EXHIBIT 10.3
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
OCWEN PARTNERSHIP, L.P.
TABLE OF CONTENTS
ARTICLE I DEFINED TERMS...................................................1
ARTICLE II PARTNERSHIP CONTINUATION AND IDENTIFICATION.....................6
2.01. Continuation....................................................6
2.02. Name, Office and Registered Agent...............................6
2.03. Partners........................................................6
2.04. Term and Dissolution............................................6
2.05. Filing of Certificate and Perfection of Limited Partnership.....7
2.06. Certificates Describing Partnership Units.......................7
ARTICLE III BUSINESS OF THE PARTNERSHIP.....................................7
ARTICLE IV CAPITAL CONTRIBUTIONS AND ACCOUNTS..............................8
4.01. Capital Contributions...........................................8
4.02. Additional Capital Contributions and Issuances of
Additional Partnership Interests..............................8
4.03. Additional Funding.............................................11
4.04. Capital Accounts...............................................11
4.05. Percentage Interests...........................................11
4.06. No Interest on Contributions...................................11
4.07. Return of Capital Contributions................................11
4.08. No Third-Party Beneficiary.....................................12
ARTICLE V PROFITS AND LOSSES; DISTRIBUTIONS..............................12
5.01. Allocation of Profit and Loss..................................12
5.02. Distribution of Cash...........................................14
5.03. REIT Distribution Requirements.................................15
5.04. Distributions in Kind..........................................15
5.05. Limitations on Return of Capital Contributions.................15
5.06. Distributions Upon Liquidation.................................15
5.07. Substantial Economic Effect....................................15
ARTICLE VI RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER..........16
6.01. Management of the Partnership..................................16
6.02. Delegation of Authority........................................19
6.03. Indemnification and Exculpation of Indemnitees.................19
6.04. Liability of the General Partner...............................20
6.05. Reimbursement of General Partner...............................21
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6.06. Outside Activities.............................................21
6.07. Employment or Retention of Affiliates..........................22
6.08. General Partner Participation..................................22
6.09 Title to Partnership Assets....................................22
6.10. [Intentionally Omitted]........................................22
ARTICLE VII CHANGES IN GENERAL PARTNER.....................................23
7.01. Transfer of the General Partner's Partnership Interest........23
7.02. Admission of a Substitute or Additional General Partner.......24
7.03. Effect of Bankruptcy, Withdrawal, Death
or Dissolution of a General Partner.........................25
7.04. Removal of a General Partner..................................26
ARTICLE VIII RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS................27
8.01. Management of the Partnership.................................27
8.02. Power of Attorney.............................................27
8.03. Limitation on Liability of Limited Partners...................27
8.04. Ownership by Limited Partner of Corporate
General Partner or Affiliate................................27
8.05. Exchange Right................................................27
8.06. Registration..................................................29
ARTICLE IX TRANSFER OF LIMITED PARTNERSHIP INTERESTS.....................30
9.01. Purchase for Investment.......................................30
9.02. Restrictions on Transfer of Limited Partnership Interests.....30
9.03. Admission of a Substitute Limited Partner.....................32
9.04. Rights of Assignees of Partnership Interests..................33
9.05. Effect of Bankruptcy, Death, Incompetence or
Termination of a Limited Partner............................33
9.06. Joint Ownership of Interests..................................33
ARTICLE X BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS....................34
10.01. Books and Records.............................................34
10.02. Custody of Partnership Funds; Bank Accounts...................34
10.03. Fiscal and Taxable Year.......................................34
10.04. Annual Tax Information and Report.............................34
10.05. Tax Matters Partner; Tax Elections;
Special Basis Adjustments...................................35
10.06. Reports to Limited Partners...................................35
ARTICLE XI AMENDMENT OF AGREEMENT; MERGER................................36
ARTICLE XII GENERAL PROVISIONS............................................36
12.01. Notices.......................................................36
12.02. Survival of Rights............................................36
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12.03. Additional Documents..........................................36
12.04. Severability..................................................37
12.05. Entire Agreement..............................................37
12.06. Pronouns and Plurals..........................................37
12.07. Headings......................................................37
12.08. Counterparts..................................................37
12.09. Governing Law................................................ 37
EXHIBITS
EXHIBIT A -- Partners, Capital Contributions and Percentage Interests
EXHIBIT B -- Notice of Exercise of Exchange Right
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SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
OCWEN PARTNERSHIP, L.P.
RECITALS
Ocwen Partnership, L.P. (the "Partnership") was formed as a limited
partnership under the laws of the Commonwealth of Virginia pursuant to a
Certificate of Limited Partnership filed with the State Corporation Commission
of Virginia effective as of March 3, 1997. This Amended and Restated Agreement
of Limited Partnership is entered into this 17th day of February, 1998 among
Ocwen General, Inc., a Virginia corporation (the "General Partner"), and the
Limited Partners set forth on Exhibit A hereto, for the purpose of amending and
restating the Amended and Restated Agreement of Limited Partnership and the
Limited Partnership Agreement (together, the "Initial Agreement").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, of mutual covenants
between the parties hereto, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend the Initial Agreement to read in its entirety as follows:
ARTICLE I
DEFINED TERMS
The following defined terms used in this Agreement shall have the
meanings specified below:
"ACT" means the Virginia Revised Uniform Limited Partnership Act, as it may be
amended from time to time.
"ADDITIONAL FUNDS" has the meaning set forth in Section 4.03 hereof.
"ADDITIONAL SECURITIES" means any additional REIT Shares (other than REIT Shares
issued in connection with an exchange pursuant to Section 8.05 hereof) or
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase REIT Shares, as set forth in Section
4.02(a)(ii).
"ADMINISTRATIVE EXPENSES" means (i) all administrative and operating costs and
expenses incurred by the Partnership, (ii) those administrative costs and
expenses of the General Partner, including any salaries or other payments to
directors, officers or employees of the General Partner, and any accounting and
legal expenses of the General Partner, which expenses, the Partners have agreed,
are expenses of the Partnership and not the General Partner, and (iii) to the
extent not included in clause (ii) above, REIT Expenses; PROVIDED, HOWEVER, that
Administrative Expenses shall not include any administrative costs and expenses
incurred by the Company that are attributable to Properties or partnership
interests in a Subsidiary Partnership that are owned by the Company directly.
"AFFILIATE" means, (i) any Person that, directly or indirectly, controls or is
controlled by or is under common control with such Person, (ii) any other Person
that owns, beneficially, directly or indirectly, 10% or more of the outstanding
capital stock, shares or equity interests of such Person, or (iii) any officer,
director, employee, partner or trustee of such Person or any Person controlling,
controlled by or under common control with such Person (excluding trustees and
persons serving in similar capacities who are not otherwise an Affiliate of such
Person). For the purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly,
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of the power to direct or cause the direction of the management and policies of
such Person, through the ownership of voting securities or partnership interests
or otherwise.
"AGREED VALUE" means the fair market value of a Partner's non-cash Capital
Contribution as of the date of contribution as agreed to by such Partner and the
General Partner. The names and addresses of the Partners, number of Partnership
Units issued to each Partner, and the Agreed Value of non-cash Capital
Contributions as of the date of contribution is set forth on EXHIBIT A.
"AGREEMENT" means this Amended and Restated Agreement of Limited Partnership.
"AMENDED AND RESTATED ARTICLES OF INCORPORATION" means the amended and restated
articles of incorporation of the Company filed with the State Corporation
Commission of Virginia, as amended or restated from time to time.
"CAPITAL ACCOUNT" has the meaning provided in Section 4.04 hereof.
"CAPITAL CONTRIBUTION" means the total amount of cash, cash equivalents, and the
Agreed Value of any Property or other asset contributed or agreed to be
contributed, as the context requires, to the Partnership by each Partner
pursuant to the terms of the Agreement. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner.
"CASH AMOUNT" means an amount of cash per Partnership Unit equal to the Value of
the REIT Shares Amount on the date of receipt by the Company of a Notice of
Exchange.
"CERTIFICATE" means any instrument or document that is required under the laws
of the Commonwealth of Virginia, or any other jurisdiction in which the
Partnership conducts business, to be signed or sworn to by the Partners of the
Partnership (either by themselves or pursuant to the power-of-attorney granted
to the General Partner in Section 8.02 hereof) and filed for recording in the
appropriate public offices in the Commonwealth of Virginia or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the Commonwealth of Virginia or such other
jurisdiction.
"CODE" means the Internal Revenue Code of 1986, as amended, and as hereafter
amended from time to time. Reference to any particular provision of the Code
shall mean that provision in the Code at the date hereof and any successor
provision of the Code.
"COMMISSION" means the U.S. Securities and Exchange Commission.
"COMPANY" means Ocwen Asset Investment Corp., a Virginia corporation organized
as a real estate investment trust.
"CONVERSION FACTOR" means 1.0, PROVIDED THAT, (a) in the event that the Company
(i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or
makes a distribution to all holders of its outstanding REIT Shares in REIT
Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on such date; and (b) in the event that the Company
declares or pays a dividend or other distribution on its outstanding REIT Shares
(other than (A) cash dividends payable in the ordinary course of the Company's
business or (B) dividends payable in REIT Shares that give rise to an adjustment
in the Conversion Factor under subsection (a) hereof) and the Value of the REIT
Shares on the 20th trading day following the record date ("Record Date") for
such dividend or distribution (the "Post-Distribution Value") is less than the
Value of the REIT Shares on the Business Day immediately preceding such Record
Date (the "Pre-Distribution Value"), then the Conversion Factor in effect after
the Record Date shall be adjusted by multiplying the Conversion Factor in effect
prior to the Record Date by a fraction, the numerator of which is the
Pre-Distribution Value and the denominator of which is the Post-Distribution
Value, PROVIDED, HOWEVER, that no adjustment shall be made if (x) with respect
to any cash dividend or distribution with respect to REIT shares, the
Partnership distributes with respect to each Partnership Unit an amount equal to
the amount of such dividend or distribution multiplied by the Conversion Factor
or (y) with respect to any dividend or
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distribution of securities or property other than cash, the Partnership
distributes with respect to each Partnership Unit an amount of securities or
other property equal to the amount distributed with respect to each REIT share
multiplied by the Conversion Ratio or a partnership interest or other security
readily convertible into such securities or other property. Any adjustment to
the Conversion Factor shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such event;
PROVIDED, HOWEVER, that if the Company receives a Notice of Exchange after the
record date, but prior to the effective date of such dividend, distribution,
subdivision or combination, the Conversion Factor shall be determined as if the
Company had received the Notice of Exchange immediately prior to the record date
for such dividend, distribution, subdivision or combination.
"EVENT OF BANKRUPTCY" as to any Person means the filing of a petition for relief
as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978 or
similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, PROVIDED that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.
"EXCHANGE AMOUNT" means either the Cash Amount or the REIT Shares Amount, as
selected by the General Partner or the Company in its sole and absolute
discretion pursuant to Section 8.05(b) hereof.
"EXCHANGE RIGHT" has the meaning provided in Section 8.05(a) hereof.
"EXCHANGING PARTNER" has the meaning provided in Section 8.05(a) hereof.
"GENERAL PARTNER" means Ocwen General, Inc., a Virginia corporation, and any
Person who becomes a substitute or additional General Partner as provided
herein, and any of their successors as General Partner.
"GENERAL PARTNERSHIP INTEREST" means a Partnership Interest held by the General
Partner that is a general partnership interest.
"INDEMNITEE" means (i) any Person made a party to a proceeding by reason of its
status as the Company, the General Partner or a director, officer or employee of
the Company, the Partnership or the General Partner, and (ii) such other Persons
(including Affiliates of the Company, General Partner or the Partnership) as the
General Partner may designate from time to time, in its sole and absolute
discretion.
"INDEPENDENT DIRECTOR" means a director of the Company who is not an officer or
employee of the Company, any Affiliate of an officer or employee or any
Affiliate of (i) any lessee of any property of the Company or any Subsidiary of
the Company, (ii) any Subsidiary of the Company, or (iii) any partnership that
is an Affiliate of the Company.
"LIMITED PARTNER" means any Person named as a Limited Partner on EXHIBIT A
attached hereto, and any Person who becomes a Substitute or Additional Limited
Partner, in such Person's capacity as a Limited Partner in the Partnership.
"LIMITED PARTNERSHIP INTEREST" means the ownership interest of a Limited Partner
in the Partnership at any particular time, including the right of such Limited
Partner to any and all benefits to which such Limited Partner may be entitled as
provided in this Agreement and in the Act, together with the obligations of such
Limited Partner to comply with all the provisions of this Agreement and of such
Act.
"LOSS" has the meaning provided in Section 5.01(f) hereof.
"NOTICE OF EXCHANGE" means the Notice of Exercise of Exchange Right
substantially in the form attached as EXHIBIT B hereto.
"NASDAQ" means the Nasdaq Stock Market.
"OFFER" has the meaning set forth in Section 7.01(c) hereof.
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"OFFERING" means the initial offer and sale by the Company and the purchase by
the Underwriters (as defined in the Prospectus) of REIT Shares for sale to the
public.
"ORIGINAL LIMITED PARTNER" means Ocwen Limited, Inc., a Virginia corporation.
"PARTNER" means any General Partner or Limited Partner.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning set forth in Regulations
Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt Minimum Gain
shall be determined in accordance with Regulations Section 1.704-2(i)(5).
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership held by
either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations Section
1.704-2(d). In accordance with Regulations Section 1.704-2(d), the amount of
Partnership Minimum Gain is determined by first computing, for each Partnership
nonrecourse liability, any gain the Partnership would realize if it disposed of
the property subject to that liability for no consideration other than full
satisfaction of the liability, and then aggregating the separately computed
gains. A Partner's share of Partnership Minimum Gain shall be determined in
accordance with Regulations Section 1.704-2(g)(1).
"PARTNERSHIP RECORD DATE" means the record date established by the General
Partner for the distribution of cash pursuant to Section 5.02 hereof, which
record date shall be the same as the record date established by the Company for
a distribution to its shareholders of some or all of its portion of such
distribution.
"PARTNERSHIP UNIT" means a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder. The allocation of Partnership Units
among the Partners shall be as set forth on EXHIBIT A, as may be amended from
time to time.
"PERCENTAGE INTEREST" means the percentage ownership interest in the Partnership
of each Partner, as determined by dividing the Partnership Units owned by a
Partner by the total number of Partnership Units then outstanding. The
Percentage Interest of each Partner shall be as set forth on EXHIBIT A, as may
be amended from time to time.
"PERSON" means any individual, partnership, corporation, joint venture, trust or
other entity.
"PROFIT" has the meaning provided in Section 5.01(f) hereof.
"PROPERTY" means any office or industrial property or other investment in which
the Partnership holds an ownership interest.
"PROSPECTUS" means the final prospectus delivered to purchasers of REIT Shares
in the Offering.
"REGULATIONS" means the Federal Income Tax Regulations issued under the Code, as
amended and as hereafter amended from time to time. Reference to any particular
provision of the Regulations shall mean that provision of the Regulations on the
date hereof and any successor provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through 860 of
the Code.
"REIT EXPENSES" means (i) costs and expenses relating to the formation and
continuity of existence and operation of the Company and any Subsidiaries
thereof, including Ocwen General, Inc. (which Subsidiaries shall, for purposes
hereof, be included within the definition of Company), including taxes, fees and
assessments associated therewith, any and all costs, expenses or fees payable to
any director, officer, or employee of the Company, (ii) costs and expenses
relating to any public offering and registration of securities by the Company
and all statements, reports, fees and expenses incidental thereto, including,
without limitation, underwriting discounts and selling commissions applicable to
any such offering of securities, and any costs and expenses associated with any
claims made by any holders of such securities or any underwriters or placement
agents thereof, (iii) costs and expenses associated with any repurchase of any
securities by the Company, (iv) costs and expenses associated with the
preparation and filing of any periodic or other reports and communications by
the Company under federal, state or local laws or regulations, including filings
with the Commission, (v) costs and expenses associated with compliance by the
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Company with laws, rules and regulations promulgated by any regulatory body,
including the Commission and any securities exchange, (vi) costs and expenses
associated with any 401(k) plan, incentive plan, bonus plan or other plan
providing for compensation for the employees of the Company, (vii) costs and
expenses incurred by the Company relating to any issuing or redemption of
Partnership Interests, and (viii) all other operating or administrative costs of
the Company incurred in the ordinary course of its business on behalf of or in
connection with the Partnership.
"REIT SHARE" means a common share of beneficial interest in the Company (or
successor Entity, as the case may be).
"REIT SHARES AMOUNT" means a number of REIT Shares equal to the product of the
number of Partnership Units offered for exchange by an Exchanging Partner,
multiplied by the Conversion Factor as adjusted to and including the Specified
Exchange Date; PROVIDED THAT in the event the Company issues to all holders of
REIT Shares rights, options, warrants or convertible or exchangeable securities
entitling the shareholders to subscribe for or purchase REIT Shares, or any
other securities or property (collectively, the "rights"), and the rights have
not expired at the Specified Exchange Date, then the REIT Shares Amount shall
also include the rights issuable to a holder of the REIT Shares Amount of REIT
Shares on the record date fixed for purposes of determining the holders of REIT
Shares entitled to rights.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICE" means the Internal Revenue Service.
"SPECIFIED EXCHANGE DATE" means the first business day of the month that is at
least 60 business days after the receipt by the Company of the Notice of
Exchange.
"SHARE INCENTIVE PLANS" means the Ocwen Asset Investment Corp. non-qualified
stock option plan, as amended from time to time, or any stock incentive plan
adopted in the future by the Company.
"SUBSIDIARY" means, with respect to any Person, any corporation or other entity
of which a majority of (i) the voting power of the voting equity securities or
(ii) the outstanding equity interests is owned, directly or indirectly, by such
Person.
"SUBSIDIARY PARTNERSHIP" means any partnership of which the partnership
interests therein are owned by the Company or a wholly-owned subsidiary of the
Company.
"SUBSTITUTE LIMITED PARTNER" means any Person admitted to the Partnership as a
Limited Partner pursuant to Section 9.03 hereof.
"SURVIVING GENERAL PARTNER" has the meaning set forth in Section 7.01(d) hereof.
"TRANSACTION" has the meaning set forth in Section 7.01(c) hereof.
"TRANSFER" has the meaning set forth in Section 9.02(a) hereof.
"VALUE" means, with respect to any security, the average of the daily market
price of such security for the ten consecutive trading days immediately
preceding the date of such valuation. The market price for each such trading day
shall be: (i) if security is listed or admitted to trading on any securities
exchange or NASDAQ, the sale price, regular way, on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, on such day, (ii) if security is not listed or admitted to trading
on any securities exchange or NASDAQ takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reliable quotation
source designated by the Company, or (iii) if security is not listed or admitted
to trading on any securities exchange or NASDAQ and no such last reported sale
price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the Company, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than ten days prior to the date in question)
for which prices have been so reported; PROVIDED THAT if there are no bid and
asked prices reported during the ten days prior to the date in question, the
value of the security shall be determined by the Company acting in good faith on
the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate. In the event the security includes any
additional rights, then the value of such rights shall be determined by the
Company acting in
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good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate.
ARTICLE II
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01. CONTINUATION.
The Partners hereby agree to continue the Partnership pursuant to the
Act and upon the terms and conditions set forth in this Agreement.
2.02. NAME, OFFICE AND REGISTERED AGENT.
The name of the Partnership is Ocwen Partnership, L.P. The specified
office and place of business of the Partnership shall be 0000 Xxxx Xxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxx Xxxxx, Xxxxxxx 00000. The General Partner may
at any time change the location of such office, provided the General Partner
gives notice to the Partners of any such change. The initial registered agent is
Xxxxxx X. Xxxxxx, III, who is a resident of Virginia and a member of the
Virginia State Bar, and whose business address is Xxxxxxxxxx Xxxxx, 000 Xxxx
Xxxx Xxxxxx in the City of Richmond. The sole duty of the registered agent as
such is to forward to the Partnership any notice that is served on him as
registered agent.
2.03. PARTNERS.
The General Partner of the Partnership is Ocwen General, Inc., a
Virginia corporation. Its principal place of business is the same as that of the
Partnership.
The Limited Partners are those Persons identified as Limited Partners
on Exhibit A hereto, as amended from time to time.
2.04. TERM AND DISSOLUTION.
The term of the Partnership shall continue in full force and effect
until December 31, 2050, except that the Partnership shall be dissolved upon the
first to occur of any of the following events:
The occurrence of an Event of Bankruptcy as to a
General Partner or the dissolution, death, removal or
withdrawal of a General Partner unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof;
PROVIDED THAT if a General Partner is on the date of such
occurrence a partnership, the dissolution of such General
Partner as a result of the dissolution, death, withdrawal,
removal or Event of Bankruptcy of a partner in such
partnership shall not be an event of dissolution of the
Partnership if the business of such General Partner is
continued by the remaining partner or partners, either alone
or with additional partners, and such General Partner and such
partners comply with any other applicable requirements of this
Agreement;
The passage of 90 days after the sale or other
disposition of all or substantially all of the assets of the
Partnership (PROVIDED THAT if the Partnership receives an
installment obligation as consideration for such sale or other
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disposition, the Partnership shall continue, unless sooner
dissolved under the provisions of this Agreement, until such
time as such note or notes are paid in full);
The exchange of all Limited Partnership Interests
(other than any of such interests held by the General Partner
or Affiliates of the General Partner); or
The election by the General Partner that the Partnership should be
dissolved.
Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof), the General
Partner (or its trustee, receiver, successor or legal representative) shall
amend or cancel the Certificate and liquidate the Partnership's assets and apply
and distribute the proceeds thereof in accordance with Section 5.06 hereof.
Notwithstanding the foregoing, the liquidating General Partner may either (i)
defer liquidation of, or withhold from distribution for a reasonable time, any
assets of the Partnership (including those necessary to satisfy the
Partnership's debts and obligations), or (ii) distribute the assets to the
Partners in kind.
2.05. FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP.
The General Partner shall execute, acknowledge, record and file at the
expense of the Partnership, the Certificate and any and all amendments thereto
and all requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each state
or other jurisdiction in which the Partnership conducts business.
2.06. CERTIFICATES DESCRIBING PARTNERSHIP UNITS.
At the request of a Limited Partner, the General Partner, at its
option, may issue a certificate summarizing the terms of such Limited Partner's
interest in the Partnership, including the number of Partnership Units owned and
the Percentage Interest represented by such Partnership Units as of the date of
such certificate. Any such certificate (i) shall be in form and substance as
approved by the General Partner, (ii) shall not be negotiable and (iii) shall
bear a legend to the following effect:
This certificate is not negotiable. The Partnership
Units represented by this certificate are governed by
and transferable only in accordance with the provisions
of the Agreement of Limited Partnership of Ocwen
Partnership, L.P., as amended from time to time.
ARTICLE III
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, PROVIDED, HOWEVER, that such
business shall be limited to and conducted in such a manner as to permit the
Company at all times to qualify as a REIT, unless the Company otherwise ceases
to qualify as a REIT, (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged in any of the foregoing and (iii) to do anything
necessary or incidental to the foregoing. In connection with the foregoing,
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and without limiting the Company's right in its sole and absolute discretion to
cease qualifying as a REIT, the Partners acknowledge that the Company's current
status as a REIT and the avoidance of income and excise taxes on the Company
inures to the benefit of all the Partners and not solely to the Company.
Notwithstanding the foregoing, the Limited Partners agree that the Company may
terminate its status as a REIT under the Code at any time to the full extent
permitted under its Amended and Restated Articles of Incorporation. The General
Partner shall also be empowered to do any and all acts and things necessary or
prudent to ensure that the Partnership will not be classified as a "publicly
traded partnership" for purposes of Section 7704 of the Code.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01. CAPITAL CONTRIBUTIONS.
The General Partner and the Limited Partners have made capital
contributions to the Partnership in exchange for the Partnership Interests set
forth opposite their names on Exhibit A, as amended from time to time.
4.02. ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS.
Except as provided in this Section 4.02 or in Section 4.03, the
Partners shall have no right or obligation to make any additional Capital
Contributions or loans to the Partnership. The General Partner may contribute
additional capital to the Partnership, from time to time, and receive additional
Partnership Interests in respect thereof, in the manner contemplated in this
Section 4.02.
Issuances of Additional Partnership Interests.
GENERAL. The General Partner is hereby authorized to
cause the Partnership to issue such additional Partnership
Interests in the form of Partnership Units for any Partnership
purpose at any time or from time to time, to the Partners
(including the General Partner and the Company) or to other
Persons for such consideration and on such terms and
conditions as shall be established by the General Partner in
its sole and absolute discretion, all without the approval of
any Limited Partners. Any additional Partnership Interests
issued thereby may be issued in one or more classes, or one or
more series of any of such classes, with such designations,
preferences and relative, participating, optional or other
special rights, powers and duties, including rights, powers
and duties senior to Limited Partnership Interests, all as
shall be determined by the General Partner in its sole and
absolute discretion and without the approval of any Limited
Partner, subject to Virginia law, including, without
limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or
series of Partnership Interests; (ii) the right of each such
class or series of Partnership Interests to share in
Partnership distributions; and (iii) the rights of each such
class or series of Partnership Interests upon dissolution and
liquidation of the Partnership; PROVIDED, HOWEVER, that no
additional Partnership Interests shall be issued to the
General Partner or the Company unless:
(A) the additional Partnership Interests are
issued in connection with an issuance of REIT Shares
of or other interests in the Company,
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which shares or interests have designations,
preferences and other rights, all such that the
economic interests are substantially similar to the
designations, preferences and other rights of the
additional Partnership Interests issued to the
General Partner or the Company by the Partnership in
accordance with this Section 4.02 and (B) the General
Partner or the Company shall make a Capital
Contribution to the Partnership in an amount equal to
the proceeds raised in connection with the issuance
of such shares of stock of or other interests in the
Company;
the additional Partnership Interests are
issued in exchange for property owned by the Company
or the General Partner with a fair market value, as
determined by the General Partner, in good faith,
equal to the value of the Partnership Interests; or
the additional Partnership Interests are
issued to all Partners in proportion to their
respective Percentage Interests.
Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue Partnership Units for less than fair market
value, so long as the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the Partnership.
UPON ISSUANCE OF ADDITIONAL SECURITIES. The Company
shall not issue any additional REIT Shares (other than REIT
Shares issued in connection with an exchange pursuant to
Section 8.05 hereof) or rights, options, warrants or
convertible or exchangeable securities containing the right to
subscribe for or purchase REIT Shares (collectively,
"Additional Securities") other than to all holders of REIT
Shares, unless (A) the General Partner shall cause the
Partnership to issue to the General Partner and the Company,
as the Company may designate, Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of
the Partnership having designations, preferences and other
rights, all such that the economic interests are substantially
similar to those of the Additional Securities, and (B) the
Company contributes the proceeds from the issuance of such
Additional Securities and from any exercise of rights
contained in such Additional Securities, directly and through
the General Partner, to the Partnership; PROVIDED, HOWEVER,
that the Company is allowed to issue Additional Securities in
connection with an acquisition of a property to be held
directly by the Company, but if and only if, such direct
acquisition and issuance of Additional Securities have been
approved and determined to be in the best interests of the
Company and the Partnership by a majority of the Independent
Directors. Without limiting the foregoing, the Company is
expressly authorized to issue Additional Securities for less
than fair market value, and to cause the Partnership to issue
to the General Partner and the Company corresponding
Partnership Interests, so long as (x) the General Partner
concludes in good faith that such issuance is in the best
interests of the General Partner, the Company and the
Partnership, including
9
without limitation, the issuance of REIT Shares and
corresponding Partnership Units pursuant to an employee share
purchase plan providing for employee purchases of REIT Shares
at a discount from fair market value or employee stock options
that have an exercise price that is less than the fair market
value of the REIT Shares, either at the time of issuance or at
the time of exercise, and (y) the Company contributes all
proceeds from such issuance, directly or through the General
Partner, to the Partnership. For example, in the event the
Company issues REIT Shares for a cash purchase price and
contributes all of the proceeds of such issuance, directly and
through the General Partner, to the Partnership as required
hereunder, the General Partner and the Company, as the Company
may so designate, shall be issued a number of additional
Partnership Units equal to the product of (A) the number of
such REIT Shares issued by the Company, the proceeds of which
were so contributed, multiplied by (B) a fraction, the
numerator of which is 100%, and the denominator of which is
the Conversion Factor in effect on the date of such
contribution.
CERTAIN DEEMED CONTRIBUTIONS OF PROCEEDS OF ISSUANCE OF REIT
SHARES. In connection with any and all issuances of REIT Shares, the Company and
the General Partner, as the Company determines, shall make Capital Contributions
to the Partnership of the proceeds therefrom, PROVIDED THAT if the proceeds
actually received and contributed by the Company, directly or through the
General Partner, are less than the gross proceeds of such issuance as a result
of any underwriter's discount or other expenses paid or incurred in connection
with such issuance, then the General Partner and the Company shall be deemed to
have made Capital Contributions to the Partnership in the aggregate amount of
the gross proceeds of such issuance and the Partnership shall be deemed
simultaneously to have paid such offering expenses in accordance with Section
6.05 hereof and in connection with the required issuance of additional
Partnership Units to the General Partner and the Company for such Capital
Contributions pursuant to Section 4.02(a) hereof.
In the event the Company purchases any REIT Shares or other
shares of any class of the Company's capital stock, then the General Partner
shall cause the Partnership to purchase a number of Partnership Units held,
directly or indirectly, by the Company, as the Company may designate, equal to
the quotient of the number of such REIT Shares or such shares of the Company's
capital stock divided by the Conversion Factor and on the same terms that the
Company exchanged such REIT Shares or such shares of the Company's capital
stock. Moreover, if the Company makes a cash tender offer or other offer to
acquire REIT Shares or other shares of any class of the Company's capital stock,
then the General Partner shall cause the Partnership to make a corresponding
offer to the Company, or the direct or indirect subsidiaries through which the
Company holds Partnership Units, as the Company may designate, to acquire an
equal number of Partnership Units held, directly or indirectly, by the Company.
In the event any REIT Shares or other shares of any class of the Company's
capital stock are acquired by the Company pursuant to such tender or other
offer, the Partnership shall purchase an equivalent number of Partnership Units
held, directly or indirectly, by the Company, as the Company may designate, for
an equivalent purchase price based on the application of the Conversion Factor.
Lastly, if the Company shall repurchase any REIT Shares or any shares of any
class of the
10
Company's capital stock pursuant to this section, all costs incurred in
connection with such repurchase shall be reimbursed to the General Partner by
the Partnership pursuant to Section 6.05 hereof.
4.03. ADDITIONAL FUNDING.
If the General Partner determines that it is in the best interests of
the Partnership to provide for additional Partnership funds ("Additional Funds")
for any Partnership purpose, the General Partner may (i) cause the Partnership
to obtain such funds from outside borrowings, or (ii) elect to have the General
Partner or the Company provide such Additional Funds to the Partnership through
loans or otherwise.
4.04. CAPITAL ACCOUNTS.
A separate capital account (a "Capital Account") shall be established
and maintained for each Partner in accordance with Regulations Section
1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires an additional
Partnership Interest in exchange for more than a DE MINIMIS Capital
Contribution, (ii) the Partnership distributes to a Partner more than a DE
MINIMIS amount of Partnership property as consideration for a Partnership
Interest, or (iii) the Partnership is liquidated within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue the
property of the Partnership to its fair market value (as determined by the
General Partner, in its sole and absolute discretion, and taking into account
Section 7701(g) of the Code) in accordance with Regulations Section
1.704-1(b)(2)(iv)(f). When the Partnership's property is revalued by the General
Partner, the Capital Accounts of the Partners shall be adjusted in accordance
with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which generally require
such Capital Accounts to be adjusted to reflect the manner in which the
unrealized gain or loss inherent in such property (that has not been reflected
in the Capital Accounts previously) would be allocated among the Partners
pursuant to Section 5.01 if there were a taxable disposition of such property
for its fair market value (as determined by the General Partner, in its sole and
absolute discretion, and taking into account Section 7701(g) of the Code) on the
date of the revaluation.
4.05. PERCENTAGE INTERESTS.
If the number of outstanding Partnership Units increases or decreases
during a taxable year, each Partner's Percentage Interest shall be adjusted by
the General Partner effective as of the effective date of each such increase or
decrease to a percentage equal to the number of Partnership Units held by such
Partner divided by the aggregate number of Partnership Units outstanding after
giving effect to such increase or decrease. If the Partners' Percentage
Interests are adjusted pursuant to this Section 4.05, the Profits and Losses for
the taxable year in which the adjustment occurs shall be allocated between the
part of the year ending on the day when the Partnership's property is revalued
by the General Partner and the part of the year beginning on the following day
either (i) as if the taxable year had ended on the date of the adjustment or
(ii) based on the number of days in each part. The General Partner, in its sole
and absolute discretion, shall determine which method shall be used to allocate
Profits and Losses for the taxable year in which the adjustment occurs. The
allocation of Profits and Losses for the earlier part of the year shall be based
on the Percentage Interests before adjustment, and the allocation of Profits and
Losses for the later part shall be based on the adjusted Percentage Interests.
4.06. NO INTEREST ON CONTRIBUTIONS.
No Partner shall be entitled to interest on its Capital Contribution.
4.07. RETURN OF CAPITAL CONTRIBUTIONS.
No Partner shall be entitled to withdraw any part of its Capital
Contribution or its Capital Account or to receive any distribution from the
Partnership, except as specifically provided in this Agreement. Except as
otherwise provided herein, there shall be no obligation to return to any Partner
or withdrawn Partner any part of such Partner's Capital Contribution for so long
as the Partnership continues in existence.
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4.08. NO THIRD-PARTY BENEFICIARY.
No creditor or other third party having dealings with the Partnership
shall have the right to enforce the right or obligation of any Partner to make
Capital Contributions or loans or to pursue any other right or remedy hereunder
or at law or in equity, it being understood and agreed that the provisions of
this Agreement shall be solely for the benefit of, and may be enforced solely
by, the parties hereto and their respective successors and assigns. None of the
rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor may such
rights or obligations be sold, transferred or assigned by the Partnership or
pledged or encumbered by the Partnership to secure any debt or other obligation
of the Partnership or of any of the Partners. In addition, it is the intent of
the parties hereto that no distribution to any Limited Partner shall be deemed a
return of money or other property in violation of the Act. However, if any court
of competent jurisdiction holds that, notwithstanding the provisions of this
Agreement, any Limited Partner is obligated to return such money or property,
such obligation shall be the obligation of such Limited Partner and not of the
General Partner. Without limiting the generality of the foregoing, a deficit
Capital Account of a Partner shall not be deemed to be a liability of such
Partner nor an asset or property of the Partnership.
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS
5.01. ALLOCATION OF PROFIT AND LOSS.
GENERAL. Profit and Loss of the Partnership for each fiscal year of the
Partnership shall be allocated among the Partners in accordance with their
respective Percentage Interests.
MINIMUM GAIN CHARGEBACK. Notwithstanding any provision to the contrary,
(i) any expense of the Partnership that is a "nonrecourse deduction" within the
meaning of Regulations Section 1.704-2(b)(1) shall be allocated in accordance
with the Partners' respective Percentage Interests, (ii) any expense of the
Partnership that is a "partner nonrecourse deduction" within the meaning of
Regulations Section 1.704-2(i)(2) shall be allocated to the Partner that bears
the "economic risk of loss" of such deduction in accordance with Regulations
Section 1.704-2(i)(1), (iii) if there is a net decrease in Partnership Minimum
Gain within the meaning of Regulations Section 1.704-2(f)(1) for any Partnership
taxable year, then, subject to the exceptions set forth in Regulations Section
1.704-2(f)(2),(3), (4) and (5), items of gain and income shall be allocated
among the Partners in accordance with Regulations Section 1.704-2(f) and the
ordering rules contained in Regulations Section 1.704-2(j), and (iv) if there is
a net decrease in Partner Nonrecourse Debt Minimum Gain within the meaning of
Regulations Section 1.704-2(i)(4) for any Partnership taxable year, then,
subject to the exceptions set forth in Regulations Section 1.704(2)(g), items of
gain and income shall be allocated among the Partners in accordance with
Regulations Section 1.704-2(i)(4) and the ordering rules contained in
Regulations Section 1.704-2(j). A Partner's "interest in partnership profits"
for purposes of determining its share of the nonrecourse liabilities of the
Partnership within the meaning of Regulations Section 1.752-3(a)(3) shall be
such Partner's Percentage Interest.
QUALIFIED INCOME OFFSET. If a Partner receives in any taxable year an
adjustment, allocation, or distribution described in subparagraphs (4), (5), or
(6) of Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a
deficit balance in such Partner's Capital Account
12
that exceeds the sum of such Partner's shares of Partnership Minimum Gain and
Partner Nonrecourse Debt Minimum Gain, as determined in accordance with
Regulations Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated
specially for such taxable year (and, if necessary, later taxable years) items
of income and gain in an amount and manner sufficient to eliminate such deficit
Capital Account balance as quickly as possible as provided in Regulations
Section 1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of income or
gain to a Partner in accordance with this Section 5.01(c), to the extent
permitted by Regulations Section 1.704-1(b), items of expense or loss shall be
allocated to such Partner in an amount necessary to offset the income or gain
previously allocated to such Partner under this Section 5.01(c).
CAPITAL ACCOUNT DEFICITS. Loss shall not be allocated to a Limited
Partner to the extent that such allocation would cause a deficit in such
Partner's Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner's shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(d), to the extent permitted by
Regulations Section 1.704-1(b), Profit shall be allocated to such Partner in an
amount necessary to offset the Loss previously allocated to each Partner under
this Section 5.01(d).
ALLOCATIONS BETWEEN TRANSFEROR AND TRANSFEREE. If a Partner transfers
any part or all of its Partnership Interest, the distributive shares of the
various items of Profit and Loss allocable among the Partners during such fiscal
year of the Partnership shall be allocated between the transferor and the
transferee Partner either (i) as if the Partnership's fiscal year had ended on
the date of the transfer, or (ii) based on the number of days of such fiscal
year that each was a Partner without regard to the results of Partnership
activities in the respective portions of such fiscal year in which the
transferor and the transferee were Partners. The General Partner, in its sole
and absolute discretion, shall determine which method shall be used to allocate
the distributive shares of the various items of Profit and Loss between the
transferor and the transferee Partner.
DEFINITION OF PROFIT AND LOSS. "Profit" and "Loss" and any items of
income, gain, expense, or loss referred to in this Agreement shall be determined
in accordance with federal income tax accounting principles, as modified by
Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not
include items of income, gain and expense that are specially allocated pursuant
to Sections 5.01(b), 5.01(c), or 5.01(d). All allocations of income, Profit,
gain, Loss, and expense (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set forth in this
Section 5.01, except as otherwise required by Section 704(c) of the Code and
Regulations Section 1.704-1(b)(4). The General Partner shall have the authority
to elect the method to be used by the Partnership for allocating items of
income, gain, and expense as required by Section 704(c) of the Code including a
method that may result in a Partner receiving a disproportionately larger share
of the Partnership tax depreciation deductions, and such election shall be
binding on all Partners.
13
5.02. DISTRIBUTION OF CASH.
The Partnership shall distribute cash on a quarterly (or, at the
election of the General Partner, more frequent) basis, in an amount determined
by the General Partner in its sole and absolute discretion, to the Partners who
are Partners on the Partnership Record Date with respect to such quarter (or
other distribution period) in accordance with their respective Percentage
Interests on the Partnership Record Date; PROVIDED, HOWEVER, that if a new or
existing Partner acquires an additional Partnership Interest in exchange for a
Capital Contribution on any date other than a Partnership Record Date, the cash
distribution attributable to such additional Partnership Interest relating to
the Partnership Record Date next following the issuance of such additional
Partnership Interest shall be reduced in the proportion to (i) the number of
days that such additional Partnership Interest is held by such Partner bears to
(ii) the number of days between such Partnership Record Date and the immediately
preceding Partnership Record Date.
Notwithstanding any other provision of this Agreement, the General
Partner is authorized to take any action that it determines to be necessary or
appropriate to cause the Partnership to comply with any withholding requirements
established under the Code or any other federal, state or local law including,
without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
To the extent that the Partnership is required to withhold and pay over to any
taxing authority any amount resulting from the allocation or distribution of
income to the Partner or assignee (including by reason of Section 1446 of the
Code), either (i) if the actual amount to be distributed to the Partner equals
or exceeds the amount required to be withheld by the Partnership, the amount
withheld shall be treated as a distribution of cash in the amount of such
withholding to such Partner, or (ii) if the actual amount to be distributed to
the Partner is less than the amount required to be withheld by the Partnership,
the amount required to be withheld shall be treated as a loan (a "Partnership
Loan") from the Partnership to the Partner on the day the Partnership pays over
such amount to a taxing authority. A Partnership Loan shall be repaid through
withholding by the Partnership with respect to subsequent distributions to the
applicable Partner or assignee. In the event that a Limited Partner (a
"Defaulting Limited Partner") fails to pay any amount owed to the Partnership
with respect to the Partnership Loan within 15 days after demand for payment
thereof is made by the Partnership on the Limited Partner, the General Partner,
in its sole and absolute discretion, may elect to make the payment to the
Partnership on behalf of such Defaulting Limited Partner. In such event, on the
date of payment, the General Partner shall be deemed to have extended a loan (a
"General Partner Loan") to the Defaulting Limited Partner in the amount of the
payment made by the General Partner and shall succeed to all rights and remedies
of the Partnership against the Defaulting Limited Partner as to that amount.
Without limitation, the General Partner shall have the right to receive any
distributions that otherwise would be made by the Partnership to the Defaulting
Limited Partner until such time as the General Partner Loan has been paid in
full, and any such distributions so received by the General Partner shall be
treated as having been received by the Defaulting Limited Partner and
immediately paid to the General Partner.
Any amounts treated as a Partnership Loan or a General Partner Loan
pursuant to this Section 5.02(b) shall bear interest at the lesser of (i) the
base rate on corporate loans at large United States money center commercial
banks, as published from time to time in THE WALL STREET JOURNAL, or (ii) the
maximum lawful rate of interest on such
14
obligation, such interest to accrue from the date the Partnership or the General
Partner, as applicable, is deemed to extend the loan until such loan is repaid
in full.
In no event may a Partner receive a distribution of cash with respect
to a Partnership Unit if such Partner is entitled to receive a cash dividend as
the holder of record of a REIT Share for which all or part of such Partnership
Unit has been or will be exchanged.
5.03. REIT DISTRIBUTION REQUIREMENTS.
The General Partner shall use its reasonable efforts to cause the
Partnership to distribute amounts sufficient to enable the Company to pay
shareholder dividends that will allow the Company to (i) meet its distribution
requirement for qualification as a REIT as set forth in Section 857 of the Code
and (ii) avoid any federal income or excise tax liability imposed by the Code.
5.04. DISTRIBUTIONS IN KIND.
Subject to Subsection (b) hereof, no Partner shall be entitled to
demand property other than cash in connection with any distributions by the
Partnership.
If the Company decides to securitize mortgage loans and/or leases of
real estate through the issuance of collateralized mortgage obligations, each of
the General Partner and the Original Limited Partner has the right to redeem a
portion of its Partnership Interest in exchange for the mortgage loans and/or
leases to be securitized. The portion of a Partnership Interest redeemed
pursuant to this Section will be determined based on the fair market value of
the mortgage loans and/or leases distributed to the General Partner or Original
Limited Partner. Such fair market value will be determined by the General
Partner, but will be subject to the review of the Independent Directors.
5.05. LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS.
Notwithstanding any of the provisions of this Article V, no Partner
shall have the right to receive and the General Partner shall not have the right
to make, a distribution that includes a return of all or part of a Partner's
Capital Contributions, unless after giving effect to the return of a Capital
Contribution, the sum of all Partnership liabilities, other than the liabilities
to a Partner for the return of his Capital Contribution, does not exceed the
fair market value of the Partnership's assets.
5.06. DISTRIBUTIONS UPON LIQUIDATION.
Upon liquidation of the Partnership, after payment of, or adequate
provision for, debts and obligations of the Partnership, including any Partner
loans, any remaining assets of the Partnership shall be distributed to all
Partners with positive Capital Accounts in accordance with their respective
positive Capital Account balances. For purposes of the preceding sentence, the
Capital Account of each Partner shall be determined after all adjustments made
in accordance with Sections 5.01 and 5.02 resulting from Partnership operations
and from all sales and dispositions of all or any part of the Partnership's
assets. To the extent deemed advisable by the General Partner, appropriate
arrangements (including the use of a liquidating trust) may be made to assure
that adequate funds are available to pay any contingent debts or obligations.
5.07. SUBSTANTIAL ECONOMIC EFFECT.
It is the intent of the Partners that the allocations of Profit and
Loss under the Agreement have substantial economic effect (or be consistent with
the Partners' interests in the Partnership in the case of the allocation of
losses attributable to nonrecourse debt) within the meaning of Section 704(b) of
the Code as interpreted by the Regulations
15
promulgated pursuant thereto. Article V and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.
ARTICLE VI
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01. MANAGEMENT OF THE PARTNERSHIP.
Except as otherwise expressly provided in this Agreement, the General
Partner shall have full, complete and exclusive discretion to manage and control
the business of the Partnership for the purposes herein stated, and shall make
all decisions affecting the business and assets of the Partnership. Subject to
the restrictions specifically contained in this Agreement, the powers of the
General Partner shall include, without limitation, the authority to take the
following actions on behalf of the Partnership:
to acquire, purchase, own, operate, lease and dispose of any
real property and any other property or assets including, but not
limited to notes and mortgages, that the General Partner determines are
necessary or appropriate or in the best interests of the business of
the Partnership;
to construct buildings and make other improvements on the
properties owned or leased by the Partnership;
to authorize, issue, sell, redeem or otherwise purchase any
Partnership Interests or any securities (including secured and
unsecured debt obligations of the Partnership, debt obligations of the
Partnership convertible into any class or series of Partnership
Interests, or options, rights, warrants or appreciation rights relating
to any Partnership Interests) of the Partnership;
to borrow or lend money for the Partnership, issue or receive
evidences of indebtedness in connection therewith, refinance, increase
the amount of, modify, amend or change the terms of, or extend the time
for the payment of, any such indebtedness, and secure such indebtedness
by mortgage, deed of trust, pledge or other lien on the Partnership's
assets;
to pay, either directly or by reimbursement, for all operating
costs and general administrative expenses of the Partnership to third
parties or to the General Partner or its Affiliates as set forth in
this Agreement,
to guarantee or become a comaker of indebtedness of the Company
or any Subsidiary thereof, refinance, increase the amount of, modify,
amend or change the terms of, or extend the time for the payment of,
any such guarantee or indebtedness, and secure such guarantee or
indebtedness by mortgage, deed of trust, pledge or other lien on the
Partnership's assets;
16
to use assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with this
Agreement, including, without limitation, payment, either directly or
by reimbursement, of all operating costs and general administrative
expenses of the Company, the General Partner, the Partnership or any
Subsidiary of either, to third parties or to the General Partner as set
forth in this Agreement;
to lease all or any portion of any of the Partnership's assets,
whether or not the terms of such leases extend beyond the termination
date of the Partnership and whether or not any portion of the
Partnership's assets so leased are to be occupied by the lessee, or, in
turn, subleased in whole or in part to others, for such consideration
and on such terms as the General Partner may determine;
to prosecute, defend, arbitrate, or compromise any and all
claims or liabilities in favor of or against the Partnership, on such
terms and in such manner as the General Partner may reasonably
determine, and similarly to prosecute, settle or defend litigation with
respect to the Partners, the Partnership, or the Partnership's assets;
PROVIDED, HOWEVER, that the General Partner may not, without the
consent of all of the Partners, confess a judgment against the
Partnership that is in excess of $20,000 or is not covered by
insurance;
to file applications, communicate, and otherwise deal with any
and all governmental agencies having jurisdiction over, or in any way
affecting, the Partnership's assets or any other aspect of the
Partnership business;
to make or revoke any election permitted or required of the
Partnership by any taxing authority;
to maintain such insurance coverage for public liability, fire
and casualty, and any and all other insurance for the protection of the
Partnership, for the conservation of Partnership assets, or for any
other purpose convenient or beneficial to the Partnership, in such
amounts and such types, as it shall determine from time to time;
to determine whether or not to apply any insurance proceeds for
any property to the restoration of such property or to distribute the
same;
to establish one or more divisions of the Partnership, to hire
and dismiss employees of the Partnership or any division of the
Partnership, and to retain legal counsel, accountants, consultants,
real estate brokers, and such other persons, as the General Partner may
deem necessary or appropriate in connection with the Partnership
business and to pay therefor such reasonable remuneration as the
General Partner may deem reasonable and proper;
17
to retain other services of any kind or nature in connection
with the Partnership business, and to pay therefor such remuneration as
the General Partner may deem reasonable and proper;
to negotiate and conclude agreements on behalf of the
Partnership with respect to any of the rights, powers and authority
conferred upon the General Partner;
to maintain accurate accounting records and to file promptly
all federal, state and local income tax returns on behalf of the
Partnership;
to distribute Partnership cash or other Partnership assets in
accordance with this Agreement;
to form or acquire an interest in, and contribute property to,
any further limited or general partnerships, joint ventures or other
relationships that it deems desirable (including, without limitation,
the acquisition of interests in, and the contributions of property to,
its Subsidiaries and any other Person in which it has an equity
interest from time to time);
to establish Partnership reserves for working capital, capital
expenditures, contingent liabilities, or any other valid Partnership
purpose; and
to merge, consolidate or combine the Partnership with or into
another person (to the extent permitted by applicable law);
to do any and all acts and things necessary or prudent to
ensure that the Partnership will not be classified as a "publicly
traded partnership" for purposes of Section 7704 of the Code; and
to take such other action, execute, acknowledge, swear to or
deliver such other documents and instruments, and perform any and all
other acts that the General Partner deems necessary or appropriate for
the formation, continuation and conduct of the business and affairs of
the Partnership (including, without limitation, all actions consistent
with allowing the Company at all times to qualify as a REIT unless the
Company voluntarily terminates its REIT status) and to possess and
enjoy all of the rights and powers of a general partner as provided by
the Act.
Except as otherwise provided herein, to the extent the duties of the
General Partner require expenditures of funds to be paid to third parties, the
General Partner shall not have any obligations hereunder except to the extent
that partnership funds are reasonably available to it for the performance of
such duties, and nothing herein contained shall be deemed to authorize or
require the General Partner, in its capacity as such, to expend its individual
funds for payment to third parties or to undertake any individual liability or
obligation on behalf of the Partnership.
18
6.02. DELEGATION OF AUTHORITY.
The General Partner may delegate any or all of its powers, rights and
obligations hereunder, and may appoint, employ, contract or otherwise deal with
any Person for the transaction of the business of the Partnership, which Person
may, under supervision of the General Partner, perform any acts or services for
the Partnership as the General Partner may approve.
6.03. INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.
The Partnership shall indemnify an Indemnitee from and against any and
all losses, claims, damages, liabilities, joint or several, expenses (including
reasonable legal fees and expenses), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and either was committed in bad faith or
was the result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or (iii)
in the case of any criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. The termination of any proceeding
by judgment, order or settlement does not create a presumption that the
Indemnitee did not meet the requisite standard of conduct set forth in this
Section 6.03(a). The termination of any proceeding by conviction or upon a plea
of nolo contendere or its equivalent, or an entry of an order of probation prior
to judgment, creates a rebuttable presumption that the Indemnitee acted in a
manner contrary to that specified in this Section 6.03(a). Any indemnification
pursuant to this Section 6.03 shall be made only out of the assets of the
Partnership.
The Partnership shall reimburse an Indemnitee for reasonable expenses
incurred by an Indemnitee who is a party to a proceeding in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.03 has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
The indemnification provided by this Section 6.03 shall be in addition
to any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity.
The Partnership may purchase and maintain insurance, on behalf of the
Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
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For purposes of this Section 6.03, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of this Section 6.03; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
An Indemnitee shall not be denied indemnification in whole or in part
under this Section 6.03 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
The provisions of this Section 6.03 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
6.04. LIABILITY OF THE GENERAL PARTNER.
Notwithstanding anything to the contrary set forth in this Agreement,
the General Partner shall not be liable for monetary damages to the Partnership
or any Partners for losses sustained or liabilities incurred as a result of
errors in judgment or of any act or omission if the General Partner acted in
good faith. The General Partner shall not be in breach of any duty that the
General Partner may owe to the Limited Partners or the Partnership or any other
Persons under this Agreement or of any duty stated or implied by law or equity
provided the General Partner, acting in good faith, abides by the terms of this
Agreement.
The Limited Partners expressly acknowledge that the General Partner is
acting on behalf of the Partnership, the Company and the Company's shareholders
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners or the tax consequences of same, but not
all, of the Limited Partners) in deciding whether to cause the Partnership to
take (or decline to take) any actions. In the event of a conflict between the
interests of the shareholders of the Company on one hand and the Limited
Partners on the other, the General Partner shall endeavor in good faith to
resolve the conflict in a manner not adverse to either the shareholders of the
Company or the Limited Partners; PROVIDED, HOWEVER, that for so long as the
Company, directly or the General Partner owns a controlling interest in the
Partnership, any such conflict that the General Partner, in its sole and
absolute discretion, determines cannot be resolved in a manner not adverse to
either the shareholders of the Company or the Limited Partners shall be resolved
in favor of the shareholders. The General Partner shall not be liable for
monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Limited
20
Partners in connection with such decisions, PROVIDED that the General Partner
has acted in good faith.
Subject to its obligations and duties as General Partner set forth in
Section 6.01 hereof, the General Partner may exercise any of the powers granted
to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.
Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision of
the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the Company to continue to
qualify as a REIT or (ii) to prevent the Company from incurring any taxes under
Section 857, Section 4981, or any other provision of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.
Any amendment, modification or repeal of this Section 6.04 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 6.04 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole or
in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted.
6.05. REIMBURSEMENT OF GENERAL PARTNER.
Except as provided in this Section 6.05 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions, payments,
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.
The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole and absolute
discretion, for all REIT Expenses and Administrative Expenses.
6.06. OUTSIDE ACTIVITIES.
The Partners and any officer, director, employee, agent, trustee,
Affiliate, Subsidiary, or shareholder of any Partner shall be entitled to and
may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
substantially similar or identical to those of the Partnership. Neither the
Partnership nor any of the Limited Partners shall have any rights by virtue of
this Agreement in any such business ventures, interest or activities. None of
the Limited Partners nor any other Person shall have any rights by virtue of
this Agreement or the partnership relationship established hereby in any such
business ventures, interests or activities, and the General Partner shall have
no obligation pursuant to this Agreement to offer any interest in any such
business ventures, interests and activities to the Partnership or any Limited
Partner, even if such opportunity is of a character which, if presented to the
Partnership or any Limited Partner, could be taken by such Person.
21
6.07. EMPLOYMENT OR RETENTION OF AFFILIATES.
Any Affiliate of the General Partner may be employed or retained by the
Partnership and may otherwise deal with the Partnership (whether as a buyer,
lessor, lessee, manager, furnisher of goods or services, broker, agent, lender
or otherwise) and may receive from the Partnership any compensation, price, or
other payment therefor which the General Partner determines to be fair and
reasonable.
The Partnership may lend or contribute to its Subsidiaries or other
Persons in which it has an equity investment, and such Persons may borrow funds
from the Partnership, on terms and conditions established in the sole and
absolute discretion of the General Partner. The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other Person.
The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions as the
General Partner deems are consistent with this Agreement and applicable law.
Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are on terms that are fair and reasonable
to the Partnership.
6.08. GENERAL PARTNER PARTICIPATION.
The General Partner agrees, on behalf of the Company that all business
activities of the Company shall generally be conducted through the Partnership
or one or more Subsidiary Partnerships, unless otherwise determined by the
Independent Directors.
6.09. TITLE TO PARTNERSHIP ASSETS.
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; PROVIDED,
HOWEVER, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the property
of the Partnership in its books and records, irrespective of the name in which
legal title to such Partnership assets is held.
6.10. [INTENTIONALLY OMITTED].
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ARTICLE VII
CHANGES IN GENERAL PARTNER
7.01. TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.
The General Partner shall not transfer all or any portion of its
General Partnership Interest or withdraw as General Partner except as provided
in or in connection with a transaction contemplated by Section 7.01(c), (d) or
(e).
The General Partner agree that the Percentage Interest for it and the
Company will at all times be in the aggregate, at least 1%.
Except as otherwise provided in Section 6.04(b) or Section 7.01(d) or
(e) hereof, the Company shall not engage in any merger, consolidation or other
combination with or into another Person or sale of all or substantially all of
its assets, (other than in connection with a change in the Company's state of
incorporation or organizational form) in each case which results in a change of
control of the Company (a "Transaction"), unless:
the consent of Limited Partners (other than the General Partner
or any Subsidiary) holding more than 50% of the Percentage Interests of
the Limited Partners (other than those held by the General Partner or
any Subsidiary) is obtained;
as a result of such Transaction all Limited Partners will
receive for each Partnership Unit an amount of cash, securities, or
other property equal to the product of the Conversion Factor and the
greatest amount of cash, securities or other property paid in the
Transaction to a holder of one REIT Share in consideration of one REIT
Share, PROVIDED THAT if, in connection with the Transaction, a
purchase, tender or exchange offer ("Offer") shall have been made to
and accepted by the holders of more than 50% of the outstanding REIT
Shares, each holder of Partnership Units shall be given the option to
exchange its Partnership Units for the greatest amount of cash,
securities, or other property which a Limited Partner would have
received had it (A) exercised its Exchange Right and (B) sold, tendered
or exchanged pursuant to the Offer the REIT Shares received upon
exercise of the Exchange Right immediately prior to the expiration of
the Offer; or
the Company is the surviving entity in the Transaction and
either (A) the holders of REIT Shares do not receive cash, securities,
or other property in the Transaction or (B) all Limited Partners (other
than the General Partner or any Subsidiary) receive an amount of cash,
securities, or other property (expressed as an amount per REIT Share)
that is no less than the product of the Conversion Factor and the
greatest amount of cash, securities, or other property (expressed as an
amount per REIT Share) received in the Transaction by any holder of
REIT Shares.
23
Notwithstanding Section 7.01(c), the Company or the General Partner may
merge with or into or consolidate with another entity if immediately after such
merger or consolidation (i) substantially all of the assets of the successor or
surviving entity (the "Survivor"), other than Partnership Units held by the
Company or the General Partner, are contributed, directly or indirectly, to the
Partnership as a Capital Contribution in exchange for Partnership Units with a
fair market value equal to the value of the assets so contributed as determined
by the Survivor in good faith and (ii) the Survivor expressly agrees to assume
all obligations of the General Partner or the Company, as appropriate,
hereunder. Upon such contribution and assumption, the Survivor shall have the
right and duty to amend this Agreement as set forth in this Section 7.01(d). The
Survivor shall in good faith arrive at a new method for the calculation of the
Cash Amount, the REIT Shares Amount and Conversion Factor for a Partnership Unit
after any such merger or consolidation so as to approximate the existing method
for such calculation as closely as reasonably possible. Such calculation shall
take into account, among other things, the kind and amount of securities, cash
and other property that was receivable upon such merger or consolidation by a
holder of REIT Shares or options, warrants or other rights relating thereto, and
to which a holder of Partnership Units could have acquired had such Partnership
Units been exchanged immediately prior to such merger or consolidation. Such
amendment to this Agreement shall provide for adjustment to such method of
calculation, which shall be as nearly equivalent as may be practicable to the
adjustments provided for with respect to the Conversion Factor. The Survivor
also shall in good faith modify the definition of REIT Shares and make such
amendments to Section 8.05 hereof so as to approximate the existing rights and
obligations set forth in Section 8.05 as closely as reasonably possible. The
above provisions of this Section 7.01(d) shall similarly apply to successive
mergers or consolidations permitted hereunder.
In respect of any transaction described in the preceding Paragraph, the
Company is required to use its commercially reasonable efforts to structure such
transaction to avoid causing the Limited Partners to recognize a gain for
federal income tax purposes by virtue of the occurrence of or their
participation in such transaction, provided such efforts are consistent with the
exercise of the Board of Directors' fiduciary duties to the shareholders of the
Company under applicable law.
Notwithstanding Section 7.01(c),
a General Partner may transfer all or any portion of
its General Partnership Interest to (A) a wholly-owned
Subsidiary of such General Partner or (B) the owner of all of
the ownership interests of such General Partner, and following
a transfer of all of its General Partnership Interest, may
withdraw as General Partner; and
the Company may engage in a transaction not required
by law or by the rules of any national securities exchange on
which the REIT Shares are listed to be submitted to the vote
of the holders of the REIT Shares.
7.02. ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER.
A Person shall be admitted as a substitute or additional General
Partner of the Partnership only if the following terms and conditions are
satisfied:
24
the Person to be admitted as a substitute or additional General Partner
shall have accepted and agreed to be bound by all the terms and provisions of
this Agreement by executing a counterpart thereof and such other documents or
instruments as may be required or appropriate in order to effect the admission
of such Person as a General Partner, and a certificate evidencing the admission
of such Person as a General Partner shall have been filed for recordation and
all other actions required by Section 2.05 hereof in connection with such
admission shall have been performed;
if the Person to be admitted as a substitute or additional General
Partner is a corporation or a partnership it shall have provided the Partnership
with evidence satisfactory to counsel for the Partnership of such Person's
authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and
counsel for the Partnership shall have rendered an opinion (relying on
such opinions from other counsel and the state or any other jurisdiction as may
be necessary) that the admission of the person to be admitted as a substitute or
additional General Partner is in conformity with the Act, that none of the
actions taken in connection with the admission of such Person as a substitute or
additional General Partner will cause (i) the Partnership to be classified other
than as a partnership for federal income tax purposes, or (ii) the loss of any
Limited Partner's limited liability.
7.03. EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A
GENERAL PARTNER.
Upon the occurrence of an Event of Bankruptcy as to a General Partner
(and its removal pursuant to Section 7.04(a) hereof) or the death, withdrawal,
removal or dissolution of a General Partner (except that, if a General Partner
is on the date of such occurrence a partnership, the withdrawal, death,
dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Partnership shall be dissolved and terminated unless the
Partnership is continued pursuant to Section 7.03(b) hereof. The merger of the
General Partner with or into any entity that is admitted as a substitute or
successor General Partner pursuant to Section 7.02 hereof shall not be deemed to
be the withdrawal, dissolution or removal of the General Partner.
Following the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a) hereof) or the death,
withdrawal, removal or dissolution of a General Partner (except that, if a
General Partner is on the date of such occurrence a partnership, the withdrawal,
death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such
partnership shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining partner or
partners), the Limited Partners, within 90 days after such occurrence, may elect
to continue
25
the business of the Partnership for the balance of the term specified in Section
2.04 hereof by selecting, subject to Section 7.02 hereof and any other
provisions of this Agreement, a substitute General Partner by consent of a
majority in interest of the Limited Partners. If the Limited Partners elect to
continue the business of the Partnership and admit a substitute General Partner,
the relationship with the Partners and of any Person who has acquired an
interest of a Partner in the Partnership shall be governed by this Agreement.
7.04. REMOVAL OF A GENERAL PARTNER.
Upon the occurrence of an Event of Bankruptcy as to, or the dissolution
of, a General Partner, such General Partner shall be deemed to be removed
automatically; provided, however, that if a General Partner is on the date of
such occurrence a partnership, the withdrawal, death, dissolution, Event of
Bankruptcy as to or removal of a partner in such partnership shall be deemed not
to be a dissolution of the General Partner if the business of such General
Partner is continued by the remaining partner or partners. The Limited Partners
may not remove the General Partner, with or without cause.
If a General Partner has been removed pursuant to this Section 7.04 and
the Partnership is continued pursuant to Section 7.03 hereof, such General
Partner shall promptly transfer and assign its General Partnership Interest in
the Partnership to the substitute General Partner approved by a majority in
interest of the Limited Partners in accordance with Section 7.03(b) hereof and
otherwise admitted to the Partnership in accordance with Section 7.02 hereof. At
the time of assignment, the removed General Partner shall be entitled to receive
from the substitute General Partner the fair market value of the General
Partnership Interest of such removed General Partner as reduced by any damages
caused to the Partnership by such General Partner. Such fair market value shall
be determined by an appraiser mutually agreed upon by the General Partner and a
majority in interest of the Limited Partners within 10 days following the
removal of the General Partner. In the event that the parties are unable to
agree upon an appraiser, the removed General Partner and a majority in interest
of the Limited Partners each shall select an appraiser. Each such appraiser
shall complete an appraisal of the fair market value of the removed General
Partner's General Partnership Interest within 30 days of the General Partner's
removal, and the fair market value of the removed General Partner's General
Partnership Interest shall be the average of the two appraisals; PROVIDED,
HOWEVER, that if the higher appraisal exceeds the lower appraisal by more than
20% of the amount of the lower appraisal, the two appraisers, no later than 40
days after the removal of the General Partner, shall select a third appraiser
who shall complete an appraisal of the fair market value of the removed General
Partner's General Partnership Interest no later than 60 days after the removal
of the General Partner. In such case, the fair market value of the removed
General Partner's General Partnership Interest shall be the average of the two
appraisals closest in value.
The General Partnership Interest of a removed General Partner, during
the time after default until transfer under Section 7.04(b), shall be converted
to that of a special Limited Partner; PROVIDED, HOWEVER, such removed General
Partner shall not have any rights to participate in the management and affairs
of the Partnership, and shall not be entitled to any portion of the income,
expense, profit, gain or loss allocations or cash distributions allocable or
payable, as the case may be, to the Limited Partners. Instead, such removed
General Partner shall receive and be entitled only to retain distributions or
allocations of such items that it would have been entitled to
26
receive in its capacity as General Partner, until the transfer is effective
pursuant to Section 7.04(b).
All Partners shall have given and hereby do give such consents, shall
take such actions and shall execute such documents as shall be legally necessary
and sufficient to effect all the foregoing provisions of this Section.
ARTICLE VIII
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
8.01. MANAGEMENT OF THE PARTNERSHIP.
The Limited Partners shall not participate in the management or control
of Partnership business nor shall they transact any business for the
Partnership, nor shall they have the power to sign for or bind the Partnership,
such powers being vested solely and exclusively in the General Partner.
8.02. POWER OF ATTORNEY.
Each Limited Partner hereby irrevocably appoints the General Partner
its true and lawful attorney-in-fact, who may act for each Limited Partner and
in its name, place and stead, and for its use and benefit, to sign, acknowledge,
swear to, deliver, file or record, at the appropriate public offices, any and
all documents, certificates, and instruments as may be deemed necessary or
desirable by the General Partner to carry out fully the provisions of this
Agreement and the Act in accordance with their terms, which power of attorney is
coupled with an interest and shall survive the death, dissolution or legal
incapacity of the Limited Partner, or the transfer by the Limited Partner of any
part or all of its Partnership Interest.
8.03. LIMITATION ON LIABILITY OF LIMITED PARTNERS.
No Limited Partner shall be liable for any debts, liabilities,
contracts or obligations of the Partnership. A Limited Partner shall be liable
to the Partnership only to make payments of its Capital Contribution, if any, as
and when due hereunder. After its Capital Contribution is fully paid, no Limited
Partner shall, except as otherwise required by the Act, be required to make any
further Capital Contributions or other payments or lend any funds to the
Partnership.
8.04. OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR
AFFILIATE.
No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate
thereof, if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of counsel for
the Partnership, jeopardize the classification of the Partnership as a
partnership for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section.
8.05. EXCHANGE RIGHT.
Subject to Sections 8.05(b), 8.05(c), 8.05(d), 8.05(e) and 8.05(f) and
the provisions of any agreements between the Partnership and one or more Limited
Partners with respect to Partnership Units held by them, each Limited Partner,
other than the Company, shall have the right (the "Exchange Right") to require
the Partnership to redeem on a Specified Exchange Date all or a portion of the
Partnership Units held by such Limited Partner at an exchange price equal to and
in the form of the Cash Amount to be paid by the Partnership,
27
PROVIDED that such Partnership Units shall have been outstanding for at least
one year. The Exchange Right shall be exercised pursuant to a Notice of Exchange
delivered to the Partnership (with a copy to the General Partner) by the Limited
Partner who is exercising the Exchange Right (the "Exchanging Partner");
PROVIDED, HOWEVER, that the Partnership shall not be obligated to satisfy such
Exchange Right if the Company and/or the General Partner elects to purchase the
Partnership Units subject to the Notice of Exchange pursuant to Section 8.05(b);
and PROVIDED, FURTHER, that no Limited Partner may deliver more than two Notices
of Exchange during each calendar year. A Limited Partner may not exercise the
Exchange Right for less than 1,000 Partnership Units or, if such Limited Partner
holds less than 1,000 Partnership Units, all of the Partnership Units held by
such Partner. The Exchanging Partner shall have no right, with respect to any
Partnership Units so exchanged, to receive any distribution paid with respect to
Partnership Units if the record date for such distribution is on or after the
Specified Exchange Date.
Notwithstanding the provisions of Section 8.05(a), a Limited Partner
that exercises the Exchange Right shall be deemed to have offered to sell the
Partnership Units described in the Notice of Exchange to the General Partner and
the Company, and either of the General Partner or the Company (or both) may, in
its sole and absolute discretion, elect to purchase directly and acquire such
Partnership Units by paying to the Exchanging Partner either the Cash Amount or
the REIT Shares Amount, as elected by the General Partner or the Company (in its
sole and absolute discretion), on the Specified Exchange Date, whereupon the
General Partner or the Company shall acquire the Partnership Units offered for
exchange by the exchanging Partner and shall be treated for all purposes of this
Agreement as the owner of such Partnership Units. If the General Partner and/or
the Company shall elect to exercise its right to purchase Partnership Units
under this Section 8.05(b) with respect to a Notice of Exchange, they shall so
notify the Exchanging Partner within five Business Days after the receipt by the
General Partner of such Notice of Exchange. Unless the General Partner and/or
the Company (in its sole and absolute discretion) shall exercise its right to
purchase Partnership Units from the Exchanging Partner pursuant to this Section
8.05(b), neither the General Partner nor the Company shall have any obligation
to the Exchanging Partner or the Partnership with respect to the Exchanging
Partner's exercise of the Exchange Right. In the event the General Partner or
the Company shall exercise its right to purchase Partnership Units with respect
to the exercise of a Exchange Right in the manner described in the first
sentence of this Section 8.05(b), the Partnership shall have no obligation to
pay any amount to the Exchanging Partner with respect to such Exchanging
Partner's exercise of such Exchange Right, and each of the Exchanging Partner,
the Partnership, and the General Partner or the Company, as the case may be,
shall treat the transaction between the General Partner or the Company, as the
case may be, and the Exchanging Partner for federal income tax purposes as a
sale of the Exchanging Partner's Partnership Units to the General Partner or the
Company, as the case may be. Each Exchanging Partner agrees to execute such
documents as the General Partner may reasonably require in connection with the
issuance of REIT Shares upon exercise of the Exchange Right.
Notwithstanding the provisions of Section 8.05(a) and 8.05(b), a
Limited Partner shall not be entitled to exercise the Exchange Right if the
delivery of REIT Shares to such Partner on the Specified Exchange Date by the
General Partner or the Company pursuant to
28
Section 8.05(b) (regardless of whether or not the General Partner or the Company
would in fact exercise its rights under Section 8.05(b)) would (i) result in
such Partner or any other person owning, directly or indirectly, REIT Shares in
excess of the Ownership Limitation (as defined in the Amended and Restated
Articles of Incorporation) and calculated in accordance therewith, except as
provided in the Amended and Restated Articles of Incorporation, (ii) result in
REIT Shares being owned by fewer than 100 persons (determined without reference
to any rules of attribution), except as provided in the Amended and Restated
Articles of Incorporation, (iii) result in the Company being "closely held"
within the meaning of Section 856(h) of the Code, (iv) cause the Company to own,
directly or constructively, 10% or more of the ownership interests in a tenant
of the General Partner's, the Partnership's, or a Subsidiary Partnership's, real
property, within the meaning of Section 856(d)(2)(B) of the Code, or (v) cause
the acquisition of REIT Shares by such Partner to be "integrated" with any other
distribution of REIT Shares for purposes of complying with the registration
provisions of the Securities Act of 1933, as amended (the "Securities Act"). The
General Partner or the Company, in their sole and absolute discretion, may waive
the restriction on exchange set forth in this Section 8.05(c); PROVIDED,
HOWEVER, that in the event such restriction is waived, the Exchanging Partner
shall be paid the Cash Amount.
Any Cash Amount to be paid to an Exchanging Partner pursuant to this
Section 8.05 shall be paid on the Specified Exchange Date; PROVIDED, HOWEVER,
that the Company or the General Partner may elect to cause the Specified
Exchange Date to be delayed for up to an additional 180 days to the extent
required for the Company to cause additional REIT Shares to be issued to provide
financing to be used to make such payment of the Cash Amount. Notwithstanding
the foregoing, the Company and the General Partner agree to use their best
efforts to cause the closing of the acquisition of exchanged Partnership Units
hereunder to occur as quickly as reasonably possible.
Notwithstanding any other provision of this Agreement, the General
Partner shall place appropriate restrictions on the ability of the Limited
Partners to exercise their Exchange Rights as and if deemed necessary to ensure
that the Partnership does not constitute a "publicly traded partnership" under
section 7704 of the Code. If and when the General Partner determines that
imposing such restrictions is necessary, the General Partner shall give prompt
written notice thereof (a "Restriction Notice") to each of the Limited Partners,
which notice shall be accompanied by a copy of an opinion of counsel to the
Partnership which states that, in the opinion of such counsel, restrictions are
necessary in order to avoid the Partnership being treated as a "publicly traded
partnership" under section 7704 of the Code.
8.06. REGISTRATION.
Subject to the terms of any agreement between the Company or the
General Partner and one or more Limited Partners with respect to Partnership
Units held by them:
SHELF REGISTRATION OF THE COMMON STOCK. Within two weeks prior or
subsequent to the first date upon which the Partnership Units owned by any
Limited Partner may be exchanged (or such later date as may be required under
applicable provisions of the Securities Act), the Company agrees to file with
the Securities and Exchange Commission (the
29
"Commission"), a shelf registration statement on Form S-3 under Rule 415 of the
Securities Act (a "Registration Statement"), or any similar rule that may be
adopted by the Commission, with respect to all of the shares of Common Stock
that may be issued upon exchange of such Partnership Units pursuant to Section
8.05 hereof ("Exchange Shares"). The Company will use its best efforts to have
the Registration Statement declared effective under the Securities Act. The
Company need not file a separate Registration Statement, but may file one
Registration Statement covering Exchange Shares issuable to more than one
Limited Partner. The Company further agrees to supplement or make amendments to
each Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form utilized by the Company or by
the Securities Act or rules and regulations thereunder for such Registration
Statement.
LISTING ON SECURITIES EXCHANGE. If the Company shall list or maintain
the listing of any shares of Common Stock on any securities exchange or national
market system, it will at its expense and as necessary to permit the
registration and sale of the Exchange Shares hereunder, list thereon, maintain
and, when necessary, increase such listing to include such Exchange Shares.
REGISTRATION NOT REQUIRED. Notwithstanding the foregoing, the Company
shall not be required to file or maintain the effectiveness of a registration
statement relating to Exchange Shares after the first date upon which, in the
opinion of counsel to the Company, all of the Exchange Shares covered thereby
could be sold by the holders thereof in any period of three months pursuant to
Rule 144 under the Securities Act, or any successor rule thereto.
ARTICLE IX
TRANSFER OF LIMITED PARTNERSHIP INTERESTS
9.01. PURCHASE FOR INVESTMENT.
Each Limited Partner hereby represents and warrants to the General
Partner, to the Company and to the Partnership that the acquisition of his
Partnership Interests is made as a principal for his account for investment
purposes only and not with a view to the resale or distribution of such
Partnership Interest.
Each Limited Partner agrees that he will not sell, assign or otherwise
transfer his Partnership Interest or any fraction thereof, whether voluntarily
or by operation of law or at judicial sale or otherwise, to any Person who does
not make the representations and warranties to the General Partner set forth in
Section 9.01(a) above and similarly agree not to sell, assign or transfer such
Partnership Interest or fraction thereof to any Person who does not similarly
represent, warrant and agree.
9.02. RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
Subject to the provisions of 9.02(b), (c) and (d), no Limited Partner
may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any
portion of his Limited Partnership Interest, or any of such Limited Partner's
economic rights as a Limited Partner,
30
whether voluntarily or by operation of law or at judicial sale or otherwise
(collectively, a "Transfer") without the consent of the General Partner, which
consent may be granted or withheld in its sole and absolute discretion. Any such
purported transfer undertaken without such consent shall be considered to be
null and void ab initio and shall not be given effect. The General Partner may
require, as a condition of any Transfer to which it consents, that the
transferor assume all costs incurred by the Partnership in connection therewith.
No Limited Partner may withdraw from the Partnership other than as a
result of a permitted Transfer (I.E., a Transfer consented to as contemplated by
clause (a) above or clause (c) below or a Transfer pursuant to 9.05 below) of
all of his Partnership Units pursuant to this Article IX or pursuant to an
exchange of all of his Partnership Units pursuant to 8.05. Upon the permitted
Transfer or redemption of all of a Limited Partner's Partnership Units, such
Limited Partner shall cease to be a Limited Partner.
Subject to 9.02(d), (e) and (f) below, a Limited Partner may Transfer,
with the consent of the General Partner, all or a portion of his Partnership
Units to (i) a parent or parent's spouse, natural or adopted descendant or
descendants, spouse of such descendant, or brother or sister, or a trust created
by such Limited Partner for the benefit of such Limited Partner and/or any such
person(s), of which trust such Limited Partner or any such person(s) is a
trustee, (ii) a corporation controlled by a Person or Persons named in (i)
above, or (iii) if the Limited Partner is an entity, its beneficial owners.
No Limited Partner may effect a Transfer of its Limited Partnership
Interest, in whole or in part, if, in the opinion of legal counsel for the
Partnership, such proposed Transfer would require the registration of the
Limited Partnership Interest under the Securities Act of 1933, as amended, or
would otherwise violate any applicable federal or state securities or blue sky
law (including investment suitability standards).
No Transfer by a Limited Partner of its Partnership Units, in whole or
in part, may be made to any Person if (i) in the opinion of legal counsel for
the Partnership, the transfer would result in the Partnership's being treated as
an association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
Company to continue to qualify as a REIT or subject the Company to any
additional taxes under Section 857 or Section 4981 of the Code, or (iii) such
transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.
No transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Regulations
Section 1.752-4(b)) to any lender to the Partnership whose loan constitutes a
nonrecourse liability (within the meaning of Regulations Section 1.752-1(a)(2)),
without the consent of the General Partner, which may be withheld in its sole
and absolute discretion, PROVIDED THAT as a condition to such consent the lender
will be required to enter into an arrangement with the Partnership and the
General Partner to exchange or redeem for the Cash Amount any Partnership Units
in which a security interest is
31
held simultaneously with the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.
Any Transfer in contravention of any of the provisions of this Article
IX shall be void and ineffectual and shall not be binding upon, or recognized
by, the Partnership.
Prior to the consummation of any Transfer under this Article IX, the
transferor and/or the transferee shall deliver to the General Partner such
opinions, certificates and other documents as the General Partner shall request
in connection with such Transfer.
9.03. ADMISSION OF A SUBSTITUTE LIMITED PARTNER.
Subject to the other provisions of this Article IX, an assignee of the
Limited Partnership Interest of a Limited Partner (which shall be understood to
include any purchaser, transferee, donee, or other recipient of any disposition
of such Limited Partnership Interest) shall be deemed admitted as a Limited
Partner of the Partnership only with the consent of the General Partner and upon
the satisfactory completion of the following:
The assignee shall have accepted and agreed to be bound by the
terms and provisions of this Agreement by executing a counterpart or an
amendment thereof, including a revised EXHIBIT A, and such other
documents or instruments as the General Partner may require in order to
effect the admission of such Person as a Limited Partner.
To the extent required, an amended Certificate evidencing the
admission of such Person as a Limited Partner shall have been signed,
acknowledged and filed for record in accordance with the Act.
The assignee shall have delivered a letter containing the
representation set forth in Section 9.01(a) hereof and the agreement
set forth in Section 9.01(b) hereof.
If the assignee is a corporation, partnership or trust, the
assignee shall have provided the General Partner with evidence
satisfactory to counsel for the Partnership of the assignee's authority
to become a Limited Partner under the terms and provisions of this
Agreement.
The assignee shall have executed a power of attorney containing
the terms and provisions set forth in Section 8.02 hereof.
The assignee shall have paid all legal fees and other expenses
of the Partnership and the General Partner and filing and publication
costs in connection with its substitution as a Limited Partner.
32
The assignee has obtained the prior written consent of the
General Partner to its admission as a Substitute Limited Partner, which
consent may be given or denied in the exercise of the General Partner's
sole and absolute discretion.
For the purpose of allocating Profits and Losses and distributing cash
received by the Partnership, a Substitute Limited Partner shall be treated as
having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 9.03(a)(ii) hereof or,
if no such filing is required, the later of the date specified in the transfer
documents or the date on which the General Partner has received all necessary
instruments of transfer and substitution.
The General Partner shall cooperate with the Person seeking to become a
Substitute Limited Partner by preparing the documentation required by this
Section and making all official filings and publications. The Partnership shall
take all such action as promptly as practicable after the satisfaction of the
conditions in this Article IX to the admission of such Person as a Limited
Partner of the Partnership.
9.04. RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.
Subject to the provisions of Sections 9.01 and 9.02 hereof, except as
required by operation of law, the Partnership shall not be obligated for any
purposes whatsoever to recognize the assignment by any Limited Partner of its
Partnership Interest until the Partnership has received notice thereof.
Any Person who is the assignee of all or any portion of a Limited
Partner's Limited Partnership Interest, but does not become a Substitute Limited
Partner and desires to make a further assignment of such Limited Partnership
Interest, shall be subject to all the provisions of this Article IX to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of its Limited Partnership Interest.
9.05. EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A
LIMITED PARTNER.
The occurrence of an Event of Bankruptcy as to a Limited Partner, the
death of a Limited Partner or a final adjudication that a Limited Partner is
incompetent (which term shall include, but not be limited to, insanity) shall
not cause the termination or dissolution of the Partnership, and the business of
the Partnership shall continue if an order for relief in a bankruptcy proceeding
is entered against a Limited Partner, the trustee or receiver of his estate or,
if he dies, his executor, administrator or trustee, or, if he is finally
adjudicated incompetent, his committee, guardian or conservator, shall have the
rights of such Limited Partner for the purpose of settling or managing his
estate property and such power as the bankrupt, deceased or incompetent Limited
Partner possessed to assign all or any part of his Partnership Interest and to
join with the assignee in satisfying conditions precedent to the admission of
the assignee as a Substitute Limited Partner.
9.06. JOINT OWNERSHIP OF INTERESTS.
A Partnership Interest may be acquired by two individuals as joint
tenants with right of survivorship, provided that such individuals either are
married or are related and share the same home as tenants in common. The written
consent or vote of both owners of any such jointly held Partnership Interest
shall be required to constitute the action of the owners of such Partnership
Interest; provided, however, that the written consent of only one joint owner
will
33
be required if the Partnership has been provided with evidence satisfactory to
the counsel for the Partnership that the actions of a single joint owner can
bind both owners under the applicable laws of the state of residence of such
joint owners. Upon the death of one owner of a Partnership Interest held in a
joint tenancy with a right of survivorship, the Partnership Interest shall
become owned solely by the survivor as a Limited Partner and not as an assignee.
The Partnership need not recognize the death of one of the owners of a
jointly-held Partnership Interest until it shall have received notice of such
death. Upon notice to the General Partner from either owner, the General Partner
shall cause the Partnership Interest to be divided into two equal Partnership
Interests, which shall thereafter be owned separately by each of the former
owners.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01. BOOKS AND RECORDS.
At all times during the continuance of the Partnership, the Partners
shall keep or cause to be kept at the Partnership's specified office true and
complete books of account in accordance with generally accepted accounting
principles, including: (a) a current list of the full name and last known
business address of each Partner, (b) a copy of the Certificate of Limited
Partnership and all certificates of amendment thereto, (c) copies of the
Partnership's federal, state and local income tax returns and reports, (d)
copies of the Agreement and any financial statements of the Partnership for the
three most recent years and (e) all documents and information required under the
Act. Any Partner or its duly authorized representative, upon paying the costs of
collection, duplication and mailing, shall be entitled to inspect or copy such
records during ordinary business hours.
10.02. CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.
All funds of the Partnership not otherwise invested shall be deposited
in one or more accounts maintained in such banking or brokerage institutions as
the General Partner shall determine, and withdrawals shall be made only on such
signature or signatures as the General Partner may, from time to time,
determine.
All deposits and other funds not needed in the operation of the
business of the Partnership may be invested by the General Partner in investment
grade instruments (or investment companies whose portfolio consists primarily
thereof), government obligations, certificates of deposit, bankers' acceptances
and municipal notes and bonds. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.02(b).
10.03. FISCAL AND TAXABLE YEAR.
The fiscal and taxable year of the Partnership shall be the calendar
year.
10.04. ANNUAL TAX INFORMATION AND REPORT.
Within 75 days after the end of each fiscal year of the Partnership,
the General Partner shall furnish to each person who was a Limited Partner at
any time during such year the tax information necessary to file such Limited
Partner's individual tax returns as shall be reasonably required by law.
34
10.05. TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.
The General Partner shall be the Tax Matters Partner of the Partnership
within the meaning of Section 6231(a)(7) of the Code. As Tax Matters Partner,
the General Partner shall have the right and obligation to take all actions
authorized and required, respectively, by the Code for the Tax Matters Partner.
The General Partner shall have the right to retain professional assistance in
respect of any audit of the Partnership by the Service and all out-of-pocket
expenses and fees incurred by the General Partner on behalf of the Partnership
as Tax Matters Partner shall constitute Partnership expenses. In the event the
General Partner receives notice of a final Partnership adjustment under Section
6223(a)(2) of the Code, the General Partner shall either (i) file a court
petition for judicial review of such final adjustment within the period provided
under Section 6226(a) of the Code, a copy of which petition shall be mailed to
all Limited Partners on the date such petition is filed, or (ii) mail a written
notice to all Limited Partners, within such period, that describes the General
Partner's reasons for determining not to file such a petition.
All elections required or permitted to be made by the Partnership under
the Code or any applicable state or local tax law shall be made by the General
Partner in its sole and absolute discretion.
In the event of a transfer of all or any part of the Partnership
Interest of any Partner, the Partnership, at the option of the General Partner,
may elect pursuant to Section 754 of the Code to adjust the basis of the
Properties. Notwithstanding anything contained in Article V of this Agreement,
any adjustments made pursuant to Section 754 shall affect only the successor in
interest to the transferring Partner and in no event shall be taken into account
in establishing, maintaining or computing Capital Accounts for the other
Partners for any purpose under this Agreement. Each Partner will furnish the
Partnership with all information necessary to give effect to such election.
10.06. REPORTS TO LIMITED PARTNERS.
As soon as practicable after the close of each fiscal quarter (other
than the last quarter of the fiscal year), the General Partner shall cause to be
mailed to each Limited Partner a quarterly report containing financial
statements of the Partnership, or of the Company if such statements are prepared
solely on a consolidated basis with the Company, for such fiscal quarter,
presented in accordance with generally accepted accounting principles. As soon
as practicable after the close of each fiscal year, the General Partner shall
cause to be mailed to each Limited Partner an annual report containing financial
statements of the Partnership, or of the Company if such statements are prepared
solely on a consolidated basis with the Company, for such fiscal year, presented
in accordance with generally accepted accounting principles. The annual
financial statements shall be audited by accountants selected by the General
Partner.
Any Partner shall further have the right to a private audit of the
books and records of the Partnership, provided such audit is made for
Partnership purposes, at the expense of the Partner desiring it and is made
during normal business hours.
35
ARTICLE XI
AMENDMENT OF AGREEMENT; MERGER
The General Partner's consent shall be required for any amendment to
this Agreement. The General Partner, without the consent of the Limited
Partners, may amend this Agreement in any respect or merge or consolidate the
Partnership with or into any other partnership or business entity (as defined in
ss. 17-211 of the Act) in a transaction pursuant to Section 7.01(c), (d) or (e)
hereof; PROVIDED, HOWEVER, that the following amendments and any other merger or
consolidation of the Partnership shall require the consent of Limited Partners
(other than the Company) holding more than 50% of the Percentage Interests of
the Limited Partners (other than the Company):
any amendment affecting the operation of the Conversion Factor or the
Exchange Right (except as provided in Section 8.05(d) or 7.01(d) hereof) in a
manner adverse to the Limited Partners;
any amendment that would adversely affect the rights of the Limited
Partners to receive the distributions payable to them hereunder, other than with
respect to the issuance of additional Partnership Units pursuant to Section 4.02
hereof;
any amendment that would alter the Partnership's allocations of Profit
and Loss to the Limited Partners, other than with respect to the issuance of
additional Partnership Units pursuant to Section 4.02 hereof; or
any amendment that would impose on the Limited Partners any obligation
to make additional Capital Contributions to the Partnership.
ARTICLE XII
GENERAL PROVISIONS
12.01. NOTICES.
All communications required or permitted under this Agreement shall be
in writing and shall be deemed to have been given when delivered personally or
upon deposit in the United States mail, registered, postage prepaid return
receipt requested, to the Partners at the addresses set forth in EXHIBIT A
attached hereto; PROVIDED, HOWEVER, that any Partner may specify a different
address by notifying the General Partner in writing of such different address.
Notices to the Partnership shall be delivered at or mailed to its specified
office.
12.02. SURVIVAL OF RIGHTS.
Subject to the provisions hereof limiting transfers, this Agreement
shall be binding upon and inure to the benefit of the Partners and the
Partnership and their respective legal representatives, successors, transferees
and assigns.
12.03. ADDITIONAL DOCUMENTS.
Each Partner agrees to perform all further acts and execute, swear to,
acknowledge and deliver all further documents which may be reasonable,
necessary, appropriate or desirable to carry out the provisions of this
Agreement or the Act.
36
12.04. SEVERABILITY.
If any provision of this Agreement shall be declared illegal, invalid,
or unenforceable in any jurisdiction, then such provision shall be deemed to be
severable from this Agreement (to the extent permitted by law) and in any event
such illegality, invalidity or unenforceability shall not affect the remainder
hereof.
12.05. ENTIRE AGREEMENT.
This Agreement and exhibits attached hereto constitute the entire
Agreement of the Partners and supersede all prior written agreements and prior
and contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof.
12.06. PRONOUNS AND PLURALS.
When the context in which words are used in the Agreement indicates
that such is the intent, words in the singular number shall include the plural
and the masculine gender shall include the neuter or female gender as the
context may require.
12.07. HEADINGS.
The Article headings or sections in this Agreement are for convenience
only and shall not be used in construing the scope of this Agreement or any
particular Article.
12.08. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original copy and all of which together shall
constitute one and the same instrument binding on all parties hereto,
notwithstanding that all parties shall not have signed the same counterpart.
12.09. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Second Amended and Restated Agreement of Limited Partnership,
all as of the date first above written.
OCWEN GENERAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
37
EXHIBIT A
---------
AGREED VALUE OF
CASH CAPITAL PARTNERSHIP PERCENTAGE
PARTNER CONTRIBUTION CONTRIBUTION UNITS INTEREST
------- ------------ --------------- ----- --------
GENERAL PARTNER:
Ocwen General, Inc. $ 3,005,191 189,650 .9826%
0000 Xxxx Xxxxx Xxxxx Xxxx.
Xxxxx 0000
Xxxx Xxxx Xxxxx, XX 00000
LIMITED PARTNERS:
Ocwen Limited, Inc. $297,513,897 18,775,350 97.2816%
0000 Xxxx Xxxxx Xxxxx Xxxx.
Xxxxx 0000
Xxxx Xxxx Xxxxx, XX 00000
Investors Mortgage Insurance Holding $ 6,080,060 335,000 1.7358%
Company
0000 Xxxx Xxxxx Xxxxx Xxxx.
Xxxxx 0000
Xxxx Xxxx Xxxxx, XX 00000
TOTAL: $306,599,148 19,300,000 100.00%
EXHIBIT B
---------
NOTICE OF EXERCISE OF EXCHANGE RIGHT
In accordance with Section 8.05 of the Amended and Restated Agreement
of Limited Partnership (the "Agreement") of Ocwen Partnership, L.P., the
undersigned hereby irrevocably (i) presents for exchange ________ Partnership
Units in Ocwen Partnership, L.P. in accordance with the terms of the Agreement
and the Exchange Right referred to in Section 8.05 thereof, (ii) surrenders such
Partnership Units and all right, title and interest therein, and (iii) directs
that the Cash Amount or REIT Shares Amount (as defined in the Agreement) as
determined by the General Partner deliverable upon exercise of the Exchange
Right be delivered to the address specified below, and if REIT Shares (as
defined in the Agreement) are to be delivered, such REIT Shares be registered or
placed in the name(s) and at the address(es) specified below.
Dated:________ __, _____
Name of Limited Partner:
------------------------------
(Signature of Limited Partner)
------------------------------
(Mailing Address)
------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------
If REIT Shares are to be issued, issue to:
Please insert social security or identifying number:
Name:
