Exhibit 3.5
AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXXXX PARTNERS, L.P.
DATED AS OF NOVEMBER 17, 2006
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINED TERMS................................................ 1
ARTICLE 2 ORGANIZATIONAL MATTERS....................................... 13
2.1 Formation....................................................... 13
2.2 Name............................................................ 13
2.3 Registered Office and Agent..................................... 13
2.4 Principal Place of Business..................................... 14
2.5 Term and Termination............................................ 14
2.6 Power of Attorney............................................... 14
2.7 Effectiveness of this Agreement................................. 16
ARTICLE 3 PURPOSE AND POWERS........................................... 16
3.1 Purpose and Business............................................ 16
3.2 Powers.......................................................... 17
ARTICLE 4 CAPITAL CONTRIBUTIONS; PARTNERSHIP UNITS;
ADDITIONAL FUNDS............................................. 17
4.1 Capital Contributions of the Partners........................... 17
4.2 Issuance of Additional Partnership Interests.................... 18
4.3 Issuance of Securities by the Company........................... 19
4.4 Additional Funds................................................ 20
4.5 No Third-Party Beneficiary...................................... 20
4.6 No Interest..................................................... 20
4.7 No Preemptive Rights............................................ 20
4.8 Capital Accounts; Adjustments to Carrying Values................ 21
ARTICLE 5 DISTRIBUTIONS................................................ 21
5.1 Distributions................................................... 21
5.2 Qualification as a REIT......................................... 22
5.3 Withholding..................................................... 22
5.4 Additional Partnership Interests................................ 22
ARTICLE 6 ALLOCATIONS.................................................. 23
6.1 Allocation of Profits and Net Losses............................ 23
6.2 Special Allocations............................................. 23
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TABLE OF CONTENTS
(continued)
PAGE
6.3 Tax Allocations................................................. 25
6.4 Revisions to Allocations to Reflect Issuance of
Partnership Interests........................................... 25
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS........................ 25
7.1 Management...................................................... 25
7.2 Certificate of Limited Partnership.............................. 29
7.3 Reimbursement of the General Partner............................ 29
7.4 Acquisition of Limited Partner Interests by the
Company......................................................... 32
7.5 Transactions with Affiliates.................................... 32
7.6 Indemnification................................................. 32
7.7 Liability of the General Partner................................ 35
7.8 Other Matters Concerning the General Partner.................... 36
7.9 Title to Partnership Assets..................................... 37
7.10 Reliance by Third Parties....................................... 37
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................... 38
8.1 Limitation of Liability......................................... 38
8.2 No Right to Participate in the Management of Business........... 38
8.3 Return of Capital............................................... 38
8.4 Rights of Limited Partners Relating to the Partnership.......... 38
8.5 Redemption Right................................................ 39
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS....................... 42
9.1 Records and Accounting.......................................... 42
9.2 Reports......................................................... 42
ARTICLE 10 TAX MATTERS.................................................. 42
10.1 Preparation of Tax Returns...................................... 42
10.2 Tax Elections................................................... 43
10.3 Tax Matters Partner............................................. 43
10.4 Organizational Expenses......................................... 44
10.5 Withholding..................................................... 44
ARTICLE 11 TRANSFERS AND WITHDRAWALS.................................... 45
11.1 Transfer........................................................ 45
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TABLE OF CONTENTS
(continued)
PAGE
11.2 Transfer of the General Partner's General Partner
Interest........................................................ 46
11.3 Limited Partners' Rights to Transfer............................ 46
11.4 Substituted Limited Partners.................................... 47
11.5 Assignees....................................................... 48
11.6 General Provisions.............................................. 48
ARTICLE 12 ADMISSION OF PARTNERS........................................ 50
12.1 Admission of Successor General Partner.......................... 50
12.2 Admission of Additional Limited Partners........................ 50
12.3 Amendment of Agreement and Certificate of Limited
Partnership..................................................... 51
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION..................... 51
13.1 Dissolution..................................................... 51
13.2 Winding Up; Liquidation......................................... 52
13.3 No Obligation to Contribute Deficit............................. 53
13.4 Notice of Dissolution........................................... 53
13.5 Termination of Partnership and Cancellation of
Certificate of Limited Partnership.............................. 53
13.6 Reasonable Time for Winding-Up.................................. 53
13.7 Waiver of Partition............................................. 54
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS................. 54
14.1 Amendments...................................................... 54
14.2 Meetings of the Partners........................................ 54
ARTICLE 15 GENERAL PROVISIONS........................................... 55
15.1 Addresses and Notice............................................ 55
15.2 Titles and Captions............................................. 55
15.3 Pronouns and Plurals............................................ 56
15.4 Further Action.................................................. 56
15.5 Binding Effect.................................................. 56
15.6 Creditors....................................................... 56
15.7 Waiver.......................................................... 56
15.8 Counterparts.................................................... 56
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TABLE OF CONTENTS
(continued)
PAGE
15.9 Applicable Law.................................................. 56
15.10 Invalidity of Provisions........................................ 57
15.11 Merger.......................................................... 57
15.12 No Rights as Stockholders....................................... 57
15.13 Entire Agreement................................................ 57
EXHIBITS
EXHIBIT A- PARTNER'S CONTRIBUTIONS AND PARTNERSHIP INTERESTS
EXHIBIT B- FORM OF NOTICE OF REDEMPTION REQUEST
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AGREEMENT OF LIMITED PARTNERSHIP
OF
XXXXXXX PARTNERS, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP OF XXXXXXX PARTNERS, L.P. (this
"Agreement"), dated as of November 17, 2006, is entered into by and among
XXXXXXX GENERAL PARTNER, L.L.C., a Delaware limited liability company, as
general partner (the "General Partner"), XXXXXXX PROPERTIES TRUST, INC., a
Maryland corporation (the "Company"), and XXXXXXX ADVISORS, L.P., a Delaware
limited partnership, both as initial limited partners (the "Initial Limited
Partners"), and those Persons who subsequently execute this Agreement or a
counterpart hereof, and who become parties hereto pursuant to the terms of this
Agreement.
W I T N E S S E T H
WHEREAS, the General Partner and the Initial Limited Partners formed
Xxxxxxx Partners, L.P. (the "Partnership") as a limited partnership pursuant to
the Act by filing a certificate of limited partnership with the Secretary of
State of the State of Delaware on November 17, 2006;
WHEREAS, this Agreement shall constitute the "partnership agreement"
(within the meaning of the Act) of the Partnership, and shall be binding upon
all Persons now or at any time hereafter who are Partners;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Agreement, and of other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending legally to be bound, hereby agree as follows:
ARTICLE 1
DEFINED TERMS
Capitalized terms used in this Agreement (including exhibits, schedules
and amendments) shall have the meanings set forth below, except as otherwise
expressly indicated or limited by the context in which they appear in this
Agreement. All terms defined in this Agreement in the singular have the same
meanings when used in the plural and vice versa. Accounting terms used but not
otherwise defined shall have the meanings given to them under GAAP.
1.1 "ACT" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time, and any successor to such statute.
1.2 "ADDITIONAL LIMITED PARTNER" means a Person that has executed and
delivered an additional limited partner signature page in the form attached
hereto and has been admitted to the Partnership as a Limited Partner pursuant to
Section 12.2.
1.3 "ADJUSTED CAPITAL ACCOUNT DEFICIT" means with respect to any Partner,
the negative balance, if any, in such Partner's Capital Account as of the end of
any relevant Fiscal Year, determined after giving effect to the following
adjustments:
(a) credit to such Capital Account any portion of such negative
balance which such Partner (i) is treated as obligated to restore to the
Partnership pursuant to the provisions of Section 1.704-1(b)(2)(ii)(c) of the
Treasury Regulations, or (ii) is deemed to be obligated to restore to the
Partnership pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Treasury Regulations; and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.
This definition of Adjusted Capital Account Deficit is intended to comply with
the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
1.4 "ADVISOR" means Xxxxxxx Advisors, L.P., the advisor to the
Company and the Partnership pursuant to the Advisory Agreement.
1.5 "ADVISORY AGREEMENT" means that certain Advisory Agreement by and
among the Advisor, the Partnership and the Company dated as of , 2007.
1.6 "AFFILIATE" means, with respect to any Person, (a) any Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person, (b) any Person owning
or controlling ten percent (10%) or more of the outstanding voting interests of
such Person, (c) any Person of which such Person owns or controls ten percent
(10%) or more of the voting interests or (d) any officer, director, general
partner or trustee of such Person or any Person referred to in (a), (b) and (c)
above. For this purpose, the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
1.7 "AGREED VALUE" means (a) in the case of any Contributed Property, the
fair market value of such Contributed Property at the time such property is
contributed as determined by the General Partner and agreed to by the
contributing party, reduced by any liabilities either assumed by the Partnership
upon such contribution or to which such property is subject when contributed,
and (b) in the case of any property distributed to a Partner by the Partnership,
the Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution.
1.8 "AGREEMENT" means this Agreement of Limited Partnership of Xxxxxxx
Partners, L.P., as originally executed and as amended, modified, supplemented or
restated from time to time, as the context requires.
1.9 "APPRAISED VALUE" means the value of the Partnership Assets as
determined by an appraisal made by an Independent Appraiser.
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1.10 "ARTICLES OF INCORPORATION" means the Company's Articles of
Incorporation, filed with the Maryland State Department of Assessments and
Taxation, or other organizational documents governing the Company, as amended,
modified, supplemented or restated from time to time.
1.11 "ASSIGNEE" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
1.12 "BOOK GAIN" or "BOOK LOSS" means the gain or loss recognized by the
Partnership for purposes of Section 704(b) of the Code in any Fiscal Year by
reason of any sale or disposition with respect to any of the property or assets
of the Partnership. Such Book Gain or Book Loss shall be computed by reference
to the Carrying Value of such property or assets as of the date of such sale or
disposition, rather than by reference to the tax basis of such property or
assets as of such date, and each and every reference herein to "gain" or "loss"
shall be deemed to refer to Book Gain or Book Loss, rather than to tax gain or
tax loss, unless the context manifestly otherwise requires.
1.13 "BUSINESS DAY" means any day except a Saturday, Sunday or other day
on which commercial banks in Los Angeles, California are authorized or required
by law to close.
1.14 "CAPITAL ACCOUNT" has the meaning set forth in Section 4.8.
1.15 "CAPITAL CONTRIBUTION" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property that such Partner
contributes or is deemed to contribute to the Partnership pursuant to Article 4
hereof.
1.16 "CAPITAL TRANSACTION" means (a) any sale, exchange, taking by eminent
domain, damage, destruction or other disposition of all or any part of the
assets of the Partnership, any Subsidiary or any other Person in which the
Partnership holds a direct or indirect interest, other than tangible personal
property disposed of in the ordinary course of business; or (b) any financing or
refinancing of any indebtedness of the Partnership, any Subsidiary or any other
Person in which the Partnership holds a direct or indirect interest; provided,
that the receipt by the Partnership of Capital Contributions shall not
constitute a Capital Transaction; and provided further that no Terminating
Capital Transaction shall constitute a Capital Transaction.
1.17 "CARRYING VALUE" means, except as otherwise provided herein, (a) with
respect to a Contributed Property, the fair market value of such Contributed
Property at the time such property is contributed, as determined by the Company
and agreed to by the contributing partner, without reduction for any liabilities
either assumed by the Partnership upon such contribution or to which such
property was subject when contributed, reduced (but not below zero) by all
Depreciation with respect to such property charged to the Partners' Capital
Accounts, and (b) with respect to any other Partnership Asset, the adjusted
basis of such Partnership Asset for federal income tax purposes, all as of the
time of determination. The Carrying Value of any property shall be adjusted in
accordance with Section 4.8(b) from time to time to reflect changes, additions
or other adjustments to the Carrying Value, as deemed appropriate by the
Company.
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1.18 "CASH AMOUNT" means an amount of cash equal to the Value of the REIT
Stock Amount on the Valuation Date.
1.19 "CERTIFICATE" means the Certificate of Limited Partnership of the
Partnership, filed on November 17, 2006, as amended, restated, supplemented or
otherwise modified from time to time as herein provided in accordance with the
Act.
1.20 "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any subsequent federal law of similar import, and, to the extent
applicable, any Treasury Regulations promulgated thereunder.
1.21 "COMMON STOCK" means a share of the common stock of the Company.
Common Stock may be issued in one or more classes or series in accordance with
the terms of the Articles of Incorporation. If there is more than one class or
series of Common Stock, the term "Common Stock" shall, as the context requires,
be deemed to refer to the class or series of Common Stock that correspond to the
class or series of Partnership Units for which the reference to Common Stock is
made.
1.22 "COMPANY INTEREST" means a Partnership Interest held by the Company,
in its capacity as limited partner. A Company Interest may be expressed as a
number of Partnership Units.
1.23 "CONSENT" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
1.24 "CONSENT OF THE OUTSIDE LIMITED PARTNERS" means the Consent of the
Outside Limited Partners holding a number of Partnership Units greater than
fifty percent (50%) of the aggregate Partnership Units held by all Outside
Limited Partners.
1.25 "CONTRIBUTED PROPERTY" means each property or other asset (but
excluding cash and cash equivalents), in such form as may be contributed by a
Partner to the Partnership as permitted by the Act.
1.26 "DEPRECIATION" means, for each Fiscal Year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other period for federal income tax
purposes; provided, that if the Carrying Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of any such year
or other period, Depreciation shall be determined in the manner described in
Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3) or Section 1.704-3(d)(2),
whichever is applicable, and if such asset has a zero adjusted tax basis,
Depreciation shall be an amount determined under any reasonable method selected
by the Company.
1.27 "DISPOSITION PROCEEDS" means (i) the net cash funds or proceeds
(including unused property reserves held at time of disposition) resulting from
the sale or other disposition of the Partnership's assets, after deduction of
payment of all expenses incurred in connection therewith; plus, (ii) all net
cash proceeds subsequently received on any installment payments or promissory
notes and/or installment contracts held by the Partnership in connection with
the sale or other disposition of Partnership's assets after payment of any
underlying indebtedness related
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to the assets sold; less (iii) such amounts for reserves as the Company deems
reasonably necessary for the future operations of the Partnership.
1.28 "DISTRIBUTABLE CASH" means the sum of Disposition Proceeds,
Distributable Cash From Operations, and to the extent that the Company's Board
of Directors so determines, Refinancing Proceeds.
1.29 "DISTRIBUTABLE CASH FROM OPERATIONS" means the funds provided from
the Partnership's operations, rent payments, interest on the Partnership's cash
and short-term investments and excess operation reserves, without deduction for
non-cash expenses (such as cost recovery and amortization of imputed interest),
but after deducting cash funds used to pay all other expenses (including asset
management fees), debt payments, replacements, and capital improvements,
together with a reasonable allowance for contingencies and reserves during the
same period of time.
1.30 "EFFECTIVE DATE" means the date of first closing of the offering of
Common Stock pursuant to the Registration Statement.
1.31 "10% RETURN" means, with respect to the Company, an amount calculated
like simple interest at the rate of ten percent (10%) per annum calculated on
the varying daily balances of Invested Capital of the Company during the period
to which the 10% Return relates, and determined on the basis of a 360-day
year/30-day month, cumulative for the period for which such 10% Return is being
determined.
1.32 "ENTITY" means any general partnership, limited liability company,
proprietorship, corporation, joint venture, joint-stock company, limited
partnership, limited liability partnership, business trust, firm, trust, estate,
governmental entity, cooperative, association or other foreign or domestic
enterprise.
1.33 "FISCAL YEAR" means the fiscal year of the Partnership and shall be
the same as its taxable year, which shall be the calendar year unless otherwise
determined by the General Partner in accordance with the Code.
1.34 "GAAP" means United States generally accepted accounting principles,
as in effect from time to time.
1.35 "GENERAL PARTNER" means Xxxxxxx General Partner, L.L.C., a
Delaware limited liability company, and any successor as general partner of
the Partnership. The interest in the Partnership held by the General Partner
is referred to herein as the "General Partner Interest."
1.36 "INCAPACITY" or "INCAPACITATED" means:
(a) as to any individual Partner, death, total physical disability
or entry by a court of competent jurisdiction adjudicating him or her
incompetent to manage his or her person or his or her estate;
(b) as to any corporation that is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter;
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(c) as to any partnership that is a Partner, the dissolution
and commencement of winding up of the partnership;
(d) as to any estate that is a Partner, the distribution by the
fiduciary of the estate's entire interest in the Partnership;
(e) as to any trustee of a trust that is a Partner, the
termination of the trust (but not the substitution of a new trustee); or
(f) as to any Partner, the bankruptcy of such Partner, which shall
be deemed to have occurred when:
(i) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect;
(ii) the Partner is adjudged as bankrupt or insolvent, or a
final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Partner;
(iii) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors;
(iv) the Partner files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (ii) above;
(v) the Partner seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator for the Partner or for all
or any substantial part of the Partner's assets;
(vi) any proceeding seeking liquidation, reorganization or
other relief of or against such Partner under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof;
(vii) the appointment without the Partner's consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or stayed
within ninety (90) days of such appointment; or
(viii) an appointment referred to in clause (vii) which has
been stayed is not vacated within ninety (90) days after the expiration of any
such stay.
1.37 "INDEMNITEE" means
(a) any Person made a party to a proceeding by reason of its
status as:
(i) the General Partner,
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(ii) a Limited Partner,
(iii) the Advisor,
(iv) a director, trustee, manager, member or officer of
the Partnership, the General Partner, the Company or the Advisor, or
(v) a director, trustee, manager, member or officer of any
other Entity, serving in such capacity at the request of the Partnership, the
General Partner, the Company or the Advisor, acting on behalf of the
Partnership, the General Partner, the Advisor or the Company, or
(b) such other Persons (including Affiliates of the Company) as the
General Partner may designate from time to time (whether before or after the
event giving rise to potential liability), in its sole and absolute discretion.
1.38 "INDEPENDENT APPRAISER" means an appraiser of real estate with no
material current or prior business or personal relationship with the Advisor,
the Partnership, the General Partner, the Company or the directors of the
Company, that, in the determination of the General Partner, is qualified to
appraise real estate by virtue of being engaged to a substantial extent in the
business of rendering opinions regarding the value of assets of the type held by
the Partnership. Membership in a nationally recognized appraisal society such as
the American Institute of Real Estate Appraisers or the Society of Real Estate
Appraisers shall be conclusive evidence of such qualification.
1.39 "INITIAL LIMITED PARTNERS" means Xxxxxxx Properties Trust, Inc.
and Xxxxxxx Advisors, L.P.
1.40 "INVESTED CAPITAL" means, with respect to the Company, as of any
relevant date, an amount equal to the excess of (i) the aggregate amount of cash
contributed or deemed contributed by the Company to the Partnership from the
gross proceeds of the issuance by the Company of REIT Stock or other equity
Securities pursuant to Article IV hereof, over (ii) the sum of (A) the
cumulative distributions of Distributable Cash made to the Company pursuant to
Section 5.1(b) as of such date, and (B) the cumulative amounts paid to the
Company in redemption of its Partnership Units pursuant to Section 8.5(g) as of
such date; provided, however, that for purposes of computing the return of
Invested Capital in Section 5.1(b) and the 10% Return, all funds invested in the
Company by the Company stockholders shall be deemed contributed by the Company
to the Partnership.
1.41 "IRS" shall mean the Internal Revenue Service of the United
States.
1.42 "LIEN" means any lien, security interest, mortgage, deed of trust,
charge, claim, encumbrance, pledge, option, right of first offer or first
refusal and any other right or interest of others of any kind or nature, actual
or contingent, or other similar encumbrance of any nature whatsoever.
1.43 "LIMITED PARTNER" means, prior to the admission of the first
Additional Limited Partner to the Partnership, the Initial Limited Partners, and
thereafter any Person named as a
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limited partner of the Partnership in Exhibit A, as such Exhibit may be amended
from time to time, upon the execution and delivery by such Person of an
additional limited partner signature page, including any Additional Limited
Partner or Substituted Limited Partner in each case, in such Person's capacity
as a limited partner of the Partnership.
1.44 "LIMITED PARTNER INTEREST" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes any and all benefits to which the holder
of such Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partner Interest may be expressed as a
number of Partnership Units.
1.45 "LIQUIDATING EVENT" has the meaning set forth in Section 13.1
hereof.
1.46 "LIQUIDATOR" has the meaning set forth in Section 13.2 hereof.
1.47 "LISTING EVENT" means the listing of the REIT Stock on a national
securities exchange.
1.48 "LISTING DATE" means the date on which a Listing Event occurs.
1.49 "MARKET VALUE" means the market value of the REIT Stock as of the
date of a Listing Event, which shall be equal to the product of (a) the number
of shares of REIT Stock issued and outstanding at the time of the Listing Event,
multiplied by (b) the average Listed Market Price (as defined below) of a share
of REIT Stock for the 30 trading days beginning on the 180th day after the
Listing Date. The "Listed Market Price" of a share of REIT Stock for each such
trading day shall be the last reported sale price on such day or, if no sale
takes place on such day, the average of the closing bid and asked prices on such
day, as reported on the national securities exchange on which the REIT Stock is
listed for trading, or, if the REIT Stock is not listed for trading on a
national securities exchange, as reported by the Nasdaq Stock Market.
1.50 "NASDAQ STOCK MARKET" means the National Market of the National
Association of Securities Dealers, Inc. Automated Quotation System.
1.51 "NASAA GUIDELINES" means the North American Securities
Administrators Association, Inc. Statement of Policy Regarding Real Estate
Investment Trusts.
1.52 "NONRECOURSE DEDUCTIONS" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations.
1.53 "NONRECOURSE LIABILITIES" has the meaning set forth in Section
1.704-2(b)(3) of the Treasury Regulations.
1.54 "NOTICE OF REDEMPTION REQUEST" means a notice of redemption request
substantially in the form of Exhibit B attached hereto.
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1.55 "OUTSIDE LIMITED PARTNERS" means the Limited Partners, excluding the
Initial Limited Partners and any Limited Partner that is an Affiliate of the
Company or the Advisor.
1.56 "PARTNER" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners, collectively.
1.57 "PARTNER MINIMUM GAIN" means an amount, with respect to each
Partner's share of Partner Nonrecourse Debt, equal to the Partnership Minimum
Gain that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Treasury Regulations
Section 1.704-2(i)(3).
1.58 "PARTNER NONRECOURSE DEBT" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(4).
1.59 "PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership taxable year shall be determined in accordance with the rules of
Treasury Regulations Section 1.704-2(i)(2).
1.60 "PARTNERSHIP" means Xxxxxxx Partners, L.P., and any successor
thereto.
1.61 "PARTNERSHIP ASSET" means the interest of the Partnership in any
Entity or security (whether in corporate securities, equity, debt or hybrid
securities, partnership or joint venture interests, other contractual rights or
otherwise), or any other Real Estate Assets or other assets owned, directly or
indirectly, by the Partnership, as determined by the General Partner.
1.62 "PARTNERSHIP INTEREST" means the entire ownership interest of a
Partner in the Partnership at any particular time which represents a Capital
Contribution by such Partner and which includes the right of such Partner to any
and all benefits to which such Partner may be entitled as provided in this
Agreement, together with the obligations of such Partner to comply with all
terms and provisions of this Agreement. A Partnership Interest may be expressed
as a number of Partnership Units.
1.63 "PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in a Partnership Minimum Gain, for a Partnership
taxable year shall be determined in accordance with the rules of Treasury
Regulations Section 1.704-2(d).
1.64 "PARTNERSHIP RECORD DATE" means the record date established by the
Company for the distribution by the Partnership of Distributable Cash or other
Partnership Assets pursuant to Section 5.1 hereof, which record date shall be
the same as the record date established by the Company for a distribution to its
stockholders of some or all of its portion of such distribution by the
Partnership.
1.65 "PARTNERSHIP UNIT" means a unit of Partnership Interest with the
rights, powers and duties set forth herein, designated as such on Exhibit A and
expressed in the number set forth on Exhibit A, as such exhibit may be amended
from time to time.
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1.66 "PERCENTAGE INTEREST" means, as to each Partner, the percentage
determined by dividing the total number of Partnership Units owned by such
Partner by the aggregate number of Partnership Units then issued and
outstanding, as set forth on Exhibit A, as such exhibit may be amended from time
to time.
1.67 "PERMITTED TRANSFEREE" means with respect to a Person, (a) any
Affiliate of such Person, (b) the spouse of such Person or any ancestor,
descendent or sibling of such Person or of the spouse of such Person, or (c) any
trust for the benefit of such Person or any other person described in clause (b)
of this Section 1.67.
1.68 "PERSON" means any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such individual
or Entity where the context so permits.
1.69 "PROFITS" and "LOSSES" means, for each Fiscal Year or other period
for which allocations to Partners are made, an amount equal to the Partnership's
taxable income or loss for such period determined in accordance with federal
income tax principles, with the following adjustments:
(a) any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses pursuant
to this provision shall be added to such taxable income or loss;
(b) any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not
otherwise taken into account in computing Profits or Losses pursuant to this
provision, shall be subtracted from such taxable income or loss;
(c) in the event the Carrying Value of any Partnership asset is
adjusted pursuant to this Agreement, the amount of such adjustment shall be
taken into account as gain or loss from the disposition of such asset for
purposes of computing Profits or Losses, and shall be allocated in accordance
with the provisions of Article 6;
(d) Book Gain or Book Loss from a Capital Transaction shall be taken
into account in lieu of any tax gain or tax loss recognized by the Partnership
by reason of such Capital Transaction;
(e) in lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period, computed as provided in this Agreement;
(f) to the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or Section 743(b) of the Code is
required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) to be
taken into account in determining Capital Accounts as a result of a distribution
other than in liquidation of a Partner's interest in the Partnership, the amount
of such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the Partnership asset) or loss (if the adjustment
decreases the basis of the
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Partnership asset) from the disposition of the Partnership asset and shall be
taken into account for purposes of computing Profits or Losses; and
(g) any items which are specially allocated pursuant to Section 6.2
shall not be taken into account in computing Profits or Losses.
If the Partnership's taxable income or loss for such Fiscal Year or other
period, as adjusted in the manner provided above, is a positive amount, such
amount shall be the Partnership's Profits for such Fiscal Year or other period;
and if a negative amount, such amount shall be the Partnership's Losses for such
Fiscal Year or other period.
1.70 "REAL ESTATE ASSETS" means assets described in Code Section
856(c)(5)(B), unimproved and improved real property, real estate-related assets
and any direct or indirect interest therein (including, without limitation, fee
or leasehold interests, options, leases, partnership and joint venture
interests, equity and debt securities of entities that own real estate, first or
second mortgages on real property, mezzanine loans secured by junior liens on
real property, preferred equity interests secured by a property owner's interest
in real property and other contractual rights in real estate).
1.71 "REDEEMING PARTNER" has the meaning set forth in Section 8.5.
1.72 "REDEMPTION AMOUNT" means either the Cash Amount or the REIT Stock
Amount, as determined by the Company in its sole and absolute discretion.
1.73 "REDEMPTION RIGHT" has the meaning set forth in Section 8.5.
1.74 "REFINANCING PROCEEDS" means (i) the net cash funds or proceeds
resulting from the financing or refinancing of, or any other borrowing secured
by, the Partnership's assets, after deduction of the payment of all expenses
incurred in connection therewith; less (ii) such amounts for reserves as the
Company deems reasonably necessary for the future operations of the Partnership.
1.75 "REGISTRATION STATEMENT" means the Registration Statement on Form
S-11 to be filed by the Company with the Securities and Exchange Commission, and
any amendments thereto made at any time.
1.76 "REIT" means a "real estate investment trust" as defined under
Section 856 of the Code.
1.77 "REIT NOTICE" has the meaning set forth in Section 8.5.
1.78 "REIT REQUIREMENTS" has the meaning set forth in Section 5.2.
1.79 "REIT STOCK" means the Common Stock and all other shares of capital
stock of the Company.
1.80 "REIT STOCK AMOUNT" means a number of shares of REIT Stock equal to
the number of Partnership Units offered by redemption by a Redeeming Partner;
provided that in the
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event that the Company issues to all holders of REIT Stock rights, options,
warrants, or convertible or exchangeable securities entitling stockholders of
the Company to acquire REIT Stock, or any other securities or property
(collectively, the "rights"), then the REIT Stock Amount shall also include such
rights that a holder of that number of shares of REIT Stock would be entitled to
receive.
1.81 "SECURITIES ACT" means the Securities Act of 1933, as amended.
1.82 "SPECIAL LIMITED PARTNER" means Xxxxxxx Advisors L.P., a Delaware
limited partnership
1.83 "SPECIFIED REDEMPTION DATE" means the tenth (10th) Business Day after
receipt by the General Partner of a Notice of Redemption Request.
1.84 "STOCK OPTION PLANS" means, collectively, any and all plans adopted
from time to time by the Company pursuant to which REIT Stock is issued, or
options to acquire REIT Stock are granted, to employees or directors of the
Company, employees of the Partnership or employees of their respective
Affiliates in consideration for services or future services.
1.85 "SUBSIDIARY" means, with respect to any Person, any Entity of which a
majority of the voting power or the voting equity securities, and/or the
outstanding equity interests (whether or not voting), is owned, directly or
indirectly, by such Person.
1.86 "SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4 hereof.
1.87 "TERMINATING CAPITAL TRANSACTION" means any sale or other disposition
(other than a deemed disposition pursuant to Code Section 708(b)(1)(B) and the
Treasury Regulations thereunder) of all or substantially all of the assets of
the Partnership or a related series of transactions that, taken together, result
in the sale or other disposition of all or substantially all of the assets of
the Partnership.
1.88 "TERMINATION EVENT" means any termination of the Advisor as advisor
to the Partnership and the Company under the terms of the Advisory Agreement,
other than any termination for "Cause" (as defined in the Advisory Agreement)
and other than any termination of the Advisory Agreement due to the occurrence
of a Listing Event.
1.89 "TRANSFER" means to give, sell, assign, pledge, hypothecate, devise,
bequeath, or otherwise dispose of, transfer, or permit to be transferred, during
life or at death. The word "Transfer," when used as a noun, shall mean any
Transfer transaction.
1.90 "TREASURY REGULATIONS" means the federal income tax regulations,
including any temporary or proposed regulations, promulgated under the Code, as
such Treasury Regulations may be amended from time to time (it being understood
that all references herein to specific sections of the Treasury Regulations
shall be deemed also to refer to any corresponding provisions of succeeding
Treasury Regulations).
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1.91 "VALUATION DATE" means the date of receipt by the General Partner of
a Notice of Redemption Request or, if such date is not a Business Day, the first
Business Day thereafter.
1.92 "VALUE" means, with respect to a share of REIT Stock, (a) if REIT
Stock is traded on a national securities exchange, reported through the Nasdaq
Stock Market or otherwise traded over-the-counter, the average of the daily
Market Price (as defined below) for shares of REIT Stock for the ten (10)
consecutive trading days immediately preceding the Valuation Date, or (b) if
REIT Stock is not traded in a manner described in clause (a), the value of a
share of REIT Stock as 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. The "Market Price" for each such trading day
shall be (i) the last reported sale price on such day or, if no sale takes place
on such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the Company; or (ii) if 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 (iii) if there
shall be no bid and asked prices on such day, the average of the high bid and
low asked prices, as so reported, on the most recent day (not more than ten (10)
days prior to the date in question) for which prices have been so reported. In
the event the REIT Stock Amount includes rights that a holder of REIT Stock
would be entitled to receive, then the Value of such rights 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.
ARTICLE 2
ORGANIZATIONAL MATTERS
2.1 FORMATION
The Partnership is a limited partnership organized pursuant to the
provision of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act.
2.2 NAME
The name of the Partnership is Xxxxxxx Partners, L.P. The
Partnership's business may be conducted under such name or under any other name
or names deemed advisable by the General Partner, including the name of the
General Partner, the Company or any Affiliate thereof. The words "Limited
Partnership," "L.P.," "Ltd." or similar words or letters shall be included in
the Partnership's name where necessary for the purposes of complying with the
laws of any jurisdiction that so requires. The General Partner, acting in its
sole and absolute discretion without the Consent of any Limited Partner, may
change the name of the Partnership. The General Partner shall notify the Limited
Partners of any such name change in the next regular communication to the
Limited Partners.
2.3 REGISTERED OFFICE AND AGENT
The address of the registered office of the Partnership in the State
of Delaware shall be 000 Xxxxx XxXxxx Xxxxxxx, in the City of Dover, County of
Xxxx, Xxxxxxxx 00000, or
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such other place as may be designated from time to time by the General Partner.
The name of the registered agent for service of process on the Partnership in
the State of Delaware at such address shall be National Corporate Research, Ltd.
2.4 PRINCIPAL PLACE OF BUSINESS
The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems advisable.
The principal office of the Partnership shall be 0000 Xxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxx, 00000, or such other place as the General Partner may from time to
time designate by notice to the Limited Partners.
2.5 TERM AND TERMINATION
The term of the Partnership shall commence on the date hereof and
shall continue until November 17, 2017, unless the Partnership is dissolved
sooner pursuant to the provisions of Article 13 or as otherwise provided by law.
2.6 POWER OF ATTORNEY
(a) Each Limited Partner and each Assignee who accepts Partnership
Units (or any other Partnership Interest or any rights, benefits or privileges
associated therewith) is deemed to irrevocably constitute and appoint the
General Partner, any Liquidator and authorized officers and attorneys-in-fact of
each, and each such Person acting singly, in each case with full power of
substitution, as its true and lawful agent and attorney-in-fact, with full power
and authority in its name, place and stead to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices:
(A) all certificates, documents and other instruments
(including, without limitation, this Agreement and the
Certificate and all amendments or restatements thereof) that
the General Partner or the Liquidator deems appropriate or
necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or
a partnership in which the Limited Partners have limited
liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may or plans to conduct
business or own property, including, without limitation, any
documents necessary or advisable to convey any Contributed
Property to the Partnership;
(B) all instruments that the General Partner or any
Liquidator deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this
Agreement in accordance with its terms;
(C) all conveyances and other instruments or documents
that the General Partner or any Liquidator deems appropriate
or necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the
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terms of this Agreement, including, without limitation, a
certificate of cancellation;
(D) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant
to, or other events described in, Article 11, 12 or 13 hereof
or any Capital Contribution of any Partner;
(E) all certificates, documents and other instruments
relating to the determination of the rights, preferences and
privileges of Partnership Interests;
(F) all amendments to this Agreement as provided in
Article 14 hereof; and
(G) all other instruments that may be required by law to
be filed on behalf of or relating to the Partnership and that
are not inconsistent with this Agreement; and
(ii) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of the General
Partner or any Liquidator, to make, evidence, give, confirm or ratify any vote,
consent, approval, agreement or other action which is made or given by the
Partners hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the General Partner or any
Liquidator, to effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and/or
the Transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives.
(c) Each such Limited Partner or Assignee hereby agrees to be bound
by any representation made by the General Partner or any Liquidator, acting in
good faith pursuant to such power of attorney, and each such Limited Partner or
Assignee hereby waives any and all defenses which may be available to contest,
negate or disaffirm the action of the General Partner or any Liquidator, taken
in good faith under such power of attorney.
(d) Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner's or
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Liquidator's request therefor, such further designation, powers of attorney and
other instruments as the General Partner or the Liquidator, as the case may be,
deems necessary to effectuate this Agreement and the purposes of the
Partnership.
(e) Any Person dealing with the Partnership may conclusively presume
and rely upon the fact that any instrument referred to in this Section 2.6,
executed by the General Partner or the Liquidator acting as attorney-in-fact, is
authorized by and binding on the Partnership, without further inquiry.
2.7 EFFECTIVENESS OF THIS AGREEMENT
This Agreement shall govern the operations of the Partnership and
the rights and restrictions applicable to the Partners, to the extent permitted
by law. Pursuant to Section 17-101(12) of the Act, all Persons who become
holders of Partnership Interests shall be bound by the provisions of this
Agreement. The execution by a Person of this Agreement and acceptance thereof by
the General Partner in accordance with the terms of this Agreement or the
receipt of Partnership Interests by a Person as a successor or assign of an
existing Partner and the consent of the General Partner to the admission of such
Person as a Substituted Limited Partner in accordance with the terms of this
Agreement shall be deemed to constitute a request that the records of the
Partnership reflect such admission, and shall be deemed to be a sufficient act
to comply with the requirements of Section 17-101(12) of the Act and to so cause
that Person to become a Partner as of the date of acceptance of its Capital
Contribution by the Partnership and to bind that Person to the terms and
conditions of this Agreement (and to entitle that Person to the rights of a
Partner hereunder).
ARTICLE 3
PURPOSE AND POWERS
3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act including, without limitation,
to engage in the following activities:
(a) to acquire, hold, own, develop, construct, improve, maintain,
operate, sell, lease, transfer, encumber, convey, exchange and otherwise dispose
of or deal with Real Estate Assets;
(b) to acquire, hold, own, develop, construct, maintain, operate,
sell, lease, transfer, encumber, convey, exchange and otherwise dispose of or
deal with other real and personal property of all kinds;
(c) acquire own, hold for investment and ultimately dispose of
general and limited partner interests, and stock, warrants, options or other
equity and debt interests in Entities, and exercise all rights and powers
granted to the owner of any such interests;
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(d) make any type of investment and engage in any other lawful act
or activity for which limited partnerships may be formed under the Act, and by
such statement all lawful acts and activities shall be within the purposes of
the Partnership;
(e) to undertake such other activities as may be necessary,
advisable, desirable or convenient to the business of the Partnership; and
(f) to engage in such other ancillary activities as shall be
necessary or desirable to effectuate the foregoing purposes; provided, however,
that such business shall be limited to and conducted in such a manner as to
permit the Company at all times to be classified as a REIT, unless the Company
determines not to qualify as a REIT or ceases to qualify as a REIT for reasons
other than the conduct of the business of the Partnership.
3.2 POWERS
(a) The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described in Section
3.1 and for the protection and benefit of the Partnership including, without
limitation, full power and authority to enter into, perform, and carry out
contracts of any kind, to borrow money and to issue evidences of indebtedness,
whether or not secured by mortgage, trust deed, pledge or other Lien, and,
directly or indirectly, to acquire, hold, own, develop, construct, improve,
maintain and operate Real Estate Assets, and to sell, lease, transfer, encumber,
convey, exchange and otherwise dispose of Real Estate Assets.
(b) The General Partner also is empowered to do any and all acts and
things necessary, appropriate or advisable to ensure that the Partnership will
not be classified as a "publicly traded partnership" within the meaning of
Section 7704 of the Code, including, but not limited to, imposing restrictions
on Transfers of Partnership Units.
ARTICLE 4
CAPITAL CONTRIBUTIONS; PARTNERSHIP UNITS;
ADDITIONAL FUNDS
4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
(a) Initial Capital Contributions. The General Partner and the
Initial Limited Partners have made or shall make on the Effective Date, the
Capital Contributions as set forth on Exhibit A to this Agreement in exchange
for the number of Partnership Units set forth opposite their names on Exhibit A.
At such time as Additional Limited Partners are admitted to the Partnership,
each such Additional Limited Partner shall make Capital Contributions in the
amount set forth opposite such Limited Partner's name on Exhibit A, as it shall
be amended at the time of such contribution.
(b) Deemed Capital Contributions. To the extent the Partnership
acquires any property by the merger of any other Person into the Partnership or
the contribution of assets by any other Person to the Partnership, Persons who
receive Partnership Interests in exchange for their interests in the Person
merging into or contributing assets to the Partnership shall become
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Partners and shall be deemed to have made Capital Contributions as provided in
the applicable merger agreement or contribution agreement and as set forth in
Exhibit A, as it shall be amended to reflect such deemed Capital Contributions.
(c) Partnership Units. Each Partner shall own Partnership Units in
the amounts set forth for such Partner in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to reflect accurately redemptions, additional Capital
Contributions, the issuance of additional Partnership Units or similar events
having an effect on the number of Partnership Units held by, and the Percentage
Interest of, any Partner. Each Partnership Unit shall entitle the holder thereof
to one vote on all matters on which the Partners (or any portion of the
Partners) are entitled to vote under this Agreement.
(d) No Additional Capital Contributions. Except as provided in
Sections 4.3(a) and 10.5, the Partners shall have no obligation to make any
additional Capital Contributions or provide any additional funding to the
Partnership (whether in the form of loans or otherwise) and no Partner shall
have any obligation to restore any deficit that may exist in its Capital
Account, either upon a liquidation of the Partnership or otherwise.
4.2 ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS
(a) The General Partner is authorized to cause the Partnership to
issue additional Partnership Interests (or options or warrants to acquire
Partnership Interests) in the form of Partnership Units or other Partnership
Interests in one or more series or classes to any Persons at any time or from
time to time, on such terms and conditions as the General Partner shall
establish in each case in its sole and absolute discretion subject to Delaware
law, including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each class or series of Partnership
Interests, (ii) the right of each class or series of Partnership Interests to
share in Partnership distributions, and (iii) the rights of each class or series
of Partnership Interest upon dissolution and liquidation of the Partnership;
provided, that, no such Partnership Interests shall be issued to the Company
unless either (A) the Partnership Interests are issued pursuant to Section 4.3,
or (B) the additional Partnership Interests are issued to all Partners holding
Partnership Interests in the same class in proportion to their respective
Percentage Interests in such class.
(b) Subject to the limitations set forth in Sections 4.2(a) and
4.3(a), the General Partner may take such steps as it, in its sole and absolute
discretion, deems necessary or appropriate to admit any Person as a Limited
Partner of the Partnership in accordance with Section 12.2 or to issue any
Partnership Interests, including, without limitation, amending the Certificate,
Exhibit A or any other provision of this Agreement.
(c) Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Interests (or options
to acquire Partnership Interests) for less than fair market value, so long as
the General Partner concludes in good faith that such issuance is in the
interest of the Partnership and the Partners
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4.3 ISSUANCE OF SECURITIES BY THE COMPANY
(a) General. The Company shall not issue any debt securities,
preferred stock, Common Stock, any other class of REIT Stock or rights, options,
warrants or other securities convertible into or exchangeable for preferred
stock, Common Stock or any other class of REIT Stock (collectively,
"Securities"), other than (1) as payment of the REIT Stock Amount in connection
with a redemption of Partnership Units pursuant to Section 8.6, (2) upon the
conversion, exchange or exercise of other outstanding securities of the Company
in accordance with the terms of such securities, or (3) to all holders of REIT
Stock on a pro rata basis, unless the Company shall:
(i) in the case of REIT Stock or other equity Securities other
than Securities described in clause (ii) below, (A) contribute to the
Partnership the proceeds of or consideration (including any property or other
non-cash assets) received upon the issuance of such Securities, and (B) receive
from the Partnership in consideration for such contributions Partnership
Interests with the same terms and conditions, including dividend, dividend
priority and liquidation preference, as are applicable to such Securities
(including, for purposes of clarification, Partnership Units in the case of any
issuance of Common Stock by the Company);
(ii) in the case of options, warrants or other rights to
purchase REIT Stock, or other equity securities convertible into or exchangeable
for REIT Stock, (A) contribute to the Partnership the proceeds of or
consideration (including any property or other non-cash assets) received upon
the issuance of such equity Securities, and (B) receive from the Partnership in
consideration for such contributions a number of options, warrants or other
rights to purchase Partnership Interests equal to the number of such Securities
issued by the Company, with equivalent rights, preferences and limitations to
the terms of such equity Securities; and
(iii) in the case of debt securities, lend to the Partnership
the proceeds of or consideration received for such Securities on the same terms
and conditions, including interest rate and repayment schedule, as shall be
applicable with respect to or incurred in connection with the issuance of such
Securities and the proceeds of, or consideration received from, any subsequent
exercise, exchange or conversion thereof (if applicable).
(b) Splits. The Partnership shall (i) make a distribution in
Partnership Units, (ii) subdivide its outstanding Partnership Units, or (iii)
combine its outstanding Partnership Units into a smaller number of Partnership
Units, in the event the Company takes an analogous action with respect to the
Common Stock. The intent of the previous sentence is that one Partnership Unit
remains the economic equivalent of one share of Common Stock without dilution.
If the Company determines that it is necessary or desirable to make any filings
under the Act or otherwise in order to reference the existence of such action,
the Company may cause such filings to be made, which filings might take the form
of amendments to the Certificate; provided, however, that, unless specifically
required by this Agreement or the Act after giving effect to the terms of this
Agreement, no approval or consent of any Partners shall be required in
connection with the making of any such filing.
(c) Treatment of Proceeds. If the proceeds actually received by the
Company in connection with an issuance of Securities by the Company are less
than the gross proceeds of
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such offering, grant, award or issuance as a result of any underwriter's
discounts, commissions or other fees or expenses paid or incurred in connection
with such offering, grant, award or issuance, then the Company shall be deemed
to have made a Capital Contribution to the Partnership in the amount of the
gross proceeds of such offering, grant, award or issuance and the Partnership
shall be deemed simultaneously to have paid pursuant to Section 7.3(c) for the
amount of such expenses.
4.4 ADDITIONAL FUNDS
(a) The sums of money required to finance the business and affairs
of the Partnership shall be derived from the initial Capital Contributions made
to the Partnership by the Partners as set forth in Section 4.1 and from funds
generated from the operation and business of the Partnership.
(b) If the Partnership requires additional funds at any time or from
time to time in excess of funds available to the Partnership from borrowing or
capital contributions, the Company may borrow such funds from a financial
institution or other lender and lend such funds to the Partnership on the same
terms and conditions as are applicable to the Company's borrowing of such funds.
The Company shall be obligated to contribute the proceeds of a securities
offering as additional capital to the Partnership.
(c) If the Company contributes additional capital to the
Partnership, the General Partner shall revalue the assets of the Partnership to
their fair market values, as determined by the General Partner, and the capital
accounts of the General Partner and Limited Partners will be adjusted to reflect
the manner in which the unrealized gain or loss inherent in such assets that has
not been reflected in the capital accounts previously would be allocated among
the General Partner and Limited Partners under the terms of this as if there was
a taxable disposition of such property for such estimated fair market value on
the date of the revaluation.
4.5 NO THIRD-PARTY BENEFICIARY
No creditor or other third party having dealings with the
Partnership shall have the right to enforce the right or obligations 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.
4.6 NO INTEREST
No Partner shall be entitled to interest on any Capital Contribution
or on such Partner's Capital Account.
4.7 NO PREEMPTIVE RIGHTS
Subject to any preemptive rights that may be granted in connection
with the issuance of Partnership Interests under Section 4.3(a), no Person shall
have any preemptive or other similar right with respect to any:
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(a) additional Capital Contributions or loans to the Partnership; or
(b) issuance or sale of any Partnership Units or other Partnership
Interests.
4.8 CAPITAL ACCOUNTS; ADJUSTMENTS TO CARRYING VALUES
(a) Capital Accounts. The Partnership shall establish and maintain
throughout the life of the Partnership for each Partner a separate "Capital
Account" in accordance with Treasury Regulations Section 1.704-1(b). Such
Capital Account shall be increased by (i) the amount of all Capital
Contributions made by such Partner to the Partnership pursuant to this Agreement
and (ii) all Profits and other items of income and gain allocated to such
Partner pursuant to Section 6.2, and decreased by (1) the amount of cash or
Agreed Value of all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement and (2) all Losses and other items of
loss and deduction allocated to such Partner pursuant to Section 6.2 of this
Agreement. Any other Partnership item which is required or authorized under
Treasury Regulation Section 1.704-1(b) to be reflected in Capital Accounts shall
be so reflected.
(b) Adjustments to Carrying Values. Consistent with the provisions
of Treasury Regulations Section 1.704-1(b)(2)(iv)(f), and as provided in this
Section 4.8(b), the Carrying Values of all Partnership Assets shall be adjusted
upward or downward to reflect any Book Gains or Book Losses attributable to such
Partnership Asset, as of the times of the adjustments provided in this Section
4.8(b), as if such Book Gain or Book Loss had been recognized on an actual sale
of each such Partnership Asset and allocated pursuant to Section 6.1. Such
adjustments shall be made as of the following times: (i) as of the end of the
calendar quarter immediately prior to the acquisition of an additional interest
in the Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (ii) as of the end of the calendar quarter
immediately prior to the distribution by the Partnership to a Partner of more
than a de minimis amount of property as consideration for an interest in the
Partnership; (iii) upon the occurrence of a Listing Event or a Termination
Event, and (iv) at such other times as the General Partner may determine so long
as such adjustment is made under generally accepted industry accounting
practices within the meaning of Treasury Regulations Section
1.704-1(b)(2)(iv)(f)(5). In accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(e), the Carrying Values of Partnership assets distributed in
kind shall be adjusted upward or downward to reflect any Book Gain or Book Loss
attributable to such Partnership Asset, as of the time any such asset is
distributed. If the Carrying Values of the Partnership Assets are adjusted as a
result of a Listing Event, the total Carrying Value of all Partnership Assets
shall be deemed to equal the Market Value plus the total amount of liabilities
of the Partnership as of the date of the Listing Event. If the Carrying Values
of the Partnership Assets are adjusted as a result of a Termination Event, the
total Carrying Value of all Partnership Assets shall be deemed to equal the
Appraised Value as of the Termination Date.
ARTICLE 5
DISTRIBUTIONS
5.1 DISTRIBUTIONS
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(a) General. Subject to the provisions of Sections 5.3, 5.4, 8.5(b),
11.6(d) and 13.2, the General Partner shall cause the Partnership to distribute
to the Partners as of the applicable Partnership Record Date, at such times as
the General Partner shall determine, amounts of Distributable Cash in accordance
with the percentage interests of the Partners and the entitlement of Shopoff
Advisors as set forth in (b) below. In its sole discretion, General Partner will
determine the amounts of such distributions.
(b) Ratio of Distributions. Distributable Cash shall be distributed
in the following order: first, 100% to Xxxxxxx Properties Trust, Inc. (directly
as a limited partner and indirectly through Xxxxxxx General Partner in the ratio
of their respective Percentage Interests) until Xxxxxxx Properties Trust, Inc.,
has received an amount equal to the sum of (1) its shareholders' Invested
Capital, and (2) the 10% Return. Thereafter, 50% of the remaining amount of
Distributable Cash shall be distributed to Xxxxxxx Properties Trust, Inc. and
50% shall be distributed as an incentive distribution to Shopoff Advisors. Until
such time as Xxxxxxx Properties Trust, Inc. has received an amount equal to its
shareholders' Invested Capital plus the 10% Return, Shopoff Advisors will not
receive any incentive distributions.
(c) Tax Advances. The General Partner is authorized to make
distributions to Advisor in the event Advisor is allocated Profits, income or
gain but has not yet become entitled to incentive distributions under Section
5.1(b) above. Any such distributions shall be in the amount of the General
Partner's estimate of the income taxes resulting from such allocations and shall
be treated as an advance against distributions that would be made subsequently
to Advisor as incentive distributions under Section 5.1(b).
5.2 QUALIFICATION AS A REIT
The General Partner shall take such action as it deems necessary or
advisable to cause the Partnership to distribute sufficient amounts under this
Article 5 to enable the Company to pay stockholder dividends that will enable
the Company to (a) satisfy the requirements for qualification as a REIT under
the Code and the Treasury Regulations (the "REIT Requirements"), and (b) avoid
any federal income or excise tax liability; provided, however, the General
Partner shall not be bound to comply with this covenant to the extent such
distributions would violate applicable Delaware law.
5.3 WITHHOLDING
With respect to any withholding tax or other similar tax liability
or obligation to which the Partnership may be subject as a result of any act by
or status of any Partner or to which the Partnership becomes subject with
respect to any Partnership Interest, the Partnership shall have the right to
withhold amounts of Distributable Cash or other Partnership Assets distributable
to such Partner or with respect to such Partnership Interests, to the extent of
the amount of such withholding tax or other similar tax liability or obligation
pursuant to the provisions contained in Section 10.5.
5.4 ADDITIONAL PARTNERSHIP INTERESTS
If the Partnership issues Partnership Interests in accordance with
Section 4.2 or 4.3, the distribution priorities set forth in Section 5.1 shall
be amended, as necessary, to reflect
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any distribution priority of such Partnership Interests and corresponding
amendments shall be made to the provisions of Article 6. 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, such Partner
shall not be entitled to any distributions with respect to such additional
Partnership Interest until the first Partnership Record Date following the date
of such issuance.
ARTICLE 6
ALLOCATIONS
6.1 ALLOCATION OF PROFITS AND NET LOSSES
(a) General. Except as otherwise provided in this Article 6 and in
Section 11.6(c), and after making any special allocations under Section 6.2, and
subject to the Treasury Regulations under Section 704 of the Code, Profits and
Losses and items of income, gain, loss, deduction and credit recognized by the
Partnership shall be allocated among the Partners for federal, state and local
income tax purposes to reflect the economic interests of the Partners. Without
limiting the generality of the foregoing, the Partnership's Profits and Losses
and items of income, gain, loss, deduction and credit shall be allocated to the
Partners in a manner that results, to the extent possible, in Capital Accounts
for the Partners proportionate to the amounts they would receive if, on the last
day of the period for which the allocation is being made, all of the assets of
the Partnership were sold for their book value (as determined in accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv)), all liabilities were paid, and
the remaining proceeds were distributed to the Partners pursuant to this
Agreement.
(b) Adjustment. If the amount of Losses for any Fiscal Year that
otherwise would be allocated to a Partner under Section 6.1(a) or this Section
6.1(b) would cause or increase an Adjusted Capital Account Deficit of such
Partner as of the last day of such Fiscal Year (after all other allocations have
been made pursuant to this Article 6), then such Partner shall be allocated that
amount of Losses which does not cause or increase such Adjusted Capital Account
Deficit, and the remainder of such Losses that would have been allocated to such
Partner shall be allocated to the other Partners in proportion to their
Percentage Interests.
6.2 SPECIAL ALLOCATIONS
Notwithstanding any provisions of Section 6.1, the following special
allocations shall be made in the following order of priority:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). Except as
otherwise provided in Section 1.704-2(f) of the Treasury Regulations, if there
is a net decrease in Partnership Minimum Gain for any Fiscal Year, each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Partner's share
of the net decrease in Partnership Minimum Gain to the extent required by
Treasury Regulations Section 1.704-2(f). The items to be so allocated shall be
determined in accordance with Sections 1.704-2(f) and (j)(2) of the Treasury
Regulations. This subparagraph is intended to comply with the minimum gain
chargeback requirement in said section of the Treasury Regulations and shall be
interpreted consistently therewith. Allocations
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pursuant to this subparagraph shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant hereto.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in
Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any
Fiscal Year, each Partner who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Treasury Regulations, shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to that Partner's share of the net decrease
in the Partner Minimum Gain attributable to such Partner Nonrecourse Debt to the
extent and in the manner required by Section 1.704-2(i) of the Treasury
Regulations. The items to be so allocated shall be determined in accordance with
Sections 1.704-2(i)(4) and (j)(2) of the Treasury Regulations. This subparagraph
is intended to comply with the minimum gain chargeback requirement with respect
to Partner Nonrecourse Debt contained in said section of the Treasury
Regulations and shall be interpreted consistently therewith. Allocations
pursuant to this subparagraph shall be made in proportion to the respective
amounts to be allocated to each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Partner unexpectedly
receives any adjustment, allocation or distribution described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) that causes or
increases an Adjusted Capital Account Deficit, gross items of income and gain
shall be specially allocated to such Partner so as to eliminate such Adjusted
Capital Account Deficit as quickly as possible. This subparagraph is intended to
constitute a "qualified income offset" under Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
for any Fiscal Year with respect to a Partner Nonrecourse Debt shall be
specially allocated to the Partners that bear the economic risk of loss for such
Partner Nonrecourse Debt (as determined under Sections 1.704-2(b)(4) and
1.704-2(i)(1) of the Treasury Regulations).
(f) Curative Allocations. The allocations set forth in Section
6.1(b) and Sections 6.2(a) through (e) hereof (the "Regulatory Allocations") are
intended to comply with certain requirements of the Treasury Regulations. It is
the intent of the Partners that, to the extent possible all Regulatory
Allocations that are made be offset either with other Regulatory Allocations or
with special allocations pursuant to this Section 6.2(f). Therefore,
notwithstanding any other provision of this Article 6 (other than the Regulatory
Allocations), the General Partner shall make such offsetting special allocations
in whatever manner it determines appropriate so that, after such offsetting
allocations are made, each Partner's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such Partner would have had if
the Regulatory Allocations were not part of the Agreement and all Partnership
items were allocated pursuant to Sections 6.1(a). In exercising its discretion
under this Section 6.2(f), the General Partner shall take into account future
Regulatory Allocations under Sections 6.2(a) and
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6.2(b) that, although not yet made, are likely to offset other Regulatory
Allocations previously made under Sections 6.2(d) and 6.2(e).
(g) Changes in Interest. If during any Fiscal Year there is a change
in any Partner's Percentage Interest, then for purposes of determining the
Profits, Losses, or any other items allocable to such Partner for such Fiscal
Year, Profits, Losses, and any such other items shall be determined on a daily,
monthly, or other basis, as determined by the Company using any permissible
method under Code Section 706 and the Treasury Regulations thereunder.
6.3 TAX ALLOCATIONS
(a) Except as otherwise provided in this Section 6.3, items of
Partnership income, gain, loss and deduction shall be determined in accordance
with Code Section 703, and the Partners' distributive shares of such items for
purposes of Code Section 702 shall be determined according to their respective
shares of Profits or Losses to which such items relate.
(b) Items of Partnership taxable income, gain, loss and deduction
with respect to any Contributed Property contributed by a Partner shall be
allocated among the Partners in accordance with Code Section 704(c) so as to
take account of any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its Carrying Value. Such
allocations shall be made using any method chosen by the General Partner that is
permitted by applicable Treasury Regulations.
(c) If the Carrying Value of any asset of the Partnership is
adjusted pursuant to Section 4.8(b), subsequent allocations of items of income,
gain, loss and deduction with respect to such property shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Carrying Value. Such allocations shall be made using any method
chosen by the General Partner that is permitted by applicable Treasury
Regulations, as determined by the General Partner.
(d) Allocations pursuant to this Section 6.3 are solely for purposes
of federal, state and local taxes and shall not affect, or in any way be taken
into account in computing, any Partner's Capital Account or share of Profits,
Losses, distributions or other Partnership items pursuant to any provision of
this Agreement.
6.4 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF PARTNERSHIP INTERESTS
If the Partnership issues Partnership Interests to the Company or
any Additional Limited Partner pursuant to Article 4, the General Partner shall
make any such revisions to this Article 6 as it deems necessary to reflect the
terms of the issuance of such Partnership Interests, including making
preferential allocations to classes of Partnership Interests that are entitled
thereto. Such revisions shall not require the consent or approval of any other
Partner.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
7.1 MANAGEMENT
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(a) Management By the General Partner. Except as otherwise expressly
provided in this Agreement, full, complete and exclusive discretion to manage
and control the business and affairs of the Partnership are and shall be vested
in the General Partner, and no Limited Partner other than the Advisor shall have
any right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause.
(b) Power and Authority of the General Partner. In addition to the
powers now or hereafter granted a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner shall have full power and
authority to do all things deemed necessary or desirable by it to conduct the
business of the Partnership, to exercise all powers set forth in Section 3.2
hereof and to effectuate the purposes set forth in Section 3.1 hereof,
including, without limitation:
(i) (A) the making of any expenditures, the lending or
borrowing of money (including, without limitation, making prepayments on loans
and borrowing money to permit the Partnership to make distributions to its
Partners in such amounts as will permit the Company (so long as the Company
qualifies as a REIT) to (1) avoid the payment of any federal income or excise
tax (including any excise tax pursuant to Section 4981 of the Code) and (2) make
distributions to the Company in amounts sufficient to permit the Company to
maintain REIT status), (B) the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, (C) the issuance of any evidence of
indebtedness (including the securing of the same by deed, mortgage, deed of
trust or other lien or encumbrance on the Partnership's assets), and (D) the
incurring of any obligations it deems necessary for the conduct of the
activities of the Partnership, including the payment of all expenses associated
with the General Partner;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership, the General Partner
or the Company;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets, including Real Estate
Assets, of the Partnership (including the exercise or grant of any conversion,
option, privilege, or subscription right or other right available in connection
with any assets at any time held by the Partnership) or the merger or other
combination of the Partnership with or into another entity on such terms as the
General Partner deems proper;
(iv) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent with the terms of
this Agreement and on any terms the General Partner sees fit, including, without
limitation,
(A) the financing of the conduct of the operations of
the Company, the Partnership or any of the Partnership's
Subsidiaries,
(B) the lending of funds to other Persons (including,
without limitation, the Subsidiaries of the Partnership and/or
the Company) and
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the repayment of obligations of the Partnership and its
Subsidiaries and any other Person in which it has an equity
investment, and
(C) the making of capital contributions to the
Partnership's Subsidiaries;
(v) the development, expansion, construction, management,
operation, leasing, repair, alteration, demolition or improvement of any real
property in which the Partnership or any Subsidiary of the Partnership owns a
direct or indirect interest;
(vi) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's operations or the
implementation of the General Partner's powers under this Agreement, including
contracting with contractors, developers, consultants, accountants, legal
counsel, other professional advisors and other agents and the payment of their
expenses and compensation out of the Partnership's assets;
(vii) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(viii) the holding, management, investment and reinvestment of
cash and other assets of the Partnership;
(ix) the collection and receipt of revenues and income of the
Partnership;
(x) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles such as "president,"
"vice president," "secretary" and "treasurer" of the Partnership), and agents,
outside attorneys, accountants, consultants and contractors of the Partnership,
and the determination of their compensation and other terms of employment or
engagement;
(xi) the formation of, or acquisition of an interest
(including non-voting interests in entities controlled by Affiliates of the
Partnership or third parties) in, and the contribution of property to, any other
Entities that the General Partner deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of funds or
property to, or making of loans to, Subsidiaries of the Partnership and any
other Person from time to time), or the incurrence of indebtedness on behalf of
such Persons or the guarantee of the obligations of such Persons; provided that,
as long as the Company has determined to elect to qualify as a REIT or to
continue to qualify as a REIT, the Partnership may not engage in any such
formation, acquisition or contribution that would cause the Company to fail to
qualify as a REIT;
(xii) the control of any matters affecting the rights and
obligations of the Partnership, including:
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(A) the settlement, compromise, submission to
arbitration or any other form of dispute resolution, or
abandonment of, any claim, cause of action, liability, debt or
damages, due or owing to or from the Partnership,
(B) the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitration or other
forms of dispute resolution, and
(C) the representation of the Partnership in all suits
or legal proceedings, administrative proceedings, arbitrations
or other forms of dispute resolution, the incurring of legal
expenses, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(xiii) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries or any other
Person (including, without limitation, the contribution or loan of funds by the
Partnership to such Persons);
(xiv) the determination of the fair market value of any
Partnership Assets distributed in kind using such reasonable method of valuation
as the General Partner, in its sole discretion, may adopt;
(xv) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any asset or investment held
by the Partnership;
(xvi) the exercise of any of the powers of the General Partner
enumerated in this Agreement or the undertaking of any action on behalf of or in
connection with any Subsidiary of the Partnership or any other Person in which
the Partnership has a direct or indirect interest, or jointly with any such
Subsidiary or other Person;
(xvii) the making, execution and delivery of any and all
deeds, leases, notes, mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties, indemnities, waivers, releases
or legal instruments or agreements in writing necessary or appropriate, in the
judgment of the General Partner, for the accomplishment of any of the foregoing;
(xviii) the issuance of additional Partnership Interests in
connection with Capital Contributions by Additional Limited Partners and
additional Capital Contributions by Partners pursuant to Article 4 hereof;
(xix) the opening of bank accounts on behalf of, and in the
name of, the Partnership and its Subsidiaries; and
(xx) the amendment and restatement of Exhibit A to reflect
accurately at all times the Capital Contributions of, Partnership Units held by,
and Percentage Interests of the Partners as the same are adjusted from time to
time to the extent necessary to reflect any
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Capital Contributions, redemptions, issuance of Partnership Units, admission of
any Additional Limited Partner or any Substituted Limited Partner or otherwise,
which amendment and restatement, notwithstanding anything in this Agreement to
the contrary, shall not be deemed an amendment of this Agreement, as long as the
matter or event being reflected in Exhibit A otherwise is authorized by this
Agreement.
(c) Advisor. The Partnership and the Company have engaged the
Advisor to serve as the advisor to the Partnership and the Company pursuant to
the terms and conditions of the Advisory Agreement. In consideration for the
services to be provided to the Partnership and the Company, the Advisor will
receive the fees described in the Advisory Agreement. In addition, the Advisor
is entitled to receive distributions under Section 5.1(b) hereof.
(d) Insurance. At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain:
(i) casualty, liability and other insurance on the Real Estate
Assets of the Partnership;
(ii) liability insurance for the Indemnitees hereunder; and
(iii) such other insurance as the General Partner, in its sole
and absolute discretion, determines to be appropriate and reasonable.
(e) Working Capital and Other Reserves. At all times from and after
the date hereof, the General Partner may cause the Partnership to establish and
maintain at any and all times working capital accounts and other cash or similar
balances in such amount as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.
7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner has previously filed the Certificate with the
Secretary of State of Delaware as required by the Act. The General Partner shall
use all reasonable efforts to cause to be filed such other certificates or
documents as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and any other state, or the District of Columbia, in which the
Partnership may elect to do business or own property. To the extent that such
action is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all of the things to maintain the Partnership as a
limited partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, or the
District of Columbia, in which the Partnership may elect to do business or own
property. Subject to the terms of Section 8.5(a)(iv) hereof, the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto to any Limited Partner.
7.3 REIMBURSEMENT OF THE GENERAL PARTNER
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(a) No Compensation. Except as provided in this Section 7.3 and
elsewhere in this Agreement (including the provisions of Articles 5 and 6
regarding distributions, payments, and allocations to which it may be entitled),
the General Partner shall not be compensated for its services as general partner
of the Partnership.
(b) Responsibility for Partnership Expenses. The Partnership shall
be responsible for and shall pay all expenses relating to the Partnership's
organization and the ownership and operation of the Partnership Assets. The
General Partner shall be reimbursed on a monthly basis, or such other basis as
it may determine in its sole and absolute discretion, for all expenses that it
incurs on behalf of the Partnership relating to the ownership and operation of
the Partnership Assets, or for the benefit of the Partnership. Such
reimbursement shall be in addition to any reimbursement made as a result of
indemnification pursuant to Section 7.6 hereof. In addition to the
administrative and operating costs and expenses incurred by the Partnership, the
Partnership will pay all of the General Partner's administrative costs and
expenses and certain costs of the Company, including:
(i) all expenses relating to the General Partner's and the
Company's formation and continuity of existence;
(ii) all expenses relating to the Company's public offering,
including the Company's organizational expenses;
(iii) all expenses associated with the preparation and filing
of any periodic reports under federal, state or local laws or regulations;
(iv) all expenses associated with compliance with laws, rules
and regulations promulgated by any regulatory body;
(v) the actual cost of goods and services used by the General
Partner and obtained from entities not affiliated with the Advisor, other than
acquisition expenses;
(vi) interest and other costs for borrowed money, including
discounts, points and other similar fees;
(vii) taxes and assessments on income of the Company or the
General Partner or the General Partner's real estate assets;
(viii) costs associated with insurance required in connection
with the Company's or the General Partner's business or by the Company's or the
General Partner's directors;
(ix) expenses of managing and operating properties owned by
the partnership, payable to the property manager, whether or not the property
manager is an affiliate of the partnership;
(x) all compensation and expenses payable to the independent
directors of the Company or the General Partner and all expenses payable to the
non-independent
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directors in connection with their services to the General Partner or the
Company and the Company's stockholders and their attendance at meetings of the
directors and stockholders;
(xi) expenses associated with a listing, if applicable, or
with the issuance and distribution of the Company's stock, such as fees,
marketing and advertising expenses, taxes, legal and accounting fees, listing
and registration fees, and other organizational and offering expenses;
(xii) expenses connected with distributions in cash or
otherwise made or caused to be made by the Company to the Company's
stockholders;
(xiii) expenses of amending, converting liquidating or
terminating the Partnership's or the Company's charter;
(xiv) expenses of maintaining communications with Company
stockholders, including the cost of preparation, printing, and mailing annual
and other stockholder reports, proxy statements and other reports required by
governmental entities;
(xv) administrative services expenses (including personnel
costs; provided, however, that no reimbursement shall be made for costs of
personnel to the extent that such personnel perform services in transactions for
which the Advisor receives a separate fee);
(xvi) transfer agent and registrar's fees and charges paid to
third parties; and
(xvii) audit, accounting, legal and other professional fees;
and
(xviii) all other operating or administrative costs incurred
by the General Partner in the ordinary course of business on behalf of the
Partnership.
(c) Responsibility for Certain Company and General Partner Expenses.
The General Partner shall also be reimbursed for (i) all expenses related to the
operations of the General Partner and to the management and administration of
any Subsidiaries of the General Partner or the Partnership or Affiliates of the
Partnership, such as auditing expenses and filing fees and any and all salaries,
compensation and expenses of officers and employees of the General Partner, and
(ii) all expenses the Company incurs relating to the organization and/or
reorganization of the Partnership and the Company, the public offering of REIT
Stock by the Company, and any other offering, grant, award or issuance of REIT
Stock or additional Partnership Interests pursuant to Section 4.2 or 4.3,
including all expenses associated with compliance by the Company and the Initial
Limited Partners with laws, rules and regulations promulgated by any regulatory
body.
(d) Business of the General Partner. The Limited Partners
acknowledge that the sole business of the General Partner is the ownership of
direct or indirect interests in, and the direct or indirect operation of, the
Partnership, and that all of the expenses of the General Partner are incurred
for the benefit of the Partnership.
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(e) Characterization of Reimbursements. All payments and
reimbursements hereunder to the General Partner or the Company shall be
characterized for federal income tax purposes as expenses of the Partnership or
the Company incurred on its behalf, and not as expenses of the General Partner.
7.4 ACQUISITION OF LIMITED PARTNER INTERESTS BY THE COMPANY
The Company and any Affiliates of the Company may acquire Limited
Partner Interests and shall be entitled to exercise all rights of a Limited
Partner relating to such Limited Partner Interests.
7.5 TRANSACTIONS WITH AFFILIATES
(a) Transactions with Subsidiaries. The Partnership may lend or
contribute funds or other assets to its Subsidiaries or other Persons in which
it has an equity investment and such Subsidiaries and Persons may borrow funds
from the Partnership, on terms and conditions established in the sole and
absolute discretion of the General Partner. The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other Person.
(b) Certain Transactions with the Advisor and its Affiliates.
Notwithstanding anything to the contrary in this Agreement, the General Partner
shall not cause the Partnership, directly or indirectly, to Transfer any
property to, purchase any property from, loan any money to, borrow any money
from or enter into any other transaction with the Advisor or any of its
Affiliates, or any director of the Company, except in accordance with the
procedures set forth in Articles X and XI of the Articles of Incorporation for
transactions between the Partnership and the Advisor or its Affiliates.
(c) Benefit Plans Sponsored by the Partnership. The General Partner,
in its sole and absolute discretion and without the approval of the Limited
Partners, may propose and adopt, on behalf of the Partnership, employee benefit
plans, option or other equity incentive plans, and similar plans funded by the
Partnership for the benefit of employees of the Partnership, any Subsidiaries of
the Partnership or any Affiliate of any of them in respect of services
performed, directly or indirectly, for the benefit of the Partnership, any
Subsidiaries of the Partnership or any of their respective Affiliates.
7.6 INDEMNIFICATION
(a) General. Subject to the limitations of Section 7.6(b), to the
maximum extent permitted under the Act in effect from time to time and subject
to the limitations of Section II.G. of the NASAA Guidelines, the Partnership
shall indemnify each Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without limitation,
reasonable attorneys' fees and other legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative
(collectively, "Claims"), that relate to the operations of the Partnership, the
Company or any of the Partnership's Subsidiaries in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise; provided,
however, that in no event shall this Section 7.6(a) enlarge the indemnification
permitted below under Section 7.6(b).
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(b) Limitation. Notwithstanding any provision hereof to the
contrary:
(i) the Partnership will not indemnify any Indemnitee unless:
(A) the Indemnitee has determined in good faith that the
course of conduct which caused the loss, liability or expenses
was in the best interests of the Partnership;
(B) the Indemnitee was acting on behalf of the
Partnership or performing services for the Partnership;
(C) Such Claim was not the result of:
(1) with respect to the General Partner, the gross
negligence, willful misconduct or fraud of the General
Partner;
(2) with respect to any Limited Partner, the gross
negligence, willful misconduct or fraud of the Limited
Partner;
(3) with respect to (A) the directors, officers
and employees of the Company, (B) the Advisor and (C)
the members, managers and employees of the Advisor, the
negligence or misconduct of such Person; or
(4) with respect to the independent directors, the
gross negligence or willful misconduct of such
independent director; and
(D) any indemnification or agreement to hold harmless
may be paid only out of the assets of the Partnership, and
neither the General Partner, the Company nor any Limited
Partner shall have any obligation to contribute to the capital
of the Partnership, or otherwise provide funds, to enable the
Partnership to fund its obligations under this Section 7.6;
(ii) notwithstanding anything to the contrary in Section
7.6(b)(ii), the Partnership will not indemnify any Indemnitee for losses,
liabilities or expenses arising from or out of an alleged violation of federal
or state securities laws unless:
(A) there has been a successful adjudication on the
merits of each count involving alleged securities law
violations as to the particular Indemnitee;
(B) such claims have been dismissed with prejudice on
the merits by a court of competent jurisdiction as to the
particular Indemnitee; or
(C) a court of competent jurisdiction approves a
settlement of the claims against the particular Indemnitee and
finds that indemnification of the settlement and related costs
should be made, and the court
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considering the matter has been advised of the position of the
Securities and Exchange Commission and the published position
of any state securities regulatory authority in which
securities of the Partnership or the Company were offered or
sold as to indemnification for violations of securities laws.
(c) Contractual Obligations. Without limitation, the indemnity set
forth in this Section 7.6 shall extend to any liability of any Indemnitee
pursuant to a loan guaranty, contractual obligation for any indebtedness or
other obligation or otherwise for any indebtedness of the Partnership or any
Subsidiary of the Partnership (including, without limitation, any indebtedness
which the Partnership or any Subsidiary of the Partnership has assumed or taken
subject to), and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnification agreements
consistent with the provisions of this Section 7.6 in favor of any Indemnitee
having or potentially having liability for any such indebtedness.
(d) Advancement of Expenses. Reasonable expenses incurred by an
Indemnitee who is a party to a proceeding shall be paid or reimbursed by the
Partnership in advance of the final disposition of any and all Claims made or
threatened against an Indemnitee only if all of the following conditions are
satisfied: (a) the Claim relates to acts or omissions with respect to the
performance of duties or services on behalf of the Partnership (b) either the
Claim was initiated by a third party who is not a stockholder of the Company, or
(ii) if the Proceeding was initiated by a stockholder of the Company, the
initiating stockholder was acting in his or her capacity as such and the
advancement was approved by a court of competent jurisdiction, and (c) the
Indemnitee provides the Partnership with a written undertaking to repay the
amount paid or reimbursed by the Partnership, together with the applicable legal
rate of interest thereon, if it is ultimately determined that the Indemnitee did
not comply with the requisite standard of conduct and is not entitled to
indemnification.
(e) No Exclusivity. The indemnification provided by this Section 7.6
shall be in addition to any other rights to which an Indemnitee or any other
Person may be entitled under any agreement, pursuant to any vote of the
Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnities are indemnified.
(f) Insurance. 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.
(g) No Personal Liability for Partners. In no event may an
Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
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(h) Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.6 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.
(i) Benefit. The provisions of this Section 7.6 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.
(j) Amendment of this Section 7.6. Any amendment, modification or
repeal of this Section 7.6 or any provision hereof shall be prospective only and
shall not in any way affect the Partnership's liability to any Indemnitee under
this Section 7.6, as in effect immediately prior to such amendment,
modification, or repeal with respect to Claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such Claims may arise or be asserted.
(k) Indemnification Payments Not Distributions. If and to the extent
any payments to the General Partner or the Initial Limited Partners pursuant to
this Section 7.6 constitute gross income to the General Partner or the Initial
Limited Partners (as opposed to the repayment of advances made on behalf of the
Partnership), such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.
(l) Exception to Indemnification. Notwithstanding anything to the
contrary in this Agreement, the General Partner shall not be entitled to
indemnification hereunder for any Claim for which the General Partner is
obligated to indemnify the Partnership under any other agreement between the
General Partner and the Partnership.
7.7 LIABILITY OF THE GENERAL PARTNER
(a) General. To the maximum extent permitted under the Act and the
subject to the limitations of Section II.G. of the NASAA Guidelines in effect
from time to time, neither the General Partner nor any director, officer,
shareholder, partner, member or employee, trustee, representative or agent of
the General Partner (including the Advisor and its Affiliates) shall be liable
to the Partnership or to any Partner for (i) any act or omission performed or
failed to be performed by it, or for any losses, claims, costs, damages, or
liabilities arising from any such act or omission, except to the extent such
loss, claim, cost damage or liability results from such Person's gross
negligence, willful misconduct or fraud, (ii) any tax liability imposed on the
Partnership or (iii) any losses due to the misconduct, negligence (gross or
ordinary), dishonesty or bad faith of any agents of the Partnership.
Notwithstanding anything to the contrary in this Section 7.7(a), this limitation
on liability applies only to the extent that the particular officer or director
has satisfied the requirements of Sections 7.6(b)(i) and (ii).
(b) No Obligation to Consider Separate Interests of Limited
Partners. The Limited Partners expressly acknowledge that (i) the General
Partner (and the Advisor, in advising the Partnership) is acting on behalf of
the Partnership and the members of the General
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Partner, collectively, (ii) the General Partner (and the Advisor, in advising
the Partnership), subject to the provisions of Section 7.1(f) hereof, is under
no obligation to consider the separate interest of the Limited Partners
(including, without limitation, the tax consequences to Limited Partners or
Assignees) in deciding whether to cause the Partnership to take (or decline to
take) any actions, and (iii) neither the General Partner nor the Advisor shall
be liable for monetary damages for losses sustained, liabilities incurred, or
benefits not derived by Limited Partners in connection with such decisions,
unless the General Partner or the Advisor, as the case may be, acted in bad
faith and the act or omission was material to the matter giving rise to the
loss, liability or benefit not derived.
(c) Amendment of this Section 7.7. Any amendment, modification or
repeal of this Section 7.7 or any provision hereof shall be prospective only and
shall not in any way affect the limitations on the General Partner's and its
officers' and directors' liability to the Partnership and the Limited Partners
under this Section 7.7 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.
7.8 OTHER MATTERS CONCERNING THE GENERAL PARTNER
(a) Reliance on Documents. The General Partner may rely and shall be
protected in acting, or refraining from acting, upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
(b) Reliance on Advisors. The General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers,
brokers, architects, engineers, environmental consultants and other consultants
and advisers selected by it, and any act taken or omitted to be taken in
reliance upon the opinion of such Persons as to matters which such General
Partner reasonably believes to be within such Person's professional or expert
competence shall be conclusively presumed to have been done or omitted in good
faith and in accordance with such opinion.
(c) Action Through Agents. The General Partner shall have the right,
in respect of any of its powers or obligations hereunder, to act through any of
its duly authorized officers, agents, including the Advisor, and duly appointed
attorneys-in-fact. Each such officer, agent or attorney-in-fact shall, to the
extent granted by the General Partner in writing, have full power and authority
to do and perform each and every act and duty which is permitted or required to
be done by the General Partner hereunder.
(d) Actions to Maintain REIT Status. Notwithstanding any other
provisions of this Agreement or the Act, any action of the General Partner on
behalf of the Partnership or any decision of the General Partner to refrain from
acting on behalf of the Partnership, undertaken in the good faith belief that
such action or omission is necessary or advisable in order to: (i) protect the
ability of the Company to continue to qualify as a REIT, or (ii) avoid the
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Company incurring any taxes under Section 857 or Section 4981 of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.
7.9 TITLE TO PARTNERSHIP ASSETS
Title to all Partnership Assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be held by the Partnership as
an entity, and no Partner, individually or collectively, shall have any
ownership interest in the 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 Asset 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,
that the General Partner shall use reasonable 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.
7.10 RELIANCE BY THIRD PARTIES
(a) Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without the consent or approval of any
other Partner or Person, to encumber, sell or otherwise use in any manner any
and all Partnership Assets and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership, and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially.
(b) Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
(c) In no event shall any Person dealing with the General Partner or
its representatives be obligated to ascertain that the terms of this Agreement
have been complied with or to inquire into the necessity or expediency of any
act or action of the General Partner or its representatives.
(d) Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that:
(i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect;
(ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership; and
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(iii) such certificate, document or instrument was duly
executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement,
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
8.2 NO RIGHT TO PARTICIPATE IN THE MANAGEMENT OF BUSINESS
No Limited Partner shall take part in the management or control of
the Partnership's investment or other activities, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. Except as expressly provided herein, no Limited Partner shall have
the right to vote for the election, removal or replacement of the General
Partner. The exercise by any Limited Partner of any right conferred herein shall
not be construed to constitute participation by such Limited Partner in the
control of the business of the Partnership so as to make such Limited Partner
liable as a general partner for the debts and obligations of the Partnership for
purposes of the Act, laws of non-U.S. jurisdictions or otherwise.
8.3 RETURN OF CAPITAL
No Limited Partner shall be entitled to the withdrawal or return of
its Capital Contribution, except (a) to the extent of such Limited Partner's
right of redemption set forth in Section 8.6, and (b) to the that extent the
General Partner (or the Liquidation Trustee) determines to make distributions
made pursuant to this Agreement or upon termination of the Partnership as
provided herein. Except as otherwise expressly provided in this Agreement, no
Limited Partner or Assignee shall have priority over any other Limited Partner
or Assignee, either as to the return of Capital Contributions or as to
distributions or allocations of Profits or Losses.
8.4 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP
(a) General. In addition to the other rights provided by this
Agreement and any rights granted to limited partners of a limited partnership
under the Act that such limited partners are not permitted to waive under the
Act, and except as limited by Section 8.4(b) hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense (including such reasonable copying and administrative charges as the
General Partner may establish from time to time):
(i) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by the General Partner
pursuant to the Securities Exchange Act of 1934;
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(ii) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Fiscal Year;
(iii) to obtain a current list of the name and last known
business, residence or mailing address of each Partner; and
(iv) to obtain a copy of this Agreement and the Certificate
and all amendments thereto, together with executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate and all amendments
thereto have been executed.
Each Limited Partner hereby waives any and all rights that such Limited Partner
may have under the Act that the Act permits limited partners to waive, except
any such right that is granted expressly to such Limited Partner under this
Agreement.
(b) Confidentiality. Notwithstanding any other provision of this
Section 8.4, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determines in its sole
and absolute discretion to be reasonable, any information that:
(i) the General Partner reasonably believes to be in the
nature of trade secrets or other information, the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business; or
(ii) the Partnership is required by law or by agreements with
an unaffiliated third party to keep confidential.
8.5 REDEMPTION RIGHT
(a) Redemption Right. Subject to the provisions of this Section 8.5,
at any time on or after the first anniversary date of the issuance of a
Partnership Unit to a Partner, such Partner shall have the right (the
"Redemption Right") to require the Partnership to redeem on a Specified
Redemption Date all or a portion of the Partnership Units held by such Partner,
at a redemption price equal to and in the form of the Redemption Amount. The
Redemption Right shall be exercised pursuant to a Notice of Redemption Request
delivered to the General Partner by the Partner who is exercising the Redemption
Right (the "Redeeming Partner").
(b) Distributions and Allocations.
(i) Subject to Section 8.5, the Redeeming Partner shall have
no right to receive any distributions that are paid after the Specified
Redemption Date with respect to any Partnership Units redeemed pursuant to this
Section 8.5.
(ii) If any Partnership Interest is redeemed (other than
pursuant to Section 8.5(c)) on any day other than the first day of a Fiscal
Year, then Profit, Losses, each item thereof and all other items attributable to
such Partnership Interest for such Fiscal Year shall be divided and allocated to
the Redeeming Partner by taking into account the Redeeming Partner's ownership
of such Partnership Interest during the Fiscal Year in accordance with Section
706(d) of the Code, using the interim closing of the books method (unless the
General Partner, in its sole
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and absolute discretion, elects to adopt a daily, weekly or monthly proration
period, in which event Profits, Losses, each item thereof and all other items
attributable to such redeemed Partnership Interest for such Fiscal Year shall be
prorated based upon the applicable method selected by the Company).
(c) Company Assumption of Obligation. Notwithstanding the provisions
of Section 8.5(a), the Company may, in its sole and absolute discretion (subject
to the limitations on ownership and transfer of shares of REIT Stock in the
Articles of Incorporation), assume directly the obligation to satisfy a
Redemption Right and satisfy such Redemption Right by paying to the Redeeming
Partner the Redemption Amount on the Specified Redemption Date, whereupon the
Company shall acquire the Partnership Units offered for redemption by the
Redeeming Partner and shall be treated for all purposes of this Agreement as the
owner of such Partnership Units. In the event that the Company shall exercise
this right to satisfy the Redemption Right in the manner described in the
preceding sentence and shall fully perform its obligation to pay the Redemption
Amount on the Specified Redemption Date, the Partnership shall have no
obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner's exercise of the Redemption Right, and each of the Redeeming
Partner, the Partnership and the Company shall treat the transaction between the
Company and the Redeeming Partner as a sale of the Redeeming Partner's
Partnership Units to the Company for federal income tax purposes. Distributions
and allocations with respect to Partnership Units acquired by the Company
pursuant to this Section 8.5(c) shall be made in accordance with Sections
11.6(c) and 11.6(d).
(d) Fractional Shares. If the Company elects, either on its own
behalf or on behalf of the Partnership, to satisfy the Redemption Right by
paying the REIT Stock Amount, and the REIT Stock Amount is not equal to a whole
number of shares of REIT Stock, the Redeeming Partner shall be paid (i) that
number of shares of REIT Stock which equals the nearest whole number less than
the REIT Stock Amount, plus (ii) (A) an amount of cash equal to the Value of one
share of REIT Stock on the applicable Valuation Date, multiplied by (B) the REIT
Stock Amount minus the whole number of shares of REIT Stock pursuant to clause
(i) of this Section 8.5(d).
(e) Execution of Documents. Each Redeeming Partner agrees to execute
such documents as the General Partner or the Company may reasonably require in
connection with (i) the exercise and satisfaction of the Redemption Right, (ii)
any assumption by the Company pursuant to Section 8.5(c), and (iii) any issuance
of REIT Stock in connection with the Partnership or the Company paying the
Redemption Amount to the Redeeming Partner.
(f) Exceptions to Redemption Right. Notwithstanding the provisions
of Section 8.5(a), a Partner shall not be entitled to receive REIT Stock instead
of cash upon exercise of the Redemption Right if the delivery of REIT Stock to
such Partner on the Specified Redemption Date would (i) be prohibited under the
Articles of Incorporation or the bylaws of the Company, (ii) adversely affect
the ability of the Company to continue to qualify as a REIT or would subject the
Company to any additional taxes under Section 857 or Section 4981 of the Code,
(iii) constitute or be likely to constitute a violation of any applicable
federal or state securities laws or regulations, or (iv) be prohibited under
Section 11.6(f) of this Agreement (in each case regardless of whether the
Company would in fact assume and satisfy the Redemption Right).
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(g) Exercise of the Redemption Right by the Company. The receipt of
a notice of redemption with respect to shares of REIT Stock held by stockholders
of the Company (a "REIT Notice) shall be deemed to be a Notice of Redemption
Request given by the Company to the Partnership and an exercise of the
Redemption Right with respect to a number of Partnership Units equal to the
number of shares of REIT Stock identified in the REIT Notice. With respect to
any Redemption Right exercised by the Company pursuant to this Section 8.5(g),
the Company will elect for payment of the Redemption Amount by the Partnership
to the Company to be the Cash Amount.
(h) Assignees. The Assignee of any Limited Partner may exercise the
rights of such Limited Partner pursuant to this Section 8.5 with respect to any
Partnership Units Transferred by such Limited Partner to such Assignee, and such
Limited Partner shall be deemed to have assigned such rights to such Assignee
and shall be bound by the exercise of such rights by such Assignee. In
connection with any exercise of such rights by such Assignee on behalf of such
Limited Partner, the Redemption Amount shall be paid by the Partnership directly
to such Assignee and not to such Limited Partner.
(i) No Liens on Partnership Units Delivered for Redemption. Each
Partner covenants and agrees that all Partnership Units delivered for redemption
pursuant to this Section 8.5 shall be delivered to the Partnership or the
Company, as the case may be, free and clear of all Liens. Notwithstanding
anything contained herein to the contrary, neither the Company nor the
Partnership shall be under any obligation to acquire Partnership Units which are
or may be subject to any Liens. Each Partner further agrees that, if any state
or local property transfer tax is payable as a result of the Transfer of its
Partnership Units to the Partnership or the Company pursuant to this Section
8.5, such Partner shall assume and pay such transfer tax.
(j) Cancellation of Units; Amendments to Exhibit A. Upon the
redemption of Partnership Units pursuant to this Section 8.5, (i) all such
redeemed Partnership Units (other than Partnership Units redeemed pursuant to
Section 8.5(c)) shall be cancelled, and (ii) the General Partner shall amend
Exhibit A to reflect the new Percentage Interests of the Partners and to (A)
either adjust the number of Partnership Units and the Percentage Interest of the
Redeeming Partner or eliminate the Redeeming Partner from Exhibit A, as
applicable, and (B) in the event that the Company assumes the obligation to
satisfy a Redemption Right pursuant to Section 8.5(c), adjust the number of
Partnership Units and the Percentage Interest of the Company to reflect the
Transfer of such Partnership Units to the Company.
(k) Additional Partnership Interests. If the Partnership issues
Partnership Interests to any Additional Limited Partner pursuant to Article 4,
the General Partner shall make such revisions to this Section 8.5 as the General
Partner determines are necessary to reflect the issuance of such Partnership
Interests (including setting forth any restrictions on the exercise of the
Redemption Right with respect to such Partnership Interests).
(l) Voting by the Advisor. The Advisor, as a "Special Limited
Partner" will have no voting rights with regard to the Partnership.
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ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 RECORDS AND ACCOUNTING
(a) Books and Records. The General Partner shall keep or cause to be
kept at the principal office of the Partnership those records and documents
required to be maintained by the Act and other books and records deemed by the
General Partner to be appropriate with respect to the Partnership's business,
including, without limitation, all books and records necessary for the Company
to comply with applicable REIT Requirements and to provide to the Limited
Partners any information, lists and copies of documents required to be provided
pursuant to Sections 8.5(a) and 9.2 hereof.
(b) Accounting Method. The books of the Partnership
shall be maintained, for financial and tax reporting purposes, on an
accrual basis in accordance with GAAP.
9.2 REPORTS
(a) Annual Reports. As soon as practicable after the end of each
Fiscal Year, the General Partner shall cause to be mailed to each Limited
Partner as of the close of the Fiscal Year, an annual report containing
financial statements of the Partnership, or of the Company, if such statements
are prepared on a consolidated basis with the Partnership, for such Fiscal Year,
presented in accordance with GAAP, such statements to be audited by a nationally
recognized firm of independent public accountants selected by the General
Partner in its sole discretion.
(b) Quarterly Reports. If and to the extent that the General Partner
mails quarterly reports to its stockholders, then as soon as practicable after
the end of each fiscal quarter of the Partnership, but in no event later than
the date such reports are mailed, the General Partner shall cause to be mailed
to each Limited Partner a report containing unaudited financial statements as of
the last day of the calendar quarter of the Partnership, or of the Company, if
such statements are prepared on a consolidated basis with the Partnership, and
such other information as may be required by applicable law or regulation, or as
the General Partner determines to be appropriate.
(c) Delivery. Notwithstanding the foregoing, the General Partner may
deliver to the Limited Partners each of the reports described above, as well as
any other communications that it may provide hereunder, by e-mail or by any
other electronic means.
ARTICLE 10
TAX MATTERS
10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
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10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code. The General Partner shall have the right to seek
to revoke any such election it makes upon the General Partner's determination,
in its sole and absolute discretion, that such revocation is in the best
interests of the Partners.
10.3 TAX MATTERS PARTNER
(a) General. The General Partner shall be the "tax matters partner"
of the Partnership for federal income tax purposes. Pursuant to Section
6223(c)(3) of the Code, upon receipt of notice from the Internal Revenue Service
of the beginning of an administrative proceeding with respect to the
Partnership, the tax matters partner shall furnish the Internal Revenue Service
with the name, address, taxpayer identification number, and profit interest of
each of the Limited Partners and the Assignees; provided, that such information
is provided to the Partnership by the Limited Partners and the Assignees.
(b) Powers. The tax matters partner is authorized, but not required:
(i) to enter into any settlement with the Internal Revenue
Service with respect to any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being referred to as a
"tax audit" and such judicial proceedings being referred to as "judicial
review"), and in the settlement agreement the tax matters partner may expressly
state that such agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner:
(A) who (within the time prescribed pursuant to the Code
and the Treasury Regulations) files a statement with the
Internal Revenue Service providing that the tax matters
partner shall not have the authority to enter into a
settlement agreement on behalf of such Partner; or
(B) who is a "notice partner" (as defined in Section
6231(a)(8) of the Code) or a member of a "notice group" (as
defined in Section 6223(b)(2) of the Code);
(ii) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such final adjustment, including
the filing of a petition for readjustment with the Tax Court or the filing of a
complaint for refund with the United States Claims Court or the District Court
of the United States for the district in which the Partnership's principal place
of business is located;
(iii) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
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(iv) to file a request for an administrative adjustment with
the Internal Revenue Service and, if any part of such request is not allowed by
the Internal Revenue Service, to file an appropriate pleading (petition or
complaint) for judicial review with respect to such request;
(v) to enter into an agreement with the Internal Revenue
Service to extend the period for assessing any tax which is attributable to any
item required to be taken account of by a Partner for tax purposes, or an item
affected by such item; and
(vi) to take any other action on behalf of the Partners or the
Partnership in connection with any tax audit or judicial review proceeding to
the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax matters
partner in connection with any such proceeding, except to the extent required by
law, is a matter in the sole and absolute discretion of the tax matters partner
and the provisions relating to indemnification of the General Partner set forth
in Section 7.6 of this Agreement shall be fully applicable to the tax matters
partner in its capacity as such.
(c) Reimbursements. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
to assist the tax matters partner in discharging its duties hereunder, so long
as the compensation paid by the Partnership for such services is reasonable.
10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.
10.5 WITHHOLDING
(a) General. Each Limited Partner hereby authorizes the Partnership
to withhold from, or pay on behalf of or with respect to, such Limited Partner
any amount of federal, state, local, or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the
Code.
(b) Treatment of Amounts Withheld. Any amount paid on behalf of or
with respect to a Limited Partner shall constitute a loan by the Partnership to
such Limited Partner, which loan shall be repaid by such Limited Partner within
fifteen (15) days after notice from the General Partner that such payment must
be made unless:
(i) the Partnership withholds such payment from a distribution
which would otherwise be made to the Limited Partner; or
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(ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner.
Any amounts withheld from amounts otherwise distributable to a Limited Partner
as described in clause (i) or (ii) of this Section 10.5(b) shall be treated as
having been distributed to such Limited Partner.
(c) Security Interest. Each Limited Partner hereby unconditionally
and irrevocably grants to the Partnership a security interest in such Limited
Partner's Partnership Interest to secure such Limited Partner's obligation to
pay to the Partnership any amounts required to be paid pursuant to this Section
10.5. Each Limited Partner shall take such actions as the Partnership or the
General Partner shall request in order to perfect or enforce the security
interest created hereunder.
(d) Default. In the event that a Limited Partner fails to pay when
due any amounts owed to the Partnership pursuant to this Section 10.5, the
General Partner may, in its sole and absolute discretion, elect to make the
payment to the Partnership on behalf of such defaulting Limited Partner, and in
such event shall be deemed to have loaned such amount to such defaulting Limited
Partner and shall succeed to all rights and remedies of the Partnership as
against such defaulting Limited Partner. Without limitation, in such event, the
General Partner shall have the right to receive distributions that would
otherwise be distributable to such defaulting Limited Partner until such time as
such loan, together with all interest thereon, has been paid in full, and any
such distributions so received by the General Partner shall be treated as having
been distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan.
(e) Interest. Any amount payable by a Limited Partner under this
Section 10.5 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, plus four (4) percentage points, and
(ii) the maximum lawful rate of interest on such obligation, such interest to
accrue from the date such amount is due (i.e., fifteen (15) days after demand)
until such amount is paid in full.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
11.1 TRANSFER
(a) Definition. The term "Transfer," when used in this Article 11
with respect to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which the General Partner purports to assign all or
any part of its General Partner Interest to another Person or a Limited Partner
purports to assign all or any part of its Limited Partner Interest to another
Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
The term "Transfer" when used in this Article 11 does not include any redemption
of Partnership Units or other Partnership Interests for cash or REIT Stock
pursuant to Section 8.5.
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(b) Restriction on Transfer. No Partnership Interest shall be
Transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Article 11. Any Transfer or purported Transfer of a
Partnership Interest not made in accordance with this Article 11 shall be null
and void.
11.2 TRANSFER OF THE GENERAL PARTNER'S GENERAL PARTNER INTEREST
(a) The General Partner may not Transfer any of its General Partner
Interest or withdraw as General Partner, except:
(i) with the Consent of the Outside Limited Partners; or
(ii) if such Transfer is to an entity which is wholly-owned,
directly or indirectly, by the General Partner;
(b) In the event the General Partner withdraws as general partner of
the Partnership in accordance with Section 11.2(a), the General Partner's
General Partner Interest shall immediately be converted into a Limited Partner
Interest.
11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
(a) General. Subject to the provisions of Section 11.3(b), no
Limited Partner shall have the right to Transfer all or a portion of such
Limited Partner's Partnership Interest, or any of such Limited Partner's rights
as a Limited Partner, without the consent of the General Partner, which may be
given or withheld by the General Partner in its sole and absolute discretion.
(b) Transfers to Permitted Transferees. Notwithstanding the
provisions of Section 11.3(a), but subject to the provisions of Sections
11.3(c), 11.3(d), and 11.3(e) and other applicable restrictions on Transfers
contained in this Article 11, a Limited Partner may Transfer, with or without
the consent of the General Partner, all or a portion of his Partnership Units to
a Permitted Transferee; provided that, such Permitted Transferee qualifies as
"accredited investor" as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act; and provided further that, no Transfer
pursuant to this Section 11.3(b) shall be effective until the General Partner
receives notice of such Transfer.
(c) No Transfers Violating Securities Laws. The General Partner may
prohibit any Transfer by a Limited Partner of its Partnership Units if, in the
opinion of legal counsel to the Partnership, such Transfer would require the
filing of a registration statement under the Securities Act, or would otherwise
violate any federal or state securities laws or regulations applicable to the
Partnership or the Partnership Units.
(d) No Transfers to Certain Lenders. 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 Treasury Regulations Section 1.752-4(b)) to any lender to
the Partnership whose loan constitutes a nonrecourse liability (within the
meaning of Treasury Regulations Section 1.752-1(a)(2)), without the consent of
the General Partner, which may be withheld in its sole and absolute discretion.
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(e) Additional Prohibited Transfers. No Transfer by a
Limited Partner of its Partnership Units may be made to any Person if:
(i) in the opinion the Company based on the advice of legal
counsel, if appropriate, it would adversely affect the ability of the Company to
continue to qualify as a REIT or would subject the Company to any additional
taxes under Section 857 or Section 4981 of the Code;
(ii) in the opinion of the General Partner based on the advice
of legal counsel, if appropriate, it would result in the Partnership being
treated as an association taxable as a corporation for federal income tax
purposes;
(iii) such Transfer would subject the Partnership to
regulation under the Investment Company Act of 1940, the Investment Advisers Act
of 1940, as amended or ERISA;
(iv) such Transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code; or
(v) such Transfer is to a Prohibited Transferee.
(f) Incapacitated Limited Partners. If a Limited Partner is
Incapacitated, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all of the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners, for the purpose of settling or managing the estate and such
power as the Incapacitated Limited Partner possessed to Transfer all or any part
of his or its interest in the Partnership. The Incapacity of a Limited Partner,
in and of itself, shall not dissolve or terminate the Partnership.
(g) Transfers by the Advisor. For so long as the Advisor remains the
advisor to the Partnership and Company under the Advisory Agreement, neither the
Advisor nor any Affiliate of the Advisor (other than the Company) may Transfer
any portion of the Partnership Units held by the Advisor to any Person, other
than (i) Transfers to any Affiliate of the Advisor, and (ii) deemed Transfers to
the Company pursuant to Section 8.6(c).
11.4 SUBSTITUTED LIMITED PARTNERS
(a) Consent of the General Partner. No Limited Partner shall have
the right to substitute a Permitted Transferee in such Limited Partner's place.
The General Partner shall, however, have the right to consent to the admission
of a Permitted Transferee of the Partnership Interest of a Limited Partner
pursuant to this Section 11.4 as a Substitute Limited Partner, which consent may
be given or withheld by the General Partner in its sole and absolute discretion.
The General Partner's failure or refusal to permit such transferee to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or any Partner.
(b) Rights of a Substituted Limited Partner. A transferee who has
been admitted as a Substituted Limited Partner in accordance with this Article
11 shall have all the rights and powers and be subject to all the restrictions
and liabilities of a Limited Partner under
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this Agreement. The admission of any transferee as a Substituted Limited Partner
shall be conditioned upon the transferee executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted in Section 2.6, and
such other documents or instruments as may be required in the reasonable
discretion of the General Partner in order to effect such Person's admission as
a Substituted Limited Partner.
(c) Amendments to Exhibit A. Upon the admission of a Substituted
Limited Partner, the General Partner shall amend Exhibit A to reflect the name,
address, number of Partnership Units, and Percentage Interest of such
Substituted Limited Partner and to eliminate or adjust, if necessary, the name,
address and interest of the predecessor of such Substituted Limited Partner.
11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion, does
not consent to the admission of any transferee as a Substituted Limited Partner,
as described in Section 11.4(a), such transferee shall be considered an Assignee
for purposes of this Agreement. An Assignee shall be deemed to have had assigned
to it, and shall be entitled to receive distributions from the Partnership and
the share of Profit, Losses and any other items of gain, loss, deduction or
credit of the Partnership attributable to the Partnership Units assigned to such
transferee, but shall not be deemed to be a holder of Partnership Units for any
other purpose under this Agreement except as otherwise provided in this
Agreement, and shall not be entitled to vote such Partnership Units in any
matter presented to the Limited Partners for a vote (such Partnership Units
being deemed to have been voted on such matter in the same proportion as all
other Partnership Units held by Limited Partners are voted). In the event any
such transferee desires to make a further assignment of any such Partnership
Units, such transferee shall be subject to all of the provisions of this Article
11 to the same extent and in the same manner as any Limited Partner desiring to
make an assignment of Partnership Units.
11.6 GENERAL PROVISIONS
(a) Withdrawal of a Limited Partner. No Limited Partner may withdraw
from the Partnership other than as a result of a Transfer of all of such Limited
Partner's Partnership Units pursuant to which the transferee is admitted as a
Substituted Limited Partner or a redemption of all of the Partnership Units held
by such Limited Partner pursuant to Section 8.6.
(b) Termination of Status as a Limited Partner. Any Limited Partner
that (i) Transfers all of such Limited Partner's Partnership Units (or other
Partnership Interests) in a Transfer pursuant to which the transferee is
admitted as a Substituted Limited Partner, or (ii) redeems all of such the
Partnership Units held by such Limited Partner pursuant to Section 8.6 shall
cease to be a Limited Partner.
(c) Allocations. If any Partnership Interest is Transferred during
the Partnership's Fiscal Year in compliance with the provisions of this Article
11 (including Transfers to the General Partner pursuant to Section 8.5(c) on any
day other than the first day of a Fiscal Year, then Profit, Losses, each item
thereof and all other items attributable to such
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Partnership Interest for such Fiscal Year shall be divided and allocated between
the transferor Partner and the transferee Partner by taking into account their
varying interests during the Fiscal Year in accordance with Section 706(d) of
the Code, using the interim closing of the books method (unless the General
Partner, in its sole and absolute discretion, elects to adopt a daily, weekly or
monthly proration period, in which event Profits, Losses, each item thereof and
all other items attributable to such transferred Partnership Interest for such
Fiscal Year shall be prorated based upon the applicable method selected by the
General Partner).
(d) Distributions. All distributions of Distributable Cash or other
Partnership Assets attributable to Partnership Units, with respect to which the
Partnership Record Date is before the date of a Transfer of such Partnership
Units (including any Transfer to the General Partner pursuant to Section
8.5(c)), shall be made to the transferor Partner, and all distributions of
Distributable Cash or other Partnership Assets thereafter attributable to such
Partnership Units shall be made to the transferee Partner.
(e) Capital Accounts. The original Capital Account established for
each transferee shall be in the same amount as the Capital Account or portion
thereof of the Partner to which such transferee succeeds, at the time such
transferee is admitted to the Partnership. The Capital Account of any Partner
whose Percentage Interest shall be increased by means of the Transfer to it of
all or part of the Partnership Interest of another Partner shall be
appropriately adjusted to reflect such Transfer. Any reference in this Agreement
to a Capital Contribution of, or distribution to, a then-Partner shall include a
Capital Contribution or distribution previously made by or to any prior Partner
on account of the Partnership Interest of such then-Partner.
(f) Additional Restrictions. In addition to any other restrictions
on transfer contained in this Agreement, in no event may any Transfer of a
Partnership Interest by any Partner or any redemption pursuant to Section 8.5 be
made without the express consent of the General Partner, in its sole and
absolute discretion, (i) to any Person or entity who lacks the legal right,
power or capacity to own a Partnership Interest; (ii) in violation of applicable
law; (iii) of any component portion of a Partnership Interest, such as the
Capital Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) if in the opinion of the General
Partner based on the advice of legal counsel, if appropriate, such Transfer
would cause a termination of the Partnership for federal or state income tax
purposes (except as a result of a redemption of all Partnership Units held by
all Limited Partners); (v) if in the opinion of the General Partner based on the
advice of legal counsel, if appropriate, such Transfer would cause the
Partnership to cease to be classified as a partnership for federal income tax
purposes (except as a result of a redemption of all Partnership Units held by
all Limited Partners); (vi) if such Transfer requires the registration of such
Partnership Interest pursuant to any applicable federal or state securities
laws; (vii) if such Transfer would cause the Partnership to become a "publicly
traded partnership," as such term is defined in Section 7704(b) of the Code
(provided that this clause (vii) shall not be the basis for limiting or
restricting in any manner the exercise of the Redemption Right under Section 8.5
unless, and only to the extent that, outside tax counsel advises the General
Partner that, in the absence of such limitation or restriction, there is a
significant risk that the Partnership will be treated as a "publicly traded
partnership" and, by reason thereof, taxable as a corporation); (viii) if such
Transfer would cause the Company to own 10% or more of the ownership interests
of any tenant of a property held by the Partnership within the meaning of
Section 856(d)(2)(B) of the Code; (ix) if such Transfer would result in the
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Company being "closely held" within the meaning of Section 856(h) of the Code;
or (x) if in the opinion the Company based on the advice of legal counsel, if
appropriate, such Transfer 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.
ARTICLE 12
ADMISSION OF PARTNERS
12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner Interest pursuant to
Article 11 hereof who is proposed to be admitted as a successor general partner
to the Partnership shall be admitted to the Partnership as the general partner,
effective immediately following the successor general partner's execution and
delivery to the Partnership of an acceptance of all of the terms and conditions
of this Agreement and such other documents or instruments as may be required or
appropriate to effect such Person's admission as general partner. In the case of
such admission on any day other than the first day of a Fiscal Year, all items
attributable to the General Partner Interest for such Fiscal Year shall be
allocated between the transferring general partner and such successor as
provided in Section 11.6(c) hereof. Any such successor general partner shall
carry on the business of the Partnership without dissolution.
12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
(a) General. A Person other than the General Partner and the Initial
Limited Partners who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon executing and delivering to the General
Partner:
(i) evidence of acceptance in form satisfactory to the General
Partner of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.6 hereof; and
(ii) such other documents or instruments as may be required in
the discretion of the General Partner in order to effect such Person's admission
as an Additional Limited Partner.
(b) General Partner's Consent Required. Notwithstanding anything to
the contrary in this Section 12.2, no Person shall be admitted as an Additional
Limited Partner without the prior written consent of the General Partner, which
consent may be given or withheld in the General Partner's sole and absolute
discretion. The admission of any Person as an Additional Limited Partner shall
become effective on the date upon which the name of such Person is recorded on
the books and records of the Partnership, following the consent of the General
Partner to such admission and the satisfaction of the conditions set forth in
Section 12.2(a).
(c) Allocations to Additional Limited Partners. If any Additional
Limited Partner is admitted to the Partnership on any day other than the first
day of a Fiscal Year, then Profit, Losses, each item thereof and all other items
allocable among Partners and Assignees for such Fiscal Year shall be allocated
among such Additional Limited Partner and all other Partners
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and Assignees by taking into account their varying interests during the Fiscal
Year in accordance with Section 706(d) of the Code, using the interim closing of
the books method. Solely for purposes of making such allocations, each of such
items for the calendar month in which an admission of any Additional Limited
Partner occurs shall be allocated among all of the Partners and Assignees,
including such Additional Limited Partner.
12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.6 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor general partner in accordance with the terms of this Agreement.
Subject to Section 13.1(b), upon the withdrawal of the General Partner, any
successor general partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, only upon the
first to occur of any of the following ("Liquidating Events"):
(a) the expiration of its term as provided in Section 2.5 hereof;
(b) an event of withdrawal of the General Partner, as defined in the
Act (other than an event of bankruptcy), unless, within ninety (90) days after
such event of withdrawal, a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
successor general partner;
(c) an election to dissolve the Partnership made by the General
Partner, in its sole and absolute discretion;
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
(e) the occurrence of a Terminating Capital Transaction; or
(f) a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner or the Partnership is
bankrupt or insolvent, or a final and non-appealable order for relief is entered
by a court with appropriate jurisdiction against the General Partner or the
Partnership, in each case under any federal or state bankruptcy or insolvency
laws as now or hereafter in effect, unless prior to the entry of such order or
judgment
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a "majority in interest" (as defined below) of the remaining Partners Consent in
writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner, if applicable.
As used in this Article 13, a "majority in interest" shall refer to Partners
(excluding the General Partner) who hold Partnership Units that constitute more
than fifty percent (50%) of the aggregate number of outstanding Partnership
Units not held by the General Partner.
13.2 WINDING UP; LIQUIDATION
(a) Upon dissolution of the Partnership, the business and affairs of
the Partnership shall be wound up as provided in this Section 13.2. The General
Partner shall act as the "Liquidator" (or, in the event there is no remaining
General Partner, any Person elected by Limited Partners holding more than 50% of
the total number of Partnership Units then issued and outstanding). The
Liquidator shall wind up the affairs of the Partnership, shall dispose of such
Partnership Assets as it deems necessary or appropriate and shall pay and
distribute the assets of the Partnership, including the proceeds of any such
disposition, as follows:
(i) first, to creditors, including Partners who are creditors,
to the extent otherwise permitted by law, in satisfaction of liabilities of the
Partnership (whether by payment or by establishment or reserves as determined by
the Liquidator in its sole discretion), other than distributions to Partners
pursuant to Article 5, and
(ii) second, to the Partners in accordance with Section
5.1(b).
It is intended that the distributions in Section 13(a)(ii) will also be in the
ratios of the Partners' positive Capital Account balances at the time the
distributions are made, but in any event such distributions will be governed by
Section 5.1(b). If the balances in the Capital Accounts do not result in Capital
Account balances identical to the ratios in Section 5.1(b), items of Profits and
Losses will be reallocated among the Partners for the Fiscal Year of the
liquidation (and, at the election of the General Partner, if necessary and
permissible, prior Fiscal Years) so as to cause the balances in the Capital
Accounts to be in the amounts necessary to assure that such result is achieved.
Notwithstanding anything herein to the contrary, in the event the Partnership is
liquidated within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g), liquidation distributions shall be made by the end of the
taxable year in which the Partnership liquidates or, if later, within ninety
(90) days of the date of such liquidation.
(b) In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the Partners pursuant to this
Article 13 may be:
(i) distributed to a trust established for the benefit of the
General Partner and Limited Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or the General Partner
arising out of or in connection with the Partnership; the assets of any such
trust shall be distributed to the General Partner and Limited Partners from time
to time, in the reasonable discretion of the Liquidator, in the same proportions
as the amount distributed to such trust by the Partnership would otherwise have
been distributed to the General Partner and Limited Partners pursuant to this
Agreement; or
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(ii) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership, provided that
such withheld or escrowed amounts shall be distributed to the General Partner
and Limited Partners in the manner and order of priority set forth in Section
13.2(a) as soon as practicable.
(c) The Liquidator shall, in its sole discretion, determine whether
to sell any Partnership Assets, including, without limitation, Real Estate
Assets, and if so, whether at a public or private sale, for what price and on
what terms. If the Liquidator determines to sell or otherwise dispose of any
Partnership Asset or any interest therein, the Liquidator shall do so
expeditiously and for its fair market value under the circumstances, giving due
regard to the activity and condition of the relevant market and general
financial and economic conditions. If the Liquidator determines not to sell or
otherwise dispose of any Partnership Asset or any interest therein, the
Liquidator shall not be required to distribute the same to the Partners promptly
but shall have full right and discretion to determine the time and manner of
such distribution and distributions giving due regard to the interests of the
Partners.
13.3 NO OBLIGATION TO CONTRIBUTE DEFICIT
If any Partner has a deficit balance in his Capital Account (after
giving effect to all contributions, distributions and allocations for all
taxable years, including the year during which such liquidation occurs), such
Partner shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever.
13.4 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that
would, but for the provisions of an election or objection by one or more
Partners pursuant to Section 13.1, result in a dissolution of the Partnership,
the General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners.
13.5 TERMINATION OF PARTNERSHIP AND CANCELLATION OF CERTIFICATE OF LIMITED
PARTNERSHIP
Upon the completion of the liquidation of the Partnership's assets,
as provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
state of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
13.6 REASONABLE TIME FOR WINDING-UP
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
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13.7 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS
14.1 AMENDMENTS
(a) By the General Partner. The General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement
except as set forth in Section 14.1(b) hereof. The General Partner shall provide
notice to the Limited Partners when any action under this Section 14.1(a) is
taken in the next regular communication to the Limited Partners. The Limited
Partners shall not have the power to amend this Agreement.
(b) Restrictions on General Partner's Ability to Amend this
Agreement. Notwithstanding Section 14.1(a) hereof, this Agreement shall not be
amended with respect to any Partner adversely affected without the Consent of
such Partner adversely affected if such amendment would:
(i) convert a Limited Partner's interest in the Partnership
into a General Partner Interest;
(ii) impose on the Limited Partners any obligation to make
additional Capital Contributions to the Partnership;
(iii) modify the limited liability of a Limited Partner in a
manner adverse to such Limited Partner; or
(iv) modify the rights of the Partners to receive
distributions; or
(v) amend this Section 14.1(b).
14.2 MEETINGS OF THE PARTNERS
(a) General. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding 25 percent or more of the Partnership
Interests. The request shall state the nature of the business to be transacted.
Notice of any such meeting shall be given to all Partners not less than seven
(7) days nor more than thirty (30) days prior to the date of such meeting.
Partners may vote in person or by proxy at such meeting.
(b) Vote Required. Whenever the vote or Consent of the Partners is
permitted or required under this Agreement, such vote or Consent may be given at
a meeting of the Partners or may be given in accordance with the procedure
prescribed in Section 14.2(c) hereof. Except as otherwise expressly provided in
this Agreement, the Consent of holders of Partnership Units that constitute more
than fifty percent (50%) of the aggregate number of outstanding Partnership
Units held by the Partners (including the General Partner) shall constitute the
consent of the Partners.
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(c) Action Without a Meeting. Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by holders of Partnership
Units that constitute more than fifty percent (50%) (or such other percentage as
is expressly required by this Agreement) of the aggregate number of outstanding
Partnership Units held by the Partners (including the General Partner). Such
consent may be in one instrument or in several instruments, and shall have the
same force and effect as a vote the holders of Partnership Units that constitute
more than fifty percent (50%) (or such other percentage as is expressly required
by this Agreement) of the aggregate number of outstanding Partnership Units held
by the Partners (including the General Partner). Such consent shall be filed
with the General Partner. An action so taken shall be deemed to have been taken
at a meeting held on the effective date of the consent as certified by the
General Partner.
(d) Proxy. Each Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a Partner is entitled to participate,
including waiving notice of any meeting, or voting or participating at a
meeting. Every proxy must be signed by the Partner or his attorney-in-fact and a
copy thereof delivered to the Partnership. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the Partner
executing it, such revocation to be effective upon the General Partner's receipt
of written notice of such revocation from the Partner executing such proxy.
(e) Conduct of Meeting. Each meeting of the Partners shall be
conducted by the General Partner or such other Person as the General Partner may
appoint pursuant to such rules for the conduct of the meeting as the General
Partner or such other Person deems appropriate. Meetings of Partners may be
conducted in the same manner as meetings of the stockholders of the Company and
may be held at the same time, and as part of, meetings of the stockholders of
the Company.
ARTICLE 15
GENERAL PROVISIONS
15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered if delivered in person, sent by
first class United States mail, by overnight delivery or via facsimile to the
Partner or Assignee at the address set forth in Exhibit A or such other address
of which the Partner shall notify the General Partner in writing.
Notwithstanding the foregoing, the General Partner may elect to deliver any such
notice, demand, request or report by E-mail or by any other electronic means, in
which case such communication shall be deemed given or made one day after being
sent.
15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience of reference only, shall not be deemed part of this Agreement and
shall in no way define, limit, extend or describe the scope or intent of any
provisions hereof. Except as specifically provided
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otherwise, references to "Articles" and "Sections" are to Articles and Sections
of this Agreement.
15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
15.6 CREDITORS
Other than as expressly set forth herein with respect to the
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
15.7 WAIVER
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
15.10 INVALIDITY OF PROVISIONS
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If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
15.11 MERGER
Subject to Section 11.2, the Partnership may merge with, or
consolidate into, any Person or Entity in accordance with Section 17-211 of the
Act.
15.12 NO RIGHTS AS STOCKHOLDERS
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as stockholders
of the Company, including, without limitation, any right to receive dividends or
other distributions made to such stockholders or to vote or to consent or
receive notice as stockholders in respect to any meeting or stockholders for the
election of directors of the Company or any other matter.
15.13 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement of Limited Partnership as of the day and year first-above written.
GENERAL PARTNER:
XXXXXXX GENERAL PARTNER, L.L.C.
By:
------------------------
Name:
Title:
LIMITED PARTNER:
XXXXXXX ADVISORS, L.P.
By:
------------------------
Name:
Title:
LIMITED PARTNER:
XXXXXXX PROPERTIES TRUST, INC.,
a Maryland corporation
By:
------------------------
Name:
Title:
EXHIBIT A
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS
NUMBER OF
TYPE OF CAPITAL PARTNERSHIP PERCENTAGE
NAME AND ADDRESS OF PARTNER INTEREST CONTRIBUTION UNITS INTEREST
Xxxxxxx General Partner, L.L.C. General Partnership
Interest $100.00 100 1.0%
Xxxxxxx Advisors, L.P. Limited Partnership
Interest $100.00 100 1.0%
Xxxxxxx Properties Trust, Inc. Limited Partnership
Interest $9,800.00 9,800 98%
TOTAL $10,000.00 10,000 100%
EXHIBIT B
NOTICE OF REDEMPTION REQUEST
The undersigned Limited Partner hereby irrevocably (i) requests
that Xxxxxxx Partners, L.P. (the "Partnership") redeem
Partnership Units in the Partnership held by such
Limited Partner in accordance with the terms of the Agreement of Limited
Partnership of the Partnership (the "Partnership Agreement") and the Redemption
Right referred to therein; (ii) agrees to surrender such Partnership Units and
all right, title, and interest therein promptly upon payment of the Redemption
Amount; (iii) directs that the Redemption Amount deliverable upon exercise of
the Redemption Right be delivered to such Limited Partner at the address as
specified in the Partnership Agreement; and (iv) directs that, if the General
Partner determines that the Redemption Amount shall be the REIT Stock Amount,
the REIT Stock be registered or placed in the name of such Limited Partner and
at such address specified in the Partnership Agreement. The undersigned hereby
represents, warrants, and certifies that the undersigned (a) has not transferred
or encumbered title to such Partnership Units; (b) has the full right, power and
authority to redeem and surrender such Partnership Units as provided herein; and
(c) has obtained the consent or approval of all Persons, if any, having the
right to consent or approve such redemption and surrender.
Dated:
[NAME OF LIMITED PARTNER]
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
[NAME OF LIMITED PARTNER]
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
