AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TANGER PROPERTIES LIMITED PARTNERSHIP
TABLE OF CONTECTS
Page
ARTICLE 1 DEFINED TERMS.......................................................1
Section 1.1 Definitions.....................................................1
ARTICLE 2 ORGANIZATIONAL MATTERS.............................................16
Section 2.1 Organization...................................................16
Section 2.2 Name...........................................................16
Section 2.3 Registered Office and Agent; Principal Office..................16
Section 2.4 Power of Attorney..............................................17
Section 2.5 Term...........................................................18
ARTICLE 3 PURPOSE............................................................18
Section 3.1 Purpose and Business...........................................18
Section 3.2 Powers.........................................................18
ARTICLE 4 CAPITAL CONTRIBUTIONS..............................................19
Section 4.1 Capital Contributions of the Partners..........................19
Section 4.2 Additional Capital Contributions Generally.....................19
Section 4.3 Loans by Partners..............................................19
Section 4.4 Loans by Third Parties.........................................19
Section 4.5 Additional Funding and Capital Contributions...................19
Section 4.6 Unit Option Plan...............................................21
Section 4.7 Preferred Contributions........................................22
ARTICLE 5 DISTRIBUTIONS......................................................22
Section 5.1 Requirement, Characterization, and Priority of Distributions...22
Section 5.2 Distributions in Kind..........................................23
Section 5.3 Amounts Withheld...............................................23
Section 5.4 Distributions Upon Liquidation.................................24
ARTICLE 6 ALLOCATIONS........................................................24
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss....24
Section 6.2 General Allocations............................................24
Section 6.3 Additional Allocation Provisions...............................25
Section 6.4 Tax Allocations................................................27
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS..............................28
Section 7.1 Management.....................................................28
Section 7.2 Certificate of Limited Partnership.............................30
Section 7.3 Restrictions on General Partner's Authority....................31
Section 7.4 Reimbursement of the General Partner...........................33
Section 7.5 Outside Activities of the General Partner and the Initial
General Partner................................................33
Section 7.6 Contracts with Affiliates......................................34
Section 7.7 Indemnification................................................34
Section 7.8 Liability of the General Partner...............................36
Section 7.9 Other Matters Concerning the General Partner...................36
Section 7.10 Title to Partnership Assets....................................37
Section 7.11 Reliance by Third Parties......................................37
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.........................38
Section 8.1 Limitation of Liability........................................38
Section 8.2 Management of Business.........................................38
Section 8.3 Outside Activities of Limited Partners.........................38
Section 8.4 Return of Capital..............................................39
Section 8.5 Rights of Limited Partners Relating to the Partnership.........39
Section 8.6 Exchange Rights................................................40
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS.............................41
Section 9.1 Records and Accounting.........................................41
Section 9.2 Fiscal Year....................................................42
Section 9.3 Reports........................................................42
ARTICLE 10 TAX MATTERS.......................................................42
Section 10. Preparation of Tax Returns.....................................42
Section 10.2 Tax Elections..................................................42
Section 10.3 Tax Matters Partner............................................43
Section 10.4 Organizational Expenses........................................44
Section 10.5 Withholding....................................................44
ARTICLE 11 TRANSFERS AND WITHDRAWALS.........................................45
Section 11.1 Transfer.......................................................45
Section 11.2 Transfer of General Partner's Partnership Interest.............45
Section 11.3 Limited Partners' Rights to Transfer...........................46
Section 11.4 Substituted Limited Partners...................................47
Section 11.5 Assignees......................................................48
Section 11.6 General Provisions.............................................48
ARTICLE 12 ADMISSION OF PARTNERS.............................................49
Section 12.1 Admission of Successor General Partner.........................49
Section 12.2 Admission of Additional Limited Partners.......................49
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership..50
Section 12.4 Limit on Number of Partners....................................50
ARTICLE 13 DISSOLUTION AND LIQUiDATION.......................................50
Section 13.1 Dissolution....................................................50
Section 13.2 Winding Up.....................................................51
Section 13.3 Compliance with Timing Requirements of Regulations.............52
Section 13.4 Deemed Distribution and Recontribution.........................53
Section 13.5 Rights of Limited Partners.....................................53
Section 13.6 Notice of Dissolution..........................................53
Section 13.7 Cancellation of Certificate of Limited Partnership.............53
Section 13.8 Reasonable Time for Winding-Up.................................53
Section 13.9 Waiver of Partition............................................54
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS......................54
Section 14.1 Amendments.....................................................54
Section 14.2 Action by the Partners.........................................54
.
ARTICLE 15 GENERAL PROVISIONS................................................55
Section 15.1 Addresses and Notice...........................................55
Section 15.2 Titles and Captions............................................55
Section 15.3 Pronouns and Plurals...........................................55
Section 15.4 Further Action.................................................55
Section 15.5 Binding Effect.................................................55
Section 15.6 Creditors......................................................55
Section 15.7 Waiver.........................................................56
Section 15.8 Counterparts...................................................56
Section 15.9 Applicable Law.................................................56
Section 15.10 Invalidity of Provisions.......................................56
Section 15.11 Limitation to Preserve REIT Status.............................56
ARTICLE 1 DEFINED TERMS.......................................................1
Section 1.1 Definitions......................................................1
ARTICLE 2 ORGANIZATIONAL MATTERS.............................................16
Section 2.1 Organization....................................................16
Section 2.2 Name............................................................16
Section 2.3 Registered Office and Agent; Principal Office...................16
Section 2.4 Power of Attorney...............................................17
Section 2.5 Term............................................................18
ARTICLE 3 PURPOSE............................................................18
Section 3.1 Purpose and Business............................................18
Section 3.2 Powers..........................................................18
ARTICLE 4 CAPITAL CONTRIBUTIONS..............................................19
Section 4.1 Capital Contributions of the Partners...........................19
Section 4.2 Additional Capital Contributions Generally......................19
Section 4.3 Loans by Partners...............................................19
Section 4.4 Loans by Third Parties..........................................19
Section 4.5 Additional Funding and Capital Contributions....................19
Section 4.6 Unit Option Plan................................................21
Section 4.7 Preferred Contributions.........................................22
ARTICLE 5 DISTRIBUTIONS......................................................22
Section 5.1 Requirement, Characterization, and Priority of Distributions....22
Section 5.2 Distributions in Kind...........................................23
Section 5.3 Amounts Withheld................................................23
Section 5.4 Distributions Upon Liquidation..................................24
ARTICLE 6 ALLOCATIONS........................................................24
Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss.....24
Section 6.2 General Allocations.............................................24
Section 6.3 Additional Allocation Provisions................................25
Section 6.4 Tax Allocations.................................................27
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS..............................28
Section 7.1 Management......................................................28
Section 7.2 Certificate of Limited Partnership..............................30
Section 7.3 Restrictions on General Partner's Authority.....................31
Section 7.4 Reimbursement of the General Partner............................33
Section 7.5 Outside Activities of the General Partner and the Initial
General Partner................................................33
Section 7.6 Contracts with Affiliates.......................................34
Section 7.7 Indemnification.................................................34
Section 7.8 Liability of the General Partner................................36
Section 7.9 Other Matters Concerning the General Partner....................36
Section 7.10 Title to Partnership Assets.....................................37
Section 7.11 Reliance by Third Parties.......................................37
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.........................38
Section 8.1 Limitation of Liability.........................................38
Section 8.2 Management of Business..........................................38
Section 8.3 Outside Activities of Limited Partners..........................38
Section 8.4 Return of Capital...............................................39
Section 8.5 Rights of Limited Partners Relating to the Partnership..........39
Section 8.6 Exchange Rights.................................................40
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS.............................41
Section 9.1 Records and Accounting..........................................41
Section 9.2 Fiscal Year.....................................................42
Section 9.3 Reports.........................................................42
ARTICLE 10 TAX MATTERS.......................................................42
Section 10.1 Preparation of Tax Returns......................................42
Section 10.2 Tax Elections...................................................42
Section 10.3 Tax Matters Partner.............................................43
Section 10.4 Organizational Expenses.........................................44
Section 10.5 Withholding.....................................................44
ARTICLE 11 TRANSFERS AND WITHDRAWALS.........................................45
Section 11.1 Transfer........................................................45
Section 11.2 Transfer of General Partner's Partnership Interest..............45
Section 11.3 Limited Partners' Rights to Transfer............................46
Section 11.4 Substituted Limited Partners....................................47
Section 11.5 Assignees.......................................................48
Section 11.6 General Provisions..............................................48
ARTICLE 12 ADMISSION OF PARTNERS.............................................49
Section 12.1 Admission of Successor General Partner.........................49
Section 12.2 Admission of Additional Limited Partners.......................49
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership..50
Section 12.4 Limit on Number of Partners....................................50
ARTICLE 13 DISSOLUTION AND LIQUiDATION.......................................50
Section 13.1 Dissolution....................................................50
Section 13.2 Winding Up.....................................................51
Section 13.3 Compliance with Timing Requirements of Regulations.............52
Section 13.4 Deemed Distribution and Recontribution.........................53
Section 13.5 Rights of Limited Partners.....................................53
Section 13.6 Notice of Dissolution..........................................53
Section 13.7 Cancellation of Certificate of Limited Partnership.............53
Section 13.8 Reasonable Time for Winding-Up.................................53
Section 13.9 Waiver of Partition............................................54
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS......................54
Section 14.1 Amendments......................................................54
Section 14.2 Action by the Partners..........................................54
ARTICLE 15 GENERAL PROVISIONS................................................55
Section 15.1 Addresses and Notice...........................................55
Section 15.2 Titles and Captions............................................55
Section 15.3 Pronouns and Plurals...........................................55
Section 15.4 Further Action.................................................55
Section 15.5 Binding Effect.................................................55
Section 15.6 Creditors......................................................55
Section 15.7 Waiver.........................................................56
Section 15.8 Counterparts...................................................56
Section 15.9 Applicable Law.................................................56
Section 15.10 Invalidity of Provisions.......................................56
Section 15.11 Limitation to Preserve REIT Status.............................56
EXHIBIT A PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS...................1
EXHIBIT A-1 PREFERRED CONTRIBUTIONS...........................................4
EXHIBIT B NOTICE OF EXCHANGE..................................................1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
TANGER PROPERTIES LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP,
dated as of December 30, 1999 and effective on the Transfer Date (as defined
below), is entered into by and among Tanger GP Trust, a Maryland business trust,
as the General Partner; Tanger LP Trust, a Maryland business trust, as a Limited
Partner; Tanger Family Limited Partnership, a North Carolina limited
partnership, as a Limited Partner; and Tanger Factory Outlet Centers, Inc., a
North Carolina corporation (the "Initial General Partner") that will not be a
partner hereto after the Transfer Date; together with any other Persons who
become Partners in the Partnership as provided herein.
ARTICLE 1
DEFINED TERMS
Section 1.1 Definitions.
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the North Carolina Revised Uniform Limited
Partnership Act, as it may be amended from time to time, and any successor to
such statute.
"Additional Funds" shall have the meaning set forth in Section
4.5.A.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) decrease such deficit by any amounts which such Partner is obligated to
restore pursuant to this Agreement or is deemed to be obligated to restore
pursuant to the penultimate sentence of each of Treasury Regulation
Sections 1.704-2(i)(5) and 1.704-2(g); and
(ii) increase such deficit by the items described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"Adjustment Date" means, with respect to any Capital
Contribution, the close of business on the Business Day last preceding the date
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of the Capital Contribution, provided, that if such Capital Contribution is
being made by the General Partner in respect of the proceeds from the issuance
of REIT Shares (or the issuance of other securities of the Initial General
Partner exercisable for, convertible into or exchangeable for REIT Shares), then
the Adjustment Date shall be as of the close of business on the Business Day
last preceding the date of the issuance of such securities.
"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) in the case of any Contributed
Property set forth in Exhibit A and as of the time of its contribution to the
Partnership, the Agreed Value of such property as set forth in Exhibit A; (ii)
in the case of any Contributed Property not set forth in Exhibit A and as of the
time of its contribution to the Partnership, the fair market value of such
property or other consideration as determined by the General Partner, reduced by
any liabilities either assumed by the Partnership upon such contribution or to
which such property is subject when contributed; and (iii) in the case of any
property distributed to a Partner by the Partnership, the fair market value of
such property as determined by the General Partner 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 the
distribution as determined 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.
"Appraisal" means with respect to any assets, the opinion of
an independent third party experienced in the valuation of similar assets,
selected by the General Partner in good faith, such opinion may be in the form
of an opinion by such independent third party that the value for such property
or asset as set by the General Partner is fair, from a financial point of view,
to the Partnership.
"Articles of Incorporation" means the Articles of
Incorporation of the Initial General Partner filed in the state of North
Carolina on March 3, 1993 as amended or restated from time to time.
"Assignee" means a Person to whom one or more Partnership
Units have been transferred in a manner permitted under this Agreement, but who
has not become a Substituted Limited Partner, and who has the rights set forth
in Section 11.5.
"Available Cash" means, with respect to any period for which
such calculation is being made, (i) the sum of:
a. the Partnership's Net Income or Net Loss (as the case may be) for such
period,
b. Depreciation and all other noncash charges deducted in determining Net
Income or Net Loss for such period,
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c. the amount of any reduction in reserves of the Partnership referred to
in clause (ii)(f) below (including, without limitation, reductions
resulting because the General Partner determines such amounts are no longer
necessary),
d. the excess of the net proceeds from the sale, exchange, disposition, or
refinancing of Partnership property for such period over the gain (or loss,
as the case may be) recognized from any such sale, exchange, disposition,
or refinancing during such period (excluding Terminating Capital
Transactions), and
e. all other cash received by the Partnership for such period that was not
included in determining Net Income or Net Loss for such period;
(ii) less the sum of:
a. all principal debt payments made during such period by the Partnership,
b. capital expenditures made by the Partnership during such period,
c. investments in any entity (including loans made thereto) to the extent
that such investments are not otherwise described in clauses (ii)(a) or
(b),
d. all other expenditures and payments not deducted in determining Net
Income or Net Loss for such period,
e. any amount included in determining Net Income or Net Loss for such
period that was not received by the Partnership during such period, and
f. the amount of any increase in reserves established during such period
which the General Partner determines are necessary or appropriate in its
sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not
include any cash received or reductions in reserves, or take into account any
disbursements made or reserves, established, after commencement of the
dissolution and liquidation of the Partnership.
"Bankruptcy" means any event where the General Partner, or the
Partnership, as the case may be, makes an assignment for the benefit of
creditors, files a voluntary petition in bankruptcy, is adjudicated a bankrupt
or insolvent, files a petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against him in any proceeding of this nature, or seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for all or
any substantial part of its properties, in each case, if it is a Bankruptcy of
the General Partner, within the meaning of Section 59-402 of the Act (or any
successor provision). In addition, the term "Bankruptcy" shall include any act
under Section 59-402(5) of the Act.
"Board of Directors" means the Board of Directors of the Initial General
Partner.
3
"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 be closed.
"Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
(a) To each Partner's Capital Account there shall be added
such Partner's Capital Contributions, such Partner's share of Net Income and any
items in the nature of income or gain which are specially allocated pursuant to
Section 6.3 hereof, and the amount of any Partnership liabilities assumed by
such Partner or which are secured by any property distributed to such Partner.
(b) From each Partner's Capital Account there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 6.3 hereof,
and the amount of any liabilities of such Partner assumed by the Partnership or
which are secured by any property contributed by such Partner to the
Partnership.
(c) In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred interest.
(d) In determining the amount of any liability for purposes of
subsections (a) and (b) hereof, there shall be taken into account Code section
752(c) and any other applicable provisions of the Code and Regulations.
(e) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Section 1.704-1(b) and Section 1.704-2, 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) or Section 1.704-2.
"Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Partnership by such Partner.
4
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the North Carolina Secretary
of State, as amended from time to time in accordance with the terms hereof and
the Act.
"Class A Common Limited Partnership Interest" means a
Partnership Interest consisting of Class A Common Limited Partnership Units.
"Class A Common Limited Partnership Unit" means: (i) any
Partnership Unit that was held by Tanger Family Partnership on the Transfer
Date, without regard to any subsequent transfer of such Partnership Unit; (ii)
any Partnership Unit issued pursuant to Section 4.6 of this Agreement in
connection with the exercise of an option granted under the Unit Option Plan;
and (iii) any Partnership Unit issued after the Transfer Date to a Limited
Partner, excluding the Wholly-Owned LP Trust, or to an Additional Limited
Partner pursuant to Section 4.5 of this Agreement in exchange for a Capital
Contribution.
"Class B Common Limited Partnership Interest" means a
Partnership Interest consisting of Class B Common Limited Partnership Units.
"Class B Common Limited Partnership Unit" means: (i) any
Partnership Unit that was transferred from the Initial General Partner to the
Wholly-Owned LP Trust on the Transfer Date, without regard to any subsequent
transfer of such Partnership Unit; (ii) any Partnership Unit converted after the
Transfer Date from a Preferred Unit pursuant to Section 4.7 of this Agreement;
and (iii) any Partnership Unit issued after the Transfer Date to the
Wholly-Owned LP Trust pursuant to Section 4.5 of this Agreement in exchange for
a Capital Contribution.
"Class C Preferred Limited Partnership Interest" means a
Partnership Interest consisting of Class C Preferred Limited Partnership Units.
"Class C Preferred Limited Partnership Unit" means any
Preferred Unit that was transferred from the Initial General Partner to the
Wholly-Owned LP Trust on the Transfer Date, without regard to any subsequent
transfer of such Partnership Unit, the total number of which at all times shall
correspond to the number of shares of Preferred Stock as provided in Section 4.7
of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor statute thereto, as interpreted by the
applicable regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Consent" means the consent to, approval of, or vote on a
proposed action by a Partner given in accordance with Article 14 hereof.
"Consent of the Class A Limited Partners" means the Consent of
a Majority in Interest of the Class A Limited Partners, which Consent shall be
obtained prior to the taking of any action for which it is required by this
Agreement and may be given or withheld by a Majority in Interest of the Class A
Limited Partners, unless otherwise expressly provided herein, in their sole and
absolute discretion.
5
"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).
"Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (ii) all amounts owed by such
Person to banks or other Persons in respect to reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any lien on any property owned by such Person, to the
extent attributable to such Person's interest in such property, even though such
Person has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person which, in accordance with generally accepted
accounting principles, should be capitalized.
"Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period 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 Gross
Asset Value using any reasonable method selected by the General Partner.
"Deemed Partnership Interest Value" means, as of any date, the
Deemed Value of the Partnership multiplied by the applicable Partner's
Percentage Interest.
"Deemed Value of the Partnership" means, as of any date, the
total number of REIT Shares issued and outstanding as of the close of business
on such date (excluding any treasury shares) multiplied by the Value of a REIT
Share on such date, (i) minus the net fair market value of the REIT Properties
determined by the Board of Directors of the Initial General Partner in good
faith and (ii) divided by the combined Percentage Interests of the Wholly-Owned
Trusts on such date;
"Effective Date" means June 4, 1993.
"Election Notice" is defined in Section 4.5.E.
"Exchange" shall have the meaning set forth in Section 8.6.
"Exchange Factor" initially means 1.0, provided that:
(a) in the event that the Initial General Partner
6
(i) declares or pays a dividend on its outstanding REIT
Shares in REIT Shares to all holders of its outstanding
REIT Shares or makes a distribution to all holders of
its outstanding REIT Shares in REIT Shares,
(ii) splits or subdivides its REIT Shares into a larger
number of REIT Shares or
(iii)affects a reverse split combines its outstanding REIT
Shares into a smaller number of REIT Shares,
the Exchange Factor shall be adjusted by multiplying the Exchange
Factor previously in effect 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, split, subdivision, reverse split or
combination (assuming for such purposes that such dividend,
distribution, split, subdivision, reverse split 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, split, subdivision, reverse split or combination;
(b) in the event that the Initial General Partner distributes
any rights, options or warrants to all holders of its REIT Shares to subscribe
for or to purchase or to otherwise acquire REIT Shares (or other securities or
rights convertible into, exchangeable for or exercisable for REIT Shares) at a
price per share less than Value of a REIT Share on the record date for such
distribution (each a "Distributed Right"), then the Exchange Factor shall be
adjusted by multiplying the Exchange Factor previously in effect by a fraction,
the numerator of which shall be the number of REIT Shares issued and outstanding
on the record date plus the maximum number of REIT Shares purchasable under such
Distributed Rights, and the denominator of which shall be the number of REIT
Shares issued and outstanding on the record date plus a fraction, the numerator
of which is the maximum number of REIT Shares purchasable under such Distributed
Rights times the minimum purchase price per REIT Share under such Distributed
Rights, and the denominator of which is the Value of a REIT Share as of the
record date; provided, that if any such Distributed Rights expire or become no
longer exercisable, then the Exchange Factor shall be adjusted, effective
retroactive to the date of distribution of the Distributed Rights, to reflect a
reduced maximum number of REIT Shares or any change in the minimum purchase
price for the purposes of the above fractions; and
(c) in the event the Initial General Partner shall, by
dividend or otherwise, distribute to all holders of its REIT Shares evidences of
its indebtedness or assets (including securities, but excluding any dividend or
distribution referred to in clause (i) above), which evidences of indebtedness
or assets relate to assets not received by the Initial General Partner or
through either Wholly-Owned Trust pursuant to a pro rata distribution by the
Partnership, then the Exchange Factor shall be adjusted to equal the amount
determined by multiplying the Exchange Factor in effect immediately prior to the
close of business on the date fixed for determination of stockholders entitled
to receive such distribution by a fraction of which the numerator shall be such
Value of each REIT Share on the date fixed for such determination, and the
denominator shall be the Value of each REIT Share on the dated fixed for such
determination less the then fair market value (as determined by the Board of
7
Directors, whose determination shall be conclusive) of the portion of the
evidences of indebtedness or assets so distributed applicable to one REIT Share.
Any adjustment to the Exchange Factor shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event; provided that any Limited Partner may waive, by written notice to
the General Partner, the effect of any adjustment to the Exchange Factor
applicable to the Units held by such Limited Partner, and thereafter, such
adjustment will not be effective as to such Units.
"Exchange Right" shall have the meaning set forth in Section
8.6 hereof.
"Funding Debt" means the incurrence of any Debt by or on
behalf of the General Partner for the purpose of providing funds to the
Partnership.
"Funding Notice" is defined in Section 4.5.B.
"General Partner" means the Initial General Partner until the
Transfer Date and thereafter, Tanger GP Trust 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 partnership interest. A General Partner
Interest may be expressed as a number of Partnership Units.
"General Partner Loan" is defined in Section 4.5.C.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value of such asset,
as determined by the contributing Partner and the General Partner (as set forth
on Exhibit C attached hereto, as such Exhibit may be amended from time to time)
provided that, if the contributing Partner is the General Partner then, except
with respect to the General Partner's initial Capital Contribution which shall
be determined as set forth on Exhibit C, or capital contributions of cash, the
determination of the fair market value of the contributed asset shall be
determined by Appraisal.
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined by
the General Partner using such reasonable method of valuation as it may adopt,
provided however, that for this purpose the net value of all of the Partnership
assets, in the aggregate, shall be equal to the Deemed Value of the Partnership,
regardless of the method of valuation adopted by the General Partner, as of the
following times:
(i) the acquisition of an additional interest in the
Partnership by a new or existing Partner in exchange
for more than a de minimis Capital Contribution, if the
General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership;
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(ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property
as consideration for an interest in the Partnership if
the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership;
(iii)the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); and
(iv) at such other times as the General Partner shall
reasonably determine necessary or advisable in order
to comply with Regulations Sections 1.704-1(b) and
1.704-2.
(c) The Gross Asset Value of any Partnership asset distributed
to a Partner shall be the gross fair market value of such asset on the date of
distribution as determined by the distributee and the General Partner, or if the
distributee and the General Partner cannot agree on such a determination, by
Appraisal.
(d) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (d) to the extent that the General Partner reasonably determines
that an adjustment pursuant to subparagraph (b) is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subparagraph (a), (b) or (c), such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income and Net Losses.
"Holder" means either the Partner or Assignee owning a Unit.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person,
such natural Person's estate or heirs or current spouse, parents,
parents-in-law, children, siblings and grandchildren and any trust or estate,
all of the beneficiaries of which consist of such Person or such Person's
spouse, parents, parents-in-law, children, siblings or grandchildren.
"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
9
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 under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within 120 days after the commencement thereof, (g) the
appointment without the Partner's consent or acquiescence of a trustee, receiver
of liquidator has not been vacated or stayed within 90 days of such appointment,
or (h) an appointment referred to in clause (g) is not vacated within 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, trustee or
officer of the Partnership or the General Partner or any of the Wholly-Owned
Trusts, and (ii) such other Persons (including Affiliates of the General Partner
or the Partnership) as the General Partner may designate from time to time, in
its sole and absolute discretion.
"Initial General Partner" means Tanger Factory Outlet Centers,
Inc., a North Carolina corporation that qualifies as a REIT, which has been the
general partner of the Partnership at all times prior to the Transfer Date and
which is withdrawing as the general partner of the Partnership on the Transfer
Date. The term "Initial General Partner" will continue to refer to Tanger
Factory Outlet Centers, Inc. after the Transfer Date.
"Limited Partner" means: (i) any Person named as a Limited
Partner in Exhibit A attached hereto, as such Exhibit may be amended from time
to time, and without regard to any classification of the Partnership Interests
held by such Person named as a Limited Partner in Exhibit A; and (ii) any
Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of
a Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to comply with
the terms and provisions of this Agreement. A Limited Partnership Interest may
be expressed as a number of Partnership Units and/or Preferred Units.
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"Liquidator" has the meaning set forth in Section 13.2.A.
"Majority in Interest of the Class A Limited Partners" means
those Limited Partners (other than any Limited Partner 50% or more of whose
equity is owned, directly or indirectly, by the General Partner) collectively
holding a number of Class A Common Limited Partnership Units that is greater
than fifty percent (50%) of the aggregate number of Class A Common Limited
Partnership Units of all Limited Partners (other than any Limited Partner 50% or
more whose equity is owned, directly or indirectly, by the General Partner).
"Net Income" or "Net Loss" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Income or Net
Loss pursuant to this definition of Net Income or Net Loss shall be added to
such taxable income or loss;
(b) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Income or Net Loss pursuant to this definition of
Net Income or Net Loss shall be subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subparagraph (b) or subparagraph (c) of the
definition of Gross Asset Value, the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such asset for purposes of
computing Net Income or Net Loss;
(d) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year;
(f) To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
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(g) Notwithstanding any other provision of this definition of
Net Income or Net Loss, any items which are specially allocated pursuant to
Section 6.3 hereof shall not be taken into account in computing Net Income or
Net Loss. The amounts of the items of Partnership income, gain, loss, or
deduction available to be specially allocated pursuant to Section 6.3 hereof
shall be determined by applying rules analogous to those set forth in this
definition of Net Income or Net Loss.
"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 Exchange" means the Notice of Exchange
substantially in the form of Exhibit B to this Agreement.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the 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" means the limited partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership of either a Limited Partner or the General Partner and includes any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. A Partnership
Interest may be expressed as a number of Partnership Units and/or Preferred
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).
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"Partnership Record Date" means the record date established by
the General Partner for the distribution of Available Cash pursuant to Section
5.1 hereof which record date shall be the same as the record date established by
the Initial General Partner for a distribution to its shareholders of some or
all of the portion of such distribution made to the Wholly-Owned Trusts.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2,
but does not include Preferred Units issued pursuant to Section 4.7.
"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 Partnership Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time. Preferred Units are not included in any aspect of this calculation.
"Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.
"Preemptive Contribution" is defined in Section 4.5.E.
"Preferred Distribution" means an amount per Unit equal to the
greater of $3.9375 or the amount described in subparagraph H(2)(a)(ii) of
Article II of the Articles of Incorporation (calculated in the manner set forth
in such subparagraph H(2)(a)(ii)).
"Preferred Distribution Shortfall" is defined in Section
5.1(B).
"Preferred Offering" means the public offering of the
Preferred Stock pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended, initially filed with the Securities and
Exchange Commission on October 6, 1993, as thereafter amended.
"Preferred Stock" means the Series A Cumulative Convertible
Redeemable Preferred Shares of the Initial General Partner.
"Preferred Units" means the interests in the Partnership
received by the Initial General Partner in exchange for the additional capital
contribution described in Section 4.7 of this Agreement and shall include the
Class C Preferred Limited Partnership Units after the Transfer Date.
"Properties" means such interests in real property and
personal property including without limitation, fee interests, interests, in
ground leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Partnership may hold from time to time.
"Pro Rata Contribution" is defined in Section 4.5.E.
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"Public Offering Funding Amount" is defined in Section 8.6.D.
"Public Offering Funding" is defined in Section 8.6.D.
"Qualified Transferee" means an "Accredited Investor" as
defined in Rule 501 promulgated under the Securities Act.
"Redemption Amount" means, with respect to any Preferred Unit,
the sum of (a) the amount of any accumulated Preferred Distribution Shortfall
with respect to such Preferred Unit, plus (b) $250.00, provided, however, that
in the case of any Preferred Unit (or fraction thereof) redeemed as a result of
a redemption of Preferred Stock pursuant to subparagraph H(8) or (10) of Article
II of the Articles of Incorporation of the Initial General Partner, the
Redemption Amount shall be equal to the amount paid by the Initial General
Partner on account of the redemption of the equivalent amount of such Preferred
Stock (including fractions thereof) pursuant to such subparagraph H(8) or (10),
as applicable.
"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).
"Regulatory Allocations" has the meaning set forth in Section
6.3(A)(viii) of this Agreement.
"REIT" means a real estate investment trust under Section 856
of the Code.
"REIT Properties" means any property or assets owned by the
Initial General Partner directly or by any of the Wholly-Owned Trusts, excluding
the Initial General Partner's interests in the Wholly-Owned Trusts, the
Wholly-Owned Trusts' interests in the Partnership and any property or assets
owned by the Partnership.
"REIT Requirements" has the meaning set forth in Section 5.1.
"REIT Share" shall mean a share of common stock of the Initial
General Partner, but shall not, for purposes of the definition of "Exchange
Factor," include any Excess Shares (as defined in the Articles of Incorporation
of the Initial General Partner).
"REIT Shares Amount" shall mean a number of REIT Shares equal
to the product of the number of Partnership Units made subject to an Exchange by
a Limited Partner, multiplied by the Exchange Factor.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
"Specified Exchange Date" means the date of receipt by the
Initial General Partner of a Notice of Exchange.
"Stock Option Plan" means the non-qualified and incentive
stock option plan of the Initial General Partner.
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"Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4.
"Tanger Family Partnership" means Tanger Family Limited
Partnership, a North Carolina limited partnership.
"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.
"Transfer Date" means the effective date of the transfer of
the entire Partnership Interest of the Initial General Partner to the
Wholly-Owned Trusts, as provided in the Partnership Interest Transfer Agreement
among the Initial General Partner, Tanger Family Partnership, Tanger LP Trust
and Tanger GP Trust, which the parties thereto are executing concurrently with
this Agreement.
"Unit Option Plan" means the Non-Qualified Unit Option Plan of
the Partnership described in Section 4.6.
"Valuation Date" means the date of receipt by the Initial
General Partner of a Notice of Exchange or, if such date is not a Business Day,
the immediately preceding Business Day.
"Value" means, with respect to a REIT Share, the average of
the daily market price for the ten (10) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be: (i) if the REIT Shares are listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System, the closing price, regular way,
on such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day, (ii) if the REIT Shares are not listed
or admitted to trading on any securities exchange or the NASDAQ-National Market
System, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner, or
(iii) if the REIT Shares are not listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System and no such last reported sale
price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than 10 days prior to the date in
question) for which prices have been so reported; provided that if there are no
bid and asked prices reported during the 10 days prior to the date in question,
the Value of the REIT Shares shall be determined by the General Partner acting
in good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the REIT Shares
15
Amount includes rights that a holder of REIT Shares would be entitled to
receive, then the Value of such rights shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate; and
provided further that, in connection with determining the Deemed Value of the
Partnership for purposes of determining the number of additional Partnership
Units issuable upon a Capital Contribution funded by an underwritten public
offering of REIT Shares, then the Value of the REIT Shares shall be the public
offering price per share of the REIT Shares sold.
"Wholly-Owned LP Trust" means Tanger LP Trust.
"Wholly-Owned Trust" means Tanger GP Trust or Tanger LP Trust.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
The Partnership was initially formed with an initial
contribution of $1.00 by the Initial General Partner for one Partnership Unit of
general partnership interest, and an initial contribution of $1.00 by Tanger
Family Limited Partnership, a North Carolina limited partnership, for one
Partnership Unit of limited partnership interest. Upon the Effective Date, the
contributions specified on Exhibit A as being made on the Effective Date were
made and the Partnership Units specified therein have been issued. Upon such
issuance, the initial Partnership Unit issued to the Initial General Partner and
the initial Partnership Unit issued to Tanger Family Limited Partnership were
redeemed for the price of $1.00 each.
Section 2.2 Name
The name of the Partnership is Tanger Properties Limited
Partnership. 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," "LP.," "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 and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the
State of North Carolina is located at 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxx Xxxxxxxx, and the registered agent for service of process on the
Partnership in the State of North Carolina at such registered office shall be as
16
set forth in the Certificate, as it may be amended from time to time. The
principal office of the Partnership is 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 or such other place as the General Partner may
from time to time designate by notice to the Limited Partners. The Partnership
may maintain offices at such other place or places within or outside the State
of North Carolina as the General Partner deems advisable.
Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (a) all certificates,
documents and other instruments (including, without
limitation, this Agreement and the Certificate and all
amendments or restatements thereof) that the General Partner
or the Liquidator deems appropriate or necessary to form,
qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in
which the limited partners have limited liability) in the
State of North Carolina and in all other jurisdictions in
which the Partnership may conduct business or own property;
(b) all instruments that the General Partner deems
appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance
with its terms; (c) all conveyances and other instruments or
documents that the General Partner deems appropriate or
necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of
cancellation; (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant
to, or other events described in, Article 11, 12 or 13
hereof or the Capital Contribution of any Partner; and (e)
all certificates, documents and other instruments relating
to the determination of the rights, preferences and
privileges of Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and
absolute discretion of the General Partner, to make,
evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action which is made or given
by the Partners hereunder or is consistent with the terms of
this Agreement or appropriate or necessary, in the sole
discretion of the General Partner, to effectuate the terms
or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
to amend this Agreement except in accordance with Article 14 hereof or as may be
otherwise expressly provided for in this Agreement.
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B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
to act as contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive and not be affected by the
subsequent Incapacity of any Limited Partner or Assignee and the transfer of all
or any portion of such Limited Partner's or Assignee's Partnership Units and
shall extend to such Limited Partner's or Assignee's heirs, successors, assigns
and personal representatives. Each such Limited Partner or Assignee hereby
agrees to be bound by any representation made by the General Partner, acting in
good faith pursuant to such power of attorney; and each such Limited Partner or
Assignee hereby waives any and all defenses which may be available to contest,
engage or disaffirm the action of the General Partner, taken in good faith under
such power of attorney. Each Limited Partner or Assignee shall execute and
deliver to the General Partner or the Liquidator, within 15 days after receipt
of the General Partner's request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidator, as the
case may be, deems necessary to effectuate this Agreement and the purposes of
the Partnership.
Section 2.5 Term
The term of the Partnership commenced on May 24, 1993 and
shall continue until December 31, 2093 unless it 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, however, that such
business shall be limited to and conducted in such a manner as to permit the
Initial General Partner at all times to be classified as a REIT for federal
income tax purposes, unless the Initial General Partner has determined to cease
to qualify as a REIT, (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged in any of the foregoing and (iii) to do anything
necessary or incidental to the foregoing.
Section 3.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, provided that the Partnership
shall not take, or refrain from taking, any action which, in the judgment of the
General Partner, in its sole and absolute discretion, (i) could adversely affect
the ability of the Initial General Partner to continue to qualify as a REIT,
(ii) could subject the Initial General Partner to any additional taxes under
18
Section 857 or Section 4981 of the Code, or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
Initial General Partner or its securities, unless any such action (or inaction)
under (i), (ii) or (iii) shall have been specifically consented to by the
General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions of the Partners
Upon the Effective Date, the Partners made Capital
Contributions as set forth in Exhibit A to this Agreement. To the extent the
Partnership acquires after the date of this Agreement any property by the merger
of any other Person into the Partnership, Persons who receive Partnership
Interests in exchange for their interests in the Person merging into the
Partnership shall become Partners and shall be deemed to have made Capital
Contributions as provided in the applicable merger agreement and as set forth in
Exhibit A as amended. The Partners shall own Partnership Units in the amounts
set forth in Exhibit A and shall have a Percentage Interest in the Partnership
as set forth in Exhibit A, which Percentage Interest shall be adjusted in
Exhibit A from time to time by the General Partner to the extent necessary to
reflect accurately exchanges, redemptions, Capital Contributions, the issuance
of additional Partnership Units, or similar events having an effect on a
Partner's Percentage Interest. Except as provided in Sections 4.5 and 10.5, the
Partners shall have no obligation to make any additional Capital Contributions
or loans to the Partnership.
Section 4.2 Additional Capital Contributions Generally
Except as otherwise required by law or pursuant to this
Article 4, no Partner shall be required or permitted to make any additional
Capital Contributions to the Partnership.
Section 4.3 Loans by Partners
Except as otherwise provided in Section 4.5, no Partner shall
be required or permitted to make any loans to the Partnership.
Section 4.4 Loans by Third Parties
The Partnership may incur Debt, or enter into other similar
credit, guarantee, financing or refinancing arrangements for any purpose
(including, without limitation, in connection with any further acquisition of
Properties) upon such terms as the General Partner determines appropriate;
provided that loans from the General Partner shall be subject to Section 4.5.C.
Section 4.5 Additional Funding and Capital Contributions
A. General. The General Partner may, at any time and from
time to time, determine that the Partnership requires additional funds
("Additional Funds") for the acquisition or development of additional Properties
or for such other purposes as the General Partner may determine. Additional
Funds may be raised by the Partnership, at the election of the General Partner,
in any manner provided in, and in accordance with, the terms of this Section
4.5. No Person shall have any preemptive rights or rights to subscribe for or
acquire any Partnership Interest, except as set forth in this Section 4.5.
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B. Additional General Partner Capital Contributions. Upon
written notice (the"Funding Notice") to the Partners of the need for Additional
Funds and theanticipated source(s) thereof, the General Partner may contribute
Additional Funds to the capital of the Partnership in exchange for Partnership
Units. Notwithstanding the foregoing in this Section 4.5.B, to the extent the
Initial General Partner raises all or any portion of the Additional Funds
through the sale or other issuance of REIT Shares or other equity interests in
the Initial General Partner, the Initial General Partner shall contribute the
Additional Funds to the General Partner and the General Partner shall contribute
the Additional Funds to the capital of the Partnership in exchange for
Partnership Units. No notice to the Partners will be given in respect of Capital
Contributions under Section 4.6 or Section 4.7.
C. General Partner Loans. Upon delivery of a Funding Notice
to the Partners, the General Partner may, or, to the extent the General Partner
enters into a Funding Debt, the General Partner shall, lend the Additional Funds
to the Partnership (a "General Partner Loan"). If the General Partner enters
into such a Funding Debt, the General Partner Loan will consist of the net
proceeds from such Funding Debt and will be on the same terms and conditions,
including interest rate, repayment schedule and costs and expenses, as shall be
applicable with respect to or incurred in connection with such Funding Debt.
Otherwise, all General Partner Loans made pursuant to this Section 4.5 shall be
on terms and conditions no less favorable to the Partnership than would be
available to the Partnership from any third party.
D. Additional Limited Partners. Upon delivery of a Funding
Notice to the Partners, the General Partner on behalf of the Partnership may
raise all or any portion of the Additional Funds by accepting additional Capital
Contributions, (i) in the case of cash, from the General Partner or, pursuant to
Section 4.5.E hereof, any Limited Partner, or, (ii) in the case of property
other than cash, from any Partner and/or third parties, and either (a) in the
case of a Partner, issuing additional Units, or (b) in the case of a third
party, admitting such third party as an Additional Limited Partner. Subject to
the terms of this Section 4.5, the General Partner shall determine the amount,
terms and conditions of such additional Capital Contributions.
E. Preemptive Rights of Partners. The Funding Notice
delivered by the General Partner prior to its making or accepting (on behalf of
the Partnership) any additional cash Capital Contributions pursuant to either
Section 4.5.B or 4.5.D herein shall contain the total amount of additional
Capital Contributions sought to be made to the Partnership, and the terms and
conditions pertaining thereto. Each Partner may elect to make an additional
Capital Contribution not to exceed the product of (i) the total amount of
additional Capital Contributions being sought, multiplied by (ii) such Partner's
Percentage Interest (with such product deemed the "Pro Rata Contribution"). Such
election shall be made, if at all, by providing written notice thereof (the
"Election Notice") to the General Partner within ten (10) days after delivery of
the Funding Notice. Such Election Notice shall contain the amount of the
additional Capital Contribution, if any, the Partner is to make (such additional
Capital Contribution not to exceed the respective Pro Rata Contribution of such
Partner) equal to all or any portion of its Pro Rata Contribution (with all or
such portion thereof that such partner elects to make hereinafter referred to as
the "Preemptive Contribution"). Notwithstanding the foregoing, no Partner shall
have any preemptive rights with respect to a capital contribution under Section
4.6 or Section 4.7.
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F. Additional Units. Except as provided in Section 4.6 or
Section 4.7, upon the acceptance of a Capital Contribution, the
contributing Partner shall receive the following number of additional whole
Partnership Units (rounded down to the nearest whole Partnership Unit):
U1 = CC/DV x TU
where
U1 = number of additional Partnership Units to be issued
CC = In the case of a contribution of Property other
than cash, the Agreed Value of the Capital
Contribution; in the case of a contribution of cash,
the amount of such cash, provided, however, that in
the case of a contribution by the General Partner of
cash proceeds from a public stock offering by the
Initial General Partner, the amount of cash for this
purpose shall be determined without reduction for the
expenses of such offering
DV = Deemed Value of the Partnership as of the
Adjustment Date for such Capital Contribution
TU = total number of Partnership Units outstanding
immediately prior to the Capital Contribution
G. Required General Partner Capital Contributions. In the
event that additional Partnership Units are issued to any Limited Partner for
any reason, including without limitation on account of: (i) a capital
contribution under this Section 4.5; (ii) the exercise of options granted under
Section 4.6; or (iii) the conversion of Preferred Units under Section 4.7; the
General Partner shall make a Capital Contribution to the Partnership in an
amount such that the General Partner receives the number of additional
Partnership Units pursuant to Section 4.5.F that is necessary to maintain the
Percentage Interest held by the General Partner at not less than one percent.
Any Partnership Units received by the General Partner pursuant to this Section
4.5.G shall be deemed to be a general partnership interest.
Section 4.6 Unit Option Plan
The Partnership is expressly authorized hereby to adopt a
Non-Qualified Unit Option Plan (the "Unit Option Plan"), substantially in the
form of Exhibit D hereto, that may grant to employees of the Partnership options
to acquire Class A Common Limited Partnership Units. The number of Partnership
Units authorized to be issued under the Unit Option Plan was limited initially
to 600,000 Partnership Units. By an amendment to the Unit Option Plan dated
January 6, 1998, the number of Partnership Units authorized to be issued under
the Unit Option Plan has been increased to 1,750,000 Partnership Units. If at
any time or from time to time options to acquire Units of Limited Partnership
granted in connection with the Unit Option Plan are properly exercised:
21
(a) the consideration paid upon exercise of such options
shall, as soon as practicable after such exercise,
be contributed to the capital of the Partnership;
and
(b) The number of Partnership Units issued in respect of
exercise shall be issued to the exercising party;
provided that if such party is not then a Limited
Partner, that such party become an additional Limited
Partner hereunder pursuant to Section 12.2 hereof.
Section 4.7 Preferred Contributions
A. General. Upon the closing of the Preferred Offering, the
Initial General Partner contributed to the Partnership proceeds of such
Preferred Offering in the amount set forth in Exhibit A-1 to this Agreement. The
Initial General Partner received Preferred Units of the Partnership in an amount
equal to the number of shares of Preferred Stock sold in such Preferred
Offering, which Preferred Units are entitled to receive distributions and to
such other rights as are set forth in this Agreement.
B. Conversion of Preferred Units. If, at any time, holders of
Preferred Stock shall convert such Preferred Stock, in whole or in part
(including fractions thereof), into REIT Shares, then a number of Preferred
Units equal to the number of shares of Preferred Stock (including fractions
thereof) so converted shall automatically be converted into Class B Common
Limited Partnership Units, and the Partners' Percentage Interests shall be
adjusted to reflect such conversion.
C. Redemption of Preferred Units. If, at any time, shares of
Preferred Stock are redeemed (whether automatically or at the option of the
Initial General Partner), the Partnership shall redeem an equal number of
Preferred Units upon the terms set forth in Section 5.1(C).
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement, Characterization, and Priority of
Distributions
(A) Requirement and Characterization of Distributions. The
General Partner shall cause the Partnership to distribute quarterly all, or such
portion as the General Partner may in its discretion determine, of the Available
Cash generated by the Partnership during such quarter in the priority set forth
in subparagraphs (B) and (C) of this Section 5.1. The General Partner shall take
such reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with the Initial General Partner's qualification as a REIT, (i)
to cause the Partnership to distribute sufficient amounts to the Wholly-Owned
Trusts, pro rata, which amounts shall be transferred to the Initial General
Partner, to enable the Initial General Partner to pay shareholder dividends that
will (a) satisfy the requirements for qualifying as a REIT under the Code and
Regulations ("REIT Requirements"), and (b) avoid any federal income or excise
22
tax liability of the Initial General Partner, and (ii) to distribute Available
Cash to the Limited Partners so as to preclude any such distribution or portion
thereof from being treated as part of a sale of property to the Partnership by a
Limited Partner under Section 707 of the Code or the Regulations thereunder;
provided that the General Partner and the Partnership shall not have liability
to a Limited Partner under any circumstances as a result of any distribution to
a Limited Partner being so treated.
(B) Priority of Distributions. To the extent Available Cash
is distributed pursuant to subsection (A) of this Section 5.1, such
distributions shall be made each quarter in the following order of priority:
(2) First, to the extent that the amount of cash
distributed to the Holders of Preferred Units for
any prior quarter was less than the Preferred
Distribution for each of the outstanding Preferred
Units for such quarter, and has not been
subsequently distributed pursuant to this subsection
(B)(1) or pursuant to subsection (C) (a "Preferred
Distribution Shortfall"), Available Cash shall be
distributed to the Holders of Preferred Units in an
amount necessary to satisfy such Preferred
Distribution Shortfall for the current and all prior
Partnership Years;
(3) Second, Available Cash shall be distributed to the
Holders of Preferred Units on the Partnership Record
Date in an amount equal to the Preferred
Distribution for each outstanding Preferred Unit;
and
(4) The balance of the Available Cash to be distributed,
if any, shall be distributed to the Holders of
Partnership Units on the Partnership Record Date
with respect to such quarter, pro rata in accordance
with the respective number of Partnership Units so
held on such Partnership Record Date.
(C) Notwithstanding subparagraph (B) of this Section 5.1, in
any quarter during which the Partnership redeems any outstanding Preferred
Units, Available Cash shall first be distributed to the Wholly-Owned LP Trust in
an amount equal to the sum of the Redemption Amounts for each such Preferred
Unit redeemed.
Section 5.2 Distributions in Kind
No right is given to any Partner to demand and receive
property or cash. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind to the Partners of Partnership
assets, and such assets shall be distributed in such a fashion as to ensure that
the fair market value is distributed and allocated in accordance with Articles
5, 6 and 13.
Section 5.3 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of
any state or local tax law and Section 10.5 hereof with respect to any
allocation, payment or distribution to the General Partner, the Limited Partners
or Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees, as the case may be, pursuant to Section 5.1 for
all purposes under this Agreement.
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Section 5.4 Distributions Upon Liquidation
Notwithstanding the foregoing, proceeds from a Terminating
Capital Transaction shall be distributed to the Partners in accordance with
Section 13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1 Timing and Amount of Allocations of Net
Income and Net Loss
Net Income and Net Loss of the Partnership shall be determined
and allocated with respect to each fiscal year of the Partnership as of the end
of each such year. Subject to the other provisions of this Article 6, an
allocation to a Partner of a share of Net Income or Net Loss shall be treated as
an allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.
Section 6.2 General Allocations
Except as otherwise provided in this Article 6, Net Income and
Net Loss shall be allocated to the Holders of Partnership Units and Preferred
Units in the following order of priority:
(A) First, subject to subparagraph (D) of this Section 6.2,
Net Income (or, ifnecessary, items of income or gain) shall be allocated to the
Holders of Preferred Units in an amount equal to the excess of (1) the amount of
Available Cash distributed to such Holders pursuant to subparagraphs (B)(1) and
(B)(2) and (C) (to the extent attributable to Preferred Distribution Shortfalls)
of Section 5.1 for the current and all prior Partnership Years over (2) the
amount of Net Income (or items of income or gain) previously allocated to such
Holders pursuant to this subparagraph (A) of this Section 6.2.
(B) Second, subject to subparagraph (D) of this Section 6.2,
for any Partnership Year ending on or after a date in which Preferred Units are
redeemed, Net Income (or Net Loss) (or items thereof) shall be allocated to the
Wholly-Owned LP Trust in an amount equal to the excess (or deficit) of (1) the
sum of the Redemption Amounts for Preferred Units that have been or are being
redeemed during the Partnership Year over (2) the product of $250.00 times the
number of such Preferred Units. In addition, in the event that the partnership
is liquidated pursuant to Article 13, the allocation described above shall be
made to the Wholly-Owned LP Trust with respect to all Preferred Units then
outstanding.
(C) Third, subject to subparagraphs (D) and (E) of this
Section 6.2, any remaining Net Income and Net Loss (and each item thereof) shall
be allocated to each of the Holders of Partnership Units in accordance with
their respective Percentage Interest.
24
(D) Notwithstanding subparagraphs (A), (B), and (C) of this
Section 6.2, the General Partner in its sole discretion shall allocate Net
Income or Net Loss (or items thereof) ("Reallocated Income or Reallocated Loss")
to the Partners to the extent necessary such that, after giving effect to all
allocations for the Partnership Year, the combined Capital Account balance of
the Wholly-Owned Trusts will have a balance that is not less than the product of
(1) the number of Preferred Units held by the Wholly-Owned LP Trust multiplied
by (2) $250.00.
(E) Notwithstanding subparagraph (C) of this Section 6.2 (but
subject to subparagraphs (A), (B), and (D) of this Section 6.2), allocations of
Reallocated Income and Reallocated Loss shall be taken into account in
allocating other items of income, gain, loss and deduction among the Partners
pursuant to this Section 6.2 so that, to the extent possible, the net amount of
such allocations of other items and the allocations of Reallocated Income and
Reallocated Loss to each Partner shall be equal to the net amount that would
have been allocated to each such Partner if the allocations of Reallocated
Income and Reallocated Loss had not occurred.
Section 6.3 Additional Allocation Provisions
Notwithstanding the foregoing provisions of this Article 6:
(A) Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding the provisions of
Section 6.2 of the Agreement, or any other provision of this Article
6, if there is a net decrease in Partnership Minimum Gain during any
fiscal year, each Partner shall be specially allocated items of
Partnership income and gain for such 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 allocated shall be determined in accordance with Regulations
Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3(A)(i) is
intended to qualify as a "minimum gain chargeback" within the meaning
of Regulation Section 1.704-2(f) which shall be controlling in the
event of a conflict between such Regulation and this Section
6.3(A)(i).
(ii) Partner Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(i)(4), and notwithstanding the
provisions of Section 6.2 of the Agreement, or any other provision of
this Article 6 (except Section 6.3(A)(i)), if there is a net decrease
in Partner Minimum Gain attributable to a Partner Nonrecourse Debt
during any fiscal year, each Partner who has a share of the Partner
Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with 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)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each General Partner
and Limited Partner pursuant thereto. The items to be so allocated
25
shall be determined in accordance with Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2). This Section 63(A)(ii) is intended to
qualify as a "chargeback of partner nonrecourse debt minimum gain"
within the meaning of Regulation Section 1.704-2(i) which shall be
controlling in the event of a conflict between such Regulation and
this Section 6.3(A)(ii).
(iii) Nonrecourse Deductions and Partner Nonrecourse
Deductions. Any Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Partners in accordance with their
Percentage Interests. Any Partner Nonrecourse Deductions for any
fiscal year shall be specially allocated to the Partner(s) 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).
(iv) Qualified Income Offset. If any Partner unexpectedly
receives an adjustment, allocation or distribution described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of
Partnership income and gain shall be allocated, in accordance with
Regulations Section 1.704-1(b)(2)(ii)(d), to the Partner in an amount
and manner sufficient to eliminate, to the extent required by such
Regulations, the Adjusted Capital Account Deficit of the Partner as
quickly as possible provided that an allocation pursuant to this
Section 6.3(A)(iv) shall be made if and only to the extent that such
Partner would have an Adjusted Capital Account Deficit after all other
allocations provided in this Article 6 have been tentatively made as
if this Section 6.3(A)(iv) were not in the Agreement. It is intended
that this Paragraph 6.3(A)(iv) qualify and be construed as a
"qualified income offset" within the meaning of Regulations
1.704-1(b)(2)(ii)(d), which shall be controlling in the event of a
conflict between such Regulations and this Paragraph 6.3(A)(iv).
(v) Gross Income Allocation. In the event any Partner has a
deficit Capital Account at the end of any fiscal year which is in
excess of the sum of (1) the amount (if any) such Partner is obligated
to restore to the Partnership, and (2) the amount such Partner is
deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5),
each such Partner shall be specially allocated items of Partnership
income and gain in the amount of such excess as quickly as possible,
provided that an allocation pursuant to this Section 6.3(A)(v) shall
be made if and only to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other
allocations provided in this Article 6 have been tentatively made as
if this Section 6.3(A)(v) and Section 6.3(A)(iv) were not in the
Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent any
allocation of Net Loss would cause or increase an Adjusted Capital
Account Deficit as to any Partner, such allocation of Net Loss shall
be reallocated among the other Partners in accordance with their
respective Percentage Interests, subject to the limitations of this
Paragraph 6.3(A)(vi).
(vii) Section 754 Adjustment. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Code
Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining
26
Capital Accounts as the result of a distribution to a Partner in
complete liquidation of his interest in the Partnership, 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 gain or loss shall be
specially allocated to the Partners in accordance with their interests
in the Partnership in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocation. The allocations set forth in
Sections 6.3.(A)(i), (ii), (iii), (iv), (v), (vi), and (vii) (the
"Regulatory Allocations") are intended to comply with certain
regulatory requirements, including the requirements of Regulations
Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of
Section 6.2, the Regulatory Allocations shall be taken into account in
allocating other items of income, gain, loss and deduction among the
Partners so that, to the extent possible, the net amount of such
allocations of other items and the Regulatory Allocations to each
Partner shall be equal to the net amount that would have been
allocated to each such Partner if the Regulatory Allocations had not
occurred.
(B) For purposes of determining a Partner's proportional
share of the "excess nonrecourse liabilities" of the Partnership within the
meaning of Regulations Section 1.752-3(a)(3), each Partner's interest in
Partnership profits shall be such Partner's Percentage Interest.
Section 6.4 Tax Allocations
A. In General. Except as otherwise provided in this Section
6.4, for income tax purposes each item of income, gain, loss and deduction
(collectively, "Tax Items") 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 6.2 and 6.3.
B. Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 6.4(A), Tax Items with respect to Partnership property
that is contributed to the Partnership by a Partner shall be shared among the
Partners for income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take into account the variation, if any,
between the basis of the property to the Partnership and its initial Gross Asset
Value. With respect to Partnership property that is initially contributed to the
Partnership upon its formation, such variation between basis and initial Gross
Asset Value shall be taken into account under the "traditional method" as
described in Proposed Treasury Regulation ss. 1.704-3(b) and Treasury Regulation
ss. 1.704-1(c)(2). With respect to properties subsequently contributed to the
Partnership, the Partnership shall account for such variation under any method
approved under Section 704(c) of the Code and the applicable regulations as
chosen by the General Partner. In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (b) of the definition of
Gross Asset Value (provided in Article 1 of the Agreement), subsequent
allocations of Tax Items with respect to such asset shall take account of the
variation, if any, between the adjusted basis of such asset and its Gross Asset
Value in the same manner as under Section 704(c) of the Code and the applicable
regulations.
27
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
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. Except as provided in Section 8.5 with
respect to the Holders of Class B Common Limited Partnership Interests, the
General Partner may not be removed by the Limited Partners with or without
cause, except with the consent of the General Partner. In addition to the powers
now or hereafter granted a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to the other
provisions hereof including Section 7.3, 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:
(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation,
making prepayments on loans and borrowing money to
permit the Partnership to make distributions to its
Partners in such amounts as will permit the Initial
General Partner (so long as the Initial General
Partner has determined to qualify 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 shareholders sufficient to
permit the Initial General Partner to maintain REIT
status), the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities,
the issuance of evidences of indebtedness (including
the securing of same by mortgage, deed of trust or
other lien or encumbrance on the Partnership's
assets) and the incurring of any obligations it
deems necessary for the conduct of the activities of
the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to
governmental or other agencies having jurisdiction
over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets
of the Partnership or the merger or other
combination of the Partnership with or into another
entity provided, that, in the event of any sale,
exchange, disposition or other transfer of any
property of the Partnership, the Partnership shall
no later than 15 days after the end of the calendar
quarter in which such sale, exchange, disposition or
other transfer becomes a taxable event to Partners,
to the extent of the net cash proceeds of such sale,
exchange, disposition or other transfer, effect a
distribution of cash, less its then regular
28
quarterly distribution, in an amount such that the
pro rata share thereof received by each Partner
shall equal or exceed the total liability of such
Partner for federal, state and local income and
franchise taxes resulting from such sale, exchange,
disposition or other transfer and from such
distribution; provided, further, that any Partner
may elect not to receive all or any part of such
additional distribution and in such event, although
such Partner's Capital Account will not be reduced
to the extent that no distribution is received by
such Partner, the Partner's Percentage Interest and
the number of Partnership Units considered owned by
such Partner shall not be adjusted, it being the
intent that the sole effect of the election not to
receive a distribution will be to increase the
amount of cash or other property to be received by
such Partner upon a dissolution of the Partnership;
(4) the mortgage, pledge, encumbrance or hypothecation
of any assets of the Partnership, and the use of the
assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent
with the terms of this Agreement and on any terms it
sees fit, including, without limitation, the
financing of the conduct or the operations of the
General Partner, the Partnership the lending of
funds to other Persons and the repayment of
obligations of the Partnership and any other Person
in which it has an equity investment;
(5) the negotiation, execution, and performance of any
contracts, leases, 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;
(6) the distribution of Partnership cash or other
Partnership assets in accordance with this
Agreement;
(7) the selection and dismissal of employees of the
Partnership or the General Partner (including,
without limitation, employees having titles such as
"president," "vice president," "secretary" and
"treasurer"), and agents, outside attorneys,
accountants, consultants and contractors of the
General Partner or the Partnership and the
determination of their compensation and other terms
of employment or hiring and the granting to any of
such employees of Partnership options to acquire
Units under the Unit Option Plan;
(8) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems
necessary or appropriate;
(9) the formation of, or acquisition of an interest in,
and the contribution of property to, any further
limited or general partnerships, joint ventures or
other relationships that it deems desirable
(including, without limitation, the acquisition of
29
interests in, and the contributions of property to
any Subsidiary and any other Person in which it has
an equity investment from time to time); provided
that as long as the Initial General Partner has
determined to continue to qualify as a REIT, the
General Partner may not engage in any such
formation, acquisition or contribution that would
cause the Initial General Partner to fail to qualify
as a REIT;
(10) the control of any matters affecting the rights and
obligations of the Partnership, including the
conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation,
and the indemnification of any Person against
liabilities and contingencies to the extent
permitted by law;
(11) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any
Person (including, without limitation, the
contribution or loan of funds by the Partnership to
such Persons); and
(12) subject to the other provisions in this Agreement,
the determination of the fair market value of any
Partnership property distributed in kind using such
reasonable method of valuation as it may adopt,
provided that such methods are otherwise consistent
with requirements of this Agreement.
B. Each of the Limited Partners agrees that the General
Partner is authorized to execute, deliver and perform the above-mentioned
agreements and transactions on behalf of the Partnership without any further
act, approval or vote of the partners, notwithstanding any other provisions of
this Agreement (except as provided in Section 7.3), the Act or any applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.
C. 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 Indemnities hereunder.
D. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain working capital
reserves in such amounts as the General Partner, in it sole and absolute
discretion, deems appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the
General Partner may, but shall be under no obligation to, take into account the
tax consequences to any Partner (including the General Partner) and to the
Initial General Partner of any action taken by it. The General Partner and the
Partnership shall not have liability to the Initial General Partner or to a
Partner under any circumstances as a result of an income tax liability incurred
by the Initial General Partner or such Limited Partner as a result of an action
(or inaction) by the General Partner pursuant to its authority under this
Agreement.
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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 and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of North
Carolina and each other state, the District of Columbia or other jurisdiction,
in which the Partnership may elect to do business or own property. Subject to
the terms of Section 8.5.A(4) hereof, the General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Limited Partner. 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 limited liability) in the State of North Carolina, any
other state, or the District of Columbia or other jurisdiction, in which the
Partnership may elect to do business or own property.
Section 7.3 Restrictions on General Partner's Authority
A. The General Partner may not take any action in
contravention of this Agreement, including, without limitation:
(1) take any action that would make it impossible to
carry on the ordinary business of the Partnership,
except as otherwise provided in this Agreement;
(2) possess Partnership property, or assign any rights
in specific Partnership property, for other than a
Partnership purpose except as otherwise provided in
this Agreement;
(3) admit a Person as a Partner, except as otherwise
provided in this Agreement;
(4) perform any act that would subject a Limited Partner
to liability as a general partner in any
jurisdiction or any other liability except as
provided herein or under the Act; or
(5) enter into any contract, mortgage, loan or other
agreement that prohibits or restricts, or has the
effect of prohibiting, the ability of a Limited
Partner to exercise its rights to an Exchange in
full, except with the written consent of such
Limited Partner.
B. The General Partner shall not, without the prior Consent
of the Class A Limited Partners, undertake, on behalf of the Partnership, any of
the following actions or enter into any transaction which would have the effect
of such transactions:
(1) Except as provided in Section 7.3.C., amend, modify
or terminate this Agreement other than to reflect
the admission, substitution, termination or
withdrawal of partners pursuant to Article 12
hereof.
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(2) Make a general assignment for the benefit of
creditors or appoint or acquiesce in the appointment
of a custodian, receiver or trustee for all or any
part of the assets of the Partnership.
(3) Institute any proceeding for Bankruptcy on behalf of
the Partnership.
(4) Approve or acquiesce to the transfer of the
Partnership Interest of the General Partner to any
Person other than the Partnership.
(5) Admit into the Partnership any Additional or
Substitute General Partners.
C. Notwithstanding Section 7.3.B, the General Partner shall
have the power, without any consent of any Limited Partners, to amend this
Agreement as may be required to facilitate or implement any of the following
purposes:
(1) to add to the obligations of the General 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;
(2) to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this
Agreement;
(3) 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;
(4) 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;
(5) to amend the provisions of this Agreement to protect
the qualification of the Initial General Partner as
a REIT because of a change in applicable law (or an
authoritative interpretation thereof), a ruling of
the Internal Revenue Service or if the Initial
General Partner has determined to cease qualifying
as a REIT; and
(6) to modify, as set forth in the definition of
"Capital Account," the manner in which Capital
Accounts are computed.
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.C is taken.
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D. Notwithstanding Section 7.3.B and 7.3.C hereof, this
Agreement shall not be amended, and no action may be taken by the General
Partner, without the Consent of each Partner adversely affected if such
amendment or action would (i) convert a Limited Partner's interest in the
Partnership into a general partner's interest (except as the result of the
General Partner acquiring such interest), (ii) modify the limited liability of a
Limited Partner, (iii) alter rights of the Partner to receive distributions
pursuant to Article 5 or Section 7.1.A(3), or the allocations specified in
Article 6 (except as permitted pursuant to Section 4.5, 4.6, 4.7 and Section
7.3.C(3) hereof), (iv) alter or modify the rights to an Exchange or REIT Shares
Amount as set forth in Section 8.6, and related definitions hereof or (v) amend
this Section 7.3.D. Further, no amendment may alter the restrictions on the
General Partner's authority set forth elsewhere in this Section 7.3 without the
Consent specified in such section.
E. The General Partner shall not, without the prior Consent
of the Holders of Class A Limited Partnership Units, so long as the Holders of
the Class A Common Limited Partnership Units have at least 10% of the aggregate
Percentage Interests of the Partnership, on behalf of the Partnership, take any
of the following actions:
(1) Dissolve the Partnership.
(2) Agree to or consummate any merger, consolidation,
reorganization or other business combination to
which the Partnership is a party.
(3) Sell, dispose, convey or otherwise transfer all or
substantially all of the assets of the Partnership,
in one or a series of transactions.
Section 7.4 Reimbursement of the General Partner
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. Subject to Section 15.11, the General Partner shall be
reimbursed on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all expenses it incurs
relating to the ownership of interests in and operation of, or for the benefit
of, the Partnership. The Limited Partners acknowledge that the General Partner's
sole business is the ownership of interests in and operation of the Partnership
and that such expenses are incurred for the benefit of the Partnership; provided
that, the General Partner shall not be reimbursed for expenses it incurs
relating to the organization of the Partnership and the General Partner and the
initial public offering of REIT Shares by the Initial General Partner or
subsequent offerings of securities of the Initial General Partner. Such
reimbursements shall be in addition to any reimbursement to the General Partner
as a result of indemnification pursuant to Section 7.7 hereof.
C. It is the intent of the Partners that any amounts paid by
the Partnership to the General Partner pursuant to this Section 7.4 be treated
as a "guaranteed payment" within the meaning of Section 707(c) of the Code.
Section 7.5 Outside Activities of the General Partner
and the Initial General Partner
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A. The General Partner shall not directly or indirectly enter
into or conduct any business, other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner and
the management of the business of the Partnership and such activities as are
incidental to same. Without the Consent of the Class A Limited Partners, the
General Partner shall not, directly or indirectly, participate in or otherwise
acquire any interest in any real or personal property, except its General
Partner Interest, and other than such short-term liquid investments, bank
accounts or similar instruments as it deems necessary to carry out its
responsibilities contemplated under this Agreement and the Certificate of
Incorporation. Any Limited Partner Interests acquired by the General Partner,
whether pursuant to exercise by a Limited Partner of its right to an Exchange or
otherwise, shall be automatically converted into a General Partner Interest
comprised of an identical number of Partnership Units.
B. The Initial General Partner shall not directly or
indirectly enter into or conduct any business, other than in connection with the
ownership, acquisition and disposition of its interests in the Wholly-Owned
Trusts, its operation as a public reporting company with a class (or classes) of
securities registered under the Securities Exchange Act of 1943, as amended, its
operation as a REIT and such activities as are incidental to the same. In the
event the Initial General Partner exercises its rights under Article II of the
Articles of Incorporation to purchase REIT Shares, then the General Partner
shall cause the Partnership to purchase from the Wholly-Owned LP Trust a number
of Partnership Units as determined based on the application of the Exchange
Factor on the same terms that the Initial General Partner purchased such REIT
Shares.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute to Persons in which
it has an equity investment, and such Persons may borrow funds from the
Partnership, on terms and conditions established in the sole and absolute
discretion of the General Partner. The foregoing authority shall not create any
right or benefit in favor of any Person.
B. Except as provided in Section 7.5.A, the Partnership may
transfer assets to joint ventures, other partnerships, corporations or other
business entities in which it is or thereby becomes a participant upon such
terms and subject to such conditions consistent with this Agreement and
applicable law.
C. The General Partner, in its sole and absolute discretion
and without the approval of the Limited Partners, may propose and adopt on
behalf of the Partnership employee benefit plans funded by the Partnership for
the benefit of employees of the General Partner the Initial General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, the Initial General Partner or any of the
Partnership's Subsidiaries.
D. The General Partner is expressly authorized to enter into,
in the name and on behalf of the Partnership, a right of first opportunity
arrangement and other conflict avoidance agreements with various Affiliates of
the Partnership and the General Partner, on such terms as the General Partner,
in its sole and absolute discretion, believes are advisable.
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Section 7.7 Indemnification
A. The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including legal fees and expenses), judgments, fines, settlements, and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the operations of the Partnership as set forth in this Agreement in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
any entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A. Any indemnification pursuant to this Section 7.7 shall be
made only out of the assets of the Partnership.
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 this Section 7.7.A has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity.
D. The Partnership may purchase and maintain insurance, on
behalf of the Indemnities 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. For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participates or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of Section 7.7; and actions taken or
omitted by the Indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the Partnership.
35
F. In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
G. An Indemnitee shall not be denied indemnification in whole
or in part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of
the Indemnities, their heirs, successors,assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
I. It is the intent of the Partners that any amounts paid by
the Partnership to the General Partner pursuant to this Section 7.7 be treated
as a "guaranteed payment" within the meaning of Section 707(c) of the Code.
Section 7.8 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable or accountable in damages or
otherwise to the Partnership, any Partners or any Assignees for losses
sustained, liabilities incurred or benefits not derived as a result of errors in
judgment or mistakes of fact or law of any act or omission if the General
Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the
General Partner is acting for the benefit of the Partnership, the Limited
Partners and the Initial General Partner and its shareholders collectively, that
the General Partner is under no obligation to give priority to the separate
interests of the Limited Partners or the Initial General Partner or its
shareholders (including, without limitation, the tax consequences to Limited
Partners or Assignees or to the Initial General Partner or its shareholders) in
deciding whether to cause the Partnership to take (or decline to take) any
actions, except as expressly provided herein.
C. Subject to its obligations and duties as General Partner
set forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8
or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the Partnership and
the Limited Partners under this Section 7.8 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
36
Section 7.9 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture,
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
B. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters which such
General Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
C. The General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact. Each
such attorney shall, to the extent provided by the General Partner in the power
of attorney, have full power and authority to do and perform all and every act
and duty which is permitted or required to be done by the General Partner
hereunder.
D. Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the Initial
General Partner to continue to qualify as a REIT or (ii) to avoid the Initial
General Partner incurring any taxes under Section 857 or Section 4981 of the
Code, is expressly authorized under this Agreement and is deemed approved by all
of the Limited Partners.
Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partners, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner
may determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the property
of the Partnership in its books and records, irrespective of the name in which
legal title to such Partnership assets is held.
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Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement,
any Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority to encumber, sell or otherwise use
in any manner any and all assets of the Partnership and to enter into any
contracts on behalf of the Partnership, and such Person shall be entitled to
deal with the General Partner as if it were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby waives any
and all defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than 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 take part in the operations,
management or control (within the meaning of the Act) of the Partnership's
business transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. The transaction of any
such business by 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.
Section 8.3 Outside Activities of Limited Partners
Subject to any agreements entered into by a Limited Partner or
its Affiliates with the General Partner, the Initial General Partner, the
Partnership or a Subsidiary, any Limited Partner and any officer, director,
employee, agent, trustee, Affiliate or shareholder of any Limited Partner shall
be entitled to and may have business interests and engage in business activities
in addition to those relating to the Partnership, including business interests
and activities in direct competition with the Partnership. Neither the
Partnership nor any Partners shall have any rights by virtue of this Agreement
in any business ventures of any Limited Partner or Assignee. Subject to such
agreements, none of the Limited Partners nor any other Person shall have any
38
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 such Person shall have no obligation pursuant to this Agreement to
offer any interest in any such business ventures to the Partnership, any Limited
Partner or any such other Person, even if such opportunity is of a character
which, if presented to the Partnership, any Limited Partner or such other
Person, could be taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the rights of Exchange set forth in Section
8.6, no Limited 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. No
Limited Partner or Assignee shall have priority over any other Limited Partner
or Assignee either as to the return of Capital Contributions, or as otherwise
expressly provided in this Agreement, as to profits, losses, distributions or
credits.
Section 8.5 Rights of Limited Partners Relating to the
Partnership
A. In addition to other rights provided by this Agreement or
by the Act, and except as limited by Section 8.5.D hereof, each Limited Partner
shall have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at the Partnership's expense:
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by the Initial General Partner
pursuant to the Securities Exchange Act of 1934, as
amended, and each communication sent to the
shareholders of the Initial General Partner;
(2) to obtain a copy of the Partnership's federal, state
and local income tax returns for each Partnership
Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each
Partner;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together
with executed copies of all powers of attorney
pursuant to which this Agreement, the Certificate
and all amendments thereto have been executed; and
(5) to obtain true and full information regarding the
amount of cash and a description and statement of
any other property or services contributed by each
Partner and which each Partner has agreed to
contribute in the future, and the date on which each
became a Partner.
B. The Partnership shall notify each Limited Partner in
writing of any change made to the Exchange Factor within 10 Business Days of the
date such change becomes effective.
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C. In addition to the foregoing rights, and notwithstanding
anything to the contrary in this Agreement, the Holders of the Class B Common
Limited Partnership Units shall have the right at any time to remove the General
Partner, with or without cause upon written notice. A substitute General Partner
shall be named by the holders of a majority in interest of all of the Class A
Common Limited Partnership Units. Upon such removal, the General Partner's
Partnership Units shall become Class B Common Limited Partnership Units.
D. Notwithstanding any other provision of this Section 8.5,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that (i) the General Partner
believes to be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is not in the
best interests of the Partnership or (ii) the Partnership or the General Partner
is required by law or by agreements with unaffiliated third parties to keep
confidential.
Section 8.6 Exchange Rights
A. Each Limited Partner shall have the right to require the
Initial General Partner to acquire all or a portion of any Class A Common
Limited Partnership Units held by such Limited Partner (such Class A Common
Limited Partnership Units being hereafter "Tendered Units") in exchange for REIT
Shares (an "Exchange"). By execution of this Agreement, the Initial General
Partner expressly agrees to reserve for future issue, and to issue in exchange
for Tendered Units, a sufficient number of its authorized but unissued REIT
Shares to acquire Tendered Units pursuant to the provisions of this Section 8.6.
Such Exchange shall be exercised pursuant to a Notice of Exchange delivered to
the Initial General Partner by the Limited Partner who is exercising the
relevant right (the "Tendering Partner"). Such Limited Partner shall have no
right, with respect to any Class A Common Limited Partnership Units so
transferred, to receive any distributions paid after the Specified Exchange
Date.
B. The Tendering Partner effecting an Exchange shall have the
right to receive, as of Specified Exchange Date, the REIT Shares Amount. The
REIT Shares Amount shall be delivered as duly authorized, validly issued, fully
paid and nonassessable REIT Shares, free of any pledge, lien, encumbrance or
restriction, other than those provided in the Articles of Incorporation, the
Securities Act of 1933, as amended (the "Securities Act") and relevant state
securities or blue sky laws. Notwithstanding any delay in such delivery (but
subject to Section 8.6.C, the Tendering Partner shall be deemed the owner of
such REIT Shares and rights for all purposes, including with limitation, rights
to vote or consent, receive dividends, and exercise rights, as of the Specified
Exchange Date.
C. Notwithstanding the provisions of Section 8.6.A, 8.6.B or
any other provision of this Agreement, a Limited Partner (i) shall not be
entitled to effect an Exchange to the extent the ownership or right to acquire
REIT Shares pursuant to such Exchange by such Partner on the Specified Exchange
Date would cause such Partner or any other Person to violate the restrictions on
ownership and transfer of shares set forth in the Articles of Incorporation and
(ii) shall have no rights under this Agreement which would otherwise be
prohibited under the Articles of Incorporation. To the extent any attempted
Exchange would be in violation of this Section 8.6.C, it shall be void ab initio
to such extent and such Limited Partner shall not require any rights or economic
interest in REIT Shares otherwise issuable upon such Exchange.
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D. With respect to any Exchange pursuant to this Section 8.6:
(1) Concurrently with any Exchange under this Section
8.6, the Initial General Partner shall transfer all
Tendered Units to the Wholly-Owned Trusts and shall
allocate the Tendered Units between the Wholly-Owned
Trusts in such amounts as is necessary to maintain
the Percentage Interest held by the General Partner
at not less than one percent. In exchange for such
Tendered Units, each Wholly-Owned Trust shall issue
a number of its common shares to the Initial General
Partner that is equal to the number of Tendered
Units transferred pursuant to such Exchange from the
Initial General Partner to such Wholly-Owned Trust.
All Partnership Units acquired by the General
Partner pursuant to this Section 8.6 shall
automatically, and without further action required,
be converted into and deemed to be General Partner
interests comprised of the same number of
Partnership Units. Notwithstanding anything to the
contrary in this Agreement, all Partnership Units
acquired by the Wholly-Owned LP Trust pursuant to
this Section 8.6 shall automatically, and without
further action required, be converted into and
deemed to be Class B Common Limited Partnership
Units.
(2) The consummation of such Exchange shall be subject
to the expiration or termination of the applicable
waiting period, if any, under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
(3) Each Tendering Partner shall continue to own all
Partnership Units subject to any Exchange and be
treated as a Limited Partner with respect to such
Partnership Units for all purposes of this
Agreement, until such Partnership Units are
transferred to the Wholly-Owned Trusts and paid for
on the Specified Exchange Date.
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 appropriate books and records with respect
to the Partnership's business, including without limitation, all books and
records necessary to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Section 9.3 hereof. Any
records maintained by or on behalf of the Partnership in the regular course of
its business may be kept on, or be in the form of, punch cards, magnetic tape,
41
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. As soon as practicable, but in no event later than 105
days after the close of each Partnership Year, or such earlier date as they are
filed with Securities and Exchange Commission, the General Partner shall cause
to be mailed to each Limited Partner as of the close of the Partnership Year, an
annual report containing financial statements of the Partnership, or of the
Initial General Partner if such statements are prepared solely on a consolidated
basis with the Initial General Partner, for such Partnership Year, presented in
accordance with generally accepted accounting principles, such statements to be
audited by a nationally recognized firm of independent public accountants
selected by the General Partner.
B. As soon as practicable, but in no event later than 105
days after the close of each calendar quarter (except the last calendar quarter
of each year) the General Partner shall cause to be mailed to each Limited
Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the Initial General
Partner, if such statements are prepared solely on a consolidated basis with the
applicable law or regulation, or as the General Partner determines to be
appropriate.
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 90 days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code, including the election under Section
754 of the Code. The General Partner shall have the right to seek to revoke any
42
such election (including without limitation, any election under Section 754 of
the Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is 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. Pursuant to Section 6223(c)(3)
of the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address and profit interest of each
of the Limited Partners; provided, however, that such information is provided to
the Partnership by the Limited Partners.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial
proceedings for the adjustment of Partnership items
required to be taken into account by a Partner for
income tax purposes (such administrative proceedings
being referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"),
and in the settlement agreement the tax matters
partner may expressly state that such agreement
shall bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within
the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS
providing that the tax matters partner shall not
have the authority to enter into a settlement
agreement on behalf of such Partner or (ii) who is a
"notice partner" (as defined in Section 6231 of the
Code) or a member of a "notice group" (as defined in
Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item
required to be taken into account by a Partner for
tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such
final adjustment, including the filing of a petition
for readjustment with the Tax Court or the United
States Claims Court, or the filing of a complaint
for refund with the District Court of the United
States for the district in which the Partnership's
principal place of business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment
with the IRS at any time and, if any part of such
request is not allowed by the IRS, to file an
appropriate pleading (petition or complaint) for
judicial review with respect to such request;
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(5) to enter into an agreement with the IRS to extend
the period for assessing any tax which is
attributable to any item required to be taken into
account by a Partner for tax purposes, or an item
affected by such item; and
(6) to take any other action on behalf of the Partners
of the Partnership in connection with any tax audit
or judicial review proceeding to the extent
permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by
the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
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 his duties as such (including legal and accounting fees)
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 his duties hereunder, so long as the compensation paid by
the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any,
incurred by it in organizing the Partnership ratably over a 60-month period as
provided in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Limited Partner any
amount of federal, state, local, or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within 15 days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited Partner
or (ii) the General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the available funds of the Partnership
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Limited Partner.
Each Limited Partner hereby unconditionally and irrevocably
grants to the Partnership a security interest in such Limited Partner's
Partnership Interest to secure such Limited Partner's obligation to pay to the
Partnership any amounts required to be paid pursuant to this Section 10.5. In
the event that a Limited Partner fails to pay any amounts owed to the
Partnership pursuant to this Section 10.5 when due, the General Partner may, in
44
its sole and absolute discretion, elect to make the payment to the Partnership
on behalf of such defaulting Limited Partner, and in such event shall be deemed
to have loaned such amount to such defaulting Limited Partner and shall succeed
to all rights and remedies of the Partnership as against such defaulting Limited
Partner (including, without limitation, the right to receive distributions). Any
amounts payable by a Limited Partner hereunder shall bear interest at the base
rate on corporate loans at large United States money center commercial banks, as
published from time to time in the Wall Street Journal, plus four percentage
points (but not higher than the maximum lawful rate) from the date such amount
is due (i.e., 15 days after demand) until such amount is paid in full. Each
Limited Partner shall take such actions as the Partnership or the General
Partner shall request in order to perfect or enforce the security interest
created hereunder.
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 the General Partner purports to assign its General Partner Interest to
another Person or by which a Limited Partner purports to assign its Limited
Partnership Interest to another Person, and includes a sale, assignment, gift,
(outright or in trust), 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 an Exchange pursuant to Section 8.6. No part of
the interest of a Limited Partner shall be subject to the claims of any
creditor, any spouse for alimony or support, or to legal process, and may not be
voluntarily or involuntarily alienated or encumbered except as may be
specifically provided for in this Agreement.
B. 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 General Partner's Partnership
Interest
The General Partner shall not withdraw from the Partnership
and shall not transfer all or any portion of its interest in the Partnership
(whether by sale, statutory merger or consolidation, liquidation or otherwise)
without the consent of all of the Holders of Class A Common Limited Partnership
Units, which may be withheld by each Holder of Class A Common Limited
Partnership Units in its sole and absolute discretion, and only upon the
admission of a successor General Partner pursuant to Section 12.1. Upon any
transfer of a Partnership Interest in accordance with the provisions of this
Section 11.2, the transferee shall become a Substitute General Partner for all
purposes herein, and shall be vested with the powers and rights of the
transferor General Partner, and shall be liable for all obligations and
responsible for all duties of the General Partner, once such transferee has
executed such instruments as may be necessary to effectuate such admission and
to confirm the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired. It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes, by operation of law or express agreement, all of the
45
obligations of the transferor General Partner under this Agreement with respect
to such transferred Partnership interest, and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor General Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor General Partner of
its obligations under this Agreement without the Consent of the Class A Limited
Partners, in their reasonable discretion. In the event the General Partner
withdraws from the Partnership, in violation of this Agreement or otherwise, or
otherwise dissolves or terminates, or upon the Bankruptcy of the General
Partner, a Majority in Interest of the Class A Limited Partners may elect to
continue the Partnership business by selecting a Substitute General Partner in
accordance with the Act.
Section 11.3 Limited Partners' Rights to Transfer
A. Prior to June 4, 1994, no Limited Partner shall transfer
all or any portion of its Partnership Interest to any transferee without the
consent of the General Partner, which consent may be withheld in its sole and
absolute discretion; provided, however, that any Limited Partner may, at any
time, without the consent of the General Partner, (i) transfer all or any
portion of its Partnership Interest to the General Partner, to the Wholly-Owned
LP Trust, or to an Affiliate of Xxxxxxx X. Xxxxxx or the Tanger Family
Partnership or to the Immediate Family of Xxxxxxx X. Xxxxxx, subject to the
provisions of Section 11.6, (ii) transfer its Partnership Interest pursuant to
its right of Exchange as provided in Section 8.6 hereof, or (iii) pledge (a
"Pledge") all or any portion of its Partnership Interest to a lending
institution, which is not an Affiliate of such Limited Partner, as collateral or
security for a bona fide loan or other extension of credit, and transfer such
pledged Partnership Interest to such lending institution in connection with the
exercise of remedies under such loan or extension or credit. After June 4, 1994,
each Limited Partner or Assignee pursuant to the proviso of the preceding
sentence shall have the right to transfer all or any portion of its Partnership
Interest, or subject to the provisions of Section 11.6 and the satisfaction of
each of the following conditions, transfer all or any portion of its Partnership
Interests to any other Person:
(a) General Partner Right of First Refusal. The
transferring Partner shall give written notice of
the proposed transfer to the General Partner, which
notice shall state (i) the identity of the proposed
transferee, and (ii) the amount and type of
consideration proposed to be received for the
transferred Partnership Units. The General Partner
shall have ten (10) days upon which to give the
transferring Partner notice of its election to
acquire the Partnership Units on the proposed terms.
If it so elects, it shall purchase the Partnership
Units on such terms within ten (10) days after
giving notice of such election. If it does not so
elect, the transferring Partner may transfer such
Partnership Units to a third party, on economic
terms no more favorable to the transferee than the
proposed terms, subject to the other conditions of
this Section 11.3.
(b) Qualified Transferee. Any transfer of a Partnership
Interest shall be made only to Qualified
Transferees.
46
It is a condition to any transfer otherwise permitted
hereunder that the transferee assumes by operation of law or express agreement
all of the obligations of the transferor Limited Partner under this Agreement
with respect to such transferred Partnership Interest and no such transfer
(other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner, in
its reasonable discretion. Notwithstanding the foregoing, any transferee of any
transferred Partnership Interest shall be subject to any and all ownership
limitations contained in the Articles of Incorporation. Any transferee, whether
or not admitted as a Substituted Limited Partner, shall take subject to the
obligations of the transferor hereunder. Unless admitted as a Substitute Limited
Partner, no transferee, whether by a voluntary transfer, by operation of law or
otherwise, shall have rights hereunder, other than the rights of an Assignee as
provided in Section 11.5.
B. If a Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator, or receiver
of such Limited Partner's estate shall have all the rights of a Limited Partner,
but not more rights than those enjoyed by other Limited Partners, for the
purpose of settling or managing the estate, and such power as the Incapacitated
Limited Partner possessed to transfer all or any part of his or its interest in
the Partnership. The Incapacity of a 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 by a Limited Partner of his Partnership Units if,
in the opinion of legal counsel to the Partnership, such transfer would require
the filing of a registration statement under the Securities Act by the
Partnership or would otherwise violate any federal or state securities laws or
regulations applicable to the Partnership or the Partnership Unit.
D. No transfer by a Limited Partner of his Partnership Units
(including any Exchange) 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 (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 of
the Code.
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his place (including any transferee permitted
by Section 11.3). The General Partner shall, however, have the right to consent
to the admission of a transferee of the interest of a Limited Partner pursuant
to this Section 11.4 as a Substituted Limited Partner, which consent may be
given or withheld by the 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 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
Limited Partner in accordance with this Article 11 shall have all the rights and
powers and be subject to all the restrictions and liabilities of a Limited
Partner under this Agreement.
47
C. Upon the admission of a Substituted Limited Partner, the
General Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
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 a Substituted Limited Partner, as described in Section 11.4, such transferee
shall be considered an Assignee for purposes of this Agreement. An Assignee
shall be entitled to all the rights of an assignee of a limited partnership
interest under the Act, including the right to receive distributions from the
Partnership and the share of Net Income, Net Losses, gain and loss attributable
to the Partnership Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article 11, and the right of Exchange
provided in Section 8.6, but shall not be deemed to be a holder of Partnership
Units for any other purpose under this Agreement, and shall not be entitled to
effect a Consent with respect to such Partnership Units on any matter presented
to the Limited Partners for approval (such Consent remaining with the transferor
Limited Partner). 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 Limited Partner desiring to make an assignment of Partnership Units.
Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11 or pursuant to the exercise
of its right of Exchange of all of its Partnership Units under Section 8.6.
B. Any Limited Partner who shall transfer all of his
Partnership Units in a transfer permitted pursuant to this Article 11 where such
transferee was admitted as a Limited Partner or pursuant to the exercise of its
right of Exchange of all of its Partnership Units under Section 8.6 shall cease
to be a 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 Interest is transferred during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or transferred pursuant to Section 8.6, Net
Income, Net Losses, each item thereof and all other items attributable to such
interest for such fiscal year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their
varying interests during the fiscal year in accordance with Section 706(d) of
the Code, using the interim closing of the books method. Solely for purposes of
making such allocations, each of such items for the calendar month in which the
transfer or redemption occurs shall be allocated to the Person who is a Partner
48
as of midnight on the last day of said month. All distributions of Available
Cash with respect to which the Partnership Record Date is before the date of
such transfer or redemption shall be made to the transferor Partner, and all
distributions of Available Cash thereafter shall be made to the transferee
Partner.
E. In addition to any other restrictions on transfer herein
contained, in no event may any transfer or assignment of a Partnership Interest
by any Partner (including by way of an Exchange) be made (i) to any person or
entity who lacks the legal right, power or capacity to own a Partnership
Interest; (ii) in violation of applicable law; (iii) of any component portion of
a Partnership Interest, such as the Capital Account, or rights to distributions,
separate and apart from all other components of a Partnership Interest; (iv) in
the event such transfer would cause the Initial General Partner to cease to
comply with the REIT Requirements, if the Initial General Partner at such time
has determined to continue meet the REIT Requirements; (v) if such transfer
would cause a termination of the Partnership for federal or state income tax
purposes (except as a result of the Exchange of all Partnership Units held by
all Limited Partners); (vi) if such transfer would, in the opinion of counsel to
the Partnership, cause the Partnership to cease to be classified as a
partnership for Federal income tax purposes (except as a result of the Exchange
of all Partnership Units held by all Limited Partners); (vii) if such transfer
would cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of ERISA, a "party-in-interest" (as defined in Section 3(14)
of ERISA) or a "disqualified person" (as defined in Section 4975(c) of the
Code); (viii) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.2-101; (ix) if such transfer requires the registration of such
Partnership Interest pursuant to any applicable federal or state securities
laws; (x) if such transfer causes the Partnership to become a "Publicly Traded
Partnership," as such term is defined in Sections 469(k)(2) or 7704(b) of the
Code or if such transfer would cause the Partnership to have more than 500
Partners (including, as Partners, those persons indirectly owning an Interest in
the Partnership through a partnership, subchapter S corporation or grantor
trust); or (xi) if such transfer subjects the Partnership to be regulated under
the Investment Company Act of 1940, the Investment Advisors Act of 1940 or the
Employee Retirement Income Security Act of 1974, each as amended.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner's General Partner
Interest pursuant to Section 11.2 hereof who is proposed to be admitted as a
successor General Partner shall be admitted to the Partnership as the General
Partner, effective upon such transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission.
Section 12.2 Admission of Additional Limited Partners
A. After the admission to the Partnership of the initial
Limited Partners on the date hereof, a Person who makes a Capital Contribution
49
to the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner in order to effect such Person's admission as an Additional
Limited Partner.
B. Notwithstanding anything to the contrary in this Section
12.2, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The grant of an option to
acquire Units under the Unit Option Plan, which grant is in the sole and
absolute discretion of the General Partner, to any Person shall constitute the
consent of the General Partner to such Person (but not any Assignee) to becoming
a Limited Partner upon exercise of such option to acquire Units. The admission
of any Person as an Additional Limited Partner shall become effective on the
date upon which the name of such Person is recorded on the books and records of
the Partnership, following the receipt of the Capital Contribution in respect of
such Limited Partner and the consent of the General Partner to such admission.
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership
For the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the Act to
amend the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.
Section 12.4 Limit on Number of Partners
No Person shall be admitted to the Partnership as an
Additional Partner if the effect of such admission would be to cause the
Partnership to have more than 500 Partners, including as Partners for this
purpose those Persons indirectly owning an Interest in the Partnership through
another partnership, subchapter S corporation or a grantor trust.
ARTICLE 13
DISSOLUTION AND LIQUiDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of 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;
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B. an event of withdrawal of the General Partner, as defined
in the Act, unless, within 90 days after the withdrawal, all of the Holders of
the Class A Common Limited Partnership Units, and at least a majority in
interest of all the remaining Partners, agree in writing, in their sole and
absolute discretion, to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a substitute General
Partner;
C. an election to dissolve the Partnership made by the
General Partner, approved by the Consent of the Holders of the Class A Common
Limited Partnership Units;
D. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
E. the sale of all or substantially all of the assets and
properties of the Partnership;
F. a Bankruptcy of the General Partner, unless all of the
remaining Partners agree in writing to continue the business of the Partnership
and to the appointment, effective as of a date prior to the date of such
Bankruptcy, of a substitute General Partner; or
G. the Exchange by all Partners (other than the General
Partner) of all Class A Common Limited Partnership Units into REIT Shares.
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 Class A Limited Partners (the "Liquidator")) shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take full
account of the Partnership's liabilities and property and the Partnership
property shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom (which may, to the extent
determined by the General Partner, include shares of stock in the General
Partner) shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors
other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General
Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other
Partners; and
(4) The balance, if any, to the General Partner and
Limited Partners in accordance with their positive
Capital Account balances, determined after taking
into account all Capital Account adjustments for the
Partnership taxable year during which the
51
liquidation occurs (other than those made as a
result of the liquidating distribution set forth in
this Section 13.2.A(4)).
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.
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, 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) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
Section 13.3 Compliance with Timing Requirements of
Regulations
In the event the Partnership is "liquidated" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made
pursuant to this Article 13 to the General Partner and Limited Partners who have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in his Capital
Account (after giving effect to all contributions, distributions and allocations
for the taxable years, including the year during which such liquidation occurs),
such Partner shall have no obligation to make any contribution to the capital of
the Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever. In the discretion of the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
(A) distributed to a trust established for the benefit of the
General Partner and Limited Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the General Partner, in the same
proportions and the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General Partner and Limited Partners
pursuant to this Agreement; or
(B) withheld to provide a reasonable reserve for partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided that such withhold
52
amounts shall be distributed to the General Partner and Limited Partners as soon
as practicable.
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, the Partnership shall be deemed to have distributed the Property in
kind to the General Partner and Limited 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 recontributed 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 Limited Partners
Except as otherwise provided in this Agreement, each Limited
Partner shall look solely to the assets of the Partnership for the return of his
Capital Contribution and shall have no right or power to demand or receive
property from the General Partner. No Limited Partner shall have priority over
any other Limited Partner as to the return of his Capital Contributions,
distributions or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs
that would, but for provisions of Section 13.1, result in a dissolution of the
Partnership, the General Partner shall, within 30 days thereafter, provide
written notice thereof to each of the Partners and to all other parties with
whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conduct business (as determined in the discretion of the General
Partner).
Section 13.7 Cancellation of Certificate of Limited
Partnership
Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2 hereof, the Partnership shall be
terminated and the Certificate and all qualifications of the Partnership as a
foreign limited partnership in jurisdictions other than the State of North
Carolina shall be cancelled and such other actions as may be necessary to
terminate the Partnership shall be taken.
Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up
of the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
53
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the
Partnership property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
Section 14.1 Amendments
A. The actions requiring consent or approval of Limited
Partners pursuant to this Agreement, including Section 7.3, or otherwise
pursuant to applicable law, are subject to the procedures in this Article 14.
B. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partner. Following such proposal, the General
Partner shall submit any proposed amendment to the Limited Partners. The General
Partner shall seek the written consent of the Partners on the proposed amendment
or shall call a meeting to vote thereon and to transact any other business that
it may deem appropriate. For purposes of obtaining a written consent, the
General Partner may require a response within a reasonable specified time, but
not less than 15 days, and failure to respond in such time period shall
constitute a consent which is consistent with the General Partner's
recommendation (if so recommended) with respect to the proposal; provided, that,
an action shall become effective at such time as requisite consents are received
even if prior to such specified time.
Section 14.2 Action by the Partners
A. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding 25 percent or more of any class of Limited
Partnership Interests. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven days nor more than 30 days prior to the date of such meeting.
Partners may vote in person or by proxy at such meeting. Whenever the vote or
Consent of Partners is permitted or required under this Agreement, such vote or
Consent may be given at a meeting of Partners or may be given in accordance with
the procedure prescribed in Section 14.1 hereof.
B. Any action required or permitted to be taken at a meeting
of the Partners may be taken without a meeting if a written consent setting
forth the action so taken is signed by the percentage as is expressly required
by this Agreement for the action in question. Such consent may be in one
instrument or in several instruments, and shall have the same force and effect
as a vote of the Percentage Interests of the Partners (expressly required by
this Agreement). Such consent shall be filed with the General Partner. An action
so taken shall be deemed to have been taken at a meeting held on the effective
date so certified.
54
C. Each Limited Partner may authorize any Person or Persons
to act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate.
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 as the Partners 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.
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 an inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.
Section 15.6 Creditors
55
None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon any breach thereof shall constitute waiver
of any such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.9 Applicable Law
This Agreement shall be construed in accordance with and
governed by the laws of the State of North Carolina, without regard to the
principles of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
Section 15.11 Limitation to Preserve REIT Status
To the extent that the amount paid or credited to the General
Partner or its officers, directors, employees or agents pursuant to Section 7.4
or Section 7.7 would constitute gross income to the Initial General Partner for
purposes of Sections 856(c)(2) or 856(c)(3) of the Code (a "GP Payment") then,
notwithstanding any other provision of this Agreement, the amount of such GP
Payments for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a) 4.17%
of the Initial General Partner's total gross income
(but not including the amount of any GP Payments)
for the fiscal year which is described in
subsections (A) through (H) of Section 856(c)(2) of
the Code over (b) the amount of gross income (within
the meaning of Section 856(c)(2) of the Code)
derived by the Initial General Partner from sources
other than those described in subsections (A)
through (H) of Section 856(c)(2) of the Code (but
not including the amount of any GP Payments); or
56
(ii) an amount equal to the excess, if any, of (a) 25% of
the Initial General Partner's total gross income
(but not including the amount of any GP Payments)
for the fiscal year which is described in
subsections (A) through (I) of Section 856(c)(3) of
the Code over (b) the amount of gross income (within
the meaning of Section 856(c)(3) of the Code)
derived by the Initial General Partner from sources
other than those described in subsections (A)
through (I) of Section 856(c)(3) of the Code (but
not including the amount of any GP Payments);
provided, however, that GP Payments in excess of the amounts set forth in
subparagraphs (i) and (ii) above may be made if the General Partner, as a
condition precedent, obtains an opinion of tax counsel that the receipt of such
excess amounts would not adversely affect the Initial General Partner's ability
to qualify as a REIT. To the extent GP Payments may not be made in a year due to
the foregoing limitations, such GP Payments shall carry over and be treated as
arising in the following year.
57
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
TANGER GP TRUST
as General Partner
By
Xxxxxxx X. Xxxxxx, Chairman of the Board
TANGER LP TRUST
as Limited Partner
By
Xxxxxxx X. Xxxxxx, Chairman of the Board
TANGER FAMILY LIMITED PARTNERSHIP
as Limited Partner
By
Xxxxxxx X. Xxxxxx, General Partner
TANGER FACTORY OUTLET CENTERS, INC.
By
Xxxxxxx X. Xxxxxx, Chief Executive Officer
58
A-4
EXHIBIT A
PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS
I. Initial Contributions
Name and Address Cash Agreed Value of Total Partnership
of Partner Contributions Contributed Property* Contributions Units
General Partner
Tanger Factory Outlet
Centers, Inc. $1.00 -- $1.00 1
0000 Xxxx Xxxxxxxxx
Xxxxxxxxxx, XX
00000
Limited Partners
Tanger Family Limited
Partnership $1.00 -- $1.00 1
0000 Xxxx Xxxxxxxxx
Xxxxxxxxxx, XX
00000
EXHIBIT A (CONTINUED)
II. Contributions Made On Effective Date
Name and Address Cash Agreed Value of Total Partnership
of Partner Contributions Contributed Property* Contributions Units
General Partner
Tanger Factory Outlet
Centers, Inc. $92,315,000 $7,008,807 $99,323,807 4,857,796
0000 Xxxx Xxxxxxxxx
Xxxxxxxxxx, XX
00000
Limited Partners
Tanger Family Limited
Partnership -- $62,019,954 $62,019,954 3,033,305
0000 Xxxx Xxxxxxxxx
Xxxxxxxxxx, XX
00000
EXHIBIT A (CONTINUED)
III. Partnership Holdings Immediately Following The Transfer Date
Name and Address Cash Agreed Value of Total Partnership
of Partner Contributions Contributed Property* Contributions Units
General Partner
Tanger GP Trust -- -- -- 150,000
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX
00000
---------------------------
Limited Partners
Class A Common
Tanger Family Limited
Partnership -- $62,019,954 $62,019,954 3,033,305
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX
00000
Class B Common
Tanger LP Trust
0000 Xxxxxxxxx Xxxxxx -- -- -- 7,700,256
Xxxxxxxxxx, XX
00000
Class C Preferred
Tanger LP Trust
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX
00000 -- -- -- 88,219.7
EXHIBIT A-1
PREFERRED CONTRIBUTIONS
Name of Partner Amount of Cash Contribution Preferred Units
Tanger Factory $75,000,000* 300,000
Outlet Centers,
Inc.
-----------------------
*Less expenses of the Preferred Offering
B-1
EXHIBIT B
NOTICE OF EXCHANGE
The undersigned hereby irrevocably (i) exchanges ___________ Limited Partnership
Units in Tanger Properties Limited Partnership in accordance with the terms of
the Limited Partnership Agreement of Tanger Properties Limited Partnership and
the rights of Exchange referred to therein, (ii) surrenders such Limited
Partnership Units and all right, title and interest therein, and (iii) directs
that the REIT Shares deliverable upon Exchange be delivered to the address
specified below, and such REIT Shares be registered or placed in the name(s) and
at the address(es) specified below.
Dated:
Name of Limited Partner:
(Signature of Limited Partner)
(Street Address)
(City) (State) (Zip Code)
Signature Guaranteed by:
Issue REIT Shares to:
Please insert social security or identifying number:
Name:
