EXHIBIT 10.1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXX REIT PROPERTIES, L.P.
TABLE OF CONTENTS
PAGE
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ARTICLE I PARTNERSHIP..............................................................................................1
1.1 CREATION OF PARTNERSHIP: PARTNERSHIP INTERESTS...................................................1
1.2 NAME.............................................................................................2
1.3 APPROVAL OF ASSIGNMENT TO, AND ADMISSION OF, HREH................................................2
ARTICLE II DEFINITIONS.............................................................................................2
2.1 DEFINITIONS......................................................................................2
ARTICLE III CAPITALIZATION.........................................................................................11
3.1 INITIAL CAPITAL..................................................................................11
3.2 ISSUANCE AND REDEMPTION OF PARTNERSHIP INTERESTS.................................................11
3.3 ADDITIONAL FUNDS.................................................................................18
3.4 CAPITAL ACCOUNTS.................................................................................19
3.5 INTEREST ON AND RETURN OF CAPITAL................................................................20
3.6 NEGATIVE CAPITAL ACCOUNTS........................................................................20
3.7 LIMIT ON CONTRIBUTIONS AND OBLIGATIONS OF PARTNERS...............................................21
3.8 REDEMPTION AND REPURCHASE OF UNITS...............................................................21
3.9 REDEMPTION AND REPURCHASE OF INTERESTS OWNED BY HINES CONTROLLED
ENTITIES.........................................................................................21
ARTICLE IV OFFICE AND REGISTERED AGENT.............................................................................21
ARTICLE V PURPOSES AND POWERS OF PARTNERSHIP.......................................................................22
5.1 PURPOSES OF THE PARTNERSHIP......................................................................22
5.2 POWERS...........................................................................................22
5.3 REIT REQUIREMENTS................................................................................22
ARTICLE VI TERM....................................................................................................22
ARTICLE VII ALLOCATIONS............................................................................................23
7.1 PROFITS..........................................................................................23
7.2 LOSSES...........................................................................................24
7.3 SPECIAL ALLOCATIONS..............................................................................24
7.4 CURATIVE ALLOCATIONS.............................................................................26
7.5 TAX ALLOCATIONS: CODE SECTION 704(c).............................................................26
ARTICLE VIII CASH AVAILABLE FOR DISTRIBUTION.......................................................................27
8.1 DEFINITION OF AVAILABLE CASH.....................................................................27
8.2 TIMING AND PRIORITY OF DISTRIBUTIONS OF AVAILABLE CASH...........................................27
8.3 CONSENT TO ALLOCATIONS AND DISTRIBUTIONS.........................................................28
8.4 RIGHT TO LIMIT DISTRIBUTIONS.....................................................................28
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ARTICLE IX MANAGEMENT OF PARTNERSHIP...............................................................................28
9.1 GENERAL PARTNER..................................................................................28
9.2 LIMITATIONS ON POWER AND AUTHORITY OF PARTNERS...................................................29
9.3 LIMITED PARTNERS.................................................................................30
9.4 LIABILITY OF GENERAL PARTNER.....................................................................30
9.5 INDEMNITY........................................................................................30
9.6 OTHER ACTIVITIES OF PARTNERS AND AGREEMENTS WITH RELATED PARTIES.................................30
9.7 OTHER MATTERS CONCERNING THE GENERAL PARTNER.....................................................31
9.8 PARTNER EXCULPATION..............................................................................32
9.9 GENERAL PARTNER EXPENSES AND LIABILITIES.........................................................32
ARTICLE X BANKING..................................................................................................32
ARTICLE XI ACCOUNTING..............................................................................................32
11.1 FISCAL YEAR......................................................................................32
11.2 BOOKS OF ACCOUNT.................................................................................32
11.3 METHOD OF ACCOUNTING.............................................................................33
11.4 TAX MATTERS......................................................................................33
ARTICLE XII TRANSFERS OF PARTNERSHIP INTERESTS.....................................................................34
12.1 GENERAL PARTNER..................................................................................34
12.2 LIMITED PARTNER..................................................................................34
12.3 ADMISSION ADJUSTMENTS............................................................................36
12.4 TRANSFERS TO LENDERS.............................................................................36
ARTICLE XIII ADMISSION OF NEW PARTNERS.............................................................................36
ARTICLE XIV TERMINATION, LIQUIDATION AND DISSOLUTION OF PARTNERSHIP................................................36
14.1 TERMINATION EVENTS...............................................................................36
14.2 METHOD OF LIQUIDATION............................................................................37
14.3 DATE OF TERMINATION..............................................................................38
14.4 RECONSTITUTION UPON BANKRUPTCY...................................................................38
14.5 DEATH, LEGAL INCOMPETENCY, ETC. OF A LIMITED PARTNER.............................................38
ARTICLE XV POWER OF ATTORNEY.......................................................................................38
ARTICLE XVI AMENDMENT OF AGREEMENT.................................................................................39
ARTICLE XVII MISCELLANEOUS.........................................................................................40
17.1 NOTICES..........................................................................................40
17.2 MODIFICATIONS....................................................................................40
17.3 SUCCESSORS AND ASSIGNS...........................................................................40
17.4 DUPLICATE ORIGINALS..............................................................................41
17.5 CONSTRUCTION.....................................................................................41
17.6 GOVERNING LAW....................................................................................41
17.7 OTHER INSTRUMENTS................................................................................41
17.8 GENERAL PARTNER WITH INTEREST AS LIMITED PARTNER.................................................41
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17.9 LEGAL CONSTRUCTION...............................................................................41
17.10 GENDER...........................................................................................41
17.11 PRIOR AGREEMENTS SUPERSEDED......................................................................41
17.12 NO THIRD PARTY BENEFICIARY.......................................................................41
17.13 PURCHASE FOR INVESTMENT..........................................................................41
17.14 WAIVER...........................................................................................42
17.15 COUNTERPARTS.....................................................................................42
Schedule A - Partners, Capital Accounts and Partnership Interests
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXX REIT PROPERTIES, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement") has been executed and delivered effective as of the ___ day of
_______________, 2003 (the "Effective Date"), by Xxxxx Real Estate Investment
Trust, Inc., a Maryland corporation (the "General Partner" or the "Company"),
and those persons and entities identified as "Limited Partners" in Schedule A
(the "Limited Partners"), (the General Partner and each Limited Partner being a
"Partner" and collectively, the "Partners").
RECITALS
WHEREAS, effective as of August 20, 2003, the General Partner and HALP
Associates Limited Partnership entered into that certain Agreement of Limited
Partnership (the "Original Agreement") of Xxxxx REIT Properties, L.P. in
accordance with the
Delaware Revised Uniform Limited Partnership Act as amended
(the "Act").
WHEREAS, as of August 27, 2003, the Original Agreement was amended
pursuant to the First Amendment to Agreement of Limited Partnership for Xxxxx
REIT Properties, L.P. (the "First Amendment").
WHEREAS, the Partners deem it to be in their best interest to amend and
restate the Original Agreement, as amended by the First Amendment, in accordance
with the Act and this Agreement.
THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partners agree as follows:
ARTICLE I
PARTNERSHIP
1.1 CREATION OF PARTNERSHIP: PARTNERSHIP INTERESTS. The
General Partner is the sole general partner and the Limited Partners are the
sole limited partners of the Partnership. All Partnership profits, losses, and
distributive shares of tax items accruing prior to the date of this Agreement
shall be allocated in accordance with, and the respective rights and obligations
of the Partners with respect to the period prior to the date of this Agreement
shall be governed by, the Agreement of Limited Partnership of the Partnership
that existed prior to this Agreement. No Partner has any interest in any
Partnership property solely as a result of being a Partner and the interests of
all Partners in the Partnership are, for all purposes, personal property.
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1.2 NAME. The Partnership name shall be "Xxxxx REIT
Properties, L.P.," but the General Partner may from time to time change the name
of the Partnership or may adopt such trade or fictitious names as it may
determine.
1.3 APPROVAL OF ASSIGNMENT TO, AND ADMISSION OF, HREH.
Effective as of the date hereof, HALP has made an assignment of 21,739.13 OP
Units (representing all of the OP Units owned by HALP) to HREH. Such assignment
is hereby approved and HREH is hereby admitted as a limited partner of the
Partnership.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth respectively after each:
"Act" shall mean the
Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, and any successor statute.
"Adjusted Capital Account" shall mean, at any time, the then balance in
the Capital Account of a Partner, after giving effect to the following
adjustments:
(i) add to such Capital Account any amounts that such
Partner is obligated to restore or is deemed obligated to restore under
any provision of this Agreement or as described in the penultimate
sentences of Regulations Section 1.704-2(g)(1) and Regulations Section
1.704-2(i)(5), or any successor provisions; and
(ii) subtract from such Capital Account the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Adjusted Capital Account Deficit" shall mean, with respect to any
Partner, the deficit balance, if any, in that Partner's Adjusted Capital
Account.
"Affiliate" means (i) any Person directly or indirectly owning,
controlling, or holding, with power to vote ten percent or more of the
outstanding voting securities of such other Person, (ii) any Person ten percent
or more of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with the power to vote, by such other Persons, (iii) any
Person directly or indirectly controlling, controlled by, or under common
control with such other Person, (iv) any executive officer, director, trustee or
general partner of such other person, or (v) any legal entity for which such
Person acts as an executive officer, director, trustee or general partner.
"Agreement" shall mean this Agreement of Limited Partnership, as it may
be amended from time to time.
"Articles of Incorporation" means the Articles of Incorporation of the
Company.
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"Available Cash" shall have the meaning provided in Section 8.1.
"Bankruptcy" of a Partner shall mean (a) the filing by a Partner of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
(or corresponding provisions of future laws) or any other federal or state
insolvency law, or a Partner's filing an answer consenting to or acquiescing in
any such petition, (b) the making by a Partner of any assignment for the benefit
of its creditors or the admission by a Partner in writing of its inability to
pay its debts as they mature, or (c) the expiration of sixty (60) days after the
filing of any involuntary petition under Title 11 of the United States Code (or
corresponding provisions of future laws), seeking liquidation, reorganization,
arrangement or readjustment of its debts under any other Federal or state
insolvency law, provided that the same shall not have been vacated, set aside or
stayed within such 60-day period.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than Saturday or Sunday during which
national banks located in Houston, Texas are customarily open for business.
"Capital Account" shall mean the capital account maintained by the
Partnership for each Partner as described in Section 3.4 below.
"Capital Contribution" shall mean, when used in respect of a Partner,
if applicable, the initial capital contribution of such Partner as set forth in
Section 3.1 below, and any other amounts of money and/or the Gross Asset Value
of other property contributed by such Partner to the capital of the Partnership
with respect to the Partner's interest in the Partnership, including the Capital
Contribution made by any predecessor holder of the Partnership Interest of such
Partner.
"Capital Transaction Gain or Loss" shall mean any Profits or Losses
described in paragraphs (iii), (iv) and (vi) of the definition of Profits and
Losses contained in this Article 2.
"Cash Amount" means an amount of cash equal to the value of the REIT
Shares Amount, which shall be based upon Net Asset Value on the date of receipt
by the General Partner of a Notice of Redemption.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time, and any successor statute.
"Common Share" means a share of common stock, $.001 par value per
share, of the Company.
"Company" means Xxxxx Real Estate Investment Trust, Inc., a Maryland
corporation and the General Partner of the Partnership.
"Contributing Partner" shall have the meaning provided in Section
3.2(B)(v).
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"Depreciation" shall mean for any fiscal year or portion thereof, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such period for Federal income tax
purposes, except that if the Gross Asset Value of an asset differs from its
adjusted basis for Federal income tax purposes at the beginning of such period,
Depreciation shall be an amount that bears the same relationship to such
beginning Gross Asset Value as the depreciation, amortization or cost recovery
deduction in such period for Federal income tax purposes bears to the beginning
adjusted tax basis; provided, however, that if the adjusted basis for Federal
income tax purposes of an asset at the beginning of such period is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the General Partner.
"Effective Date" shall have the meaning provided in the introductory
paragraph of this Agreement.
"Exchange Date" shall have the meaning provided in Section 3.2(G).
"General Partner" means Xxxxx Real Estate Investment Trust, Inc., a
Maryland corporation, sometimes also referred to in this Agreement as the
"Company."
"Gross Asset Value" means, with respect to any Partnership asset, the
asset's adjusted basis for Federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value of
such asset, as agreed to by the General Partner and the Contributing
Partner;
(ii) The Gross Asset Value of all Partnership assets shall be
adjusted to equal their respective gross fair market values, which
shall be determined in a manner consistent with the determination of
Net Asset Value, as of the following times: (a) 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) the
distribution by the Partnership to a Partner of more than a de minimis
amount of Partnership property as consideration for an interest in the
Partnership; (c) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); and (d) upon the
occurrence of any other event for which an adjustment to Gross Asset
Value is permitted under the Regulations; provided, however, that
adjustments pursuant to clauses (a), (b) and (d) above shall be made
only if the General Partner reasonably determines that such adjustments
are necessary or appropriate to reflect the relative economic interests
of the Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership asset
distributed to any Partner shall be adjusted to equal the gross fair
market value of such asset on the date of distribution, which shall be
determined in a manner consistent with the determination of Net Asset
Value;
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(iv) The Gross Asset Value of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m) and paragraph (vi) of the definition of Profits
and Losses in this Article II below; provided, however, that Gross
Asset Value shall not be adjusted pursuant to this paragraph (iv) to
the extent the General Partner determines that an adjustment pursuant
to paragraph (ii) above is necessary or appropriate in connection with
a transaction that would otherwise result in an adjustment pursuant to
this paragraph (iv); and
(v) If the Gross Asset Value of an asset has been determined
or adjusted pursuant to paragraphs (i), (ii) or (iv) above, such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Profits
and Losses.
"HALP" shall mean HALP Associates Limited Partnership.
"Hines Controlled Entity" shall mean any partnership, limited liability
company, corporation, trust or other entity which is, directly or indirectly,
controlled by (a) Xxxxx Interests Limited Partnership, and/or (b) Xxxxxxx X.
Xxxxx and/or Xxxxxx X. Xxxxx or, in the event of the death or disability of
Xxxxxxx X. Xxxxx and/or Xxxxxx X. Xxxxx, the heirs, legal representatives or
estates of either or both of them.
"HREH" shall mean Hines Real Estate Holdings Limited Partnership.
"Issuance Date" means with respect to OP Units or the Participation
Interest owned by a Partner, the date upon which such OP Units or the
Participation Interest are issued to such Partner (and with respect to
Preference Units, shall have the meaning set forth in the applicable Preference
Unit Term Sheet).
"Limited Partner" shall mean any Person (i) whose name is set forth as
a Limited Partner on Schedule A attached hereto or who has become a Limited
Partner pursuant to the terms and conditions of this Agreement, and (ii) who
holds a partnership interest. "Limited Partners" means all such persons.
"Listing Date" shall mean the date on which the Common Shares are first
listed on a national securities exchange or included for quotation on a national
market system.
"Majority-in-Interest of the Limited Partners" shall mean, as of any
given time, Limited Partners who own more than fifty percent (50%) of the
Percentage Interests in the Partnership held by Limited Partners.
"Market Price" means, with respect to any Specified Redemption Date:
(a) the last reported sales price per share of the Common Shares at the close of
trading (whether or not the last reported sale occurred on such date) as
reported in the Wall Street Journal on the first Business Day of the calendar
quarter immediately preceding the date of receipt by the General
5
Partner of the Notice of Redemption, or (b) if the Common Shares are not traded
on a national exchange, the Net Asset Value per Common Share as of the date of
receipt by the General Partner of the Notice of Redemption.
"Net Asset Value" as of a particular date means the net fair market
value of the Partnership's equity as of such date, as approved by the Board of
Directors, which shall generally equal the net proceeds that would be available
for distribution by the Partnership if all properties owned directly or
indirectly (through one or more special purpose entities) by the Partnership
were sold at their fair market value in an all cash sale as of such date, and
all expected transaction costs (including all closing costs customarily borne by
a seller in the market where each Property is located and estimated legal fees
and expenses) were paid, and all liabilities were repaid, out of such proceeds.
"Nonrecourse Deductions" has the meaning set forth in 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 written notice delivered by a Redeeming
Partner to the Partnership (with a copy to the General Partner) under Section
3.2(C), pursuant to which the Redeeming Partner exercises the Redemption Right
with respect to all or a portion of its OP Units or Participation Interest in
accordance with the provisions of Section 3.2(C).
"OP Units" are units of Partnership Interest more particularly
described in Section 3.2.
"OP Unit Value" shall mean, as of any given time, the number of OP
Units into which a Preference Unit is convertible (whether or not the conversion
can then be effected), or the value of the Preference Unit expressed in OP Units
if the Preference Unit is not convertible into OP Units, as provided for in the
applicable Preference Unit Term Sheet.
"Other Securities" shall have the meaning set forth in Section
3.2(B)(iv).
"Participation Interest" shall have the meaning set forth in Section
3.2(A).
"Participation Interest Unit Equivalents" shall mean, as of any
Specified Redemption Date with respect to part or all of the Participation
Interest, the lesser of (i) the number of outstanding OP Units of the
Partnership, multiplied by a fraction whose numerator is the Percentage Interest
attributable to the Participation Interest as of such date and whose denominator
is 100% minus the Percentage Interest attributable to the Participation Interest
as of such date or (ii) the number of outstanding OP Units of the Partnership,
multiplied by a fraction (a) whose numerator is the aggregate amount that would
be distributed in respect of the Participation Interest if an amount equal to
Net Asset Value as of such date were distributed among the Partners in
accordance with Section 14.2(C) hereof and (b) whose denominator equals (x) the
aggregate amount that would be distributed to all Partners if an amount equal to
Net Asset Value as of such date were distributed among the Partners in
accordance with Section 14.2(C), minus (y) the amount determined under clause
(a).
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"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2).
"Partners" shall mean, collectively, the General Partner and the
Limited Partners, or any additional or successor partners of the Partnership
admitted to the Partnership in accordance with the terms of this Agreement.
References to a Partner shall be to any one of the Partners.
"Partnership Interest" shall mean the ownership interest of a Partner
in the Partnership at any particular time, including the right of such Partner
to any and all benefits to which such Partner may be entitled as provided in
this Agreement, and to the extent not inconsistent with this Agreement, under
the Act, together with the obligations of such Partner to comply with all of the
terms and provisions of this Agreement and the Act.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Sections 1.704-2(b)(2) and 1.704-2(d).
"Percentage Interest" shall be determined as of the end of each
calendar month in the following manner:
(i) The Percentage Interest of the holder of the Participation
Interest as of the end of a particular calendar month shall equal the
sum of (a) the Percentage Interest of such holder as of the end of the
immediately preceding month (which shall be 0% in the case of each
calendar month beginning prior to the Effective Date), multiplied by a
fraction whose numerator is the number of OP Units outstanding as of
the end of the immediately preceding month and whose denominator is the
number of OP Units outstanding as of the end of the current month, plus
(b) 0.0625% of the net equity invested in those real estate investments
reflected on the balance sheet of the Partnership as of the end of such
month, divided by the Unreturned Capital (as defined below) of the
Partnership as of the end of the current month, plus (c) 0.5% of the
Gross Real Estate Investments (as defined below) made by the
Partnership during the current month, divided by the Unreturned Capital
of the Partnership as of the end of the current month. For purposes of
the foregoing, the "Unreturned Capital" of the Partnership as of the
end of a month means the excess (if any) of the aggregate amount of
Capital Contributions made by all Partners to the Partnership through
the end of such month, over the aggregate amount of Capital
Contributions returned to all Partners as a result of redemption
distributions and distributions of sales proceeds by the Partnership to
the Partners through the end of such month. The "Gross Real Estate
Investments" of the Partnership shall generally mean the gross amount
invested by the Partnership in any real estate investments (either
directly or indirectly through one or more partnerships, limited
liability companies, or special purpose entities and including any real
estate investments
7
contributed to the Partnership in exchange for Units), including any
debt attributable to such investments; provided, however, that in the
case of amounts invested by the Partnership in any entity that is not
wholly-owned by the Partnership, "Gross Real Estate Investments" shall
mean the Partnership's allocable share of the Gross Real Estate
Investments of such entity.
(ii) The Percentage Interest as of the end of a particular
calendar month for each Partner holding Units shall equal (a) 100%
minus the Percentage Interest attributable to the Participation
Interest, multiplied by (b) the sum of the OP Unit Value of any
Preference Units held by that Partner and the number of OP Units held
by that Partner, divided by (c) the sum of the OP Unit Value of all
Preference Units issued and outstanding at the time and the total
number of OP Units issued and outstanding at the time.
(iii) The Percentage Interests determined under clauses (i)
and (ii) as of the end of a particular month shall become effective as
of the beginning of the immediately following month.
The respective Percentage Interests of the Partners as of the date of
this Agreement are set forth in Schedule A attached to this Agreement.
"Person" means an individual, corporation, partnership, estate, trust,
a portion of a trust set aside for or to be used exclusively for the purposes
described in Section 642(c) of the Code, association, private foundation within
the meaning of Section 509(a) of the Code, joint stock company or other entity
and also includes a group as that term is used for purposes of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended.
"Preference Units" are units of Partnership Interest more particularly
described in Section 3.2(A)(ii).
"Preference Unit Term Sheet" shall have the meaning provided in Section
3.2(B)(1).
"Private Placement PTP Exemption" shall mean the exemption from
publicly traded partnership status provided in Regulations Section 1.7704-1(h)
(which generally applies if (i) all interests in a partnership are issued in a
transaction or series of transactions that are not required to be registered
under the Securities Act and (ii) the partnership does not have more than 100
partners at any time during taxable year of the partnership).
"Private Transfer" shall mean:
(i) transfers in which the basis of the Partnership Interest
in the hands of the transferee is determined, in whole or in part, by
reference to its basis in the hands of the transferor or is determined
under Code Section 732;
(ii) transfers at death, including transfers from an estate or
testamentary trust;
(iii) transfers between members of a family;
8
(iv) transfers involving the issuance of interests by (or on
behalf of) the Partnership in exchange for cash, property, or services;
(v) transfers involving distributions from a qualified
retirement plan or an individual retirement account;
(vi) the transfer by a Partner and any related persons (within
the meaning of Code Section 267(b) or 707(b)(1)) in one or more
transactions during any 30 calendar day period of Partnership Interests
representing in the aggregate more than 2 percent of the total
interests in Partnership capital or profits;
(vii) transfers by one or more Partners of interests
representing in the aggregate 50 percent or more of the total interests
in Partnership capital and profits in one transaction or a series of
related transactions; and
(viii) transfers not recognized by the Partnership within the
meaning of Regulations Section 1.7704-1(d)(2) (i.e., transfers in cases
where the Partnership neither admits the transferee as a partner nor
recognizes any rights of the transferee as a partner).
"Profits" and "Losses" shall mean for each fiscal year or portion
thereof, an amount equal to the Partnership's items of taxable income or loss
for such year or period, determined by the General Partner in accordance with
Code Section 703(a) with the following adjustments:
(i) any income which is exempt from Federal income tax and not
otherwise taken into account in computing Profits or Losses shall be
added to taxable income or loss;
(ii) any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures under Regulations Section 1.704-1(b)(2)(iv)(i) and not
otherwise taken into account in computing Profits or Losses, will be
subtracted from taxable income or loss;
(iii) in the event that the Gross Asset Value of any
Partnership asset is adjusted pursuant to the definition of Gross Asset
Value contained in this Article 2, the amount of such adjustment shall
be taken into account as gain or loss from the disposition of such
asset for purposes of computing Profits and Losses;
(iv) gain or loss resulting from any disposition of
Partnership assets with respect to which gain or loss is recognized for
Federal income tax purposes shall be computed by reference to the Gross
Asset Value of the property disposed of, notwithstanding that the
adjusted tax basis of such property differs from its Gross Asset Value;
9
(v) 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 or other period;
(vi) to the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or Code Section
743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as a result of a distribution other than in complete
liquidation of a Partner's Partnership Interest, is required pursuant
to the last sentence of Regulations Section 1.704-1(b)(2)(iv)(m)(2) to
be taken into account in determining Capital Accounts, the amount of
such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
the basis of the asset) from the disposition of the asset and shall be
taken into account for purposes of computing Profits or Losses; and
(vii) any items specially allocated pursuant to Section 7.3 or
Section 7.4 shall not be considered in determining Profits or Losses.
"Recapitalization" shall have the meaning provided in Section 3.2(F).
"Record Date" shall have the meaning provided in Section 9.1.
"Redeeming Partner" shall have the meaning provided in Section 3.2(C).
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount as determined pursuant to Section 3.2 hereof.
"Redemption Right" shall have the meaning provided in Section 3.2(C).
"Regulations" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"REIT" shall have the meaning provided in Section 5.3.
"REIT Requirements" shall have the meaning provided in Section 5.3.
"REIT Shares Amount" means a number of Common Shares equal to (i) in
the case of a Partner redeeming OP Units, the number of OP Units offered for
redemption by a Redeeming Partner, as adjusted pursuant to Sections 3.2(F) and
(G) and (ii) in the case of Partner redeeming part or all of the Participation
Interest, the number of Participation Interest Unit Equivalents, as adjusted
pursuant to Section 3.2(a).
"Rights" shall have the meaning provided in Section 3.2(G).
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"Specified Redemption Date" means with respect to a Redeeming Partner,
the date that is ten Business Days after receipt by the General Partner of the
Notice of Redemption from such Partner.
"TMP" shall have the meaning provided in Section 11.4.
"Transfer" shall mean any sale, transfer, gift, exchange, assignment,
devise or other disposition, any pledge or collateral assignment, and any other
event that causes any Person to acquire beneficial ownership, or any agreement
to take any such actions or cause any such events, with respect to Units or
Partnership Interests, or the right to vote or receive distributions with
respect to Units or Partnership Interests, including (a) the granting or
exercise of any option (or any disposition of any option), (b) any disposition
of any securities or rights convertible into or exchangeable for Units or
Partnership Interests or any interest in Units or Partnership Interests or any
exercise of any such conversion or exchange right, and (c) Transfers of
interests in other entities that result in changes in beneficial ownership of
Units or Partnership Interests; in each case, whether voluntary or involuntary,
whether owned of record or beneficially owned, and whether by operation of law
or otherwise; provided, however, neither the conversion of a Preference Unit
into one or more OP Units nor the redemption of an OP Unit or Participation
Interest in accordance with Section 3.2 constitutes a Transfer. The terms
"Transferor," "Transferee," "Transferred" and "Transferring" have correlative
meanings.
"Units" has the meaning set forth in Section 3.2(A).
ARTICLE III
CAPITALIZATION
3.1 INITIAL CAPITAL. As of the effective date hereof, the
Partners have made or will make contributions of cash and/or property to the
Partnership, and the amount of such cash contributions and the Gross Asset Value
of such in-kind Capital Contributions are reflected in the Capital Account
balance of each such Partner as set forth opposite such Partner's name on the
attached Schedule A, as amended from time to time, under the heading "Agreed
Capital Account".
3.2 ISSUANCE AND REDEMPTION OF PARTNERSHIP INTERESTS.
A. The interest of a Partner in the Partnership that
has been received in exchange for Capital Contributions is referred to
as being evidenced by one or more "Units." Units may be either "OP
Units" or "Preference Units":
(i) An "OP Unit" is a unit of Partnership
Interest that has been received in exchange for Capital
Contributions and that, as more particularly provided for
below in Section 3.2(C), may be redeemed for the Redemption
Amount. The General Partner may create separate classes or
series of OP Units having privileges, variations, and
designations as may be determined by the General Partner in
its sole and absolute discretion.
11
(ii) A "Preference Unit" is a unit of
Partnership Interest having such rights, preferences and other
privileges, variations and designations as may be determined
by the General Partner in its sole and absolute discretion
(but not in violation of the provisions of Section 3.2(B) or
the terms of any other Preference Unit(s) Term Sheets). There
may be more than one series or class of Preference Units
having differing terms and conditions, but all Preference
Units within a given series or class shall have the same
rights, preferences and other privileges, variations and
designations. With respect to each series or class of
Preference Units, the General Partner may also, in its
discretion, determine and fix, among other terms and
conditions, any of the following: (a) the series to which such
Preference Units shall belong, (b) the distribution rate
therefor, (c) the price at and the terms and conditions on
which such Preference Units may be redeemed, (d) the amount
payable in respect of such Preference Units in the event of
involuntary or voluntary liquidation, (e) the terms and
conditions on which such Preference Units may be converted and
the securities into which such Preference Units may be
converted (and/or the valuation of such Preference Units as
measured in OP Units), if such Preference Units are issued
with the privilege of conversion, and (f) the number of such
Preference Units to be issued as a part of such series. Once
determined and fixed as herein provided, however, the terms
and conditions of a particular series or class of Preference
Units may not be changed without the written consent of the
holders of at least 67% of the Preference Units within the
class or series (or such greater percentage as may be provided
for in any the applicable Preference Unit Term Sheet).
The aggregate total of all Units outstanding as of the date of this
Agreement is 21,958.69, all of which consist of OP Units. As of the
date of this Agreement, each Partner is deemed to hold Units as shown
on Schedule A.
Effective as of the date hereof, the Partnership is issuing to
HALP a limited partnership interest denominated as a "Participation
Interest." The Participation Interest is in addition to, and distinct
from, the Units described above and any references to "Units" or OP
Units shall not be deemed to include the Participation Interest. It is
intended that the Participation Interest constitute a profits interest
within the meaning of Section 2.02 of IRS Revenue Procedure 93-27,
1993-2 C.B. 343.
B. From time to time hereafter, subject to and in
accordance with the provisions of this Section 3.2(B), the General
Partner shall cause the Partnership to issue additional Units as
follows:
(i) OP Units to the Company upon the
issuance by the Company of additional Common Shares (other
than in exchange for OP Units) and the contribution of the net
proceeds thereof as a Capital Contribution to the Partnership
as provided for in Section 3.3(B) below, it being understood,
however, that the Company may issue Common Shares in
connection with share option plans, dividend reinvestment
plans, restricted share plans or other benefit or compensation
plans without receiving any proceeds and that the issuance of
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such Common Shares shall nonetheless entitle the Company to
receive additional OP Units pursuant to this clause (i);
(ii) OP Units to Partners (including the
General Partner) that hold Preference Units that are
convertible into OP Units, upon the exercise of such
conversion in accordance with the terms and conditions of the
Preference Unit Term Sheet applicable thereto;
(iii) OP Units to Partners holding OP Units
(including the General Partner) if and to the extent of each
such Partner's participation in any reinvestment program
contemplated by Section 3.3(C) below;
(iv) Preference Units to the Company upon
the issuance by the Company of securities other than Common
Shares whether debt or equity securities ("Other Securities")
and the contribution of the net proceeds thereof as a Capital
Contribution to the Partnership as provided for in Section
3.3(B) below; and
(v) in all other cases, OP Units and/or
Preference Units, as determined by the General Partner, in its
discretion, to existing or newly-admitted Partners (including
the General Partner), in exchange for the contribution by a
Partner (the "Contributing Partner") of Capital Contributions
to the Partnership.
Issuance of OP Units as aforesaid shall be in accordance with the
following:
(a) the number of OP Units issued to the Company under clause
(i) of this Section 3.2(B) shall be equal to the number of Common
Shares issued;
(b) the number of OP Units issued to a Partner under clause
(ii) of this Section 3.2(B) shall be as provided for in the Preference
Unit Term Sheet pursuant to which the Preference Units being converted
exist;
(c) the number of OP Units issued to a Limited Partner under
clause (iii) of this Section 3.2(B) shall be as provided for in the
applicable reinvestment program; and
(d) the number of OP Units issued to a Contributing Partner
under clause (v) of this Section 3.2(B) shall be equal to the quotient
(rounded to the nearest whole number) arrived at by dividing (x) the
initial Gross Asset Value of the property contributed as additional
Capital Contributions (net of any debt to which such property is
subject or assumed by the Partnership in connection with such
contribution) by (y) the Net Asset Value attributable to each OP Unit.
Issuance of Preference Units as aforesaid shall be in accordance with
the following:
(1) Preference Units issued pursuant to clause (v) of this
Section 3.2(B) shall have the terms and conditions specified in an
agreement (a "Preference Unit Term Sheet") executed by and between the
Partnership (at the direction or in the discretion of the General
Partner) and the Contributing Partner. The number of Preference Units
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issued to a Contributing Partner under clause (v) of this Section
3.2(B) shall be equal to the quotient (rounded to the nearest whole
number) arrived at by dividing (x) the net fair market value of any
property or assets contributed as additional capital contributions by
(y) price per Preference Unit provided for in the Preference Unit Term
Sheet; and
(2) Preference Units issued pursuant to clause (iv) of this
Section 3.2(B) shall have economic terms substantially identical to
those of the applicable Other Securities.
Units may also be issued to some or all of the Partners holding
Preference Units if and to the extent of such Partner's participation
in any reinvestment program contemplated by Section 3.3(C). Upon the
issuance of additional OP Units and/or Preference Units in accordance
with the provisions of this Section 3.2(B), each recipient of such
Units shall either execute this Agreement or a joinder to this
Agreement (which joinder, as to Preference Units, may be a part of any
applicable Preference Unit Term Sheet) and, as applicable, the
Percentage Interest of all of the Partners shall thereupon be
appropriately adjusted by the General Partner.
C. Subject to the provisions of Sections 3.2(D) and
(F), on or after the later of (i) the date which is one year after the
Issuance Date or (ii) upon the completion of an initial public offering
of the Common Shares of the Company pursuant to a registration
statement filed with the Securities and Exchange Commission, each
Limited Partner shall have the right (the "Redemption Right") to
require the Partnership to redeem on a Specified Redemption Date all or
a portion of the OP Units or Participation Interest held by such
Limited Partner at a redemption price equal to and in the form of the
Redemption Amount. The Redemption Right shall be exercised pursuant to
a Notice of Redemption delivered to the Partnership (with a copy to the
General Partner) by the Limited Partner who is exercising the
Redemption Right (the "Redeeming Partner"); provided, however, that the
Partnership shall not be obligated to satisfy such Redemption Right if
the Company elects to purchase the OP Units or Participation Interest
subject to the Notice of Redemption pursuant to Section 3.2(E).
Notwithstanding the foregoing provisions of this Section 3.2(C), the
Company agrees to use its best efforts to cause the closing of the
acquisition of redeemed Partnership Interests hereunder to occur as
quickly as reasonably possible. The Redeeming Partner shall have no
right, with respect to any OP Units or Participation Interest so
redeemed, to receive any distribution paid with respect to such OP
Units or Participation Interest if the Record Date for such
distribution is on or after the Specified Redemption Date. If, and
beginning with the first day of the first taxable year in which, the
Partnership no longer qualifies for the Private Placement PTP
Exemption, the Redemption Right shall comply with the requirements of
Regulations Section 1.7704-1(f) and shall be construed and administered
in accordance therewith.
D. In addition to other restrictions set forth on the
Redemption Rights in any other provision of this Agreement, the
following restrictions apply to Redemption Rights:
(i) Notwithstanding any other provision of
this Article 3, but subject to the last sentence of clause
(iii) below, a Limited Partner shall be
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entitled to exercise the Redemption Right only if (x) the
redemption or purchase of the Limited Partner's OP Units or
Participation Interest would constitute a Private Transfer or
(y) the Percentage Interest attributable to the OP Units or
Participation Interest to be purchased or redeemed, when
aggregated with other Transfers of Partnership Interests
within the same taxable year of the Partnership (but not
including Private Transfers), would constitute a Percentage
Interest of ten percent (10%) or less.
(ii) The General Partner may establish such
policies and procedures as it may deem necessary or desirable
in its discretion to administer the 10% Percentage Interest
limit set forth in subparagraph (i) above, including without
limitation imposing further limitations on the OP Units or
Participation Interest with respect to which the Redemption
Right may be exercised during any period of time shorter than
a calendar year and establishing procedures to allocate the
ability to exercise the Redemption Right among the Limited
Partners.
(iii) The restrictions set forth in clauses
(i) and (ii) above shall continue in effect until such time as
the Partnership is no longer potentially subject to
classification as a publicly traded partnership, as defined in
Code Section 7704, in the absence of such restrictions, as
determined by the General Partner in its discretion. The
restrictions set forth in clauses (i) and (ii) above, together
with the restrictions on the Transfer of Partnership Interests
set forth in Section 12(B), are intended to limit transfers of
interests in the Partnership in such a manner as to permit the
Partnership to qualify for the safe harbors from treatment as
a publicly traded partnership set forth in Regulations
Sections 1.7704-1(d), (e), (f) and (j) and shall be construed
and administered in accordance therewith. The General Partner
may modify the restrictions set forth in clauses (i) and (ii)
above, and the provisions of Section 12(B), from time to time
in its discretion to ensure that the Partnership complies and
continues to comply with the Code and Regulations requirements
described above. Notwithstanding anything herein to the
contrary, the provisions of subparagraphs (i)-(iii) shall only
apply if, and beginning with the first day of the first
taxable year in which, the Partnership no longer qualifies for
the Private Placement PTP Exemption.
(iv) A Limited Partner shall not be entitled
to exercise either a Redemption Right or any right to convert
a Preference Unit into an OP Unit if such exercise would (a)
result in the total Common Shares and any other ownership or
beneficial interests in the Company being owned by fewer than
one hundred persons within the meaning of Code Section
856(a)(5); (b) result in such Limited Partner or any other
person owning, directly or constructively under Code Section
856(d)(5), in excess of 9.9% of the total Common Shares (and
any other ownership or beneficial interests) in the Company;
(c) cause more than 50% of the value of the Company's Common
Shares (and any other ownership or beneficial interests) to be
held by five or fewer individuals and certain organizations
under Code Section 856(h) and 542(a)(2); (d) cause the Company
to own, directly or constructively, 10% or more of the
ownership interests of any person that is a tenant with
respect to any real property owned or constructively
15
owned by the Company (so as to prevent the application of Code
Section 856(d)(2)); or (e) cause the acquisition of Common
Shares (and any other ownership or beneficial interests) in
the Company by such Limited Partner to be "integrated" with
any other distribution of interests in the Company for
purposes of complying with the registration provisions of the
Securities Act of 1933. The General Partner may modify the
restrictions set forth in this Section 3.2(D)(iv) from time to
time in its discretion to ensure that the Partnership complies
and continues to comply with Code Section 856. The General
Partner may, in its sole discretion, waive the restrictions on
redemption set forth in this Section 3.2(D)(iv); provided,
however, that in the event a restriction is waived, the
redeeming partner shall be paid the Cash Amount.
(v) A Limited Partner shall not be entitled
to exercise a Redemption Right if it prejudices or affects the
continuity of the Partnership for purposes of Code Section
708. Prior to any such redemption described in the preceding
sentence, the General Partner may require an opinion of
counsel satisfactory to the General Partner to the effect that
such redemption will not cause adverse tax consequences to the
nonredeeming Partners, and such Limited Partner exercising the
Redemption Right shall be responsible for paying said
counsel's fee for his opinion.
Provided, however, that the General Partner may exempt a Limited
Partner from the foregoing restrictions to the same extent, and under
the same circumstances, that the General Partner may waive similar
restrictions pursuant to its Articles of Incorporation.
E. Notwithstanding the provisions of Section 3.2(C),
a Limited Partner that exercises the Redemption Right shall be deemed
to have offered to sell the OP Units or Participation Interest
described in the Notice of Redemption to the Company, and the Company
(or any designee thereof) may, in its sole and absolute discretion,
elect to purchase directly and acquire such OP Units or Participation
Interest by paying to the Redeeming Partner either the Cash Amount or
the REIT Shares Amount, as elected by the Company or any designee
thereof (each in its sole and absolute discretion), on the Specified
Redemption Date, whereupon the Company or any designee thereof shall
acquire the OP Units or Participation Interest offered for redemption
by the Redeeming Partner and shall be treated for all purposes of this
Agreement as the owner of such OP Units or Participation Interest. If
the Company or any designee thereof shall elect to exercise its right
to purchase OP Units or a Participation Interest under this Section
3.2(E) with respect to a Notice of Redemption, it shall so notify the
Redeeming Partner within five Business Days after the receipt by the
General Partner of such Notice of Redemption. Unless the Company or any
designee thereof (each in its sole and absolute discretion) shall
exercise its right to purchase OP Units or a Participation Interest
from the Redeeming Partner pursuant to this Section 3.2(E), neither the
Company nor any designee thereof shall have any obligation to the
Redeeming Partner or the Partnership with respect to such Redeeming
Partner's exercise of such Redemption Right. In the event that the
Company or any designee thereof shall exercise its right to purchase OP
Units or a Participation Interest with respect to the exercise of a
Redemption Right in the manner described in the first sentence of this
Section 3.2(E), the Partnership shall have no
16
obligation to pay any amount to the Redeeming Partner with respect to
such Redeeming Partner's exercise of such Redemption Right, and each of
the Redeeming Partner, the Partnership, and the Company or any designee
thereof, as the case may be, shall treat the transaction between the
Company or any designee thereof, as the case may be, and the Redeeming
Partner for federal income tax purposes as a sale of the Redeeming
Partner's OP Units or Participation Interest to the Company or any
designee thereof. Each Redeeming Partner agrees to execute such
documents as the General Partner may reasonably require in connection
with the issuance of Common Shares upon exercise of the Redemption
Right. Any OP Units or Participation Interest acquired by the General
Partner pursuant to such Redemption Right shall, upon and after such
acquisition, be treated as a general partner interest.
F. The Company shall at all times reserve and keep
available out of its authorized but unissued Common Shares, solely for
the purpose of effecting the exchange of OP Units and the Participation
Interest for Common Shares, such number of Common Shares as shall from
time to time be sufficient to effect the redemption of the
Participation Interest and all outstanding OP Units not owned by the
Company, and any Preference Units not owned by the Company that are
convertible into OP Units (whether or not the conversion can then be
effected). No Limited Partner shall, by virtue of being the holder of
the Participation Interest or one or more OP Units and/or Preference
Units be deemed to be a shareholder of or have any other interest in
the Company. In the event of any change in the outstanding Common
Shares of the Company or its successor by reason of any share dividend,
split, recapitalization, merger, consolidation, combination, exchange
of shares or other similar corporate change other than the issuance of
Rights, as further described in Section 3.2(G) (a "Recapitalization"),
the number of OP Units held by each Partner shall be adjusted upward or
downward to equal such number of Common Shares of the Company (or as
applicable, the Common Shares or equivalent class of securities of the
successor thereto) as would have been held by the Partner immediately
following the Recapitalization if such Partner had held a number of
Common Shares equal to such number of OP Units immediately prior to
such Recapitalization. In the event the Company or any designee thereof
acquires OP Units or a Participation Interest pursuant to such Section
3.2(E), the General Partner shall record the transfer on the books of
the Partnership so that the Company or any designee thereof, as
applicable, is thereupon the owner and holder of such OP Units or
Participation Interest. As is more particularly described in Section
3.2(D)(iv), notwithstanding any other provisions of this Section 3.2, a
Limited Partner shall not have the right to exercise a Redemption Right
if, upon payment of the REIT Shares Amount to such Limited Partner, (i)
the Company would, as a result thereof, no longer qualify (or it would
be reasonably possible in the judgement of the General Partner that the
Company no longer would qualify) as a real estate investment trust
under the Code; or (ii) the payment of such REIT Shares Amount to the
Limited Partner would constitute or be reasonably possible in the
judgment of the General Partner to constitute a violation of applicable
federal or state securities laws or would violate any applicable
provisions of the organizational documents of the Company (including
without limitation any restrictions on ownership of securities of the
Company set forth in the Articles of Incorporation or Bylaws of the
Company). In either such event, to the extent the consequences
described in (i) or (ii) could be eliminated by reasonable action of
the General Partner or the Company without any material detriment
17
to the General Partner or the Company and at the expense of such
Limited Partner(s) requesting such exchange, the Company or the General
Partner shall take all such reasonable action to effect the exchange of
OP Units or a Participation Interest for Common Shares by such Limited
Partner(s) as herein provided.
G. In the event that a Redeeming Partner exercises
the Redemption Right, and the Company or any designee thereof elects to
make the payment of the REIT Shares Amount to the Redeeming Partner
referenced in accordance with the first sentence of Section 3.2(E), and
in the event that the Company issues to all of its holders of Common
Shares as of a certain record date rights, options, warrants or
convertible or exchangeable securities entitling such shareholders to
subscribe for or purchase Common Shares or any other securities or
property (collectively, "Rights"), with the record date for such Rights
issuance falling within the period starting on the date that the
Company receives the Redemption Notice from the Redeeming Partner and
ending on the day immediately preceding the date upon which the Company
or its designee delivers the Common Shares to the Redeeming Partner in
exchange for such Redeeming Partner's OP Units (the date upon which
such exchange occurs being referred to herein as the "Exchange Date"),
which Rights will not be distributed before the Exchange Date, then the
amount payable by the Company or its designee to the Redeeming Partner
in exchange for its OP Units or Participation Interest under this
Section 3.2 shall also include such Rights that the Redeeming Partner
would have received if it had been the owner of the Common Shares to be
delivered by the Company to the Redeeming Partner prior to the record
date for the issuance of the Rights (as the same may be expressed for
any purpose hereunder in a number of OP Units or Common Shares as
determined by the General Partner).
3.3 ADDITIONAL FUNDS.
A. No Partner shall be assessed or, except as
otherwise provided in this Agreement, be required to contribute
additional funds or other property to the Partnership. Any additional
funds or other property required by the Partnership, as determined by
the General Partner in its sole discretion, may, at the option of the
General Partner and without an obligation to do so (except as provided
for in Section 3.3(B) below), be contributed by the General Partner or
any other Partner (provided such other Partner is willing to do so and
the General Partner consents thereto, each in its sole and absolute
discretion) as additional Capital Contributions. If and as the General
Partner or any other Partner makes additional Capital Contributions to
the Partnership, each such Partner shall receive additional OP Units
and/or Preference Units as provided for in Section 3.2(B) above. The
General Partner shall also have the right (but not the obligation) to
raise any additional funds required for the Partnership in accordance
with the provisions of Section 9.7(E) below and/or by causing the
Partnership to borrow the necessary funds from third parties on such
terms and conditions as the General Partner shall deem appropriate in
its sole discretion. If the General Partner elects to cause the
Partnership to borrow the additional funds, or if the Partnership
issues a guaranty, indemnity or similar undertaking in connection with
the indebtedness of the Company as aforesaid, in any such case one or
more of the Partnership's assets may be encumbered to secure the loan
or undertaking. Except as provided for in Section 3.3(C) below, no
18
Limited Partner shall have the right to make additional Capital
Contributions to the Partnership without the prior written consent of
the General Partner.
B. Except for (i) the capitalization of any
wholly-owned entity of the General Partner which is the general partner
of a partnership having the Partnership as a limited partner, (ii) the
net proceeds generated by the issuance of Other Securities that
evidence debt (and are not equity securities) that are loaned by the
Company to the Partnership, and (iii) where the Company determines that
the net proceeds generated by the issuance of Common Shares or Other
Securities (whether for debt or equity) are to be retained by the
Company for a valid business reason consistent with the purposes of the
Partnership and such retention does not materially adversely affect the
Limited Partners, the net proceeds of any and all funds raised by or
through the Company through the issuance of Common Shares or Other
Securities shall be contributed to the Partnership as additional
Capital Contributions, and in such event the Company shall be issued
additional Units pursuant to Section 3.2(B) above.
C. If the General Partner creates and administers a
reinvestment program in substantial conformance with a dividend
reinvestment program which may be available from time to time to
holders of the Common Shares, each Limited Partner holding OP Units
shall have the right to reinvest any or all cash distributions payable
to it from time to time pursuant to this Agreement (subject to the
restrictions described in Article 12), by having some or all (as the
Limited Partner elects) of such distributions contributed to the
Partnership as additional Capital Contributions, and in such event the
Partnership shall issue to each such Limited Partner additional OP
Units pursuant to Section 3.2(B)(iii) above, or the General Partner, in
its sole discretion, may elect to cause distributions with respect to
which a Limited Partner has elected reinvestment to be contributed to
the Company in exchange for the issuance of Common Shares. At the
option of the General Partner, such a program may also be made
available with respect to Preference Units.
3.4 CAPITAL ACCOUNTS. A separate capital account ("Capital
Account") shall be maintained for each Partner.
A. To each Partner's Capital Account there shall be
added the amount of cash and the Gross Asset Value of any property
contributed by such Partner to the Partnership pursuant to any
provision of this Agreement, such Partner's distributive share of
Profits and any items in the nature of income or gain which are
specially allocated pursuant to Section 7.3, Section 7.4 or Section
14.2(C) hereof, and the amount of any Partnership liabilities assumed
by such Partner or which are secured by any Partnership property
distributed to such Partner.
B. From each Partner's Capital Account there shall be
subtracted the amount of cash and the Gross Asset Value of any
Partnership property distributed to such Partner pursuant to any
provision of this Agreement, such Partner's distributive share of
losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 7.3, Section 7.4 or Section
14.2(C) hereof, and the amount of any
19
liabilities of such Partner assumed by the Partnership or which are
secured by any property contributed by such Partner to the Partnership.
C. In the event all or a portion of a Partnership
Interest is transferred in accordance with the terms of this Agreement
(including a transfer of OP Units or a Participation Interest in
exchange for Common Shares, pursuant to Section 3.2(E)), the transferee
shall succeed to the Capital Account of the transferor to the extent it
relates to the transferred Partnership Interest.
D. In determining the amount of any liability for
purposes of Sections 3.4(A) and 3.4(B) above, there shall be taken into
account Code Section 752(c) and any other applicable provisions of the
Code and Regulations.
E. This Section 3.4 and the other provisions of this
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, or the Partners) are computed in
order to comply with such Regulations, the General Partner may make
such modification, provided that it is not likely to have a material
effect on the amounts distributed to any Partner pursuant to Section
14.2 upon the liquidation of the Partnership. The General Partner also
shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Partners and the
amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations
Section 1.704-1(b)(2)(iv)(g), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause
this Agreement not to comply with Regulations Section 1.704-1(b).
3.5 INTEREST ON AND RETURN OF CAPITAL.
A. No Partner shall be entitled to any interest on
its Capital Account or on its Capital Contributions to the Partnership.
B. Except as expressly provided for in this
Agreement, no Partner shall have the right to demand or to receive the
return of all or any part of its Capital Contributions to the
Partnership and there shall be no priority of one Partner over another
Partner as to the return of capital contributions or withdrawals or
distributions of profits and losses. No Partner shall have the right to
demand or receive property other than cash in return for the
contributions of such Partner to the Partnership.
3.6 NEGATIVE CAPITAL ACCOUNTS. Upon the liquidation of the
Partnership or the liquidation of the Participation Interest, the holder of the
Participation Interest shall be required to pay to the Partnership any deficit
or negative balance which may exist in its Capital Account at such time
(determined after taking into account the allocations described in Article 7 or
Section 14.2(C) for the year in which such liquidation or redemption occurs).
Subject to the
20
provisions of any guarantee or other written agreement between a Partner and the
Partnership, or except as provided in the preceding sentence, no Partner shall
otherwise be required to pay to the Partnership any deficit or negative balance
which may exist in its Capital Account.
3.7 LIMIT ON CONTRIBUTIONS AND OBLIGATIONS OF PARTNERS. Except
as provided in Sections 3.1, 3.2 and 3.3 (or the provisions of any guarantee or
other written agreement between a Partner and the Partnership), no Partner shall
be required to make any additional advances or contributions to or on behalf of
the Partnership or guarantee any obligations of the Partnership.
3.8 REDEMPTION AND REPURCHASE OF UNITS. Notwithstanding any
other provision of this Agreement which may be contrary to this Section 3.8, in
the event of the proposed repurchase or redemption for cash by the Company of
(i) Common Shares or (ii) Other Securities with respect to which the Partnership
had previously issued Preference Units pursuant to Section 3.2(B)(iv) of this
Agreement, then, in such event, the Partnership shall provide cash to the
Company concurrently with such repurchase or redemption or for such purpose
equal to the proposed repurchase or redemption price, and one OP Unit owned by
the General Partner (or, in the case of redemption or repurchase by the Company
of Other Securities contemplated by clause (ii) above, one Preference Unit owned
by the General Partner which had been issued with respect to such Other
Securities) shall be canceled with respect to each Common Share (or share of
Other Securities) so repurchased or redeemed.
3.9 REDEMPTION AND REPURCHASE OF INTERESTS OWNED BY XXXXX
CONTROLLED ENTITIES. Notwithstanding any other provision of this Agreement which
may be contrary to this Section 3.9, if at any time the General Partner is not
sponsored by a Xxxxx Controlled Entity, HALP, HREH, and each other Xxxxx
Controlled Entity may redeem all or a portion of the Participation Interest
and/or Units it owns at any time, or from time to time. The redemption price of
the portion of the Participation Interest and/or Units being redeemed will be
equal to the Cash Amount attributable to such Participation Interest or Units,
as the case may be. The holder may elect, at its option, to receive cash or
Common Shares (or a combination of same) in connection with such redemption.
ARTICLE IV
OFFICE AND REGISTERED AGENT
The address of the registered office of the Partnership in the
State of
Delaware is located at 0000 Xxxxxx Xxxxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx
of Xxx Xxxxxx, Xxxxx xx Xxxxxxxx 00000, and the registered agent for service of
process on the Partnership in the State of
Delaware at such registered office is
the Corporation Trust Company. The principal office of the Partnership is
located at 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000 or
such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the State of
Delaware as the General
Partner may deem advisable.
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ARTICLE V
PURPOSES AND POWERS OF PARTNERSHIP
5.1 PURPOSES OF THE PARTNERSHIP. The objects and purposes of
the Partnership are to engage in any lawful business activities in which a
partnership formed under the Act may engage or participate, with its primary
objects and purposes being, either as a partner in a partnership or joint
venture or otherwise, to purchase, own, maintain, mortgage, encumber, construct,
develop, equip, manage, lease, finance, operate, dispose of or otherwise deal
with real property, interests in real property or mortgages secured by real
property.
5.2 POWERS. The Partnership purposes may be accomplished by
taking any action which is not prohibited under the Act.
5.3 REIT REQUIREMENTS. Each Limited Partner understands and
acknowledges that the General Partner intends to elect to be treated as a real
estate investment trust ("REIT") under Code Section 856. Each Limited Partner
further understands and acknowledges that in order to maintain its status as a
REIT, the General Partner must comply with numerous and complex rules and
regulations set forth in the Code and the Regulations, many of which are applied
on a quarterly and/or annual basis (the "REIT Requirements"), and that the
management and operation of the Partnership will have a material effect on the
ability of the General Partner to continue to maintain its status as a REIT.
Accordingly, notwithstanding any other provision of this Agreement or any
non-mandatory provision of the Act, the Partnership shall not take any action
which (or fail to take any action, the omission of which) (i) could adversely
affect the ability of the General Partner to qualify or continue to qualify as a
REIT, (ii) could subject the General Partner to any additional taxes under Code
Section 857 or Code Section 4981 or other potentially adverse consequences under
the Code, or (iii) otherwise could cause the General Partner to violate the REIT
Requirements, specifically including, but not limited to, restrictions on
Redemption Rights in Section 3.2(D)(iv). In addition, notwithstanding any other
provision of this Agreement or any non-mandatory provision of the Act, any
action of the General Partner on behalf of the Partnership or any decision of
the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the General Partner's business judgement that such action or
omission is necessary or advisable in order (i) to protect the ability of the
General Partner to continue to qualify as a REIT or (ii) to avoid the General
Partner incurring any taxes under Code Section 857 or Code Section 4981, is
expressly authorized under this Agreement and is approved by all of the Limited
Partners.
ARTICLE VI
TERM
The term of the Partnership shall continue until the
Partnership is terminated upon the occurrence of an event described in Section
14.1 below.
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ARTICLE VII
ALLOCATIONS
7.1 PROFITS.
A. After giving effect to the special allocations set
forth in Sections 7.3, 7.4, and 14.2(C), Profits for any fiscal year
other than Capital Transactions Gains shall be allocated as follows:
(i) first, gross profits shall be allocated to the
holder of the Participation Interest, until the cumulative
amount of Profits allocated to such holder pursuant to this
Section 7.1(A) with respect to its Participation Interest
equals the cumulative amount of distributions, other than
distributions of proceeds from transactions resulting in
Capital Transaction Gains or Losses, made to such holder
pursuant to Section 8.2 hereof with respect to its
Participation Interest; and
(ii) thereafter, remaining Profits shall be allocated
among the Partners in proportion to the number of OP Units
held by each such Partner.
B. After giving effect to the allocations set forth
in Sections 7.3, 7.4 and 14.2(C), Capital Transaction Gains shall be
computed separately with respect to each property and shall be
allocated among the Partners as follows:
(i) first, among the Partners in proportion to, and
to the extent of, any deficit balance in each such Partner's
Capital Account;
(ii) second, to the holder of the Participation
Interest in the minimum amount needed so as to cause its
Capital Account balance to equal the product of the Percentage
Interest attributable to the Participation Interest and the
aggregate Capital Account balances of all the Partners (after
giving effect to the allocation in this clause (ii)); and
(iii) thereafter, among the Partners in proportion to
their respective Percentage Interests.
C. In the event that the Partnership issues
additional Units to the General Partner or any Limited Partner pursuant
to Section 3.2 hereof, the General Partner shall make such revisions to
this Section 7.1 as it determines are necessary to reflect the terms of
the issuance of such additional Units, including such revisions as are
needed to ensure that such allocations (i) will comply with the terms
of Regulations Sections 1.704-1 and -2 and Code Section 514(c)(9)(E),
(ii) will properly reflect the varying interests of the Partners in the
Partnership, and (iii) will cause the Capital Accounts of the Partners
held by them to be in the ratios in which the Partners are entitled to
receive distributions with respect to their Partnership Interests
pursuant to Article 8 hereof.
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7.2 LOSSES.
A. After giving effect to the special allocations set
forth in Sections 7.3, 7.4, and 14.2(C), all Losses (including Capital
Transaction Losses, which shall be computed and allocated separately
with respect to each property) shall be allocated among the Partners as
follows:
(i) first, among the Partners in proportion to the
number of OP Units held by each such Partner, until the
aggregate Capital Account balances of the Partners holding OP
Units is reduced to an amount equal to the product of (a) 100%
minus the Percentage Interest attributable to the
Participation Interest and (b) the aggregate Capital Account
balances of all the Partners (after giving effect to the
allocation in this clause (i));
(ii) second, among the Partners in proportion to
their respective positive Capital Account balances; and
(iii) thereafter, among the Partners in proportion to
the number of OP Units held by each such Partner.
B. The Losses allocated pursuant to Section 7.2(A)
above shall not exceed the maximum amount of Losses that can be so
allocated without causing any Limited Partner to have an Adjusted
Capital Account Deficit at the end of any fiscal year. All Losses in
excess of the limitations set forth in this Section 7.2(B) shall be
allocated among the other Partners in proportion to the number of OP
Units held by each such other Partner.
C. In the event that the Partnership issues
additional Units to the General Partner or any Limited Partner pursuant
to Section 3.2 hereof, the General Partner shall make such revisions to
this Section 7.2 as it determines are necessary to reflect the terms of
the issuance of such additional Units, including such revisions as are
needed to ensure that such allocations (i) will comply with the terms
of Regulations Sections 1.704-1 and -2 and Code Section 514(c)(9)(E),
(ii) will properly reflect the varying interests of the Partners in the
Partnership, and (iii) will cause the Capital Accounts of the Partners
to be in the ratios in which the Partners are entitled to receive
distributions with respect to their Partnership Interests pursuant to
Article 8 hereof.
7.3 SPECIAL ALLOCATIONS. The following special allocations
shall be made in the following order:
A. Except as otherwise provided in Regulations
Section 1.704-2(f), and notwithstanding any other provision of this
Article 7, if there is a net decrease in Partnership Minimum Gain
during any fiscal year, each Partner shall be specially allocated items
of Partnership income and gain for such fiscal year (and, if necessary,
subsequent fiscal years) in an amount equal to such Partner's share of
the net decrease in Partnership Minimum Gain, determined in accordance
with Regulations Section 1.704-2(g). The items to be so allocated shall
be determined in accordance with
24
Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
7.3(A) is intended to comply with the minimum gain chargeback
requirement in Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith.
B. Except as otherwise provided in Regulations
Section 1.704-2(i)(4), and notwithstanding any other provision of this
Article 7, if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to a Partner Nonrecourse Debt during any
Partnership fiscal year, each Partner who has a share of the Partner
Nonrecourse Debt 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 fiscal year (and, if necessary, subsequent fiscal years) in an
amount equal to such Partner's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(4).
The items to be so allocated shall be determined in accordance with
Regulations Sections 1.704-2(i)(4) and 1.704-2(i)(2). This Section
7.3(B) is intended to comply with the minimum gain chargeback
requirement in Regulations Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
C. In the event any Partner unexpectedly receives any
adjustments, allocations, or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Partner as quickly as
possible, provided that an allocation pursuant to this Section 7.3(C)
shall be made only if and to the extent that such Partner would have an
Adjusted Capital Account Deficit after all other allocations provided
for in this Article 7 have been tentatively made, as if this Section
7.3(C) were not in this Agreement.
D. In the event any Partner has a deficit Capital
Account at the end of any Partnership fiscal year which is in excess of
the sum of (i) the amount such Partner is obligated to restore pursuant
to any provision of this Agreement, and (ii) the amount such Partner is
deemed to be obligated to restore pursuant to the penultimate sentences
of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such
Partner shall be specially allocated items of Partnership income and
gain in the amount of such excess as quickly as possible, provided that
an allocation pursuant to this Section 7.3(D) shall be made only if and
to the extent that such Partner would have a deficit Capital Account
after all other allocations provided for in this Article 7 have been
made as if Section 7.3(C) hereof and this Section 7.3(D) were not in
the Agreement.
E. If and to the extent Partners holding Preference
Units receive preferred distributions from the Partnership (other than
distributions pursuant to Section 14.2(C) in final liquidation of the
Partnership), each such Partner shall be allocated Partnership gross
income in an amount equal to the amount of preferred distributions
received with respect to such Preference Units, prior to any
allocations of Profit and Loss pursuant to Sections 7.1 and 7.2 above.
For purposes of this Section 7.3(E), any payment with respect to a
Preference Unit that, under the applicable Preference Unit Term Sheet,
25
constitutes a payment in redemption of such Preference Unit (and a
return of the Partner's Capital Contribution with respect to such
Preference Unit) shall not result in a special allocation of gross
income to the Partner receiving such payments under this Section
7.3(E), except to the extent such payment is specifically attributable
to accrued and unpaid preferred distributions with respect to such
Preference Unit provided for in such Preference Unit Term Sheet.
F. Nonrecourse Deductions for any fiscal year shall
be allocated among the Partners in accordance with their respective
Percentage Interests.
G. Any Partner Nonrecourse Deductions for any fiscal
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 Section 1.704-2(i)(1).
H. To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Code Section 734(b) is
required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4), to
be taken into account in determining Capital Accounts as the result of
a distribution to a Partner in complete liquidation of its interest in
the Partnership, the amount of such adjustment to Capital Accounts
shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis)
and such gain or loss shall be specifically allocated to the Partner to
whom such distribution was made.
7.4 CURATIVE ALLOCATIONS. The allocations set forth in
Sections 7.2(C), 7.3(A), 7.3(B), 7.3(C), 7.3(D), 7.3(F), 7.3(G), and 7.3(H)
above (the "Regulatory Allocations") are intended to comply with certain
requirements of the Regulations under Code Section 704(b). It is the intent of
the Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
other items of Partnership income, gain, loss, or deduction pursuant to this
Section 7.4. Therefore, notwithstanding any other provision of this Article 7
(other than the Regulatory Allocations), the General Partner shall make such
offsetting special allocations of Partnership income, gain, loss, or deduction
in whatever manner it determines appropriate so that, after such offsetting
allocations are made, each Partner's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such Partner would have had if
the Regulatory Allocations were not part of the Agreement and all Partnership
items were allocated pursuant to Section 7.1(A)(ii) and 7.2(A) (subject,
however, to Section 7.3(E) above). In exercising its discretion under this
Section 7.4, the General Partner shall take into account future Regulatory
Allocations under Section 7.3(A) and 7.3(B) that, although not yet made, are
likely to offset other Regulatory Allocations previously made under Sections
7.3(F) and 7.3(G).
7.5 TAX ALLOCATIONS: CODE SECTION 704(c).
A. Income, gain, loss, and deduction with respect to
any property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the Partners so as to take
account of any variation between the adjusted basis of such property to
the Partnership for Federal income tax purposes and its initial Gross
26
Asset Value in accordance with any permissible method or methods under
Code Section 704(c) and the Regulations thereunder, as determined in
the sole discretion of the General Partner.
B. In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to the definition of "Gross
Asset Value" contained in Article 2 above, subsequent allocations of
income, gain, loss and deduction with respect to such asset shall take
account of any variation between the adjusted basis of such asset for
Federal income tax purposes and its Gross Asset Value in the same
manner or manners permitted under Code Section 704(c) and the
Regulations thereunder.
C. The portion of any gain recognized by the
Partnership on the disposition of property which is classified as
ordinary income under Sections 751, 1245 or 1250 of the Code, or which
is classified as "unrecaptured section 1250 gain" under Section 1(h)(7)
of the Code, shall be allocated among the Partners in the ratio in
which the deductions giving rise to such ordinary income or
unrecaptured section 1250 gain were allocated; provided, however, that
the amount of ordinary income or unrecaptured section 1250 gain so
allocated shall not exceed the gain from such sale or disposition that
is so allocable to the Partner.
D. Any elections or other decisions relating to the
allocations provided under this Section 7.5 shall be made by the
General Partner using any permissible manner under the Code or the
Regulations that the General Partner may elect in its sole discretion.
Allocations pursuant to this Section 7.5 are solely for purposes of
Federal, state, and local taxes and shall not affect, or in any way be
taken into account in computing, any Partner's Capital Account or share
of Profits, Losses, other items, or distributions pursuant to any
provision in this Agreement.
ARTICLE VIII
CASH AVAILABLE FOR DISTRIBUTION
8.1 DEFINITION OF AVAILABLE CASH. As used in this Agreement,
"Available Cash" shall mean and be defined as all cash receipts of the
Partnership from whatever source during the period in question in excess of all
items of Partnership expense (other than non-cash expenses such as depreciation)
and other cash needs of the Partnership, including, without limitation,
investments by the Partnership, amounts paid by the Partnership as principal on
debts and advances during such period, capital expenditures, payments to any
dealer manager, advisor or property manager under any dealer manager, advisory
and/or property management agreement, other fees and expense reimbursements,
funds used for redemptions, and any reserves (as determined by the General
Partner) established or increased during such period. In the discretion of the
General Partner, but subject to Section 5.3, reserves may include cash held for
future acquisitions.
8.2 TIMING AND PRIORITY OF DISTRIBUTIONS OF AVAILABLE CASH.
Available Cash shall be distributed to or for the benefit of the Partners of
record as of the applicable Record Date not less frequently than monthly. All
such distributions shall, subject to the rights of any
27
holder of Preference Units, be distributed among the Partners holding OP Units
and Participation Interests in proportion to their respective Percentage
Interests as of the applicable Record Date.
8.3 CONSENT TO ALLOCATIONS AND DISTRIBUTIONS. Each of the
Partners hereby consents to the allocations and distributions provided for in
this Agreement.
8.4 RIGHT TO LIMIT DISTRIBUTIONS. The right of any Partner to
receive distributions of any nature pursuant to the terms of this Agreement
shall be subject to the terms of any agreement between such Partner and the
Partnership limiting, restricting or providing rights of set-off with respect to
such distributions.
ARTICLE IX
MANAGEMENT OF PARTNERSHIP
9.1 GENERAL PARTNER. The General Partner shall be the sole
manager of the Partnership business, and shall have the right and power to make
all decisions and take any and every action with respect to the property, the
business and affairs of the Partnership and shall have all the rights, power and
authority generally conferred by law, or necessary, advisable or consistent with
accomplishing the purposes of the Partnership. All such decisions or actions
made or taken by the General Partner hereunder shall be binding upon all of the
Partners and the Partnership. The powers of the General Partner to manage the
Partnership business shall include, without limitation, the power and authority
to, directly or indirectly:
(i) operate any business normal or customary for the
owner of or investor in commercial property of the type held
by the Partnership;
(ii) perform any and all acts necessary or
appropriate to the operation of the Partnership's assets,
including, but not limited to, preparing, negotiating,
executing and delivering leases and rental agreements with
regard to real and personal property owned by the Partnership,
preparing applications for rezoning, preparing objections to
rezoning of other property and establishing bank accounts in
the name of the Partnership;
(iii) improve, renovate and/or perform construction
activities with regard to the properties owned by the
Partnership and to retain such contractors, subcontractors and
other persons or entities as may be required in connection
with such activities;
(iv) procure and maintain such insurance as may be
available in such amounts and covering such risks as are
deemed appropriate by the General Partner;
(v) take and hold all real, personal and mixed
property of the Partnership in the name of the Partnership or
in the name of a nominee;
28
(vi) negotiate, execute and deliver agreements on
behalf of and in the name of the Partnership;
(vii) borrow money (whether on a secured or unsecured
basis), finance and refinance the assets of the Partnership or
any part thereof or interest therein, and in connection
therewith, issue notes, bonds, securities and other
undertakings and evidences of indebtedness and documents
related thereto (including, without limitation, guaranties,
indemnities and similar undertakings to support loans obtained
or debt securities issued by the Company);
(viii) coordinate all accounting and clerical
functions of the Partnership and employ such accountants,
lawyers, property managers, leasing agents and other
management or service personnel as may from time to time be
required to carry on the business of the Partnership;
(ix) acquire any assets, and encumber, sell, assign,
transfer, ground lease or otherwise dispose of any or all of
the assets of the Partnership, or any part thereof or interest
therein including, without limitation, by way of any Unit
dividend, split, recapitalization, merger, consolidation,
combination, exchange of Units or other similar Partnership
organizational change;
(x) organize one or more partnerships, corporations,
limited liability companies or other business entities which
are controlled, directly or indirectly, by the Partnership and
make any capital contributions (in cash or in kind) required
pursuant to the organizational documents or subscription
agreements relating to any such partnerships, corporations,
limited liability companies or other business entities; and
(xi) establish the date (the "Record Date") for the
purpose of making any proper determination in connection with,
but not limited to, the following matters: (a) which Partners
are entitled to receive distributions, (b) consent to any
matter for which the consent of Partners is permitted or
required under any provision hereof, or (c) otherwise when
Partners are allocated rights hereunder.
9.2 LIMITATIONS ON POWER AND AUTHORITY OF PARTNERS.
Notwithstanding the powers of the General Partner set forth in Section 9.1
above, the General Partner shall not have the right or power to do any of the
following unless any such action is approved by a Majority-in-Interest of the
Limited Partners:
A. do any act in contravention of this Agreement, or
any amendment hereto; or
B. do any act which would make it impossible to carry
on the ordinary business of the Partnership, except to the extent that
such act is specifically permitted by the terms hereof (it being
understood and agreed that a sale of any or all of the assets of the
Partnership, for example, would be an ordinary part of the
Partnership's business and affairs and is specifically permitted
hereby).
29
9.3 LIMITED PARTNERS. The Limited Partners shall have no right
or authority to act for or to bind the Partnership and no Limited Partner (other
than the General Partner if the General Partner is also a Limited Partner) shall
participate in the conduct or control of the Partnership's affairs or business.
9.4 LIABILITY OF GENERAL PARTNER. The General Partner shall
not be liable or accountable, in damages or otherwise, to the Partnership or to
any other Partner for any error of judgment or for any mistakes of fact or law
or for anything which it may do or refrain from doing hereafter in connection
with the business and affairs of the Partnership except (i) in the case of
fraud, willful misconduct (such as an intentional breach of fiduciary duty or an
intentional breach of this Agreement) or gross negligence, and (ii) for other
breaches of this Agreement, but the liability of the General Partner under this
clause (ii) shall be limited to its interest in the Partnership as more
particularly provided for in Section 9.8. The General Partner shall not have any
personal liability for the return of any Limited Partner's Capital
Contributions.
9.5 INDEMNITY. The Partnership shall indemnify and shall hold
the General Partner (and the officers and directors thereof) harmless from any
liability, loss, cost or damage, including without limitation reasonable legal
fees and court costs, incurred by it by reason of anything it may do or refrain
from doing hereafter for and on behalf of the Partnership or in connection with
its business or affairs; provided, however, that the Partnership shall not be
required to indemnify (i) the General Partner for any liability, loss, cost or
damage which it might incur as a result of its fraud, willful misconduct or
gross negligence in the performance of its duties hereunder, (ii) any officer or
director (other than "Independent Directors", as such term is defined in the
Articles of Incorporation) of the General Partner for any liability, loss, cost
or damage which it might incur as a result of misconduct or negligence of such
person, and (iii) any Independent Directors of the General Partner for any
liability, loss, cost or damage which it might incur as a result of willful
misconduct or gross negligence of such person. In addition, the General Partner
shall be entitled to reimbursement from the Partnership for any amounts paid by
it in satisfaction of indemnification obligations owed by the General Partner to
present or former officers or directors of the General Partner or its
predecessors, as provided for in or pursuant to the Articles of Incorporation
and Bylaws of the General Partner. The right of indemnification set forth in
this Section 9.5 shall be in addition to any rights to which the person or
entity seeking indemnification may otherwise be entitled and shall inure to the
benefit of the successors and assigns of any such person or entity. No Partner
shall be personally liable with respect to any claim for indemnification
pursuant to this Section 9.5, but such claim shall be satisfied solely out of
assets of the Partnership.
9.6 OTHER ACTIVITIES OF PARTNERS AND AGREEMENTS WITH RELATED
PARTIES. Except as may otherwise be agreed to in writing, each Limited Partner,
and its affiliates, shall be free to engage in, to conduct or to participate in
any business or activity whatsoever, including, without limitation, the
acquisition, development, management and exploitation of real and personal
property (other than property of the Partnership), without any accountability,
liability or obligation whatsoever to the Partnership or to any other Partner,
even if such business or activity competes with or is enhanced by the business
of the Partnership. The General Partner, in the exercise of its power and
authority under this Agreement, may contract and otherwise deal with or
otherwise obligate the Partnership to entities in which the General Partner or
any one or more
30
of the officers, directors or shareholders of the General Partner may have an
ownership or other financial interest, whether direct or indirect.
9.7 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
A. The General Partner shall be protected in relying,
acting or refraining from acting on any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, or other paper or document believed by it to be
genuine and to have been executed or presented by the proper party or
parties.
B. The General Partner may exercise any of the powers
granted or perform any of the duties imposed by this Agreement either
directly or through agents. The General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment
bankers and other consultants selected by it, each of whom may serve as
consultants for the Partnership. An opinion by any consultant on a
matter which the General Partner believes to be within its professional
or expert competence shall be full and complete protection as to any
action taken or omitted by the General Partner based on the opinion and
actions taken or omitted in accordance therewith. The General Partner
shall not be responsible for the misconduct, negligence, acts or
omissions of any consultant or contractor of the Partnership or of the
General Partner, and shall assume no obligation other than to use due
care in the selection of all consultants and contractors.
C. No mortgagee, grantee, creditor or any other
person dealing with the Partnership shall be required to investigate
the authority of the General Partner or secure the approval of or
confirmation by any Limited Partner of any act of the General Partner
in connection with the conduct of any ordinary or extraordinary
Partnership business.
D. The General Partner may retain such persons or
entities as it shall determine (including the General Partner or any
entity in which the General Partner shall have an interest or with
which it is affiliated) to provide services to or on behalf of the
Partnership. The General Partner shall be entitled to reimbursement
from the Partnership for its out-of-pocket expenses (including, without
limitation, amounts paid or payable to the General Partner or any
entity in which the General Partner shall have an interest or with
which it is affiliated) incurred in connection with Partnership
business. Such expenses shall be deemed to include without limitation
those expenses required in connection with the administration of the
Partnership such as the maintenance of Partnership books and records,
management of the Partnership property and assets and preparation of
information respecting the Partnership needed by the Partners in the
preparation of their individual tax returns.
E. The General Partner may loan to the Partnership
the net proceeds of loans obtained or debt securities issued by the
Company so long as the terms of such loan to the Partnership are
substantially equivalent to the corresponding loan obtained or debt
securities issued by the Company.
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9.8 PARTNER EXCULPATION. Except for fraud, willful misconduct
and gross negligence, no Partner shall have any personal liability whatsoever,
whether to the Partnership or to any other Partner, for the debts or liabilities
of the Partnership or its obligations hereunder, and the full recourse of any
Partner shall be limited to the interest of that Partner in the Partnership. To
the fullest extent permitted by law, no officer, director or shareholder of the
General Partner shall be liable to the Partnership for money damages except for
(i) active and deliberate dishonesty established by a final judgment, order or
decree of a court of competent jurisdiction or (ii) actual receipt of an
improper benefit or profit in money, property or services. Without limitation of
the foregoing, and except for fraud, willful misconduct and gross negligence, no
property or assets of any Partner, other than its interest in the Partnership,
shall be subject to levy, execution or other enforcement procedures for the
satisfaction of any judgment (or other judicial process) in favor of any other
Partners and arising out of, or in connection with, this Agreement. No advisor,
trustee, manager, trust manager, member, director, officer, partner, employee,
beneficiary, shareholder, participant or agent of any Partner (or of any partner
of a Partner) shall be personally liable in any matter or to any extent under or
in connection with this Agreement, and the Partnership, each Partner and their
respective successors and assigns shall look solely to the interest of the other
Partner in the Partnership for the payment of any claim or for any performance
hereunder.
9.9 GENERAL PARTNER EXPENSES AND LIABILITIES. The Partnership
will pay or reimburse the General Partner for all ongoing accounting and
administrative expenses of the General Partner so that, absent extraordinary
circumstances, the General Partner will not bear any expenses beyond those borne
by the Partnership. The Partnership shall pay all out-of-pocket costs and
expenses (including legal, accounting, tax, consulting and other professional
fees and expenses and travel and entertainment expenses) incurred by the
Partnership, the General Partner, and the General Partner and its Affiliates in
connection with the structuring and organization of the Partnership and the
General Partner and the offering and sale of Units and Common Shares and Other
Securities.
ARTICLE X
BANKING
The funds of the Partnership shall be kept in accounts
designated by the General Partner and all withdrawals therefrom shall be made on
such signature or signatures as shall be designated by the General Partner.
ARTICLE XI
ACCOUNTING
11.1 FISCAL YEAR. The fiscal year and taxable year of the
Partnership (the "fiscal year") shall end on the last day of December of each
year, unless another fiscal year end is selected by the General Partner.
11.2 BOOKS OF ACCOUNT. The Partnership books of account shall
be maintained at the principal office designated in Article 4 or at such other
locations and by such person or persons as may be designated by the General
Partner. The Partnership shall pay the expense of
32
maintaining its books of account. Each Partner shall have, during reasonable
business hours and upon reasonable prior notice, access to the books of the
Partnership and in addition, at its expense, shall have the right to copy such
books. The General Partner, at the expense of the Partnership, shall cause to be
prepared and distributed to the Partners annual financial data sufficient to
reflect the status and operations of the Partnership and its assets and to
enable each Partner to file its federal income tax return.
11.3 METHOD OF ACCOUNTING. The Partnership books of account
shall be maintained and kept, and its income, gains, losses and deductions shall
be accounted for, in accordance with generally accepted accounting principles
consistently applied, or such other method of accounting as may be adopted
hereafter by the General Partner.
11.4 TAX MATTERS.
A. The General Partner is hereby designated the Tax Matters
Partner (hereinafter referred to as the "TMP") of the Partnership and
shall have all rights and obligations of the TMP under the Code. The
Partnership shall reimburse the TMP for any and all out-of-pocket costs
and expenses (including attorneys' and accountants' fees) incurred or
sustained by it in its capacity as TMP. The Partnership shall
indemnify, defend and hold the TMP harmless from and against any loss,
liability, damage, cost or expense (including attorneys' and
accountants' fees) sustained or incurred as a result of any act or
decision concerning the Partnership tax matters and within the scope of
its responsibility as TMP. If the Partnership is the subject of an
income tax audit by any federal, state, local or foreign authority,
then to the extent the Partnership is treated as an entity for purposes
of the audit, including administrative settlement and judicial review,
the TMP shall be authorized to act for, and its decision shall be final
and binding upon, the Partnership and each Partner.
B. The General Partner shall take such steps as are necessary
to ensure that the Partnership is taxed as a partnership under the
Code. Subject to the preceding sentence, the General Partner shall have
the exclusive right to make any determination whether the Partnership
shall make available elections (including any election pursuant to Code
Section 754 to adjust the tax basis of Partnership assets) for federal,
state, or local tax purposes, and the General Partner shall be absolved
from all liability and other consequences from its making or failing to
make any such election. All decisions and other matters concerning the
computation and allocation or tax items and attributes which are not
otherwise specifically provided for by the terms of this Agreement
shall be determined by the General Partner, and the General Partner
shall be absolved from all liability and other consequences from any
such decisions which are made in good faith.
C. The General Partner shall take all such actions as are
reasonably necessary for the Partnership to comply with any withholding
or comparable requirements under federal, state, local and foreign law
and shall remit any amounts withheld to, and file required forms with,
the applicable taxing jurisdictions. All amounts withheld from
distributions shall be treated as having been distributed to the
Partner with respect to whom the withholding was made. Any amounts that
are required to be withheld by the Partnership with respect to a
Partner which are in excess or in advance of distributions to
33
such Partnership shall be paid over by such Partner to the Partnership.
Each Partner agrees to furnish the Partnership with such
representations and forms as the General Partner shall reasonably
request to assist in complying with the Partnership's withholding
obligations. A Partner subject to withholding shall pay to or reimburse
the Partnership for taxes, related interest and penalties, and all
other costs and expenses incurred by the Partnership in connection with
such withholding obligation, except for interest, penalties or costs
(but not taxes) that are incurred as a result of the gross negligence
or willful misconduct of the Partnership or the General Partner
ARTICLE XII
TRANSFERS OF PARTNERSHIP INTERESTS
12.1 GENERAL PARTNER. The General Partner may not Transfer its
interest in the Partnership without the consent of a Majority-in-Interest of the
Limited Partners unless (i) the Transfer of such interest is to a Xxxxx
Controlled Entity or to an entity that is, directly or indirectly, wholly-owned
by the Company and/or a Xxxxx Controlled Entity, or (ii) the Transfer of such
interest is pursuant to or in connection with a Recapitalization and either (a)
the Recapitalization has been approved by the consent of a Majority-in-Interest
of the Limited Partners, or (b) an appropriate adjustment to the number of OP
Units held by each Partner has been made in accordance with Section 3.2(F).
12.2 LIMITED PARTNER.
A. No Limited Partner or substituted Limited Partner
may Transfer all or any part of its interest in the Partnership, unless
each of the following conditions are met:
(i) The Limited Partner obtains the prior written
consent of the General Partner (which consent may be given or
withheld in the sole discretion of the General Partner),
except for (x) the exchange of OP Units or a Participation
Interest for Common Shares, pursuant to Section 3.2(C) above
or (y) the Transfer of Units or Participation Interests by any
Xxxxx Controlled Entity to any other Xxxxx Controlled Entity.
(ii) Either (x) the Partnership qualifies for the
Private Placement PTP Exemption for the entire taxable year of
such Transfer and for all prior taxable years, (y) the
Transfer is a Private Transfer, or (z) the Partnership is no
longer potentially subject to classification as a publicly
traded partnership, as defined in Section 7704 of the Code, as
determined by the General Partner in its sole discretion.
(iii) Such Transfer is not limited or prohibited by,
and complies with, any restrictions on transferability
contained in the Articles of Incorporation and Bylaws of the
Company and/or any applicable agreement executed by the
transferor.
34
(iv) Such Transfer would not violate the securities
laws of any jurisdiction applicable to the Partnership or the
Partnership Interest to be assigned or transferred;
(v) Such Transfer would not cause the Partnership to
lose its status as a partnership for U.S. federal income tax
purposes or cause the Partnership to become subject to the
Investment Company Act;
(vi) Such Transfer would not cause (A) all or any
portion of the assets of the Partnership (1) to constitute
"plan assets" (under ERISA, the Code or the applicable
provisions of any similar law) of any existing or contemplated
investor, or (2) to be subject to the provisions of ERISA, the
Code or any applicable similar law, or (B) the General Partner
to become a fiduciary with respect to any existing or
contemplated investor, pursuant to ERISA or the applicable
provisions of any similar law, or otherwise.
(vii) Such Transfer would not cause a termination of
the Partnership under Code Section 708.
(viii) The Transferor delivers opinions of counsel
regarding the foregoing matters in form and substance
reasonably acceptable to the General Partner as a condition to
any such Transfer.
(ix) The Transfer would not, in the opinion of the
General Partner, (y) by treating the interest in the
Partnership so transferred as if it had been exchanged for
Common Shares in accordance with Section 3.2(C) above, violate
the limitations on ownership of Common Shares contained in the
Articles of Incorporation and/or Bylaws of the Company, or (z)
violate any State or Federal securities laws.
(x) The Transferee shall have agreed to be bound by
the terms of this Agreement and shall have executed a
counterpart hereof or joinder hereto.
B. A Limited Partner shall notify the General Partner
of any Transfer of beneficial interest or other interest which occurs
without a transfer of record ownership, as well as any pledge or other
collateral transfer.
C. 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. A Limited Partner shall not be
permitted to retire or withdraw from the Partnership except as
expressly permitted by this Agreement.
D. Any Transferee of all or any portion of a Limited
Partner's interest in the Partnership in accordance and compliance with
the provisions of this Section 12.2 shall be entitled to receive
Profits, Losses and distributions hereunder attributable to such
interest acquired by reason of such Transfer, from and after the
effective date of the
35
Transfer of such interest; provided, however, anything in this
Agreement to the contrary notwithstanding, (i) without the prior
written consent of the General Partner, no Transferee shall be
considered a substituted Limited Partner; (ii) the Partnership and the
General Partner shall be entitled to treat the Transferor of such
interest as the absolute owner thereof in all respects, and shall incur
no liability for the allocation of Profits and Losses or distributions
which are made to such Transferor until such time as the written
instrument of Transfer has been received by the General Partner and the
"effective date" of the Transfer has passed, and (c) the General
Partner shall have the right to require any such Transferor to exchange
such Partnership Interest for Common Shares or cash, pursuant to
Section 3.2(C) above. The "effective date" of any Transfer shall be the
last day of the month set forth on the written instrument of Transfer
or such other date consented to in writing by the General Partner as
the "effective date."
12.3 ADMISSION ADJUSTMENTS. The General Partner shall, when
necessary, cause this Agreement to be amended from time to time (and shall cause
Schedule A to be revised), to reflect the admission or withdrawal of Partners,
and the issuance, conversion and redemption of any Preference Units and/or OP
Units (including the corresponding adjustment to Percentage Interests).
12.4 TRANSFERS TO LENDERS. Notwithstanding any other provision
of this Agreement to the contrary, no transfer of any Units or Participation
Interest may be made to a lender to the Partnership or any person who is related
(within the meaning of Regulations Section 1.752-4(b)) to any lender to the
Partnership whose loan constitutes a Nonrecourse Liability, without the consent
of the General Partner, which consent may be given or withheld by the General
Partner in its sole and absolute discretion, provided that as a condition to
such consent being granted the lender will be required to enter into an
arrangement with the Partnership and the General Partner to exchange or redeem
for the Cash Amount or the REIT Shares Amount any Units or Participation
Interest 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 Code Section 752.
ARTICLE XIII
ADMISSION OF NEW PARTNERS
The General Partner shall admit to the Partnership as limited
partners those persons and entities who are not already Partners and who receive
a Participation Interest, OP Units and/or Preference Units in accordance with
the provisions of this Agreement.
ARTICLE XIV
TERMINATION, LIQUIDATION AND DISSOLUTION OF PARTNERSHIP
14.1 TERMINATION EVENTS. The Partnership shall be dissolved
and its affairs wound up in the manner hereinafter provided upon the earliest to
occur of the following events:
A. the sale of all or substantially all of the assets
of the Partnership; or
36
B. subject to Section 14.4 below, the entry of a
final judgment, order or decree of a court of competent jurisdiction
adjudicating as bankrupt either the Partnership or the General Partner,
and the expiration without appeal of the period, if any, allowed by
applicable law to appeal therefrom.
14.2 METHOD OF LIQUIDATION. Upon the happening of any of the
events specified in Section 14.1 above, the General Partner (or if there be no
General Partner, a liquidating trustee selected by a Majority-in-Interest of the
Limited Partners) shall immediately commence to wind up the Partnership's
affairs and shall liquidate the assets of the Partnership as promptly as
possible, unless the General Partner, or the liquidating trustee, shall
determine that an immediate sale of Partnership assets would cause undue loss to
the Partnership, in which event the liquidation may be deferred for a reasonable
time. The Partners shall continue to share distributions, Profits and Losses
during the period of liquidation in the same proportions as before dissolution
(subject to Section 14.2(C) below). The proceeds from liquidation of the
Partnership, including repayment of any debts of Partners to the Partnership,
shall be applied in the following order:
A. Debts of the Partnership, including repayments of
principal and interest on loans and advances made by the General
Partner pursuant to Sections 3.3 and/or 9.7 above; then
B. To the establishment of any reserves deemed
necessary or appropriate by the General Partner, or by the person(s)
winding up the affairs of the Partnership in the event there is no
remaining General Partner of the Partnership, for any contingent or
unforeseen liabilities or obligations of the Partnership. Such reserves
established hereunder shall be held for the purpose of paying any such
contingent or unforeseen liabilities or obligations and, at the
expiration of such period as the General Partner, or such person(s)
deems advisable, the balance of such reserves shall be distributed in
the manner provided hereinafter in this Section 14.2 as though such
reserves had been distributed contemporaneously with the other funds
distributed hereunder; and then
C. To the Partners in accordance with their
respective positive Capital Account balances, after giving effect to
all contributions, distributions and allocations for all periods. In
connection therewith, income, gain and loss of the Partnership (and to
the extent necessary to achieve the purposes hereof, items of gross
income and deduction) with respect to the sale or other disposition of
all or substantially all of the Partnership's assets and/or the
Partnership's operations in connection therewith (whether or not
attributable to the taxable year in which the distribution pursuant to
this Section 14.2(C) is to be made or a preceding taxable year) shall
be allocated among the Partners so that each Partner's Capital Account
shall equal, after taking into account the prior balance (positive or
negative) in such Partner's Capital Account and the effect of such
allocation, the amount that such Partner would be entitled to receive
if the Partnership were to make a distribution to the Partners pursuant
to the provisions of Section 8.2 hereof in an amount equal to the
remaining liquidation proceeds to be distributed under this Section
14.2(C).
37
14.3 DATE OF TERMINATION. The Partnership shall be terminated
when all notes received in connection with any liquidating sales or other
dispositions have been paid or distributed and all of the cash or property
available for application and distribution under Section 14.2 above (including
reserves) shall have been applied and distributed in accordance therewith.
14.4 RECONSTITUTION UPON BANKRUPTCY.
A. Notwithstanding any dissolution of the Partnership
under Section 14.1(D) above, if the Partnership is reconstituted as set
forth in this Section 14.4, then the business of the Partnership shall
be continued with the Partnership's property and the Partnership's
assets shall not be liquidated.
B. If the Partnership is dissolved by reason of the
bankruptcy of the General Partner, a successor general partner may, in
the discretion of the General Partner hereunder with the written
consent of a Majority-in-Interest of the Limited Partners, be admitted
within 90 days after the dissolution, effective as of the date of
dissolution. Upon the admission of such successor general partner,
without any further consent or approval of any other Partner, the
Partnership shall be reconstituted as a successor limited partnership.
C. If the Partnership is dissolved by reason of the
bankruptcy of the Partnership in a proceeding for the reorganization
(and not the liquidation) of the Partnership, then, with the consent of
the Company and a Majority-in-Interest of the Limited Partners, the
Partnership may be reconstituted within 90 days after dissolution,
effective as of the date of dissolution, whereupon the Partnership
shall be reconstituted as a successor limited partnership.
A. The successor limited partnership reconstituted in
accordance with the foregoing provisions of this Section 14.4 shall
continue the business of the Partnership with the Partnership's
property. The Percentage Interests of the Partners in the successor
limited partnership shall be in proportion to their respective
Percentage Interests in the dissolved Partnership. Such successor
limited partnership shall be governed by the terms and provisions of
this Agreement and references in this Agreement to the Partnership or
to the Partners or their rights and obligations shall be understood to
comprehend such successor limited partnership and the Partners thereof
and their rights and obligations.
14.5 DEATH, LEGAL INCOMPETENCY, ETC. OF A LIMITED PARTNER. The
death, legal incompetency, insolvency, dissolution or bankruptcy of a Limited
Partner shall not dissolve or terminate the Partnership. Upon the death or
incapacity of an individual Limited Partner, such individual Limited Partner's
interest in the Partnership shall be transferred either by will, the laws of
intestacy or otherwise to the legal representative or successor of such
individual Limited Partner.
ARTICLE XV
POWER OF ATTORNEY
Each Limited Partner hereby irrevocably constitutes and
appoints the General
38
Partner, with full power of substitution, its true and lawful attorney, for it
and in its name, place and stead and for its use and benefit, to sign, swear to,
acknowledge, file and record:
A. this Agreement, and subject to Article 16 below, amendments
to this Agreement;
B. any certificates, instruments and documents (including
assumed and fictitious name certificates) as may be required by, or may
be appropriate under, the laws of the State of
Delaware, the State of
Texas or any other State or jurisdiction in which the Partnership is
doing or intends to do business, in order to discharge the purposes of
the Partnership or otherwise in connection with the use of the name or
names used by the Partnership;
C. any other instrument which may be required to be filed or
recorded by the Partnership on behalf of the Partners under the laws of
any State or by any governmental agency in order for the Partnership to
conduct its business;
D. any documents which may be required to effect the
continuation of the Partnership, the admission of a substitute or
additional Partner, the dissolution and termination of the Partnership
or the amendment and restatement of Schedule A, provided such
continuation, admission, dissolution and termination or amendment and
restatement of Schedule A, is not in violation of any provision of this
Agreement; and
E. any documents which may be required or desirable to have
the General Partner appointed, and act as, the TMP.
The foregoing grant of authority is a special power of attorney coupled with an
interest, is irrevocable and shall survive the death or incapacity of any
individual Limited Partner, and shall survive the delivery of any assignment by
a Limited Partner of the whole or any portion of his interest in the
Partnership.
ARTICLE XVI
AMENDMENT OF AGREEMENT
A. Each Limited Partner, by his execution of or joinder in
this Agreement, hereby irrevocably appoints the General Partner with
power of substitution, as his true and lawful attorney coupled with an
interest, in his name, place and xxxxx to amend this Agreement in any
respect other than:
(i) to enlarge the obligation of any Partner to make
contributions to the capital of the Partnership; or
(ii) except as otherwise provided for in this
Agreement or as required by law, to modify the allocation of
Profits or Losses or distributions among the Partners as
provided for in Articles 7 and 8 above, respectively; or
(iii) to amend Articles 1 or 12 or Section 9.2; or
39
(iv) to amend this Article 16.
B. With respect to amendments regarding Sections 16(A)(ii) or
16(A)(iii), this Agreement may be amended with the written consent of
the General Partner and those Limited Partners holding not less than
67% of the aggregate of Percentage Interests held by all Limited
Partners. Notwithstanding the foregoing, the terms and conditions of a
particular series of Preference Units may not be changed without the
written consent of the holders of at least 67% of the Preference Units
within the class or series (or such greater percentage as may be
provided for in the applicable Preference Unit Term Sheet).
C. With respect to amendments regarding Section 16(A)(i), this
Agreement may be amended only with the written consent of the General
Partner and any Partner adversely affected by such amendment. With
respect to amendments regarding Section 16(A)(iv) this Agreement may be
amended only with the written consent of all Partners.
In the event this Agreement shall be amended pursuant to this Article
16, the General Partner shall cause this Agreement to be amended to reflect the
amendment.
ARTICLE XVII
MISCELLANEOUS
17.1 NOTICES. Any notice, election or other communication
provided for or required by this Agreement shall be in writing and shall be
deemed to have been given when delivered by hand or by telecopy or other
facsimile transmission, the first business day after sent by overnight courier
(such as Federal Express), or on the second business day after deposit in the
United States Mail, certified or registered, return receipt requested, postage
prepaid, properly addressed to the Partner to whom such notice is intended to be
given at the address for the Partner set forth on Schedule A of this Agreement,
or at such other address as such person may have previously furnished in writing
to the Partnership and each Partner with copies to the General Partner at 0000
Xxxx Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000.
17.2 MODIFICATIONS. Except as otherwise provided in this
Agreement, no change or modification of this Agreement, nor any waiver of any
term or condition in the future, shall be valid or binding upon a Partner unless
such change or modification shall be in writing and signed by such Partner.
17.3 SUCCESSORS AND ASSIGNS. Any person acquiring or claiming
an interest in the Partnership, in any manner whatsoever, shall be subject to
and bound by all of the terms, conditions and obligations of this Agreement to
which his predecessor-in-interest was subject or bound, without regard to
whether such a person has executed a counterpart hereof or any other document
contemplated hereby. No person, including the legal representative, heir or
legatee of a deceased Partner, shall have any rights or obligations greater than
those set forth in this Agreement, and no person shall acquire an interest in
the Partnership or become a Partner thereof except as expressly permitted by and
pursuant to the terms of this Agreement. Subject to the foregoing, and the
provisions of Article 12 above, this Agreement shall be binding upon and
40
inure to the benefit of the Partners and their respective successors, assigns,
heirs, legal representatives, executors and administrators.
17.4 DUPLICATE ORIGINALS. For the convenience of the Partners,
any number of counterparts hereof may be executed, and each such counterpart
shall be deemed to be an original instrument, and all of which taken together
shall constitute one agreement.
17.5 CONSTRUCTION. The titles of the Articles, Sections and
subsections herein have been inserted as a matter of convenience of reference
only and shall not control or affect the meaning or construction of any terms or
provisions herein.
17.6 GOVERNING LAW. This Agreement shall be governed by the
laws of the State of
Delaware. Except to the extent the Act is inconsistent with
the provisions of this Agreement, the provisions of such Act shall apply to the
Partnership.
17.7 OTHER INSTRUMENTS. The parties hereto covenant and agree
that they will execute such other and further instruments and documents as, in
opinion of the General Partner, are or may become necessary or desirable to
effectuate and carry out the Partnership as provided for by this Agreement.
17.8 GENERAL PARTNER WITH INTEREST AS LIMITED PARTNER. If the
General Partner ever has an interest as a Limited Partner in the Partnership,
the General Partner shall, with respect to such interest, enjoy all of the
rights and be subject to all of the obligations and duties of a Limited Partner.
17.9 LEGAL CONSTRUCTION. In case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein
17.10 GENDER. Whenever the context shall so require, all words
herein in any gender shall be deemed to include the masculine, feminine or
neuter gender, all singular words shall include the plural, and all plural words
shall include the singular.
17.11 PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes
any prior understandings or written or oral agreements among the Partners, or
any of them, respecting the within subject matter and contains the entire
understanding amongst the Partners with respect thereto.
17.12 NO THIRD PARTY BENEFICIARY. The terms and provisions of
this Agreement are for the exclusive use and benefit of General Partner and the
Limited Partners and shall not inure to the benefit of any other person or
entity.
17.13 PURCHASE FOR INVESTMENT. Each Partner represents,
warrants and agrees that it has acquired and will hold its interest in the
Partnership for its own account for investment only and not for the purpose of,
or with a view toward, the resale or distribution of all or any part thereof,
nor with a view toward selling or otherwise distributing such interest or any
part thereof
41
at any particular time or under any predetermined circumstances. Each Partner
further represents and warrants that it is a sophisticated investor, able and
accustomed to handling sophisticated financial matters for itself, particularly
real estate investments, and that it has a sufficiently high net worth that it
does not anticipate a need for the funds it has invested in the Partnership in
what it understands to be a highly speculative and illiquid investment.
17.14 WAIVER. No consent or waiver, express or implied, by any
Partner to or of any breach or default by any other Partner in the performance
by such other Partner of its obligations hereunder shall be deemed or construed
to be a consent to or waiver of any other breach or default in the performance
by such other Partner of the same or any other obligations of such Partner
hereunder. Failure on the part of any Partner to complain of any act or failure
to act on the part of any other Partner or to declare any other Partner in
default, irrespective of how long such failure continues, shall not constitute a
waiver by such Partner of its rights hereunder.
17.15 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, which when taken together, shall constitute but one original.
42
IN WITNESS WHEREOF, this Agreement has been executed and sworn to as of
the day and year first above written by the General Partner and the undersigned
Limited Partners.
GENERAL PARTNER:
XXXXX REAL ESTATE INVESTMENT TRUST, INC.,
a Maryland corporation
By:
----------------------------------------
Name:
----------------------------
Title:
---------------------------
LIMITED PARTNERS:
XXXXX REAL ESTATE HOLDINGS LIMITED
PARTNERSHIP
By: JCH Investments, Inc.,
its General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
HALP ASSOCIATES LIMITED PARTNERSHIP
By: Xxxxx Interests Limited Partnership,
its General Partner
By: Xxxxx Holdings, Inc.,
its General Partner
By:
---------------------------
Name:
-------------------------
Title:
------------------------
43
SCHEDULE A
Partners, Capital Accounts and Partnership Interests
AGREED
PREFERENCE CAPITAL PERCENTAGE
NAME AND ADDRESS OF PARTNERS OP UNITS UNITS ACCOUNT INTEREST
---------------------------- ------------- ---------- -------- ----------
General Partner:
Xxxxx Real Estate Investment Trust, Inc. 219.56 $ 2,020 1%
Limited Partners:
Xxxxx Real Estate Holdings Limited Partnership 21,739.13 $200,000 99%
HALP Associates Limited Partnership Participation $ 0 0%
Interest
44
