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EXHIBIT 99.1
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FORM OF
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NET 3 ACQUISITION L.P.
Dated as of [October __, 2001]
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[FORM OF]
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
NET 3 ACQUISITION LP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
of [October __, 2001], is entered into by and among Lex GP-1, Inc. ("GP-1"), a
Delaware corporation, as the general partner (the "General Partner"), Lex LP-1,
Inc. ("LP-1"), a Delaware corporation, as the initial limited partner, (the
"Initial Limited Partner"), Lexington Corporate Properties Trust, a Maryland
statutory real estate investment trust, as an additional signatory ("LXP"), and
the Persons whose names will be hereinafter set forth on Exhibit A hereto as
special limited partners (collectively, the "Special Limited Partners"), with
any other Persons who become Partners in the Partnership as provided herein.
WHEREAS, the General Partner caused to be filed on November 3, 2000,
a certificate of limited partnership on behalf of Net 3 Acquisition LP (the
"Partnership") and thereafter GP-1 and LP-1 entered into an Agreement of Limited
Partnership of the Partnership, dated ________, 2000;
WHEREAS, on November 13, 2000, GP-1, in its capacity as the General
Partner of the Partnership, and LP-1, in its capacity as the sole limited
partner of the Partnership, authorized and approved the Net 3 Merger and the
execution and delivery of the Net 3 Merger Agreement by the Partnership;
WHEREAS, at the Effective Time, (i) Net 1 and Net 2 merged with and
into Net 3, whereupon the separate existence of Net 1 and Net 2 ceased and (ii)
Net 3, also referred to as the Partnership in this Agreement, was the surviving
limited partnership of the Net 3 Merger; and
WHEREAS, in connection with the consummation of the Net 3 Merger
pursuant to the Net 3 Merger Agreement, GP-1, LP-1, LXP and the Special Limited
Partners set forth on Exhibit A hereby entered into this Amended and Restated
Agreement of Limited Partnership of Net 3 Acquisition LP on the terms and
conditions set forth below.
ARTICLE 1
DEFINED TERMS
The following definitions shall for all purposes be applied to the
following terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time.
"Additional Limited Partners" means the Special Limited Partners and
any other limited partner admitted to the Partnership pursuant to Section 4.2.A.
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"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which
has been adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is
deemed distributed by, and re-contributed to, the Partnership for federal income
tax purposes upon a termination thereof pursuant to Section 708 of the Code,
such property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is further adjusted pursuant to Exhibit B
hereof.
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under common control with such
Person.
"Agreed Value" means (i) the 704(c) Value of such property or other
consideration in the case of any Contributed Property as of the time of its
contribution to the Partnership, reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when
contributed, and (ii) 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 under Section 752 of the Code and the Regulations thereunder.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units held
by an Additional Limited Partner have been transferred in a manner permitted
under this Agreement, but who has not become a Substituted Additional Limited
Partner and who has the rights set forth in Section 11.5.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B
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and the hypothetical balance of such Partner's Capital Account computed as if it
had been maintained strictly in accordance with federal income tax accounting
principles.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Cash Redemption Amount" means an amount equal to the product of (i)
the number of Partnership Units offered for redemption by the Redeeming Partner,
multiplied by (ii)(a) the average Daily Market Price of the REIT Shares for the
twenty (20) Business Days preceding the Specified Redemption Date multiplied by
(b) the Redemption Factor.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
"Capital Contributions" means, with respect to any Partner, any
cash, cash equivalents or the Agreed Value of Contributed Property which such
Partner contributes or is deemed to contribute to the Partnership pursuant to
Section 4.1 or 4.2 hereof.
"Capital Event" means the sale, refinancing or other disposition of
a Partnership asset outside the ordinary course of the Partnership's business.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such property charged to the Partners'
Capital Accounts and (ii) with respect to any other Partnership property, the
adjusted basis of such property for federal income tax purposes, all as of the
time of determination. The Carrying Value of any property shall be adjusted from
time to time in accordance with Exhibit B hereof, and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
"Certificate" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Common Unit" means a fractional, undivided share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1 and 4.2, other than
the Special Limited Partner Units.
"Contributed Property" means each property or other asset, in such
form as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership (or deemed contributed to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code).
Once the Carrying Value of a Contributed Property is adjusted pursuant to
Exhibit B hereof, such property shall no longer constitute a Contributed
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Property for purposes of Exhibit B hereof, but shall be deemed an Adjusted
Property for such purposes.
"Daily Market Price" means the price of REIT Shares on the relevant
date, determined (a) on the basis of the last reported trading price of REIT
Shares as reported on the New York Stock Exchange (the "NYSE"), or if the REIT
Shares are not then listed on the NYSE, as reported on such national securities
exchange upon which the REIT Shares are listed, or (b) if there is no reported
sale or trade on the day in question, on the basis of the average of the closing
bid and asked quotations regular way so reported, or (c) if REIT Shares are not
listed on the NYSE or on any national securities exchange, on the basis of the
high bid and low asked quotations regular way on the day in question in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System, or, if not so quoted, as reported by the
National Quotation Bureau, Incorporated, or a similar organization.
"Declaration of Trust" means the Declaration of Trust of LXP, as
amended or restated from time to time.
"Depreciation" means, for each fiscal year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Effective Date" shall mean the date of the filing of the Net 3
Merger Certificate with the Secretary of State of the State of Delaware.
"Effective Time" shall mean the time of the filing of the Net 3
Merger Certificate with the Secretary of State of Delaware.
"General Partner" means the General Partner or its successors as
general partner of the Partnership.
"General Partner Interest" means a Partnership Interest held by the
General Partner that is a general partner interest. A General Partner Interest
shall be expressed as a number of Partnership Units.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.
"Incapacity" or "Incapacitated" means (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner, the filing of a
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certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
Bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties, (f) any
proceeding seeking liquidation, reorganization or other relief 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, (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator for the assets of
the Partner which such appointment has not been vacated or stayed within ninety
(90) days of such appointment, or (h) an appointment referred to in clause (g)
is not vacated within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of his status as (A) the General Partner, or (B) a director or officer of
the Partnership, the General Partner, the Initial Limited Partner or LXP, and
(ii) such other Persons (including Affiliates of the Partnership, the General
Partner, the Initial Limited Partner or LXP) 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.
"Initial Limited Partner" means Lex LP-1, Inc.
"Initial Redemption Date" means _____, 2006 (five years from Closing
Date).
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Net 1" means Net 1 L.P., a Delaware limited partnership.
"Net 2" means Net 2 L.P., a Delaware limited partnership.
"Limited Partner Interest" means a Partnership Interest held by a
Limited Partner in the Partnership that is a limited partner interest. A Limited
Partner Interest shall be expressed as a number of Partnership Units.
"Limited Partners" means the Initial Limited Partner and the Special
Limited Partners.
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"Liquidator" has the meaning set forth in Section 13.2.
"Liquidating Event" has the meaning set forth in Section 13.1.
"LXP" means Lexington Corporate Properties Trust, a Maryland
statutory real estate investment trust.
"Net 3 Merger" means the merger of Net 1 and Net 2 with and into Net
3 which Mergers became effective on __________, 2001.
"Net Income" means, for any taxable period, the excess, if any, of
the Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Exhibit C, Net Income or the resulting Net Loss, whichever
the case may be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C, Net Loss or the resulting Net Income, whichever
the case may be, shall be recomputed without regard to such item.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially
in the form of Exhibit D-1 to this Agreement.
"Operating Cash Flow" means, for any period, operating revenue from
leases on real property investments, partnership distributions with respect to
partnerships in which the Partnership has interests, and interest on uninvested
funds and other cash investment returns, less operating expenses, capital
expenditures and regularly scheduled principal and interest payments (exclusive
of balloon payments due at maturity) on outstanding mortgage and other
indebtedness. The General Partner may, in its discretion, reduce Operating Cash
Flow for any
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period by an amount determined by the General Partner to be necessary to fund
reserves required by the Partnership.
"Partner" means the General Partner, the Initial Limited Partner, or
any Special Limited Partner, and "Partners" means, collectively, the General
Partner, the Initial Limited Partner and all of the Special Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" shall have the meaning set forth in Section 2.3 of
this Agreement.
"Partnership Interest" means an ownership interest in the
Partnership and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest shall be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Operating Cash Flow pursuant to Section
5.1 hereof, which record date shall be the same as the record date established
by LXP for a distribution to its stockholders of some or all of such
distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2;
provided, that the Partnership Units represented by the Special Limited Partner
Units shall be entitled solely to the Special Limited Partner Unit Distribution
Amounts.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of
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Partnership Units then outstanding and as specified in Exhibit A attached
hereto, as such Exhibit may be amended from time to time.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association, limited liability company or other
entity.
"Prior Agreement" means the Agreement of Limited Partnership of Net
3 Acquisition L.P., dated as of October __, 2000.
"Recapture Income" means any gain recognized by the Partnership upon
the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.4.
"Redemption Amount" means the Share Redemption Amount or Cash
Redemption Amount, as applicable.
"Redemption Factor" means 1.0, provided that in the event that LXP
(i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or
makes a distribution to all holders of its outstanding REIT Shares in REIT
Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Redemption
Factor shall be adjusted by multiplying the Redemption Factor in effect
immediately before such event by a fraction, the numerator of which shall be the
number of REIT Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time), and the denominator of which shall be the actual number of REIT
Shares (determined without the above assumption) issued and outstanding on the
record date for such dividend distribution, subdivision or combination. Any
adjustment to the Redemption Factor shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
"Redemption Right" has the meaning set forth in Section 8.4.A.
hereof.
"Regulations" means the Income Tax Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" shall mean a common share of LXP, $.0001 par value. A
REIT Share shall also mean an excess share of LXP, $.0001 par value, issued in
exchange or upon conversion of a common share of LXP under the circumstances
contemplated by the Declaration of Trust.
"Relative Interest" means the percentage determined by a fraction,
the numerator of which is the Capital Contributions deemed to be made by the
General Partner, the Initial
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Limited Partner and the Special Limited Partners on the Effective Date to the
Partnership and the denominator of which is such Capital Contributions plus the
capital contributions deemed to be made by the partners of Net 3 to Net 3 on the
Effective Date. LXP may require the Partnership to adjust the Relative Interest
from time to time, in its discretion (provided that the sum of the Relative
Interest of the Partnership and the relative interest of Net 3 continue to total
one (1.0)), so that each Partnership Unit held by the Special Limited Partners
remains substantially equivalent to each partnership unit held by the special
limited partners in Net 3 with regard to (i) allocations of income, gain, loss,
deduction and credit, (ii) distributions from Operating Cash Flow and (iii)
distributions upon dissolution and liquidation of the Partnership and Net 3.
"Residual Gain" or "Residual Loss" means any item of gain or loss,
as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.X.x(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"704(c) Value" of any Contributed Property means the fair market
value of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt; provided that the 704(c) Value of any property deemed contributed
to the Partnership for federal income tax purposes upon termination and
reconstitution thereof pursuant to Section 708 of the Code shall be determined
in accordance with Exhibit B hereof. Subject to Exhibit B hereof, the General
Partner shall, in its sole and absolute discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate of the 704(c) Values of
Contributed Properties in a single or integrated transaction among the separate
properties on a basis proportional to their respective fair market values.
"Share Redemption Amount" means the number of REIT Shares equal to
the product of the number of Partnership Units offered for redemption by a
Redeeming Partner, multiplied by the Redemption Factor; provided that in the
event the General Partner issues to all holders of REIT Shares rights, options,
warrants or convertible or exchangeable securities entitling the stockholders to
subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "rights") then the Redemption Amount shall also include such
rights that a holder of that number of REIT Shares would be entitled to receive.
"Special Limited Partner" means a Person admitted to the Partnership
as a Special Limited Partner and who is shown as such on the books and records
of the Partnership.
"Special Limited Partner Interest" means a Partnership Interest of
the Special Limited Partners in the Partnership representing a fractional part
of the Partnership Interests of all Special Limited Partners and includes any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. A Special
Limited Partner Interest may be expressed as a number of Partnership Units.
"Special Limited Partner Units" shall mean those Special Limited
Partner Units issued pursuant to Section 4.1 and 4.2 having the Special Limited
Partner Exchange Rights, such
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Special Limited Partner Units being entitled to receive Special Limited Partner
Unit Distribution Amounts.
"Special Limited Partner Unit Distribution Amounts" means such
amounts of distributions for each Special Limited Partner Unit which is equal to
the amount of distributions made in respect of one REIT Share outstanding on any
given date multiplied by the Conversion Ratio (as defined in the Articles
Supplementary of LXP, dated January 17, 1997), such amount of Special Limited
Partner Unit Distribution Amounts being adjusted from time to time pursuant to
Section ___.
"Specified Redemption Date" means the tenth (10th) Business Day
after receipt by the General Partner and LXP of a Notice of Redemption.
"Subsequent Partner" means a Person admitted to the Partnership as a
Partner after the date hereof through the sale or issuance by the Partnership of
additional Partnership Interests and not through the transfer of existing
Partnership Interests.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"Substituted Additional Limited Partner" means a Person who is
admitted as an Additional Limited Partner to the Partnership pursuant to Section
11.4.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereof) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Exhibit B
hereof) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization.
A. The Partnership is a limited partnership formed pursuant to
the provisions of the Act and upon the terms and conditions set forth in the
Prior Agreement. The Partners hereby amend and restate the Prior Agreement in
its entirety as of the date hereof to reflect the
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admission of the Special Limited Partner(s) into the Partnership. Except as
expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal
property for all purposes.
Section 2.2 Net 3 Merger.
A. The General Partner, in its capacity as the General Partner of
the Partnership, and each of the other Partners in their respective capacities
as such, hereby authorizes and approves the consummation of the Net 3 Merger and
reaffirms all the terms and conditions set forth in the Net 3 Merger Agreement
by the Partnership. At the Effective Time, (i) Net 1 and Net 2 merged with and
into Net 3, whereupon the separate existence of Net 1 and Net 2 ceased and (ii)
Net 3, also referred to as the Partnership in this Agreement, was the surviving
limited partnership of the Net 3 Merger.
B. At the Effective Time:
(1) Each limited partner interest in Net 1 and Net 2
outstanding immediately prior to the Effective Time has been exchanged, pursuant
to the terms of the Net 3 Merger Agreement, for either (a) common shares of LXP
and cash or (b) 8.5% senior subordinated debentures of LXP due 2009.
(2) The general partnership interests in each of Net 1 and
Net 2 outstanding immediately prior to the Effective Time have been exchanged
for Special Limited Partner Interests in Net 3 which are being issued pursuant
to this Agreement, and the general partners of Net 1 and Net 2 are each hereby
admitted to the Partnership as a Special Limited Partner.
Section 2.3 Name.
The name of the Partnership is Net 3 Acquisition LP. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time.
Section 2.4 Registered Office and Agent Principal Office.
The address of the registered office of the Partnership in the State
of Delaware is located at 0000 Xxxxxx Xxxxxx, Xxxx xx Xxxxxxxxxx, Xxxxxx of Xxx
Xxxxxx, Xxxxxxxx 00000, and the registered agent for service of process on the
Partnership in the State of Delaware at such registered office is The
Corporation Trust Company. The principal office of the Partnership is located at
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and may be changed to such other
place as the General Partner may from time to time designate. The Partnership
may maintain offices at such other place or places within or outside the State
of Delaware as the General Partner deems advisable.
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Section 2.5 Term.
The term of the Partnership commenced on October __, 2000, the date
the Certificate was filed in the office of the Secretary of State of Delaware in
accordance with the Act and shall continue until [December 31, 2093], unless the
Partnership is dissolved sooner pursuant to the provisions of Article 13 or as
otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business.
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided that such business
shall be limited to and conducted in such a manner as to permit LXP at all times
to be classified as a REIT, unless LXP ceases to qualify as a REIT for reasons
other than the conduct of the business of the Partnership, (ii) to enter into
any partnership, joint venture or other similar arrangement to engage in any of
the foregoing or to own interests in any entity engaged in any of the foregoing
and (iii) to do anything necessary or incidental to the foregoing. In connection
with the foregoing, and without limiting the General Partner's right in its sole
discretion to cease qualifying as a REIT, the Partners acknowledge that LXP's
status as a REIT inures to the benefit of all the Partners and not solely to
LXP.
Section 3.2 Powers.
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership; provided that the Partnership
shall not take, or refrain from taking, any action which, in the judgment of
LXP, in its sole and absolute discretion, (i) could adversely affect the ability
of LXP to continue to qualify as a REIT under Section 857 of the Code, (ii)
could subject LXP to any additional taxes under any Section of the Code or (iii)
could violate any law or regulation of any governmental body or agency having
jurisdiction over LXP or its securities, unless such action (or inaction) shall
have been specifically consented to by LXP in writing.
Notwithstanding anything to the contrary that may be contained
herein, the Partnership had and continues to have the power and authority to
execute, acknowledge, verify, deliver, file and record any and all documents and
instruments, including the Net 3 Merger Agreement and the Net 3 Merger
Certificate, and to perform any and all acts required by applicable law or which
were or may be necessary or advisable in order to give effect to the
consummation of the Net 3 Merger.
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ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners.
As of the date of this Agreement, (i) the Partners shall be deemed
to have made the Capital Contributions set forth in Exhibit A to this Agreement
and (ii) each Partner shall own Common Units or Special Limited Partner Units in
the amount set forth for such Partner in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth for such Partner 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,
Capital Contributions, Capital Events, the issuance of additional Common Units
or similar events having an effect on a Partner's Percentage Interest. Except as
provided in Sections 4.2 and 10.4, the Partners shall have no obligation to make
any additional Capital Contributions or loans to the Partnership.
Section 4.2 Issuances of Additional Partnership Interests.
A. The General Partner is hereby authorized to cause the
Partnership from time to time to issue to the Partners or other Persons
additional Common Units, Special Limited Partner Units, Partnership Units or
other Partnership Interests in one or more classes, or one or more series of any
of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to existing Partnership Interests, all as shall
be determined by the General Partner in its sole and absolute discretion,
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Interests, (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions, and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership.
B. Notwithstanding any provision of Section 4.2.A to the
contrary, no such additional Partnership Units or other Partnership Interests
shall be issued to the General Partner, the Initial Limited Partner, LXP or any
of their Subsidiaries unless
(1) (a) the additional Partnership Interests are issued in
connection with an issuance of shares of LXP, which shares have designations,
preferences and other rights, all such that the economic interests are
substantially similar to the designations, preferences and other rights of the
additional Partnership Interests issued to the General Partner, the Initial
Limited Partner, LXP or any of their Subsidiaries in accordance with Section
4.2.A, and (b) LXP through the General Partner or the Limited Partner shall make
a Capital Contribution to the Partnership in an amount equal to the proceeds
raised in connection with the issuance of such shares of LXP, or
(2) the additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage Interests.
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ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions.
A. Common Units. The General Partner shall distribute from time
to time, but not less than semi-annually, to the Partners who are Partners of
the Partnership for such relevant period an amount equal to 100% of the
Operating Cash Flow generated by the Partnership during such relevant period in
accordance with their respective Percentage Interest on such applicable
Partnership Record Date for such distributions; provided, that in no event may a
Partner receive a distribution of Operating Cash Flow with respect to a Common
Unit if such Partner is entitled to receive a distribution from the Partnership
with respect to any (i) Equivalent Units, or (ii) any REIT Share for which such
Partnership Unit has been redeemed or exchanged; and further provided, that in
no event shall the General Partner make any distributions to any Partner unless
and until all distributions, present or accrued, have been first paid in respect
of such Equivalent Unit.
B. Special Limited Partner Units. Notwithstanding Section 5.1.A,
each Partner's share of Operating Cash Flow with respect to Special Limited
Partner Units held by such Partner shall be equal to the Special Limited Partner
Distribution Amount.
Section 5.2 Amounts Withheld.
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.4 hereof with respect to any allocations,
payment or distribution to the Partners or the Assignees shall be treated as
amounts distributed to the Partners or the Assignees pursuant to Section 5.1 for
all purposes under this Agreement.
Section 5.3 Distributions Upon Liquidation.
Proceeds from a Terminating Capital Transaction, and any other cash
received or reductions in reserves made after commencement of the liquidation of
the Partnership, shall be distributed to the Partners in accordance with Section
13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes.
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Income shall be allocated to the holders of
Special Limited Partner Units with respect to such Special Limited Partner Units
only in an amount equal to cash
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distributions received with respect to such Special Limited Partner Units, and
the remainder to the holder of Common Units pro rata in the proportion that each
holder's Common Units bear to the total number of Common Units outstanding;
provided, that following (i) the Effective Date and (ii) the sale or other
disposition (in which gain or loss is recognized) of real properties
representing at least fifty (50%) percent of the Carrying Value of such
properties as of the Effective Date, gains from the sale or other disposition of
partnership assets shall be allocated to the Partners having negative Capital
Accounts, to the extent and in accordance with such negative Capital Accounts
and thereafter to all Partners in accordance with their Percentage Interests,
provided, further, that Partners holding Special Limited Partner Units shall
only be allocated taxable income with respect to such Special Limited Partner
Units in an amount equal to the cash distributions received in respect of such
Special Limited Partner Units.
B. Net Losses. After giving effect to the special allocations set
forth in Exhibit C, Net Losses shall be allocated first, to any Partner having a
positive Capital Account pro rata in the ratio that each such Partner's positive
Capital Account balance bears to the total aggregate positive Capital Account
balance, and thereafter to the Limited Partners in accordance with their
respective Percentage Interests.
C. For purposes of Regulations Section 1.752-3(a)(3), the
Partners agree that Nonrecourse Liabilities of the Partnership in excess of the
sum of the amount of Partnership Minimum Gain and the total amount of
Nonrecourse Built-in Gain shall be allocated first to account for any income or
gain to be allocated among the Partners in accordance with their respective
Percentage Interests.
D. Any gains upon the sale or other taxable disposition of any
Partnership asset shall, to the extent possible, after taking into account other
required allocations of gain pursuant to Exhibit C that are characterized as
Recapture Income, be allocated to Partners in the same proportions and to the
same extent as such Partners have been allocated any deductions directly or
indirectly giving rise to the treatment of such gains as Recapture Income.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management.
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner. The Limited Partners shall not
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. In addition to the powers now or hereafter
granted to a general partner of a limited partnership under applicable law or
which are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to Section 7.3 hereof, 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:
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(1) the execution, acknowledgment, verification, delivery,
filing and recording, for and in the name of the Partnership, and any and all
documents and instruments, including the Net 3 Merger Agreement and the
performance of any and all acts required by applicable law or which the General
Partner deems necessary or advisable in order to give effect to the consummation
of the Net 3 Merger;
(2) 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 LXP (so long as LXP qualifies as a REIT) to avoid
the payment of any federal income tax (including, for this purpose, any excise
tax pursuant to Section 4981 of the Code) and to make distributions to its
stockholders sufficient to permit LXP to maintain REIT status) and the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets of the Partnership or the
merger or other combination of the Partnership with or into another entity (all
of the foregoing subject to any prior approval only to the extent required by
Section 7.3 hereof);
(4) the use of the assets of the Partnership for any purpose
consistent with the terms of this Agreement and on any terms the General Partner
sees fit, and the making of capital contributions or loans to its Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements owned
by the Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution and performance of any
contracts, 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;
(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(8) the formation of, or acquisition of an interest in, and
the contribution of property to, any further limited or general partnerships or
joint ventures that the General Partner deems desirable;
(9) 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);
(10) the determination of the fair market value of any
Partnership property distributed in kind using such reasonable method of
valuation as the General Partner may adopt;
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(11) 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; and
(12) the making, execution and delivery of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing necessary or
appropriate in the judgment of the General Partner for the accomplishment of any
of the powers of the General Partner enumerated in this Agreement.
B. At all times from and after the date hereof, the General
Partner may cause the Partnership to obtain and maintain (i) casualty, liability
and other insurance on the properties of the Partnership and (ii) liability
insurance for the Indemnitees hereunder.
C. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain any and all
reserves, working capital accounts and other cash or similar balances in such
amounts as the General Partner, in its sole discretion, deems appropriate and
reasonable from time to time.
D. In exercising its authority under this Agreement, the General
Partner may, but shall not be obligated to, take into account the tax
consequences to any Partner of any action taken by it. The General Partner and
the Partnership shall not, however, have liability to an Additional Limited
Partner under any circumstances as a result of an income tax liability incurred
by such Additional Limited Partner as a result of an action (or inaction) by the
General Partner pursuant to its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership.
To the extent that such action is determined by the General Partner
to be reasonable and necessary or appropriate, the General Partner shall file
amendments to the Certificate and do all the things to maintain the Partnership
as a limited partnership (or a partnership in which the limited partners have
limited liability) under the laws of the State of Delaware and each other state,
or the District of Columbia, in which the partnership may elect to do business
or own property. 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 to the extent provided by applicable law) 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.
Section 7.3 Restrictions on Authority.
Subject to Section 8.4(C), after the Effective Date, without the
consent of holders of a majority of the outstanding Partnership Units held by
the Special Limited Partners, the General Partner may not consent to the
Partnership participating in any merger, consolidation or other combination with
or into another Person or sale of all or substantially all of its assets.
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Section 7.4 Reimbursement of LXP.
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments and allocations to which it may be entitled), the General Partner shall
not be compensated for its services as general partner of the Partnership.
B. LXP and the General Partner shall be reimbursed by the
Partnership for the product of (i) the Relative Interest and (ii) all expenses
the General Partner and LXP incurs relating to the formation and organization of
the General Partner, the Partnership and the Limited Partner, and any other
issuance of REIT Shares pursuant to Section 4.2 hereof.
C. In the event that LXP shall elect to purchase from
stockholders REIT Shares pursuant to any stock repurchase program or for the
purpose of delivering such REIT Shares to satisfy an obligation under Section
8.4 of this Agreement, any dividend reinvestment program adopted by LXP, any
employee stock purchase plan adopted by LXP, or any other similar obligation or
arrangement undertaken by LXP in the future, the purchase price paid by LXP for
such REIT Shares and any other expenses incurred by LXP in connection with such
purchase shall be considered expenses of the Partnership and shall be reimbursed
to LXP to such extent, subject to the condition that, if such REIT Shares are
sold, LXP shall contribute to the Partnership, through the General or Limited
Partner, any proceeds received by LXP for such REIT Shares (provided that REIT
shares delivered to an Additional Limited Partner in exchange for Partnership
Units pursuant to Section 8.4 shall not be considered a sale of REIT Shares for
such purpose).
Section 7.5 Indemnification.
A. The Partnership shall indemnify and hold harmless each
Indemnitee from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including, without limitation, attorney's 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, that relate to the Mergers or to the
operations of the Partnership as set forth in this Agreement in which such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise; provided that the Partnership shall not indemnify an Indemnitee for
such Indemnitee's breach of duty of loyalty to the Partnership or for acts or
omissions not taken by the Indemnitee in good faith or which involve intentional
misconduct or a knowing violation of law or in which such Indemnitee received an
improper personal benefit. The General Partner is hereby authorized and
empowered, on behalf of the Partnership, to enter into one or more indemnity
agreements consistent with the provisions of this Section 7.5 in favor of any
Indemnitee having or potentially having liability for any such indebtedness. It
is the intention of this Section 7.5.A that the Partnership indemnify each
Indemnitee to the fullest extent permitted under the Act. The termination of any
proceeding by judgment, order or settlement does not create a presumption that
the Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.5.A. The termination of any proceeding by conviction of an Indemnitee
or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an
entry of an order of probation against an Indemnitee prior to judgment, creates
a rebuttable presumption that such Indemnitee acted in a manner contrary to that
specified in this Section 7.5.A with respect to the subject matter of such
proceeding.
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B. Reasonable expenses incurred by an Indemnitee who is a party
to a proceeding may be paid or reimbursed by the Partnership in advance of the
final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.5.A has been met and (ii) a written undertaking by or on
behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.5 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.
D. The Partnership may, but shall not be obligated to, purchase
and maintain insurance on behalf of any of the Indemnitees and such other
Persons as the General Partner shall determine against any liability that may be
asserted against or expenses that may be incurred by such Person in connection
with the Partnership's activities, regardless of whether the Partnership would
have the power to indemnify such Person against such liability under the
provisions of this Agreement.
E. 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.
F. The provisions of this Section 7.5 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.5 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.5 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.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
Section 8.1 Management of Business.
The Limited Partners and Assignees shall not take part in the
operation, management or control of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
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Section 8.2 Outside Activities of Additional Limited Partners.
Neither the Partnership nor any Partner shall have any rights by
virtue of this Agreement in any business ventures of any Additional Limited
Partner or Assignee. None of the Additional Limited Partners nor any other
Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any business ventures of any other Person
(other than the General Partner and the Initial Limited Partner to the extent
expressly provided herein) and such Person shall have no obligation pursuant to
this Agreement or otherwise to offer any interest in any such business ventures
to the Partnership, any Additional Limited Partner or any such other Person,
even if such opportunity is of a character which, if presented to the
Partnership, any Additional Limited Partner, or such other Person, could be
taken by such Person.
Section 8.3 Return of Capital.
Except pursuant to the right of redemption set forth in Section 8.4,
no Partner shall be entitled to the withdrawal or return of his Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein.
Section 8.4 Redemption Rights.
A. Subject to Section 8.4.B or C, on or at any time after the
Initial Redemption Date, each Special Limited Partner shall have the right (the
"Redemption Right") to require the Partnership to redeem on a Specified
Redemption Date all or a portion of the Partnership Units held by such Special
Limited Partner for the Share Redemption Amount or Cash Redemption Amount, as
applicable, to be delivered by the Partnership. The Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the General Partner by
the Special Limited Partner who is exercising the Redemption Right (the
"Redeeming Partner"). The General Partner shall redeem the Special Limited
Partner Units for the Share Redemption Amount. A Special Limited Partner may not
exercise the Redemption Right for fewer than one thousand (1,000) Partnership
Units or, if such Special Limited Partner holds fewer than one thousand (1,000)
Partnership Units, all of the Partnership Units held by such Special Limited
Partner. The Redeeming Partner shall have no right, with respect to any
Partnership Units so redeemed, to receive any distributions paid after the
Specified Redemption Date. The Assignee of any Special Limited Partner may
exercise the rights of such Special Limited Partner pursuant to this Section
8.4, and such Special 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 Special Limited Partner's Assignee. In connection with any exercise of such
rights by such Assignee on behalf of such Special Limited Partner, the
Redemption Amount shall be delivered by the Partnership directly to such
Assignee and not to such Special Limited Partner.
B. Following the date that at least 50% of the Partnership Units
held by the Special Limited Partners immediately following the Effective Date
have been redeemed in accordance with the provisions of Section 8.4, LXP or the
General Partner may require the remaining Special Limited Partners to redeem
their Partnership Units for the Redemption Amount to be delivered by the
Partnership. The right of the General Partner under this Section 8.4.B shall be
exercised pursuant to a notice delivered to all remaining Special Limited
Partners.
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Such redemption shall be effective on the date specified in the notice, which
date shall be at least 30 days after the notice is sent to the Special Limited
Partners.
C. At any time that (i) the General Partner shall be considering
a sale of all or substantially all of its assets, or a merger, consolidation,
stock issuance, stock redemption or other similar transaction that would result
in a change in the beneficial ownership of the General Partner by 50% or more,
or (ii) the Partnership shall be considering a sale of all or substantially all
of its assets or a merger, consolidation, or issuance or redemption of
partnership interests which would result in a change in the beneficial ownership
in Partnership capital or profits of 50% or more, then the General Partner shall
have the right to redeem the Partnership Units held by all, but not less than
all, of the Additional Limited Partners (other than the Special Limited
Partners) for the Redemption Amount provided that such redemption is contingent
upon the completion of such transaction. In such event, the General Partner
shall provide notice to the Limited Partners and such Limited Partners shall be
required to surrender their Partnership Units for cancellation. The rights of
such Additional Limited Partners shall be limited to the receipt of the
Redemption Amount.
D. In connection with any REIT Shares delivered to any Additional
Limited Partner upon the redemption of Partnership Units held by such Additional
Limited Partner, it is intended that such Additional Limited Partner be able to
resell publicly such REIT Shares pursuant to the provisions of Rule 144 under
the Securities Act of 1933, but without the need to comply with the holding
period requirements of Rule 144(d). To the extent that counsel to LXP reasonably
determines that resales of any such REIT Shares cannot be made pursuant to the
provisions of Rule 144, and without the need to comply with the holding period
requirements of Rule 144(d), LXP agrees, at its sole cost and expense, if
requested by Special Limited Partners representing a majority of the Partnership
Units (including REIT Shares delivered upon exchange of such Partnership Units)
held by such Special Limited Partners, or by Additional Limited Partners
representing a majority of the Partnership Units (including REIT Shares
delivered upon the exchange of such Partnership Units) held by such class of
Additional Limited Partners, to include REIT Shares that may be (or already have
been) acquired by any Special Limited Partner or any Additional Limited Partner,
as the case may be, in an effective registration statement under the Securities
Act of 1933; provided that LXP's obligations to include such REIT Shares in such
an effective registration statement shall be conditioned upon Special Limited
Partners representing a majority of the Partnership Units (including REIT Shares
delivered upon exchange of such Partnership Units) held by such Special Limited
Partners or, where applicable, by Additional Limited Partners representing a
majority of the Partnership Units (including REIT Shares delivered upon the
exchange of such Partnership Units) held by such class of Additional Limited
Partners, agreeing to be bound by a customary registration rights agreements to
be prepared by LXP. In addition, any Additional Limited Partner whose REIT
Shares are included in such registration statement must also agree to be bound
by the terms and provisions of a registration rights agreement.
E. Notwithstanding the provisions of Section 8.4.A or Section
8.4.B, a Subsequent Partner shall not be entitled to exercise the Redemption
Right pursuant to Section 8.4.A or Section 8.4.B if the delivery of REIT Shares
to such Subsequent Partner on the Specified Redemption Date would be prohibited
under the Declaration of Trust and shall be
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subject in any event to the issuance of REIT Shares being in compliance with all
applicable Federal and State securities laws.
F. Notwithstanding any other provision of this Agreement, upon
the occurrence of a Capital Event prior to the Specified Redemption Date, the
proceeds of which are distributed to the Partners, and ultimately
proportionately to the shareholders of the General Partner, the Percentage
Interest of each Partner shall, from the date of such Capital Event, be equal to
(i) the product of (a) such Partner's Percentage Interest prior to such Capital
Event and (b) the difference between (x) the fair market value of the assets of
the Partnership and (y) any amounts distributed to such Partner as a result of
the Capital Event, divided by (ii) the fair market value of the assets of the
Partnership after such distribution. The General Partner shall adjust the number
of Partnership Units owned by each Partner to appropriately reflect the
adjustments made by this Section 8.4.F.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting.
The General Partner shall keep or cause to be kept at the principal
office of the Partnership 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. The books of the
Partnership shall be maintained, for financial and tax reporting purposes, on an
accrual basis in accordance with generally accepted accounting principles, or on
such other basis as the General Partner determines to be necessary or
appropriate.
Section 9.2 Fiscal Year.
The fiscal year of the Partnership shall be the calendar year.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns.
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by the
Additional Limited Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections.
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code; provided that, the General Partner shall make the
election under Section 754 of the Code in
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accordance with applicable Regulations thereunder. The General Partner shall
have the right to seek to revoke any such elections (including, without
limitation, the election under Section 754 of the Code) upon the General
Partner's determination in its sole and absolute discretion that such revocation
is in the best interests of the Partners.
Section 10.3 Tax Matters Partner.
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. The tax matters partner is
authorized but not required, to take any action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review proceeding to
the extent permitted by law.
B. The taking of any action and the incurring of any expense by
the tax matters partner in connection with any such audit or proceeding, except
to the extent required by law, is a matter in the sole and absolute discretion
of the tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 7.7 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters partner
in performing its duties as such (including legal and accounting fees 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.
Section 10.4 Withholding.
Each Additional Limited Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Additional 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 Additional Limited
Partner pursuant to this Agreement. Any amount paid on behalf of or with respect
to an Additional Limited Partner shall constitute a loan by the Partnership to
such Additional Limited Partner which loan shall be repaid by such Additional
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 such Additional Limited
Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to Additional
Limited Partner. Any amounts withheld pursuant to the foregoing clauses (i) or
(ii) shall be treated as having been distributed to such Additional Limited
Partner. Any amounts payable by a Limited Partner hereunder shall bear interest
at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in The Wall Street Journal,
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.
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ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.
A. The term "transfer," when used in this Article 11 with respect
to a Partnership Unit, shall be deemed to refer to a transaction by which a
Partner purports to assign all or any part of its Partnership Interest to
another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
The term "transfer" when used in this Article 11 does not include any redemption
of Partnership Units by an Additional Limited Partner or acquisition of
Partnership Units from an Additional Limited Partner by the General Partner
pursuant to Section 8.4.
B. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void.
Section 11.2 Transfer of Partnership Interests by the General
Partner and the Initial Limited Partner.
A. The General Partner may not transfer any of its General
Partner Interest except to the Initial Limited Partner or LXP. The General
Partner may not withdraw as General Partner except in connection with the
complete transfer of its Partnership Interest as permitted hereunder.
B. The Initial Limited Partner may not transfer any of its
Partnership Interests, except to the General Partner or LXP. The Initial Limited
Partner may not withdraw as Initial Limited Partner except in connection with
the complete transfer of its Partnership Interest as permitted hereunder.
C. If LXP acquires any or all of the Partnership Interests of the
General Partner or the Initial Limited Partner as permitted hereunder, LXP
agrees that it will not transfer any of its Partnership Interests, except to the
Initial Limited Partner or to the General Partner. LXP may not withdraw as
Partner except in connection with the complete transfer of any Partnership
Interest as permitted hereunder.
D. Any transferee who acquires a Partnership Interest under this
Section 11.2 may become a Substituted Additional Limited Partner, or a successor
General Partner upon such terms specified by the General Partner, including the
delivery to the General Partner of such documents or instruments, including
powers of attorney, as may be required in the discretion of the General Partner
in order to effect such Person's admission as a Partner.
Section 11.3 Additional Limited Partners' Rights to Transfer.
A. Subject to the provisions of Section 11.3.E, no Additional
Limited Partner shall have the right to transfer all or any portion of its
Partnership Interest, or any of such
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Additional Limited Partner's rights as a Special Limited Partner, without the
prior written consent of the General Partner, which consent may be given or
withheld by the General Partner in its sole and absolute discretion. Any
purported transfer of a Partnership Interest by an Additional Limited Partner in
violation of this Section 11.3.A shall be void ab initio and shall not be given
effect for any purpose by the Partnership.
B. If an Additional Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator or receiver
of such Additional Limited Partner's estate shall have all the rights of a
Special Limited Partner, but no more rights than those enjoyed by other Special
Limited Partners, as the case may be, for the purpose of settling or managing
the estate and such power as the Incapacitated Additional Limited Partner
possessed to transfer all or any part of its interest in the Partnership. The
Incapacity of an Additional Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer otherwise
permitted under Section 11.3.E by an Additional Limited Partner of his
Partnership Units (i) if, in the opinion of legal counsel to the Partnership,
such transfer would require filing of a registration statement under the
Securities Act of 1933 or would otherwise violate any federal, state, or foreign
securities laws or regulations applicable to the Partnership or the Partnership
Units or, (ii) if the transferring Additional Limited Partner, fails or is
unable to obtain and deliver to the Partnership, after request therefor is made
by the General Partner, a legal opinion from counsel acceptable to the General
Partner, addressed to the Partnership and the General Partner, that such
registration is not required in connection with such transfer and that such
transfer does not violate any federal, state or foreign securities laws or
regulations applicable to the Partnership or the Partnership Units.
D. No transfer by an Additional Limited Partner of its
Partnership Units may be made to any Person if (i) in the opinion of legal
counsel for the Partnership, it would result in the Partnership being treated as
an association taxable as a corporation or would cause the General Partner to
lose its REIT status under the Code or (ii) such transfer is effectuated through
an "established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704(b) of the Code.
E. Notwithstanding the provisions of Section 11.3.A (but subject
to the provisions of Section 11.3.C and 11.3.D), an Additional Limited Partner
may, with or without the consent of the General Partner, transfer all or a
portion of his Partnership Units to (i)(a) a member of his Immediate Family, or
a trust for the benefit of a member of his Immediate Family, (b) an organization
that qualifies under Section 501(c)(3) of the Code and that is not a private
foundation within the meaning of Section 509(a) of the Code or (c) in the case
of an Additional Partner that is a partnership, a partner in the Additional
Limited Partner in a distribution by that Additional Limited Partner to its
partners under the partnership agreement of such Additional Limited Partner or
(ii) a lender as security for a loan made to or guaranteed by the Additional
Limited Partner, provided that in connection with any such transfer the lender
does not acquire greater rights with respect to the Partnership Units than those
held by the transferring Additional Limited Partner.
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Section 11.4 Substituted Additional Limited Partners.
A. No Additional Limited Partner shall have the right to
substitute a transferee in his place. The General Partner shall, however, have
the right to consent to the admission of a transferee of the interest of an
Additional Limited Partner pursuant to this Section 11.4 as a Substituted
Additional Limited Partner which consent may be given or withheld by the General
Partner in its sole and absolute discretion. The General Partner's failure or
refusal to permit a transferee of any such interests to become a Substituted
Additional Limited Partner shall not give rise to any cause of action against
the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Additional
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 the transferor
Additional Limited Partner under this Agreement.
C. Upon the admission of a Substituted Additional Limited
Partner, the General Partner shall amend Exhibit A, where applicable, to reflect
the name, address, number of Partnership Units, and Percentage Interest of such
Substituted Additional Limited Partner, and to eliminate or adjust, if
necessary, the name, address and interest of the predecessor of such Substituted
Additional Limited Partner.
Section 11.5 Assignees.
If the General Partner, in its sole and absolute discretion, does
not consent to the admission of any permitted transferee under Section 11.3 as
an Additional Limited Partner, as described in Section 11.4, 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 Net Income, Net Losses,
Recapture Income, and any other items of income, gain, loss, deduction and
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, and shall not be entitled to vote such
Partnership Units in any matter presented to the Additional 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 Special Limited
Partners or other Additional Limited Partners, where applicable, 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 the provisions of
this Article 11 to the same extent and in the same manner as any Additional
Limited Partner desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions.
A. No Additional Limited Partner may withdraw from the
Partnership other than as a result of a permitted transfer of all of such
Additional Limited Partner's Partnership Units in accordance with this Article
11 or pursuant to redemption of all of its Partnership Units under Section 8.4.
B. Any Additional Limited Partner who shall transfer all of his
Partnership Units in a transfer permitted pursuant to this Article 11 shall
cease to be an Additional Limited Partner upon the admission of an Assignee of
such Partnership Units as a Substituted Additional
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Limited Partner. Similarly, any Additional Limited Partner who shall transfer
all of his Partnership Units pursuant to a redemption of all of his Partnership
Units under Section 8.4 shall cease to be an Additional Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on the
first day of a fiscal quarter of the Partnership, unless the General Partner
otherwise agrees.
D. If any Partnership Unit is transferred or assigned in
compliance with the provisions of this Article 11, or redeemed or transferred
pursuant to Section 8.4 on any day other than the first day of a Partnership
Year, then Net Income, Net Losses, each item thereof and all other items
attributable to such Partnership Unit for such Partnership Year shall be
allocated to the transferor Partner or the Redeeming Partner, as the case may
be, and, in the case of a transfer or assignment other than a redemption, to the
transferee Partner, by taking into account their varying interests during the
Partnership Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method. Solely for purposes of making such
allocations, each of such items for the calendar month in which a transfer or
assignment occurs shall be allocated to the transferee Partner, and none of such
items for the calendar month in which a transfer or a redemption occurs shall be
allocated to the transferor Partner or the Redeeming Partner, as the case may
be. All distributions of Operating Cash Flow attributable to such Partnership
Unit with respect to which the Partnership Record Date is before the date of
such transfer, assignment or redemption shall be made to the transferor Partner
or the Redeeming Partner, as the case may be, and, in the case of a transfer or
assignment other than a redemption, all distributions of Operating Cash Flow
thereafter attributable to such Partnership Unit shall be made to the transferee
Partner.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Subsequent Partner.
No person shall be admitted as a Partner except in accordance with
the terms of this Agreement and upon obtaining the consent of the General
Partner. Any prospective Partner must submit 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, and (ii) such other documents or instruments,
including powers of attorney, as may be required in the discretion of the
General Partner in order to effect such Person's admission as a Partner.
A. The admission of any Person as a Subsequent Partner shall
become effective on the date upon which the name of such Person is recorded in
the books and records of the Partnership, following the consent of the General
Partner to such admission.
B. If any Subsequent Partner is admitted to the Partnership on
any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Subsequent
Partner and all other Partners and Assignees by taking into account their
varying interests during the Partnership Year in accordance with Section 706(d)
of the Code, using the interim closing of the books method. Solely for purposes
of making such allocations,
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each of such items for the calendar month in which an admission of any
Subsequent Partner occurs shall be allocated among all the Partners and
Assignees including such Additional Limited Partner. All distributions of
Operating Cash Flow with respect to which the Partnership Record Date is before
the date of such admission shall be made solely to Partners and Assignees other
than the Subsequent Partner, and all distributions of Operating Cash Flow
thereafter shall be made to all the Partners and Assignees including such
Subsequent Partner.
Section 12.2 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
practicable 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.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution.
The Partnership shall not be dissolved by the admission of
Substituted Additional Limited Partners or Subsequent Partners or by the
admission of a successor General Partner in accordance with the terms of this
Agreement. Upon the withdrawal of the General Partner, any successor General
Partner shall continue the business of the Partnership. The Partnership shall
dissolve, and its affairs shall be wound up, upon the first to occur of any of
the following ("Liquidating Events"):
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, unless (i) at the time of such event there is at least one remaining
general partner of the Partnership who carries on the business of the
Partnership (and each remaining general partner of the Partnership is hereby
authorized to carry on the business of the Partnership in such an event) or (ii)
within ninety (90) days after such event, all Partners agree in writing to
continue the business of the Partnership and to the appointment, effective as of
the date of such event, of LXP as the General Partner of the Partnership (and
LXP agrees to become a general partner of the Partnership);
C. entry of a decree of judicial dissolution of the Partnership
pursuant to the provision of the Act; or
D. the sale of all or substantially all of the assets and
properties of the Partnership.
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Section 13.2 Winding Up.
A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Partnership's business
and affairs. The General Partner or, in the event there is no remaining General
Partner, any Person elected by a majority in interest of the Limited Partners
(the General Partner or such other Person being referred to herein as the
"Liquidator") shall be responsible for overseeing the winding up and dissolution
of the Partnership and shall take full account of the Partnership's liabilities
and property and the Partnership property shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom
shall be applied and distributed in the following order:
(1) First, to the satisfaction of all of the Partnership's
debts and liabilities, including all contingent, conditional or immature claims
and obligations to creditors other than the Partners (whether by payment or the
making of reasonable provision for payment thereof);
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other Partners;
(4) The balance if any, to the Partners in accordance with
the positive Capital Account balances of the Partners, after giving effect to
all contributions, distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion (subject to
its obligation to gradually settle and close the Partnership's business under
Section 17-803 of the Act), defer for a reasonable time the liquidation of any
assets except those necessary to satisfy liabilities of the Partnership
(including to those Partners as creditors).
Section 13.3 Negative Capital Accounts.
A. Except as provided in this Section 13.3, no Partner, general
or limited, shall be liable to the Partnership or to any other Partner for any
negative balance outstanding in each such Partner's Capital Account, whether
such negative Capital Account results from the allocation of Net Losses, or
other items of deduction and loss to such Partner or from distributions to such
Partner.
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B. Subject to Section 13.3.C, if any Special Limited Partner on
the date of the "liquidation" of his respective interest in the Partnership
(within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g)), including a
redemption under Section 8.4, would, following a hypothetical sale of
Partnership assets and the liquidation of the Partnership, have a negative
balance in his Capital Account, then such Special Limited Partner shall
contribute in cash to the capital of the Partnership the amount required to
increase his Capital Account as of such date to zero. Any such contribution
required of such Special Limited Partner hereunder shall be made on or before
the later of (i) the end of the Partnership Year in which the interest of such
Special Limited Partner is liquidated or (ii) the ninetieth (90th) day following
the date of such liquidation.
C. After the death of a Special Limited Partner, the executor of
the estate of such Special Limited Partner may elect to reduce (or eliminate)
the deficit Capital Account restoration obligation of such Special Limited
Partner. Pursuant to Section 13.3.B. such election may be made by such executor
by delivering to the General Partner within two hundred seventy (270) days of
the death of such Special Limited Partner a written notice setting forth the
maximum deficit balance in his Capital Account that such executor agrees to
restore under Section 13.3.B, if any. If such executor does not make a timely
election pursuant to this Section 13.3.C (whether or not the balance in his
Capital Account is negative at such time), then a Special Limited Partner's
estate (and the beneficiaries thereof who receive distribution of Partnership
Units therefrom) shall be deemed to have a deficit Capital Account restoration
obligation as set forth pursuant to the terms of Section 13.3.B.
Section 13.4 Deemed Distribution and Recontribution.
Notwithstanding any other provision of this Article 13, in the event
the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes and for purposes of maintaining Capital
Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed to have
distributed the property in kind to the Partners, who shall be deemed to have
assumed and taken such property subject to all Partnership liabilities, all in
accordance with their respective Capital Accounts. Immediately thereafter, the
General Partner and Limited Partners shall be deemed to have re-contributed the
Partnership property in kind to the Partnership, which shall be deemed to have
assumed and taken such property subject to all such liabilities.
Section 13.5 Rights of the Limited Partners.
Except as otherwise provided in this Agreement, the Limited Partners
shall look solely to the assets of the Partnership for the return of its Capital
Contribution and shall have no right or power to demand or receive property
other than cash from the Partnership.
Section 13.6 Waiver of Partition.
Each Partner hereby waives any right to partition of the Partnership
property.
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ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT
Section 14.1 Amendments.
A. This Agreement may be amended with the consent of the General
Partner, the Initial Limited Partner, and the Special Limited Partners
representing a majority of Partnership Units held by such Special Limited
Partners, but such amendments shall not require the approval of any Additional
Limited Partners other than the Special Limited Partners.
B. Notwithstanding Section 14.1.A, the General Partner shall have
the power, without the consent of any other Partner to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners; to set forth the
designation, rights, powers, duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to Section 4.2.A hereof;
(2) to reflect a change that is of an inconsequential nature
and does not adversely affect the Limited Partners in any material respect, or
to cure any ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other changes with
respect to matters arising under this Agreement that will not be inconsistent
with law or with the provisions of this Agreement; and
(3) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling, or regulation of a federal
or state agency or contained in federal or state law.
The General Partner shall provide notice to the other Partners when any action
under this Section 14.1.B is taken.
C. Notwithstanding Sections 14.1.A and 14.1.B hereof, this
Agreement shall not be amended without the consent of each Partner adversely
affected if such amendment would (i) convert a Limited Partner's interest in the
Partnership into a general partner interest, (ii) modify the limited liability
of a Limited Partner in a manner adverse to such Partner, (iii) alter or modify
the Redemption Right and REIT Shares Amount as set forth in Section 8.4 in a
manner adverse to such Partner, or (iv) amend this Section 14.1.C. Further, no
amendment may alter the restrictions on the General Partner's authority set
forth in Section 7.3 without the consent specified in that section.
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ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice.
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other address
of which the Partner shall notify the General Partner in writing.
Section 15.2 Titles and Captions.
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals.
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa. Each reference herein to Partnership Units held by the General Partner or
a Special Limited Partner shall be deemed to be a reference to Partnership Units
held by such Partner in its role as such.
Section 15.4 Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 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 or any
such breach or any other covenant, duty, agreement or condition.
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Section 15.7 Counterparts.
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affirming its signature hereto.
Section 15.8 Applicable Law.
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
Section 15.9 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.10 Entire Agreement.
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any other prior written or oral understandings or agreements among
them with respect thereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first written above.
GENERAL PARTNER:
Lex GP-1, Inc.
By _____________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
LIMITED PARTNER:
Lex LP-1, Inc.
By _____________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
SPECIAL LIMITED PARTNERS
By _____________________________
On behalf of the Special Limited
Partners set forth on Exhibit A
Acknowledged and Accepted:
LEXINGTON CORPORATE PROPERTIES TRUST
By__________________________
Name: Xxxxxx Xxxxx
Title: President
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EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate
Capital Account in accordance with the rules of Regulations Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions and any other deemed contributions made by such
Partner to the Partnership pursuant to this Agreement and (ii) all items of
Partnership income and gain (including income and gain exempt from tax) computed
in accordance with Section 1.B hereof and allocated to such Partner pursuant to
Section 6.1.A of the Agreement and Exhibit C hereof, and decreased by (x) the
amount of cash or Agreed Value of all actual and deemed distributions of cash or
property made to such Partner pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with Section 1.B hereof
and allocated to such Partner pursuant to Section 6.1.B of the Agreement and
Exhibit C hereof.
B. For purposes of computing the amount of any item of income,
gain, deduction or loss to be reflected in the Partners' Capital Accounts,
unless otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code which may be made by the Partnership; provided that the amounts of any
adjustments to the adjusted bases of the assets of the Partnership made pursuant
to Section 734 of the Code as a result of the distribution of property by the
Partnership to a Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital Accounts) shall be reflected
in the Capital Accounts of the Partners in the manner and subject to the
limitations prescribed in Regulations Section 1.704-1(b)(2)(iv)(m)(4).
(2) The computation of all items of income, gain, loss and
deduction shall be made without regard to the fact that items described in
Sections 705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable in gross
income or are neither currently deductible nor capitalized for federal income
tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the adjusted
basis of such property as of such date of disposition were equal in amount to
the Partnership's Carrying Value with respect to such property as of such date.
B-1
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(4) In lieu of the depreciation, amortization, and other
cash recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Partnership Asset
is adjusted pursuant to Section 1.D hereof, the amount of any such adjustment
shall be taken into account as gain or loss from the disposition of such asset.
(6) Any items specially allocated under Section 2 of Exhibit
C hereof shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a
Partnership Unit shall succeed to a pro rata portion of the Capital Account of
the transferor; provided that if the transfer causes a termination of the
Partnership under Section 708(b)(1)(B) of the Code, the Partnership's properties
shall be deemed, solely for federal income tax purposes, to have been
distributed in liquidation of the Partnership to the holders of Partnership
Units (including such transferee) and re-contributed by such Persons in
reconstitution of the Partnership. In such event, the Carrying Values of the
Partnership properties shall be adjusted immediately prior to such deemed
distribution pursuant to Section x.X.(2) hereof. The Capital Accounts of such
reconstituted Partnership shall be maintained in accordance with the principles
of this Exhibit B.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D.(2), the Carrying Values of
all Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D.(2) hereto, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property and allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following
times: (a) immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior to the distribution by the
Partnership to a Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c) immediately prior to
the liquidation of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); provided that adjustments pursuant to clauses (a) and (b)
above shall be made only if the General Partner determines that such adjustments
are necessary or appropriate to reflect the relative economic interests of the
Partners in the Partnership.
(3) In accordance with Regulations Section
1.704-1(b)(2)(iv)(e) the Carrying Value of Partnership assets distributed in
kind shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of the time any
such asset is distributed.
(4) In determining Unrealized Gain or Unrealized Loss for
purposes of this Exhibit B, the aggregate cash amount and fair market value of
all Partnership assets (including cash or cash equivalents) shall be determined
by the General Partner using such reasonable method of valuation as it may
adopt, or in the case of a liquidating distribution
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pursuant to Article 13 of the Agreement, be determined and allocated by the
Liquidator using such reasonable methods of valuation as it may adopt. The
General Partner, or the Liquidator, as the case may be, shall allocate such
aggregate value among the assets of the Partnership (in such manner as it
determines in its sole and absolute discretion to arrive at a fair market value
for individual properties).
E. The provisions of this Agreement (including this Exhibit B and
the other Exhibits to this Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners), are computed in
order to comply with such Regulations, the General Partner may make such
modification, provided that it is not likely to have a material effect on the
amounts distributable to any Person pursuant to Article 13 of the Agreement upon
the dissolution of the Partnership. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Partners and the amount of Partnership Capital reflected
on the Partnership's balance sheet, as computed for book purposes, in accordance
with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of his Capital
Contributions or his Capital Account or to receive any distribution from the
Partnership, except as provided in this Agreement.
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EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules
Notwithstanding any other provision of the Agreement or this Exhibit
C, the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if there
is a net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
l.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and for purposes of this net decrease only, each
Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of the Agreement or any other provisions of this
Exhibit C (except Section l.A. hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(i)(4). This Section 1.B is intended to comply
with the minimum gain chargeback requirement in such Section of the Regulations
and shall be interpreted consistently therewith. Solely for the purposes of this
Section 1.B, each Partner's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to Section 6.1 of the Agreement or this
Exhibit C with respect to such Partnership Year, other than allocations-pursuant
to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections l.A and l.B hereof, such Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain shall be specifically allocated to
such
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Partner in an amount and manner sufficient to eliminate, to the extent required
by the Regulations, its Adjusted Capital Account Deficit created by such
adjustments, allocations or distributions as quickly as possible.
D. Nonrecourse Deductions. Nonrecourse Deductions for any
Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that Nonrecourse Deductions for any Partnership Year must be
allocated in a different ratio to satisfy the safe harbor requirements of the
Regulations promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the Initial Limited Partner and the Limited Partners,
to revise the prescribed ratio for such Partnership Year to the numerically
closest ratio which does satisfy such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i)(2).
F. Code Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, items of income, gain, loss and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners consistent with the
principles of Section 704(c) of the Code that takes into account the variation
between the 704(c) Value of such property and its adjusted basis at the time of
contribution; and
(b) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the Partners in
the same manner as its correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit C.
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(2) (a) In the case of an Adjusted Property, such items
shall
(1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code to take into
account the Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to Exhibit B and
(2) second, in the event such property was originally
a Contributed Property, be allocated among the Partners in a manner consistent
with Section 2.B.(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall be allocated among the Partners in
the same manner as its correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit C.
(3) All other items of income, gain, loss and deduction
shall be allocated among the Partners in the same manner as their correlative
item of "book" gain or loss is allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
C. To the extent Regulations promulgated pursuant to 704(c) of
the Code permit a partnership to utilize creative methods to eliminate the
disparities between the value of property and its adjusted basis (including,
without limitation, the implementation of curative allocations), the General
Partner shall have the authority to elect the method used by the Partnership and
such election shall be binding on the Partners.
Without limiting the foregoing, the General Partner shall take all
steps (including, without limitation, implementing curative allocations) that it
determines are necessary or appropriate to ensure that the amount of taxable
gain required to be recognized by the General Partner upon a disposition by the
Partnership of any Contributed Property or Adjusted Property does exceed the sum
of (i) the gain that would be recognized by the General Partner if such property
had an adjusted tax basis at the time of disposition equal to the 704(c) Value
of such property plus (ii) the deductions for depreciation, amortization or
other cost recovery actually allowed to the General Partner with respect to such
property for federal income tax purposes (after giving effect to the "ceiling
rule").
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EXHIBIT D-1
NOTICE OF REDEMPTION
The undersigned Special Limited Partner hereby irrevocably (i)
redeems ___________ Partnership Units in Net 3 Acquisition L.P. in accordance
with the terms of the Second Amended and Restated Agreement of Limited
Partnership of Net 3 Acquisition L.P., as amended, and the Redemption Right
referred to therein, (ii) surrenders such Partnership Units and all right, title
and interest therein, and (iii) directs that the Redemption Amount deliverable
upon exercise of the Redemption Right be delivered to the address and placed in
the name(s) and at the address(es) specified below. The undersigned hereby
represents, warrants, certifies and agrees (a) that the undersigned has good,
marketable and unencumbered title to such Partnership Units, free and clear of
the rights or interests of any other person or entity, (b) that the undersigned
has the full right, power and authority to redeem and surrender such Partnership
Units as provided herein, (c) that the undersigned has obtained the consent or
approval of all persons or entities, if any, having the right to consent to or
approve such redemption and surrender, (d) that if the undersigned is acquiring
REIT Shares, the undersigned is doing so with the understanding that such REIT
Shares may only be resold or distributed pursuant to a registration statement
under the Securities Act of 1933 or in a transaction exempt from the
registration requirements of such Act and (e) that Lexington Corporate
Properties Trust may refuse to transfer such REIT Shares as to which evidence
satisfactory to it of such registration or exemption is not provided to it.
Dated: _____________
Name of Special Limited Partner:
____________________________________________
(Signature of Special Limited Partner)
____________________________________________
(Street Address)
____________________________________________
(City) (State) (Zip Code)
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Signature Guaranteed by:
________________________________________
If REIT Shares are issued, issue them to:
Please insert social security or identifying number:
Name:
D-1-2
