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EXHIBIT 10.14
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FORM OF
AGREEMENT OF LIMITED PARTNERSHIP
OF
VORNADO OPERATING L.P.
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Dated as of: -, 1998
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IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE PARTNERSHIP INTERESTS
BEING OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. ACCORDINGLY, NO
PARTNERSHIP INTEREST MAY BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND
UNLESS THE OTHER TRANSFER RESTRICTIONS CONTAINED HEREIN HAVE BEEN SATISFIED.
INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE
ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
ARTICLE I
DEFINED TERMS
Act.............................................................................................................. 1
Additional Limited Partner....................................................................................... 1
Adjusted Capital Account......................................................................................... 1
Adjusted Capital Account Deficit................................................................................. 1
Adjusted Property................................................................................................ 1
Adjustment Date.................................................................................................. 1
Affiliate........................................................................................................ 1
Affiliated Transferee............................................................................................ 2
Agreed Value..................................................................................................... 2
Agreement........................................................................................................ 2
Assignee......................................................................................................... 2
Bankruptcy....................................................................................................... 2
Book-Tax Disparities............................................................................................. 2
Business Day..................................................................................................... 2
Capital Account.................................................................................................. 2
Capital Contribution............................................................................................. 3
Carrying Value................................................................................................... 3
Cash Amount...................................................................................................... 3
Certificate...................................................................................................... 3
Class A Unit..................................................................................................... 3
Code............................................................................................................. 3
Consent.......................................................................................................... 3
Consent of the Outside Limited Partners.......................................................................... 3
Contributed Property............................................................................................. 3
Conversion Factor................................................................................................ 3
Convertible Funding Debt......................................................................................... 4
Corporate Expenses............................................................................................... 4
Debt............................................................................................................. 4
Deemed Partnership Interest Value................................................................................ 4
Deemed Value of the Partnership Interest......................................................................... 5
Depreciation..................................................................................................... 5
Effective Date................................................................................................... 5
ERISA............................................................................................................ 5
Exchange Act..................................................................................................... 5
Funding Debt..................................................................................................... 5
General Partner.................................................................................................. 5
General Partner Certificate...................................................................................... 5
General Partner Entity........................................................................................... 5
General Partnership Interest..................................................................................... 5
Incapacity....................................................................................................... 5
Incapacitated.................................................................................................... 5
Indemnitee....................................................................................................... 6
Intercompany Agreement........................................................................................... 6
Interstate....................................................................................................... 6
IRS.............................................................................................................. 6
Limited Partner.................................................................................................. 6
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Limited Partnership Interest..................................................................................... 6
Liquidating Event................................................................................................ 6
Liquidator....................................................................................................... 6
Majority in Interest............................................................................................. 6
Net Income....................................................................................................... 6
Net Loss......................................................................................................... 7
New Securities................................................................................................... 7
Nonrecourse Built-in Gain........................................................................................ 7
Nonrecourse Deductions........................................................................................... 7
Nonrecourse Liability............................................................................................ 7
Notice of Redemption............................................................................................. 7
Partner.......................................................................................................... 7
Partner Minimum Gain............................................................................................. 7
Partner Nonrecourse Debt......................................................................................... 7
Partner Nonrecourse Deductions................................................................................... 7
Partnership...................................................................................................... 7
Partnership Interest............................................................................................. 7
Partnership Minimum Gain......................................................................................... 7
Partnership Record Date.......................................................................................... 8
Partnership Unit................................................................................................. 8
Partnership Year................................................................................................. 8
Percentage Interest.............................................................................................. 8
Person........................................................................................................... 8
Predecessor Entity............................................................................................... 8
Publicly Traded.................................................................................................. 8
Recapture Income................................................................................................. 8
Redeeming Partner................................................................................................ 8
Redemption Amount................................................................................................ 8
Redemption Right................................................................................................. 8
Regulations...................................................................................................... 9
REIT............................................................................................................. 9
Residual Gain or Residual Loss................................................................................... 9
Safe Harbors..................................................................................................... 9
Securities Act................................................................................................... 9
704(c) Value..................................................................................................... 9
Share............................................................................................................ 9
Shares Amount.................................................................................................... 9
Specified Redemption Date........................................................................................ 9
Stock Option Plan................................................................................................ 9
Subsidiary....................................................................................................... 9
Substituted Limited Partner...................................................................................... 9
Successor Entity................................................................................................. 10
Terminating Capital Transaction.................................................................................. 10
Termination Transaction.......................................................................................... 10
Unit Equivalent.................................................................................................. 10
Unrealized Gain.................................................................................................. 10
Unrealized Loss.................................................................................................. 10
Valuation Date................................................................................................... 10
Value............................................................................................................ 10
Vornado Sub...................................................................................................... 11
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ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization................................................................................... 11
Section 2.2 Name........................................................................................... 11
Section 2.3 Registered Office and Agent; Principal Office.................................................. 11
Section 2.4 Term........................................................................................... 11
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business........................................................................... 11
Section 3.2 Powers......................................................................................... 12
Section 3.3 Partnership Only for Purposes Specified........................................................ 12
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1 Capital Contributions of the Partners.......................................................... 12
Section 4.2 Issuances of Partnership Interests............................................................. 13
Section 4.3 No Preemptive Rights........................................................................... 14
Section 4.4 Other Contribution Provisions.................................................................. 14
Section 4.5 No Interest on Capital......................................................................... 14
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions.............................................. 14
Section 5.2 Amounts Withheld............................................................................... 15
Section 5.3 Distributions Upon Liquidation................................................................. 15
Section 5.4 Revisions to Reflect Issuance of Additional Partnership Interests.............................. 15
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes....................................................... 15
Section 6.2 Revisions to Allocations to Reflect Issuance of Additional Partnership Interests............... 16
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management..................................................................................... 16
Section 7.2 Certificate of Limited Partnership............................................................. 19
Section 7.3 Title to Partnership Assets.................................................................... 20
Section 7.4 Reimbursement of the General Partner........................................................... 20
Section 7.5 Outside Activities of the General Partner...................................................... 21
Section 7.6 Transactions with Affiliates................................................................... 23
Section 7.7 Indemnification................................................................................ 23
Section 7.8 Liability of the General Partner............................................................... 25
Section 7.9 Other Matters Concerning the General Partner................................................... 25
Section 7.10 Reliance by Third Parties...................................................................... 26
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Section 7.11 Restrictions on General Partner's Authority.................................................... 26
Section 7.12 Loans by Third Parties......................................................................... 26
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability........................................................................ 26
Section 8.2 Management of Business......................................................................... 27
Section 8.3 Outside Activities of Limited Partners......................................................... 27
Section 8.4 Return of Capital.............................................................................. 27
Section 8.5 Rights of Limited Partners Relating to the Partnership......................................... 27
Section 8.6 Redemption Right............................................................................... 28
Section 8.7 Right of Offset................................................................................ 30
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting......................................................................... 31
Section 9.2 Fiscal Year.................................................................................... 31
Section 9.3 Reports........................................................................................ 31
ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns..................................................................... 32
Section 10.2 Tax Elections.................................................................................. 32
Section 10.3 Tax Matters Partner............................................................................ 32
Section 10.4 Organizational Expenses........................................................................ 33
Section 10.5 Withholding.................................................................................... 33
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer....................................................................................... 34
Section 11.2 Transfers of Partnership Interests of General Partner.......................................... 34
Section 11.3 Limited Partners' Rights to Transfer........................................................... 35
Section 11.4 Substituted Limited Partners................................................................... 37
Section 11.5 Assignees...................................................................................... 37
Section 11.6 General Provisions............................................................................. 37
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner......................................................... 39
Section 12.2 Admission of Additional Limited Partners....................................................... 39
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership.................................. 39
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution.................................................................................... 40
Section 13.2 Winding Up..................................................................................... 40
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Section 13.3 Compliance with Timing Requirements of Regulations............................................. 41
Section 13.4 Deemed Distribution and Recontribution......................................................... 41
Section 13.5 Rights of Limited Partners..................................................................... 42
Section 13.6 Notice of Dissolution.......................................................................... 42
Section 13.7 Cancellation of Certificate of Limited Partnership............................................. 42
Section 13.8 Reasonable Time for Winding Up................................................................. 42
Section 13.9 Waiver of Partition............................................................................ 42
Section 13.10 Liability of Liquidator........................................................................ 42
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments..................................................................................... 43
Section 14.2 Meetings of the Partners....................................................................... 44
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notice........................................................................... 44
Section 15.2 Titles and Captions............................................................................ 44
Section 15.3 Pronouns and Plurals........................................................................... 45
Section 15.4 Further Action................................................................................. 45
Section 15.5 Binding Effect................................................................................. 45
Section 15.6 Creditors; Other Third Parties................................................................. 45
Section 15.7 Waiver......................................................................................... 45
Section 15.8 Counterparts................................................................................... 45
Section 15.9 Applicable Law................................................................................. 45
Section 15.10 Invalidity of Provisions....................................................................... 45
Section 15.11 Power of Attorney.............................................................................. 45
Section 15.12 Entire Agreement............................................................................... 46
Section 15.13 No Rights as Stockholders...................................................................... 47
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EXHIBIT A
PARTNERS AND
PARTNERSHIP INTERESTS
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF XXXXXXXXXX
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FORM OF
AGREEMENT OF LIMITED PARTNERSHIP
OF
VORNADO OPERATING L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP of Vornado Operating L.P., dated
as of -, 1998, is entered into by and among Vornado Operating Company, a
Delaware corporation, as the General Partner of and a Limited Partner in the
Partnership, and Interstate Properties, a New Jersey general partnership, as a
Limited Partner in the Partnership, together with any other Persons who become
Partners in the Partnership as provided herein.
The parties hereto hereby agree to form the Partnership as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, as follows:
ARTICLE I
DEFINED TERMS
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 Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time, and any successor to such statute.
"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" means the Capital Account
maintained for each Partner as of the end of each Partnership Year (i) increased
by any amounts which such Partner is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5) and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Exhibit B hereto.
"Adjustment Date" has the meaning set forth in Section 4.2.B
hereof.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
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"Affiliated Transferee" means, with respect to any Limited
Partner, a member of such Limited Partner's Immediate Family, a trust formed
solely for the benefit of such Limited Partner and/or members of such Limited
Partner's Immediate Family, or any partnership, limited liability company, joint
venture, corporation or other business entity all of the interests in which are,
and remain, directly or indirectly owned and controlled solely by such Limited
Partner and/or members of such Limited Partner's Immediate Family, and if the
Limited Partner is an entity and owned Partnership Units on the Effective Date,
Persons who, as of the Effective Date, directly or indirectly owned interests in
or were beneficiaries of such Limited Partner and continue to own such interests
(or be beneficiaries) at the time of the proposed transfer or any Affiliated
Transferee of such Persons.
"Agreed Value" means (i) in the case of any Contributed
Property, the 704(c) Value of such property as of the time of its contribution
to the Partnership, reduced by any liabilities either assumed by the Partnership
upon such contribution or to which such property is subject when contributed;
and (ii) in the case of any property distributed to a Partner by the
Partnership, the Partnership's Carrying Value of such property at the time such
property is distributed, reduced by any indebtedness either assumed by such
Partner upon such distribution or to which such property is subject at the time
of distribution as determined under Section 752 of the Code and the regulations
thereunder.
"Agreement" means this Agreement of Limited Partnership, as it
may be amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership
Units 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 hereof.
"Bankruptcy" with respect to any Person shall be deemed to
have occurred when (a) the Person 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 Person 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 Person, (c) the Person executes and delivers a general
assignment for the benefit of the Person's creditors, (d) the Person files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Person in any proceeding of the
nature described in clause (b) above, (e) the Person seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Person or for all or any substantial part of the Person'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 one hundred twenty (120) days after the commencement
thereof, (g) the appointment without the Person's consent or acquiescence of a
trustee, receiver or liquidator has not been vacated or stayed within ninety
(90) days of such appointment or (h) an appointment referred to in clause (g) is
not vacated within ninety (90) days after the expiration of any such stay.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B hereto and the hypothetical balance of such Partner's Capital
Account computed as if it had been maintained, with respect to each such
Contributed Property or Adjusted Property, strictly in accordance with federal
income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required by law to close.
"Capital Account" means the Capital Account maintained for a
Partner pursuant to Exhibit B hereto.
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"Capital Contribution" means, with respect to any Partner, any
cash, cash equivalents or the Agreed Value of Contributed Property which such
Partner contributes or is deemed to contribute to the Partnership pursuant to
Section 4.1 or 4.2 hereof.
"Carrying Value" means (i) with respect to a Contributed
Property or Adjusted Property, the 704(c) Value of such property reduced (but
not below zero) by all Depreciation with respect to such Contributed Property or
Adjusted Property, as the case may be, charged to the Partners' Capital Accounts
and (ii) with respect to any other Partnership property, the adjusted basis of
such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
time in accordance with Exhibit B hereto, and to reflect changes, additions or
other adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on
the Valuation Date of the Shares Amount, subject to Section 8.6.A(v).
"Certificate" means the Certificate of Limited Partnership of
the Partnership filed in the office of the Delaware Secretary of State on -,
1998, as amended from time to time in accordance with the terms hereof and the
Act.
"Class A Unit" means any Partnership Unit that is not
specifically designated by the General Partner as being of another specified
class of Partnership Units.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Consent" means the consent or approval of a proposed action
by a Partner given in accordance with Section 14.2 hereof.
"Consent of the Outside Limited Partners" means the Consent of
Limited Partners (excluding for this purpose the General Partner, any Person of
which the General Partner owns or controls more than fifty percent (50%) of the
voting interests and any Person owning or controlling, directly or indirectly,
more than fifty percent (50%) of the outstanding voting interests of the General
Partner) holding Percentage Interests regardless of class that are greater than
fifty percent (50%) of the aggregate Percentage Interest of all Limited Partners
of all classes taken together who are not excluded for the purposes hereof.
"Contributed Property" means each property or other asset
contributed to the Partnership, in such form as may be permitted by the Act, but
excluding cash contributed or deemed contributed to the Partnership. Once the
Carrying Value of a Contributed Property is adjusted pursuant to Exhibit B
hereto, such property shall no longer constitute a Contributed Property for
purposes of Exhibit B hereto, but shall be deemed an Adjusted Property for such
purposes.
"Conversion Factor" means 1.0; provided that in the event that
the General Partner Entity (i) declares (and the applicable record date has
passed or will have passed before a Redeeming Partner would receive cash or
Shares in respect of the Partnership Units being redeemed) or pays a dividend on
its outstanding Shares in Shares or makes a distribution to all holders of its
outstanding Shares in Shares, (ii) subdivides its outstanding Shares or (iii)
combines its outstanding Shares into a smaller number of Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of Shares issued and outstanding on the
record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time) and the denominator of which shall be
the actual number of Shares (determined without the above assumption) issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination; and provided further that in the event that an entity shall cease
to be the General Partner Entity (the "Predecessor Entity") and another entity
shall become the General Partner Entity (the
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"Successor Entity"), the Conversion Factor shall be adjusted by multiplying the
Conversion Factor by a fraction, the numerator of which is the Value of one
Share of the Predecessor Entity, determined as of the time immediately prior to
when the Successor Entity becomes the General Partner Entity, and the
denominator of which is the Value of one Share of the Successor Entity,
determined as of that same date. (For purposes of the second proviso in the
preceding sentence, in the event that any stockholders of the Predecessor Entity
will receive consideration in connection with the transaction in which the
Successor Entity becomes the General Partner Entity, the numerator in the
fraction described above for determining the adjustment to the Conversion Factor
(that is, the Value of one Share of the Predecessor Entity) shall be the sum of
the greatest amount of cash and the fair market value of any securities and
other consideration that the holder of one Share in the Predecessor Entity could
have received in such transaction (determined without regard to any provisions
governing fractional shares).) Any adjustment to the Conversion Factor shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for the event giving rise thereto; it being intended
that (x) adjustments to the Conversion Factor are to be made in order to avoid
unintended dilution or anti-dilution as a result of transactions in which Shares
are issued, redeemed or exchanged without a corresponding issuance, redemption
or exchange of Partnership Units and (y) if a Specified Redemption Date shall
fall between the record date and the effective date of any event of the type
described above, that the Conversion Factor applicable to such redemption shall
be adjusted to take into account such event.
"Convertible Funding Debt" has the meaning set forth in
Section 7.5.F hereof.
"Corporate Expenses" shall mean (i) costs and expenses
relating to the continuity of existence of the General Partner and any Person in
which the General Partner owns an equity interest, to the extent not prohibited
by Section 7.5.A (and excluding expenses relating to any Person in which the
General Partner acquired an interest with the Consent of the Outside Limited
Partners, unless the Consent of the Outside Limited Partners has been obtained
to include such expenses within the definition of "Corporate Expenses"), other
than the Partnership (which Persons shall, for purposes of this definition, be
included within the definition of "General Partner"), and any and all costs,
expenses or fees payable to any trustee or director of the General Partner or
such Persons, (ii) costs and expenses relating to any offer or registration of
securities by the General Partner (the proceeds of which will be contributed or
advanced to the Partnership) and all statements, reports, fees and expenses
incidental thereto, including underwriting discounts and selling commissions
applicable to any such offer of securities, (iii) costs and expenses associated
with the preparation and filing of any periodic reports by the General Partner
under federal, state or local laws or regulations, including filings with the
Securities and Exchange Commission, (iv) costs and expenses associated with
compliance by the General Partner with laws, rules and regulations promulgated
by any regulatory body, including the Securities and Exchange Commission, and
(v) all other operating or administrative costs of the General Partner incurred
in the ordinary course of its business; provided, however, that any of the
foregoing expenses that are determined by the General Partner to be expenses
relating to the ownership and operation of, or for the benefit of, the
Partnership shall be treated, subject to Section 7.4.E hereof, as reimbursable
expenses under Section 7.4.B hereof rather than as "Corporate Expenses".
"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 of 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)
obligations of such Person incurred in connection with entering into a lease
which, in accordance with generally accepted accounting principles, should be
capitalized.
"Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interest of such class multiplied by the applicable Partner's
Percentage Interest of such class.
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"Deemed Value of the Partnership Interest" means, as of any
date with respect to any class of Partnership Interests, (a) if the shares of
common stock (or other comparable equity interest) of the General Partner are
Publicly Traded, (i) the total number of shares of common stock (or other
comparable equity interest) of the General Partner corresponding to such class
of Partnership Interest (as provided for in Section 4.2.B hereof) issued and
outstanding as of the close of business on such date (excluding any treasury
shares) multiplied by the Value of a share of such common stock (or other
comparable equity interest) on such date divided by (ii) the Percentage Interest
of the General Partner in such class of Partnership Interests on such date, and
(b) otherwise, the aggregate Value of such class of Partnership Interests
determined as set forth in the fourth and fifth sentences of the definition of
Value.
"Depreciation" means, for each fiscal year, an amount equal to
the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Carrying Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such year or other period, Depreciation shall
be an amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Effective Date" means the date of the this Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"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.
"General Partner" means Vornado Operating Company, a Delaware
corporation, or its successors as general partner of the Partnership.
"General Partner Certificate" means the Restated Certificate
of Incorporation or other similar organizational document governing the General
Partner, as amended, supplemented or restated from time to time.
"General Partner Entity" means the General Partner; provided,
however, that if (i) the shares of common stock (or other comparable equity
interests) of the General Partner are at any time not Publicly Traded and (ii)
the shares of common stock (or other comparable equity interests) of an entity
that owns, directly or indirectly, fifty percent (50%) or more of the shares of
common stock (or other comparable equity interests) of the General Partner are
Publicly Traded, the term "General Partner Entity" shall refer to such entity
whose shares of common stock (or other comparable equity securities) are
Publicly Traded. If both requirements set forth in clauses (i) and (ii) above
are not satisfied, then the term "General Partner Entity" shall mean the General
Partner.
"General Partnership Interest" means a Partnership Interest
held by the General Partner that is a general partnership interest. A General
Partnership Interest may be expressed as a number of Partnership Units.
"Immediate Family" means, with respect to any natural Person,
such natural Person's spouse, parents, descendants, nephews, nieces, brothers
and sisters.
"Incapacity" or "Incapacitated" means means, (i) as to any
individual Partner, death, total physical disability or entry of an order by a
court of competent jurisdiction adjudicating such Partner incompetent to manage
his or her Person or estate, (ii) as to any corporation which is a Partner, the
filing of a 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
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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.
"Indemnitee" means (i) any Person made a party to a proceeding
or threatened with being made a party to a proceeding by reason of its status as
(A) the General Partner, (B) a Limited Partner or (C) an officer of the
Partnership (or any Subsidiary or other entity in which the Partnership owns an
equity interest) or a trustee/director, officer or stockholder of the General
Partner or the General Partner Entity (or any Subsidiary or other entity in
which the General Partner owns an equity interest (so long as the General
Partner's ownership of an interest in such entity is not prohibited by Section
7.5.A) or for which the General Partner, acting on behalf of the Partnership,
requests the trustee/director, officer or stockholder to serve as a director,
officer, trustee or agent, including serving as a trustee of an employee benefit
plan) and (ii) such other Persons (including Affiliates of the General Partner,
a Limited Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
"Intercompany Agreement" means the Intercompany Agreement to
be entered into between the General Partner and Vornado Sub, as it may be
amended, supplemented or restated from time to time.
"Interstate" means Interstate Properties, a New Jersey general
partnership.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"Limited Partner" means any Person named as a Limited Partner
in Exhibit A attached hereto, as such Exhibit may be amended and restated from
time to time, or 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.
"Liquidating Event" has the meaning set forth in Section 13.1
hereof.
"Liquidator" has the meaning set forth in Section 13.2.A
hereof.
"Majority in Interest" means Partners (excluding the General
Partner) who hold more than fifty percent (50%) of the outstanding Percentage
Interests not held by the General Partner.
"Net Income" means, for any taxable period, the excess, if
any, of the Partnership's items of income and gain for such taxable period over
the Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Exhibit B hereto. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Exhibit C hereto, Net Income or the resulting Net Loss,
whichever the case may be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any,
of the Partnership's items of loss and deduction for such taxable period over
the Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. If an item of income, gain,
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loss or deduction that has been included in the initial computation of Net Loss
is subjected to the special allocation rules in Exhibit C hereto, Net Loss or
the resulting Net Income, whichever the case may be, shall be recomputed without
regard to such item.
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase shares of common stock (or other comparable equity interest) of the
General Partner, excluding grants under any Stock Option Plan, or (ii) any Debt
issued by the General Partner that provides any of the rights described in
clause (i).
"Nonrecourse Built-in Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a mortgage or
negative pledge securing a Nonrecourse Liability, the amount of any taxable gain
that would be allocated to the Partners pursuant to Section 2.B of Exhibit C
hereto if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption
substantially in the form of Exhibit D attached hereto.
"Partner" means the 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 continued upon the terms and conditions set forth in this Agreement, and
any successor thereto.
"Partnership Interest" means a Limited Partnership Interest or
the General Partnership Interest, as the context requires, 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.
"Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by
the General Partner either (i) for the making of any distribution pursuant to
Section 5.1 hereof, which record date shall be the same as the record date
established by the General Partner Entity for a distribution to its stockholders
of some or all of its portion of such
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distribution received by the General Partner if the shares of common stock (or
comparable equity interest) of the General Partner Entity are Publicly Traded,
or (ii) if applicable, for determining the Partners entitled to vote on or
consent to any proposed action for which the consent or approval of the Partners
is sought pursuant to Section 14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2
hereof, and includes Class A Units and any other classes or series of
Partnership Units established after the date hereof. The number of Partnership
Units outstanding and the Percentage Interests in the Partnership represented by
such Partnership Units are set forth in Exhibit A hereto, as such Exhibit may be
amended and restated from time to time. The ownership of Partnership Units may
be evidenced by a certificate in a form approved by the General Partner.
"Partnership Year" means the fiscal year of the Partnership.
"Percentage Interest" means, as to a Partner holding a
Partnership Interest of any class issued hereunder, its interest in such class,
determined by dividing the Partnership Units of such class owned by such Partner
by the total number of Partnership Units of such class then outstanding as
specified in Exhibit A attached hereto, as such exhibit may be amended and
restated from time to time, multiplied by the aggregate Percentage Interest
allocable to such class of Partnership Interests. For such time or times as the
Partnership shall at any time have outstanding more than one class of
Partnership Interests, the Percentage Interest attributable to each class of
Partnership Interests shall be determined as set forth in Section 4.2.B hereof.
"Person" means a natural person, partnership (whether general
or limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.
"Predecessor Entity" has the meaning set forth in the
definition of "Conversion Factor" herein.
"Publicly Traded" means listed or admitted to trading on the
New York Stock Exchange, the American Stock Exchange or another national
securities exchange or designated for quotation on the Nasdaq National Market,
or any successor to any of the foregoing.
"Recapture Income" means any gain recognized by the
Partnership (computed without regard to any adjustment required by Section 743
of the Code) upon the disposition of any property or asset of the Partnership,
which gain is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6.A
hereof.
"Redemption Amount" means either the Cash Amount or the Shares
Amount, as determined by the General Partner in its sole and absolute
discretion; provided that in the event that the Shares are not Publicly Traded
at the time a Redeeming Partner exercises its Redemption Right, the Redemption
Amount shall be paid only in the form of the Cash Amount unless the Redeeming
Partner, in its sole and absolute discretion, consents to payment of the
Redemption Amount in the form of the Shares Amount; provided further, the
foregoing is subject to Section 8.6.A(iv). A Redeeming Partner shall have no
right, without the General Partner's consent, in its sole and absolute
discretion, to receive the Redemption Amount in the form of the Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A
hereof.
"Regulations" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
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"REIT" means a real estate investment trust under Section 856
of the Code.
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C hereto to
eliminate Book-Tax Disparities.
"Safe Harbors" has the meaning set forth in Section 11.6.F
hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" of any Contributed Property means the fair
market value of such property at the time of contribution as determined by the
General Partner using such reasonable method of valuation as it may adopt.
Subject to Exhibit B hereto, the General Partner shall, in its sole and absolute
discretion, use such method as it deems reasonable and appropriate to allocate
the aggregate of the 704(c) Values of Contributed Properties in a single or
integrated transaction among each separate property on a basis proportional to
their fair market values.
"Share" means a share of capital stock (or other comparable
equity interest) of the General Partner Entity. Shares may be issued in one or
more classes or series in accordance with the terms of the General Partner
Certificate (or, if the General Partner is not the General Partner Entity, the
organizational documents of the General Partner Entity). In the event that there
is more than one class or series of Shares, the term "Shares" shall, as the
context requires, be deemed to refer to the class or series of Shares that
correspond to the class or series of Partnership Interests for which the
reference to Shares is made. When used with reference to Class A Units, the term
"Shares" refers to shares of common stock (or other comparable equity interest)
of the General Partner Entity.
"Shares Amount" means a number of Shares equal to the product
of the number of Partnership Units offered for redemption by a Redeeming Partner
times the Conversion Factor; provided, that in the event the General Partner
Entity issues to all holders of Shares rights, options, warrants or convertible
or exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"), then
the Shares Amount shall also include such rights that a holder of that number of
Shares would be entitled to receive.
"Specified Redemption Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Redemption; provided, that if the
Shares are not Publicly Traded, the Specified Redemption Date means the
thirtieth Business Day after receipt by the General Partner of a Notice of
Redemption.
"Stock Option Plan" means any share or stock incentive plan or
similar compensation arrangement (including, without limitation, any arrangement
whereby the Partnership or the General Partner delivers Units or shares of
capital stock of the General Partner into a "rabbi trust") of the General
Partner, the Partnership or any Affiliate of the Partnership or the General
Partner, as the context may require.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership or joint venture, 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 hereof.
"Successor Entity" has the meaning set forth in the definition
of "Conversion Factor" herein.
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"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership for
cash 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 for cash.
"Termination Transaction" has the meaning set forth in Section
11.2.B hereof.
"Unit Equivalent" has the meaning set forth in Section
8.6.A(v) hereof.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
fair market value of such property (as determined under Exhibit B hereto) as of
such date, over (ii) the Carrying Value of such property (prior to any
adjustment to be made pursuant to Exhibit B hereto) as of such date.
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B hereto) as of such date, over (ii) the fair market value of such
property (as determined under Exhibit B hereto) as of such date.
"Valuation Date" means the date of receipt by the General
Partner of a Notice of Redemption or, if such date is not a Business Day, the
first Business Day thereafter.
"Value" means, with respect to any outstanding Shares of the
General Partner Entity that are Publicly Traded, the average of the daily market
price for the ten (10) consecutive trading days immediately preceding the date
with respect to which value must be determined or, if such day is not a Business
Day, the immediately preceding Business Day. The market price for each such
trading day shall be 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. In the event that the outstanding Shares of the General Partner Entity
are Publicly Traded and the Shares Amount includes rights that a holder of
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. In the event that the Shares of the General Partner Entity are not
Publicly Traded, the Value of the Shares Amount per Partnership Unit offered for
redemption (which will be the Cash Amount per Partnership Unit offered for
redemption payable pursuant to Section 8.6.A hereof) means the amount that a
holder of one Partnership Unit would receive if each of the assets of the
Partnership were to be sold for its fair market value on the Specified
Redemption Date, the Partnership were to pay all of its outstanding liabilities,
and the remaining proceeds were to be distributed to the Partners in accordance
with the terms of this Agreement. Such Value shall be determined by the General
Partner, acting in good faith and based upon a commercially reasonable estimate
of the amount that would be realized by the Partnership if each asset of the
Partnership (and each asset of each partnership, limited liability company,
joint venture or other entity in which the Partnership owns a direct or indirect
interest) were sold to an unrelated purchaser in an arms' length transaction
where neither the purchaser nor the seller were under economic compulsion to
enter into the transaction (without regard to any discount in value as a result
of the Partnership's minority interest in any property or any illiquidity of the
Partnership's interest in any property). In connection with determining the
Deemed Value of the Partnership Interest for purposes of determining the number
of additional Partnership Units issuable upon a Capital Contribution funded by
an underwritten public offering of shares of common stock (or other comparable
equity interest) of the General Partner, the Value of such shares shall be the
public offering price per share of such common stock (or other comparable equity
interest) sold.
"Vornado" means Vornado Realty Trust, a Maryland real estate
investment trust.
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"Vornado Sub" means Vornado Realty L.P., a Delaware limited
partnership.
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant to
the provisions of the Act and upon the terms and conditions set forth herein.
The Partners hereby form the Partnership pursuant to and in accordance with the
Act. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
Section 2.2 Name
The name of the Partnership is Vornado Operating L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time 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 Delaware shall be located at Corporation Trust Center, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxxxxx 00000, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be Corporation Trust Company. The principal office of
the Partnership shall be Vornado Operating L.P., Park 00 Xxxx, Xxxxx XX, Xxxxxx
Xxxxx, Xxx Xxxxxx 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
Delaware as the General Partner deems advisable.
Section 2.4 Term
The term of the Partnership shall continue until December 31,
2095 (as such date may be extended by the General Partner in its sole
discretion), unless it is dissolved sooner pursuant to the provisions of Article
XIII hereof or as otherwise provided by law.
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (a) to own assets that Vornado could not itself own and conduct
activities that Vornado could not itself conduct due to the status of Vornado as
a real estate investment trust for federal income tax purposes; (b) to perform
the Intercompany Agreement, pursuant to which, among other things, the parties
will agree to provide each other with rights of first opportunity with respect
to certain transactions and investments; (c) to conduct any business that may be
lawfully conducted by a limited
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partnership organized pursuant to the Act; (d) to enter into any partnership,
joint venture, limited liability company or other similar arrangement to engage
in any of the foregoing or the ownership of interests in any entity engaged,
directly or indirectly, in any of the foregoing; and (e) to do anything
necessary or incidental to the foregoing. For so long as the Intercompany
Agreement shall remain in effect, the Partnership will be prohibited from
pursuing any REIT Opportunity (as defined in the Intercompany Agreement) except
to the extent permitted by the Intercompany Agreement. In connection with the
foregoing, the Limited Partners acknowledge that the performance of the
Intercompany Agreement by the General Partner inures to the benefit of all the
Partners and not solely the General Partner or its Affiliates. Notwithstanding
the foregoing, the Limited Partners acknowledge and agree that the General
Partner Entity (or the General Partner, as applicable) may terminate the
Intercompany Agreement at any time to the full extent permitted under the
Intercompany Agreement.
Section 3.2 Powers
The Partnership shall have full power and authority 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,
including, without limitation, directly or through its ownership interest in
other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided, however, 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 General
Partner Entity (or the General Partner, as applicable) to perform the
Intercompany Agreement or (ii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner Entity
(or the General Partner, if different) or its securities, unless such action (or
inaction) shall have been specifically consented to by the General Partner in
writing.
Section 3.3 Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes
specified in Section 3.1 above, and this Agreement shall not be deemed to create
a partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1 above.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1 Capital Contributions of the Partners
A. Capital Contributions to the Partnership on the Effective
Date. On the Effective Date and concurrently with the execution of this
Agreement, the General Partner and Interstate are making Capital Contributions
to the Partnership. Thereafter, the General Partner will complete Exhibit A
hereto to reflect the Capital Contributions made by each Partner, the number of
Partnership Units (by class) held by each Partner and the Percentage Interest in
the Partnership represented by such Partnership Units. The Capital Accounts of
the Partners and the Carrying Values of the Partnership's assets shall be
determined as of the Effective Date pursuant to Exhibit B hereto to reflect the
Capital Contributions made on the Effective Date.
B. General Partnership Interest. A number of Partnership Units
held by the General Partner equal to one percent (1%) of all outstanding
Partnership Units shall be deemed to be the General Partnership Interest. All
other Partnership Units held by the General Partner shall be Limited Partnership
Interests and shall be held by the General Partner in its capacity as a Limited
Partner in the Partnership.
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C. Capital Contributions By Merger. To the extent the
Partnership acquires 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 hereto.
D. No Obligation to Make Additional Capital Contributions.
Except as provided in Sections 7.5 and 10.5 hereof, the Partners shall have no
obligation to make any additional Capital Contributions or provide any
additional funding to the Partnership (whether in the form of loans, repayments
of loans or otherwise). No Partner shall have any obligation to restore any
deficit that may exist in its Capital Account, either upon a liquidation of the
Partnership or otherwise.
Section 4.2 Issuances of Partnership Interests
A. General. The General Partner is hereby authorized to cause
the Partnership from time to time to issue to Partners (including the General
Partner and its Affiliates) or other Persons (including, without limitation, in
connection with the contribution of property to the Partnership) Partnership
Units or other Partnership Interests in one or more classes, or in one or more
series of any of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to Limited Partnership Interests, all as shall
be determined, subject to applicable Delaware law, by the General Partner in its
sole and absolute discretion, including, without limitation, (i) the allocations
of items of Partnership income, gain, loss, deduction and credit to each such
class or series of Partnership Interests, (ii) the right of each such class or
series of Partnership Interests to share in Partnership distributions and (iii)
the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; provided that, no such
Partnership Units or other Partnership Interests shall be issued to the General
Partner unless either (a) the Partnership Interests are issued in connection
with the grant, award or issuance of Shares or other equity interests in the
General Partner having designations, preferences and other rights such that the
economic interests attributable to such Shares or other equity interests are
substantially similar to the designations, preferences and other rights (except
voting rights) of the additional Partnership Interests issued to the General
Partner in accordance with this Section 4.2.A, or (b) the Partnership Interests
are issued to all Partners holding Partnership Interests in the same class in
proportion to their respective Percentage Interests in such class or (c) the
Partnership Interests are issued in connection with a Termination Transaction or
a transaction in which another Person is merged, combined or consolidated with
or into the General Partner and in exchange for the transfer or contribution of
all or substantially all of the assets of such other person by the General
Partner to the Partnership. In the event that the Partnership issues Partnership
Interests pursuant to this Section 4.2.A, the General Partner shall make such
revisions to this Agreement (including but not limited to the revisions
described in Section 5.4, Section 6.2 and Section 8.6 hereof) as it deems
necessary to reflect the issuance of such additional Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for Partnership Units, the Percentage Interest related
thereto shall be equal to a fraction, the numerator of which is equal to the
amount of cash, if any, plus the Agreed Value of Contributed Property, if any,
contributed with respect to such additional Partnership Units and the
denominator of which is equal to the sum of (i) the Deemed Value of the
Partnership Interests for all outstanding classes (computed as of the Business
Day immediately preceding the date on which the additional Capital Contributions
are made (such contribution date being referred to as an "Adjustment Date"))
plus (ii) the aggregate amount of additional Capital Contributions contributed
to the Partnership on such Adjustment Date in respect of such additional
Partnership Units. The Percentage Interest of each other Partner holding
Partnership Interests not making a full pro rata Capital Contribution shall be
adjusted to a fraction the numerator of which is equal to the sum of (i) the
Deemed Partnership Interest Value of such Limited Partner (computed as of the
Business Day immediately preceding the Adjustment Date) plus (ii) the amount of
additional Capital Contributions (such amount being equal to the amount of cash,
if any, plus the Agreed Value of Contributed Property, if any, so contributed),
if any, made by such Partner to the Partnership in respect of such Partnership
Interest as of such Adjustment Date and the denominator of which is equal to the
sum of
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(i) the Deemed Value of the Partnership Interests of all outstanding classes
(computed as of the Business Day immediately preceding such Adjustment Date)
plus (ii) the aggregate amount of the additional Capital Contributions
contributed to the Partnership on such Adjustment Date in respect of such
additional Partnership Interests. For purposes of calculating a Partner's
Percentage Interest pursuant to this Section 4.2.B, cash Capital Contributions
by the General Partner will be deemed to equal the cash contributed by the
General Partner plus (a) in the case of cash contributions funded by an offering
of any equity interests in or other securities of the General Partner, the
offering costs attributable to the cash contributed to the Partnership, and (b)
in the case of Partnership Units issued pursuant to Section 7.5.E hereof, an
amount equal to the difference between the Value of the Shares sold pursuant to
any Stock Option Plan and the net proceeds of such sale.
C. Classes of Partnership Units. From and after the Effective
Date, subject to Section 4.2.A above, the Partnership shall have one class of
Common Partnership Units entitled "Class A Units" which shall be issued to the
General Partner in respect of its General Partnership Interest and in respect of
its Limited Partnership Interest and to Interstate in respect of its Limited
Partnership Interest. The General Partner may, in its sole and absolute
discretion, issue to newly admitted Partners Class A Units or Partnership Units
of any other class established by the Partnership in accordance with Section
4.2.A in exchange for the contribution by such Partners of cash, partnership
interests, stock, notes or any other assets or consideration; provided that any
Partnership Unit that is not specifically designated by the General Partner as
being of a particular class shall be deemed to be a Class A Unit unless the
context clearly requires otherwise.
Section 4.3 No Preemptive Rights
Except to the extent expressly granted by the General Partner
(on behalf of the Partnership) pursuant to another agreement, no Person shall
have any preemptive, preferential or other similar right with respect to (i)
additional Capital Contributions or loans to the Partnership or (ii) issuance or
sale of any Partnership Units or other Partnership Interests.
Section 4.4 Other Contribution Provisions
In the event that any Partner is admitted to the Partnership
and is given a Capital Account in exchange for services rendered to the
Partnership, such transaction shall be treated by the Partnership and the
affected Partner as if the Partnership had compensated such Partner in cash for
the fair market value of such services, and the Partner had contributed such
cash to the capital of the Partnership.
Section 4.5 No Interest on Capital
No Partner shall be entitled to interest on its Capital
Contributions or its Capital Account.
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
A. General. Subject to Section 5.1.C, the General Partner
shall have the exclusive right and authority to declare and cause the
Partnership to make distributions as and when the General Partner deems
appropriate or desirable in its sole discretion. Notwithstanding anything to the
contrary contained herein, in no event may a Partner receive a distribution with
respect to a Partnership Unit for a quarter or shorter period if such Partner is
entitled to receive a distribution for such quarter or shorter period with
respect to a Share for which such Partnership Unit has been redeemed or
exchanged. Unless otherwise expressly provided for herein or in an agreement at
the time a new class of
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Partnership Interests is created in accordance with Article IV hereof, no
Partnership Interest shall be entitled to a distribution in preference to any
other Partnership Interest.
B. Method. When, as and if declared by the General Partner,
the Partnership will make distributions to the General Partner in any amount
necessary to enable the General Partner to pay Corporate Expenses, and
thereafter to the extent of the remaining distribution amount, to holders of
Partnership Units in proportion to their respective Percentage Interests. Each
holder of Partnership Interests that are entitled to any preference in
distribution shall be entitled to a distribution in accordance with the rights
of any such class of Partnership Interests (and, within such class, pro rata in
proportion to the respective Percentage Interests on such Partnership Record
Date).
C. Minimum Distributions for General Partner REIT Years. In
any taxable year for which the General Partner is attempting to qualify as a
real estate investment trust for federal income tax purposes, the General
Partner shall be permitted to use commercially reasonable efforts (including
incurring indebtedness), as determined by the General Partner in its sole
discretion exercised in good faith, to make cash distributions pursuant to
Section 5.1B in an aggregate amount sufficient to permit the distributions made
to the General Partner under Section 5.1B(ii) to at least equal 95% of the
Partnership's taxable income that is allocable to the General Partner.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of
any foreign, 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 pursuant to Section 5.1 above for all purposes
under this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction shall be
distributed to the Partners in accordance with Section 13.2 hereof.
Section 5.4 Revisions to Reflect Issuance of Additional Partnership
Interests
In the event that the Partnership issues additional
Partnership Interests to the General Partner or any Additional Limited Partner
pursuant to Article IV hereof, the General Partner shall make such revisions to
this Article V as it deems necessary to reflect the issuance of such additional
Partnership Interests.
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the Partnership's items
of income, gain, loss and deduction (computed in accordance with Exhibit B
hereto) shall be allocated among the Partners in each taxable year (or portion
thereof) as provided herein below.
A. Net Income. After giving effect to the special allocations
set forth in Section 1 of Exhibit C hereto, Net Income shall be allocated (i)
first, to the General Partner to the extent that Net Losses previously allocated
to the General Partner pursuant to the last sentence of Section 6.1.B below
exceed Net Income previously allocated to the General Partner pursuant to this
clause (i) of Section 6.1.A, and (ii) second, to all holders of Partnership
Units in proportion to their respective Percentage Interests.
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B. Net Losses. After giving effect to the special allocations
set forth in Section 1 of Exhibit C hereto, Net Losses shall be allocated to
holders of all Partnership Units in proportion to their Percentage Interests;
provided that, Net Losses shall not be allocated to any Limited Partner pursuant
to this Section 6.1.B to the extent that such allocation would cause such
Limited Partner to have an Adjusted Capital Account Deficit (or increase any
existing Adjusted Capital Account Deficit) at the end of such taxable year (or
portion thereof). All Net Losses in excess of the limitations set forth in this
Section 6.1.B shall be allocated to the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of Regulations
Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (i) the amount of Partnership Minimum Gain
and (ii) the total amount of Nonrecourse Built-in Gain shall be allocated among
the Partners in accordance with their respective Percentage Interests.
D. Recapture Income. Any gain allocated to the Partners upon
the sale or other taxable disposition of any Partnership asset shall, to the
extent possible after taking into account other required allocations of gain
pursuant to Exhibit C hereto, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
Section 6.2 Revisions to Allocations to Reflect Issuance of Additional
Partnership Interests
In the event that the Partnership issues additional
Partnership Interests to the General Partner or any Additional Limited Partner
pursuant to Article IV hereof, the General Partner shall make such revisions to
this Article VI as it deems necessary to reflect the terms of the issuance of
such additional Partnership Interests, including making preferential allocations
to classes of Partnership Interests that are entitled thereto.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
X. Xxxxxx of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership are and shall be exclusively vested in the General Partner,
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.
The General Partner may not be removed by the Limited Partners with or without
cause. 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 Sections 7.6.A, 7.6.D and 7.11 below, shall have full power and
authority to do all things deemed necessary or desirable by it, on such terms
and conditions as the General Partner in its sole discretion deems appropriate,
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, subject
to Section 7.6.D, or borrowing of money, 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 the General Partner
deems necessary or desirable for the conduct of the
activities of the Partnership;
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(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, sale, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all
of the assets of the Partnership (including the
exercise or grant of any conversion, option,
privilege or subscription right or other right
available in connection with any assets at any time
held by the Partnership) or the merger or other
combination of the Partnership with or into another
entity, on such terms as the General Partner deems
proper in its sole and absolute discretion;
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement,
including, without limitation, the financing of the
conduct of the operations of the Partnership or any
of the Partnership's Subsidiaries, the lending of
funds to other Persons, subject to Section 7.6.D, and
the repayment of obligations of the Partnership and
its Subsidiaries and any other Person in which the
Partnership has an equity investment and the making
of capital contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any
real property or improvements owned by the
Partnership or any Subsidiary of the Partnership or
any other Person in which the Partnership has made a
direct or indirect equity investment;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the
General Partner considers useful or necessary to the
conduct of the Partnership's operations or the
implementation of the General Partner's powers under
this Agreement, including contracting with
contractors, developers, consultants, accountants,
legal counsel, other professional advisors and other
agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(8) the holding, managing, investing and reinvesting of
cash and other assets of the Partnership and, in
connection therewith, the opening, maintaining and
closing of bank and brokerage accounts and the
drawing of checks or other orders for the payment of
moneys;
(9) the collection and receipt of revenues and income of
the Partnership;
(10) the selection and dismissal of employees of the
Partnership (including, without limitation, employees
having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside
attorneys, accountants, consultants and contractors
of the Partnership, and the determination of their
compensation and other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of
the Partnership and the Partners;
(12) the formation of, or acquisition of an interest in,
and the contribution of property to, any further
limited or general partnerships, joint ventures,
limited liability companies or other relationships
that it deems desirable (including, without
limitation, the acquisition of
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interests in, and the contributions of property to
its Subsidiaries and any other Person in which it has
an equity investment from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the
settlement, compromise, submission to arbitration or
any other form of dispute resolution or abandonment
of any claim, cause of action, liability, debt or
damages due or owing to or from the Partnership, the
commencement or defense of suits, legal proceedings,
administrative proceedings, arbitrations or other
forms of dispute resolution, the representation of
the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other
forms of dispute resolution, the incurring of legal
expense and the indemnification of any Person against
liabilities and contingencies to the extent permitted
by law;
(14) the determination of the fair market value of any
Partnership property distributed in kind, using such
reasonable method of valuation as the General Partner
may adopt;
(15) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited
power of attorney, of any right, including the right
to vote, appurtenant to any assets or investment held
by the Partnership;
(16) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or
in connection with any Subsidiary of the Partnership
or any other Person in which the Partnership has a
direct or indirect interest, individually or jointly
with any such Subsidiary or other Person;
(17) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of any
Person in which the Partnership does not have any
interest pursuant to contractual or other
arrangements with such Person;
(18) the making, executing and delivering of any and all
deeds, leases, notes, deeds to secure debt,
mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or other legal
instruments or agreements in writing necessary or
appropriate in the judgment of the General Partner
for the accomplishment of any of the powers of the
General Partner under this Agreement;
(19) the distribution of cash to acquire Partnership Units
held by a Limited Partner in connection with a
Limited Partner's exercise of its Redemption Right
under Section 8.6 hereof;
(20) the amendment and restatement of Exhibit A hereto to
reflect accurately at all times the Capital
Contributions and Percentage Interests of the
Partners as the same are adjusted from time to time
to the extent necessary to reflect redemptions,
Capital Contributions, the issuance of Partnership
Units, the admission of any Additional Limited
Partner or any Substituted Limited Partner or
otherwise, which amendment and restatement,
notwithstanding anything in this Agreement to the
contrary, shall not be deemed an amendment of this
Agreement, as long as the matter or event being
reflected in Exhibit A hereto otherwise is authorized
by this Agreement;
(21) the approval and/or implementation of any merger
(including a triangular merger), consolidation or
other combination between the Partnership and another
Person that is not prohibited under this Agreement,
whether with or without Consent, the terms of Section
17- 211(g) of the Act shall be applicable such that
the General Partner shall have the right to
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effect any amendment to this Agreement or effect the
adoption of a new partnership agreement for a limited
partnership if it is the surviving or resulting
limited partnership on the merger or consolidation
(except as may be expressly prohibited under Section
14.1.C, Section 14.1.D or Section 14.1.F); and
(22) the taking of any and all actions necessary or
desirable in furtherance of, in connection with or
incidental to the foregoing.
B. No Approval by Limited Partners. Except as provided in
Section 7.11 below, 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 provision of this Agreement, the
Act or any applicable law, rule or regulation, to the full extent permitted
under the Act or other applicable law. The execution, delivery or performance by
the General Partner or the Partnership of the Intercompany Agreement or any
other 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. Insurance. At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain (i) casualty,
liability and other insurance on the properties of the Partnership, (ii)
liability insurance for the Indemnitees hereunder and (iii) such other insurance
as the General Partner, in its sole and absolute discretion, determines to be
necessary.
D. Working Capital and Other Reserves. At all times from and
after the date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable
(both in purpose and amount) from time to time, including upon liquidation of
the Partnership pursuant to Section 13.2 hereof.
E. No Obligations to Consider Tax Consequences of Limited
Partners. 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) of any action taken (or not
taken) by it. The General Partner and the Partnership shall not have liability
to a Limited Partner for monetary damages or otherwise for losses sustained,
liabilities incurred or benefits not derived by such Limited Partner in
connection with such decisions, provided that the General Partner has acted in
good faith and not beyond its authority under this Agreement.
Section 7.2 Certificate of Limited Partnership
The Partnership has caused the Certificate to be filed with
the Secretary of State of Delaware. 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 Delaware 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 have limited liability) in the State
of Delaware and any other state, the District of Columbia or other jurisdiction
in which the Partnership may elect to do business or own property.
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Section 7.3 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. 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.
Section 7.4 Reimbursement of the General Partner
A. No Compensation. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles V and VI
hereof regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership
shall be responsible for and shall pay all expenses relating to the
Partnership's organization, the ownership of its assets and its operations. 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 and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses related to
the management and administration of any Subsidiaries of the General Partner or
the Partnership or Affiliates of the Partnership such as auditing expenses and
filing fees); provided that (x) the amount of any such reimbursement shall be
reduced by (i) any interest earned by the General Partner with respect to bank
accounts or other instruments or accounts held by it as permitted in Section
7.5.A below and (ii) any amount derived by the General Partner from any
investments permitted in Section 7.5.A below and (y) Corporate Expenses shall
not be treated as Partnership expenses for purposes of this Section 7.4.B. The
General Partner shall determine in good faith the amount of expenses incurred by
it related to the ownership and operation of, or for the benefit of, the
Partnership. In the event that certain expenses are incurred for the benefit of
the Partnership and other entities (including the General Partner), such
expenses will be allocated to the Partnership and such other entities in such a
manner as the General Partner in its sole and absolute discretion deems fair and
reasonable. Such reimbursements shall be in addition to any reimbursement to the
General Partner pursuant to Section 10.3.C hereof and as a result of
indemnification pursuant to Section 7.7 below. All payments and reimbursements
hereunder shall be characterized for federal income tax purposes as expenses of
the Partnership incurred on its behalf, and not as expenses of the General
Partner.
C. Partnership Interest Issuance Expenses. The General Partner
shall also be reimbursed for all expenses it incurs relating to any issuance of
additional Partnership Interests, Debt of the Partnership or rights, options,
warrants or convertible or exchangeable securities pursuant to Article IV hereof
(including, without limitation, all costs, expenses, damages and other payments
resulting from or arising in connection with litigation related to any of the
foregoing), all of which expenses are considered by the Partners to constitute
expenses of, and for the benefit of, the Partnership.
D. Purchases of Shares by the General Partner. In the event
that the General Partner elects to purchase from its stockholders Shares in
connection with a share repurchase or similar program or for the purpose of
delivering such Shares to satisfy an obligation under any dividend reinvestment
or share purchase program adopted by the General Partner, any employee share
purchase plan adopted by the General Partner or any similar obligation or
arrangement undertaken by the General Partner in the future, the purchase price
paid by the General Partner for such Shares and any other expenses incurred by
the General Partner in connection with such purchase shall be considered
Corporate Expenses, and the Partnership shall distribute cash to the General
Partner to offset such expenses pursuant
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to Section 5.1, subject to the conditions that: (i) if such Shares subsequently
are to be sold by the General Partner, the General Partner pays to the
Partnership any proceeds received by the General Partner for such Shares
(provided that a transfer of Shares for Partnership Units pursuant to Section
8.6 hereof would not be considered a sale for such purposes); and (ii) if such
Shares are not retransferred by the General Partner within thirty (30) days
after the purchase thereof, the General Partner shall cause the Partnership to
cancel a number of Partnership Units of the appropriate class (rounded to the
nearest whole Partnership Unit) held by the General Partner equal to the product
attained by multiplying the number of such Shares by a fraction, the numerator
of which is one and the denominator of which is the Conversion Factor.
E. Tax Treatment of Certain Reimbursements. If and to the
extent that any reimbursement made pursuant to this Section 7.4 is determined
for federal income tax purposes not to constitute a payment of expenses of the
Partnership, then such reimbursement shall be treated as a distribution pursuant
to Section 5.1.B. hereof.
Section 7.5 Outside Activities of the General Partner
A. General. Without the Consent of the Outside Limited
Partners, except as set forth in this Section 7.5.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 or Limited Partner and the management of the
business of the Partnership and such activities as are incidental to any of the
foregoing. Without the Consent of the Outside Limited Partners, the assets of
the General Partner shall be limited to Partnership Interests and permitted debt
obligations of the Partnership (as contemplated by Section 7.5.F below), so that
Shares and Partnership Units are completely fungible except as otherwise
specifically provided herein; provided, that the General Partner shall be
permitted to hold (i) interests in entities that hold no material assets; (ii)
interests in entities that own only interests in the Partnership and/or
interests in other entities that either hold no assets or hold only interests in
the Partnership; (iii) assets and/or interests in entities that hold assets,
having an aggregate value not greater than [FIVE PERCENT (5%)] of the total
market value of the General Partner Entity (determined by reference to the value
of all outstanding equity securities of the General Partner Entity), provided
that (X) the General Partner Entity will apply the net income from such assets
(other than net income derived as a result of an entity's ownership of an
interest in the Partnership) to offset Corporate Expenses before utilizing the
distribution provisions of Section 5.1.B, (Y) the General Partner will
contribute all net income generated by such assets and/or interests (other than
net income derived as a result of an entity's ownership of an interest in the
Partnership) to the Partnership (after taking into account Corporate Expenses as
described in clause (X) above), and (Z) the General Partner will use
commercially reasonable efforts to transfer such assets and interests (other
than interests in the Partnership) to the Partnership or an entity controlled by
the Partnership as soon as such a transfer can be made without causing the
General Partner or the Partnership to incur any material expenses in connection
therewith; and (iv) such bank accounts or similar instruments or accounts in its
own name as it deems necessary to carry out its responsibilities and purposes as
contemplated under this Agreement and its organizational documents; and,
provided, further, that the General Partner shall be permitted to acquire,
directly or through a Subsidiary, up to a one percent (1%) interest in any
partnership or limited liability company at least ninety-nine percent (99%) of
the equity of which is owned directly or indirectly by the Partnership. The
General Partner and any of its Affiliates may acquire Limited Partnership
Interests and shall be entitled to exercise all rights of a Limited Partner
relating to such Limited Partnership Interests.
B. Repurchase of Shares. In the event the General Partner
elects to purchase from its stockholders Shares in connection with a share
repurchase or similar program or for the purpose of delivering such Shares to
satisfy an obligation under any dividend reinvestment or share purchase program
adopted by the General Partner, any employee share purchase plan adopted by the
General Partner or any similar obligation or arrangement undertaken by the
General Partner in the future, and the General Partner does not resell said
Shares within thirty (30) days after the purchase thereof as contemplated in
Section 7.4.D(i), then the General Partner shall cause the Partnership to
purchase from the General Partner (and eliminate) that number of Partnership
Units of the appropriate class equal to the product obtained by multiplying the
number of Shares purchased by the General Partner times a fraction, the
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numerator of which is one and the denominator of which is the Conversion Factor,
on the same terms and for the same aggregate price that the General Partner
purchased such Shares.
C. Forfeiture of Shares. In the event the Partnership or the
General Partner acquires Shares as a result of the forfeiture of such Shares
under a restricted or similar share plan, then the General Partner shall cause
the Partnership to cancel that number of Partnership Units of the appropriate
class equal to the number of Shares so acquired divided by the Conversion
Factor, and, if the Partnership acquired such Shares, it shall transfer such
Shares to the General Partner for cancellation.
D. Issuances of Shares. After the Effective Date, the General
Partner shall not grant, award, or issue any additional Shares (other than
Shares issued pursuant to Section 8.6 hereof or pursuant to a dividend or
distribution (including any share split) of Shares to all of its stockholders),
other equity securities of the General Partner, New Securities or Convertible
Funding Debt, unless (i) the General Partner shall cause, pursuant to Section
4.2.A hereof, the Partnership to issue to the General Partner Partnership
Interests or rights, options, warrants or convertible or exchangeable securities
of the Partnership having designations, preferences and other rights, all such
that the economic interests are substantially the same as those of such
additional Shares, other equity securities, New Securities or Convertible
Funding Debt, as the case may be, and (ii) the General Partner transfers to the
Partnership, as an additional Capital Contribution, the proceeds from the grant,
award, or issuance of such additional Shares, other equity securities, New
Securities or Convertible Funding Debt, as the case may be, or from the exercise
of rights contained in such additional Shares, other equity securities, New
Securities or Convertible Funding Debt, as the case may be. Without limiting the
foregoing, the General Partner is expressly authorized to issue additional
Shares, other equity securities, New Securities or Convertible Funding Debt, as
the case may be, for less than fair market value, and the General Partner is
expressly authorized, pursuant to Section 4.2.A hereof, to cause the Partnership
to issue to the General Partner corresponding Partnership Interests, as long as
(a) the General Partner concludes in good faith that such issuance is in the
interests of the General Partner and the Partnership (for example, and not by
way of limitation, the issuance of Shares and corresponding Partnership Units
pursuant to a share purchase plan providing for purchases of Shares, either by
employees or stockholders, at a discount from fair market value or pursuant to
employee share options that have an exercise price that is less than the fair
market value of the Shares, either at the time of issuance or at the time of
exercise) and (b) the General Partner transfers all proceeds from any such
issuance or exercise to the Partnership as an additional Capital Contribution.
E. Stock Option Plan. If at any time or from time to time, the
General Partner sells Shares pursuant to any Stock Option Plan, the General
Partner shall transfer the net proceeds of the sale of such Shares to the
Partnership as an additional Capital Contribution in exchange for an amount of
additional Partnership Units equal to the number of Shares so sold divided by
the Conversion Factor.
F. Funding Debt. The General Partner may incur a Funding Debt,
including, without limitation, a Funding Debt that is convertible into Shares or
otherwise constitutes a class of New Securities ("Convertible Funding Debt"),
subject to the condition that the General Partner lends to the Partnership the
net proceeds of such Funding Debt; provided, that Convertible Funding Debt shall
be issued pursuant to Section 7.5.D above. If the General Partner enters into
any Funding Debt, the loan to the Partnership shall be on comparable terms and
conditions, including interest rate, repayment schedule and costs and expenses,
as are applicable with respect to or incurred in connection with such Funding
Debt.
Section 7.6 Transactions with Affiliates
A. Transactions with Certain Affiliates. Except as expressly
permitted by this Agreement (other than Section 7.1.A hereof, which shall not be
considered authority for a transaction that otherwise would be prohibited by
this Section 7.6.A), the Partnership shall not, directly or indirectly, sell,
transfer or convey any property to, or purchase any property from, or borrow
funds from, or lend funds to, any Partner or any Affiliate of the Partnership or
the General Partner or the General Partner Entity that is not also a Subsidiary
of the Partnership, except (i) pursuant to
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a transaction entered into in connection with the Intercompany Agreement or (ii)
pursuant to a transaction that has been approved by a majority of the
disinterested directors of the General Partner or General Partner Entity (as
applicable), taking into account the fiduciary duties of the General Partner or
General Partner Entity (as applicable) to the Limited Partners.
B. Benefit Plans. 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
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, or any of the Partnership's Subsidiaries.
C. Conflict Avoidance. 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 General Partner on such terms as the
General Partner, in its sole and absolute discretion, believes are advisable.
D. Limitation on Loans to the General Partner. Except with the
Consent of the Outside Limited Partners, the General Partner may not cause the
Partnership to loan money to the General Partner or to any Subsidiary or
Affiliate of the General Partner which is not also a Subsidiary or an entity in
which the Partnership owns an equity interest.
Section 7.7 Indemnification
A. General. To the maximum extent permitted by applicable law
at the time, the Partnership, without requiring a preliminary determination of
the ultimate entitlement to indemnification, shall indemnify each Indemnitee
from and against any and all losses, claims, damages, liabilities, joint or
several, expenses (including, without limitation, attorneys fees and other legal
fees and expenses), judgments, fines, settlements and other amounts arising from
or in connection with any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative incurred by the
Indemnitee and relating to the Partnership or the General Partner or the
formation or the operations of, or the ownership of property by, either of them
as set forth in this Agreement in which any such Indemnitee may be involved, or
is threatened to be involved, as a party or otherwise, unless it is established
by a final determination of a court of competent jurisdiction 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 obligations of the Partnership under this Section
7.7 shall include reimbursement of the General Partner for any indemnification
or advance of expenses by the General Partner pursuant to the Delaware General
Corporation Law, the General Partner Certificate or its Bylaws. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guarantee, contractual obligations for any
indebtedness or other obligations or otherwise, for any indebtedness of the
Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken subject to). The General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements not inconsistent with the provisions of this Section
7.7 in favor of any Indemnitee having or potentially having liability for any
such indebtedness. 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. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitees, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds to enable the Partnership
to fund its obligations under this Section 7.7.
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B. Advancement of Expenses. Reasonable expenses expected to be
incurred by an Indemnitee shall be paid or reimbursed by the Partnership in
advance of the final disposition of any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative made or
threatened against an Indemnitee, in the case of any trustee/director or officer
who is an Indemnitee 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. No Limitation of Rights. 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 unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
D. Insurance. The Partnership may purchase and maintain
insurance on behalf of the Indemnitees and such other Persons as the General
Partner shall determine against any liability that may be asserted against or
expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7,
(i) the Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan, (ii) excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 7.7 and (iii) 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 related to the Partnership.
F. No Personal Liability for Limited Partners. In no event may
an Indemnitee subject any of the Limited Partners to liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. 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. Benefit. The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any other
Persons. Any amendment, modification or repeal of this Section 7.7, or any
provision hereof, shall be prospective only and shall not in any way affect the
obligation of the Partnership to any Indemnitee under this Section 7.7 as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or related 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.
I. Indemnification Payments Not Distributions. If and to the
extent any payments to the General Partner pursuant to this Section 7.7
constitute gross income to the General Partner (as opposed to the repayment of
advances made on behalf of the Partnership), such amounts shall constitute
guaranteed payments within the meaning of Section 707(c) of the Code, shall be
treated consistently therewith by the Partnership and all Partners, and shall
not be treated as distributions for purposes of computing the Partners' Capital
Accounts.
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Section 7.8 Liability of the General Partner
A. General. Notwithstanding anything to the contrary set forth
in this Agreement, the General Partner and its directors and officers shall not
be liable for monetary damages 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 or of any act or omission if
the General Partner acted in good faith.
B. No Obligation to Consider Separate Interests of Limited
Partners or Stockholders. The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership and the General Partner's
stockholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners or Assignees or to such
stockholders) in deciding whether to cause the Partnership to take (or decline
to take) any actions and that the General Partner shall not be liable for
monetary damages or otherwise for losses sustained, liabilities incurred or
benefits not derived by Limited Partners in connection with such decisions,
provided that the General Partner has acted in good faith.
C. Actions of Agents. Subject to its obligations and duties as
General Partner, 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 the General Partner in good faith.
D. Effect of Amendment. 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.
Section 7.9 Other Matters Concerning the General Partner
A. Reliance on Documents. The General Partner may rely and
shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
B. Reliance on Advisors. The General Partner may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers and other consultants and advisors selected by it, and any act taken or
omitted to be taken in reliance upon the opinion of such Persons as to matters
which the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall have the
right, in respect of any of its powers or obligations hereunder, to act through
any of its duly authorized officers 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.
Section 7.10 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement
(other than the limitations on the General Partner's authority set forth in
Sections 7.5, 7.6.A, 7.6.D, and 7.11), any Person dealing with the Partnership
shall be entitled to assume that the General Partner has full power and
authority, without consent or approval of any other Partner or Person, to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership, to enter into any
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contracts on behalf of the Partnership and to take any and all actions on behalf
of the Partnership, and such Person shall be entitled to deal with the General
Partner as if the General Partner were the Partnership's sole party in interest,
both legally and beneficially. 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.
Section 7.11 Restrictions on General Partner's Authority
The General Partner may not take any action in contravention
of an express prohibition or limitation of this Agreement without the written
Consent of (i) all Partners adversely affected or (ii) such lower percentage of
the Limited Partnership Interests as may be specifically provided for under a
provision of this Agreement or the Act.
Section 7.12 Loans by Third Parties
The Partnership may incur Debt, or enter into similar credit,
guarantee, financing or refinancing arrangements for any purpose (including,
without limitation, in connection with any acquisition of property) with any
Person upon such terms as the General Partner determines appropriate; provided,
that the Partnership shall not incur any Debt that is recourse to the General
Partner unless, and then only to the extent that, the General Partner has
expressly agreed.
ARTICLE VIII
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, including Section 10.5
hereof, 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 operation,
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
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Subject to Section 7.5 hereof, and subject to any agreements
entered into pursuant to Section 7.6.C hereof and to any other agreements
entered into by a Limited Partner or its Affiliates with the Partnership or a
Subsidiary, any Limited Partner (other than the General Partner) and any
officer, director, employee, agent, trustee, Affiliate or stockholder 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 or indirect 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. None of the Limited Partners (other than the General
Partner) nor any other Person shall have any rights by virtue of this Agreement
or the partnership relationship established hereby in any business ventures of
any other Person (other than the General Partner to the extent expressly
provided herein), 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 right of redemption set forth in
Section 8.6 below, no Limited Partner shall be entitled to the withdrawal or
return of its 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
(except as permitted by Section 4.2.A hereof) or, except to the extent provided
by Exhibit C hereto or as permitted by Sections 4.2.A or 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. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.D below, each
Limited Partner shall have the right, for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the Partnership, upon written
demand with a statement of the purpose of such demand and at such Limited
Partner's own expense:
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by the General Partner Entity
pursuant to the Exchange Act;
(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; and
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto, together with
copies of all powers of attorney pursuant to which
this Agreement, the Certificate and all amendments
thereto have been executed.
B. Notice of Conversion Factor. The Partnership shall notify
each Limited Partner upon request of the then current Conversion Factor and any
changes that have been made thereto.
C. Notice of Extraordinary Transaction of the General Partner
Entity. The General Partner Entity shall not make any extraordinary
distributions of cash or property to its stockholders or effect a merger
(including, without limitation, a triangular merger), a sale of all or
substantially all of its assets or any other similar extraordinary transaction
without notifying the Limited Partners of its intention to make such
distribution or effect such merger, sale or other extraordinary transaction at
least twenty (20) days prior to the record date to determine stockholders
eligible
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to receive such distribution or to vote upon the approval of such merger, sale
or other extraordinary transaction (or, if no such record date is applicable, at
least twenty (20) days before consummation of such merger, sale or other
extraordinary transaction). This provision for such notice shall not be deemed
(i) to permit any transaction that otherwise is prohibited by this Agreement or
requires a Consent of the Partners or (ii) to require a Consent of the Limited
Partners to a transaction that does not otherwise require Consent under this
Agreement. Each Limited Partner agrees, as a condition to the receipt of the
notice pursuant hereto, to keep confidential the information set forth therein
until such time as the General Partner Entity has made public disclosure thereof
and to use such information during such period of confidentiality solely for
purposes of determining whether or not to exercise the Redemption Right;
provided, however, that a Limited Partner may disclose such information to its
attorney, accountant and/or financial advisor for purposes of obtaining advice
with respect to such exercise so long as such attorney, accountant and/or
financial advisor agrees to receive and hold such information subject to this
confidentiality requirement.
D. Confidentiality. 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 reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business or (ii) the Partnership is required by law or by agreements with
unaffiliated third parties to keep confidential.
Section 8.6 Redemption Right
A. General. (i) Subject to Section 8.6.C below, on or after
the date one (1) year after the Effective Date (or, if later, the date of the
issuance of a Partnership Unit to a Limited Partner pursuant to Article IV
hereof) which one-year period shall commence upon the issuance of such
Partnership Unit regardless of whether such Partnership Unit is designated upon
issuance as a Class A Unit or otherwise, or on or after such date prior to the
expiration of such one-year period as the General Partner, in its sole and
absolute discretion, designates with respect to any or all Partnership Units
then outstanding, the holder of a Partnership Unit (if other than the General
Partner or the General Partner Entity or any Subsidiary of either the General
Partner or the General Partner Entity) shall have the right (the "Redemption
Right") to require the Partnership to redeem such Partnership Unit on a
Specified Redemption Date and at a redemption price equal to and in the form of
the Cash Amount to be paid by the Partnership. Any such Redemption Right shall
be exercised pursuant to a Notice of Redemption delivered to the Partnership
(with a copy to the General Partner) by the Limited Partner who is exercising
the Redemption Right (the "Redeeming Partner"). A Limited Partner may not
exercise the Redemption Right for less than one thousand (1,000) Partnership
Units or, if such Redeeming Partner holds less than one thousand (1,000)
Partnership Units, for less than all of the Partnership Units held by such
Redeeming Partner.
(ii) The Redeeming Partner shall have no right with respect to
any Partnership Units so redeemed to receive any distributions paid after the
Specified Redemption Date, unless the record date for such distribution was a
date prior to the Specified Redemption Date.
(iii) The Assignee of any Limited Partner may exercise the rights
of such Limited Partner pursuant to this Section 8.6, and such Limited Partner
shall be deemed to have assigned such rights to such Assignee and shall be bound
by the exercise of such rights by such Limited Partner's Assignee. In connection
with any exercise of such rights by such Assignee on behalf of such Limited
Partner, the Cash Amount shall be paid by the Partnership directly to such
Assignee and not to such Limited Partner.
(iv) In the event that the General Partner provides notice to the
Limited Partners, pursuant to Section 8.5.C hereof, the Redemption Right shall
be exercisable, subject to the one-year limitation contained in Section
8.6.A(i), during the period commencing on the date on which the General Partner
provides such notice and ending on the record date to determine stockholders
eligible to receive such distribution or to vote upon the approval of such
merger, sale or other extraordinary transaction (or, if no such record date is
applicable, the date that is twenty (20) days after the date
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the General Partner provides such notice pursuant to Section 8.5.C hereof). In
the event that this subparagraph (iv) applies, the Specified Redemption Date
shall be the sooner of (1) the tenth (10th) Business Day after the Partnership
receives the Redemption Notice or (2) the Business Day immediately preceding the
record date to determine stockholders eligible to receive a distribution or vote
on approval; provided that if such time determined pursuant to clause (1) or (2)
above occurs in less than ten (10) Business Days and the Partnership elects to
redeem the subject Partnership Units for cash, the Partnership will have up to
ten (10) Business Days from receipt of the Redemption Notice to deliver payment
in respect of such Partnership Units.
(v) Notwithstanding the terms of Section 8.6.A(i) or anything
else in this Agreement to the contrary, if there shall have been a merger or
consolidation of the General Partner, or a sale of all or substantially all of
the assets of the General Partner as an entirety, and in either case, in
connection therewith, the stockholders of the General Partner are obligated to
accept cash and/or debt obligations in full or partial consideration for their
Shares, then the portion of the Redemption Amount per Partnership Unit that
corresponds to the portion of Value of the total consideration receivable for
one Share multiplied by the Conversion Factor (a "Unit Equivalent") that is
required to be accepted in cash and/or debt obligations shall thereafter be an
amount of cash equal to the sum of (i) the cash payable for a Unit Equivalent on
the date of the closing of such merger, consolidation or sale and (ii) the Value
on the date of the closing of such merger, consolidation, or sale of the debt
obligations to be received with respect to a Unit Equivalent. The balance of the
Redemption Amount per Partnership Unit shall be determined as provided for in
the definitions of Conversion Factor, Redemption Amount, Shares Amount, Cash
Amount and Value.
B. General Partner Assumption of Right. (i) If a Limited
Partner has delivered a Notice of Redemption, the General Partner may, in its
sole and absolute discretion (subject to any limitations on ownership and
transfer of Shares set forth in the General Partner Certificate), elect to
assume directly and satisfy a Redemption Right by paying to the Redeeming
Partner either the Cash Amount or the Shares Amount, as the General Partner
determines in its sole and absolute discretion (provided that payment of the
Redemption Amount in the form of Shares shall be in Shares registered under
Section 12 of the Exchange Act and listed for trading on the exchange or
national market on which the Shares are Publicly Traded, and provided, further,
that in the event that the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall be
paid only in the form of the Cash Amount unless the Redeeming Partner, in its
sole and absolute discretion, consents to payment of the Redemption Amount in
the form of the Shares Amount), on the Specified Redemption Date, whereupon the
General Partner shall acquire the Partnership Units offered for redemption by
the Redeeming Partner and shall be treated for all purposes of this Agreement as
the owner of such Partnership Units and such Partnership Units shall
automatically convert to Class A Units upon acquisition by the General Partner.
Unless the General Partner, in its sole and absolute discretion, shall exercise
its right to assume directly and satisfy the Redemption Right, the General
Partner shall not have any obligation to the Redeeming Partner or to the
Partnership with respect to the Redeeming Partner's exercise of the
Redemption Right. In the event the General Partner shall exercise its right to
satisfy the Redemption Right in the manner described in the first sentence of
this Section 8.6.B and shall fully perform its obligations in connection
therewith, the Partnership shall have no right or obligation to pay any amount
to the Redeeming Partner with respect to such Redeeming Partner's exercise of
the Redemption Right, and each of the Redeeming Partner, the Partnership and the
General Partner shall, for federal income tax purposes, treat the transaction
between the General Partner and the Redeeming Partner as a sale of the Redeeming
Partner's Partnership Units to the General Partner. Nothing contained in this
Section 8.6.B shall imply any right of the General Partner to require any
Limited Partner to exercise the Redemption Right afforded to such Limited
Partner pursuant to Section 8.6.A above.
(ii) In the event that the General Partner determines to pay
the Redeeming Partner the Redemption Amount in the form of Shares, the total
number of Shares to be paid to the Redeeming Partner in exchange for the
Redeeming Partner's Partnership Units shall be the applicable Shares Amount. In
the event this amount is not a whole number of Shares, the Redeeming Partner
shall be paid (i) that number of Shares which equals the nearest whole number
less than such amount plus (ii) an amount of cash which the General Partner
determines, in its reasonable discretion, to represent the fair value of the
remaining fractional Share which would otherwise be payable to the Redeeming
Partner.
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(iii) Each Redeeming Partner agrees to execute such documents
as the General Partner may reasonably require in connection with the issuance of
Shares upon exercise of the Redemption Right.
C. Exceptions to Exercise of Redemption Right. Notwithstanding
the provisions of Sections 8.6.A and 8.6.B above, a Partner shall not be
entitled to exercise the Redemption Right pursuant to Section 8.6.A above if
(but only as long as) the delivery of Shares to such Partner on the Specified
Redemption Date (i) would be prohibited under the General Partner Certificate,
or (ii) as long as the Shares are Publicly Traded, would be prohibited under
applicable federal or state securities laws or regulations (assuming the General
Partner would in fact assume and satisfy the Redemption Right).
D. No Liens on Partnership Units Delivered for Redemption.
Each Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered for redemption shall be delivered to the Partnership
or the General Partner, as the case may be, free and clear of all liens, and,
notwithstanding anything contained herein to the contrary, neither the General
Partner nor the Partnership shall be under any obligation to acquire Partnership
Units which are or may be subject to any liens. Each Limited Partner further
agrees that, in the event any state or local property transfer tax is payable as
a result of the transfer of its Partnership Units to the Partnership or the
General Partner, such Limited Partner shall assume and pay such transfer tax.
E. Additional Partnership Interests. In the event that the
Partnership issues Partnership Interests to any Additional Limited Partner
pursuant to Article IV hereof, the General Partner shall make such amendments to
this Section 8.6 as it determines are necessary to reflect the issuance of such
Partnership Interests (including setting forth any restrictions on the exercise
of the Redemption Right with respect to such Partnership Interests).
Section 8.7 Right of Offset
The General Partner shall have the right to offset any amounts
owed to the Partnership or the General Partner by any Limited Partner pursuant
to (i) any written agreement between such Limited Partner and the Partnership,
the General Partner or an Affiliate of either of them pursuant to which such
Limited Partner acquired Partnership Units or (ii) the provisions of Section 5.2
of this Agreement, against any amounts owed to such Limited Partner by the
Partnership or the General Partner hereunder, including the right to cancel or
acquire, as applicable, the Partnership Units held by such Limited Partner,
based on the Cash Amount that would be payable therefor, assuming a redemption
as of the date of cancellation or acquisition, as applicable. In exercising the
foregoing offset rights, the General Partner shall be required to give a Limited
Partner, in the case of an offset against a distribution, five (5) days prior
written notice (provided, however, that if a distribution is to be made at any
time during such five day period the General Partner may retain the distribution
payable to any Limited Partner to whom such a written notice has been given to
the extent of the amount owed by such Limited Partner pending the passage of
such period and upon the passage of such period without payment of all amounts
owed by the applicable Limited Partner, the General Partner shall be entitled to
the right of offset described above, it being understood that if the Limited
Partner pays in full the amount owed the General Partner shall promptly release
the retained distribution to such Limited Partner) and, in the case of an offset
against Partnership Units (through cancellation or acquisition), ten (10) days'
prior written notice, in each case of the amount owed (determined as of a date
reasonably close to the date of such notice) and the proposed offset and the
Limited Partner has not paid the amount owed within such period.
ARTICLE IX
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
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necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3 below. 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,
computer disk, 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. Annual Reports. As soon as practicable, but in no event
later than the date on which the General Partner Entity mails its annual report
to its stockholders, the General Partner shall cause to be mailed to each
Limited Partner an annual report, as of the close of the most recently ended
Partnership Year, containing financial statements of the Partnership, or of the
General Partner Entity if such statements are prepared solely on a consolidated
basis with the Partnership, 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 Entity.
B. Quarterly Reports. If and to the extent that the General
Partner Entity mails quarterly reports to its stockholders, as soon as
practicable, but in no event later than the date on which such reports are
mailed, the General Partner shall cause to be mailed to each Limited Partner a
report containing unaudited financial statements, as of the last day of such
quarter, of the Partnership, or of the General Partner Entity if such statements
are prepared solely on a consolidated basis with the Partnership, and such other
information as may be required by applicable law or regulation, or as the
General Partner determines to be appropriate.
ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and
timely filing of all returns of Partnership income, gains, deductions, losses
and other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably required
by Limited Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code; provided, that the General Partner
shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder. The General Partner shall have the right to
seek to revoke any such election (including, without limitation, the election
under Section 754 of the Code) upon the General Partner's determination in its
sole and absolute discretion that such revocation is in the best interests of
the Partners.
Section 10.3 Tax Matters Partner
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A. General. The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. Pursuant to Section
6223(c)(3) of the Code, upon receipt of notice from the 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, taxpayer identification
number and profit interest of each of the Limited Partners and any Assignees;
provided, that such information is provided to the Partnership by the Limited
Partners.
X. Xxxxxx. 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(a)(8) 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 filing of
a complaint for refund with the United States Claims
Court or the District Court of the United States for
the district in which the Partnership's principal
place of business is located;
(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;
(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 hereof shall be fully applicable to the
tax matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
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accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
or a law firm to assist the tax matters partner in discharging its duties
hereunder, as 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 sixty (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 Section 1441, 1442, 1445, or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a recourse loan by the Partnership to such Limited Partner, which
loan shall be repaid by such Limited Partner within fifteen (15) days after
notice from the General Partner that such payment must be made unless (i) the
Partnership withholds such payment from a distribution which would otherwise be
made to the Limited Partner or (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 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 (4) percentage
points (but not higher than the maximum lawful rate) from the date such amount
is due (i.e., fifteen (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 XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. Definition. The term "transfer," when used in this Article
XI with respect to a Partnership Interest or a Partnership Unit, shall be deemed
to refer to a transaction by which the General Partner purports to assign all or
any part of its General Partnership Interest to another Person or by which a
Limited Partner purports to assign all or any part of its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise. The term "transfer" when used in this Article XI does not include
any redemption or repurchase of Partnership Units by the Partnership from a
Partner (including the General Partner) or acquisition of Partnership Units from
a Limited Partner by the General Partner pursuant to Section 8.6 hereof or
otherwise. 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 no part of the interest of a Limited
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Partner may be voluntarily or involuntarily alienated or encumbered except as
may be specifically provided for in this Agreement.
B. General. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Article XI. Any transfer or purported transfer of a Partnership Interest
not made in accordance with this Article XI shall be null and void.
Section 11.2 Transfers of Partnership Interests of General Partner
A. Except for transfers of Partnership Units to the
Partnership as provided in Section 7.5 or Section 8.6 hereof, the General
Partner may not transfer any of its Partnership Interest (including both its
General Partnership Interest and its Limited Partnership Interest) except in
connection with a transaction described in Section 11.2.B below or as otherwise
expressly permitted under this Agreement, nor shall the General Partner withdraw
as General Partner except in connection with a transaction described in Section
11.2.B below.
B. The General Partner shall not engage in any merger
(including a triangular merger), consolidation or other combination with or into
another Person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of the terms of any outstanding
Shares (other than a change in par value, or from par value to no par value, or
as a result of a subdivision or combination as described in the definition of
"Conversion Factor") ("Termination Transaction"), unless , in connection
therewith, all Limited Partners (other than the General Partner, the General
Partner Entity and any entities controlled by either of them) will have the
right to elect to receive, or, will receive, for each Partnership Unit an amount
of cash, securities, or other property equal to the product of the Conversion
Factor and the greatest amount of cash, securities or other property paid to a
holder of Shares, if any, corresponding to such Partnership Unit in
consideration of one such Share; provided, that if, in connection with the
Termination Transaction, a purchase, tender or exchange offer shall have first
been made to and accepted by the holders of more than fifty percent (50%) of the
outstanding Shares and a holder of Partnership Units did not receive advance
written notice (whether from the General Partner, the offeror or otherwise) of
the offer and an opportunity to redeem its Partnership Units substantially in
accordance with the provisions in Section 8.6, then such holder of Partnership
Units shall receive, or shall have the right to elect to receive, the greatest
amount of cash, securities, or other property which such holder would have
received had it exercised the Redemption Right and received Shares in exchange
for its Partnership Units immediately prior to such purchase, tender or exchange
offer and had thereupon accepted such purchase, tender or exchange offer and to
the extent required by the terms thereof applicable to all other holders of
Shares participating in the purchase, tender or exchange offer, participated in
all other phases of such Termination Transaction as well.
Section 11.3 Limited Partners' Rights to Transfer
A. General. Subject to the provisions of Sections 11.3.C,
11.3.D, 11.3.E, 11.3.F, 11.3.G, 11.4 and 11.6 below, prior to the first
anniversary of the Effective Date, the Limited Partnership Interest of any
Partner may not be transferred in whole or in part, directly, indirectly or
beneficially, without the prior written consent of the General Partner, which
consent the General Partner may withhold in its sole discretion; provided,
however, that it is expressly understood that subject to the provisions of
Sections 11.3.C, 11.3.D, 11.3.E, 11.3.F, 11.3.G, 11.4 and 11.6 below each
Limited Partner will be permitted to make one or more transfers to any
Affiliated Transferee of such Limited Partner. Commencing on the first
anniversary after the Effective Date, and subject to the provisions of Sections
11.3.C, 11.3.D, 11.3.E, 11.3.F, 11.3.G, 11.4 and 11.6 below, a Limited Partner
(other than the General Partner or the General Partner Entity or any Subsidiary
of either of them) may transfer all or any portion of its Limited Partnership
Interest to any Person, provided such Limited Partner obtains the prior written
consent of the General Partner, which consent may be withheld only if the
General Partner determines in its sole discretion exercised in good faith that
such a transfer would cause the Partnership or any or all of the Partners other
than the Limited Partner seeking to transfer its rights as a Limited Partner to
be subject to tax liability as a result of such transfer. Any purported transfer
attempted in violation of the foregoing sentence shall be deemed void ab initio
and shall have no force or effect.
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B. Incapacitated Limited Partners. 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 its interest in the Partnership. The Incapacity of a Limited Partner, in
and of itself, shall not dissolve or terminate the Partnership.
C. No Transfers Violating Securities Laws. The General Partner
may prohibit any transfer of Partnership Units by a Limited Partner if, in the
opinion of legal counsel to the Partnership, such transfer would require filing
of a registration statement under the Securities Act or would otherwise violate
any federal, or state securities laws or regulations applicable to the
Partnership or the Partnership Unit.
D. No Transfers Affecting Tax Status of Partnership. No
transfer of Partnership Units by a Limited Partner (including a redemption or
exchange pursuant to Section 8.6 hereof) 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 for federal income tax
purposes or would result in a termination of the Partnership for federal income
tax purposes (except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners other than the General Partner or
the General Partner Entity or any Subsidiary of either the General Partner or
the General Partner Entity or pursuant to a transaction not prohibited under
Section 11.2 hereof) 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.
E. No Transfers to Holders of Nonrecourse Liabilities. No
pledge or transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability without the consent of the General Partner,
in its sole and absolute discretion; provided, that as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Redemption
Amount any Partnership Units in which a security interest is held simultaneously
with the time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender under Section
752 of the Code.
F. No Transfers Affecting Tax Status of Vornado. The General
Partner may prohibit any transfer of Partnership Units by a Limited partner if,
in the opinion of legal counsel to the Partnership, such transfer would
adversely affect Vornado's ability to qualify as a REIT for federal income tax
purposes, including, without limitation, any transfer that would have the result
of causing Vornado to be treated as owning, under the attribution rules that
apply for purposes of Section 856(d)(2)(B) of the Code, (i) 10 percent or more
of the assets or net profits of the Partnership or (ii) 10 percent or more of
the total combined voting power or total number of shares of the General
Partner. As a condition to approving a transfer of partnership Units, the
General Partner may require a representation from the transferee that the
transfer will not cause Vornado to be treated as owning, under the attribution
rules that apply for purposes of Section 856(d)(2)(B) of the Code, the interests
in the Partnership or the General Partner referred to in the preceding sentence.
In the absence of such a representation, the General Partner may prohibit the
transfer of Partnership Units.
G. Ownership Limitation. Without the prior written consent of
the General Partner, which may be withheld in the General Partner's sole
discretion, no Person other than the General Partner may own, either directly or
under the attribution rules of Section 318(a) of the Code, as modified by
Section 856(d)(5) of the Code, an interest of more than 9.9% in the assets or
net profits of the Partnership (the "Ownership Limit"). The General Partner may
prohibit any transfer of Partnership Units that would cause a Person to own,
either directly or under the applicable attribution rules, interests in the
Partnership in violation of the Ownership Limit. Any transfer of Partnership
Units that causes a Person to own, either directly or under the applicable
attribution rules, interests in the Partnership in violation
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of the Ownership Limit without the prior written approval of the General Partner
shall be void ab initio as to the interests in the Partnership that would
otherwise have been owned, either directly or under the applicable attribution
rules, in excess of the ownership Limit. If, notwithstanding the foregoing, a
Person owns, either directly or under the applicable attribution rules,
interests in the Partnership in violation of the Ownership Limit, such interests
will automatically be converted to "Excess Partnership Interests" as of the day
immediately prior to the first day on which such interests were owned, either
directly or under the applicable attribution rules, in violation of the
Ownership Limit (the "Exchange Date") and will be transferred as a matter of law
on the Exchange Date to a special trust established by the Partnership for the
benefit of a charitable organization designated by the Partnership. While
interests in the Partnership are Excess Partnership Interests, all distributions
in respect of such interests will be for the benefit of the special trust and
all rights associated with such interests will be exercised by such special
trust. If distributions were made in respect of such interests after the
Exchange Date but prior to the discovery that such interests were Excess
Partnership Interests, the recipient of such distributions will be required to
pay such distributions to the special trust. In the event that the special trust
disposes of such Excess Partnership Units, the special trust shall pay to the
Person who held such interests in the Partnership at the time that the interests
were converted to Excess Partnership Interests an amount equal to the lesser of
(i) the proceeds of the disposition by the special trust and (ii) the fair
market value of the interests on the Exchange Date.
As a condition to approving a transfer of Partnership Units,
the General Partner may require a representation from the transferee that the
transfer will not cause any Person to own, either directly or under the
applicable attribution rules, interests in the Partnership in violation of the
Ownership Limit. In the absence of such a representation, the General Partner
may prohibit the transfer of partnership Units.
Section 11.4 Substituted Limited Partners
A. Consent of General Partner. No Limited Partner shall have
the right to substitute a transferee as a Limited Partner in its place without
the consent of the General Partner 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. Rights of Substituted Limited Partner. A transferee who has
been admitted as a Substituted Limited Partner in accordance with this Article
XI shall have all the rights and powers and be subject to all the restrictions
and liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including, without limitation, the
provisions of Section 15.11 hereof and such other documents or instruments as
may be required to effect the admission).
C. Amendment and Restatement of Exhibit A. Upon the admission
of a Substituted Limited Partner, the General Partner shall amend and restate
Exhibit A hereto to reflect the name, address, Capital Account, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address, Capital Account and
Percentage 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
above as a Substituted Limited Partner, as described in Section 11.4 above, 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, loss and
Recapture Income attributable to the Partnership
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Units assigned to such transferee, and shall have the rights granted to the
Limited Partners under Section 8.6 hereof, but shall not be deemed to be a
holder of Partnership Units for any other purpose under this Agreement, and
shall not be entitled to vote such Partnership Units in any matter presented to
the Limited Partners for a vote (such Partnership Units being deemed to have
been voted on such matter in the same proportion as all other Partnership Units
held by Limited Partners are voted). In the event any such transferee desires to
make a further assignment of any such Partnership Units, such transferee shall
be subject to all the provisions of this Article XI 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. Withdrawal of Limited Partner. 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
XI or pursuant to redemption of all of its Partnership Units under Section 8.6
hereof.
B. Termination of Status as Limited Partner. Any Limited
Partner who shall transfer all of its Partnership Units in a transfer permitted
pursuant to this Article XI or pursuant to redemption of all of its Partnership
Units under Section 8.6 hereof shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI
may only be made on the first day of a fiscal quarter of the Partnership, unless
the General Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred
during any quarterly segment of the Partnership's fiscal year in compliance with
the provisions of this Article XI or redeemed or transferred pursuant to Section
8.6 hereof, 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
(unless the General Partner, in its sole and absolute discretion, elects to
adopt a daily, weekly, or a monthly proration period, in which event Net Income,
Net Losses, each item thereof and all other items attributable to such interest
for such fiscal year shall be prorated based upon the applicable method selected
by the General Partner). 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 as of midnight on the last day
of said month. All distributions attributable to any Partnership Unit with
respect to which the Partnership Record Date is before the date of such
transfer, assignment or redemption shall be made to the transferor Partner or
the Redeeming Partner, as the case may be, and, in the case of a transfer or
assignment other than a redemption, all distributions thereafter attributable to
such Partnership Unit shall be made to the transferee Partner.
E. Additional Restrictions. In addition to any other
restrictions on transfer herein contained, including without limitation the
provisions of this Article XI, in no event may any transfer or assignment of a
Partnership Interest by any Partner (including pursuant to Section 8.6 hereof)
be made without the express consent of the General Partner, in its sole and
absolute discretion, (i) to any Person or entity who lacks the legal right,
power or capacity to own a Partnership Interest; (ii) in violation of applicable
law; (iii) of any component portion of a Partnership Interest, such as the
Capital Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) if in the opinion of legal counsel to
the Partnership such transfer would cause a termination of the Partnership for
federal or state income tax purposes (except as a result of the redemption or
exchange for Shares of all Partnership Units held by all Limited Partners or
pursuant to a transaction not prohibited under Section 11.2 hereof); (v) if in
the opinion of counsel to the Partnership, such transfer would cause the
Partnership to cease to be classified as a partnership for federal income tax
purposes (except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners or pursuant to a transaction not
prohibited under Section 11.2 hereof); (vi) 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); (vii) if
such transfer would, in the opinion of counsel to the Partnership, cause any
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portion of the assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.1-101;
(viii) if such transfer requires the registration of such Partnership Interest
pursuant to any applicable federal or state securities laws; (ix) if such
transfer is effectuated through an "established securities market" or a
"secondary market" (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code or such transfer causes the Partnership to become a
"publicly traded partnership," as such term is defined in Section 469(k)(2) or
Section 7704(b) of the Code; or (x) if such transfer subjects the Partnership to
regulation under the Investment Company Act of 1940, the Investment Advisors Act
of 1940 or ERISA, each as amended.
F. Avoidance of "Publicly Traded Partnership" Status. The
General Partner shall (a) use commercially reasonable efforts (as determined by
it in its sole discretion exercised in good faith) to monitor the transfers of
interests in the Partnership to determine (i) if such interests are being traded
on an "established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code and (ii)
whether additional transfers of interests would result in the Partnership being
unable to qualify for at least one of the "safe harbors" set forth in
Regulations Section 1.7704-1 (or such other guidance subsequently published by
the IRS setting forth safe harbors under which interests will not be treated as
"readily tradable on a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code) (the "Safe Harbors") and (b)
take such steps as it believes are commercially reasonable and appropriate (as
determined by it in its sole discretion exercised in good faith) to prevent any
trading of interests or any recognition by the Partnership of transfers made on
such markets and, except as otherwise provided herein, to insure that at least
one of the Safe Harbors is met.
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner's General
Partnership 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's 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. General. No Person shall be admitted as an Additional
Limited Partner without the consent of the General Partner, which consent shall
be given or withheld in the General Partner's sole and absolute discretion. A
Person who makes a Capital Contribution to the Partnership in accordance with
this Agreement, including, without limitation, pursuant to Section 4.1.C hereof,
or who exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only with the consent of the
General Partner and 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 15.11 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. The
admission of any Person as an Additional Limited Partner shall become effective
on the date upon which the name of such Person is recorded on the books and
records of the Partnership, following the consent of the General Partner to such
admission.
B. Allocations to Additional Limited Partners. If any
Additional Limited Partner is admitted to the Partnership on any day other than
the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items allocable among Partners and Assignees for such
Partnership Year shall be allocated among
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such Additional Limited Partner and all other Partners and Assignees by taking
into account their varying interests during the Partnership Year in accordance
with Section 706(d) of the Code, using the interim closing of the books method
(unless the General Partner, in its sole and absolute discretion, elects to
adopt a daily, weekly or monthly proration method, in which event Net Income,
Net Losses, and each item thereof would be prorated based upon the applicable
period selected by the General Partner). Solely for purposes of making such
allocations, each of such items for the calendar month in which an admission of
any Additional Limited Partner occurs shall be allocated among all the Partners
and Assignees including such Additional Limited Partner. All distributions with
respect to which the Partnership Record Date is before the date of such
admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions thereafter shall be made to
all the Partners and Assignees including such Additional Limited Partner.
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 (including an amendment and restatement of
Exhibit A hereto) and, if necessary, to prepare as soon as practical an
amendment of this Agreement 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 15.11 hereof.
ARTICLE XIII
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
(each a "Liquidating Event"):
(i) the expiration of its term as provided in Section
2.4 hereof;
(ii) an event of withdrawal of the General Partner,
as defined in the Act (other than an event of Bankruptcy), unless, within ninety
(90) days after the withdrawal a Majority in Interest of the remaining Partners
Consent in writing to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a substitute General
Partner;
(iii) an election to dissolve the Partnership made by
the General Partner, in its sole and absolute discretion, after December 31,
2046;
(iv) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(v) the sale of all or substantially all of the
assets and properties of the Partnership for cash or for marketable securities;
or
(vi) a final and nonappealable judgment is entered by
a court of competent jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and nonappealable order for relief is entered by a court
with appropriate jurisdiction against the General Partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to or within ninety days after of the entry of such order
or
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judgment a Majority in Interest of the remaining Partners Consent in writing to
continue the business of the Partnership and to the appointment, effective as of
a date prior to the date of such order or judgment, of a substitute General
Partner.
Section 13.2 Winding Up
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, in the event there
is no remaining General Partner, any Person elected by a Majority in Interest of
the Limited Partners (the "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 equity or other securities of the General Partner or any other
entity) 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 Partners;
and
(3) The balance, if any, to the Partners in accordance
with their Capital Accounts, after giving effect to
all contributions, distributions, and allocations for
all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of
Section 13.2.A above 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) or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A above,
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
Subject to Section 13.4 below, 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 XIII 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 its Capital Account (after giving effect to all contributions,
distributions and allocations for all taxable years, including the year during
which such liquidation occurs), such Partner shall have no obligation to make
any contribution to the capital of the Partnership with respect to such deficit,
and such deficit shall not be considered a debt owed to the Partnership or to
any other Person for any purpose whatsoever. In the discretion of the General
Partner, a pro rata portion of the distributions that would otherwise
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be made to the General Partner and Limited Partners pursuant to this Article
XIII 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 (in which case 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 as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement); or (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 withheld 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 XIII, in
the event the Partnership is deemed liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged and the Partnership's affairs shall not be wound
up. Instead, for federal income tax purposes and for purposes of maintaining
Capital Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed
to have distributed its assets in kind to the General Partner and Limited
Partners, who shall be deemed to have assumed and taken such assets 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 assets in kind to the
Partnership, which shall be deemed to have assumed and taken such assets 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 its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise expressly
provided in this Agreement, no Limited Partner shall have priority over any
other Limited Partner as to the return of its 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 an election or objection by one or more
Partners pursuant to Section 13.1 above, result in a dissolution of the
Partnership, the General Partner shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Partners 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 conducts 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 above, 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 Delaware
shall be canceled 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 above, in order to minimize any losses otherwise
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attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the
Partnership property.
Section 13.10 Liability of Liquidator
The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may be
indemnified pursuant to Section 7.7 hereof.
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. General. Amendments to this Agreement may be proposed only
by the General Partner. Following such proposal (except an amendment pursuant to
Section 14.1.B below), the General Partner shall submit any proposed amendment
to the Limited Partners and shall seek the written vote 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
vote, the General Partner may require a response within a reasonable specified
time, but not less than fifteen (15) days, and failure to respond in such time
period shall constitute a vote which is consistent with the General Partner's
recommendation with respect to the proposal.
B. Amendments Not Requiring Limited Partner Approval. Subject
to Section 14.1.C and 14.1.D, the General Partner shall have the power, without
the Consent of the Limited Partners, to amend this Agreement as may be required
to reflect any changes to this Agreement that the General Partner deems
necessary or appropriate in its sole discretion, provided that such change does
not adversely affect or eliminate any right granted to a Limited Partner
pursuant to any of the provisions of this Agreement specified in Section 14.1.C
or Section 14.1.D as requiring a particular minimum vote. The General Partner
shall notify the Limited Partners when any action under this Section 14.1.B is
taken in the next regular communication to the Limited Partners.
C. Amendments Requiring Limited Partner Approval (Excluding
General Partner). Without the Consent of the Outside Limited Partners, the
General Partner shall not amend Section 4.2.A, Section 7.5, Section 7.6, Section
7.8, Section 11.2, Section 13.1, this Section 14.1.C or Section 14.2.
D. Other Amendments Requiring Certain Limited Partner
Approval. Notwithstanding anything in this Section 14.1 to the contrary, this
Agreement shall not be amended with respect to any Partner adversely affected
without the Consent of such Partner adversely affected if such amendment would
(i) convert a Limited Partner's interest in the Partnership into a general
partner's interest, (ii) modify the limited liability of a Limited Partner,
(iii) amend Section 7.11, (iv) amend Article V, Article VI, or Section 13.2.A(3)
(except as permitted pursuant to Sections 4.2, 5.4 and 6.2, (v) amend Section
8.6 or any defined terms set forth in Article I that relate to the Redemption
Right (except as permitted in Section 8.6.E), or (vi) amend this Section 14.1.D.
E. Amendment and Restatement of Exhibit A Not An Amendment.
Notwithstanding anything in this Article XIV or elsewhere in this Agreement to
the contrary, any amendment and restatement of Exhibit A hereto by the General
Partner to reflect events or changes otherwise authorized or permitted by this
Agreement, whether pursuant to Section 7.1.A(20) hereof or otherwise, shall not
be deemed an amendment of this Agreement and may be done at any time and from
time to time, as necessary by the General Partner without the Consent of the
Limited Partners.
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F. Amendment by Merger. In the event that the Partnership
participates in any merger (including a triangular merger), consolidation or
combination with another entity in a transaction not otherwise prohibited by
this Agreement and as a result of such merger, consolidation or combination this
Agreement is to be amended (or a new agreement for a limited partnership or
limited liability company, as applicable, is to be adopted for the surviving
entity) and any of the Outside Limited Partners (as defined herein in "Consent
of Outside Limited Partners") will hold equity interests in the continuing or
surviving entity, then any such amendments to this Agreement (or changes from
this Agreement reflected in the new agreement for the surviving entity) shall
require the consents provided in Section 14.1.C and Section 14.1.D.
Section 14.2 Meetings of the Partners
A. General. Meetings of the Partners may be called only by the
General Partner. 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 (7) days nor more than thirty (30) days prior to the date of such
meeting; provided that a Partner's attendance at any meeting of Partners shall
be deemed a waiver of the foregoing notice requirement with respect to such
Partner. 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.A above. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests held by Limited Partners (including Limited
Partnership Interests held by the General Partner) shall control.
B. Actions Without a Meeting. Any action required or permitted
to be taken at a meeting of the Partners may be taken without a meeting if a
written consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of
the Percentage Interests of the Partners (or such other percentage as is
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.
C. Proxy. Each Limited Partner may authorize any Person or
Persons to act for such Limited Partner 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 its attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the Limited
Partner executing it, such revocation to be effective upon the Partnership's
receipt of notice thereof in writing.
D. Conduct of Meeting. 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 XV
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 hereto or such
other address as the Partners shall notify the General Partner in writing.
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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 and inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.
Section 15.6 Creditors; Other Third Parties
Other than as expressly set forth herein with regard to any
Indemnitee, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor or other third party having
dealings with 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 a 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 and enforced in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
Section 15.10 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.
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Section 15.11 Power of Attorney
A. General. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each 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 any Liquidator
deems appropriate or necessary to form, qualify or
continue the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the limited partners have
limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may
conduct business or own property, (b) all instruments
that the General Partner or any Liquidator deems
appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement
in accordance with its terms, (c) all conveyances and
other instruments or documents that the General
Partner or any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation
of the Partnership pursuant to the 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 XI, XII or XIII 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 or any
Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or
other action which is made or given by the Partners
hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole
discretion of the General Partner or any Liquidator,
to effectuate the terms or intent of this Agreement.
Nothing contained in this Section 15.11 shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement except
in accordance with Article XIV hereof or as may be otherwise expressly provided
for in this Agreement.
B. Irrevocable Nature. 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 or any Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership, and
it shall survive and not be affected by the subsequent Incapacity of any Limited
Partner or Assignee and 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 or any Liquidator, acting in good
faith pursuant to such power of attorney; and each such Limited Partner or
Assignee hereby waives any and all defenses which may be available to contest,
negate or disaffirm the action of the General Partner or any Liquidator, taken
in good faith under such power of attorney. Each Limited Partner or Assignee
shall execute and deliver to the General Partner or the Liquidator, within
fifteen (15) days after receipt of the General Partner's or Liquidator's request
therefor, such further designation, powers of attorney and other instruments as
the General Partner or the Liquidator, as the case may be, deems necessary to
effectuate this Agreement and the purposes of the Partnership.
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Section 15.12 Entire Agreement
This Agreement and all Exhibits attached hereto (which
Exhibits are incorporated herein by reference as if fully set forth herein)
contains the entire understanding and agreement among the Partners with respect
to the subject matter hereof and supersedes any prior written or oral
understandings or agreements among them with respect thereto.
Section 15.13 No Rights as Stockholders
Nothing contained in this Agreement shall be construed as
conferring upon the holders of the Partnership Units any rights whatsoever as
stockholders of the General Partner Entity or the General Partner (if
different), including, without limitation, any right to receive dividends or
other distributions made to stockholders of the General Partner Entity or the
General Partner (if different) or to vote or to consent or receive notice as
stockholders in respect to any meeting of stockholders for the election of
directors of the General Partner Entity or the General Partner (if different) or
any other matter.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GENERAL PARTNER:
VORNADO OPERATING COMPANY
By: _____________________________
Name:
Title:
LIMITED PARTNERS:
INTERSTATE PROPERTIES
By: _____________________________
Name:
Title:
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EXHIBIT A
VORNADO OPERATING L.P.
PARTNERS AND PARTNERSHIP INTERESTS
(as of -, 1998)
----------------------------------------------------------------------------------------------
Class A Agreed Initial Percentage
Cert. No. Units Capital Account Interest
----------------------------------------------------------------------------------------------
R-A
R-A 1 Vornado Operating Company 90.1000%
R-A 2 Interstate Properties 9.9000%
----------------------------------------------------------------------------------------------
TOTAL 100.0000%
========
----------------------------------------------------------------------------------------------
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EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate
Capital Account in accordance with the rules of Regulations Section
l.704-l(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions and any other deemed contributions made by such
Partner to the Partnership pursuant to this Agreement and (ii) all items of
Partnership income and gain (including income and gain exempt from tax) computed
in accordance with Section 1.B hereof and allocated to such Partner pursuant to
Section 6.1 of the Agreement and Exhibit C hereof, and decreased by (x) the
amount of cash or Agreed Value of all actual and deemed distributions of cash or
property made to such Partner pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with Section 1.B hereof
and allocated to such Partner pursuant to Section 6.1 of the Agreement and
Exhibit C hereof.
B. For purposes of computing the amount of any item of income,
gain, deduction or loss to be reflected in the Partners' Capital Accounts,
unless otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made
without regard to any election under Section 754 of
the Code which may be made by the Partnership,
provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership made
pursuant to Section 734 of the Code as a result of
the distribution of property by the Partnership to a
Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital
Accounts) shall be reflected in the Capital Accounts
of the Partners in the manner and subject to the
limitations prescribed in Regulations Section l.704-
1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and
deduction shall be made without regard to the fact
that items described in Sections 705(a)(l)(B) or
705(a)(2)(B) of the Code are not includable in gross
income or are neither currently deductible nor
capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be
determined as if the adjusted basis of such property
as of such date of disposition were equal in amount
to the Partnership's Carrying Value with respect to
such property as of such date.
(4) 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.
(5) In the event the Carrying Value of any Partnership
Asset is adjusted pursuant to Section 1.D hereof, the
amount of any such adjustment shall be taken into
account as gain or loss from the disposition of such
asset.
B-1
57
(6) Any items specially allocated under Section 2 of
Exhibit C hereof shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a
Partnership Unit shall succeed to a pro rata portion of the Capital Account of
the transferor. The Capital Accounts of such reconstituted Partnership shall be
maintained in accordance with the principles of this Exhibit B.
D. (1) Consistent with the provisions of Regulations
Section 1.704-1(b)(2)(iv)(f), and as provided in
Section 1.D(2), the Carrying Values of all
Partnership assets shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized
Loss attributable to such Partnership property, as of
the times of the adjustments provided in Section
1.D(2) hereof, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale
of each such property and allocated pursuant to
Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following
times: (a) immediately prior to the acquisition of an
additional interest in the Partnership by any new or
existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior
to the distribution by the Partnership to a Partner
of more than a de minimis amount of property as
consideration for an interest in the Partnership; and
(c) immediately prior to the liquidation of the
Partnership within the meaning of Regulations Section
1.704-l(b)(2)(ii)(g), provided, however, that
adjustments pursuant to clauses (a) and (b) above
shall be made only if the General Partner determines
that such adjustments are necessary or appropriate to
reflect the relative economic interests of the
Partners in the Partnership.
(3) In accordance with Regulations Section 1.704-
l(b)(2)(iv)(e), the Carrying Value of Partnership
assets distributed in kind shall be adjusted upward
or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership
property, as of the time any such asset is
distributed.
(4) In determining Unrealized Gain or Unrealized Loss for
purposes of this Exhibit B, the aggregate cash amount
and fair market value of all Partnership assets
(including cash or cash equivalents) shall be
determined by the General Partner using such
reasonable method of valuation as it may adopt, or in
the case of a liquidating distribution pursuant to
Article XIII of the Agreement, shall be determined
and allocated by the Liquidator using such reasonable
methods of valuation as it may adopt. The General
Partner, or the Liquidator, as the case may be, shall
allocate such aggregate fair market value among the
assets of the Partnership in such manner as it
determines in its sole and absolute discretion to
arrive at a fair market value for individual
properties.
E. The provisions of the Agreement (including this Exhibit B
and the other Exhibits to the Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704- 1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification
without regard to Article XIV of the Agreement, provided that it is not likely
to have a material effect on the amounts distributable to any Person pursuant to
Article XIII 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
l.704-l(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 l.704-1(b).
2. No Interest
B-2
58
No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its
Capital Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VIII and XIII of the
Agreement.
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59
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this
Exhibit C, the following special allocations shall be made in the following
order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if there
is a net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and for purposes of this Section 1.A only, each
Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5), shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Partner's share of the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i) (4). This
Section 1.B is intended to comply with the minimum gain chargeback requirement
in such Section of the Regulations and shall be interpreted consistently
therewith. Solely for purposes of this Section 1.B, each Partner's Adjusted
Capital Account Deficit shall be determined prior to any other allocations
pursuant to Section 6.1 of the Agreement or this Exhibit with respect to such
Partnership Year, other than allocations pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulations Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or 1.704-
l(b)(2)(ii)(d)(6), and after giving effect to the allocations required under
Sections 1.A and 1.B hereof with respect to such Partnership Year, such Partner
has an Adjusted Capital Account Deficit, items of Partnership income and gain
(consisting of a pro rata portion of each item of Partnership income, including
gross income and gain for the Partnership Year) shall be specially allocated to
such Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit created by
such adjustments, allocations or distributions as quickly as possible. This
Section 1.C is intended to constitute a "qualified income offset" under
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
X. Xxxxx Income Allocation. In the event that any Partner has
an Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to be made under the preceding paragraphs hereof
with respect to such Partnership Year), each such Partner shall be specially
allocated items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit.
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60
E. Nonrecourse Deductions. Nonrecourse Deductions for any
Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Regulations Section 1.704-
l(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, and deduction shall be allocated for federal income tax purposes
among the Partners as follows:
(1) (a) In the case of a Contributed Property,
such items attributable thereto shall be
allocated among the Partners consistent with
the principles of Section 704(c) of the Code
to take into account the variation between
the 704(c) Value of such property and its
adjusted basis at the time of contribution
(taking into account Section 2.C of this
Exhibit C); and
(b) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall
be allocated among the Partners in the same
manner as its correlative item of "book"
gain or loss is allocated pursuant to
Section 6.1 of the Agreement and Section 1
of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such
items shall
(i) first, be allocated among the Partners in a
manner consistent with the principles of Section
704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to
Exhibit B;
(ii) second, in the event such property was
originally a Contributed Property, be allocated among
the Partners in a manner consistent with Section
2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual Loss
attributable to an Adjusted Property shall
be allocated among the Partners in the same
manner its correlative item of
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"book" gain or loss is allocated pursuant to
Section 6.1 of the Agreement and Section 1
of this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section
704(c) of the Code permit a Partnership to utilize alternative methods to
eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall, subject to the following, have the
authority to elect the method to be used by the Partnership and such election
shall be binding on all Partners.
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EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) elects to redeem
Partnership Units in Vornado Operating L.P. in accordance with the
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terms of the Agreement of Limited Partnership of Vornado Operating L.P., as
amended (the "Partnership Agreement"), and the Redemption Right referred to
therein, (ii) surrenders such Partnership Units and all right, title and
interest therein and (iii) directs that promptly after the Specified Redemption
Date the Cash Amount or Shares Amount (as determined by the General Partner)
deliverable upon exercise of the Redemption Right be delivered to the address
specified below, and if Shares are to be delivered, such Shares be registered or
placed in the name(s) and at the address(es) specified below. The undersigned
hereby represents, warrants, and certifies that the undersigned (a) has
marketable and unencumbered title to such Partnership Units, free and clear of
the rights of or interests of any other person or entity, (b) has the full
right, power and authority to redeem and surrender such Partnership Units as
provided herein and (c) has obtained the consent or approval of all persons or
entities, if any, having the right to consult or approve such redemption and
surrender. Capitalized terms used herein have the meanings assigned to them in
the Partnership Agreement.
Dated: Name of Limited Partner:
----------------- -----------------------------
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(Signature of Limited Partner)
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(Street Address)
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(City) (State) (Zip Code)
Signature Guaranteed by:
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IF SHARES ARE TO BE ISSUED, ISSUE TO:
Name:
Please insert social security or identifying number:
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