of its Limited Partnership Interest
to another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
The term "transfer" when used in this Article XI does not include any redemption
or repurchase of Partnership Units by the Partnership from a Partner or
acquisition of Partnership Units from a Limited Partner by the Managing General
Partner pursuant to Section 8.6 or otherwise. No part of the interest of a
Limited Partner shall be subject to the claims of any creditor, any spouse for
alimony or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered except as may be specifically provided for
in this Agreement.
B. General. No Partnership Interest shall be transferred, in whole or
in part, except in accordance with the terms and conditions set forth in this
Article XI. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article XI shall be null and void.
SECTION 11.2 TRANSFERS OF PARTNERSHIP INTERESTS OF GENERAL PARTNERS
A. Except for transfers of Partnership Units to the Partnership as
provided in Section 7.5 or Section 8.6, the Managing General Partner may not
transfer any of its Partnership Interest (including both its General Partnership
Interest and its Limited
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Partnership Interest) except in connection with a transaction described in
Section 11.2.B or as otherwise expressly permitted under this Agreement, nor
shall the Managing General Partner withdraw as a General Partner except in
connection with a transaction described in Section 11.2.B. A General Partner,
other than the Managing General Partner, may not transfer any of its Partnership
Interests or withdraw as a General Partner except (i) in connection with a
transaction described in Section 11.2.B, (ii) as set forth in Section 11.2.C,
(iii) as set forth in Section 7.9.E. or (iv) with the consent of the Managing
General Partner, in its sole and absolute discretion.
B. The Managing General Partner shall not engage in any merger
(including a triangular merger), consolidation or other combination with or into
another person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of outstanding Shares (other than a
change in par value, or from par value to no par value, or as a result of a
subdivision or combination as described in the definition of "Conversion
Factor") ("Termination Transaction"), unless the Termination Transaction has
been approved by the Consent of the Partners holding at least a majority of the
then outstanding Partnership Units (including any Partnership Units held by the
General Partners) and in connection with which all Limited Partners either will
receive, or will have the right to elect to receive, for each Partnership Unit
an amount of cash, securities, or other property equal to the product of the
Conversion Factor multiplied by the greatest amount of cash, securities or other
property paid to a holder of Shares corresponding to such Partnership Unit in
consideration of one such Share at any time during the period from and after the
date on which the Termination Transaction is consummated; provided that, if, in
connection with the Termination Transaction, a purchase, tender or exchange
offer shall have been made to and accepted by the holders of more than fifty
percent (50%) of the outstanding Shares, each holder of Partnership Units shall
receive, or shall have the right to elect to receive without any right of
Consent set forth above in this subsection B, the greatest amount of cash,
securities, or other property which such holder would have received had it
exercised the Redemption Right and received Shares in exchange for its
Partnership Units immediately prior to the expiration of such purchase, tender
or exchange offer and had thereupon accepted such purchase, tender or exchange
offer.
C. In accordance with its Plan of Dissolution and Liquidation entered
into on ____________, 1997 (the "Plan of Liquidation"), each of the General
Partners, other than the Managing General Partner, shall dissolve and liquidate
on the second anniversary date of the consummation of the Consolidation. On
such date, (i) each liquidating General Partner shall be deemed to have
withdrawn as a general partner from the Partnership and (ii) the General
Partnership Interest of such General Partner shall be converted into a Limited
Partnership Interest and distributed to such General Partner's partners in
accordance with the Plan of Liquidation.
SECTION 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. General. Subject to the provisions of Sections 11.3.C, 11.3.D,
11.3.E, 11.4 and 11.6, a Limited Partner (other than a General Partner) may
transfer with or without the consent of the General Partners, all or any portion
of its Partnership Interest, or any of such Limited Partner's rights as a
Limited Partner, provided that prior written
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notice of such proposed transfer is delivered to the Managing General Partner.
Notwithstanding the foregoing, any Limited Partner may, at any time, without the
consent of the General Partners, (i) transfer all or any portion of its
Partnership Interest to any General Partner, (ii) transfer all or any portion of
its Partnership Interest to an Affiliate, another original Limited Partner or to
an Immediate Family member, subject to the provisions of Section 11.6, (iii)
transfer all or any portion of its Partnership Interest to a trust for the
benefit of a charitable beneficiary or to a charitable foundation, subject to
the provisions of Section 11.6, and (iv) subject to the provisions of Section
11.6, pledge (a "Pledge") all or any portion of its Partnership Interest to a
lending institution, which is not an Affiliate of such Limited Partner, as
collateral or security for a bona fide loan or other extension of credit, and
transfer such pledged Partnership Interest to such lending institution in
connection with the exercise of remedies under such loan or extension or credit.
Each Limited Partner or Assignee (resulting from a transfer made pursuant to
clauses (i) - (iv) of the proviso of the preceding sentence) shall have the
right to transfer all or any portion of its Partnership Interest, subject to the
provisions of Section 11.6 and the satisfaction of each of the following
conditions (in addition to the right of each such Limited Partner or Assignee to
continue to make any such transfer permitted by clauses (i) - (iv) of such
proviso without satisfying either of the following conditions):
(a) GENERAL PARTNER RIGHT OF FIRST REFUSAL. The transferring Partner
shall give written notice of the proposed transfer to the General
Partner, which notice shall state (i) the identity of the
proposed transferee, and (ii) the amount and type of
consideration proposed to be received for the transferred
Partnership Units. The General Partner shall have ten (10) days
upon which to give the transferring Partner notice of its
election to acquire the Partnership Units on the proposed terms.
If it so elects, it shall purchase the Partnership Units on such
terms within ten (10) days after giving notice of such election.
If it does not so elect, the transferring Partner may transfer
such Partnership Units to a third party, on economic terms no
more favorable to the transferee than the proposed terms, subject
to the other condition of this Section 11.3.
(b) QUALIFIED TRANSFEREE. Any transfer of a Partnership Interest
shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted hereunder
(excluding Pledges of a Partnership Interest, but including any transfer of the
pledged Partnership Interest, whether to the secured party or otherwise,
pursuant to the secured party's exercise of its remedies under such Pledge or
the related loan or extension of credit) that the transferee assumes by
operation of law or express agreement all of the obligations of the transferor
Limited Partner under this Agreement with respect to such transferred
Partnership Interest and no such transfer (other than pursuant to a statutory
merger or consolidation wherein all obligations and liabilities of the
transferor Partner are assumed
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by a successor corporation by operation of law) shall relieve the transferor
Partner of its obligations under this Agreement without the approval of the
General Partner, in its reasonable discretion. Notwithstanding the foregoing,
any transferee of any transferred Partnership Interest shall be subject to any
and all ownership limitations contained in the Declaration of Trust. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take
subject to the obligations of the transferor hereunder. Unless admitted as a
Substitute Limited Partner, no transferee, whether by a voluntary transfer, by
operation of law or otherwise, shall have rights hereunder, other than the
rights of an Assignee as provided in Section 11.5.
B. Incapacitated Limited Partners. If a Limited Partner is subject to
Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners for the purpose of settling or managing the estate and such
power as the Incapacitated Limited Partner possessed to transfer all or any part
of its interest in the Partnership. The Incapacity of a Limited Partner, in and
of itself, shall not dissolve or terminate the Partnership.
C. No Transfers Violating Securities Laws. The Managing General
Partner may prohibit any transfer of Partnership Units by a Limited Partner
unless it receives a written opinion of legal counsel (which opinion and counsel
shall be reasonably satisfactory to the Partnership) to such Limited Partner
that such transfer would not require filing of a registration statement under
the Securities Act or would not otherwise violate any federal, or state
securities laws or regulations applicable to the Partnership or the Partnership
Unit or, at the option of the Partnership, an opinion of legal counsel to the
Partnership to the same effect.
D. No Transfers Affecting Tax Status of Partnership. No transfer of
Partnership Units by a Limited Partner (including a redemption or exchange
pursuant to Section 8.6) may be made to any Person if (i) in the opinion of
legal counsel for the Partnership, it would result in the Partnership being
treated as an association taxable as a corporation for federal income tax
purposes or would result in a termination of the Partnership for federal income
tax purposes (except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners other than the General Partners
or the General Partner Entity or any Subsidiary of either the Managing General
Partner or the General Partner Entity or pursuant to a transaction expressly
permitted under Section 7.11.B or Section 11.2), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
General Partner Entity to continue to qualify as a REIT or would subject the
General Partner Entity to any additional taxes under Section 857 or Section 4981
of the Code or (iii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code.
E. No Transfers to Holders of Nonrecourse Liabilities. No Pledge or
transfer of any Partnership Units may be made to a lender to the Partnership or
any Person who is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Partnership whose loan constitutes a
Nonrecourse Liability unless (i) the Managing General Partner is provided notice
thereof and (ii) the lender enters into an
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58
arrangement with the Partnership and the Managing General Partner to exchange or
redeem for the Redemption Amount any Partnership Units in which a security
interest is held simultaneously with the time at which such lender would be
deemed to be a partner in the Partnership for purposes of allocating liabilities
to such lender under Section 752 of the Code.
SECTION 11.4 SUBSTITUTED LIMITED PARTNERS
A. Consent of General Partners. No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in its place. The
Managing 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 Managing General Partner in its sole and absolute discretion.
The Managing General Partner's failure or refusal to permit a transferee of any
such interests to become a Substituted Limited Partner shall not give rise to
any cause of action against the Partnership or any Partner. The Managing
General Partner hereby grants its consent to the admission as a Substituted
Limited Partner to any bona fide financial institution that loans money or
otherwise extends credit to a holder of Units and thereafter becomes the owner
of such Units pursuant to the exercise by such financial institution of its
rights under a Pledge of such Units granted in connection with such loan or
extension of credit.
B. Rights of Substituted Limited Partner. A transferee who has been
admitted as a Substituted Limited Partner in accordance with this Article XI
shall have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including, without limitation, the
provisions of Section 15.11) and such other documents or instruments as may be
required to effect the admission.
C. Amendment of Exhibit A. Upon the admission of a Substituted
Limited Partner, the Managing General Partner shall amend Exhibit A to reflect
the name, address, Capital Account, number of Partnership Units, and Percentage
Interest of such Substituted Limited Partner and to eliminate or adjust, if
necessary, the name, address, Capital Account and Percentage Interest and
interest of the predecessor of such Substituted Limited Partner.
SECTION 11.5 ASSIGNEES
If the Managing General Partner, in its sole and absolute discretion,
does not consent to the admission of any permitted transferee under Section 11.3
as a Substituted Limited Partner, as described in Section 11.4, such transferee
shall be considered an Assignee for purposes of this Agreement. An Assignee
shall be entitled to all the rights of an assignee of a limited partnership
interest under the Act, including the right to receive distributions from the
Partnership and the share of Net Income, Net Losses, gain, loss and Recapture
Income attributable to the Partnership Units assigned to such transferee, and
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59
shall have the rights granted to the Limited Partners under Section 8.6, but
shall not be deemed to be a holder of Partnership Units for any other purpose
under this Agreement, and shall not be entitled to vote such Partnership Units
in any matter presented to the Limited Partners for a vote (such Partnership
Units being deemed to have been voted on such matter in the same proportion as
all other Partnership Units held by Limited Partners are voted). If any such
transferee desires to make a further assignment of any such Partnership Units,
such transferee shall be subject to all the provisions of this Article XI to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.
SECTION 11.6 GENERAL PROVISIONS
A. Withdrawal of Limited Partner. No Limited Partner may withdraw
from the Partnership other than as a result of a permitted transfer of all of
such Limited Partner's Partnership Units in accordance with this Article XI or
pursuant to redemption of all of its Partnership Units under Section 8.6.
B. Termination of Status as Limited Partner. Any Limited Partner who
shall transfer all of its Partnership Units in a transfer permitted pursuant to
this Article XI or pursuant to redemption of all of its Partnership Units under
Section 8.6 shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI may
only be made upon three business days prior notice, unless the Managing General
Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article XI or redeemed or transferred pursuant to Section
8.6, Net Income, Net Losses, each item thereof and all other items attributable
to such interest for such fiscal year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their
varying interests during the fiscal year in accordance with Section 706(d) of
the Code, using the interim closing of the books method (unless the Managing
General Partner, in its sole and absolute discretion, elects to adopt a daily,
weekly, or a monthly proration period, in which event Net Income, Net Losses,
each item thereof and all other items attributable to such interest for such
fiscal year shall be prorated based upon the applicable method selected by the
Managing General Partner). Solely for purposes of making such allocations, each
of such items for the calendar month in which the transfer or redemption occurs
shall be allocated to the Person who is a Partner as of midnight on the last day
of said month. All distributions of Available Cash attributable to any
Partnership Unit with respect to which the Partnership Record Date is before the
date of such transfer, assignment or redemption shall be made to the transferor
Partner or the Redeeming Partner, as the case may be, and, in the case of a
transfer or assignment other than a redemption, all distributions of Available
Cash thereafter attributable to such Partnership Unit shall be made to the
transferee Partner.
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E. Additional Restrictions. In addition to any other restrictions on
transfer herein contained, including without limitation the provisions of this
Article XI, in no event may any transfer or assignment of a Partnership Interest
by any Partner (including pursuant to Section 8.6) be made without the express
consent of the Managing General Partner, in its sole and absolute discretion,
(i) to any person or entity who lacks the legal right, power or capacity to own
a Partnership Interest; (ii) in violation of applicable law; (iii) of any
component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest; (iv) if in the opinion of legal counsel to the Partnership
such transfer would cause a termination of the Partnership for federal or state
income tax purposes (except as a result of the redemption or exchange for Shares
of all Partnership Units held by all Limited Partners or pursuant to a
transaction expressly permitted under Section 7.11.B or Section 11.2); (v) if in
the opinion of counsel to the Partnership, such transfer would cause the
Partnership to cease to be classified as a partnership for federal income tax
purposes (except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners or pursuant to a transaction
expressly permitted under Section 7.11.B or Section 11.2); (vi) if such transfer
would cause the Partnership Interests of "benefit plan investors" to become
"significant," as those terms are used in Section 7.9.E., or would cause the
Partnership to become, with respect to any employee benefit plan subject to
Title I of ERISA, a "party-in-interest" (as defined in Section 3(14) of ERISA)
or a "disqualified person" (as defined in Section 4975(c) of the Code); (vii) if
such transfer would, in the opinion of counsel to the Partnership, cause any
portion of the assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.1-101;
(viii) if such transfer requires the registration of such Partnership Interest
pursuant to any applicable federal or state securities laws; (ix) if such
transfer is effectuated through an "established securities market" or a
"secondary market" (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code or such transfer causes the Partnership to become a
"publicly traded partnership," as such term is defined in Section 469(k)(2) or
Section 7704(b) of the Code (provided that this clause (ix) shall not be the
basis for limiting or restricting in any manner the exercise of the Redemption
Right under Section 8.6 unless, and only to the extent that, outside tax counsel
provides to the Managing General Partner an opinion to the effect that, in the
absence of such limitation or restriction, there is a significant risk that the
Partnership will be treated as a "publicly traded partnership" and, by reason
thereof, taxable as a corporation); (x) if such transfer subjects the
Partnership to regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or ERISA, each as amended; (xi) such transfer
could adversely affect the ability of the General Partner Entity to remain
qualified as a REIT; or (xii) if in the opinion of legal counsel for the
transferring Partner (which opinion and counsel shall be reasonably satisfactory
to the Partnership) or legal counsel for the Partnership, such transfer would
adversely affect the ability of the General Partner Entity to continue to
qualify as a REIT or subject the General Partner Entity to any additional taxes
under Section 857 or Section 4981 of the Code.
F. Avoidance of "Publicly Traded Partnership" Status. The Managing
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
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market (or the substantial equivalent thereof)" within the meaning of Section
7704 of the Code and (ii) whether additional transfers of interests would result
in the Partnership being unable to qualify for at least one of the "safe
harbors" set forth in Regulations Section 1.7704-1 (or such other guidance
subsequently published by the IRS setting forth safe harbors under which
interests will not be treated as "readily tradable on a secondary market (or the
substantial equivalent thereof)" within the meaning of Section 7704 of the Code)
(the "Safe Harbors"). The Managing General Partner shall take all steps
reasonably necessary or appropriate to prevent any trading of interests or any
recognition by the Partnership of transfers made on such markets and, except as
otherwise provided herein, to insure that at least one of the Safe Harbors is
met; provided, however, that the foregoing shall not authorize the Managing
General Partner to limit or restrict in any manner the right of any holder of a
Partnership Unit to exercise the Redemption Right in accordance with the terms
of Section 8.6 unless, and only to the extent that, outside tax counsel provides
to the Managing General Partner an opinion to the effect that, in the absence of
such limitation or restriction, there is a significant risk that the Partnership
will be treated as a "publicly traded partnership" and, by reason thereof,
taxable as a corporation.
ARTICLE XII
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF A SUCCESSOR GENERAL PARTNER
A successor to all of a General Partner's General Partnership Interest
pursuant to Section 11.2 who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as a General Partner, effective
upon such transfer. Any such transferee shall carry on the business of the
Partnership without dissolution. In each case, the admission shall be subject
to such successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission.
SECTION 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. General. No Person shall be admitted as an Additional Limited
Partner without the consent of the Managing General Partner, which consent shall
be given or withheld in the Managing General Partner's sole and absolute
discretion. A Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement, including without limitation, under Section
4.1.C, or who exercises an option to receive Partnership Units shall be admitted
to the Partnership as an Additional Limited Partner only with the consent of the
Managing General Partner and only upon furnishing to the Managing General
Partner (i) evidence of acceptance in form satisfactory to the Managing General
Partner of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 15.11 and (ii) such other
documents or instruments as may be required in the discretion of the Managing
General Partner to effect such Person's admission as an Additional Limited
Partner. The admission of any Person as an Additional Limited Partner shall
become effective on the
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date upon which the name of such Person is recorded on the books and
records of the Partnership, following the consent of the Managing General
Partner to such admission.
B. Allocations to Additional Limited Partners. If any Additional
Limited Partner is admitted to the Partnership on any day other than the first
day of a Partnership Year, then Net Income, Net Losses, each item thereof and
all other items allocable among Partners and Assignees for such Partnership Year
shall be allocated among such Additional Limited Partner and all other Partners
and Assignees by taking into account their varying interests during the
Partnership Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method (unless the Managing General Partner, in its
sole and absolute discretion, elects to adopt a daily, weekly or monthly
proration method, in which event Net Income, Net Losses, and each item thereof
would be prorated based upon the applicable period selected by the Managing
General Partner). Solely for purposes of making such allocations, each of such
items for the calendar month in which an admission of any Additional Limited
Partner occurs shall be allocated among all the Partners and Assignees including
such Additional Limited Partner. All distributions of Available Cash with
respect to which the Partnership Record Date is before the date of such
admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions of Available Cash thereafter
shall be made to all the Partners and Assignees including such Additional
Limited Partner.
SECTION 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
For the admission to the Partnership of any Partner, the Managing
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 15.11 hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
SECTION 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of a General Partner, the remaining General Partners and any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, upon the first to
occur of any of the following ("Liquidating Events") :
(i) the expiration of its term as provided in Section 2.4 hereof;
(ii) an event of withdrawal of a General Partner, as defined in
the Act (other than an event of bankruptcy), unless (1) there is at least one
other General
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Partner, in which case the remaining General Partners shall continue the
business of the Partnership, or (2) within ninety (90) days after the withdrawal
a "majority in interest" (as defined below) of the remaining Partners Consent in
writing to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a substitute General Partner;
(iii) through December 31, 2046, an election to dissolve the
Partnership made by the Managing General Partner with the consent of Limited
Partners who hold ninety percent (90%) of the outstanding Units held by Limited
Partners (including Units held by the General Partners);
(iv) an election to dissolve the Partnership made by the Managing
General Partner, in its sole and absolute discretion after December 31, 2046;
(v) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
(vi) the sale of all or substantially all of the assets and
properties of the Partnership for cash or for marketable securities; or
(vii) a final and non-appealable judgment is entered by a court
of competent jurisdiction ruling that the remaining General Partner(s) is
bankrupt or insolvent, or a final and non-appealable order for relief is entered
by a court with appropriate jurisdiction against the remaining General
Partner(s), in each case under any federal or state bankruptcy or insolvency
laws as now or hereafter in effect, unless prior to or at the time of the entry
of such order or judgment a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of a date prior to the date of
such order or judgment, of a substitute General Partner.
As used herein, a "majority in interest" shall refer to Partners
(excluding the General Partners) who hold more than fifty percent (50%) of the
outstanding Percentage Interests not held by the General Partners.
SECTION 13.2 WINDING UP
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partners (or, if there is no
remaining General Partner, any Person elected by a majority in interest of the
Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partners, include equity or other securities of the General Partners or any
other entity) shall be applied and distributed in the following order:
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(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
Partners;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the Limited
Partners; and
(4) The balance, if any, to the Partners in accordance with
their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all
periods.
The General Partners shall not receive any additional compensation for
any services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of Section
13.2.A which require liquidation of the assets of the Partnership, but subject
to the order of priorities set forth therein, if prior to or upon dissolution of
the Partnership the Liquidator determines that an immediate sale of part or all
of the Partnership's assets would be impractical or would cause undue loss to
the Partners, the Liquidator may, in its sole and absolute discretion, defer for
a reasonable time the liquidation of any assets except those necessary to
satisfy liabilities of the Partnership (including to those Partners as
creditors) or distribute to the Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 13.2.A, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
SECTION 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
Subject to Section 13.4, if the Partnership is "liquidated" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made
under this Article XIII to the General Partners and Limited Partners who have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such liquidation occurs),
such Partner shall have no obligation to make any contribution to the capital of
the Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever. In the discretion of the Managing General Partner, a pro rata
portion of the distributions that would otherwise be made to the General
Partners and Limited Partners pursuant to this Article XIII may be: (A)
distributed to a trust established for the benefit of the General
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Partners 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
Partners arising out of or in connection with the Partnership (in which case the
assets of any such trust shall be distributed to the General Partners and
Limited Partners from time to time, in the reasonable discretion of the Managing
General Partner, in the same proportions as the amount distributed to such trust
by the Partnership would otherwise have been distributed to the General Partners
and Limited Partners pursuant to this Agreement); or (B) withheld to provide a
reasonable reserve for Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld amounts shall be distributed to the
General Partners and Limited Partners as soon as practicable.
SECTION 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article XIII, if the
Partnership is deemed liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged and the Partnership's affairs shall not be wound up. Instead,
for federal income tax purposes and for purposes of maintaining Capital Accounts
pursuant to Exhibit B, the Partnership shall be deemed to have distributed its
assets in kind to the General Partners and Limited Partners, who shall be deemed
to have assumed and taken such assets subject to all Partnership liabilities,
all in accordance with their respective Capital Accounts. Immediately
thereafter, the General Partners and Limited Partners shall be deemed to have
recontributed the Partnership assets in kind to the Partnership, which shall be
deemed to have assumed and taken such assets subject to all such liabilities.
SECTION 13.5 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise expressly provided in
this Agreement, no Limited Partner shall have priority over any other Limited
Partner as to the return of its Capital Contributions, distributions, or
allocations.
SECTION 13.6 NOTICE OF DISSOLUTION
If a Liquidating Event occurs or an event occurs that would, but for
provisions of an election or objection by one or more Partners pursuant to
Section 13.1, result in a dissolution of the Partnership, the Managing General
Partner shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of the
Managing General Partner).
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SECTION 13.7 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2, the Partnership shall be terminated and
the Certificate and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
SECTION 13.8 REASONABLE TIME FOR WINDING UP
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2, to minimize any losses otherwise attendant upon such
winding-up, and the provisions of this Agreement shall remain in effect among
the Partners during the period of liquidation.
SECTION 13.9 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
SECTION 13.10 LIABILITY OF LIQUIDATOR
The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may be
indemnified pursuant to Section 7.7.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS
A. General. Amendments to this Agreement may be proposed by a General
Partner or by any Limited Partners holding twenty-five percent (25%) or more of
the Partnership Interests. Following such proposal (except an amendment
pursuant to Section 14.1.B), the Managing General Partner shall submit any
proposed amendment to the Limited Partners. The Managing General Partner shall
seek the written vote of the Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the Managing General
Partner may require a response within a reasonable specified time, but not less
than fifteen (15) days, and failure to respond in such time period shall
constitute a vote which is consistent with the Managing General Partner's
recommendation with respect to the proposal. Except as provided in Section
14.1.B, 14.1.C or 14.1.D, a proposed amendment shall be adopted and be effective
as an amendment hereto if it is approved by the General Partners and it receives
the Consent of Partners holding a majority of the Percentage Interests of the
Limited Partners (including Limited Partnership Interests held by the General
Partners).
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B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A or 14.1.C, the Managing General Partner shall
have the power, without the consent of the Limited Partners, to amend this
Agreement as may be required to facilitate or implement any of the following
purposes:
(1) to add to the obligations of the General Partners or
surrender any right or power granted to the General Partners
or any Affiliate of a General Partner for the benefit of the
Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement
(which may be effected through the replacement of Exhibit A
with an amended Exhibit A);
(3) to set forth the designations, rights, powers, duties, and
preferences of the holders of any additional Partnership
Interests issued pursuant to Article IV;
(4) to reflect a change that does not adversely affect the
Limited Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in this
Agreement not inconsistent with law or with other provisions
of this Agreement, or make other changes with respect to
matters arising under this Agreement that will not be
inconsistent with law or with the provisions of this
Agreement; and
(5) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or
regulation of a federal, state or local agency or contained
in federal, state or local law.
The Managing General Partner shall notify the Limited Partners when
any action under this Section 14.1.B is taken in the next regular communication
to the Limited Partners.
C. Amendments Requiring Limited Partner Approval (Excluding General
Partners). Notwithstanding Section 14.1.A, without the Consent of the Outside
Limited Partners, the General Partners shall not amend Section 4.2.A, Section
5.1.E, Section 7.1.A (second sentence only), Section 7.5, Section 7.6, Section
7.8, Section 7.11.B, Section 11.2, Section 13.1 (other than Section 13.1(iii)
which can be amended only with a Consent of 90% of the Partnership Units
(including Partnership Units held by the General Partners), the last sentence of
Section 11.4 (provided that no such amendment shall in any event adversely
affect the rights of any lender who made a loan or who extended credit and
received in connection therewith a Pledge of Units prior to the date such
amendment is adopted unless, and only to the extent such lender consents
thereto, this Section 14.1.C or Section 14.2.
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D. Other Amendments Requiring Certain Limited Partner Approval.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended with respect to any Partner adversely affected without the
Consent of such Partner adversely affected if such amendment would (i) convert a
Limited Partner's interest in the Partnership into a general partner's interest,
(ii) modify the limited liability of a Limited Partner, (iii) amend Section
7.11.A, (iv) amend Article V or Article VI (except as permitted pursuant to
Sections 4.2, 5.1.E, 5.4, 6.2 and 14.1(B)(3)), (v) amend Section 8.6 or any
defined terms set forth in Article I that relate to the Redemption Right (except
as permitted in Section 8.6.E), or (vi) amend this Section 14.1.D. This Section
14.1.D does not require unanimous consent of all Partners adversely affected
unless the amendment is to be effective against all Partners adversely affected.
SECTION 14.2 MEETINGS OF THE PARTNERS
A. General. Meetings of the Partners may be called by the Managing
General Partner and shall be called upon the receipt by the Managing General
Partner of a written request by Limited Partners holding twenty-five percent
(25%) or more of the Partnership Interests. The call shall state the nature of
the business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven (7) days nor more than thirty (30) days prior to
the date of such meeting. Partners may vote in person or by proxy at such
meeting. Whenever the vote or Consent of Partners is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of Partners
or may be given in accordance with the procedure prescribed in Section 14.1.A.
Except as otherwise expressly provided in this Agreement, the Consent of holders
of a majority of the Percentage Interests held by Limited Partners (including
Limited Partnership Interests held by the General Partners) shall control.
B. Actions Without a Meeting. Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as a vote of a
majority of the Percentage Interests of the Partners (or such other percentage
as is expressly required by this Agreement). Such consent shall be filed with
the Managing General Partner. An action so taken shall be deemed to have been
taken at a meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or its
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Limited Partner executing it,
such revocation to be effective upon the Partnership's receipt of written notice
thereof.
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D. Conduct of Meeting. Each meeting of Partners shall be conducted by
the Managing General Partner or such other Person as the Managing General
Partner may appoint pursuant to such rules for the conduct of the meeting as the
Managing General Partner or such other Person deem appropriate.
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other address
as the Partners shall notify the Managing General Partner in writing.
SECTION 15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" "Sections"
and "Exhibits" are to Articles, Sections and Exhibits of this Agreement.
SECTION 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
SECTION 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
SECTION 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
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SECTION 15.6 CREDITORS
Other than as expressly set forth herein with regard to any
Indemnitee, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
SECTION 15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
SECTION 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
SECTION 15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
SECTION 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
SECTION 15.11 POWER OF ATTORNEY
A. General. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the Managing 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 Managing
General Partner or
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any Liquidator deems appropriate or necessary to form,
qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in
which the limited partners have limited liability) in the
State of Delaware and in all other jurisdictions in which
the Partnership may conduct business or own property, (b)
all instruments that the Managing General Partner or any
Liquidator deem appropriate or necessary to reflect any
amendment, change, modification or restatement of this
Agreement in accordance with its terms, (c) all conveyances
and other instruments or documents that the Managing General
Partner or any Liquidator deems appropriate or necessary to
reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without
limitation, a certificate of cancellation, (d) all
instruments relating to the admission, withdrawal, removal
or substitution of any Partner pursuant to, or other events
described in, Article XI, XII or XIII hereof or the Capital
Contribution of any Partner and (e) all certificates,
documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and
absolute discretion of the Managing 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 Managing General
Partner or any Liquidator, to effectuate the terms or intent
of this Agreement.
Nothing contained in this Section 15.11 shall be construed as
authorizing the Managing General Partner or any Liquidator to amend this
Agreement except in accordance with Article XIV hereof or as may be otherwise
expressly provided for in this Agreement.
B. Irrevocable Nature. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in recognition
of the fact that each of the Partners will be relying upon the power of the
Managing General Partner or any Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership, and
it shall survive and not be affected by the subsequent Incapacity of any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Units and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal representatives.
Each such Limited Partner or Assignee hereby agrees to be bound by any
representation made by the Managing 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 Managing General Partner or any
Liquidator, taken in good faith under such power
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of attorney. Each Limited Partner or Assignee shall execute and deliver to the
Managing General Partner or the Liquidator, within fifteen (15) days after
receipt of the Managing General Partner's or Liquidator's request therefor, such
further designation, powers of attorney and other instruments as the Managing
General Partner or the Liquidator, as the case may be, deems necessary to
effectuate this Agreement and the purposes of the Partnership.
SECTION 15.12 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any prior
written oral understandings or agreements among them with respect thereto.
SECTION 15.13 NO RIGHTS AS SHAREHOLDERS
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as partners or
shareholders of any of the General Partners, including, without limitation, any
right to receive dividends or other distributions made to shareholders of the
Managing General Partner or partners of the other General Partners or to vote or
to consent or receive notice as (i) shareholders in respect to any meeting of
shareholders for the election of trustees of the Managing General Partner or
partners of the other General Partners or any other matter or (ii) partners in
respect to any meeting of partners of the other General Partners or any other
matter.
SECTION 15.14 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the General Partners
or any of their officers, directors, trustees, employees or agents pursuant to
Section 7.4 or Section 7.7 would constitute gross income to the Managing General
Partner for purposes of Section 856(c)(2) or 856(c)(3) of the Code (a "Managing
General Partner Payment") then, notwithstanding any other provision of this
Agreement, the amount of such Managing General Partner Payment for any fiscal
year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) 4.20% of the
Managing General Partner's total gross income (but not including the amount of
any Managing General Partner Payments) for the fiscal year which is described in
subsections (A) though (H) of Section 856(c)(2) of the Code over (b) the amount
of gross income (within the meaning of Section 856(c)(2) of the Code) derived by
the Managing General Partner from sources other than those described in
subsections (A) through (H) of Section 856(c)(2) of the Code (but not including
the amount of any Managing General Partner Payments); or
(ii) an amount equal to the excess, if any of (a) 25% of the
Managing General Partner's total gross income (but not including the amount of
any Managing General Partner Payments) for the fiscal year which is described in
subsections (A) through (I) of Section 856(c)(3) of the Code over (b) the amount
of gross income (within
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73
the meaning of Section 856(c)(3) of the Code) derived by the Managing General
Partner from sources other than those described in subsections (A) through (I)
of Section 856(c)(3) of the Code (but not including the amount of any Managing
General Partner Payments);
provided, however, that Managing General Partner Payments in excess of
the amounts set forth in subparagraphs (i) and (ii) above may be made if the
Managing General Partner, as a condition precedent, obtains an opinion of tax
counsel that the receipt of such excess amounts would not adversely affect the
Managing General Partner's ability to qualify as a REIT. To the extent Managing
General Partner Payments may not be made in a year due to the foregoing
limitations, such Managing General Partner Payments shall carry over and be
treated as arising in the following year, provided, however, that such amounts
shall not carry over for more than five years, and if not paid within such five
year period, shall expire; provided further, that (i) as Managing General
Partner Payments are made, such payments shall be applied first to carry over
amounts outstanding, if any, and (ii) with respect to carry over amounts for
more than one Partnership Year, such payments shall be applied to the earliest
Partnership Year first.
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74
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
GENERAL PARTNERS:
EQUITY OFFICE PROPERTIES TRUST
By:_________________________________
Name:_______________________________
Title:______________________________
XXXX/XXXXXXX XXXXX REAL ESTATE
OPPORTUNITY PARTNERS LIMITED
PARTNERSHIP
By: Equity Office Properties Trust,
its managing general partner
By:____________________________
Name:__________________________
Title:_________________________
XXXX/XXXXXXX XXXXX REAL ESTATE
OPPORTUNITY PARTNERS LIMITED
PARTNERSHIP II
By: Equity Office Properties Trust,
its managing general partner
By:____________________________
Name:__________________________
Title:_________________________
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75
LIMITED PARTNERS:
By: Equity Office Properties Trust,
as Attorney-in-Fact for the Limited
Partners
By:________________________________
Name:______________________________
Title:_____________________________
For purposes of Section 8.6 hereof:
EQUITY OFFICE PROPERTIES TRUST
By:____________________________________
Name:__________________________________
Title:_________________________________
_
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76
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
Class A Agreed Initial
Name and Address of Partner Partnership Class B Partnership Capital Account Percentage Interest
--------------------------- ----------- ------------------- --------------- -------------------
GENERAL PARTNERS:
Equity Office Properties Trust
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxx/Xxxxxxx Xxxxx Real
Estate Opportunity Partners
Limited Partnership
c/o Equity Office Holdings
Trust
Two Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Xxxx/Xxxxxxx Xxxxx Real
Estate Opportunity Partners
Limited Partnership II
c/o Equity Office Holdings
Trust
Two Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
LIMITED PARTNERS:
100.00%
=========== =================== =============== ===================
TOTAL
77
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section l.704-l(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance
with Section 1.B hereof and allocated to such Partner pursuant to Section 6.1
of the Agreement and Exhibit C thereof, and decreased by (x) the amount of cash
or Agreed Value of all actual and deemed distributions of cash or property made
to such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1 of the Agreement and Exhibit C thereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) (1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any
election under Section 754 of the Code which may be made by the
Partnership, provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership made pursuant to
Section 734 of the Code as a result of the distribution of
property by the Partnership to a Partner (to the extent that such
adjustments have not previously been reflected in the Partners'
Capital Accounts) shall be reflected in the Capital Accounts of
the Partners in the manner and subject to the limitations
prescribed in Regulations Section l.704-1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and deduction shall
be made without regard to the fact that items described in
Sections 705(a)(l)(B) or 705(a)(2)(B) of the Code are not
includable in gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable disposition
of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition
were equal in amount to
78
the Partnership's Carrying Value with respect to such property as
of such date.
(4) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation
for such fiscal year.
(5) In the event the Carrying Value of any Partnership Asset is
adjusted pursuant to Section 1.D hereof, the amount of any such
adjustment shall be taken into account as gain or loss from the
disposition of such asset.
(6) Any items specially allocated under Section 2 of Exhibit C hereof
shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a Partnership Unit
shall succeed to a pro rata portion of the Capital Account of the transferor;
provided, however, that, if the transfer causes a termination of the Partnership
under Section 708(b)(l)(B) of the Code, the Partnership's properties shall be
deemed, solely for federal income tax purposes, to have been distributed in
liquidation of the Partnership to the holders of the Partnership units
(including the transferee) and recontributed by such Persons in reconstitution
of the Partnership. In such event, the Carrying Values of the Partnership
properties shall be adjusted immediately prior to such deemed distribution
pursuant to Section 1.D(2) hereof. The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the principles of this
Exhibit B.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the
Carrying Values of all Partnership assets shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized
Loss attributable to such Partnership property, as of the times
of the adjustments provided in Section 1.D(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an
actual sale of each such property and allocated pursuant to
Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest in
the Partnership by any new or existing Partner in exchange for
more than a de minimis Capital Contribution; (b) immediately
prior to the distribution by the Partnership to a Partner of more
than a de minimis amount of property as consideration for an
interest in the Partnership; and (c) immediately prior to the
liquidation of the Partnership within the meaning of Regulations
Section 1.704-l(b)(2)(ii)(g), provided however that adjustments
pursuant to clauses (a) and (b) above shall be made only if the
General Partner determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the
Partners in the Partnership.
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79
(3) In accordance with Regulations Section 1.704- l(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind shall be
adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of
the time any such asset is distributed.
(4) In determining Unrealized Gain or Unrealized Loss for purposes of
this Exhibit B, the aggregate cash amount and fair market value
of all Partnership assets (including cash or cash equivalents)
shall be determined by the General Partner using such reasonable
method of valuation as it may adopt, or in the case of a
liquidating distribution pursuant to Article XIII of the
Agreement, shall be determined and allocated by the Liquidator
using such reasonable methods of valuation as it may adopt. The
General Partner, or the Liquidator, as the case may be, shall
allocate such aggregate fair market value among the assets of the
Partnership in such manner as it determines in its sole and
absolute discretion to arrive at a fair market value for
individual properties.
E. The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify 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
without regard to Article XIV of the Agreement, provided that it is not likely
to have a material effect on the amounts distributable to any Person pursuant to
Article XIII of the Agreement upon the dissolution of the Partnership. The
General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations Section
l.704-l(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 l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions or
on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
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80
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this Exhibit
C, the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section
6.1 of the Agreement or any other provisions of this Exhibit C, if there is a
net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This
Section 1.A is intended to comply with the minimum gain chargeback requirements
in Regulations Section 1.704-2(f) and for purposes of this Section 1.A only,
each Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5), shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Partner's share of the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated
shall be determined in accordance with Regulations Section 1.704-2(i) (4). This
Section 1.B is intended to comply with the minimum gain chargeback requirement
in such Section of the Regulations and shall be interpreted consistently
therewith. Solely for purposes of this Section 1.B, each Partner's Adjusted
Capital Account Deficit shall be determined prior to any other allocations
pursuant to Section 6.1 of the Agreement or this Exhibit with respect to such
Partnership Year, other than allocations pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or 1.704-
l(b)(2)(ii)(d)(6), and after giving effect to the allocations required under
Sections 1.A and 1.B hereof with respect to such Partnership Year, such Partner
has an Adjusted Capital Account Deficit, items of
81
Partnership income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income and gain for the Partnership Year)
shall be specifically allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, its Adjusted
Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 1.C is intended to
constitute a "qualified income offset" under Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
X. Xxxxx Income Allocation. In the event that any Partner has an
Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to be made under the preceding paragraphs hereof
with respect to such Partnership Year), each such Partner shall be specially
allocated items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership Year shall be specially allocated to the Partner who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal income
tax purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
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82
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners
consistent with the principles of Section 704(c) of the Code
to take into account the variation between the 704(c) Value
of such property and its adjusted basis at the time of
contribution (taking into account Section 2.C of this
Exhibit C); and
(b) any item of Residual Gain or Residual Loss attributable
to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of
"book" gain or loss is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such items shall
(i) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof
pursuant to Exhibit B;
(ii) second, in the event such property was originally
a Contributed Property, be allocated among the Partners in a
manner consistent with Section 2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss attributable
to an Adjusted Property shall be allocated among the
Partners in the same manner its correlative item of "book"
gain or loss is allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
(3) all other items of income, gain, loss and deduction shall be
allocated among the Partners the same manner as their correlative
item of "book" gain or loss is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section 704(c)
of the Code permit a Partnership to utilize alternative methods to eliminate the
disparities between the Carrying Value of property and its adjusted basis, the
General Partner shall, subject to the following, have the authority to elect the
method to be used by the Partnership and such election shall be binding on all
Partners. With respect to the Contributed Property transferred to the
Partnership in connection with the Consolidation, the Partnership shall elect to
use the "traditional method" set forth in Treasury Regulation Section
1.704-3(b).
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EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________ Partnership Units
in EOP Operating Limited Partnership in accordance with the terms of the
Agreement of Limited Partnership of EOP Operating Limited Partnership, as
amended, and the Redemption Right referred to therein, (ii) surrenders such
Partnership Units and all right, title and interest therein and (iii) directs
that the Cash Amount or Shares Amount (as determined by the General Partner)
deliverable upon exercise of the Redemption Right be delivered to the address
specified below, and if Shares are to be delivered, such Shares be registered
or placed in the name(s) and at the address(es) specified below. The
undersigned hereby represents, warrants, and certifies that the undersigned (a)
has marketable and unencumbered title to such Partnership Units, free and clear
of the rights of or interests of any other person or entity, (b) has the full
right, power and authority to redeem and surrender such Partnership Units as
provided herein and (c) has obtained the consent or approval of all persons or
entities, if any, having the right to consult or approve such redemption and
surrender.
Dated:_________________ Name of Limited Partner:_______________________
_______________________________
(Signature of Limited Partner)
_______________________________
(Street Address)
_______________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
_______________________________
IF SHARES ARE TO BE ISSUED, ISSUE TO:
Name:
Please insert social security or identifying number:
84
EXHIBIT E
VALUE OF CONTRIBUTED PROPERTY
UNDERLYING PROPERTY 704(C) VALUE AGREED VALUE
------------------- ------------ ------------
